Document:

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                                                                     EXHIBIT 4.1

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                           ROCHESTER GAS AND ELECTRIC
                                  CORPORATION

                                       TO

                             BANKERS TRUST COMPANY,

                                                Trustee

                                   ----------

                             SUPPLEMENTAL INDENTURE

                           Dated as of April 1, 2001

                        SUPPLEMENTAL TO GENERAL MORTGAGE

                            Dated September 1, 1918

                                   ----------

                First Mortgage 6.95% Bonds, Due 2011, Series TT

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     SUPPLEMENTAL INDENTURE, dated as of April 1, 2001 between ROCHESTER GAS AND
ELECTRIC CORPORATION (its name having been duly changed from "Rochester Railway
and Light Company"), a corporation of the State of New York with offices located
at 89 East Avenue, Rochester, New York 14649 (hereinafter sometimes called the
"Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation of
the State of New York with its principal corporate trust office located at Four
Albany Street, New York, New York 10006, as Trustee under the Indenture dated
September 1, 1918 between Rochester Railway and Light Company and Bankers Trust
Company (hereinafter sometimes called the "Trustee"), party of the second part.

     WHEREAS, the Company heretofore executed and delivered its General Mortgage
(hereinafter sometimes referred to as the "Original Indenture"), dated the 1st
day of September, 1918, to the Trustee to secure an issue of General Mortgage
Bonds of the Company issuable in series and limited in aggregate principal
amount as therein specified; and

     WHEREAS, the Company heretofore executed and delivered forty indentures
amending and supplementing the Original Indenture, said forty indentures being
dated March 1, 1921, October 23, 1928, August 1, 1932, as of May 1, 1940, as of
March 1, 1949, as of August 15, 1950, as of June 1, 1952, as of March 1, 1955,
as of July 1, 1957, as of October 15, 1959, as of November 15, 1961, as of
September 15, 1964, as of May 1, 1966, as of September 15, 1967, as of July 1,
1968, as of August 15, 1969, as of September 1, 1970, as of August 1, 1974, as
of June 15, 1976, as of September 15, 1977, as of December 1, 1978, as of August
1, 1979, as of February 15, 1980, as of August 15, 1981, as of May 15, 1982, as
of June 15, 1982, as of March 1, 1983, as of June 15, 1984, as of May 15, 1985,
as of August 1, 1986, as of May 1, 1987, as of December 15, 1987, as of December
1, 1988, as of April 1, 1991, as of March 15, 1992, as of May 1, 1992, as of May
15, 1992, as of October 15, 1992, as of September 1, 1993, and as of March 15,
1999, respectively (the Original Indenture as so amended and supplemented being
hereinafter referred to as the "Mortgage"); and

     WHEREAS, all mortgages formerly constituting prior liens upon properties
and franchises of the Company have been heretofore discharged (except to the
extent, if any, that under the agreement between the Company and the City of
Rochester, dated September 5, 1892, and agreements supplemental hereto, the City
may still have the right to purchase the subways owned by the Company upon the
terms and conditions therein stated), and the lien of the Mortgage now
constitutes a first mortgage lien upon all properties and franchises of the
Company which are subject to the lien thereof; and
<PAGE>

     WHEREAS, there are now issued and outstanding under the Mortgage bonds in
the aggregate principal amount of $580,500,000 as follows:

<TABLE>
<CAPTION>
                 Designation               Principal Amount
                 -----------               ----------------

<S>                                        <C>
     Series PP...........................    100,000,000
     Series QQ...........................    100,000,000
     Series RR...........................     10,500,000
     Series SS...........................     50,000,000
     Secured Medium-Term
      Notes, Series A....................    170,000,000
     Secured Medium-Term
      Notes, Series B....................    150,000,000
</TABLE>

and no bonds of any other series are issued or outstanding under the Mortgage;
and

     WHEREAS, the Company desires to issue additional bonds under the Mortgage,
of a new series to be designated "First Mortgage 6.95% Bonds, due 2011, Series
TT" (hereinafter sometimes called "bonds of Series TT"); and

     WHEREAS, as is provided or permitted by the Mortgage, for the purpose of
better assuring and confirming unto the Trustee certain additional property
which has been acquired by the Company and is intended to be subject to the lien
of the Mortgage, the Company desires by this Supplemental Indenture expressly to
subject such property to the lien of the Mortgage as hereinafter more
particularly set forth; and

     WHEREAS, all provisions of the Mortgage pertinent to the execution and
delivery of this Supplemental Indenture and to the taking of the action referred
to herein have been complied with and the Company, pursuant to due and
appropriate corporate action, duly had and taken before the execution and
delivery hereof, has duly authorized and directed the execution and delivery to
the Trustee of this Supplemental Indenture; and

     WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture, in the form and terms hereof, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed
have been done, performed and fulfilled and the execution and delivery hereof
have been in all respects duly authorized;

     NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that in
consideration of the premises and of the sum of One Dollar to the Company duly
paid by the Trustee at or before the sealing and delivery of these presents and
for other valuable considerations, the receipt whereof is hereby

                                      -2-
<PAGE>

acknowledged, and in consideration of the purchase and acceptance of the bonds
of Series TT by the holders thereof, and in order to secure the payment of the
principal, interest and premium, if any, on all bonds at any time issued under
and secured by the Original Indenture, as from time to time amended and
supplemented, according to their tenor, purport and effect and to secure the
performance and observance of all the covenants and conditions in such bonds
and in the Original Indenture, as from time to time amended and supplemented,
contained, and for the purpose of better assuring and confirming unto the
Trustee the property mortgaged or intended to be mortgaged by the Original
Indenture, as from time to time amended and supplemented (other than property
disposed of in accordance with the provisions of the Original Indenture, as
from time to time amended and supplemented), the Company by these presents does
expressly confirm the conveyance and transfer to the Trustee of such property
and does grant, bargain, sell, convey and transfer, unto the Trustee, party of
the second part, its successors and assigns, forever, all and singular, the
following property:

                                  CLAUSE FIRST

     All the property described or referred to in the deeds set forth in
Schedule A hereto annexed and made a part hereof as fully as if set forth herein
at length.

                                 CLAUSE SECOND

     Any and all the rents, issues and profits, tolls and other income of said
property.

     TO HAVE AND TO HOLD the properties, franchises, premises, rights,
appurtenances and privileges hereby conveyed or assigned, or intended to be
conveyed or assigned, unto the Trustee, its successors and assigns forever;

     SUBJECT, HOWEVER, to excepted encumbrances as defined in Section 1.02 of
the Mortgage;

     BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of all present and future holders of the bonds and coupons issued and
to be issued under and secured by the Original Indenture, as from time to time
amended and supplemented;

     AND UPON THE TRUST, USES AND PURPOSES and subject to the terms, covenants,
agreements and conditions set forth in the Mortgage as amended and supplemented
by this Supplemental Indenture.

                                      -3-
<PAGE>

                                   ARTICLE I
                               BONDS OF SERIES TT

     SECTION ONE.  The bonds of Series TT shall be designated "First Mortgage
6.95% Bonds, due 2011, Series TT."  The bonds of Series TT may be executed on
behalf of the Company by its President or any Vice President by his manual or
facsimile signature under its corporate seal, which may be in the form of a
facsimile seal of the Company and may be impressed, affixed, imprinted or
otherwise reproduced on the bonds of Series TT, attested by its Secretary or an
Assistant Secretary by his manual or facsimile signature, and shall be delivered
to the Trustee for authentication by it, and thereupon, as provided in the
Mortgage as hereby supplemented and not otherwise, the Trustee shall
authenticate the bonds of Series TT and shall deliver the same to the Company
upon its written order.  The bonds of Series TT shall be fully registered bonds
without coupons and shall be dated as provided in Section 2.07 of the Mortgage.
All bonds of Series TT shall be payable on April 1, 2011, in such coin or
currency of the United States of America as at the time is legal tender for the
payment of public and private debts, and shall bear interest, payable in like
coin or currency, at the rate of 6.95 percent (6.95%) per annum, computed on the
basis of a 360-day year of twelve 30-day months, semi-annually on April 1 and
October 1 of each year, until maturity, according to the terms of the bonds or
on prior redemption or by declaration or otherwise, and, after the date of such
maturity, at the same rate of interest borne prior to maturity by the principal
of the bonds of Series TT from such date of maturity until they shall be paid or
payment thereof shall have been duly provided for, and (to the extent that
payment of such interest is enforceable under applicable law) interest on any
overdue installment of interest at the same rate of interest borne by the
principal of the bonds of Series TT.  The persons in whose names bonds of Series
TT are registered at the close of business on any record date (as hereinafter
defined) with respect to any interest payment date shall be entitled to receive
the interest payable on such interest payment date (except that in case of any
redemption of bonds of Series TT as provided for herein on a date subsequent to
the record date and prior to such interest payment date, interest on such
redeemed bonds shall be payable only to the date fixed for redemption thereof
and only against surrender of such bonds for redemption in accordance with the
notice of such redemption) notwithstanding the cancellation of any bond of
Series TT upon any registration of transfer or exchange subsequent to the record
date and prior to such interest payment date; provided, however, that if, and to
the extent, the Company shall default in the payment of the interest due on any
interest payment date, such defaulted interest shall be paid to the persons in
whose names outstanding bonds of Series TT are registered on the day immediately
preceding the date of payment of such defaulted interest or, at the election of
the Company, on a subsequent record date established by notice given by mail by
or on behalf of the Company to the holders of bonds of Series TT not less than
fifteen days preceding such subsequent record date.  The term "record date"
shall mean, with respect to any regular semi-annual interest payment date,

                                      -4-
<PAGE>

the close of business on the 15th day of the calendar month next preceding such
interest payment date or, in the case of defaulted interest, the close of
business on any subsequent record date established as provided above.

     Principal of and interest on the bonds of Series TT shall be payable at the
office or agency of the Company in the Borough of Manhattan, The City of New
York.

     The bonds of Series TT shall be redeemable at the option of the Company on
any date prior to maturity, as a whole or from time to time in part, upon notice
given by mailing the same to each registered holder directed to his registered
address not less than thirty (30) nor more than ninety (90) days before the
redemption date, at a redemption price equal to the accrued interest on the
bonds of Series TT being redeemed to the date of redemption (the "Redemption
Date") plus the greater of: (i) 100% of the principal amount of bonds of Series
TT being redeemed; or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest on the bonds of Series TT being
redeemed (not including any portion of such payments of interest accrued as of
the Redemption Date) discounted to the Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus thirty (30) basis points, as calculated by an Independent
Investment Banker.  For purposes of this paragraph the following terms shall
have the following meanings:

               "Adjusted Treasury Rate" means, with respect to any Calculation
     Date: (i) the yield, under the heading which represents the average for the
     immediately preceding week, appearing in the most recently published
     statistical release designated "H.15(519)" or any successor publication
     which is published weekly by the Board of Governors of the Federal Reserve
     System and which establishes yields on actively traded United States
     Treasury securities adjusted to constant maturity under the caption
     "Treasury Constant Maturities," for the maturity corresponding to the
     Comparable Treasury Issue (if no maturity is within three months before or
     after maturity date of the bonds of Series TT, yields for the two published
     maturities most closely corresponding to the Comparable Treasury Issue
     shall be determined and the adjusted Treasury Rate shall be interpolated or
     extrapolated from such yields on a straight line basis, rounding to the
     nearest month); or (ii) if such release (or any successor release) is not
     published during the week preceding the Calculation Date or does not
     contain such yields, the rate per annum equal to the semi-annual equivalent
     yield to maturity of the Comparable Treasury Issue, calculated using a
     price for the Comparable Treasury Issue (expressed as a percentage of its
     principal amount) equal to the Comparable Treasury Price for such
     Calculation Date.

               "Calculation Date" means the third business day preceding the
     applicable Redemption Date.

                                      -5-
<PAGE>

               "Comparable Treasury Issue" means the United States Treasury
     security selected by an Independent Investment Banker as having a maturity
     comparable to the remaining term of the bonds of Series TT that would be
     utilized, at the time of selection and in accordance with customary
     financial practice, in pricing new issues of corporate debt securities of
     comparable maturity to the remaining term of the bonds of Series TT.

               "Comparable Treasury Price" means (i) the average of five
     Reference Treasury Dealer Quotations for such Calculation Date, after
     excluding the highest and lowest Reference Treasury Dealer Quotations, or
     (ii) if the Independent Investment Banker obtains fewer than five such
     Reference Treasury Dealer Quotations, the average of all such quotations.

