Document:

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                                                                  Exhibit 4(a)

                                                                  Conformed Copy

                             IMPERIAL SUGAR COMPANY

                                       and

                              THE BANK OF NEW YORK,

--------------------------------------------------------------------------------

                                  Rights Agent

                                   _________

                                Rights Agreement

                          Dated as of December 31, 2002

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                            <C>
Section 1.   Certain Definitions.............................................................................   1

Section 2.   Appointment of Rights Agent.....................................................................   8

Section 3.   Issue of Rights Certificates....................................................................   8

Section 4.   Form of Rights Certificates.....................................................................  10

Section 5.   Countersignature and Registration...............................................................  10

Section 6.   Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
             Lost or Stolen Rights Certificates..............................................................  11

Section 7.   Exercise of Rights; Purchase Price..............................................................  12

Section 8.   Cancellation and Destruction of Rights Certificates.............................................  14

Section 9.   Reservation and Availability of Capital Stock...................................................  14

Section 10.  Preferred Stock Record Date.....................................................................  15

Section 11.  Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.....................  16

Section 12.  Certificate of Adjusted Purchase Price or Number of Shares......................................  23

Section 13.  Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power.................  23

Section 14.  Fractional Rights and Fractional Shares.........................................................  26

Section 15.  Rights of Action................................................................................  27

Section 16.  Agreement of Rights Holders.....................................................................  27

Section 17.  Rights Certificate Holder Not Deemed a Shareholder..............................................  28

Section 18.  Concerning the Rights Agent.....................................................................  28

Section 19.  Merger or Consolidation or Change of Name of Rights Agent.......................................  28

Section 20.  Duties of Rights Agent..........................................................................  29

Section 21.  Change of Rights Agent..........................................................................  31

Section 22.  Issuance of New Rights Certificates.............................................................  31
</TABLE>

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<TABLE>
<S>                                                                                                             <C>
Section 23.   Redemption and Termination......................................................................  32

Section 24.   Exchange........................................................................................  33

Section 25.   Notice of Certain Events........................................................................  34

Section 26.   Notices.........................................................................................  35

Section 27.   Supplements and Amendments......................................................................  35

Section 28.   Successors......................................................................................  36

Section 29.   Determinations and Actions by the Board of Directors, etc.......................................  36

Section 30.   Benefits of this Agreement......................................................................  36

Section 31.   Severability....................................................................................  37

Section 32.   Governing Law...................................................................................  37

Section 33.   Counterparts....................................................................................  37

Section 34.   Descriptive Headings............................................................................  37
</TABLE>

Exhibit A -   Form of Statement of Resolution Establishing Series of Shares
              designated Series A Junior Participating Preferred Stock

Exhibit B -   Form of Rights Certificate

Exhibit C -   Summary of Rights

                                     -ii-

<PAGE>

                                RIGHTS AGREEMENT

         This Rights Agreement, dated as of December 31, 2002 (the "Agreement"),
between Imperial Sugar Company, a Texas corporation (the "Company"), and The
Bank of New York, a New York trust company (the "Rights Agent"),

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, effective as of December 31, 2002 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized and
declared a dividend of one Right for each share of common stock, without par
value, of the Company (the "Common Stock") outstanding at the close of business
on January 15, 2003 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company issued
(whether originally issued or delivered from the Company's treasury) between the
Record Date and the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined), and, in certain circumstances
provided for in Section 22 hereof, after the Distribution Date, each Right
initially representing the right to purchase one Fractional Share (as
hereinafter defined) of Series A Junior Participating Preferred Stock of the
Company, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:

         "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include any Exempt Person; provided, however, that a Person shall not be or
become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding solely as a result of a reduction in the number of
shares of Common Stock outstanding due to the repurchase of Common Stock by the
Company, unless and until such time as such Person together with its Affiliates
and Associates shall purchase or otherwise become the Beneficial Owner of
additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of shares of Common Stock constituting 1%
or more of the then outstanding shares of Common Stock shall become an Affiliate
or Associate of such Person, unless, in either such case, such Person, together
with all Affiliates and Associates of such Person, is not then the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding; and
provided, further, that if the Board of Directors, with the concurrence of a
majority of the members of the Board of Directors who are not, and are not
representatives, nominees, Affiliates or Associates of, such Person or an
Acquiring Person, determines in good faith that a Person that would otherwise be
an "Acquiring Person" has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
"Acquiring

                                      -1-

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Person" or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person as promptly
as practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
be an "Acquiring Person," then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement.

         Notwithstanding anything in this definition of "Acquiring Person" to
the contrary,

               (A) so long as Lehman Brothers Inc., together with all Affiliates
      and Associates thereof, remains the Beneficial Owner of 15% or more of the
      outstanding shares of Common Stock, Lehman Brothers Inc. and any Affiliate
      or Associate thereof shall not be or become an Acquiring Person unless and
      until Lehman Brothers Inc., together with all Affiliates and Associates
      thereof, becomes the Beneficial Owner of additional shares of Common Stock
      constituting 10% or more of the shares of Common Stock beneficially owned
      by Lehman Brothers Inc., together with all Affiliates and Associates
      thereof, as of the date of this Agreement, or any other Person (or
      Persons) who is (or collectively are) the Beneficial Owner of shares of
      Common Stock constituting 10% or more of the shares of Common Stock so
      owned as of the date of this Agreement shall become an Affiliate or
      Associate of such Person, unless, in either such case, such Person,
      together with all Affiliates and Associates of such Person, is not then
      the Beneficial Owner of 15% or more of the shares of Common Stock then
      outstanding; and

               (B) if, as of the date hereof, any Person, together with all
      Affiliates or Associates of such Person, is the Beneficial Owner of a
      number of shares of Common Stock that would otherwise cause such Person to
      be an Acquiring Person, such Person shall not be or become an Acquiring
      Person unless and until such time as such Person or any Affiliate or
      Associate of such Person shall purchase or otherwise become the Beneficial
      Owner of additional shares of Common Stock constituting 10% or more of the
      shares of Common Stock beneficially owned by such Person, together with
      all Affiliates and Associates thereof, as of the date of this Agreement or
      any other Person (or Persons) who is (or collectively are) the Beneficial
      Owner of shares of Common Stock constituting 10% or more of the shares of
      Common Stock so owned as of the date of this Agreement shall become an
      Affiliate or Associate of such Person unless, in either such case, such
      Person, together with all Affiliates and Associates of such Person, is not
      then the Beneficial Owner of 15% or more of the shares of Common Stock
      then outstanding.

         At any time that the Rights are redeemable, the Board of Directors may,
generally or with respect to any specified Person or Persons, determine to
increase to a specified percentage or amount greater than that set forth herein
or decrease to a specified percentage or amount lower than that set forth herein
or determine a number of shares to be (but in no event less than or equal to the
percentage or number of shares of Common Stock then beneficially owned by such
Person), the level of Beneficial Ownership of Common Stock at which a Person or
such Person or Persons becomes an Acquiring Person.

         "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.

                                       -2-

<PAGE>

         "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided, however, that no Person shall be deemed an
"Affiliate" of Lehman Brothers Inc. solely by virtue of being an officer or
director of Lehman Brothers Inc. unless and until such officer or director, as
the case may be, and Lehman Brothers Inc. (or an Affiliate or Associate of
Lehman Brothers Inc.) (i) have any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or consent as described in the proviso to
subparagraph (i) of the definition of "Beneficial Owner") or disposing of any
voting securities of the Company or (ii) are members of any group (as that term
is used in Rule 13d-5(b) of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement) with respect to the Company or
securities of the Company.

         "Associate" shall mean, with reference to any Person, (1) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a Subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (2) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (3) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.

         A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:

         (i)   that such Person or any of such Person's Affiliates or
     Associates, directly or indirectly, is the "beneficial owner" of (as
     determined pursuant to Rule 13d-3 of the General Rules and Regulations
     under the Exchange Act as in effect on the date of this Agreement) or
     otherwise has the right to vote or dispose of, including pursuant to any
     agreement, arrangement or understanding (whether or not in writing), and
     shall include shares of Common Stock distributable pursuant to the
     Company's Second Amended and Restated Joint Plan of Reorganization, which
     became effective August 29, 2001; provided, however, that a Person shall
     not be deemed the "Beneficial Owner" of, or to "beneficially own," any
     security under this subparagraph (i) as a result of an agreement,
     arrangement or understanding to vote such security if such agreement,
     arrangement or understanding: (A) arises solely from a revocable proxy or
     consent given in response to a public (i.e., not including a solicitation
     exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under the
     Exchange Act as in effect on the date of this Agreement) proxy or consent
     solicitation made pursuant to, and in accordance with, the applicable
     provisions of the General Rules and Regulations under the Exchange Act ,
     (B) is not then reportable by such Person on Schedule 13D under the
     Exchange Act (or any comparable or successor report) and (C) does not
     constitute a trust, proxy, power of attorney or other device with the
     purpose or effect of allowing two or more persons, acting in concert, to
     avoid being deemed "beneficial owners" of such security or otherwise avoid
     the status of "Acquiring Person" under the terms of this Agreement or as
     part of a plan or scheme to evade the reporting requirements under Schedule
     13D or Sections 13(d) or 13(g) of the Exchange Act;

                                      -3-

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         (ii)  that such Person or any of such Person's Affiliates or
     Associates, directly or indirectly, has the right or obligation to acquire
     (whether such right or obligation is exercisable or effective immediately
     or only after the passage of time or the occurrence of an event) pursuant
     to any agreement, arrangement or understanding (whether or not in writing)
     or upon the exercise of conversion rights, exchange rights, other rights,
     warrants or options, or otherwise; provided, however, that a Person shall
     not be deemed the "Beneficial Owner" of, or to "beneficially own," (A)
     securities tendered pursuant to a tender or exchange offer made by such
     Person or any of such Person's Affiliates or Associates until such tendered
     securities are accepted for purchase or exchange, (B) securities issuable
     upon exercise of Rights at any time prior to the occurrence of a Triggering
     Event, or (C) securities issuable upon exercise of Rights from and after
     the occurrence of a Triggering Event which Rights were acquired by such
     Person or any of such Person's Affiliates or Associates prior to the
     Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
     "Original Rights") or pursuant to Section 11(i) or (p) hereof in connection
     with an adjustment made with respect to any Original Rights; or

         (iii) that are beneficially owned, directly or indirectly, by (A) any
     other Person (or any Affiliate or Associate thereof) with which such Person
     or any of such Person's Affiliates or Associates has any agreement,
     arrangement or understanding (whether or not in writing) for the purpose of
     acquiring, holding, voting (except pursuant to a revocable proxy or consent
     as described in the proviso to subparagraph (i) of this definition) or
     disposing of any voting securities of the Company or (B) any group (as that
     term is used in Rule 13d-5(b) of the General Rules and Regulations under
     the Exchange Act, as in effect on the date of this Agreement) of which such
     Person is a member;

provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," (x) any securities acquired through such Person's
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under
the Exchange Act, or to cover overallotments created in connection with a public
offering) until the expiration of forty days after the date of such acquisition
or (y) any securities acquired through such Person's participation in good faith
ordinary course market-making activities. For purposes of this Agreement,
"voting" a security shall include voting, granting a proxy, acting by consent,
making a request or demand relating to corporate action (including, without
limitation, calling a shareholder meeting), entering into a voting trust or
voting agreement or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act, as in effect on the date of this Agreement)
in respect of such security.

         "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

         "close of business" on any given date shall mean 5:00 p.m., New York,
New York time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 p.m., New York, New York time, on the next
succeeding Business Day.

                                      -4-

<PAGE>

         "Closing Price" of a security for any day shall mean the last sales
price, regular way, on such day or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by NASDAQ or such other
self-regulatory organization or registered securities information processor (as
such terms are used under the Exchange Act) that then reports information
concerning such security, or, if sales price information is not so reported, the
average of the high bid and low asked prices in the over-the-counter market on
such day, as reported by NASDAQ or such other entity, or, if on such day such
security is not quoted by any such entity, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. If on such day no
market maker is making a market in such security, the fair value of such
security on such day as determined in good faith by the Board of Directors of
the Company shall be used.

         "Common Stock" shall mean the common stock, without par value, of the
Company, except that "Common Stock" when used with reference to equity interests
issued by any Person other than the Company shall mean the capital stock of such
Person with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.

         "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.

         "Company" shall mean the Person named as the "Company" in the preamble
of this Agreement until a successor Person shall have become such or until a
Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor Person or
Principal Party.

         "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.

         "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.

         "Distribution Date" shall mean the earlier of (i) the close of business
on the tenth day (or, if such Stock Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be determined by the
Company's Board of Directors as set forth below before the Distribution Date
occurs) after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Company's Board of Directors as set forth
below before the Distribution Date occurs) after the date that a tender offer or
exchange offer by any Person (other than any Exempt Person) is first published
or sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act as then in effect, if upon consummation
thereof, such

                                      -5-

<PAGE>

Person would be an Acquiring Person, other than a tender or exchange offer that
is determined before the Distribution Date occurs to be a Permitted Offer. The
Board of Directors of the Company may, to the extent set forth in the preceding
sentence, defer the date set forth in clause (i) or (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event (but in no event to a date later than
the close of business on the tenth day after the first occurrence of a
Triggering Event).

         "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Exchange Ratio" shall have the meaning set forth in Section 24 hereof.

         "Exempt Person" shall mean the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
and any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.

         "Expiration Date" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which the Rights expire pursuant to Section 13(d)
hereof and (iv) the time at which all Rights then outstanding and exercisable
are exchanged pursuant to Section 24 hereof.

         "Final Expiration Date" shall mean the close of business on December
31, 2012.

         "Flip-In Event" shall mean an event described in Section 11(a)(ii)
hereof.

         "Flip-In Trigger Date" shall have the meaning set forth in Section
11(a)(iii) hereof.

         "Flip-Over Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof, but excluding any transaction described in Section
13(d) hereof that causes the Rights to expire.

         " Fractional Share" with respect to the Preferred Stock shall mean one
one-hundredth of a share of Preferred Stock.

         "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotations System.

         "Original Rights" shall have the meaning set forth in the definition of
"Beneficial Owner."

         "Permitted Offer" shall mean a tender offer or an exchange offer that
(i) offers to purchase all outstanding shares of Common Stock, (ii) remains open
for at least 35 Business Days, (iii) results in the bidder, together with its
Affiliates and Associates, owning at least 85%

                                      -6-

<PAGE>

of the outstanding Common Stock upon completion of the offer, (iii) provides for
a "subsequent offering period" as permitted by Rule 14d-11 under the Exchange
Act (or any successor provision) of at least five business days, and (v)
contains a commitment by the bidder to promptly propose (if necessary) and use
its best efforts to consummate a merger of the Company with the bidder (or a
subsidiary thereof) in which each share of Common Stock not then owned by the
bidder (or any subsidiary thereof) will be converted into the same form and
amount of consideration per share as that paid in such offer.

         "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity or any group of Persons acting in concert.

         "Preferred Stock" shall mean shares of Series A Junior Participating
Preferred Stock, without par value, of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designations attached hereto
as Exhibit A and, to the extent that there is not a sufficient number of shares
of Series A Junior Participating Preferred Stock authorized to permit the full
exercise of the Rights, any other series of Preferred Stock, without par value,
of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Preferred Stock.

         "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.

         "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.

         "Record Date" shall have the meaning set forth in the recitals clause
at the beginning of this Agreement.

         "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.

         "Rights" shall have the meaning set forth in the recitals clause at the
beginning of this Agreement.

         "Rights Agent" shall mean the Person named as the "Rights Agent" in the
preamble of this Agreement until a successor Rights Agent shall have become such
pursuant to the applicable provisions hereof, and thereafter "Rights Agent"
shall mean such successor Rights Agent. If at any time there is more than one
Person appointed by the Company as Rights Agent pursuant to the applicable
provisions of this Agreement, "Rights Agent" shall mean and include each such
Person.

         "Rights Certificates" shall mean the certificates evidencing the
Rights.

         "Rights Dividend Declaration Date" shall have the meaning set forth in
the recitals clause at the beginning of this Agreement.

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "Spread" shall have the meaning set forth in Section 11(a)(iii) hereof.

                                      -7-

<PAGE>

         "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition and Section 23, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.

         "Subsidiary" shall mean, with reference to any Person, any corporation
or other Person of which an amount of voting securities sufficient to elect at
least a majority of the directors or other persons performing similar functions
is beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.

         "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

         "Summary of Rights" shall mean the Summary of Rights sent pursuant to
Section 3(b) hereof.

         "Trading Day" with respect to a security shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business, or, if such
security is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.

         "Triggering Event" shall mean any Flip-In Event or any Flip-Over Event.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent (i) to act as agent for the Company and (ii) to take certain
actions in respect of the holders of the Rights (who, in accordance with Section
3 hereof, shall prior to the Distribution Date also be the holders of the Common
Stock) (although it is expressly agreed that the Rights Agent shall not act as
agent for such holders) in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable.

         Section 3. Issue of Rights Certificates.

         (a) Until the Distribution Date, (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Stock registered in the names of the holders of the
Common Stock and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Distribution Date (other than any Person referred to in the
first sentence of Section 7(e)), at the address of such holder shown on the
records of the Company, one or more Rights Certificates, evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are

                                      -8-

<PAGE>

distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.

         (b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C, by first-class, postage prepaid mail, to each record holder
of Common Stock as of the close of business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to certificates
for Common Stock outstanding as of the Record Date, until the Distribution Date
or the earlier surrender for transfer thereof or the Expiration Date, the Rights
associated with the shares of Common Stock represented by such certificates
shall be evidenced by such certificates for Common Stock together with the
Summary of Rights, and the registered holders of the Common Stock shall also be
the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any of the
certificates for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.

         (c) Rights shall be issued in respect of all shares of Common Stock
that are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in Section 22
hereof, after the Distribution Date. Certificates issued representing such
shares of Common Stock that shall so become outstanding or shall be transferred
or exchanged after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date shall also be deemed to be certificates for Rights,
and shall bear the following legend:

         This certificate also evidences and entitles the holder hereof to
     certain Rights as set forth in the Rights Agreement between Imperial Sugar
     Company (the "Company") and The Bank of New York (the "Rights Agent") dated
     as of December 31, 2002 as it may from time to time be supplemented or
     amended (the "Rights Agreement"), the terms of which are hereby
     incorporated herein by reference and a copy of which is on file at the
     principal offices of the Company. Under certain circumstances, as set forth
     in the Rights Agreement, such Rights may be redeemed, may be exchanged, may
     expire or may be evidenced by separate certificates and will no longer be
     evidenced by this certificate. The Company will mail to the holder of this
     certificate a copy of the Rights Agreement, as in effect on the date of
     mailing, without charge promptly after receipt of a written request
     therefor. Under certain circumstances set forth in the Rights Agreement,
     Rights beneficially owned by or transferred to any Person who is, was or
     becomes an Acquiring Person or an Affiliate or Associate thereof (as such
     terms are defined in the Rights Agreement), and certain transferees
     thereof, will become null and void and will no longer be transferable.