               "Independent Investment Banker" means one of the Reference
     Treasury Dealers appointed by the Company.

               "Primary Treasury Dealer means a primary U.S. Government
     securities dealer in New York City.

               "Reference Treasury Dealer" means:  (i) each of Morgan Stanley &
     Co. Incorporated, BNY Capital Markets, Inc., Chase Securities Inc. and
     Mellon Financial Markets, LLC, and their respective successors; provided
     that, if any of the foregoing ceases to be a Primary Treasury Dealer, the
     Company will substitute another Primary Treasury Dealer; and (ii) any other
     Primary Treasury Dealer selected by the Company.

               "Reference Treasury Dealer Quotations" means, with respect to
     each Reference Treasury Dealer and any Calculation Date, the average, as
     determined by the Independent Investment Banker, of the bid and asked
     prices for the Comparable Treasury Issue (expressed in each case as a
     percentage of its principal amount) quoted in writing to the Independent
     Investment Banker at 5:00 p.m., New York City time, on the Calculation
     Date.

     The bonds of Series TT shall also be redeemable on any date prior to
maturity, on the conditions referred to in this paragraph, on like mailing of
notice of such redemption, at 100% of the principal amount thereof, together
with accrued interest to the date of redemption (sometimes hereinafter referred
to as the special redemption price).  Redemption as a whole, but not in part
only, at said special redemption price may be effected as provided in Section
5.08 of the Mortgage.  Redemption as a whole or from time to time in part at
said special redemption price may also be effected out of cash deposited
pursuant to Sections 4.06 and 4.19 of the Mortgage, the accrued interest in case
of any such redemption to be provided for by the Company pursuant to the
provisions of Section 5.07 of the Mortgage.  Any notice of redemption of bonds
of Series TT out of cash deposited pursuant to said Sections 4.06 and 4.19 shall
state that the redemption is

                                      -6-
<PAGE>

to be effected out of cash deposited pursuant to said Section 4.06 or said
Section 4.19, as the case may be.

     Bonds of Series TT shall be issuable in minimum denominations of $100,000
and in denominations exceeding such amount in integral multiples of $1,000.  The
bonds of Series TT may be exchanged (without payment of any service charge, but
the Company may require the payment of a sum sufficient to cover any tax or
taxes or other governmental charges required to be paid by it) at the option of
the holders thereof, in like aggregate principal amounts for bonds of Series TT
of other authorized denominations.

     The Company shall not be required to make exchanges or registrations of
transfer of bonds of Series TT for a period of ten days next preceding the
mailing of notice of redemption of bonds of Series TT, and the Company shall not
be required to exchange or register the transfer of any bond of Series TT
selected, called or being called for redemption or, in the case of a bond of
Series TT to be redeemed in part, that portion so to be redeemed.

     The bonds of Series TT will be issued as definitive bonds which, at the
option of the Company, may be fully engraved or may be printed or lithographed.

                                      -7-
<PAGE>

     SECTION TWO.  The bonds of Series TT shall be substantially in the
following form:

                      [FORM OF FACE OF BOND OF SERIES TT]

                     ROCHESTER GAS AND ELECTRIC CORPORATION

$................................             No. .............................

                 FIRST MORTGAGE 6.95% BOND, DUE 2011, SERIES TT
                               DUE APRIL 1, 2011

     ROCHESTER GAS AND ELECTRIC CORPORATION, a corporation organized and
existing under the laws of the State of New York (hereinafter called the
Company), for value received, hereby promises to pay to
or registered assigns on April 1, 2011, at the office or agency of the Company
in the Borough of Manhattan, The City of New York,

Dollars in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts, and to
pay at said office or agency, in like coin or currency, interest thereon, semi-
annually on April 1 and October 1 of each year, at the rate of 6.95 percent
(6.95%) per annum, computed on the basis of a 360-day year of twelve 30-day
months, from the April 1 or October 1, as the case may be, next preceding the
date hereof to which interest has been paid, unless the date hereof is a date to
which interest has been paid, in which case from the date hereof, or unless the
date hereof is prior to October 1, 2001 in which case from April 6, 2001, until
this bond shall mature according to its terms or on prior redemption or by
declaration or otherwise, and, after the date of such maturity, at the same rate
of interest borne prior to maturity by the principal hereof from such date of
maturity until this bond shall be paid or payment hereof shall have been duly
provided for, and (to the extent that payment of such interest is enforceable
under applicable law) to pay interest on any overdue installment of interest at
the same rate of interest borne by the principal hereof.  The interest so
payable on any April 1 and  October 1 will, subject to certain exceptions
provided in the Mortgage referred to on the reverse hereof, be paid to the
person in whose name this bond (or the bond or bonds in exchange or substitution
for which this bond was issued) was registered at the close of business on the
15th day of the calendar month next preceding such April 1 and October 1.

     The provisions of this bond are continued on the reverse hereof and such
continued provisions shall for all purposes have the same effect as though fully
set forth at this place.

                                      -8-
<PAGE>

     This bond shall not become valid or obligatory for any purpose until
Bankers Trust Company, or its successor as Trustee under the Mortgage, shall
have signed the certificate of authentication hereon.

     IN WITNESS WHEREOF, ROCHESTER GAS AND ELECTRIC CORPORATION has caused this
bond to be signed in its name by its President or one of its Vice Presidents by
his signature or a facsimile thereof and its corporate seal, or a facsimile
thereof, to be affixed hereto and attested by its Secretary or one of its
Assistant Secretaries by his signature or a facsimile thereof.

Dated: April 6, 2001                 ROCHESTER GAS AND ELECTRIC CORPORATION

                                     By ...................................
                                                  Vice President

[CORPORATE SEAL]

Attest:

 ..................................
            Secretary

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This bond is one of the issue of bonds, of the series designated therein,
described in the Mortgage referred to on the reverse hereof.

                                     BANKERS TRUST COMPANY,
                                            Trustee,

                                     By ...................................
                                                 Authorized Officer

                                      -9-
<PAGE>

                     [FORM OF REVERSE OF BOND OF SERIES TT]

     This bond is one of an issue of bonds of the Company, issuable in series,
and is one of a series known as its First Mortgage 6.95% Bonds, due 2011, Series
TT, all bonds of all series issued and to be issued under and secured by an
Indenture of Mortgage dated September 1, 1918, as amended and/or supplemented by
forty-one Supplemental Indentures, all executed by the Company to Bankers Trust
Company, a corporation of the State of New York, as Trustee, and together herein
called the Mortgage, to which Indenture of Mortgage and all indentures and
conveyances supplemental thereto reference is made for a complete description of
the property mortgaged, the nature and extent of the security, the rights of the
holders of the bonds and of the Company in respect thereof, the rights, duties
and immunities of the Trustee, and the terms and conditions upon which the bonds
are, and are to be, secured.

     The Mortgage contains provisions permitting, under certain conditions, the
holders of not less than seventy-five per cent (75%) in aggregate principal
amount of all the bonds (or, if only certain series are affected, of such
series, together with the consent of the holders of at least a majority in
aggregate principal amount of all the bonds) at the time outstanding to waive
any past default under the Mortgage and its consequences except an event of
default (i) in respect of the payment of the principal of or interest on any
bond, (ii) arising from the creation (not including in such term existing liens
on property acquired after March 1, 1949) of any lien ranking prior to or equal
with the lien of the Mortgage on any of the mortgaged property or (iii) in
respect of the waiver of which specific provision is otherwise made in the
Mortgage.  The Mortgage also contains a provision that under certain
circumstances if, after the principal of all bonds then outstanding under the
Mortgage shall have been declared due and payable, as provided in the Mortgage,
all defaults under the Mortgage shall have been remedied, then the holders of a
majority in principal amount of the bonds then secured by and outstanding under
the Mortgage, by written notice to the Company and to the Trustee, may waive and
rescind such default and its consequences.  The Mortgage also contains
provisions permitting the Company and Trustee, with the consent of the holders
of not less than seventy-five per cent (75%) in aggregate principal amount of
all the bonds (or, if only certain series are affected, of such series, together
with the consent of the holders of at least a majority in aggregate principal
amount of all the bonds) at the time outstanding, to enter into supplemental
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Mortgage or of any supplemental indenture or modifying
in any manner the rights of the holders of the bonds; provided, however, that no
such supplemental indenture shall (a) extend the fixed maturity of any bonds, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof, or limit the right of a bondholder to institute suit
for the enforcement of payment of principal or interest, without the consent of
the holder of each bond so affected, or (b) reduce the percentage of

                                      -10-
<PAGE>

bonds, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all bonds, or (c) permit the
creation of any mortgage or pledge or lien in the nature thereof ranking prior
to or equal with the lien of the Mortgage, without the consent of the holders
of all bonds. Any such waiver or consent by the holder of this bond (unless
effectively revoked as provided in the Mortgage) shall be conclusive and
binding upon such holder and upon all future holders of this bond (and any bond
issued in lieu hereof or exchange herefor), irrespective of whether or not any
notation of such waiver or consent is made upon this bond.

     The bonds of Series TT are issuable in fully registered form, in minimum
denominations of $100,000 and in denominations exceeding such amount in integral
multiples of $1,000.  This bond is transferable in the manner and subject to the
limitations prescribed in the Mortgage by the registered holder hereof in
person, or by his duly authorized attorney, and this bond may be exchanged for a
like aggregate principal amount of bonds of the same series of other authorized
denominations, at the principal corporate trust office of the Trustee in said
Borough of Manhattan, upon surrender and cancellation of this bond, without
payment of any service charge, but the Company may require the payment of a sum
sufficient to cover any related tax or taxes or other governmental charges
required to be paid by it.  The Company, the Trustee, any paying agent and any
bond registrar may deem and treat the person in whose name this bond is
registered as the absolute owner hereof for the purpose of receiving payment and
for all other purposes and neither the Company nor the Trustee nor any paying
agent nor any bond registrar shall be affected by any notice to the contrary.

     The bonds of Series TT are redeemable at the option of the Company on any
date prior to maturity, as a whole or from time to time in part, upon notice
given by mailing the same to each registered holder directed to his registered
address not less than thirty (30) nor more than ninety (90) days before the
redemption date, at a redemption price equal to the accrued interest on the
bonds of Series TT being redeemed to the date of redemption (the "Redemption
Date") plus the greater of: (i) 100% of the principal amount of bonds of Series
TT being redeemed; or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest on the bonds of Series TT being
redeemed (not including any portion of such payments of interest accrued as of
the Redemption Date) discounted to the Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus thirty (30) basis points, as calculated by an Independent
Investment Banker.  For purposes of this paragraph the following terms shall
have the following meanings:

               "Adjusted Treasury Rate" means, with respect to any Calculation
     Date: (i) the yield, under the heading which represents the average for the
     immediately preceding week, appearing in the most recently published
     statistical release designated "H.15(519)" or any successor publication
     which is published weekly by the Board of Governors of the Federal

                                      -11-
<PAGE>

     Reserve System and which establishes yields on actively traded United
     States Treasury securities adjusted to constant maturity under the caption
     "Treasury Constant Maturities," for the maturity corresponding to the
     Comparable Treasury Issue (if no maturity is within three months before or
     after maturity date of the bonds of Series TT, yields for the two
     published maturities most closely corresponding to the Comparable Treasury
     Issue shall be determined and the adjusted Treasury Rate shall be
     interpolated or extrapolated from such yields on a straight line basis,
     rounding to the nearest month); or (ii) if such release (or any successor
     release) is not published during the week preceding the Calculation Date
     or does not contain such yields, the rate per annum equal to the
     semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
     calculated using a price for the Comparable Treasury Issue (expressed as a
     percentage of its principal amount) equal to the Comparable Treasury Price
     for such Calculation Date.

               "Calculation Date" means the third business day preceding the
     applicable Redemption Date.

               "Comparable Treasury Issue" means the United States Treasury
     security selected by an Independent Investment Banker as having a maturity
     comparable to the remaining term of the bonds of Series TT that would be
     utilized, at the time of selection and in accordance with customary
     financial practice, in pricing new issues of corporate debt securities of
     comparable maturity to the remaining term of the bonds of Series TT.

               "Comparable Treasury Price" means (i) the average of five
     Reference Treasury Dealer Quotations for such Calculation Date, after
     excluding the highest and lowest Reference Treasury Dealer Quotations, or
     (ii) if the Independent Investment Banker obtains fewer than five such
     Reference Treasury Dealer Quotations, the average of all such quotations.

               "Independent Investment Banker" means one of the Reference
     Treasury Dealers appointed by the Company.