With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone, and registered

                                      -9-

<PAGE>

holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.

         Section 4. Form of Rights Certificates.

         (a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof), when, as and if issued,
shall be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or quotation system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of Fractional
Shares of Preferred Stock as shall be set forth therein at the price set forth
therein (such exercise price per Fractional Share (or, as set forth in this
Agreement, for other securities), the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.

         (b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by a Person described in the
first sentence of Section 7(e), and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any such Rights, shall contain (to the extent feasible) the
following legend, modified as applicable to apply to such Person:

     The Rights represented by this Rights Certificate are or were beneficially
     owned by a Person who was or became an Acquiring Person or an Affiliate or
     Associate of an Acquiring Person (as such terms are defined in the Rights
     Agreement). Accordingly, this Rights Certificate and the Rights represented
     hereby [will] [have] become null and void in the circumstances and with the
     effect specified in Section 7(e) of such Agreement.

The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate. The
Company shall give notice to the Rights Agent promptly after it becomes aware of
the existence of any Acquiring Person or any Associate or Affiliate thereof.

         Section 5. Countersignature and Registration.

         (a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof, which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so

                                      -10-

<PAGE>

countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.

         (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the certificate number and the date of
each of the Rights Certificates.

         Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

         (a) Subject to the provisions of Section 4(b), Section 7(e), Section
13(d), Section 14 and Section 24 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of Fractional Shares of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) thereof or of the Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Rights Certificates.

         (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them,

                                      -11-

<PAGE>

and reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will, subject to Section 4(b),
Section 7(e), Section 13(d), Section 14 and Section 24, execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.

         Section 7. Exercise of Rights; Purchase Price.

         (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly completed and executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of Fractional Shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.

         (b) The Purchase Price for each Fractional Share of Preferred Stock
pursuant to the exercise of a Right shall initially be $31.89, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.

         (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the reverse
side thereof duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price per Fractional Share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i)(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of Fractional Shares of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing interests in such number of
Fractional Shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash
or by

                                      -12-

<PAGE>

certified check, cashier's or official bank check or bank draft payable to the
order of the Company or the Rights Agent. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) or Section 13(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock would
be issued.

         (d) In case the registered holder of any Rights Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.

         (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by or transferred to (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person other than any such Person that became such pursuant to a
Permitted Offer and the Board of Directors in good faith determines was not
involved in and did not cause or facilitate, directly or indirectly, such
Triggering Event, (ii) a direct or indirect transferee of such Rights from such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after such Triggering Event or (iii) a direct or indirect transferee of such
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Triggering Event and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person (or such Affiliate or Associate) to holders of equity
interests in such Acquiring Person (or such Affiliate or Associate) or to any
Person with whom such Acquiring Person (or such Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company determines
is part of a plan, arrangement or understanding that has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action, no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise, and such Rights shall not be transferable. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.

         (f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

                                      -13-

<PAGE>

         Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

         Section 9. Reservation and Availability of Capital Stock.

         (a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares, or out of its
authorized and issued shares held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or :other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.

         (b) So long as any shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights are listed on any national
securities exchange or quoted on any trading system, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange, or quoted on such system, upon official notice of issuance upon such
exercise. Following the occurrence of a Triggering Event, the Company will use
its best efforts to list (or continue the listing of) the Rights and the
securities issuable and deliverable upon the exercise of the Rights on one or
more national securities exchanges or to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or such other
transaction reporting system then in use.

         (c) The Company shall use its best efforts to (i) prepare and file, as
soon as practicable following the first occurrence of a Flip-In Event or, if
applicable, as soon as practicable following the earliest date after the first
occurrence of a Flip-In Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in clause (i) of the
first

                                      -14-

<PAGE>

sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
In addition, if the Company shall determine that the Securities Act requires an
effective registration statement under the Securities Act following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as such a registration statement has been declared
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or any required
registration statement shall not have been declared effective.

         (d)   The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Fractional Shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.

         (e)   The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of Fractional Shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of Rights Certificates to
a Person other than, or the issuance or delivery of a number of Fractional
Shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of Fractional Shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.

         Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of Fractional Shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such shares (fractional or otherwise) of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights

                                      -15-

<PAGE>

evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares or other
securities subject to purchase upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

          (a)  (i)    In the event the Company shall at any time after the
     Rights Dividend Declaration Date (A) declare a dividend on the outstanding
     shares of Preferred Stock payable in shares of Preferred Stock, (B)
     subdivide the outstanding shares of Preferred Stock, (C) combine the
     outstanding shares of Preferred Stock into a smaller number of shares or
     (D) otherwise reclassify the outstanding shares of Preferred Stock
     (including any such reclassification in connection with a consolidation or
     merger in which the Company is the continuing or surviving corporation),
     except as otherwise provided in this Section 11(a) and Section 7(e) hereof,
     the Purchase Price in effect at the time of the record date for such
     dividend or of the effective date of such subdivision, combination or
     reclassification, and the number and kind of shares of Preferred Stock or
     capital stock or other securities, as the case may be, issuable on such
     date, shall be proportionately adjusted so that the holder of any Right
     exercised after such time shall be entitled to receive, upon payment of the
     Purchase Price then in effect, the aggregate number and kind of shares of
     Preferred Stock or capital stock or other securities, as the case may be,
     which, if such Right had been exercised immediately prior to such date and
     at a time when the Preferred Stock transfer books of the Company were open,
     he would have owned upon such exercise and been entitled to receive by
     virtue of such dividend, subdivision, combination or reclassification. If
     an event occurs that would require an adjustment under both this Section
     11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
     Section 11(a)(i) shall be in addition to, and shall be made prior to, any
     adjustment required pursuant to Section 11(a)(ii) hereof.

          (ii) Subject to Sections 23 and 24 of this Agreement, in the event any
     Person shall, at any time after the Rights Dividend Declaration Date,
     become an Acquiring Person, unless the event causing such Person to become
     an Acquiring Person is (1) a Flip-Over Event or (2) an acquisition of
     shares of Common Stock pursuant to a Permitted Offer (provided that this
     clause (2) shall cease to apply if such Acquiring Person thereafter becomes
     the Beneficial Owner of any additional shares of Common Stock other than
     pursuant to such Permitted Offer or a transaction set forth in Section
     13(a) or 13(d) hereof), then (x) the Purchase Price shall be adjusted to be
     the Purchase Price immediately prior to the first occurrence of a Flip-In
     Event multiplied by the number of Fractional Shares of Preferred Stock for
     which a Right was exercisable immediately prior to such first occurrence
     and (y) each holder of a Right (except as provided below in Section
     11(a)(iii) and in Section 7(e) hereof) shall thereafter have the right to
     receive, upon exercise thereof at a price equal to the Purchase Price in
     accordance with the terms of this Agreement, in lieu of the shares of
     Preferred Stock otherwise purchasable

                                      -16-

<PAGE>

     thereunder, such number of shares of Common Stock of the Company as shall
     equal the result obtained by dividing the Purchase Price by 50% of the
     Current Market Price per share of Common Stock on the date of such first
     occurrence (such number of shares, the "Adjustment Shares"); provided that
     the Purchase Price and the number of Adjustment Shares shall be further
     adjusted as provided in this Agreement to reflect any events occurring
     after the date of such first occurrence.

          (iii) In the event that the number of shares of Common Stock that are
     authorized by the Company's certificate of incorporation but not
     outstanding or reserved for issuance for purposes other than upon exercise
     of the Rights is not sufficient to permit the exercise in full of the
     Rights in accordance with the foregoing subparagraph (ii) of this Section
     11(a), the Company shall, to the extent permitted by applicable law and
     regulation, (A) determine the excess of (1) the value of the Adjustment
     Shares issuable upon the exercise of a Right (computed using the Current
     Market Price used to determine the number of Adjustment Shares) (the
     "Current Value") over (2) the Purchase Price (such excess is herein
     referred to as the "Spread"), and (B) with respect to each Right, make
     adequate provision to substitute for the Adjustment Shares, upon the
     exercise of the Rights and payment of the applicable Purchase Price, (1)
     cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
     equity securities of the Company (including, without limitation, shares, or
     units of shares, of preferred stock (including, without limitation, the
     Preferred Stock) that the Board of Directors of the Company has determined
     to have the same value as shares of Common Stock (such shares of preferred
     stock are herein referred to as "Common Stock Equivalents")), (4) debt
     securities of the Company, (5) other assets or (6) any combination of the
     foregoing, having an aggregate value equal to the Current Value, where such
     aggregate value has been determined by the Board of Directors of the
     Company based upon the advice of a nationally recognized investment banking
     firm selected by the Board of Directors of the Company; provided, however,
     if the Company shall not have made adequate provision to deliver value
     pursuant to clause (B) above within 30 days following the later of (x) the
     first occurrence of a Flip-In Event and (y) the date on which the Company's
     right of redemption pursuant to Section 23(a) expires (the later of (x) and
     (y) being referred to herein as the "Flip-In Trigger Date"), then the
     Company shall be obligated to deliver, upon the surrender for exercise of a
     Right and without requiring payment of the Purchase Price, shares of Common
     Stock (to the extent available) and then, if necessary, cash, which shares
     and/or cash have an aggregate value equal to the Spread. If the Board of
     Directors of the Company shall determine in good faith that it is likely
     that sufficient additional shares of Common Stock could be authorized for
     issuance upon exercise in full of the Rights, the 30-day period set forth
     above may be extended to the extent necessary, but not more than 90 days
     after the Flip-In Trigger Date, in order that the Company may seek
     shareholder approval for the authorization of such additional shares (such
     period, as it may be extended, the "Substitution Period"). To the extent
     that the Company or the Board of Directors determines that some action need
     be taken pursuant to the first and/or second sentences of this Section
     11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof,
     that such action shall apply uniformly to all outstanding Rights, and (y)
     may suspend the exercisability of the Rights until the expiration of the
     Substitution Period in order to seek any authorization of additional shares
     and/or to decide the appropriate form of distribution to be made pursuant
     to such first sentence and to determine the value

                                      -17-

<PAGE>

     thereof. In the event of any such suspension, the Company shall issue a
     public announcement stating that the exercisability of the Rights has been
     temporarily suspended, as well as a public announcement at such time as the
     suspension is no longer in effect. For purposes of this Section 11(a)(iii),
     the value of the Common Stock shall be the Current Market Price per share
     of the Common Stock on the Flip-In Trigger Date and the value of any Common
     Stock Equivalent shall be deemed to have the same value as the Common Stock
     on such date.

          (b)  In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or shares having substantially the same
rights, privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock that the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration, part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights.
Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.

          (c)  In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market
Price per share of Preferred Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a

                                      -18-

<PAGE>

statement filed with the Rights Agent and shall be binding on the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Preferred Stock and the denominator of which shall be such Current Market Price
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price that
would have been in effect if such record date had not been fixed.

          (d)  (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock of a Person on any date shall be deemed to be
the average of the daily Closing Prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily Closing Prices per share of such Common Stock for the 10
consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of Common Stock is
determined during a period following the announcement of (A) a dividend or
distribution on such Common Stock other than a regular quarterly cash dividend
or the dividend of the Rights or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, shall not have occurred prior to the commencement of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above, then, and
in each such case, the Current Market Price shall be properly adjusted to take
into account ex-dividend trading. If the Common Stock is not publicly held or
not so listed or traded, "Current Market Price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.

          (ii) For the purpose of any computation hereunder, the "Current Market
Price" per share (or Fractional Share) of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Market
Price per share (or Fractional Share) of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Preferred Stock shall be conclusively deemed
to be an amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded, Current
Market Price per share of the Preferred Stock shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the Current Market Price of a Fractional Share of Preferred Stock
shall be equal to the Current Market Price of one share of Preferred Stock
divided by 100.

          (e)  Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of

                                      -19-

<PAGE>

at least 1% in the Purchase Price; provided, however, that any adjustments that
by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or to the nearest
ten-thousandth of a Fractional Share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.

          (f)  If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive in respect of such Right any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (f), (g), (h), (i), (j), (k) and (m) hereof, and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.

          (g)  All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Fractional Shares of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

          (h)  Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Fractional Shares of Preferred Stock (calculated to the nearest one
ten-thousandth of a Fractional Share) obtained by (i) multiplying (x) the number
of Fractional Shares of Preferred Stock covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

          (i)  The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in lieu of any adjustment in
the number of Fractional Shares of Preferred Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of Fractional Shares of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day

                                      -20-

<PAGE>

thereafter, but, if the Rights Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.

          (j)  Irrespective of any adjustment or change in the Purchase Price or
the number of Fractional Shares of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Fractional Share and the number of
Fractional Shares that were expressed in the initial Rights Certificates issued
hereunder.

          (k)  Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, or the stated capital of
the number of Fractional Shares of Preferred Stock or of the number of shares of
Common Stock or other securities issuable upon exercise of a Right, the Company
shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable such number of Fractional Shares of Preferred Stock or such number
of shares of Common Stock or other securities at such adjusted Purchase Price.

          (l)  In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.

          (m)  Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities that by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in

                                      -21-

<PAGE>

this Section 11 hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such shareholders.

          (n)  The Company covenants and agrees that it shall not, at any time
that there is an Acquiring Person, (i) consolidate with any other Person, (ii)
merge with or into any other Person or (iii) sell, lease or transfer (or permit
one or more Subsidiaries to sell, lease or transfer), in one transaction or a
series of related transactions, assets, earning power or cash flow aggregating
more than 50% of the assets, earning power or cash flow of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons, if (x) at the
time of or immediately after such consolidation, merger, sale, lease or transfer
there are any rights, warrants or other instruments or securities of the Company
or any other Person outstanding or agreements, arrangements or understandings in
effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease or transfer, the
shareholders or other equity owners of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates, or (z) the identity, form or nature of
organization of the Principal Party (including, without limitation, the
selection of the Person that will be the Principal Party as a result of the
Company's entering into one or more consolidations, mergers, sales, leases or
transfers with more than one party) would preclude or limit the exercise of
Rights or otherwise diminish substantially or eliminate the benefits intended to
be afforded by the Rights.

          (o)  The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if the purpose of
such action is to, or if at the time such action is taken it is reasonably
foreseeable that such action will, diminish substantially or eliminate the
benefits intended to be afforded by the Rights.

          (p)  Notwithstanding Section 3(c) hereof or any other provision of
this Agreement to the contrary, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares or (iv) otherwise reclassify the outstanding shares of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter with Rights, shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction (the "Adjustment Fraction"), the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the number of Rights
associated with one share of Common Stock, the Company may elect to adjust the
number of Fractional Shares of Preferred Stock purchasable upon the exercise of
one Right and

                                      -22-

<PAGE>

the Purchase Price. If the Company makes such election, the number of Rights
associated with one share of Common Stock shall remain unchanged, and the number
of Fractional Shares of Preferred Stock purchasable upon exercise of one Right
and the Purchase Price shall be proportionately adjusted so that (i) the number
of Fractional Shares of Preferred Stock purchasable upon exercise of a Right
following such adjustment shall equal the product of the number of Fractional
Shares of Preferred Stock purchasable upon exercise of a Right immediately prior
to such adjustment multiplied by the Adjustment Fraction and (ii) the Purchase
Price following such adjustment shall equal the product of the Purchase Price
immediately prior to such adjustment multiplied by the Adjustment Fraction.

               Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) mail a
brief summary thereof to each registered holder of a Rights Certificate (or, if
prior to the Distribution Date, to each registered holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.

               Section 13. Consolidation, Merger or Sale or Transfer of Assets,
Cash Flow or Earning Power.

          (a)  In the event that, from and after the time an Acquiring Person
has become such, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger, and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, or (z) the Company shall sell, lease or otherwise transfer (or
one or more of its Subsidiaries shall sell, lease or otherwise transfer), in one
transaction or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any wholly owned Subsidiary of the Company or any
combination thereof in one or more transactions each of which complies (and all
of which together comply) with Section 11(o) hereof), then, and in each such
case (except as may be contemplated by Section 13(d) hereof), proper provision
shall be made so that: (i) the Purchase Price shall be adjusted to be the
Purchase Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of Fractional Shares of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence; (ii) on and
after the Distribution Date, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the Purchase Price in accordance with the terms of this
Agreement, in lieu of shares of Preferred Stock or Common Stock of the Company,
such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first

                                      -23-

<PAGE>

refusal or other adverse claims, as shall be equal to the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such
Flip-Over Event; provided that the Purchase Price and the number of shares of
Common Stock of such Principal Party issuable upon exercise of each Right shall
be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such first occurrence of a Triggering Event or after
the date of such Flip-Over Event, as applicable; (iii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Flip-Over
Event, all the obligations and duties of the Company pursuant to this Agreement;
(iv) the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence of a
Flip-Over Event; (v) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (vi) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the occurrence of
any Flip-Over Event.

          (b)  "Principal Party" shall mean

          (i)  in the case of any transaction described in clause (x) or (y) of
     the first sentence of Section 13(a), (A) the Person that is the issuer of
     any securities into which shares of Common Stock of the Company are
     converted in such merger or consolidation, or, if there is more than one
     such issuer, the issuer the Common Stock of which has the greatest
     aggregate market value, or (B) if no securities are so issued, (x) the
     Person that survives such consolidation or is the other party to the merger
     and survives such merger, or, if there is more than one such Person, the
     Person the Common Stock of which has the greatest aggregate market value or
     (y) if the Person that is the other party to the merger does not survive
     the merger, the Person that does survive the merger (including the Company
     if it survives); and

          (ii) in the case of any transaction described in clause (z) of the
     first sentence of Section 13(a), the Person that is the party receiving the
     greatest portion of the assets or earning power transferred pursuant to
     such transaction or transactions, or, if each Person that is a party to
     such transaction or transactions receives the same portion of the assets or
     earning power so transferred, or if the Person receiving the greatest
     portion of the assets or earning power cannot be determined, the Person the
     Common Stock of which has the greatest aggregate market value;

provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act, and if (1) such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
Person; (2) such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3) such Person is
owned, directly or indirectly, by a joint

                                      -24-

<PAGE>

venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.