               "Primary Treasury Dealer means a primary U.S. Government
     securities dealer in New York City.

               "Reference Treasury Dealer" means:  (i) each of Morgan Stanley &
     Co. Incorporated, BNY Capital Markets, Inc., Chase Securities Inc. and
     Mellon Financial Markets, LLC, and their respective successors; provided
     that, if any of the foregoing ceases to be a Primary Treasury Dealer, the
     Company will substitute another Primary Treasury Dealer; and (ii) any other
     Primary Treasury Dealer selected by the Company.

               "Reference Treasury Dealer Quotations" means, with respect to
     each Reference Treasury Dealer and any Calculation Date, the average, as

                                      -12-
<PAGE>

     determined by the Independent Investment Banker, of the bid and asked
     prices for the Comparable Treasury Issue (expressed in each case as a
     percentage of its principal amount) quoted in writing to the Independent
     Investment Banker at 5:00 p.m., New York City time, on the Calculation
     Date.

     The bonds of Series TT may also be redeemed on any date prior to maturity,
on certain conditions referred to in the Mortgage, on giving notice of such
redemption as provided in the Mortgage, at 100% of the principal amount thereof,
together with accrued interest to the date of redemption.

     It is provided in the Mortgage that any notice of redemption of bonds may
state that it is subject to the receipt of the redemption moneys by the Trustee
before the date fixed for redemption and shall be of no effect unless such
moneys are so received before such date.

     The Mortgage provides that if the Company shall deposit with Bankers Trust
Company or its successor as Trustee in trust for the purpose funds sufficient to
pay the applicable redemption price for any series of bonds (including any
portions, constituting $1,000 or a multiple thereof, of fully registered bonds),
and all interest payable on such bonds (or portions) to the date on which they
become due and payable upon redemption, and complies with the other provisions
of the Mortgage in respect thereof, then from the date of redemption such bonds
(or portions) shall no longer be secured by the lien of the Mortgage or bear
interest.

     The Mortgage provides that if the Company shall deposit with Bankers Trust
Company or its successor as Trustee in trust for the purpose funds sufficient to
pay the principal of all of the bonds of any series and premium, if any,
thereon, and all interest payable on such bonds to the date on which they become
due and payable at maturity, and complies with the other provisions of the
Mortgage in respect thereof, then from the date of such deposit such bonds shall
no longer be secured by the lien of the Mortgage.

     The Mortgage provides that, upon any partial redemption of a fully
registered bond, upon surrender thereof endorsed for transfer, new bonds of the
same series and of authorized denominations in principal amount equal to the
unredeemed portion of such fully registered bond will be delivered without
charge in exchange therefor.

     The principal hereof may be declared or may become due prior to the express
date of the maturity hereof on the conditions, in the manner and at the time set
forth in the Mortgage, upon the occurrence of an event of default as in the
Mortgage provided.

                   [END OF REVERSE SIDE OF BOND OF SERIES TT]

                                      -13-
<PAGE>

                                   ARTICLE II
                               Sundry Provisions

     SECTION ONE.  The Trustee hereby accepts the trust herein declared and
provided, and agrees to perform the same upon the terms and conditions set forth
in the Mortgage, as hereby amended and supplemented.

     SECTION TWO.  The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplemental Indenture,
or the due execution hereof by the Company, or for or in respect of the recitals
contained herein, all of which recitals are made by the Company solely.  Nor
shall the Trustee, subject to the provisions of Sections 10.01 and 10.02 of the
Mortgage, be answerable or accountable for anything whatsoever in connection
with this Supplemental Indenture, except its own misconduct or negligence.

     SECTION THREE.  In compliance with Section 13 of the Lien Law of the State
of New York, the Company hereby agrees that it will receive the advances secured
by the Mortgage, as amended and supplemented hereby, and will hold the right to
receive such advances as a trust fund to be applied first for the purpose of
paying the cost of the improvement, if any, as required by said Lien Law, and
that it will apply the same first to the payment of the cost of the improvement,
if any, before using any part of the total of the same for any other purpose.

     SECTION FOUR.  This Supplemental Indenture may be executed in several
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.

     IN WITNESS WHEREOF, Rochester Gas Electric Corporation has caused this
Supplemental Indenture to be signed in its name and behalf by its President or
one of its Vice Presidents and its corporate seal to be hereunto affixed, duly
attested by its Secretary or one of its Assistant Secretaries, and Bankers Trust
Company, to evidence its acceptance of the trusts hereby created, has caused
this Supplemental Indenture to be signed in its name and behalf by one of its
Vice Presidents or Assistant Vice Presidents and its corporate seal to be
hereunto affixed, duly attested by one of its Associates, as of the day and year
first above written, this 4th day of  April, 2001.

                                      -14-
<PAGE>

                             ROCHESTER GAS AND ELECTRIC CORPORATION

                             By ..............................................
                                  Mark Keogh, Vice President and Treasurer

[CORPORATE SEAL]

Attest:

 .......................................
David C. Heiligman, Vice President
and Corporate Secretary

STATE OF NEW YORK       )
                        )  SS.:
COUNTY OF MONROE        )

     On the 4th day of April, in the year 2001, before me, the undersigned,
personally appeared MARK KEOGH, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

                                        _____________________________________
                                                    Notary Public

                                      -15-
<PAGE>

                                     BANKERS TRUST COMPANY,
                                            Trustee,

                                     By ...................................
                                             Carol Ng, Vice President

[CORPORATE SEAL]

Attest:

 .....................................
       Daniel Chipko, Associate

STATE OF NEW YORK       )
                        )  SS.:
COUNTY OF NEW YORK      )

     On the 4th day of April, in the year 2001, before me, the undersigned,
personally appeared CAROL NG, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that she executed the same in her
capacity, and that by her signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

                                        _____________________________________
                                                    Notary Public

                                      -16-
<PAGE>

                                   SCHEDULE A

                           TO SUPPLEMENTAL INDENTURE

                           Dated as of April 1, 2001

               Between Rochester Gas and Electric Corporation and
                         Bankers Trust Company, Trustee

                Deed Recorded in the Wayne County Clerk's Office
              on March 3, 2000 in Liber 976 of Deeds, at Page 472

ALL THAT TRACT OR PARCEL OF LAND being part of Town Lot 12, Township 14, Range
3, Town of Ontario, Wayne County, State of New York, and more particularly
described as follows:

COMMENCING at a point at the northeast corner of lands reputedly owned by Steven
C. Chapman (formerly owned by American Roadways); thence N 84-30-00 W, 422.77
feet to the northwest corner of said property as shown on a map entitled "Final
Plan American Roadways", by R. Ronald Kreiling, P.E., L.S., Dwg. No. 80-530
dated November 14, 1980, filed in Wayne County Clerk's Office, No. 12565; thence
S 08-40-00 W, 433.62 feet to a point being the northeast corner of lands here
being conveyed and being the true point of beginning; thence,

1.   S 08-40-00 W, 150.00 feet to a point on the north right-of-way line (100'
     wide) of Ontario Midland Railroad; thence

2.   N 84-30-00 W, 122.97 feet along the north R.O.W. line to the point of
     curvature; thence

3.   Westerly along a curve to the right delta angle 00-37-57, radius 11509.20
     feet, arc length 127.08 feet to a point being the southwest corner of lands
     here being conveyed; thence

4.   N 08-40-00 E, 150.70 feet to a point; thence

5.   S 84-30-00 E, 250.00 feet to the point and place of beginning; comprising
     an area of 0.860 acres to R.O.W. line.

All as shown on a map entitled "Final Plan R. G. & E. Subdivision Beh Industrial
Park", by Kreiling Associates, P.E., L.S., P.C., Dwg. No. 99-3810-1, filed in
the Wayne County Clerk's Office, #24397.

                                      -17-<PAGE>   1

                                                                  EXHIBIT 10.1.5

                               FIFTH AMENDMENT TO
                                CREDIT AGREEMENT

         THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth Amendment"),
dated as of March 30, 2001, is entered into among HOME INTERIORS & GIFTS, INC.,
a Texas corporation (the "Borrower"), the institutions listed on the signature
pages hereof that are parties to the Credit Agreement defined below
(collectively, the "Lenders"), THE CHASE MANHATTAN BANK, as syndication agent
(in said capacity, the "Syndication Agent"), NATIONAL WESTMINSTER BANK, PLC , as
documentation agent (the "Documentation Agent"), THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, as a co-agent, SOCIETE GENERALE, as a co-agent, CITICORP
USA. INC., as a co-agent (collectively, the "Co-Agents"), and BANK OF AMERICA,
N.A., formerly known as NationsBank, N.A., as administrative agent (in said
capacity, the "Administrative Agent").

                                   BACKGROUND

         A. The Borrower, the Lenders, the Documentation Agent, the Syndication
Agent, the Co-Agents, and the Administrative Agent are parties to that certain
Credit Agreement, dated as of June 4, 1998, as amended by that certain First
Amendment to Credit Agreement, dated as of December 18, 1998, that certain
Second Amendment to Credit Agreement dated as of March 12, 1999, that certain
Third Amendment to Credit Agreement, dated as of November 19, 1999 and that
certain Fourth Amendment to Credit Agreement dated as of July 26, 2000, but
effective as of July 3, 2000 (as the same has been or may be amended, restated
or modified from time to time, the "Credit Agreement").

         B. The Borrower, the Lenders, the Documentation Agent, the Syndication
Agent, the Co-Agents, and the Administrative Agent desire to make certain
amendments to the Credit Agreement.

         NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower, the
Lenders, the Documentation Agent, the Syndication Agent, the Co-Agents, and the
Administrative Agent covenant and agree as follows:

                                   ARTICLE I

                                  Definitions

Section 1.1 Definitions. Capitalized terms used in this Fifth Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement, as amended hereby.

<PAGE>   2

                                   ARTICLE II

                                   Amendments

         Section 2.1 Amendment to Defined Terms in Section 1.1. Effective as of
the date hereof, the following definitions in Section 1.1 of the Credit
Agreement are amended and restated to read in their entirety as follows:

                  "Applicable Base Rate Margin" means (a) for Facility A Term
         Loan Advances and Revolving Loans, 1.5% and (b) for Facility B Term
         Loan Advances, 2.0%.

                  "Applicable Law" means (a) in respect of any Person, all
         provisions of constitutions, statutes, rules, regulations and orders of
         governmental bodies or regulatory agencies applicable to such Person
         and its properties, including, without limiting the foregoing, all
         orders and decrees of all courts and arbitrators in proceedings or
         actions to which the Person in question is a party, and (b) in respect
         of contracts relating to interest or finance charges that are made or
         performed in the State of Texas, "Applicable Law" shall mean the laws
         of the United States of America, including, without limitation, 12 USC
         ss.ss. 85 and 86(a), as amended from time to time, and any other
         statute of the United States of America now or at any time hereafter
         prescribing the maximum rates of interest on loans and extensions of
         credit, and the laws of the State of Texas, including, without
         limitation, Chapter 303 of the Texas Finance Code, as amended, and any
         other statute of the State of Texas now or at any time hereafter
         prescribing maximum rates of interest on loans and extensions of
         credit; provided that the parties hereto agree that the provisions of
         Chapter 346 of the Texas Finance Code, as amended, shall not apply to
         the Advances, this Agreement, the Notes or any other Loan Documents.

                  "Applicable LIBOR Rate Margin" means (a) for Facility A Term
         Loan Advances and Revolving Advances, 2.75% and (b) for Facility B Term
         Loan Advances, 3.25%.