          (c)  The Company shall not consummate any Flip-Over Event unless each
Principal Party (or Person that may become a Principal Party as a result of such
Flip-Over Event) shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and each such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of such Flip-Over Event, the
Principal Party at its own expense will

          (i)   prepare and file a registration statement under the Securities
     Act with respect to the Rights and the securities purchasable upon exercise
     of the Rights on an appropriate form, and will use its best efforts to
     cause such registration statement to (A) become effective as soon as
     practicable after such filing and (B) remain effective (with a prospectus
     at all times meeting the requirements of the Securities Act) until the
     Expiration Date;

          (ii)  use its best efforts to qualify or register the Rights and the
     securities purchasable upon exercise of the Rights under the "blue sky"
     laws of such jurisdictions as may be necessary or appropriate;

          (iii) use its best efforts, if the Common Stock of the Principal Party
     is or shall become listed on a national securities exchange, to list (or
     continue the listing of) the Rights and the securities purchasable upon
     exercise of the Rights on such securities exchange and, if the Common Stock
     of the Principal Party shall not be listed on a national securities
     exchange, to cause the Rights and the securities purchasable upon exercise
     of the Rights to be reported by NASDAQ or such other transaction reporting
     system then in use; and

          (iv)  deliver to holders of the Rights historical financial statements
     for the Principal Party and each of its Affiliates that comply in all
     respects with the requirements for registration on Form 10 under the
     Exchange Act.

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-Over Event
shall occur at any time after the occurrence of a Flip-In Event, the Rights that
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).

          (d)  Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Common

                                      -25-

<PAGE>

Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of any such
Person or Persons), (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to such Permitted
Offer, and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.

          Section 14. Fractional Rights and Fractional Shares.

          (a)  The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates or scrip evidencing fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Closing Price
of one Right for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.

          (b)  The Company shall not be required to issue fractions of shares of
Preferred Stock (other than, except as provided in Section 7(c) hereof,
fractions that are integral multiples of a Fractional Share of Preferred Stock)
upon exercise of the Rights or to distribute certificates or scrip evidencing
fractional shares of Preferred Stock (other than, except as provided in Section
7(c) hereof, fractions that are integral multiples of a Fractional Share of
Preferred Stock). Interests in fractions of shares of Preferred Stock in
integral multiples of a Fractional Share of Preferred Stock may, at the election
of the Company in its sole discretion, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the shares of Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of a Fractional Share of
Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of one one-hundredth of the Closing Price of
a share of Preferred Stock for the Trading Day immediately prior to the date of
such exercise.

          (c)  Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates or scrip evidencing fractional shares
of Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
Closing Price of one share of Common Stock for the Trading Day immediately prior
to the date of such exercise.

          (d)  The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.

                                      -26-

<PAGE>

          Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock) and, where applicable, the Company; and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. After a Triggering Event,
holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.

          Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:

          (a)   prior to the Distribution Date, the Rights will not be evidenced
by Rights Certificates and will be transferable only in connection with the
transfer of Common Stock;

          (b)   after the Distribution Date, the Rights Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the
certificate contained therein duly completed and fully executed;

          (c)   subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and

          (d)   notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided,

                                      -27-

<PAGE>

however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.

          Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Fractional
Shares of Preferred Stock or any other securities of the Company that may at any
time be issuable upon the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.

          Section 18. Concerning the Rights Agent.

          (a)  The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.

          (b)  The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it, after proper inquiry or examination, to be
genuine and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.

          Section 19. Merger or Consolidation or Change of Name of Rights Agent.

          (a)  Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights

                                      -28-

<PAGE>

Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

              (b)  In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

              Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:

              (a)  The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.

              (b)  Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Current Market Price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

              (c)  The Rights Agent shall be liable hereunder only for its own
gross negligence or willful misconduct. In no event shall the Rights Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action.

              (d)  The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.

                                      -29-

<PAGE>

              (e)  The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of actual knowledge of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock or Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock or Common Stock or other securities will, when so issued, be
validly authorized and issued, fully paid and nonassessable.

              (f)  The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

              (g)  The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.

              (h)  The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

              (i)  The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct; provided, however, that reasonable
care was exercised in the selection and continued employment thereof.

              (j)  No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.

                                      -30-

<PAGE>

              (k)  If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

              Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and the Preferred Stock, by registered or
certified mail, and to the registered holders, if any, of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and the Preferred Stock, by registered
or certified mail, and to the registered holders of the Rights Certificates, if
any, by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the registered holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or trust company
organized and doing business under the laws of the United States or of the State
of New York (or of any other state of the United States so long as such
corporation or trust company is authorized to conduct a stock transfer or
corporate trust business in the State of New York), in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a corporation or trust
company described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders, if any, of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

              Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option,

                                      -31-

<PAGE>

issue new Rights Certificates evidencing Rights in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement granted or awarded on or prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities issued by the
Company on or prior to the Distribution Date, including shares so issued upon
exercise of warrants issued pursuant to the Warrant Agreement dated as of August
28,2001 between the Company and The Bank of New York, as warrant agent, as
amended or supplemented from time to time, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

              Section 23. Redemption and Termination.

              (a)  The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the close of business on the tenth day
following the first date of public announcement of the occurrence of a Flip-In
Event (or, if such date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date) and (ii) the Expiration
Date, cause the Company to redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted, if necessary, to reflect any stock split, stock dividend
or similar transaction occurring after the Rights Dividend Declaration Date
(such redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that the Rights may not be redeemed following any merger to
which the Company is a party that (i) occurs when there is an Acquiring Person
and (ii) was not approved (x) prior to the time such Person became an Acquiring
Person by the Board of Directors of the Company and (y) prior to such merger by
the shareholders of the Company at a shareholders' meeting. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Flip-In Event until such time as the
Company's right of redemption hereunder has expired. The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the
Current Market Price of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.

              (b)  Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the redemption of the Rights (the
effectiveness of which action may be conditioned on the occurrence of one or
more events or on the existence of one or more facts or may be effective at some
future time), evidence of which shall be filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for

                                      -32-

<PAGE>

each Right so held. Promptly after the effectiveness of the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the registered holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Company for the
Common Stock. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.

              Section 24. Exchange.

              (a)  The Board of Directors of the Company may, at its option, at
any time and from time to time after the occurrence of a Flip-In Event, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for shares of Common Stock or Common Stock Equivalents or any
combination thereof, at an exchange ratio of one share of Common Stock, or such
number of Common Stock Equivalents or units representing fractions thereof as
would be deemed to have the same value as one share of Common Stock, per Right,
appropriately adjusted, if necessary, to reflect any stock split, stock dividend
or similar transaction occurring after the Rights Dividend Declaration Date
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors may not effect such
exchange at any time after (i) any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding
or (ii) the occurrence of a Flip-Over Event.

              (b)  Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the exchange of any Rights pursuant to and
in accordance with subsection (a) of this Section 24 (the effectiveness of which
action may be conditioned on the occurrence of one or more events or on the
existence of one or more facts or may be effective at some future time) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or Common Stock
Equivalents equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the registered holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected as nearly pro rata as possible based on the
number of Rights (other than Rights that have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.

                                      -33-

<PAGE>

              (c)  In the event that the number of shares of Common Stock that
are authorized by the Company's certificate of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights is
not sufficient to permit an exchange of Rights as contemplated in accordance
with this Section 24, the Company may, at its option, take all such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.

              (d)  The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates or scrip evidencing
fractional shares of Common Stock upon exchange of the Rights. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
value of a whole share of Common Stock. For purposes of this Section 24, the
value of a whole share of Common Stock shall be the Closing Price per share of
Common Stock for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24, and the value of any Common Stock Equivalent shall
be deemed to have the same value as the Common Stock on such date.

              Section 25. Notice of Certain Events.

              (a)  In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof), or to
effect any sale, lease or other transfer of all or substantially all the
Company's assets, cash flow or earning power to any other Person or Persons
(other than a wholly owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, lease, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock, whichever shall be the earlier.
The failure to give notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.

                                      -34-

<PAGE>

              (b)  In case any Flip-In Event or Flip-Over Event shall occur,
then (i) the Company shall as soon as practicable thereafter give to each
registered holder of a Rights Certificate (or if occurring prior to the
Distribution Date, the registered holders of Common Stock), in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13(a) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.

              Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

              Imperial Sugar Company
              One Imperial Square
              8016 Highway 90A
              P.O. Box 9
              Sugar Land, Texas 77487-0009
              Attention: General Counsel

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:

              The Bank of New York
              101 Barclay Street, 11E
              New York, New York  10286
              Attention: Stock Transfer Administration

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.

              Section 27. Supplements and Amendments. Except as provided in the
last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of Rights or
holders of Common Stock. At any time when the Rights are not redeemable, except
as provided in the last sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or supplement the

                                      -35-

<PAGE>

provisions hereunder in any manner that the Company may deem necessary or
desirable; provided that no such amendment or supplement shall materially
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); and further
provided that this Agreement may not be supplemented or amended pursuant to this
sentence to lengthen (A) a time period relating to when the Rights may be
redeemed or (B) any other time period unless the lengthening of such other time
period is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights (other than any Acquiring Person
and its Affiliates and Associates). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment; provided, however, that the Rights
Agent may, but shall not be obligated to, enter into any such supplement or
amendment that affects the Rights Agent's own rights, duties or immunities under
this Agreement. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made that decreases the Redemption
Price.

              Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

              Section 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company (or, as set forth herein, certain specified members
thereof) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.

              Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).

                                      -36-

<PAGE>

              Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, then, unless there has occurred a merger referred to
in the proviso to the first sentence of Section 23(a), the right of redemption
set forth in Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such determination
by the Board of Directors of the Company or, if earlier, immediately prior to
any such merger. Without limiting the foregoing, if any provision requiring that
a determination be made by less than the entire Board of Directors of the
Company is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, such determination shall then be made by the
entire Board of Directors of the Company.

              Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Texas and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State, except that the rights, duties
and obligations of the Rights Agent shall be governed by the laws of the State
of New York applicable to contracts made and to be performed entirely within New
York.

              Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

              Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

                                      -37-

<PAGE>

              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.

                             IMPERIAL SUGAR COMPANY

                             By   /s/ William F. Schwer
                                -----------------------------------
                             Name:  William F. Schwer
                             Title: Executive Vice President

                             THE BANK OF NEW YORK

                             By   /s/ Steven Myers
                                -----------------------------------
                             Name:  Steven Myers
                             Title: Vice President

                                      -38-

<PAGE>

                                                                       Exhibit A

                                     FORM OF
              STATEMENT OF RESOLUTION ESTABLISHING SERIES OF SHARES
                                   designated
                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       of
                             IMPERIAL SUGAR COMPANY

         Pursuant to Article 2.13D of the Texas Business Corporation Act

         Pursuant to the provisions of Article 2.13D of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares of Preferred
Stock, without par value, designated as "Series A Junior Participating Preferred
Stock" and fixing and determining the relative rights and preferences thereof:

         1.   The name of the corporation is Imperial Sugar Corporation (the
"Corporation").

         2.   The following resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by all necessary action on the part of the Corporation,
consisting of due adoption effective as of December 31, 2002 by the Board of
Directors of the Corporation at a meeting duly held:

         RESOLVED, that pursuant to the authority vested in the Board of
     Directors of this Corporation in accordance with the provisions of the
     Amended and Restated Articles of Incorporation, a series of Preferred
     Stock, without par value, of the Corporation be and hereby is created, and
     that the designation and number of shares thereof and the voting and other
     powers, preferences and relative, participating, optional or other rights
     of the shares of such series and the qualifications, limitations and
     restrictions thereof are as follows:

                  Series A Junior Participating Preferred Stock

         1.   Designation and Amount. There shall be a series of Preferred Stock
that shall be designated as "Series A Junior Participating Preferred Stock,"
and the number of shares constituting such series shall be 500,000. Such number
of shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
A Junior Participating Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.

                                      A-1

<PAGE>

         2. Dividends and Distributions.

         (A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock, in
preference to the holders of shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating Preferred Stock,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on March 31, June 30, September 30 and December 31 in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $0.25 or (b) the Adjustment Number (as defined below) times the aggregate
per share amount of all cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, without par value, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. The "Adjustment Number" shall initially be 100.
In the event the Corporation shall at any time after December 31, 2002 (the
"Rights Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

         (B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.25 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.

         (C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend

                                      A-2

<PAGE>

Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.

         3.    Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:

         (A)   Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to a number of votes equal to the Adjustment Number
on all matters submitted to a vote of the shareholders of the Corporation.

         (B)   Except as otherwise provided herein, in the Amended and Restated
Articles of Incorporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of any other class or
series entitled to vote with the Common Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Corporation.

         (C)   (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") that shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, (1) the number of
Directors shall be increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock) upon
which these or like voting rights have been conferred and are exercisable (the
"Voting Preferred Stock") with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect such two Directors.

         (ii)  During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Voting Preferred Stock of such voting right.

         (iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors

                                      A-3

<PAGE>

may order, or any shareholder or shareholders owning in the aggregate not less
than ten percent of the total number of shares of Voting Preferred Stock
outstanding, irrespective of series, may request, the calling of a special
meeting of the holders of Voting Preferred Stock, which meeting shall thereupon
be called by the Chairman of the Board, the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any annual meeting
at which holders of Voting Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Voting Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such order or request
or, in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than ten percent of the total
number of shares of Voting Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed for the
next annual meeting of the shareholders.

         (iv) In any default period, after the holders of Voting Preferred Stock
shall have exercised their right to elect Directors voting as a class, (x) the
Directors so elected by the holders of Voting Preferred Stock shall continue in
office until their successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class or
classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.

         (v)  Immediately upon the expiration of a default period, (x) the right
of the holders of Voting Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Voting Preferred
Stock as a class shall terminate and (z) the number of Directors shall be such
number as may be provided for in the Amended and Restated Articles of
Incorporation or By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the Amended
and Restated Articles of Incorporation or By-Laws). Any vacancies in the Board
of Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.

         (D)  Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.

         4.   Certain Restrictions.

         (A)  Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared,

                                      A-4

<PAGE>

on shares of Series A Junior Participating Preferred Stock outstanding shall
have been paid in full, the Corporation shall not

             (i)   declare or pay dividends on, make any other distributions on,
         or redeem or purchase or otherwise acquire for consideration any shares
         of stock ranking junior (either as to dividends or upon liquidation,
         dissolution or winding up) to the Series A Junior Participating
         Preferred Stock;

             (ii)  declare or pay dividends on or make any other distributions
         on any shares of stock ranking on a parity (either as to dividends or
         upon liquidation, dissolution or winding up) with the Series A Junior
         Participating Preferred Stock, except dividends paid ratably on the
         Series A Junior Participating Preferred Stock and all such parity stock
         on which dividends are payable or in arrears in proportion to the total
         amounts to which the holders of all such shares are then entitled; or

             (iii) redeem or purchase or otherwise acquire for consideration any
         shares of Series A Junior Participating Preferred Stock, or any shares
         of stock ranking on a parity with the Series A Junior Participating
         Preferred Stock, except in accordance with a purchase offer made in
         writing or by publication (as determined by the Board of Directors) to
         all holders of Series A Junior Participating Preferred Stock, or to all
         such holders and the holders of any such shares ranking on a parity
         therewith, upon such terms as the Board of Directors, after
         consideration of the respective annual dividend rates and other
         relative rights and preferences of the respective series and classes,
         shall determine in good faith will result in fair and equitable
         treatment among the respective series or classes.

         (B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

         5.  Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.

         6.  Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$10 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Junior Participating Preferred Stock Liquidation Preference").
Following the payment of the full amount of the Series A Junior Participating
Preferred Stock Liquidation Preference, no additional distributions shall be
made to

                                      A-5

<PAGE>

the holders of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Junior Participating Preferred Stock Liquidation
Preference by (ii) the Adjustment Number. Following the payment of the full
amount of the Series A Junior Participating Preferred Stock Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock shall, subject to the prior rights of all other series of
Preferred Stock, if any, ranking prior thereto, receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series A Junior Participating
Preferred Stock and Common Stock, on a per share basis, respectively.

         (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Junior Participating
Preferred Stock Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, that rank on a parity with the Series A
Junior Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.

         (C) Neither the merger or consolidation of the Corporation into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6, but the
sale, lease or conveyance of all or substantially all the Corporation's assets
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6.

         7.  Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.

         8.  Redemption. (A) The Corporation, at its option, may redeem shares
of the Series A Junior Participating Preferred Stock in whole at any time and in
part from time to time, at a redemption price equal to the Adjustment Number
times the current per share market price (as such term is hereinafter defined)
of the Common Stock on the date of the mailing of the notice of redemption,
together with unpaid accumulated dividends to the date of such redemption. The
"current per share market price" on any date shall be deemed to be the average
of the closing price per share of such Common Stock for the ten consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Common Stock is determined during a period

                                      A-6

<PAGE>

following the announcement of (A) a dividend or distribution on the Common Stock
other than a regular quarterly cash dividend or (B) any subdivision, combination
or reclassification of such Common Stock and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, shall not have occurred prior to the commencement of such
ten Trading Day period, then, and in each such case, the current per share
market price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sales price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange but sales price information is
reported for such security, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
self-regulatory organization or registered securities information processor (as
such terms are used under the Securities Exchange Act of 1934, as amended) that
then reports information concerning the Common Stock, or, if sales price
information is not so reported, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by NASDAQ or such other
entity, or, if on any such date the Common Stock is not quoted by any such
entity, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Corporation. If on any such date no such market maker
is making a market in the Common Stock, the fair value of the Common Stock on
such date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if the Common
Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or Friday on
which banking institutions in the State of New York are not authorized or
obligated by law or executive order to close.

         (B) In the event that fewer than all the outstanding shares of the
Series A Junior Participating Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.

         (C) Notice of any such redemption shall be given by mailing to the
holders of the shares of Series A Junior Participating Preferred Stock to be
redeemed a notice of such redemption, first class postage prepaid, not later
than the fifteenth day and not earlier than the sixtieth day before the date
fixed for redemption, at their last address as the same shall appear upon the
books of the Corporation. Each such notice shall state: (i) the redemption date;
(ii) the number of shares to be redeemed and, if fewer than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on the close of business on such redemption date. Any notice that is mailed in
the manner herein

                                      A-7

<PAGE>

provided shall be conclusively presumed to have been duly given, whether or not
the shareholder received such notice, and failure duly to give such notice by
mail, or any defect in such notice, to any holder of Series A Junior
Participating Preferred Stock shall not affect the validity of the proceedings
for the redemption of any other shares of Series A Junior Participating
Preferred Stock that are to be redeemed. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the redemption price. If fewer than all the
shares represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.

The shares of Series A Junior Participating Preferred Stock shall not be subject
to the operation of any purchase, retirement or sinking fund.

         9.  Ranking. The Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise, and shall rank senior to the Common Stock
as to such matters.

         10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Amended and Restated Articles
of Incorporation of the Corporation shall not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.

         11. Fractional Shares. Series A Junior Participating Preferred Stock
may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.

         IN WITNESS WHEREOF, Imperial Sugar Company has caused this Certificate
to be executed on its behalf by the undersigned officer this ___ day of _______,
200_.

                             IMPERIAL SUGAR COMPANY

                             By ________________________________________________
                             Name:
                             Title:

                                      A-8

<PAGE>

                                                                       Exhibit B

                          [Form of Rights Certificate]

Certificate No. R-                                               ________ Rights

NOT EXERCISABLE AFTER DECEMBER 31, 2012 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.

                               Rights Certificate

                             IMPERIAL SUGAR COMPANY

         This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of December 31, 2002 as it may from time to time
be supplemented or amended (the "Rights Agreement"), between Imperial Sugar
Company, a Texas corporation (the "Company"), and The Bank of New York, a
national banking association (the "Rights Agent"), to purchase from the Company
at any time prior to 5:00 p.m. (New York, New York time) on December 31, 2012 at
the principal office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one-hundredth of a fully paid,
nonassessable share (a "Fractional Share" ) of Series A Junior Participating
Preferred Stock, without par value (the "Preferred Stock"), of the Company, at a
purchase price of $31.89 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate set forth on the reverse
hereof duly executed. The Purchase Price may be paid in cash or by certified
check, cashier's or official bank check or bank draft payable to the order of
the Company or the Rights Agent. The number of Rights evidenced by this Rights
Certificate (and the number of shares that may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Fractional Share set forth
above, are the number and Purchase Price as of December 31, 2002, based on the
Preferred Stock as constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such term is defined
in the Rights Agreement) that a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.

         From and after the first occurrence of a Triggering Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by or transferred to (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the

                                      B-1

<PAGE>

Rights Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, such Rights shall, with certain exceptions, become null and
void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.

         As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities or assets that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.

         This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Fractional Shares of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right, payable, at the election of the Company, in
cash or shares of Common Stock or such other consideration as the Board of
Directors may determine, at any time prior to the earlier of the close of
business on (a) the tenth day following the first public announcement of the
occurrence of a Flip-In Event (as such time period may be extended or shortened
pursuant to the Rights Agreement) and (b) the Expiration Date (as such term is
defined in the Rights Agreement) or (ii) may be exchanged in whole or in part
for shares of Common Stock and/or other equity securities of the Company deemed
to have the same value as shares of Common Stock, at any time prior to a
person's becoming the beneficial owner of 50% or more of the shares of Common
Stock outstanding or the occurrence of a Flip-Over Event.

         No fractional shares of Preferred Stock are required to be issued upon
the exercise of any Right or Rights evidenced hereby (other than, except as set
forth above, fractions that are integral multiples of a Fractional Share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.

                                      B-2

<PAGE>

         No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company that may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.

         This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

         WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.

Dated as of January 15, 2003

ATTEST:                                       IMPERIAL SUGAR COMPANY

____________________________________          By:_______________________________
Secretary                                        Title:

Countersigned:

THE BANK OF NEW YORK

By__________________________________
  Authorized Signature

                                      B-3

<PAGE>

                  [Form of Reverse Side of Rights Certificate]

                               FORM OF ASSIGNMENT

         (To be executed by the registered holder if such holder desires
          to transfer any Rights evidenced by the Rights Certificate.)

FOR VALUE RECEIVED _______________________________________________ hereby sells,
assigns and transfers unto______________________________________________________
________________________________________________________________________________
                  (Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the said Rights on the books of the
within-named Company, with full power of substitution.

Dated: _________________, 200__

                                            ____________________________________
                                            Signature

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).

                                      B-4

<PAGE>

                                   Certificate

    The undersigned hereby certifies by checking the appropriate boxes that:

    (1)    the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);

    (2)    after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.

Dated: _____________, 200__         ____________________________________________
                                    Signature

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).

                                     NOTICE

    The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.

                                      B-5

<PAGE>

                          FORM OF ELECTION TO PURCHASE

                  (To be executed if holder desires to exercise
                 Rights represented by the Rights Certificate.)

To:  IMPERIAL SUGAR COMPANY

         The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares (or other securities) be
issued in the name of and delivered to:

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

         If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

Dated: ____________, 200__                 _____________________________________
                                           Signature

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).

                                      B-6

<PAGE>

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

         (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);

         (2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or who is a direct or indirect transferee of an
Acquiring Person or of an Affiliate or Associate of an Acquiring Person.

Dated: _____________, 200__         ____________________________________________
                                    Signature

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).

                                     NOTICE

         The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.

                                      B-7

<PAGE>

                                                                       Exhibit C

Under certain circumstances set forth in the Rights Agreement, Rights
beneficially owned by or transferred to any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement), and certain transferees thereof, will become null and
void and will no longer be transferable.

                                SUMMARY OF RIGHTS

           Effective as of December 31, 2002, the Board of Directors of Imperial
Sugar Company (the "Company") declared a dividend of one right ("Right") for
each outstanding share of the Company's Common Stock, without par value ("Common
Stock"), to shareholders of record at the close of business on January 15, 2003.
Each Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundredth of a share (a "Fractional Share") of Series A
Junior Participating Preferred Stock, without par value (the " Preferred Stock"
), at a purchase price of $31.89 per Fractional Share, subject to adjustment
(the "Purchase Price"). The description and terms of the Rights are set forth in
a Rights Agreement dated as of December 31, 2002 as it may from time to time be
supplemented or amended (the "Rights Agreement") between the Company and The
Bank of New York, as Rights Agent.

           Initially, the Rights will be attached to all certificates
representing outstanding shares of Common Stock, and no separate certificates
for the Rights ("Rights Certificates") will be distributed. The Rights will
separate from the Common Stock and a "Distribution Date" will occur, with
certain exceptions, upon the earlier of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the date of
the announcement being the "Stock Acquisition Date"), or (ii) ten business days
following the commencement of a tender offer or exchange offer that would result
in a person's becoming an Acquiring Person. Lehman Brothers Inc. and certain
related persons will not be an Acquiring Person unless and until an increase in
its beneficial ownership equal to 10% of the shares of Common Stock beneficially
owned as of the date of the Rights Agreement occurs or is deemed to occur. In
addition, if at the time of the adoption of the Rights Agreement, any other
person or group of affiliated or associated persons is the beneficial owner of
15% or more of the outstanding shares of Common Stock, such person shall not
become an Acquiring Person unless and until an increase in such person's
beneficial ownership equal to 10% of the shares of Common Stock beneficially
owned as of the date of the Rights Agreement occurs or is deemed to occur. In
certain circumstances, the Distribution Date may be deferred by the Board of
Directors. Certain inadvertent acquisitions will not result in a person's
becoming an Acquiring Person if the person promptly divests itself of sufficient
Common Stock. Until the Distribution Date, (a) the Rights will be evidenced by
the Common Stock certificates (together with a copy of this Summary of Rights or
bearing the notation referred to below) and will be transferred with and only
with such Common Stock certificates, (b) new Common Stock certificates issued
after January 15, 2003 will contain a notation incorporating the Rights
Agreement by reference and (c) the surrender for transfer of any certificate for
Common Stock (with or without a copy of this Summary of Rights) will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.

                                       C-1

<PAGE>

           The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 31, 2012, unless earlier redeemed or
exchanged by the Company as described below.

           As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Common Stock as of the close
of business on the Distribution Date and, from and after the Distribution Date,
the separate Rights Certificates alone will represent the Rights. All shares of
Common Stock issued prior to the Distribution Date will be issued with Rights.
Shares of Common Stock issued after the Distribution Date in connection with
certain employee benefit plans or upon conversion of certain securities will be
issued with Rights. Except as otherwise determined by the Board of Directors, no
other shares of Common Stock issued after the Distribution Date will be issued
with Rights.

           In the event (a "Flip-In Event") that a person becomes an Acquiring
Person (except pursuant to a Permitted Offer, as described below), each holder
of a Right will thereafter have the right to receive, upon exercise of such
Right, a number of shares of Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a Current Market Price (as
defined in the Rights Agreement) equal to two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence of any Triggering
Event, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by or transferred to an Acquiring
Person (or by certain related parties) will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below. A "Permitted
Offer" is a tender offer or an exchange offer that (i) offers to purchase all
outstanding shares of Common Stock, (ii) remains open for at least 35 Business
Days, (iii) results in the bidder, together with its Affiliates and Associates,
owning at least 85% of the outstanding Common Stock upon completion of the
offer, (iii) provides for a "subsequent offering period" as permitted by the
tender offer rules of at least five business days, and (v) contains a commitment
by the bidder to promptly propose (if necessary) and use its best efforts to
consummate a merger of the Company with the bidder (or a subsidiary thereof) in
which each share of Common Stock not then owned by the bidder (or any subsidiary
thereof) will be converted into the same form and amount of consideration per
share as that paid in such offer.

           In the event (a "Flip-Over Event") that, at any time from and after
the time an Acquiring Person becomes such, (i) the Company is acquired in a
merger or other business combination transaction (other than certain mergers
that follow a Permitted Offer), or (ii) 50% or more of the Company's assets,
cash flow or earning power is sold or transferred, each holder of a Right
(except Rights that are voided as set forth above) shall thereafter have the
right to receive, upon exercise, a number of shares of common stock of the
acquiring company having a Current Market Price equal to two times the exercise
price of the Right. Flip-In Events and Flip-Over Events are collectively
referred to as "Triggering Events."

           The number of outstanding Rights associated with a share of Common
Stock, or the number of Fractional Shares of Preferred Stock issuable upon
exercise of a Right and the Purchase Price, are subject to adjustment in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Stock occurring prior to the Distribution Date.

                                       C-2

<PAGE>

The Purchase Price payable, and the number of Fractional Shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution in the event of
certain transactions affecting the Preferred Stock.

           With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock that are not integral multiples
of a Fractional Share are required to be issued upon exercise of Rights and, in
lieu thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise. Pursuant
to the Rights Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock will be issued.

           At any time until ten days following the first date of public
announcement of the occurrence of a Flip-In Event, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, payable, at the
option of the Company, in cash, shares of Common Stock or such other
consideration as the Board of Directors may determine. Immediately upon the
effectiveness of the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.01 redemption price.

           At any time after the occurrence of a Flip-In Event and prior to a
person's becoming the beneficial owner of 50% or more of the shares of Common
Stock then outstanding or the occurrence of a Flip-Over Event, the Company may
exchange the Rights (other than Rights owned by an Acquiring Person or an
affiliate or an associate of an Acquiring Person, which will have become void),
in whole or in part, at an exchange ratio of one share of Common Stock, and/or
other equity securities deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.

           Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights should not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.

           Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company as long as the
Rights are redeemable. Thereafter, the provisions of the Rights Agreement other
than the redemption price may be amended by the Board of Directors in order to
cure any ambiguity, defect or inconsistency, to make changes that do not
materially adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to lengthen the
time period governing redemption shall be made at such time as the Rights are
not redeemable.

                                       C-3

<PAGE>

           A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.

                                       C-4<PAGE>

                                                                    Exhibit 4(b)

                                CREDIT AGREEMENT

                          Dated as of December 31, 2002

                                      among

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,
                                 as the Lenders,

                             BANK OF AMERICA, N.A.,
                          as the Administrative Agent,

                                       and

                             IMPERIAL SUGAR COMPANY
                                       and
                    CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
                                as the Borrowers

                         BANC OF AMERICA SECURITIES LLC,
                      as Co-Lead Arranger and Book Manager
                                       and
                      GENERAL ELECTRIC CAPITAL CORPORATION,
                    as Co-Lead Arranger and Syndication Agent

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                        <C>
ARTICLE 1. LOANS AND LETTERS OF CREDIT ......................................................   1
       Section 1.1   Total Facility .........................................................   1
       Section 1.2   Revolving Loans. .......................................................   1
       Section 1.3   Term Loans. ............................................................   5
       Section 1.4   Letters of Credit. .....................................................   6
       Section 1.5   Bank Products ..........................................................  10

ARTICLE 2. INTEREST AND FEES ................................................................  10
       Section 2.1   Interest. ..............................................................  10
       Section 2.2   Continuation and Conversion Elections. .................................  11
       Section 2.3   Maximum Interest Rate ..................................................  12
       Section 2.4   Unused Line Fee ........................................................  14
       Section 2.5   Letter of Credit Fee ...................................................  14
       Section 2.6   Other Fees .............................................................  14

ARTICLE 3. PAYMENTS AND PREPAYMENTS .........................................................  15
       Section 3.1   Revolving Loans ........................................................  15
       Section 3.2   Termination of Total Facility ..........................................  15
       Section 3.3   Repayment of the Term Loans ............................................  16
       Section 3.4   Prepayments of the Loans. ..............................................  16
       Section 3.5   LIBOR Rate Loan Prepayments ............................................  18
       Section 3.6   Payments by the Borrowers. .............................................  18
       Section 3.7   Payments as Revolving Loans ............................................  18
       Section 3.8   Apportionment, Application, and Reversal of Payments ...................  18
       Section 3.9   Indemnity for Returned Payments ........................................  19
       Section 3.10  The Agent's and the Lenders' Books and Records; Monthly Statements .....  19

ARTICLE 4. TAXES, YIELD PROTECTION, AND ILLEGALITY ..........................................  20
       Section 4.1   Taxes. .................................................................  20
       Section 4.2   Illegality. ............................................................  21
       Section 4.3   Increased Costs and Reduction of Return. ...............................  21
       Section 4.4   Funding Losses .........................................................  22
       Section 4.5   Inability to Determine Rates ...........................................  22
       Section 4.6   Certificates of the Lenders ............................................  22
       Section 4.7   Survival ...............................................................  23

ARTICLE 5. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES ................................  23
       Section 5.1   Books and Records ......................................................  23
       Section 5.2   Financial Information, Etc .............................................  23
       Section 5.3   Notices to the Lender ..................................................  29

ARTICLE 6. GENERAL WARRANTIES AND REPRESENTATIONS ..........................................   32
       Section 6.1   Authorization, Validity, and Enforceability of this Agreement
                     and the other Loan Documents; No Conflicts .............................  32
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                               <C>
       Section 6.2  Validity and Priority of Security Interest...............................       32
       Section 6.3  Organization and Qualification...........................................       32
       Section 6.4  Corporate Name; Prior Transactions.......................................       33
       Section 6.5  Capitalization and Subsidiaries..........................................       33
       Section 6.6  Financial Statements and Projections.....................................       33
       Section 6.7  Solvency.................................................................       34
       Section 6.8  Debt.....................................................................       34
       Section 6.9  Distributions............................................................       34
       Section 6.10  Real Estate; Leases.....................................................       34
       Section 6.11  Proprietary Rights......................................................       34
       Section 6.12  Trade Names.............................................................       35
       Section 6.13  Litigation..............................................................       35
       Section 6.14  Labor Disputes..........................................................       35
       Section 6.15  Environmental Laws......................................................       35
       Section 6.16  No Violation of Law.....................................................       36
       Section 6.17  No Default..............................................................       36
       Section 6.18  ERISA Compliance........................................................       37
       Section 6.19  Taxes...................................................................       37
       Section 6.20  Regulated Entities......................................................       37
       Section 6.21  Use of Proceeds; Margin Regulations.....................................       38
       Section 6.22  Copyrights, Patents, Trademarks, Licenses, etc..........................       38
       Section 6.23  No Material Adverse Change..............................................       38
       Section 6.24  Full Disclosure.........................................................       38
       Section 6.25  Material Agreements.....................................................       38
       Section 6.26  Bank Accounts...........................................................       38
       Section 6.27  Governmental Authorization..............................................       38
       Section 6.28  Investment Property.....................................................       39
       Section 6.29  Common Enterprise.......................................................       39
       Section 6.30  Affiliate Transactions..................................................       39
       Section 6.31  Notices from Farm Products Sellers, etc.................................       40

ARTICLE 7. AFFIRMATIVE AND NEGATIVE COVENANTS................................................       40
       Section 7.1  Taxes and Other Obligations..............................................       40
       Section 7.2  Legal Existence and Good Standing........................................       41
       Section 7.3  Compliance with Law and Agreements; Maintenance of Licenses..............       41
       Section 7.4  Maintenance of Property; Inspection of Property..........................       42
       Section 7.5  Insurance................................................................       42
       Section 7.6  Insurance and Condemnation Proceeds......................................       43
       Section 7.7  Environmental Laws.......................................................       45
       Section 7.8  Compliance with ERISA....................................................       46
       Section 7.9  Mergers, Consolidations, or Sales........................................       46
       Section 7.10  Distributions; Capital Change; Restricted Investments...................       48
       Section 7.11  Transactions Resulting in a Material Adverse Effect.....................       48
       Section 7.12  Guaranties..............................................................       48
       Section 7.13  Debt....................................................................       48
       Section 7.14  Prepayment..............................................................       50
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                       <C>
     Section 7.15  Transactions with Affiliates .......................................................   50
     Section 7.16  [Intentionally Omitted.] ...........................................................   50
     Section 7.17  Business Conducted .................................................................   50
     Section 7.18  Liens ..............................................................................   50
     Section 7.19  Sale and Leaseback Transactions ....................................................   51
     Section 7.20  New Subsidiaries; Addition of Subsidiaries as Borrowers or Guarantors. .............   51
     Section 7.21  Fiscal Year ........................................................................   52
     Section 7.22  EBITDA. ............................................................................   52
     Section 7.23  Fixed Charge Coverage Ratio ........................................................   52
     Section 7.24  Use of Proceeds ....................................................................   53
     Section 7.25  Solvency ...........................................................................   53
     Section 7.26  Guaranties of the Obligations; Co-Borrowers. .......................................   53
     Section 7.27  Landlord and Mortgagee Agreements ..................................................   53
     Section 7.28  Additional Collateral; Further Assurances. .........................................   54
     Section 7.29  Agricultural Products. .............................................................   55

ARTICLE 8.  CONDITIONS OF LENDING .....................................................................   56
     Section 8.1   Conditions Precedent to Making of Loans on the Closing Date ........................   56
     Section 8.2   Conditions Precedent to Each Loan ..................................................   61