                  "EBITDA" means, for any period, determined in accordance with
         GAAP on a consolidated basis for the Borrower and its Subsidiaries, the
         sum of (without duplication) (a) Pretax Net Income (excluding
         therefrom, to the extent included in determining Pretax Net Income, any
         items of extraordinary gain, including net gains on the sale of assets
         other than asset sales in the ordinary course of business, and adding
         thereto, to the extent included in determining Pretax Net Income, any
         items of extraordinary loss, including net losses on the sale of assets
         other than asset sales in the ordinary course of business), plus (b) to
         the extent included in determining Pretax Net Income, interest expense
         (including the amortization or write-off of debt discount and issuance
         costs and commissions and discounts and other fees and charges
         associated with Indebtedness), plus (c) to the extent included in
         determining Pretax Net Income, depreciation and amortization, plus (d)
         to the extent included in determining Pretax Net Income, other non-cash
         charges, minus (e) to the extent included in determining Pretax Net
         Income, interest and investment income for any period after December
         31, 2000, minus (f) to the extent included in determining Pretax Net
         Income, other non-cash credits, minus (g) cash payments made with
         respect to non-cash charges added back in determining EBITDA in any
         prior period which would otherwise be excluded in determining EBITDA,
         plus (h) to the extent included in

                                      -2-
<PAGE>   3

         determining Pretax Net Income, reorganization related expenses
         previously disclosed to the Lenders (regardless of the line items on
         which such expenses are reported in the Borrower's financial
         statements) taken or incurred in the fiscal quarters ending March 31,
         2001, June 30, 2001, and September 29, 2001, not to exceed $13,500,000
         in the aggregate for all three (3) such quarters (including that
         portion of the reorganization related expenses relating to the
         write-off of deferred financing costs). For purposes of this
         definition, EBITDA shall be computed utilizing the Borrower's revenue
         recognition policy in place prior to the adoption of SEC staff
         Accounting Bulletin No. 101 ("SAB 101"). The Borrower's Compliance
         Certificate shall disclose the adjustment to GAAP operating results
         taking into account the effect of the adoption of SAB 101. The
         Borrower's quarterly filings with the SEC on Form 10-Q and its annual
         filings on Form 10-K will continue to include a reconciliation of
         EBITDA to income before income taxes in accordance with the Borrower's
         GAAP financial statements. This reconciliation will include an
         adjustment for the effect of adoption of SAB 101 on the Borrower's
         operating results.

                  "Interest Period" means the period beginning on the day any
         LIBOR Advance is made and ending one, two or three months thereafter
         (as the Borrower shall select); provided, however, that all of the
         foregoing provisions are subject to the following:

                           (a) if any Interest Period which would otherwise end
                  on a day which is not a Business Day, such Interest Period
                  shall be extended to the next succeeding Business Day, unless
                  the result of such extension would be to extend such Interest
                  Period into another calendar month, in which event such
                  Interest Period shall end on the immediately preceding
                  Business Day;

                           (b) any Interest Period that begins on the last
                  Business Day of a calendar month (or on a day for which there
                  is no numerically corresponding day in the calendar month at
                  the end of such Interest Period) shall end on the last
                  Business Day of a calendar month;

                           (c) the Borrower may not select any Interest Period
                  in respect of Advances having an aggregate principal amount
                  not less than $2,000,000; and

                           (d) there shall be outstanding at any one time no
                  more than ten Interest Periods in the aggregate.

                  "Leverage Ratio" means, for any date of determination, the
         ratio of (a) Total Debt as of the date of determination to (b) EBITDA
         for the immediately preceding four consecutive fiscal quarters. For
         purpose of calculation of the Leverage Ratio only, with respect to
         assets not owned at all times during the four fiscal quarters
         immediately preceding the date of calculation of EBITDA, there shall be
         (i) included in EBITDA, the pro forma EBITDA of any assets acquired
         during any such four fiscal quarters as if acquired at the beginning of
         the four fiscal quarters preceding the date of calculation and (ii)
         excluded from EBITDA the EBITDA of any assets disposed of during any of
         such fiscal quarters as if disposed of at the beginning of the four
         fiscal quarters preceding the date of calculation.

                                      -3-
<PAGE>   4

         "Permitted Liens" means, as applied to any Person:

                           (a) Any Lien in favor of the Lenders or the
                  Administrative Agent to secure the Obligations hereunder;

                           (b) (i) Liens on real estate for ad valorem taxes not
                  yet delinquent, (ii) Liens on leasehold interests created by
                  the lessor in favor of any mortgagee of the leased premises,
                  and (iii) Liens for taxes, assessments, governmental charges,
                  levies or claims not yet delinquent, or in each case for
                  clauses (i) and (iii) that are being diligently contested in
                  good faith by appropriate proceedings and for which adequate
                  reserves shall have been set aside on such Person's books in
                  accordance with GAAP, but only so long as no foreclosure,
                  restraint, sale or similar proceedings have been commenced
                  with respect thereto that has not been stayed;

                           (c) Liens of carriers, landlords, warehousemen,
                  mechanics, laborers and materialmen and other similar Liens
                  incurred in the ordinary course of business for sums not
                  overdue for a period of more than 60 days or being contested
                  in good faith, if such reserve or appropriate provision, if
                  any, as shall be required by GAAP shall have been made
                  therefor;

                           (d) (i) Liens incurred in the ordinary course of
                  business in connection with worker's compensation,
                  unemployment insurance or similar legislation and (ii)
                  deposits to secure the performance of bids, trade contracts
                  (other than for borrowed money), leases, statutory
                  obligations, insurance contracts, surety and appeal bonds,
                  performance bonds and other obligations of a like nature
                  incurred in the ordinary course of business;

                           (e) Easements, right-of-way, restrictions and other
                  similar encumbrances on the use of real property which do not
                  materially interfere with the ordinary conduct of the business
                  of such Person or which are set forth in any title policy or
                  "marked up" commitment thereof delivered pursuant hereto and
                  reasonably acceptable to the Administrative Agent;

                           (f) Liens created to secure the purchase price of
                  assets acquired by such Person or created to secure
                  Indebtedness permitted by Section 7.1(c) hereof, which is
                  incurred solely for the purpose of financing the acquisition
                  of such assets and incurred at the time of acquisition or
                  within 90 days thereafter, so long as each such Lien shall at
                  all times be confined solely to the asset or assets so
                  acquired (and proceeds thereof), and refinancings thereof so
                  long as any such Lien remains solely on the asset or assets
                  acquired and the amount of Indebtedness related thereto is not
                  increased;

                           (g) Liens in respect of judgments or awards for which
                  appeals or proceedings for review are being prosecuted and in
                  respect of which a stay of execution upon any such appeal or
                  proceeding for review shall have been secured not constituting
                  an Event of Default under Section 8.1(h) hereof, provided that
                  (i) such Person shall have established adequate reserves for
                  such judgments or

                                      -4-
<PAGE>   5

                  awards, (ii) such judgments or awards shall be fully insured
                  and the insurer shall not have denied coverage, or (iii) such
                  judgments or awards shall have been bonded to the satisfaction
                  of the Determining Lenders;

                           (h) Any Liens which are described on Schedule 3
                  hereto, and Liens resulting from the refinancing, renewal, or
                  extension of the related Indebtedness, provided that the
                  Indebtedness secured thereby shall not be increased and the
                  Liens shall not cover additional assets of the Borrower (other
                  than after-acquired title in or on such property and proceeds
                  of the existing collateral in accordance with the document
                  creating such Lien);

                           (i) Liens arising from precautionary Uniform
                  Commercial Code financing statements with respect to operating
                  leases or consignment arrangements in the ordinary course of
                  business;

                           (j) Liens in favor of banking institutions arising by
                  operation of law encumbering deposits (including the right of
                  setoff) held by such banking institution incurred in the
                  ordinary course of business and which are within the general
                  parameters customary in the banking industry;

                           (k) Liens existing on any property or asset at the
                  time of acquisition thereof by the Borrower and its
                  Subsidiaries or existing on the property or assets of any
                  Person that becomes a Subsidiary after the Agreement Date at
                  the time such Person becomes a Subsidiary (provided, that (x)
                  such Lien is not created in contemplation of or in connection
                  with such acquisition or such Person becoming a Subsidiary, as
                  the case may be, (y) such Lien shall not apply to any other
                  property or assets of the Borrower or its Subsidiaries and (z)
                  such Lien shall secure only those obligations which it secures
                  on the date of such acquisition or the date such Person
                  becomes a Subsidiary, as the case may be);

                           (l) any obligations or duties affecting any of the
                  property of the Borrower or its Subsidiaries to any
                  municipality or public authority with respect to any
                  franchise, grant, license or permit which do not materially
                  impair the use of such property for the purposes for which it
                  is held and do not materially impair the value of the
                  Collateral;

                           (m) Statutory (but, with respect to licenses,
                  subleases and leases executed and effective on or after March
                  31, 2001, not contractual) liens on property of the Borrower
                  and its Subsidiaries in favor of landlords securing licenses,
                  subleases and leases permitted hereunder and not interfering
                  with the business of the Borrower or any of its Subsidiaries;
                  and

                           (n) Licenses, leases or subleases permitted hereunder
                  granted to others but not interfering in any material respect
                  with any rights to the Collateral or with the business of the
                  Borrower or any of its Subsidiaries.

                  "Revolving Credit Commitment" means $30,000,000 as reduced or
         terminated pursuant to Sections 2.6 or 8.2 hereof.

                                      -5-
<PAGE>   6

         Section 2.2 Addition to Defined Terms in Section 1.1. Effective as of
the date hereof, the following definitions are added to Section 1.1 of the
Credit Agreement in alphabetical order to read in their entirety as follows:

                  "Capital Expenditure Adjustment" means the amount, if any, by
         which Capital Expenditures incurred for the fiscal period beginning
         January 1, 2001, through and including April 28, 2001, October 27,
         2001, and April 27, 2002, as applicable, is less than 85% of the amount
         of Capital Expenditures projected to be incurred for such period in
         Borrower's business plan dated February 21, 2001, heretofore delivered
         to the Lenders.

                  "Carter Family" means Donald J. Carter, Sr., his lineal
         descendants whether by adoption or otherwise, their respective spouses,
         any trusts for the benefit of the foregoing persons, and the respective
         Affiliates of all of the foregoing.

                  "Committed Capital Investment" means an irrevocable commitment
         by Hicks Muse, the Carter Family and their respective Affiliates to
         provide cash equity to the Borrower within a period of time and upon
         terms and conditions satisfactory to Determining Lenders.

                  "Equityholders LC" means that certain irrevocable letter of
         credit issued for the account of the Existing Equityholders or their
         Affiliates for the benefit of the Administrative Agent for the benefit
         of the Lenders, such letter of credit to be capable of being drawn upon
         the occurrence of any Event of Default described in Section 8.1(f) or
         (g) (but excluding (a) any commencement of an involuntary proceeding or
         petition filed by the Lenders under Title 11 of the United States Code
         and (b) any prepackaged voluntary proceeding or petition filed under
         Title 11 of the United States Code upon the prior written consent by
         any combination of the Lenders whose Total Specified Percentages
         aggregate at least 66 2/3% or, in the event that all of the Commitments
         have been terminated, any combination of Lenders having at least 66
         2/3% of the Advances then outstanding).

                  "Existing Equityholders" means Hicks Muse and the Carter
         Family and their respective Affiliates.

                  "Liquidity Amount" means the sum of (a) the lesser of (i) Cash
         and Cash Equivalents or (ii) $10,000,000, minus (b) the Capital
         Expenditure Adjustment, minus (c) the Working Capital Adjustment, plus
         (d) the Revolving Credit Availability, plus (e) the Committed Capital
         Investment, plus (f) the amount available to be drawn under the
         Equityholders LC.

                  "Revolving Credit Availability" means, without duplication, an
         amount equal to (a) the Revolving Credit Commitment, minus (b) the
         outstanding Revolving Credit Advances, minus (c) the Reimbursement
         Obligations, minus (d) the outstanding Swing Line Advances.

                  "Working Capital Adjustment" means the sum of (a) the amount,
         if any, by which the accounts receivable and accounts payable on the
         balance sheet of the Borrower and its Subsidiaries at April 28, 2001,
         October 27, 2001, and April 27, 2002, as applicable, differ

                                      -6-
<PAGE>   7

         from the amounts projected for such accounts on such dates in the
         Borrower's business plan dated February 21, 2001, heretofore delivered
         to the Lenders, and such difference represents a source of cash to the
         Borrower and its Subsidiaries in excess of $3,000,000, and (b) the
         amount, if any, by which inventory on the balance sheet of the Borrower
         and its Subsidiaries at April 28, 2001, October 27, 2001, and April 27,
         2002, is less than $29,000,000, $33,000,000, and $33,000,000
         respectively.

                  Section 2.3 Amendments to Sections 2.2(a), (b) and (c).
         Effective as of the date hereof, Sections 2.2(a), (b) and (c) of the
         Credit Agreement are amended and restated to read in their entirety as
         follows:

                  (a) Base Rate Advances. In the case of Base Rate Advances
         (other than Swing Line Advances), the Borrower, through an Authorized
         Signatory, shall give the Administrative Agent prior to 11:00 a.m.,
         Dallas, Texas time, on the date of any proposed Base Rate Advance
         irrevocable written notice in substantially the form of Exhibit K
         hereto (a "Notice of Borrowing") of its intention to borrow or reborrow
         a Base Rate Advance hereunder. Such Notice of Borrowing shall (i)
         specify the requested funding date, which shall be a Business Day, the
         amount of the proposed aggregate Base Rate Advances to be made by the
         Lenders, and whether such Advance is a Revolving Credit Advance,
         Facility A Term Loan Advance or Facility B Term Loan Advance, and (ii)
         confirm that no Default or Event of Default has occurred and is
         continuing.

                  (b) LIBOR Advances. In the case of LIBOR Advances, the
         Borrower, through an Authorized Signatory, shall give the
         Administrative Agent at least three Business Days' irrevocable written
         notice pursuant to a Notice of Borrowing, of its intention to borrow or
         reborrow a LIBOR Advance hereunder. Notice shall be given to the
         Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order
         for such Business Day to count toward the minimum number of Business
         Days required. LIBOR Advances shall in all cases be subject to
         availability and to Article 9 hereof. For LIBOR Advances, the Notice of
         Borrowing shall (i) specify the requested funding date, which shall be
         a Business Day, the amount of the proposed aggregate LIBOR Advances to
         be made by Lenders, whether such Advance is a Revolving Credit Advance,
         Facility A Term Loan Advance or Facility B Term Loan Advance, and the
         Interest Period selected by the Borrower, provided that no such
         Interest Period shall extend past the Revolving Commitment Maturity
         Date, the Facility A Term Loan Maturity Date or the Facility Term B
         Loan Maturity Date, as appropriate, or prohibit or impair the
         Borrower's ability to comply with Section 2.5 or 2.8 hereof and (ii)
         confirm that no Default or Event of Default has occurred and is
         continuing.

                  (c) Swing Line Advances. In the case of Swing Line Advances,
         the Borrower, through an Authorized Signatory, shall give the Swing
         Line Bank and the Administrative Agent prior to 1:00 p.m., Dallas,
         Texas time, on the date of any proposed Swing Line Advance irrevocable
         written notice pursuant to a Notice of Borrowing, of its intention to
         borrow or reborrow a Swing Line Advance. Such Notice of Borrowing shall
         (i) specify the requested funding date, which shall be a Business Day
         and the amount of the proposed Swing Line Advance and (ii) confirm that
         no Default or Event of Default has occurred and is continuing.

                                      -7-
<PAGE>   8

         Section 2.4 Amendment to Section 2.2(d). Effective as of the date
hereof, the second sentence of Section 2.2(d) of the Credit Agreement is amended
and restated to read in its entirety as follows:

         Not later than 11:00 a.m., Dallas, Texas time on the date of any
         proposed continuation of or a conversion to a Base Rate Advance and not
         later than 11:00 a.m., Dallas, Texas time at least three Business Days
         prior to any proposed continuation of or conversion to a LIBOR Advance,
         the Borrower, through an Authorized Signatory, shall give the
         Administrative Agent irrevocable written notice in substantially the
         form of Exhibit L hereto (a "Notice of Continuation/Conversion"),
         stating (i) the proposed conversion/continuation date (which shall be a
         Business Day), (ii) the amount of the Advance to be
         converted/continued, (iii) in the case of a conversion to, or a
         continuation of, a LIBOR Advance, the requested Interest Period, and
         (iv) in the case of a conversion of a Base Rate Advance to a LIBOR
         Advance or a continuation of a LIBOR Advance, stating that no Event of
         Default has occurred and is continuing.

         Section 2.5 Amendment to Section 2.3(a)(ii). Effective as of the date
hereof, Section 2.3(a)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:

                  (ii) Interest on the Base Rate Advances shall be computed on
         the basis of a year of 365 or 366 days, as applicable, for the number
         of days actually elapsed and shall be payable in arrears on March 30,
         2001, on the 15th day of each calendar month thereafter, on the last
         day of the Interest Period for any LIBOR Advance, and on the Revolving
         Commitment Maturity Date, the Facility A Term Loan Maturity Date or the
         Facility B Term Loan Maturity Date, as appropriate.

         Section 2.6 Amendment to Section 2.3(b)(ii). Effective as of the date
hereof, Section 2.3(b)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:

                  (ii) Subject to Section 11.9 hereof, interest on each LIBOR
         Advance shall be computed on the basis of a 360-day year for the actual
         number of days elapsed, and shall be payable in arrears on March 30,
         2001, on the 15th day of each calendar month thereafter, on the last
         day of the Interest Period therefor, and on the Revolving Commitment
         Maturity Date, the Facility A Term Loan Maturity Date and the Facility
         B Term Loan Maturity Date, as appropriate.

         Section 2.7 Amendment to Section 2.3(e)(i). Effective as of the date
hereof, the reference to the phrase "Event of Default specified in Section
8.1(b) hereof" in Section 2.3(e)(i) of the Credit Agreement is deleted and the
reference to the phrase "Event of Default has occurred" is inserted in lieu
thereof.

         Section 2.8 Addition to Section 2.4. Effective as of the date hereof, a
new subsection (c) is added to

         Section 2.4 of the Credit Agreement to read in its entirety as follows:

                  (c) Additional Fee. Subject to Section 11.9 hereof, the
         Borrower agrees to pay to the Administrative Agent, for the ratable
         account of the Lenders, an additional fee in an amount equal to
         $3,000,000, which fee shall be earned and due and payable on March 30,
         2001; provided however, the payment of such fee shall be deferred until
         September 30, 2001. Notwithstanding anything to the contrary contained
         herein, if the Existing Equityholders make an equity contribution in an
         amount not less than $40,000,000 to the Borrower on or before September
         30, 2001, such additional fee shall be forgiven and shall not be due
         and payable.

         Section 2.9 Amendment to Sections 2.5(c), (e), (f) and (g). Effective
as of the date hereof, Sections 2.5(c), (e), (f) and (g) of the Credit Agreement
are amended and restated to read in their entirety as follows:

                                      -8-
<PAGE>   9

                  (c) Prepayments from Sales of Assets. Within 10 Business Days
         of the receipt of Net Cash Proceeds from the sale or disposition by the
         Borrower or any of its Subsidiaries of any assets (including the
         Capital Stock of any Subsidiary) (other than any such sales or
         dispositions permitted under Sections 7.5(a), (c), (e), (g), (h), (i)
         and (j) and such sales or dispositions permitted under Section 7.5(b)
         and (d) to the extent not reinvested in accordance with such Section),
         the Borrower shall prepay Facility A Term Loan Advances and Facility B
         Term Loan Advances in an aggregate principal amount equal to the lesser
         of (A) 100% of such Net Cash Proceeds received, or (B) an amount, if
         any, which would result in the Leverage Ratio being less than 3.50 to
         1.00 after such prepayment. Each such prepayment shall be applied as
         provided in Section 2.5(g) hereof.

                  ...

                  (e) Prepayment from Recovery Events. Within 10 Business Days
         after receipt of Net Cash Proceeds by the Borrower or any of its
         Subsidiaries from any Recovery Event, unless a Reinvestment Notice
         shall have been delivered in respect thereof, the Borrower shall prepay
         Facility A Term Loan Advances and Facility B Term Loan Advances in an
         aggregate principal amount of 100% of such Net Cash Proceeds received,
         provided that (i) no Reinvestment Notice may be delivered when an Event
         of Default has occurred and is continuing, (ii) if a Reinvestment
         Notice shall be delivered in respect thereof, an amount equal to the
         Reinvestment Prepayment Amount with respect to the relevant
         Reinvestment Event shall be applied to payment of the Advances on the
         Reinvestment Prepayment Date, and (iii) the aggregate amount of Net
         Cash Proceeds outstanding and pending reinvestment pursuant to this
         clause (iii) and Sections 7.5(b) and (d) shall not exceed $5,000,000 at
         any one time. Each such prepayment shall be applied as provided in
         Section 2.5(g) hereof.

                  (f) Prepayment from Sales of Capital Stock. Concurrently with
         the receipt of Net Cash Proceeds from the sale or disposition by the
         Borrower or any of its Subsidiaries to any Person (other than to the
         Borrower or any of its Subsidiaries) of any Capital Stock of the
         Borrower (other than those set forth in subsections (a), (b), (c), (d),
         (e) or (f) of the definition of Permitted Issuance in Section 1.1), the
         Borrower shall prepay the Facility A Term Loan Advances and the
         Facility B Term Loan Advances in an aggregate principal amount equal to
         the lesser of (A) 100% of such Net Cash Proceeds received, or (B) an
         amount, if any, which would result in the Leverage Ratio being less
         than 3.50 to 1.00 after such prepayment. Each such prepayment shall be
         applied as provided in Section 2.5(g) hereof.

                  (g) Payments, Generally. Any partial payment of a (i) Base
         Rate Advance shall be in a principal amount which is at least $100,000
         and which is an integral multiple of $100,000 and (ii) a LIBOR Rate
         Advance shall be in a principal amount which is at least $1,000,000 and
         which is an integral multiple of $500,000, and to the extent that any
         payment of a LIBOR Advance is made on a date other than the last day of
         its Interest Period, the Borrower shall reimburse each Lender (to the
         extent required) in accordance with Section 2.9 hereof. Any voluntary
         prepayment of any Term Loan Advance shall be allocated among the
         Facility A Term

                                      -9-
<PAGE>   10

         Loan Advances and the Facility B Term Loan Advances pro rata based on
         the outstanding principal amount of the Facility A Term Loan Advances
         and the Facility B Term Loan Advances and applied to the then remaining
         installments of the Facility A Term Loan Advances and the Facility B
         Term Loan Advances pro rata based on the number of then remaining
         installments in respect of the Facility A Term Loan Advances and the
         Facility B Term Loan Advances (i.e. each then remaining installment of
         the applicable Term Loan Advance shall be reduced by an amount equal to
         the aggregate amount to be applied to such Term Loan Advances divided
         by the number of the then remaining installments for such Term Loan
         Advances), provided that if the amount to be applied to any installment
         required by this Agreement would exceed the then remaining amount of
         such installment, then an amount equal to such excess shall be applied
         to the remaining installments in the order of maturity after giving
         effect to all prior reductions thereto (including the amount of
         prepayments theretofore allocated pursuant to the preceding portion of
         this sentence); provided further, however, notwithstanding the
         foregoing, until the aggregate amount of voluntary prepayments of Term
         Loan Advances exceeds $20,000,000, voluntary prepayments of Term Loan
         Advances may be applied to any scheduled installment payments of
         Facility A Term Loan Advances or Facility B Term Loan Advances, at the
         Borrower's discretion, so long as applied to the Facility A Term Loan
         Advances and the Facility B Term Loan Advances pro rata based on the
         outstanding principal amount of the Facility A Term Loan Advances and
         the Facility B Term Loan Advances then outstanding. Any prepayments
         required to be made pursuant to Sections 2.5(c), (d), (e) or (f) hereof
         shall (i) include and be applied to accrued interest to the date of
         such prepayment on the principal amount prepaid, (ii) be allocated
         among the Facility A Term Loan Advances and the Facility B Term Loan
         Advances, pro rata based on the outstanding principal amount of the
         Facility A Term Loan Advances and the Facility B Term Loan Advances and
         applied to the then remaining installments of the Facility A Term Loan
         Advances and the Facility B Term Loan Advances pro rata based on the
         number of then remaining installments in respect of the Facility A Term
         Loan Advances and the Facility B Term Loan Advances (i.e. each then
         remaining installment of the applicable Term Loan Advance shall be
         reduced by an amount equal to the aggregate amount to be applied to
         such Term Loan Advances divided by the number of the then remaining
         installments for such Term Loan Advance), provided that if the amount
         to be applied to any installment required by this Agreement would
         exceed the then remaining amount of such installment, then an amount
         equal to such excess shall be applied to the remaining installments in
         the order of maturity after giving effect to all prior reductions
         thereto (including the amount of prepayments theretofore allocated
         pursuant to the preceding portion of this sentence), (iii) not be
         subject to the notice and minimum payment provisions of this Section
         2.5; provided, however, the Borrower shall be required to reimburse
         each Lender for any loss, cost or expense incurred by each Lender in
         connection with any such prepayment as set forth in Section 2.9 hereof
         if any prepayment results in a LIBOR Advance being paid on a day other
         than the last day of an Interest Period for such LIBOR Advance, and
         (iv) be applied first to Base Rate Advances, if any, and then to LIBOR
         Advances. With respect to any voluntary payment of Term Loan Advances
         made by the Borrower within fifteen days of any Quarterly Date on which
         amortization of any Term Loan Advance is required, the Borrower shall
         have the right to designate such payment as a prepayment or as payment
         of the Term Loan Advances required to be made on such Quarterly Date.