ARTICLE 9.  DEFAULT; REMEDIES .........................................................................   62
     Section 9.1   Events of Default ..................................................................   62
     Section 9.2   Remedies. ..........................................................................   64

ARTICLE 10. TERM AND TERMINATION ......................................................................   66
     Section 10.1  Term and Termination ...............................................................   66

ARTICLE 11. AMENDMENTS; WAIVERS; PARTICIPATIONS;
            ASSIGNMENTS; SUCCESSORS ...................................................................   66
     Section 11.1  Amendments and Waivers. ............................................................   66
     Section 11.2  Assignments; Participations. .......................................................   69

ARTICLE 12. THE AGENT .................................................................................   71
     Section 12.1  Appointment and Authorization ......................................................   71
     Section 12.2  Delegation of Duties ...............................................................   71
     Section 12.3  Liability of the Agent .............................................................   71
     Section 12.4  Reliance by the Agent ..............................................................   72
     Section 12.5  Notice of Default ..................................................................   72
     Section 12.6  Credit Decision ....................................................................   72
     Section 12.7  Indemnification ....................................................................   73
     Section 12.8  The Agent in Individual Capacity ...................................................   73
     Section 12.9  Successor Agent ....................................................................   73
     Section 12.10 Withholding Tax. ...................................................................   74
     Section 12.11 Collateral Matters. ................................................................   75
     Section 12.12 Restrictions on Actions by the Lenders; Sharing of Payments. .......................   76
     Section 12.13 Agency for Perfection ..............................................................   77
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                   <C>
     Section 12.14 Payments by the Agent to the Lenders ...........................................   77
     Section 12.15 Settlement. ....................................................................   77
     Section 12.16 Letters of Credit; Intra-Lender Issues. ........................................   81
     Section 12.17 Concerning the Collateral and the Related Loan Documents .......................   83
     Section 12.18 Field Audit and Examination Reports; Disclaimer by the Lenders .................   83
     Section 12.19 Relation Among the Lenders .....................................................   84
     Section 12.20 Co-Lead Arrangers, Book Manager and Syndication Agent ..........................   84

ARTICLE 13. MISCELLANEOUS .........................................................................   84
     Section 13.1  No Waivers; Cumulative Remedies ................................................   84
     Section 13.2  Severability ...................................................................   84
     Section 13.3  Governing Law; Choice of Forum; Service of Process .............................   84
     Section 13.4  Waiver of Jury Trial ...........................................................   85
     Section 13.5  Survival of Representations and Warranties .....................................   86
     Section 13.6  Other Security and Guaranties ..................................................   86
     Section 13.7  Fees and Expenses ..............................................................   86
     Section 13.8  Notices ........................................................................   87
     Section 13.9  Waiver of Notices ..............................................................   88
     Section 13.10 Binding Effect .................................................................   88
     Section 13.11 Indemnity of the Agent and the Lenders by the Borrowers. .......................   88
     Section 13.12 Limitation of Liability ........................................................   89
     Section 13.13 Final Agreement ................................................................   90
     Section 13.14 Counterparts ...................................................................   90
     Section 13.15 Captions .......................................................................   90
     Section 13.16 Right of Setoff ................................................................   90
     Section 13.17 Confidentiality. ...............................................................   91
     Section 13.18 Conflicts with other Loan Documents ............................................   92
     Section 13.19 Joint and Several Liability ....................................................   92
     Section 13.20 Contribution and Indemnification among the Borrowers ...........................   93
     Section 13.21 Agency of the Parent for each Other Obligated Party ............................   93
     Section 13.22 Additional Borrowers ...........................................................   94
     Section 13.23 Express Waivers By the Obligated Parties in Respect of Cross Guaranties
                   and Cross Collateralization ....................................................   94
     Section 13.24 Common Enterprise ..............................................................   95
     Section 13.25 Certificates of Responsible Officers ...........................................   96
     Section 13.26 Subordination of Intercompany Indebtedness and Liens ...........................   96
</TABLE>

                                       iv

<PAGE>

                          LIST OF EXHIBITS & SCHEDULES

EXHIBITS

Exhibit A     -  Form of Revolving Loans Note
Exhibit B     -  Form of Notice of Borrowing
Exhibit C     -  Form of Term Loans Note
Exhibit D     -  Form of Notice of Continuation/Conversion
Exhibit E     -  Form of Compliance Certificate
Exhibit F     -  Form of Assignment and Acceptance
Exhibit G     -  Form of Borrowing Base Certificate
Exhibit H     -  Dreyfus Letter Agreement

SCHEDULES

Schedule 1.2  -  Revolving Loan Commitments
Schedule 1.3  -  Term Loans Commitments
Schedule 6.3  -  Jurisdictions of Organizations, etc., and Foreign Qualification
Schedule 6.4  -  Prior Names
Schedule 6.5  -  Capitalization; Subsidiaries
Schedule 6.8  -  Debt
Schedule 6.10 -  Real Estate; Leases
Schedule 6.11 -  Proprietary Rights
Schedule 6.12 -  Trade Names
Schedule 6.13 -  Litigation, etc.
Schedule 6.14 -  Labor Disputes
Schedule 6.15 -  Environmental Matters
Schedule 6.18 -  ERISA
Schedule 6.19 -  Taxes
Schedule 6.25 -  Material Agreements
Schedule 6.26 -  Bank Accounts
Schedule 6.28 -  Investment Property
Schedule 6.30 -  Affiliate Transactions
Schedule 7.2  -  Certain Subsidiaries
Schedule A    -  Permitted Liens
Schedule B    -  Unappraised Assets

                                      v

<PAGE>

                                CREDIT AGREEMENT

     This Credit Agreement dated as of December 31, 2002 ("Agreement") is by and
among the financial institutions from time to time parties hereto (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), Bank of America, N.A., with an office at 55 South Lake Avenue,
Suite 900, Pasadena, California 91101, as administrative agent for the Lenders
(in its capacity as administrative agent, the "Agent"), and Imperial Sugar
Company, a Texas corporation, and each of its Subsidiaries party hereto.

                                    RECITALS:

     A. Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein. The rules of construction contained in Annex A
shall govern the interpretation of this Agreement, and all Annexes, Exhibits,
and Schedules attached hereto are incorporated herein by reference.

     B. The Obligated Parties have requested the Lenders to make available to
the Borrowers (a) a revolving credit facility for loans and letters of credit in
the maximum, aggregate principal or face amount of $140,000,000, and (b) term
loans in an aggregate amount equal to the Term Loans Amount, which extensions of
credit the Borrowers will use for the purposes permitted by Section 7.24.

     C. The Lenders have agreed to make available to the Borrowers a revolving
credit facility and term loans upon the terms and conditions set forth in this
Agreement.

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrowers hereby agree as follows.

                                   ARTICLE 1.
                           LOANS AND LETTERS OF CREDIT

     Section 1.1 Total Facility. Subject to all of the terms and conditions of
this Agreement, the Lenders agree to make available a total credit facility of
up to $175,000,000 (the "Total Facility") for use by any one or more of the
Borrowers from time to time during the term of this Agreement. The Total
Facility shall be composed of a revolving line of credit, consisting of
Revolving Loans and Letters of Credit, and the Term Loans, as described in
Section 1.2, Section 1.3, and Section 1.4.

     Section 1.2 Revolving Loans.

          (a)  Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 8, each Lender severally, but not jointly, agrees, upon a
Borrower's request from time

                                        1

<PAGE>

to time on any Business Day during the period from the Closing Date to the
Termination Date, to make revolving loans (including revolving loans made
pursuant to Section 1.2(h) and Non-Ratable Loans and Agent Advances made
pursuant to Section 1.2(i) and Section 1.2(j), respectively, the "Revolving
Loans") to the Borrowers in amounts not to exceed such Lender's Pro Rata Share,
based upon its Revolving Loans Commitment, of the Availability, except for
Non-Ratable Loans and Agent Advances. The Lenders, however, in their unanimous
discretion, may elect to make Revolving Loans or issue or arrange to have issued
Letters of Credit in excess of the Availability or the Borrowing Base on one or
more occasions, but, if they do so, neither the Agent nor the Lenders shall be
deemed thereby to have changed the limits of the Availability or the Borrowing
Base or to be obligated to exceed such limits on any other occasion. If the
Aggregate Revolver Outstandings would exceed Availability after giving effect to
any Borrowing, then the Lenders may refuse to make or may otherwise restrict the
making of Revolving Loans and the issuance of Letters of Credit as the Lenders
determine until such excess has been eliminated, subject to the Agent's
authority, in its sole discretion, to make Agent Advances pursuant to the terms
of Section 1.2(j).

          (b)  Revolving Loans Notes. The Borrowers shall execute and deliver to
each Lender a promissory note to evidence the Revolving Loans of that Lender
(each a "Revolving Loans Note" and, collectively, the "Revolving Loans Notes").
Each Revolving Loans Note shall be in the principal amount of the applicable
Lender's Pro Rata Share of the Revolving Loans Commitments, dated as of the
Closing Date or the date of any assignment of a portion of another Lender's
Revolving Loans or Revolving Loans Commitments to such Lender, and substantially
in the form of Exhibit A. Each Revolving Loans Note shall represent the
obligation of the Borrowers to pay the amount of the applicable Lender's Pro
Rata Share of the Revolving Loans Commitments, or, if less, such Lender's Pro
Rata Share of the aggregate unpaid principal amount of all Revolving Loans made
to the Borrowers together with interest thereon as prescribed in this Agreement.
The entire unpaid balance of the Revolving Loans and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Termination Date.

          (c)  Procedure for Borrowing.

               (i) Each Borrowing of Revolving Loans shall be made upon a
     Borrower's irrevocable written notice delivered to the Agent in the form of
     a notice of borrowing in the form attached hereto as Exhibit B (a "Notice
     of Borrowing"), which must be received by the Agent prior to 10:00 a.m.
     (Los Angeles, California time) (y) three (3) Business Days prior to the
     requested Funding Date, in the case of LIBOR Rate Revolving Loans, and (z)
     on the requested Funding Date, in the case of Base Rate Revolving Loans,
     specifying:

                   (A) the amount of the Borrowing, which in the case of LIBOR
          Rate Revolving Loans shall be in an amount that is not less than
          $5,000,000 or an integral multiple of $1,000,000 in excess thereof;

                   (B) the requested Funding Date, which shall be a Business
          Day;

                   (C) whether the Revolving Loans requested are to be Base Rate

                                        2

<PAGE>

          Revolving Loans or LIBOR Rate Revolving Loans; provided that if such
          Borrower fails to specify whether any Revolving Loans are to be Base
          Rate Revolving Loans or LIBOR Rate Revolving Loans, such request shall
          be deemed a request for Base Rate Revolving Loans; and

                    (D) the duration of the Interest Period if the requested
          Revolving Loans are to be LIBOR Rate Revolving Loans; provided that if
          such Borrower fails to select the duration of the Interest Period with
          respect to any requested LIBOR Rate Revolving Loans, such Borrower
          shall be deemed to have requested such Revolving Loans be made as
          LIBOR Rate Revolving Loans with an Interest Period of one month in
          duration;

          provided, however, that with respect to the Borrowing to be made on
          the Closing Date, such Borrowing will consist of Base Rate Revolving
          Loans only.

              (ii)  With respect to any request for Base Rate Revolving Loans,
     in lieu of delivering a Notice of Borrowing, a Borrower may give the Agent
     telephonic notice of such request for advances to the Designated Account
     not later than the required time specified in clause (i) preceding. The
     Agent at all times shall be entitled to rely on such telephonic notice in
     making any such Revolving Loans, regardless of whether any written
     confirmation is received by the Agent.

              (iii) The Borrowers shall have no right to request any LIBOR Rate
     Revolving Loans while a Default or an Event of Default has occurred and is
     continuing.

          (d) Disbursement. The Borrowers shall deliver to the Agent, prior to
the Closing Date, a notice setting forth the deposit account of the Borrowers
(the "Designated Account") to which the Agent is authorized by the Borrowers to
transfer the proceeds of the Revolving Loans requested hereunder. The Borrowers
may designate a replacement Designated Account from time to time by written
notice to the Agent. Any designation by the Borrowers of the Designated Account
must be reasonably acceptable to the Agent.

          (e) Reliance Upon Authority; No Liability. The Agent is entitled to
rely conclusively on any individual's request for Revolving Loans on behalf of a
Borrower, so long as the proceeds thereof are to be transferred to the
Designated Account. The Agent shall have no duty to verify the identity of any
individual representing himself or herself as a person authorized by any
Borrower to make such requests on its behalf. The Agent shall not incur any
liability to the Borrowers as a result of acting upon any notice referred to in
Section 1.2(c) or Section 1.2(d), which the Agent believes in good faith to have
been given by an officer or other person duly authorized by a Borrower to
request Revolving Loans on its behalf or for otherwise acting under this Section
1.2. The crediting of Revolving Loans to the Designated Account shall
conclusively establish the obligation of the Borrowers to repay such Revolving
Loans as provided herein.

          (f) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to Section 1.2(c) shall be irrevocable. The
Borrowers shall be bound to borrow the funds requested therein in accordance
therewith.

                                        3

<PAGE>

          (g) The Agent's Election. Subject to the requirements of Section
1.2(i), promptly after receipt of a Notice of Borrowing (or telephonic notice in
lieu thereof) the Agent shall elect in its discretion to have the terms of
Section 1.2(h), Section 1.2(i), or Section 1.2(j) apply to such requested
Borrowing. If the Bank declines in its sole discretion to make a Non-Ratable
Loan pursuant to Section 1.2(i) or an Agent Advance pursuant to Section 1.2(j),
the terms of Section 1.2(h) shall apply to the requested Borrowing.

          (h) Making of Revolving Loans. If the Agent elects to have the terms
of this Section 1.2(h) apply to a requested Borrowing or if the requested
Borrowing is for LIBOR Rate Revolving Loans, then promptly after receipt of a
Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall notify
the Lenders by telecopy, telephone, or e-mail of the requested Borrowing.
Subject to Section 12.15, each Lender shall transfer its Pro Rata Share, based
upon its Revolving Loans Commitment, of the requested Borrowing to the Agent in
immediately available funds, to the account from time to time designated by the
Agent, not later than 12:00 noon (Los Angeles, California time) on the
applicable Funding Date. After the Agent's receipt of all proceeds of such
requested Borrowing, the Agent shall make the proceeds of such requested
Borrowing available to the applicable Borrower on the applicable Funding Date by
transferring same day funds to the Designated Account; provided, however, that
the amount of Revolving Loans so made on any date shall not exceed the
Availability on such date.

          (i) Making of Non-Ratable Loans. Subject to Section 1.2(g), if the
Agent elects, with the consent of the Bank, to have the terms of this Section
1.2(i) apply to a requested Borrowing, the Bank shall make a Revolving Loan in
the amount of such requested Borrowing available to the Borrowers on the
applicable Funding Date by transferring same day funds to the Designated
Account. Each Revolving Loan made solely by the Bank pursuant to this Section
1.2(i) is herein referred to as a "Non-Ratable Loan," and such Revolving Loans
are collectively referred to as the "Non-Ratable Loans." Each Non-Ratable Loan
shall be subject to all the terms and conditions applicable to other Revolving
Loans except that all payments thereon shall be payable to the Bank solely for
its own account. The aggregate amount of Non-Ratable Loans outstanding at any
time shall not exceed $15,000,000. The Agent shall not request the Bank to make
any Non-Ratable Loan if (A) the Agent has received written notice from any
Lender (including the Bank) that one or more of the applicable conditions
precedent set forth in Article 8 will not be satisfied on the requested Funding
Date for the applicable Borrowing, or (B) the requested Borrowing would exceed
the Availability on the applicable Funding Date. The Non-Ratable Loans shall be
secured by the Agent's Liens in and to the Collateral and shall constitute Base
Rate Revolving Loans and Obligations hereunder.

          (j) Agent Advances. Subject to Section 1.2(g) and the limitations set
forth below, the Agent is authorized by the Borrowers and the Lenders, from time
to time in the Agent's sole discretion, (a) after the occurrence of a Default or
an Event of Default, or (b) at any time that any of the other conditions
precedent set forth in Article 8 have not been satisfied, to make Base Rate
Revolving Loans to the Borrowers or any Borrower on behalf of the Lenders in an
aggregate amount outstanding at any time not to exceed ten percent (10%) of the
Borrowing Base which the Agent, in its reasonable business judgment, deems
necessary or desirable (1) to preserve or protect the Collateral, or any portion
thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (3) to pay any other amount chargeable to
the Borrowers pursuant to the terms of this Agreement, including costs,

                                       4

<PAGE>

fees, and expenses as described in Section 13.7 (any of such advances are herein
referred to as "Agent Advances"); provided that the Required Lenders may at any
time revoke the Agent's authorization to make Agent Advances. Any such
revocation must be in writing and shall become effective prospectively upon the
Agent's receipt thereof. Absent such revocation, the Agent's determination that
the making of an Agent Advance is required for any such purposes shall be
conclusive. The Agent Advances shall be secured by the Agent's Liens in and to
the Collateral and shall constitute Base Rate Revolving Loans and Obligations
hereunder.

     Section 1.3 Term Loans.

          (a)  Amount of Term Loans. Each Lender severally agrees to make a term
loan in an aggregate amount equal to such Lender's Pro Rata Share, based upon
its Term Loans Commitment, of the Term Loans Amount (any such Term Loan being
referred to as a "Term Loan" and such term loans being referred to collectively
as the "Term Loans") to the Borrowers on the Closing Date, upon the satisfaction
of the conditions precedent set forth in Article 8. The Term Loans made on the
Closing Date will consist of Base Rate Term Loans only.

          (b)  Making of Term Loans. Each Lender shall make the amount of such
Lender's Term Loans available to the Agent in same day funds, to the Agent's
designated account, not later than 11:00 a.m. (Los Angeles, California time) on
the Closing Date. After the Agent's receipt of the proceeds of the Term Loans,
upon satisfaction of the conditions precedent set forth in Article 8, the Agent
shall make the proceeds of the Term Loans received by the Agent available to the
Borrowers (i) by transferring same day funds to the Designated Account or (ii)
as the Borrowers may otherwise instruct in writing.

          (c)  Term Loans Notes. The Borrower shall execute and deliver to the
Agent on behalf of each Lender, on the Closing Date, a promissory note,
substantially in the form of Exhibit C attached hereto and made a part hereof
(such promissory notes, together with any new notes issued pursuant to Section
11.2 upon the assignment of any portion of any Lender's Term Loan, being
hereinafter referred to collectively as the "Term Loans Notes" and each of such
promissory notes being hereinafter referred to individually as a "Term Loans
Note"). The Term Loans Notes shall evidence each Lender's Term Loan, in an
original principal amount equal to that Lender's Pro Rata Share, based upon its
Term Loans Commitment, of the Term Loans Amount and with other appropriate
insertions. Each Term Loans Note shall be dated the Closing Date and stated to
amortize in thirty-six (36) monthly installments. Each of the first thirty-five
(35) installments of principal shall be in an amount equal to such Lender's Pro
Rata Share of $583,333.33 and shall be payable on the first day of each month,
commencing on February 1, 2003 and ending on December 1, 2005. The final
installment of principal shall be in the amount of $14,583,333.45 or otherwise
in an amount equal to each Lender's Pro Rata Share, based upon its Term Loans
Commitment, of the then remaining principal balance of the Term Loans, and shall
be payable on the Stated Termination Date. Each such installment shall be
payable to the Agent for the account of the applicable Lender. The Term Loans
shall be payable in full on the Termination Date. Payments or prepayments of the
Term Loans may not be reborrowed.

                                       5

<PAGE>

         Section 1.4 Letters of Credit.

               (a) Agreement to Issue or Cause to Issue. Subject to the terms
and conditions of this Agreement, the Agent agrees (i) to cause a Letter of
Credit Issuer to issue for the account of any of the Borrowers (whether one or
more) in support of an obligation of any Borrower, subject to the limitation in
the definition of Letter of Credit Subfacility, one or more
commercial/documentary and standby letters of credit (each a "Letter of Credit"
and collectively, the "Letters of Credit"); provided, however, that each Letter
of Credit shall be in such form and substance as complies with all requirements
of such Letter of Credit Issuer and shall also be in form and substance
reasonably satisfactory to the Agent.

               (b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to issue or cause to be issued any Letter of Credit at any time
if: (i) the maximum face amount of the requested Letter of Credit is greater
than the Unused Letter of Credit Subfacility at such time; (ii) the maximum
undrawn amount of the requested Letter of Credit and all commissions, fees, and
charges due from such Borrower in connection with the opening thereof would
exceed the Availability at such time; or (iii) such Letter of Credit has an
expiration date later than the earlier to occur of (A) thirty (30) days prior to
the Stated Termination Date or (B) twelve (12) calendar months from the date of
issuance for standby letters of credit and six (6) calendar months from the date
of issuance for commercial/documentary letters of credit; provided, however,
that any Letter of Credit may provide for the automatic extension or renewal
thereof in accordance with clause (iii) of Section 1.4(d) for additional
periods, but in no event shall the expiration date as so extended or renewed be
after the date permitted pursuant to clause (iii)(A) of this Section 1.4(b).

               (c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 8, the
obligation of the Agent to cause to be issued any Letter of Credit is subject to
the following conditions precedent having been satisfied in a manner reasonably
satisfactory to the Agent:

                   (i)  the Borrowers shall have delivered to the Letter of
         Credit Issuer, at such times and in such manner as the Letter of Credit
         Issuer may prescribe, an application in form and substance satisfactory
         to the Letter of Credit Issuer and reasonably satisfactory to the Agent
         for the issuance of the Letter of Credit and such other documents as
         may be required pursuant to the terms thereof, and the form, terms, and
         purpose of the proposed Letter of Credit shall be satisfactory to the
         Agent and the Letter of Credit Issuer (provided that in the event any
         term of such application or any other document is inconsistent with the
         terms of this Agreement and the Letter of Credit Issuer is either the
         same Person as the Agent or any Lender, then the terms of this
         Agreement shall be controlling); and

                   (ii) as of the date of issuance, no order of any court,
         arbitrator, or Governmental Authority shall purport by its terms to
         enjoin or restrain money center banks generally from issuing letters of
         credit of the type and in the amount of the proposed Letter of Credit,
         and no law, rule, or regulation applicable to money center banks
         generally and no request or directive (whether or not having the force
         of law) from any Governmental Authority with jurisdiction over money
         center banks generally shall

                                       6

<PAGE>

         prohibit, or request that the proposed Letter of Credit Issuer refrain
         from, the issuance of letters of credit generally or the issuance of
         such proposed Letters of Credit.

               (d) Issuance of Letters of Credit.

                   (i)   Request for Issuance. Any Borrower that wishes to cause
         the issuance of a Letter of Credit must notify the Agent of such
         request for issuance at least three (3) Business Days prior to the
         proposed issuance date. Such notice shall be irrevocable and must
         specify the original face amount of the Letter of Credit requested, the
         Business Day of issuance of such requested Letter of Credit, whether
         such Letter of Credit may be drawn in a single or in partial draws, the
         Business Day on which the requested Letter of Credit is to expire, the
         purpose for which such Letter of Credit is to be issued, and the
         beneficiary of the requested Letter of Credit. The applicable Borrower
         shall attach to such notice the proposed form of the Letter of Credit.

                   (ii)  Responsibilities of the Agent; Issuance. The Agent
         shall determine, as of the Business Day immediately preceding the
         requested issuance date of the Letter of Credit set forth in the notice
         from a Borrower pursuant to Section 1.4(d)(i), (A) the amount of the
         Unused Letter of Credit Subfacility and (B) the Availability as of such
         date. If the face amount of the requested Letter of Credit is not
         greater than the Unused Letter of Credit Subfacility and the amount of
         such requested Letter of Credit and all commissions, fees, and charges
         due from the Borrower in connection with the opening thereof does not
         exceed the Availability, the Agent shall cause the Letter of Credit
         Issuer to issue the requested Letter of Credit on the requested
         issuance date so long as the other conditions hereof are met.

                   (iii) Extensions and Amendments. The Agent shall not be
         obligated to cause the Letter of Credit Issuer to extend or amend any
         Letter of Credit issued pursuant hereto unless the requirements of this
         Section 1.4 are met as though a new Letter of Credit were being
         requested and issued. With respect to any Letter of Credit which
         contains any "evergreen" or automatic renewal provision, each Lender
         shall be deemed to have consented to any such extension or renewal
         unless such Lender shall have provided, to the Agent, written notice
         that such Lender declines to consent to any such extension or renewal
         at least fifteen (15) days prior to the date on which the Letter of
         Credit Issuer is entitled to decline to extend or renew the Letter of
         Credit; provided that, notwithstanding the foregoing, if all of the
         requirements of this Section 1.4 are met and no Default or Event of
         Default has occurred and is continuing, no Lender may decline to
         consent to any such extension or renewal.

               (e) Payments Pursuant to Letters of Credit. The Borrowers agree
to reimburse the Letter of Credit Issuer immediately for any draw under any
Letter of Credit, and to pay the Letter of Credit Issuer the amount of all other
charges and fees payable to the Letter of Credit Issuer under or in connection
with any Letter of Credit immediately when due, irrespective of any claim,
setoff, defense, or other right which any Borrower may have at any time against
the Letter of Credit Issuer or any other Person. Each drawing under any Letter
of Credit shall constitute a request by the Borrower for whose account such
Letter of Credit was issued for a

                                        7

<PAGE>

Borrowing of a Base Rate Revolving Loan in the amount of such drawing or
payment. The Funding Date with respect to such Borrowing shall be the date of
such drawing or payment.

               (f) Indemnification; Exoneration; Power of Attorney.

                   (i)   Indemnification. In addition to amounts payable as
         elsewhere provided in this Section 1.4, each Borrower agrees to
         protect, indemnify, pay, and save the Lenders, the Agent, and the
         Letter of Credit Issuer harmless from and against any and all claims,
         demands, liabilities, damages, losses, costs, charges, and expenses
         (including attorneys' fees) which any Lender, the Agent, or the Letter
         of Credit Issuer may incur or be subject to as a consequence, direct or
         indirect, of the issuance of any Letter of Credit. The Borrowers'
         obligations under this Section 1.4(f) shall survive payment of all
         other Obligations.

                   (ii)  Assumption of Risk by the Borrowers. As among the
         Borrowers, the Lenders, the Agent, and the Letter of Credit Issuer, the
         Borrowers assume all risks of the acts and omissions of, or misuse of
         any of the Letters of Credit by, the respective beneficiaries of such
         Letters of Credit. In furtherance and not in limitation of the
         foregoing, the Lenders, the Agent, and the Letter of Credit Issuer
         shall not be responsible for: (A) the form, validity, sufficiency,
         accuracy, genuineness, or legal effect of any document submitted by any
         Person in connection with the application for and issuance of and
         presentation of drafts with respect to any of the Letters of Credit,
         even if it should prove to be in any or all respects invalid,
         insufficient, inaccurate, fraudulent, or forged; (B) the validity or
         sufficiency of any instrument transferring or assigning or purporting
         to transfer or assign any Letter of Credit or the rights or benefits
         thereunder or proceeds thereof, in whole or in part, which may prove to
         be invalid or ineffective for any reason; (C) the failure of the
         beneficiary of any Letter of Credit to comply duly with conditions
         required in order to draw upon such Letter of Credit; (D) errors,
         omissions, interruptions, or delays in transmission or delivery of any
         messages, by mail, cable, telegraph, telex, or otherwise, whether or
         not they be in cipher; (E) errors in interpretation of technical terms;
         (F) any loss or delay in the transmission or otherwise of any document
         required in order to make a drawing under any Letter of Credit or of
         the proceeds thereof; (G) the misapplication by the beneficiary of any
         Letter of Credit of the proceeds of any drawing under such Letter of
         Credit; (H) any consequences arising from causes beyond the control of
         the Lenders or the Agent, including any act or omission, whether
         rightful or wrongful, of any present or future de jure or de facto
         Governmental Authority; or (I) the Letter of Credit Issuer's honor of a
         draw or payment for which the draw or payment or any certificate fails
         to comply in any respect with the terms of the Letter of Credit
         (except, unless otherwise provided in the applicable letter of credit
         application and/or reimbursement agreement, to the extent that such
         honor constitutes the gross negligence or willful misconduct of the
         Letter of Credit Issuer). None of the foregoing shall affect, impair,
         or prevent the vesting of any rights or powers of the Agent, any
         Lender, or the Letter of Credit Issuer under this Section 1.4(f).

                   (iii) Exoneration. Without limiting the foregoing, no action
         or omission whatsoever by the Agent or any Lender (excluding any Lender
         in its capacity as the Letter of Credit Issuer) under or in connection
         with any of the Letters of Credit or any

                                       8

<PAGE>

         related matters shall result in any liability of the Agent or any
         Lender to any Borrower, or relieve such Borrower of any of its
         obligations hereunder to any such Person.

                   (iv)  Rights Against Letter of Credit Issuer. Nothing
         contained in this Agreement is intended to limit any Borrower's rights,
         if any, with respect to the Letter of Credit Issuer which arise as a
         result of the letter of credit application and related documents
         executed by and between such Borrower and the Letter of Credit Issuer.

                   (v)   Account Party. Each Borrower hereby authorizes and
         directs the Letter of Credit Issuer to name any Borrower as the
         "account party" or other obligated person with respect to any Letter of
         Credit and to deliver to the Agent all instruments, documents, and
         other writings and property received by the Letter of Credit Issuer
         pursuant to each such Letter of Credit, and to accept and rely upon the
         Agent's instructions and agreements with respect to all matters arising
         in connection with each such Letter of Credit or the application
         therefor.

                   (vi)  Power of Attorney. In connection with all Inventory
         financed by any Letter of Credit, each Borrower hereby appoints the
         Agent, or the Agent's designee, as its attorney, with full power and
         authority during the existence of any Event of Default that has not
         been waived in accordance with this Agreement: (A) to sign and/or
         endorse such Borrower's name upon any warehouse or other receipts; (B)
         to sign such Borrower's name on bills of lading and other negotiable
         and non-negotiable documents; (C) to clear Inventory through customs in
         the Agent's or such Borrower's name, and to sign and deliver to customs
         officials powers of attorney in such Borrower's name for such purpose;
         (D) to complete, in such Borrower's or the Agent's name, any order,
         sale, or transaction, obtain the necessary documents in connection
         therewith, and collect the proceeds thereof; and (E) to do such other
         acts and things as are necessary in order to enable the Agent to obtain
         possession or control of such Inventory and to obtain payment of the
         Obligations. Neither the Agent nor its designee, as such Borrower's
         attorney, will be liable for any acts or omissions, nor for any error
         of judgment or mistakes of fact or law other than for gross negligence
         or willful misconduct. This power, being coupled with an interest, is
         irrevocable until all Obligations have been paid and satisfied.

                   (vii) Control of Inventory. In connection with all Inventory
         financed by Letters of Credit, during the existence of any Event of
         Default that has not been waived in accordance with this Agreement the
         Borrowers will, at the Agent's request, instruct all suppliers,
         carriers, forwarders, customs brokers, warehouses, or others receiving
         or holding cash, checks, Inventory, documents, or instruments in which
         the Agent holds a security interest to deliver them to the Agent and/or
         subject to the Agent's order, and if they shall come into any
         Borrower's possession, to deliver them, upon request, to the Agent in
         their original form. During the existence of any Event of Default that
         has not been waived in accordance with this Agreement the Borrowers
         shall also, at the Agent's request, designate the Agent as the
         consignee on all bills of lading and other negotiable and
         non-negotiable documents.

               (g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 1.4(b) and Section 10.1, any Letter of
Credit is outstanding upon the

                                       9

<PAGE>

termination of this Agreement, then upon such termination the Borrowers shall
deposit with the Agent, for the ratable benefit of the Agent and the Lenders,
with respect to each such Letter of Credit then outstanding, as the Agent in its
discretion shall specify, either (i) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent in an amount equal to the greatest amount for
which such Letter of Credit may be drawn or paid plus any fees and expenses
associated with such Letter of Credit, under which Supporting Letter of Credit
the Agent is entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments to be made by the Letter of Credit Issuer, the Agent and/or
the Lenders under such Letter of Credit and any fees and expenses associated
with such Letter of Credit or (ii) cash in an amount necessary to reimburse the
Agent and the Lenders for payments to be made by Letter of Credit Issuer, the
Agent and/or the Lenders under such Letter of Credit and any fees and expenses
associated with such Letter of Credit. Such Supporting Letter of Credit or
deposit of cash shall be held by the Agent, for the ratable benefit of the Agent
and the Lenders, as security for, and to provide for the payment of, the
aggregate undrawn amount of such Letters of Credit remaining outstanding.

         Section 1.5 Bank Products. Any Borrower may request, and the Agent may,
in its sole and absolute discretion, arrange for any Borrower to obtain, Bank
Products from the Bank or any Lender or the Bank's Affiliates or any Lender's
Affiliates although no Borrower is required to do so. To the extent Bank
Products are provided by an Affiliate of the Bank or an Affiliate of a Lender,
the Borrowers agree to indemnify and hold the Agent, the Bank, and the Lenders
harmless from any and all costs and obligations now or hereafter incurred by the
Agent, the Bank, or any of the Lenders which arise from any indemnity given by
the Agent or the Bank to its Affiliates or given by any Lender to its Affiliates
related to such Bank Products; provided, however, nothing contained herein is
intended to limit any Borrower's rights, with respect to the Bank or its
Affiliates or any Lender or its Affiliates, if any, which arise as a result of
the execution of documents by and between such Borrower and the Bank or its
Affiliates or any Lender or its Affiliates which relate to Bank Products. The
agreement contained in this Section shall survive termination of this Agreement.
Each Borrower acknowledges and agrees that the obtaining of Bank Products from
the Bank or the Bank's Affiliates or from any Lender or such Lender's Affiliates
(a) is in the sole and absolute discretion of the Bank or the Bank's Affiliates
or such Lender or such Lender's Affiliates, respectively, and (b) is subject to
all rules and regulations of the Bank or the Bank's Affiliates or such Lender or
such Lender's Affiliates, respectively.

                                   ARTICLE 2.
                                INTEREST AND FEES

         Section 2.1 Interest.

                 (a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on accrued interest thereon not paid when due) from the date
made or incurred until paid in full in cash at a rate determined by reference to
the Base Rate or the LIBOR Rate, as applicable, plus the Applicable Margin as
set forth below, but not to exceed the Maximum Rate. If at any time Loans are
outstanding with respect to which a Borrower has not delivered to the Agent a
notice specifying the basis for determining the interest rate applicable thereto
in accordance herewith, such Loans

                                       10

<PAGE>

shall be Base Rate Loans and bear interest at a rate determined by reference to
the Base Rate until notice to the contrary has been given to the Agent in
accordance with this Agreement and such notice has become effective. Except as
otherwise provided herein, the outstanding Obligations shall bear interest as
follows:

                 (i)   For all Base Rate Revolving Loans, Base Rate Term Loans
     and other Obligations (other than LIBOR Rate Revolving Loans and LIBOR Rate
     Term Loans), at a fluctuating per annum rate equal to the lesser of (A) the
     Base Rate plus the Applicable Margin or (B) the Maximum Rate; and

                 (ii)  For all LIBOR Rate Revolving Loans and all LIBOR Rate
     Term Loans, at a per annum rate equal to the lesser of (A) the LIBOR Rate
     plus the Applicable Margin or (B) the Maximum Rate.

Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) preceding as of the effective date of such change. Subject to
Section 2.3, all interest charges on the Obligations shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365 or 366, as
applicable, day year).

          (b)    Default Rate. During the existence of any Event of Default if
the Agent or the Majority Lenders in their discretion so elect, then, while any
such Event of Default exists, the Obligations shall bear interest at a rate per
annum equal to the lesser of (i) the Default Rate applicable thereto or (ii) the
Maximum Rate.

          (c)    Interest Periods. After giving effect to any Borrowing,
conversion, or continuation of any LIBOR Rate Loans, there may not be more than
five (5) different Interest Periods in effect hereunder.

     Section 2.2 Continuation and Conversion Elections.

          (a)    A Borrower may, upon irrevocable written notice to the Agent in
accordance with Section 2.2(b):

                 (i)   elect, as of any Business Day, in the case of Base Rate
     Loans to convert any such Base Rate Loans (or any part thereof in an amount
     not less than $5,000,000, or that is in an integral multiple of $1,000,000
     in excess thereof) into LIBOR Rate Loans;

                 (ii)  elect, as of any Business Day subject to Section 4.4, in
     the case of LIBOR Rate Loans to convert any such LIBOR Rate Loans into Base
     Rate Loans; or

                 (iii) elect, as of the last day of the applicable Interest
     Period, to continue any LIBOR Rate Loans having Interest Periods expiring
     on such day (or any part thereof in an amount not less than $5,000,000, or
     that is in an integral multiple of $1,000,000, in excess thereof) as LIBOR
     Rate Loans;

                                       11

<PAGE>

provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall, effective
as of the expiration date of the applicable Interest Period, automatically
convert into Base Rate Loans; provided, further, that if the notice shall fail
to specify the duration of the Interest Period of any LIBOR Rate Loan, such
Interest Period shall be one month.