                                      -10-
<PAGE>   11
         Section 2.10 Amendments to Section 2.8(b). Effective as of the date
hereof, Section 2.8(b) of the Credit Agreement is amended as follows: the
reference to the dates "June 30, 2001" and "December 31, 2001" are deleted and
the reference to the dates "May 15, 2001" and "November 15, 2001," respectively,
are inserted in lieu thereof.

         Section 2.11 Amendment to Section 2.8(c). Effective as of the date
hereof, Section 2.8(c) of the Credit Agreement is amended as follows: the
reference to the dates "June 30, 2001" and "December 31, 2001" are deleted and
the reference to the dates "May 15, 2001" and "November 15, 2001," respectively,
are inserted in lieu thereof.

         Section 2.12 Amendments to Section 2.16(a). Effective as of the date
hereof, Section 2.16(a) of the Credit Agreement is amended as follows: (a) the
reference to the dollar amount $30,000,000" is deleted and the dollar amount
"$15,000,000" is inserted in lieu thereof; and (b) the last sentence of such
Section is amended and restated to read in its entirety as follows:

         Within the limits of the Letter of Credit Facility and subject to the
         limits referred to above, the Borrower may request the issuance of
         Letters of Credit under this Section 2.16(a) and request the issuance
         of additional Letters of Credit under this Section 2.16(a).

         Section 2.13 Amendment to Section 2.16(c). Effective as of the date
hereof, the first sentence of Section 2.16(c) of the Credit Agreement is amended
and restated to read in its entirety as follows:

         The Borrower will pay to the Issuing Bank an amount equal to each draft
         drawn under any Letter of Credit (x) on the Business Day of such
         drawing if presented by noon (Dallas, Texas time) and (y) by 11:00
         a.m.(Dallas, Texas time) on the first Business Day thereafter if
         presented after noon (Dallas, Texas time).

         Section 2.14 Amendment to Section 2.16(g)(i). Effective as of the date
hereof, the reference to the number "thirty" in Section 2.16(g)(i) of the Credit
Agreement is deleted and the reference to the number "five" is inserted in lieu
thereof.

         Section 2.15 Amendment to Section 2.17. Effective as of the date
hereof, Section 2.17 of the Credit Agreement is hereby amended to read as
follows: Intentionally omitted.

         Section 2.16 Amendment to Article 4. Effective as of the date hereof, a
new Section 4.1(y) is hereby added to the Agreement to read as follows:

                  (y) Collateral. Pursuant to the Loan Documents, the Borrower
         and its Subsidiaries have granted to the Administrative Agent for the
         benefit of the Lenders perfected Liens upon substantially all of their
         assets other than those assets specifically excluded from the
         Administrative Agent's Lien pursuant to the Loan Documents.

         Section 2.17 Amendment to Section 5.7. Effective as of the date hereof,
Section 5.7 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                                      -11-
<PAGE>   12

                  Section 5.7 Visits and Inspections. The Borrower shall, and
         shall cause each of its Subsidiaries to, permit representatives of the
         Administrative Agent or any Lender from time to time after reasonable
         notice by the Administrative Agent or any Lender to (a) visit and
         inspect the properties of the Borrower and its Subsidiaries (i) as
         often as the Administrative Agent or any Lender shall reasonably deem
         advisable, and (ii) at reasonable times, (b) audit, inspect and make
         extracts from and copies of the Borrower's and each such Subsidiary's
         books and records, and (c) discuss with the Borrower's and each such
         Subsidiary's directors, officers, employees and auditors its business,
         assets, liabilities, financial positions, results of operations and
         business prospects. The Borrower shall pay the reasonable expenses
         related to inspections and audits performed by the Administrative
         Agent. Prior to the occurrence of an Event of Default, all such visits
         and inspections shall be conducted during normal business hours and,
         other than visits and inspections by the Administrative Agent and/or
         any financial advisor to the Administrative Agent, shall not be
         conducted more often than once per fiscal quarter. Following the
         occurrence and during the continuance of an Event of Default, such
         visits and inspections shall be conducted at any time requested by the
         Administrative Agent or any Lender without any requirement for advance
         notice.

         Section 2.18 Amendment to Section 5.11. Effective as of the date
hereof, Section 5.11 of the Credit Agreement is amended and restated to read in
its entirety as follows:

                  Section 5.11 Further Assurances. At any time or from time to
         time upon reasonable request by the Administrative Agent, the Borrower
         or any of its Subsidiaries shall execute and deliver such further
         documents and do such other acts and things as the Administrative Agent
         may reasonably request in order to effect fully the purposes of this
         Agreement and the other Loan Documents and to provide for payment of
         the Obligations in accordance with the terms of this Agreement and the
         other Loan Documents. At the time of delivery of the financial
         statements set forth in Sections 6.1 and 6.2 hereof, if the information
         provided therein has changed since the last delivery thereof, the
         Borrower agrees to update and deliver to the Administrative Agent
         Schedule 5 hereto (with respect to the identities, jurisdictions of
         organization and ownership of the Borrower's Subsidiaries). The
         Borrower agrees to update the information on Schedule 2 to the Security
         Agreements promptly upon discovery that the information provided
         therein is not complete and correct. On or before May 31, 2001, the
         Borrower agrees to execute and deliver, or cause its Subsidiaries to
         execute and deliver, to the Administrative Agent Deeds of Trust, in
         substantially the form of Exhibit I hereto with respect to any fee
         owned real property hereafter acquired by the Borrower or any
         Subsidiary, as applicable, with a fair market value in excess of (a)
         $500,000 at any time or (b) $2,000,000 in the aggregate at any time,
         together with any existing surveys and environmental reports in form
         reasonably satisfactory to the Administrative Agent and title insurance
         thereon in form and amount (not to exceed the fair market value
         thereof) reasonably satisfactory to the Administrative Agent, and such
         board resolutions, officer's certificates, corporate and other
         documents and opinions of counsel as the Administrative Agent shall
         reasonably request with respect thereto.

         Section 2.19 Addition to Article 5. Effective as of the date hereof, a
new Section 5.15 is added to Article 5 of the Credit Agreement to read in its
entirety as follows:

                                      -12-
<PAGE>   13

                  Section 5.15 Deposit and Operating Accounts. The Borrower and
         its Subsidiaries shall (a) except as set forth in the proviso below,
         maintain all of their operating, deposit and all other accounts with
         any Lender which is a financial institution and (b) execute such
         documents, instruments and agreements as shall be reasonably necessary
         to confirm the first priority perfected security interest of the
         Administrative Agent for the benefit of the Lenders in such accounts
         and all amounts on deposit therein, including without limitation, all
         amounts which constitute proceeds of Collateral, such documents,
         instrum ents and agreements to provide that the Lenders maintaining
         such accounts shall provide not less than five Business Days prior
         written notice of any setoff to the Borrower and Administrative Agent;
         provided, however, the Borrower may maintain accounts with financial
         institutions which are not Lenders, so long as the balance in such
         accounts does not exceed $10,000,000 in the aggregate at any time.

         Section 2.20 Amendment to Section 6.3. Effective as of the date hereof,
Section 6.3 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                  Section 6.3 Compliance Certificate. At the time financial
         statements are furnished pursuant to Sections 6.1, 6.2 and 6.8 hereof
         and, with respect to the calculation of the Liquidity Amount, on or
         before May 18, 2001, November 16, 2001 and May 17, 2002, the Compliance
         Certificate, completed as provided therein.

         Section 2.21 Amendment to Section 6.4(a)(i). Effective as of the date
hereof, Section 6.4(a)(i) of the Credit Agreement is amended and restated to
read in its entirety as follows:

                  (i) all final management letters submitted to any Obligor by
         accountants in connection with any annual, interim or special audit;

         Section 2.22 Addition to Article 6. Effective as of the date hereof,
new Sections 6.8 and 6.9 are added to Article 6 to read in their entirety as
follows:

                  Section 6.8 Monthly Financial Statements and Other Reports.
         Within 30 days after the end of each calendar month (or within such
         shorter period of time as may be necessary to timely provide the
         calculation of the Liquidity Amount on the dates required by Section
         6.3), (a) unaudited consolidated financial statements of the Borrower
         and its Subsidiaries as of the end of such fiscal month and for the
         elapsed portion of the year ended with the last day of such fiscal
         month, setting forth in comparative form the figures for the
         corresponding period of the budget, all in reasonable detail certified
         by the chief executive officer or chief financial officer or other
         officer of the Borrower reasonably acceptable to the Administrative
         Agent, to be, in his or her opinion acting solely in his or her
         capacity as an officer of the Borrower, complete and correct in all
         material respects and to present fairly, in accordance with GAAP, the
         financial position, results of operations, and cash flows of the
         Borrower and its Subsidiaries as of the end of and for such fiscal
         month, and for the elapsed portion of the year ended with the last day
         of such fiscal month, subject only to the absence of footnotes and
         normal year-end adjustments; and (b) a flash report including the
         number of orders shipped, the fulfillment rate, the number of active
         displayers, the average order size, and the number of orders per

                                      -13-
<PAGE>   14

         displayer for such calendar month, all in form and substance reasonably
         satisfactory to the Administrative Agent.

                  Section 6.9 Due Diligence. The Borrower and its Subsidiaries
         will at all times cooperate with the reasonable due diligence efforts
         of E&Y Capital Advisors LLC and legal counsel for the Administrative
         Agent.

         Section 2.23 Amendment to Section 7.1(c). Effective as of the date
hereof, the reference to the dollar amount "$30,000,000" in Section 7.1(c) of
the Credit Agreement is deleted and the reference to the dollar amount
"$15,000,000" is inserted in lieu thereof.

         Section 2.24 Amendment to Section 7.1(l). Effective as of the date
hereof, Section 7.1(l) of the Credit Agreement is amended and restated to read
in its entirety as follows:

                  (l) Indebtedness of all Foreign Subsidiaries of the Borrower
         for working capital purposes and overdraft facilities in an aggregate
         amount not to exceed $5,000,000 at any one time outstanding; and

         Section 2.25 Amendment to Section 7.1(m). Effective as of the date
hereof, Section 7.1(m) of the Credit Agreement is amended and restated to read
in its entirety as follows:

                  (m) Other unsecured Indebtedness not to exceed $20,000,000 in
         the aggregate at any time so long as no Default or Event of Default has
         occurred or will occur as a result of the incurrence of such
         Indebtedness;

         Section 2.26 Amendment to Section 7.3(j). Effective as of the date
hereof, Section 7.3(j) of the Credit Agreement is amended and restated to read
in its entirety as follows:

                  (j) Loans and advances by the Borrower and any of its
         Subsidiaries to its suppliers in an aggregate principal amount not
         exceeding $2,000,000 at any one time outstanding;

         Section 2.27 Amendment to Section 7.3(m). Effective as of the date
hereof, Section 7.3(m) of the Credit Agreement is amended and restated to read
in its entirety as follows:

         (m) Acquisitions completed on or before March 30, 2001.

         Section 2.28 Amendment to Section 7.5. Effective as of the date hereof,
Section 7.5 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                  Section 7.5 Sale of Assets. The Borrower shall not, and shall
         not permit any of its Subsidiaries to, sell (including for discount or
         otherwise), lease, transfer or otherwise dispose of assets, except (a)
         sales of inventory sold in the ordinary course of business, (b) so long
         as no Default has occurred and is continuing, sales or other
         dispositions of worn-out or obsolete assets or assets no longer useful
         in the conduct of the Borrower's business in the ordinary course of
         business in which the Net Cash Proceeds thereof are used within 365
         days of such sale to purchase assets of similar value and quality and
         business utility to those assets sold, provided that the aggregate
         amount of Net Cash Proceeds outstanding and pending reinvestment
         pursuant to this clause (b) and Sections 7.5(d) and Section 2.5(e)
         shall not exceed $5,000,000 at any one time, (c) sales of Cash and Cash
         Equivalents in the ordinary course of business, (d) so long as no
         Default has occurred and is continuing, sales of assets (excluding the
         Parker Equities Properties) in which the Net Cash Proceeds thereof are
         used within 365 days of such sale to purchase assets of similar value
         and quality and business utility to those assets sold, provided that
         the aggregate amount of Net Cash

                                      -14-
<PAGE>   15

         Proceeds outstanding and pending reinvestment pursuant to this clause
         (d) and Sections 7.5(b) and Section 2.5(e) shall not exceed $5,000,000
         at any time, (e) sales and dispositions (i) from any Domestic
         Subsidiary to the Borrower or any other Domestic Subsidiary and (ii)
         from any Foreign Subsidiary to the Borrower or any of its Subsidiaries,
         (f) transfers resulting from any casualty or condemnation of property
         or assets, (g) the sale or discount of overdue accounts receivable in
         the ordinary course of business, in connection with the compromise or
         collection thereof, (h) licenses or sublicenses of intellectual
         property and general intangibles and licenses, leases or subleases of
         other property in each case in the ordinary course of business and
         which do not materially interfere with the business of the Borrower and
         its Subsidiaries, (i) the sale of assets in respect of the Candle
         Making Joint Venture prior to March 30, 2001, not to exceed $2,500,000
         in aggregate amount, and (j) such other sales or dispositions described
         in Schedule 12.