            (b)  The Borrowers shall deliver a notice of continuation/conversion
in the form of Exhibit D (a "Notice of Continuation/Conversion") to the Agent
not later than 11:00 a.m. (Los Angeles, California time) at least three (3)
Business Days in advance of the Continuation/Conversion Date, if the Loans are
to be converted into or continued as LIBOR Rate Loans and specifying:

                 (i)   the proposed Continuation/Conversion Date;

                 (ii)  whether such Notice of Continuation/Conversion relates to
     Revolving Loans and/or Term Loans, the principal amount of each type of
     such Loans to which such notice relates and the aggregate amount of each
     type of such Loans to be converted or continued;

                 (iii) the type of Loans resulting from the proposed conversion
     or continuation; and

                 (iv)  the duration of the requested Interest Period, provided,
     however, the Borrowers may not select an Interest Period that ends after
     the Stated Termination Date.

With respect to any request to convert or continue any Loans, the Borrowers may
give the Agent telephonic notice of such request not later than the required
time specified in this clause (b). The Agent at all times shall be entitled to
rely on such telephonic notice in converting or continuing any such Loans,
regardless of whether any written confirmation is received by the Agent, and the
Agent may at any time refuse to accept any such telephonic notice and require
that the Borrowers provide a written Notice of Continuation/Conversion.

            (c)  If, upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrowers have failed to timely select a new Interest
Period to be applicable to such LIBOR Rate Loans or if any Default or Event of
Default then exists, the Borrowers shall be deemed to have elected to convert
such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.

            (d)  The Agent will promptly notify each Lender of its receipt of a
Notice of Continuation/Conversion. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which such notice was given held by each Lender.

     Section 2.3 Maximum Interest Rate. If the Interest Rate, absent the
limitation set forth in this Section 2.3, would have exceeded the Maximum Rate,
then the Interest Rate shall be the Maximum Rate, and, if in the future the
Interest Rate would otherwise be less than the Maximum

                                       12

<PAGE>

Rate, then the Interest Rate shall remain at the Maximum Rate until such time as
the amount of interest paid hereunder equals the amount of interest which would
have been paid if the same had not been limited by the Maximum Rate. In the
event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section 2.3, have been paid
or accrued if the Interest Rate otherwise set forth in this Agreement had at all
times been in effect, then the Borrowers shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been paid or accrued if the Maximum Rate had, at all times, been in effect or
(ii) the amount of interest which would have been paid or accrued had the
interest rate otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. Each of the Agent, each Lender, and each Borrower acknowledges,
agrees, and declares that it is its intention to expressly comply with all
Requirements of Law in respect of limitations on the amount or rate of interest
that can legally be contracted for, charged, or received under or in connection
with the Loan Documents. Notwithstanding anything to the contrary contained in
any Loan Document (even if any such provision expressly declares that it
controls all other provisions of the Loan Documents), in no contingency or event
whatsoever shall the amount of interest (including the aggregate of all charges,
fees, benefits, or other compensation which constitutes interest under any
Requirement of Law) under the Loan Documents paid by any Borrower, received by
the Agent, the Letter of Credit Issuer, or any Lender, agreed to be paid by any
Borrower, or requested or demanded to be paid by the Agent, the Letter of Credit
Issuer, or any Lender, exceed the Maximum Rate, and all provisions of the Loan
Documents in respect of the contracting for, charging, or receiving compensation
for the use, forbearance, or detention of money shall be limited as provided by
this Section 2.3. In the event any such interest is paid to the Agent, the
Letter of Credit Issuer, or any Lender by the Borrowers, or any of them, in an
amount or at a rate which would exceed the Maximum Rate, the Agent, the Letter
of Credit Issuer, or such Lender, as the case may be, shall automatically apply
such excess to any unpaid amount of the Obligations other than interest, in the
inverse order of maturity, or if the amount of such excess exceeds said unpaid
amount, such excess shall be paid to the paying Borrowers or Borrower, as
applicable. All interest paid, or agreed to be paid, by any Borrower, or taken,
reserved, or received by the Agent, the Letter of Credit Issuer, or any Lender,
shall be amortized, prorated, spread, and allocated in respect of the
Obligations throughout the full term of this Agreement. Notwithstanding any
provision contained in any of the Loan Documents, or in any other related
documents executed pursuant hereto, neither the Agent, the Letter of Credit
Issuer, nor any Lender shall ever be entitled to charge, receive, take, reserve,
collect, or apply as interest any amount which, together with all other interest
under the Loan Documents, would result in a rate of interest under the Loan
Documents in excess of the Maximum Rate and, in the event the Agent, the Letter
of Credit Issuer, or any Lender ever charges, receives, takes, reserves,
collects, or applies any amount in respect of the Borrowers, or any of them,
that otherwise would, together with all other interest under the Loan Documents,
be in excess of the Maximum Rate, such amount shall automatically be deemed to
be applied in reduction of the unpaid principal balance of the Obligations and,
if such principal balance is paid in full, any remaining excess shall forthwith
be paid to the applicable Borrowers or Borrower. The Borrowers, the Agent, the
Letter of Credit Issuer, and the Lenders shall, to the maximum extent permitted
under any Requirement of Law, (A) characterize any non-principal payment as a
standby fee, commitment fee, prepayment charge,

                                       13

<PAGE>

delinquency charge, expense, or reimbursement for a third-party expense rather
than as interest and (B) exclude prepayments, acceleration, and the effects
thereof. Nothing in any Loan Document shall be construed or so operate as to
require or obligate the Borrowers, or any of them, to pay any interest, fees,
costs, or charges greater than is permitted by any Requirement of Law. Subject
to the foregoing, the Borrowers hereby agree that the actual effective rate of
interest from time to time existing under the Loan Documents, including all
amounts agreed to by the Borrowers or charged or received by the Agent, the
Letter of Credit Issuer, or the Lenders pursuant to and in accordance with the
Loan Documents, which may be deemed to be interest under any Requirement of Law,
shall be deemed to be a rate which is agreed to and stipulated by the Borrowers
and the Lenders in accordance with Requirements of Law.

     Section 2.4 Unused Line Fee. Subject to Section 2.3, until the Revolving
Loans have been paid in full, all Letters of Credit have terminated or expired,
and this Agreement terminated, the Borrowers agree to pay to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares of
the Revolving Loans Commitments, on the first day of each calendar month and on
the Termination Date, an unused line fee (the "Unused Line Fee") equal to
one-half of one percent (0.50%) multiplied by the amount by which the Maximum
Revolver Amount exceeded the sum of the average daily outstanding amount of the
Revolving Loans and the average daily undrawn face amount of all outstanding
Letters of Credit during the immediately preceding month or shorter period if
calculated for the first month after the Closing Date or on the Termination
Date. Subject to Section 2.3, the Unused Line Fee shall be computed on the basis
of a 360 day year for the actual number of days elapsed. For purposes of
calculating the Unused Line Fee pursuant to this Section 2.4 only, any payment
received by the Agent (if received prior to 11:00 a.m. (Los Angeles, California
time)) shall be deemed to be credited to the Borrowers' Loan Account on the
Business Day following the date such payment is received by the Agent.

     Section 2.5 Letter of Credit Fee. Subject to Section 2.3, the Borrowers
agree to pay to the Agent (a) for the account of the Lenders, in accordance with
their respective Pro Rata Shares of the Revolving Loans Commitments, for each
Letter of Credit, a fee (the "Letter of Credit Fee") equal to the Letter of
Credit Fee Percentage, or, during the existence of any Event of Default, the
Default Rate with respect to the Letters of Credit, multiplied by the undrawn
face amount of each Letter of Credit and (b) for the account of each Letter of
Credit Issuer, all out-of-pocket costs, fees, and expenses incurred by such
Letter of Credit Issuer in connection with the application for, processing of,
issuance or extension of, or amendment to any Letter of Credit, which costs,
fees, and expenses shall include a "fronting fee" in an amount equal to
one-eighth percent (0.125%) of the face amount of such Letter of Credit, payable
to the Letter of Credit Issuer on the date of issuance of each Letter of Credit.
The Letter of Credit Fee and "fronting fee" shall be payable monthly in arrears
on the first day of each month following any month in which a Letter of Credit
was issued and/or in which a Letter of Credit remained outstanding and on the
Termination Date. Subject to Section 2.3, the Letter of Credit Fee and "fronting
fee" shall be computed on the basis of a 360 day year for the actual number of
days elapsed.

     Section 2.6 Other Fees. Subject to Section 2.3, the Borrowers agree to pay
the Agent all other fees and expenses as set forth in the Agent's Letter.

                                   ARTICLE 3.

                                       14

<PAGE>

                            PAYMENTS AND PREPAYMENTS

     Section 3.1 Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, plus all other Obligations, on the Termination Date; provided, however,
that the Borrower shall repay the outstanding principal balance of each Agent
Advance, plus all accrued but unpaid interest thereon, on the forty-fifth (45th)
day following the date of the making of such advance. The Borrowers may prepay
the Revolving Loans at any time and reborrow subject to the terms of this
Agreement; provided that with respect to any LIBOR Rate Revolving Loans prepaid
prior to the expiration date of the Interest Period applicable thereto, the
Borrowers shall pay to the Agent, for the account of the Lenders, the amounts
described in Section 4.4. In addition, and without limiting the generality of
the foregoing, upon demand, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount, if any and without duplication, by which the
Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or the
Maximum Revolver Amount. Accrued interest on the Revolving Loans shall be due
and payable in arrears (a) in the case of Base Rate Revolving Loans, on the
first day of each calendar month and on the Termination Date and (b) in the case
of LIBOR Rate Revolving Loans and with respect to each such Revolving Loan (i)
on the first day of each calendar month, (ii) on each LIBOR Interest Payment
Date with respect thereto, and (iii) on the Termination Date.

     Section 3.2 Termination of Total Facility. The Borrowers may terminate this
Agreement upon at least thirty (30) Business Days' prior written notice thereof
to the Agent and the Lenders, upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued and unpaid interest thereon, and the
cancellation and return of all outstanding Letters of Credit (or alternatively
if the Agent so consents, with respect to each such Letter of Credit, the
furnishing to the Agent, in the Agent's discretion, of a Supporting Letter of
Credit or cash deposit, in each case in amounts and in the manner required by
Section 1.4(g)), (b) the prepayment in full of the Term Loans, together with
accrued and unpaid interest thereon, (c) the payment in full of the early
termination fee set forth in the following sentence, (d) the payment in full in
cash of all reimbursable expenses and other Obligations, together with accrued
and unpaid interest thereon (if and to the extent the same accrue interest in
accordance with this Agreement), and (e) with respect to any LIBOR Rate Loans
prepaid, the payment in full of all amounts due under Section 4.4, if any. In
addition, the Borrower may prepay the Term Loans in whole or in part in
accordance with Section 3.4; provided each such prepayment is accompanied by (i)
accrued and unpaid interest on the portion of the Term Loans prepaid and (ii)
with respect to LIBOR Rate Loans, payments of amounts due under Section 4.4, if
any. Subject to Section 2.3, if this Agreement is terminated at any time on or
before the second Anniversary Date, whether pursuant to this Section or pursuant
to Section 9.2, the Borrowers shall pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following
table; provided that if the Borrowers refinance the credit facility provided by
this Agreement with a credit facility agented and arranged by the same or
another lending department of the Agent, then the fee for early termination set
forth in this Section 3.2 shall not apply:

                                       15

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                    Period During which                                   Early Termination Fees
                 Early Termination Occurs
------------------------------------------------------------------------------------------------------------
<S>                                                                <C>
          On or before the first Anniversary Date                  1.00% of the Maximum Revolver Amount

------------------------------------------------------------------------------------------------------------

         After the First Anniversary Date but on or                0.50% of the Maximum Revolver Amount
             before the second Anniversary Date

------------------------------------------------------------------------------------------------------------
</TABLE>

     Section 3.3 Repayment of the Term Loans. The Borrower agrees to repay the
principal of the Term Loans to the Agent, for the account of the Lenders, as set
forth in Section 1.3. Accrued interest on the Term Loans shall be due and
payable in arrears (a) in the case of Base Rate Term Loans, on the first day of
each calendar month and on the Termination Date and (b) in the case of LIBOR
Rate Term Loans and with respect to each such Term Loan (i) on the first day of
each calendar month, (ii) on each LIBOR Interest Payment Date with respect
thereto, and (iii) on the Termination Date.

     Section 3.4 Prepayments of the Loans.

             (a) The Borrowers may prepay the principal of the Term Loans in
whole or in part, at any time and from time to time, upon at least three (3)
Business Days' prior written notice to the Agent and the Lenders. All voluntary
prepayments of the principal of the Term Loans shall be accompanied by the
payment of all accrued but unpaid interest on the Term Loans to the date of
prepayment and, if applicable, prepayment fees in accordance with Section 3.2.
Any voluntary prepayment of less than all of the outstanding principal of the
Term Loans shall be applied to the installments of principal of the Term Loans
in the direct order of the maturities of such installments. Amounts prepaid in
respect of the Term Loans may not be reborrowed.

             (b) Immediately upon receipt by any of the Borrowers or their
Subsidiaries of any proceeds of any asset disposition (including, without
limitation, proceeds of any disposition of the Michigan Sugar Notes, the Hormel
Escrow, the Tyco Escrow or the Unappraised Assets, but excluding proceeds of
asset dispositions permitted by clauses (a), (e) and (f) of Section 7.9) or of
any proceeds of the Michigan Sugar Notes, the Hormel Escrow, or the Tyco Escrow,
the Borrowers shall prepay the Loans in an amount equal to (i) in the case of
any such asset disposition, the Mandatory Prepayment Percentage of all Net
Proceeds of such asset disposition or (ii) in the case of any receipt of any
proceeds of the Michigan Sugar Notes, the Hormel Escrow, or the Tyco Escrow, all
such proceeds. In addition, if and to the extent that the Obligated Parties have
not timely utilized any insurance and condemnation proceeds, released by the
Agent in accordance with Section 7.6, to replace, repair, restore, or rebuild
the affected Fixed Assets in accordance with Section 7.6, the Borrower shall
prepay the Loans in an amount equal to such proceeds not so utilized. Any such
prepayment pursuant to this Section 3.4(b) shall be applied in accordance with
Section 3.4(c). Notwithstanding the foregoing provisions of this Section 3.4(b),
proceeds of asset dispositions and proceeds of the Michigan Sugar Notes, the
Hormel Escrow, and the Tyco Escrow in an aggregate amount of less than $500,000
may be retained by the Borrowers until the aggregate amount of any prepayment,
inclusive of the

                                       16

<PAGE>

aggregate amount then retained and not previously used to prepay the Loans,
equals or exceeds $500,000, at which time such retained amounts shall be used to
prepay the Loans in accordance with this Section 3.4(b).

             (c) Prepayments from proceeds of Accounts and Inventory in
accordance with Section 3.4(b) shall be applied as follows: the actual proceeds
of sale of Accounts and Inventory or, if allocation to Accounts and Inventory
cannot be readily determined in connection with any such sale, an amount equal
to the book value of Accounts and Inventory sold as part of a sale of a division
or by means of the sale of the Stock of a Subsidiary shall be applied, first, to
accrued interest with respect to the Revolving Loans, second, to pay the
principal of the Revolving Loans, third, to cash collateralize outstanding
Letters of Credit (subject to the immediately succeeding proviso), fourth, to
accrued interest with respect to the Term Loans, and fifth, to scheduled
installments of the Term Loans, in inverse order of the maturities of such
installments, provided that, with respect to clause "third" preceding, cash
collateral for outstanding Letters of Credit shall not be required if and to the
extent that Availability (on a dollar for dollar basis as compared to the amount
of cash collateral otherwise required) then exists and cash initially used to
collateralize outstanding Letters of Credit shall be reapplied to accrued
interest with respect to the Revolving Loans and the principal of the Revolving
Loans as provided in clauses "first" and "second" preceding as and when
Revolving Loans are thereafter advanced. Prepayments from proceeds of all asset
dispositions (other than sales of Accounts and Inventory) or from proceeds of
the Michigan Sugar Notes, the Hormel Escrow, or the Tyco Escrow or from
insurance and condemnation proceeds in accordance with Section 3.4(b), including
proceeds from the sale of a division or a Subsidiary in excess of the book value
of Accounts and Inventory sold as part of the sale of that division or
Subsidiary, shall be applied as follows: first, to accrued interest with respect
to the Term Loans, second, to scheduled installments of the Term Loans, in
inverse order of the maturities of such installments (except as stated in clause
(ii) of the proviso below), third, to accrued interest with respect to the
Revolving Loans, fourth, to pay the principal of the Revolving Loans, and fifth,
to cash collateralize outstanding Letters of Credit; provided, however, that the
Borrowers may, in their sole discretion, (i) apply the proceeds of any
disposition of the Michigan Sugar Notes, the Hormel Escrow, the Tyco Escrow, or
the Unappraised Assets, or the proceeds of the Michigan Sugar Notes, the Hormel
Escrow, or the Tyco Escrow, to prepay the Revolving Loans without any reduction
in the Revolving Loans Commitments and (ii) if and to the extent any of the
proceeds referred to in clause (i) preceding are not used by the Borrowers to
prepay the Revolving Loans and are applied to scheduled installments of the Term
Loans as required in the clause "second" immediately above, apply such proceeds
to such installments in the direct order of the maturities of such installments.

             (d) Within fifteen (15) Business Days after the Agent has received
any appraisal of Real Estate or Equipment pursuant to Section 5.2(m), the
Borrowers shall prepay the Term Loans in an amount equal to the Term Loans
Collateral Deficiency Amount (if any), which prepayment shall be applied to
scheduled installments of the Term Loans in the direct order of the maturities
of such installments.

             (e) No provision contained in this Section 3.4 shall constitute a
consent to an asset disposition that is otherwise not permitted by the terms of
this Agreement.