         Section 2.29 Amendment to Section 7.6. Effective as of the date hereof,
Section 7.6 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                  Section 7.6 Restricted Payments. The Borrower shall not, and
         shall not permit any of its Subsidiaries to, directly or indirectly
         declare, pay or make any Restricted Payments, except (a) Dividends
         payable by a Subsidiary to the Borrower or another Subsidiary, (b)
         Dividends payable in stock and not cash, (c) regularly scheduled
         payments of interest on the Senior Subordinated Notes, (d) Restricted
         Payments as a result of a purchase of Capital Stock made in order to
         fulfill the obligations of the Borrower or its Subsidiaries under an
         employee stock purchase plan or similar plan covering employees of the
         Borrower or any Subsidiary as from time to time in effect in an
         aggregate net amount not to exceed $10,000,000 during the term of this
         Agreement, (e) Permitted Issuances, and (f) Restricted Payments made
         pursuant to the Home Interiors Recapitalization and the Home Interiors
         Merger; provided, further, however, the Borrower shall not pay or make
         any Restricted Payments permitted by this Section 7.6 unless there
         shall exist no Default prior to or after giving effect to any such
         proposed Restricted Payment. Management, advisory, consulting and
         similar fees to any Affiliate of the Borrower or any of its
         Subsidiaries other than an Obligor, including, without limitation, the
         Consulting Agreement, may be accrued but shall not be paid to such
         Affiliate or Subsidiary.

         Section 2.30 Amendment to Section 7.8. Effective as of the date hereof,
Section 7.8 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                  Section 7.8 Leverage Ratio. The Borrower will not permit the
         Leverage Ratio (tested at the end of each fiscal quarter) to be greater
         than (a) 6.65 to 1.00 for the fiscal quarter ending March 31, 2001, (b)
         7.10 to 1.00 for the fiscal quarter ending June 30,

                                      -15-
<PAGE>   16

         2001, (c) 7.90 to 1.00 for the fiscal quarter ending September 30,
         2001, (d) 6.75 to 1.00 for the fiscal quarter ending December 31, 2001,
         and (e) 3.90 to 1.00 at March 31, 2002, and at the end of any fiscal
         quarter thereafter.

         Section 2.31 Amendment to Section 7.9. Effective as of the date hereof,
Section 7.9 of the Credit Agreement is amended and restated to read in its
entirety as follows:

                  Section 7.9 Interest Coverage Ratio. The Borrower shall not
         permit the Interest Coverage Ratio (tested at the end of each fiscal
         quarter) to be less than (a) 1.65 to 1.00 for the fiscal quarter ending
         March 31, 2001, (b) 1.50 to 1.00 for the fiscal quarter ending June 30,
         2001, (c) 1.30 to 1.00 for the fiscal quarter ending September 30,
         2001, (d) 1.45 to 1.00 for the fiscal quarter ending December 31, 2001,
         and (e) 2.40 to 1.00 at March 31, 2002, and at the end of any fiscal
         quarter thereafter.

         Section 2.32 Amendment to Section 7.11. Effective as of the date
hereof, Section 7.11 of the Credit Agreement is amended and restated to read in
its entirety as follows:

                  Section 7.11 Capital Expenditures. The Borrower shall not
         permit the Capital Expenditures to be paid or incurred by it and its
         Subsidiaries to exceed at any time in the aggregate (a) $3,900,000
         during the fiscal quarter ending March 31, 2001, (b) $7,350,000 during
         the portion of the fiscal year 2001 ending June 30, 2001, (c)
         $11,850,000 during the portion of the fiscal year 2001 ending September
         30, 2001, (d) $16,100,000 during the portion of the fiscal year 2001
         ending December 31, 2001, and (e) 1.50% of cumulative net revenues of
         the Borrower and its Subsidiaries from and after January 1, 2002.

         Section 2.33 Addition to Article 7. Effective as of the date hereof,
new Sections 7.14 and 7.15 are added to Article 7 of the Credit Agreement to
read in their entirety as follows:

                  Section 7.14 Liquidity Amount. The Borrower shall maintain a
         Liquidity Amount of not less than (a) $30,000,000 as of April 28, 2001,
         and (b) $35,000,000 as of October 27, 2001, and as of April 27, 2002.

                  Section 7.15 EBITDA. The Borrower shall maintain an EBITDA
         (tested at the end of each fiscal quarter) of not less than (a)
         $9,900,000 for the fiscal quarter ending March 31, 2001, (b)
         $12,500,000 for the fiscal quarter ending June 30, 2001, (c)
         $15,600,000 for the fiscal quarter ending September 30, 2001, (d)
         $25,900,000 for the fiscal quarter ending December 31, 2001, and (e)
         thereafter, calculated for each of the then most recently ended four
         fiscal quarters, $75,000,000.

         Section 2.34 Amendment to Sections 8.1(d) and (k). Effective as of the
date hereof, Sections 8.1(d) and (k) of the Credit Agreement are amended and
restated to read in their entirety as follows:

                  (d) The Borrower or any of its Subsidiaries shall default in
         the performance or observance of any other agreement or covenant
         contained in this Agreement not specifically referred to elsewhere in
         this Section 8.1, and such default shall not be cured within a period
         of 30 days after the earlier of (i) the date on which such failure or
         neglect

                                      -16-
<PAGE>   17

         first becomes known to the Borrower or (ii) the delivery of notice of
         such breach by the Administrative Agent;

                  . . .

                  (k) The Borrower or any of its Subsidiaries shall default in
         any payment in respect of Indebtedness beyond any grace period provided
         with respect thereto, or shall default in the performance of any
         agreement or instrument under which such Indebtedness is created or
         evidenced beyond any applicable grace period, or any other event or
         condition shall occur in respect of such Indebtedness, if the effect of
         such default, event or condition is to permit or cause the holder of
         such Indebtedness (or a trustee on behalf of any such holder) to cause
         such Indebtedness to become due, repurchased or redeemed prior to its
         date of maturity, provided that a default, event or condition of the
         type described above in this Section 8.1(k) shall not constitute an
         Event of Default under this Agreement unless, at such time, one or more
         defaults, events or conditions of the type described above in this
         Section 8.1(k) shall have occurred and be continuing with respect to
         Indebtedness the outstanding amount of which exceeds in the aggregate
         $5,000,000;

         Section 2.35 Amendment to Section 8.2(c). Effective as of the date
hereof, the reference to the number "30" in Section 8.2(c) of the Credit
Agreement is deleted and the reference to the number "5" is inserted in lieu
thereof.

         Section 2.36 Amendment to Section 11.1(a)(ii). Effective as of the date
hereof, Section 11.1(a)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:

         (ii) If to the Administrative Agent, at:

                                    Bank of America, N.A.
                                    100 North Tryon Street
                                    NC1-007-13-06
                                    Charlotte, NC  28255
                                    Fax:  (704) 386-9607
                                    Attn:  John J. O'Neill
         With a copy to:            Bank of America, N.A.
                                    101 North Tryon Street
                                    NC1-001-15-04
                                    Charlotte, NC  28255
                                    Fax:  (704) 388-1108
                                    Attn:  Agency Services

         Section 2.37 Amendment to Section 11.2(a). Effective as of the date
hereof, Section 11.2(a) of the Credit Agreement is amended to add at the end
thereof the following:

         (a) and financial advisors to the Administrative Agent.

                                      -17-
<PAGE>   18

         Section 2.38 Addition of Schedule 12. Effective as of the date hereof,
all references to "Schedule 12" in the Credit Agreement are deemed to be
references to the "Schedule 12" attached hereto as Schedule 12.

         Section 2.39 Amendment to Exhibit K. Effective as of the date hereof,
all references to "Exhibit K" in the Credit Agreement are deemed to be
references to the "Exhibit K" attached hereto as Exhibit K.

                                  ARTICLE III

                         Representations and Warranties

         Section 3.1 By its execution and delivery hereof, the Borrower
represents and warrants that, as of the date hereof and after giving effect to
the amendments contemplated by the foregoing Article II:

                  (a) the representations and warranties contained in the Credit
         Agreement and the other Loan Documents (other than those
         representations and warranties that specifically relate to an earlier
         date) are true and correct in all material respects on and as of the
         date hereof as made on and as of such date;

                  (b) no event has occurred and is continuing which constitutes
         a Default or an Event of Default;

                  (c) the Borrower has full corporate power and authority to
         execute and deliver this Fifth Amendment, and this Fifth Amendment
         constitutes the legal, valid and binding obligations of the Borrower,
         enforceable in accordance with their respective terms, except as
         enforceability may be limited by applicable Debtor Relief Laws and by
         general principles of equity (regardless of whether enforcement is
         sought in a proceeding in equity or at law) and except as rights to
         indemnity may be limited by federal or state securities laws;

                  (d) neither the execution, delivery and performance of this
         Fifth Amendment nor the consummation of any transactions contemplated
         herein will conflict with any material Applicable Law, the articles of
         incorporation, bylaws or other governance document of the Borrower or
         any of its Subsidiaries, or any material indenture, agreement or other
         instrument to which the Borrower or any of its Subsidiaries or any of
         their respective property may be bound;

                  (e) no authorization, approval, consent, or other action by,
         notice to, or filing with, any governmental authority or other Person
         (other than the Board of Directors of the Borrower or any Guarantor),
         is required for the execution, delivery or performance by the Borrower
         of this Fifth Amendment or the acknowledgment of this Fifth Amendment
         by any Guarantor other than (i) those approvals and consents already
         obtained, and (ii) consents under immaterial contractual obligations;

                  (f) the Borrower and its Subsidiaries have granted to the
         Administrative Agent for the benefit of the Lenders a first priority
         perfected security interest and Lien

                                      -18-
<PAGE>   19

         upon substantially all of the real property and personal property of
         the Borrower and its Subsidiaries, except for Permitted Liens (except
         as otherwise provided herein and in the Loan Documents); and

                  (g) attached hereto as Schedule 3.1(g) is a listing of all
         deposit accounts of the Borrower and its Subsidiaries and the amounts
         on deposit therein as of a date no earlier than February 28, 2001.

                                   ARTICLE IV

                           Conditions Of Effectiveness

         Section 4.1 Conditions. The effectiveness of this Fifth Amendment is
subject to the satisfaction of the following conditions precedent:

                  (a) the Administrative Agent shall receive counterparts of
         this Fifth Amendment executed by the Determining Lenders;

                  (b) the Administrative Agent shall receive counterparts of
         this Fifth Amendment executed by the Borrower and acknowledged by each
         Guarantor;

                  (c) the Administrative Agent shall have received a certified
         resolution of the Board of Directors of the Borrower authorizing the
         execution, delivery and performance of this Fifth Amendment;

                  (d) the Administrative Agent shall have received an opinion of
         counsel to the Borrower, in form and substance satisfactory to the
         Administrative Agent, with respect to the matters set forth in Sections
         3.1(c), (d) and (e) of this Fifth Amendment;

                  (e) the Administrative Agent for the pro rata benefit of the
         Lenders shall have received payment of all accrued and unpaid interest
         on the outstanding Advances;

                  (f) the Administrative Agent shall receive payment of all
         outstanding fees and expenses of counsel and consultants for the
         Administrative Agent, including without limitation, the fees and
         expenses of E&Y Capital Advisors LLC, Donohoe Jameson and Carroll P.C.
         and Winstead Sechrest & Minick P.C.;

                  (g) the Administrative Agent shall receive copies of the
         amendments to the Consulting Agreements which amend the Consulting
         Agreement to reflect the provisions of Section 7.6 of the Credit
         Agreement, as amended by this Amendment; and

                  (h) the Administrative Agent shall receive, in form and
         substance satisfactory to the Administrative Agent and its counsel,
         such other documents, certificates and instruments as the
         Administrative Agent shall reasonably require.

         Section 4.2 Amendment Fee. Provided this Fifth Amendment becomes
effective, the Borrower covenants and agrees to pay an amendment fee to the
Administrative Agent on behalf of the Lenders which execute and deliver this
Fifth Amendment to the Administrative Agent (or

                                      -19-
<PAGE>   20
 its counsel) not later than one (1) Business Day after this Fifth Amendment
becomes effective in an amount equal to the product of (a) 0.25% multiplied by
(b)(i) with respect to each Lender having a portion of the Revolving Credit
Commitment, an amount equal to such Lender's portion of the Revolving Credit
Commitment and (ii) with respect to each Lender which is owed Facility A Term
Loan Advances or Facility B Term Loan Advances, the aggregate principal amount
of Facility A Term Loan Advances and Facility B Term Loan Advances owed to such
Lender on the date of this Fifth Amendment. Such amendment fee shall be paid in
immediately available funds. The Borrower agrees that the failure to pay the
amendment fee provided in this Section 4.2 shall be an Event of Default under
Section 8.1(b)(ii) of the Credit Agreement.

         Section 4.3 Guarantor Acknowledgment. By signing below, each of the
Guarantors (i) acknowledges, consents and agrees to the execution and delivery
of this Fifth Amendment, (ii) acknowledges and agrees that its obligations in
respect of its Subsidiary Guaranty are not released, diminished, waived,
modified, impaired or affected in any manner by this Fifth Amendment or any of
the provisions contemplated herein, (iii) ratifies and confirms its obligations
under its Subsidiary Guaranty, and (iv) acknowledges and agrees that it has no
claims or offsets against, or defenses or counterclaims to, its Subsidiary
Guaranty solely as a result of the execution and delivery of this Fifth
Amendment.

                                   ARTICLE V

                                 Limited Waiver

         The Borrower has informed the Administrative Agent, the Syndication
Agent, the Documentation Agent, the Co-Agents and the Lenders that certain
Events of Default would have occurred on March 31, 2001, under the Credit
Agreement solely by reason of the Borrower's failure to comply with Sections 7.8
and 7.9 of the Credit Agreement for the fiscal quarter ending December 31, 2000
(collectively the "Specified Defaults"), but for the effectiveness of this Fifth
Amendment. By execution of this Fifth Amendment, the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Co-Agents and the Lenders hereby
waive the Specified Defaults. Except as otherwise specifically provided for in
this Article V, nothing contained herein shall be construed as a waiver by the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents and the Lenders of any covenant or provision of the Credit Agreement,
the other Loan Documents, this Fifth Amendment, or of any other contract or
instrument among the Borrower, the Administrative Agent, the Syndication Agent,
the Documentation Agent, the Co-Agents and the Lenders, and the failure of the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents or any Lender at any time or times hereafter to require strict
compliance by the Borrower of any provision thereof shall not waive, affect or
diminish any right of the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Co-Agents and the Lenders to thereafter demand strict
compliance therewith. The Administrative Agent, the Syndication Agent, the
Documentation Agent, the Co-Agents and the Lenders hereby reserve all rights
granted under the Credit Agreement, the other Loan Documents, this Fifth
Amendment and any other contract or instrument among the Borrower, the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents and the Lenders.

                                      -20-
<PAGE>   21

                                   ARTICLE VI

                                  Miscellaneous

         Section 6.1 Reference To The Credit Agreement.

                  (a) Upon the effectiveness of this Fifth Amendment, each
         reference in the Credit Agreement to "this Agreement", "hereunder", or
         words of like import shall mean and be a reference to the Credit
         Agreement, as amended by this Fifth Amendment.

                  (b) The Credit Agreement, as amended by this Fifth Amendment,
         and all other Loan Documents shall remain in full force and effect and
         are hereby ratified and confirmed.

         Section 6.2 Costs and Expenses. The Borrower hereby agrees to pay when
due the fees and expenses provided for in Section 11.2 of the Credit Agreement.

         Section 6.3 Indemnification. THE BORROWER AND EACH GUARANTOR HEREBY
AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE
DOCUMENTATION AGENT, THE CO-AGENTS AND EACH LENDER AND EACH AFFILIATE THEREOF
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (a) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (b) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (c)
ANY BREACH BY THE BORROWER OR ANY GUARANTOR OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (d) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES
OR ASSETS OF THE BORROWER, ANY GUARANTOR OR ANY OF THEIR SUBSIDIARIES, (e) THE
USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (f) ANY AND ALL TAXES, LEVIES,
DEDUCTIONS, AND CHARGES IMPOSED ON THE ADMINISTRATIVE AGENT, OR ANY OF THE
ADMINISTRATIVE AGENT'S CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (g)
ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING
RELATING TO ANY OF THE FOREGOING AND ANY LEGAL PROCEEDING RELATING TO ANY COURT
ORDER, INJUNCTION OR OTHER PROCESS OR DECREE RESTRAINING OR SEEKING TO RESTRAIN
THE ADMINISTRATIVE AGENT FROM PAYING ANY AMOUNT UNDER ANY LETTER OF CREDIT.
WITHOUT LIMITING ANY PROVISION OF THE CREDIT AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED

                                      -21-
<PAGE>   22

FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON; PROVIDED HOWEVER, NO PERSON SHALL BE INDEMNIFIED
HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The provisions of
this Section 6.3 shall survive the termination of the Credit Agreement and this
Fifth Amendment.

         Section 6.4 Waiver and Release. IN ADDITION, TO INDUCE THE
ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE DOCUMENTATION AGENT, THE
CO-AGENTS AND THE LENDERS TO AGREE TO THE TERMS OF THIS FIFTH AMENDMENT, THE
BORROWER AND EACH GUARANTOR (BY THEIR EXECUTION BELOW) REPRESENT AND WARRANT
THAT AS OF THE DATE OF THEIR EXECUTION OF THIS FIFTH AMENDMENT THERE ARE NO
CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO THEIR RESPECTIVE
OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH THEY:

                  (a) WAIVER. WAIVE ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES
         OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE
         OF THEIR EXECUTION OF THIS FIFTH AMENDMENT AND

                  (b) RELEASE. RELEASE AND DISCHARGE ADMINISTRATIVE AGENT, THE
         SYNDICATION AGENT, THE DOCUMENTATION AGENT, THE CO-AGENTS AND THE
         LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
         SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED
         PARTIES") FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES,
         CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN
         OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH THE
         BORROWER AND EACH GUARANTOR EVER HAD, NOW HAVE, CLAIMS TO HAVE OR MAY
         HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND
         FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
         CONTEMPLATED THEREBY.

The provisions of this Section 6.4 shall survive termination of the Credit
Agreement and this Fifth Amendment.

         Section 6.5 Execution in Counterparts. This Fifth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument. Signatures transmitted by facsimile shall be
effective as originals.

                                      -22-
<PAGE>   23

         Section 6.6 Governing Law; Binding Effect. This Fifth Amendment shall
be governed by and construed in accordance with the Laws of the State of Texas
without regard to the principles of the conflicts of Laws and the applicable
federal Laws and shall be binding upon the Borrower, the Administrative Agent,
the Syndication Agent, the Documentation Agent and each Lender and their
respective successors and assigns.

         Section 6.7 Headings. Section headings in this Fifth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Fifth Amendment for any other purpose.

         Section 6.8 Entire Agreement. THE CREDIT AGREEMENT, AS AMENDED BY THIS
FIFTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

================================================================================

                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

================================================================================

                                      -23-
<PAGE>   24

         IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment as the date first above written.

                               HOME INTERIORS & GIFTS, INC.

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -24-
<PAGE>   25

                               BANK OF AMERICA, N.A., as Administrative
                               Agent and as a Lender

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -25-
<PAGE>   26

                               THE CHASE MANHATTAN BANK, as Syndication
                               Agent and as a Lender

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -26-
<PAGE>   27

                               SOCIETE GENERALE, as Co-Agent and as a Lender

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -27-
<PAGE>   28

                               CITICORP USA, INC., as Co-Agent and as a Lender

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -28-
<PAGE>   29

                               BANK ONE, NA (successor by merger to Bank
                               One, Texas, NA)

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -29-
<PAGE>   30

                               BANKERS TRUST COMPANY

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -30-
<PAGE>   31

                               BHF (USA) CAPITAL CORPORATION

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -31-
<PAGE>   32

                               GENERAL ELECTRIC CAPITAL CORPORATION

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -32-
<PAGE>   33

                               HELLER FINANCIAL, INC.

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -33-
<PAGE>   34

                               NATIONAL CITY BANK OF KENTUCKY

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -34-
<PAGE>   35

                               BALANCED HIGH-YIELD FUND I LTD.

                               By:      BHF (USA) CAPITAL CORPORATION,
                                        acting as attorney-in-fact

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      -35-
<PAGE>   36

                               KZH ING-2 LLC

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -36-
<PAGE>   37

                               DELANO COMPANY

                               By: Pacific Investment Management Company,
                                   as its Investment Advisor

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -37-
<PAGE>   38

                               VAN KAMPEN CLO II, LIMITED

                               By: Van Kampen Management, Inc.,
                                   as Collateral Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -38-
<PAGE>   39

                               TCW LEVERAGED INCOME TRUST, L.P.

                               By: TCW Advisers (Bermuda), Ltd.,
                                   as General Partner

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                               By: TCW Investment Management Company,
                                   as Investment Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                               TCW LEVERAGED INCOME TRUST II, L.P.

                               By: TCW (LINC II), L.P.,
                                   as General Partner

                               By: TCW Advisers (Bermuda), Ltd.,
                                   as General Partner

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                               By: TCW Investment Management Company,
                                   as Investment Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -39-
<PAGE>   40

                               TCW Shared Opportunity Fund III, L.P.

                               By: TCW Asset Management Company
                                   Its Investment Adviser

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -40-
<PAGE>   41

                               TCW LEVERAGED INCOME TRUST IV, L.P.

                               By: TCW Asset Management Company,
                                   as its Investment Adviser

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                               By: TCW (LINC IV), L.L.C.,
                                   as General Partner

                               By: TCW Asset Management Company,
                                   as its Managing Member

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -41-
<PAGE>   42

                               CAPTIVA III FINANCE LTD., as advised by
                               Pacific Investment Management Company

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -42-
<PAGE>   43

                               ARCHIMEDES FUNDING, L.L.C.

                               By: ING Capital Advisors LLC
                                   as Collateral Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -43-
<PAGE>   44

                               SEQUILS-ING I (HBDGM), LTD.

                               By: ING Capital Advisors LLC
                                   as Collateral Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -44-
<PAGE>   45

                               ARCHIMEDES FUNDING III LTD.

                               By: ING Capital Advisors LLC
                                   as Collateral Manager

                                   By:
                                      -------------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      -45-
<PAGE>   46

                               CREDIT SUISSE FIRST BOSTON

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -46-
<PAGE>   47

                               ATHENA CDO LIMITED

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -47-
<PAGE>   48

                               ROYALTON COMPANY

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -48-
<PAGE>   49

                               PUTNAM HIGH YIELD ADVANTAGE FUND

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -49-
<PAGE>   50

                               PUTNAM HIGH YIELD TRUST

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -50-
<PAGE>   51

                               PUTNAM FUNDS TRUST - PUTNAM HIGH YIELD TRUST II

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -51-
<PAGE>   52

                               COMPASS BANK

                               By:
                                  ----------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                      -52-
<PAGE>   53

AGREED AND ACCEPTED:

DALLAS WOODCRAFT, INC., a Texas corporation
GIA, INC., a Nebraska corporation
HOMCO, INC., a Texas corporation

By:
   ----------------------------------------------
   Name:
        -----------------------------------------
   Title:
         ----------------------------------------

HOMCO PUERTO RICO, INC., a Delaware corporation
SPRING VALLEY SCENTS, INC., a Texas corporation

By:
   ----------------------------------------------
   Name:
        -----------------------------------------
   Title:
         ----------------------------------------

LAREDO CANDLE COMPANY, L.P., a Texas
limited partnership

By:      Spring Valley Scents, Inc., its
         general partner

By:
   ----------------------------------------------
   Name:
        -----------------------------------------
   Title:
         ----------------------------------------

                                      -53-
<PAGE>   54

                                   SCHEDULE 12

                                 Sales of Assets

                                 [See Attached]

<PAGE>   55

                                    EXHIBIT E

                             Compliance Certificate

                                 [See Attached]

<PAGE>   56

                                    EXHIBIT K

                               Notice of Borrowing

                                 [See Attached]

<PAGE>   57

                                 SCHEDULE 3.1(g)

                                Deposit Accounts

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