                                       17

<PAGE>

     Section 3.5 LIBOR Rate Loan Prepayments. In connection with any prepayment,
if any LIBOR Rate Loans are prepaid prior to the expiration date of the Interest
Period applicable thereto, the Borrowers shall pay to the Agent, for the benefit
of the Lenders, the amounts described in Section 4.4.

     Section 3.6 Payments by the Borrowers.

             (a) All payments to be made by the Borrowers shall be made without
setoff, recoupment, or counterclaim. Without in any way limiting any terms or
provisions of the Borrower Security Agreement, except as otherwise expressly
provided herein, all payments by the Borrowers shall be made to the Agent, for
the account of the Lenders, to the account designated by the Agent and shall be
made in Dollars and in immediately available funds, no later than 11:00 a.m.
(Los Angeles, California time) on the date specified herein. Any payment
received by the Agent after such time shall be deemed (for purposes of
calculating interest only) to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue.

             (b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.

     Section 3.7 Payments as Revolving Loans. At the election of the Agent, all
payments of principal, interest, reimbursement obligations in connection with
Letters of Credit, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for expenses pursuant to Section 13.7), and other
sums payable under the Loan Documents, may be paid from the proceeds of
Revolving Loans made hereunder whether made following a request by the Borrowers
pursuant to Section 1.2 or a deemed request as provided in this Section 3.7. The
Borrowers hereby irrevocably authorize the Agent to charge the Loan Account for
the purpose of paying all amounts from time to time due under the Loan Documents
and agree that all such amounts charged shall constitute Revolving Loans
(including Non-Ratable Loans and Agent Advances) and that all such Revolving
Loans shall be deemed to have been requested pursuant to Section 1.2.

     Section 3.8 Apportionment, Application, and Reversal of Payments. Principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to the Agent and the
Letter of Credit Issuer. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of any Borrower's
Accounts or any other Collateral received by the Agent, shall be applied,
ratably, subject to the other provisions of this Agreement, first, to pay any
fees, indemnities, or expense reimbursements then due to the Agent from the
Borrowers, second, to pay any fees or expense reimbursements then due to any of
the Lenders from the Borrowers, including any customary administrative fees,
expense reimbursements, or similar amounts relating to Bank Products, third, to
pay interest due in respect of all Loans, including Non-Ratable Loans and Agent
Advances, fourth, to pay or prepay

                                       18

<PAGE>

principal of the Non-Ratable Loans and the Agent Advances, fifth, to pay or
prepay principal of the Revolving Loans (other than the Non-Ratable Loans and
the Agent Advances) and unpaid reimbursement obligations in respect of Letters
of Credit, sixth, to pay or prepay principal of the Term Loans, seventh, to pay
an amount to the Agent equal to one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit,
to be held as cash collateral for such Obligations, and eighth, to the payment
of any other Obligation due to the Agent or any Lender by the Borrowers.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by a Borrower, or unless an Event of Default has occurred and is
continuing, neither the Agent nor any Lender shall apply any payment which it
receives to any LIBOR Rate Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event, and
only to the extent, that there are no outstanding Base Rate Loans and, in any
event, the Borrowers shall pay the LIBOR breakage losses in accordance with
Section 4.4. To the extent not inconsistent with the express terms of this
Agreement, the Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Obligations.

     Section 3.9  Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent, any Lender, the Bank, or any Affiliate of the Bank is for any reason
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrowers shall be liable to
pay to the Agent and the Lenders, and each Borrower hereby indemnifies the Agent
and the Lenders and holds the Agent and the Lenders harmless for the amount of
such payment or proceeds surrendered. The provisions of this Section 3.9 shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 3.9 shall survive the
termination of this Agreement.

     Section 3.10 The Agent's and the Lenders' Books and Records; Monthly
Statements. The Agent shall record the principal amount of the Loans owing to
each Lender, the undrawn face amount of all outstanding Letters of Credit and
the aggregate amount of unpaid reimbursement obligations outstanding with
respect to the Letters of Credit from time to time on its books. In addition,
each Lender may note the date and amount of each payment or prepayment of
principal of such Lender's Loans in its books and records. Failure by the Agent
or any Lender to make any such notation shall not affect the obligations of the
Borrowers with respect to the Loans or the Letters of Credit. The Borrowers
agree that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute presumptive proof thereof absent manifest error. The Agent will
provide to the Borrowers a monthly statement of Loans, payments, and other

                                       19

<PAGE>

transactions pursuant to this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 3.8 and
corrections of errors discovered by the Agent), unless a Borrower notifies the
Agent in writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by a
Borrower, only the items to which exception is expressly made will be considered
to be disputed by the Borrowers.

                                   ARTICLE 4.
                     TAXES, YIELD PROTECTION, AND ILLEGALITY

     Section 4.1 Taxes.

             (a) Any and all payments by the Borrowers, or any of them, to the
Agent or any Lender under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, subject to Section 12.10(c), the Borrowers shall pay all Other Taxes.

             (b) The Borrowers agree to indemnify and hold harmless the Agent
and each Lender for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this Section
4.1) paid by the Agent or any Lender and any liability (including penalties,
interest, additions to tax, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within thirty (30)
days after the date the Agent or any Lender makes written demand therefor.

             (c) If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to the
Agent or any Lender, then:

                 (i)   the sum payable shall be increased as necessary so that
     after making all required deductions and withholdings (including, without
     limitation, deductions and withholdings applicable to additional sums
     payable under this Section 4.1) the Agent or such Lender, as the case may
     be, receives an amount equal to the sum it would have received had no such
     deductions or withholdings been made;

                 (ii)  the Borrowers shall make such deductions and
     withholdings;

                 (iii) the Borrowers shall pay the full amount deducted or
     withheld to the relevant taxing authority or other authority in accordance
     with any applicable Requirement of Law; and

                 (iv)  the Borrowers shall also pay to the Agent, for the
     account of each Lender, or each Lender at the time interest is paid, all
     additional amounts which the respective Lender specifies as necessary to
     preserve the after-tax yield such Lender would have received if such Taxes
     or Other Taxes had not been imposed.

                                       20

<PAGE>

           (d)   Within thirty (30) days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.

           (e)   If the Borrowers are required to pay additional amounts to the
Agent or any Lender pursuant to Section 4.1(c), then the applicable Lender shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrowers which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.

     Section 4.2 Illegality.

           (a)   If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by such Lender to the Borrowers
through the Agent, any obligation of such Lender to make LIBOR Rate Loans shall
be suspended until such Lender notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.

           (b)   If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall, upon receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans of such Lender then outstanding, together with accrued and unpaid
interest thereon and amounts required under Section 4.4, either on the last day
of the Interest Period thereof, if such Lender may lawfully continue to maintain
such LIBOR Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such LIBOR Rate Loans. If the Borrowers are
required to so prepay any LIBOR Rate Loans, then, concurrently with such
prepayment, the Borrowers shall borrow from the affected Lender, in the amount
of such repayment, a Base Rate Loan.

     Section 4.3 Increased Costs and Reduction of Return.

           (a)   If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by such Lender with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to make
or making, funding, or maintaining any LIBOR Rate Loans, then, subject to
Section 4.6, the Borrowers shall be liable for, and shall from time to time,
upon demand (with a copy of such demand to be sent to the Agent), pay to the
Agent, for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.

           (b)   If any Lender shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender or any corporation or other entity controlling such Lender with any

                                       21

<PAGE>

Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation or other
entity controlling such Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits, or
obligations under this Agreement, then, subject to Section 4.6 and upon demand
of such Lender to the Borrowers through the Agent, the Borrowers shall pay to
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such increase.

     Section 4.4 Funding Losses. Subject to Section 4.6, the Borrowers shall
reimburse each Lender and hold each Lender harmless from any loss or expense
which such Lender may sustain or incur as a consequence of:

           (a)   the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Loan;

           (b)   the failure of the Borrowers to (i) borrow any requested LIBOR
Rate Loan, (ii) continue any LIBOR Rate Loan, or (iii) convert a Base Rate Loan
to a LIBOR Rate Loan after any Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Continuation/Conversion with respect thereto
(except as permitted by Section 4.5); or

           (c)   the prepayment or other payment (including after acceleration
thereof) of any LIBOR Rate Loans on a day that is not the last day of the
relevant Interest Period;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by such Lender to maintain its LIBOR Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. The
Borrowers shall also pay any customary administrative fees charged by any Lender
in connection with the foregoing.

     Section 4.5 Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the LIBOR
Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Loan, or that the LIBOR Rate for any requested Interest Period with respect to a
proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, the Agent will promptly so notify the Borrowers
and each Lender. Thereafter, the obligation of the Lenders to make or maintain
LIBOR Rate Loans hereunder shall be suspended until the Agent revokes such
notice in writing. Upon receipt of a notice pursuant to the first sentence of
this Section, the Borrowers may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by any of them. If the Borrowers do not
revoke any such Notice of Borrowing or Notice of Continuation/Conversion, the
Lenders shall make, convert, or continue the Loans, as proposed by the
Borrowers, in the amount specified in the applicable notice submitted by a
Borrower, but such Loans shall be made, converted, or continued as Base Rate
Loans instead of LIBOR Rate Loans.

     Section 4.6 Certificates of the Lenders. If any Lender claims reimbursement
or compensation under this Article 4, such Lender shall determine the amount
thereof and shall

                                       22

<PAGE>

deliver to the Parent and the Agent a certificate setting forth in reasonable
detail the amount payable under this Article 4 to such Lender, and such
certificate shall be conclusive and binding on the Borrowers in the absence of
manifest error; provided, however, that the Borrowers shall not be obligated to
pay such reimbursement or compensation to any Lender with respect to any amount
incurred more than one (1) year prior to the date that such Lender delivers such
a certificate to the Parent relating to such amount.

     Section 4.7 Survival. The agreements and obligations of the Borrowers in
this Article 4 shall survive the payment of all other Obligations.

                                   ARTICLE 5.
                BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

     Section 5.1 Books and Records. The Obligated Parties shall, and shall cause
each of their Subsidiaries to, maintain, at all times, correct and complete
books, records, and accounts in which complete, correct, and timely entries are
made of their transactions in accordance with GAAP (provided that, as to books
and records, the same shall be required to be correct and complete only in all
material respects) . The Obligated Parties shall, and shall cause each of their
Subsidiaries to, by means of appropriate entries, reflect in such accounts and
in all Financial Statements proper liabilities and reserves for all taxes and
proper provision for depreciation and amortization of property and bad debts,
all in accordance with GAAP. The Obligated Parties shall maintain at all times
books and records pertaining to the Collateral in such detail, form, and scope
as the Agent or any Lender shall reasonably require, including, but not limited
to, records of (a) all payments received and all credits and extensions granted
with respect to the Accounts, (b) the return, rejection, repossession, stoppage
in transit, loss, damage, or destruction of any Inventory, and (c) all other
dealings affecting the Collateral. Without limiting any other provision of this
Agreement requiring the Obligated Parties to prepare Financial Statements in
accordance with GAAP, as used in this Section 5.1 with respect to any Subsidiary
not organized under the laws of the U.S. or any state of the U.S., "GAAP" shall
include such accounting rules (if any) as may be comparable to GAAP in the
jurisdiction of organization of such foreign Subsidiary.

     Section 5.2 Financial Information, Etc. The Obligated Parties shall
promptly furnish to the Agent all such information regarding the Obligated
Parties' and each of their Subsidiaries' financial and business affairs as the
Agent or any Lender (through the Agent) may reasonably request. Without limiting
the foregoing, the Obligated Parties will furnish, or cause to be furnished, to
the Agent the following, in sufficient copies for distribution by the Agent to
each Lender, in such detail as the Agent or the Lenders (through the Agent)
shall request:

           (a)   The Obligated Parties will furnish, or cause to be furnished,
as soon as available, but in any event not later than ninety (90) days after the
close of each Fiscal Year (commencing with the Fiscal Year ending September 30,
2003), audited consolidated balance sheets and statements of income, cash flow,
and stockholders' equity for the Parent and its Subsidiaries as of and for such
Fiscal Year, and the accompanying notes thereto, setting forth comparative
figures for the previous Fiscal Year for the Parent and its Subsidiaries on a
consolidated basis, all in reasonable detail, fairly presenting the financial
position and the results of operations of the Parent and its Subsidiaries as of
the date thereof and for the Fiscal Year then

                                       23

<PAGE>

ended, and prepared in accordance with GAAP. Such Financial Statements shall be
examined in accordance with generally accepted auditing standards by, and
accompanied by a report thereon of, independent certified public accountants of
national standing selected by the Parent. The Obligated Parties shall,
simultaneously with retaining such independent public accountants to conduct
such annual audit, send a letter to such accountants, with a copy to the Agent
and the Lenders, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having audited financial statements
prepared by such accountants is for use by the Agent and the Lenders. Each
Obligated Party hereby authorizes the Agent to communicate directly with its
certified public accountants (provided that the Obligated Parties are given at
least three (3) Business Days prior notice of, and an opportunity to participate
in, any such communication) and, by this provision, authorizes those accountants
to disclose to the Agent any and all financial statements and other supporting
financial documents and schedules relating to the Obligated Parties and their
Subsidiaries and to discuss directly with the Agent the finances and affairs of
the Obligated Parties and their Subsidiaries. Concurrently with delivery of the
audited Financial Statements referred to in this Section 5.2(a) above, the
Obligated Parties will also furnish unaudited consolidating balance sheets and
statements of income for the Parent and its Subsidiaries as of and for such
Fiscal Year, which consolidating balance sheets and statements of income shall
be consistent with, and tie to in all material respects, the related
consolidated figures set forth in the audited Financial Statements.

           (b)   The Obligated Parties will furnish or cause to be furnished,

                 (i)   as soon as available, but in any event not later than
      thirty (30) days after the end of each calendar month that is not the end
      of a Fiscal Quarter, consolidated unaudited balance sheets of the Parent
      and its Subsidiaries as of the end of such month, and consolidated
      unaudited statements of income and cash flow for the Parent and its
      Subsidiaries for such month and for the period from the beginning of the
      Fiscal Year to the end of such month;

                 (ii)  as soon as available, but in any event not later than
      forty-five (45) days after the end of such Fiscal Quarter that is not the
      end of a Fiscal Year, consolidated unaudited balance sheets of the Parent
      and its Subsidiaries as of the end of such Fiscal Quarter, and
      consolidated unaudited statements of income and cash flow for the Parent
      and its Subsidiaries for such Fiscal Quarter and for the period from the
      beginning of the Fiscal Year to the end of such Fiscal Quarter, provided
      that delivery of such financial statements shall be satisfied if the
      Parent delivers its report on Form 10Q to the Agent; and

                 (iii) as soon as available, but in any event not later than
      forty-five (45) days after the end of the last month of each Fiscal Year,
      consolidated unaudited balance sheets of the Parent and its Subsidiaries
      as of the end of such month, and consolidated unaudited statements of
      income and cash flow for the Parent and its Subsidiaries for such month
      and for the period from the beginning of the Fiscal Year to the end of
      such month;

all in reasonable detail, fairly presenting the financial position and results
of operations of the Parent and its Subsidiaries as of the date thereof and for
such periods, and, in each case, containing comparable figures for the
corresponding period in the prior Fiscal Year for the

                                       24

<PAGE>

Parent and its Subsidiaries on a consolidated basis and for the Obligated
Parties' budget, and prepared in accordance with GAAP (other than for
presentation of footnotes and subject to normal year-end adjustments) applied
consistently (except as disclosed therein) with the audited Financial Statements
required to be delivered pursuant to Section 5.2(a). The Parent shall certify by
a certificate signed by its chief financial officer or chief accounting officer
that all such Financial Statements have been prepared in accordance with GAAP
(except for the inclusion of necessary footnotes) and present fairly, subject to
normal year-end adjustments, the financial position of the Parent and its
Subsidiaries as of the dates thereof and its results of operations for the
periods then ended.

           (c)   The Obligated Parties will cause to be furnished, with each of
the audited Financial Statements delivered pursuant to Section 5.2(a), a
certificate of the independent certified public accountants that audited such
Financial Statements that, in auditing such Financial Statements, they did not
become aware of any fact or condition which then constituted a Default or Event
of Default with respect to a financial covenant, except for those, if any,
described in reasonable detail in such certificate.

           (d)   The Obligated Parties will furnish or cause to be furnished,
with each of the annual audited Financial Statements delivered pursuant to
Section 5.2(a), and with each of the unaudited Financial Statements delivered
pursuant to Section 5.2(b), a certificate of the chief financial officer or
chief accounting officer of the Parent in the form of Exhibit E (a "Compliance
Certificate") (i) setting forth in reasonable detail the calculations required
to establish the Obligated Parties' compliance with the covenants set forth in
Section 7.22 and Section 7.23 during the period covered by such Financial
Statements and as of the end thereof and (ii) except as explained in reasonable
detail in such certificate, (A) stating that all of the representations and
warranties of the Obligated Parties contained in this Agreement and the other
Loan Documents are correct and complete in all material respects as at the date
of such certificate as if made at such time, except for those that speak as of a
particular date, (B) stating that the Obligated Parties are, at the date of such
certificate, in compliance in all material respects with all of their respective
covenants and agreements in this Agreement and the other Loan Documents, (C)
stating that no Default or Event of Default then exists or existed during the
period covered by such Financial Statements, and (D) describing and analyzing in
reasonable detail all material trends, changes, and developments in each and all
such Financial Statements, provided that the requirement in this clause (D) may
be satisfied by delivery of the Parent's report on Form 10-Q (as to quarterly
Financial Statements) or Form 10-K (as to annual Financial Statements). If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Obligated Parties have taken or propose to take with respect thereto.

           (e)   The Obligated Parties will furnish, or cause to be furnished,
not more than thirty (30) days after the end of each Fiscal Year, annual
forecasts prepared by the Parent (to include forecasted consolidated balance
sheets and statements of income and cash flow) for the Obligated Parties as of
the end of and for each calendar month of such Fiscal Year and, within ten (10)
Business Days after any material update, amendment, supplement, or other
modification thereof or thereto has been prepared by an Obligated Party, a copy
of each such update, amendment, supplement, or other modification thereof or
thereto.

                                       25

<PAGE>

         (f) The Obligated Parties will furnish, or cause to be furnished,
promptly after filing with the PBGC and the IRS or any other Governmental
Authority, a copy of each annual report or other filing filed with respect to
each Plan of any Obligated Party.

         (g) The Obligated Parties will furnish, or cause to be furnished,
promptly upon the filing thereof, copies of all reports, if any, to or other
documents filed by the Parent or any of its Subsidiaries with the Securities and
Exchange Commission under the Exchange Act or any other similar Governmental
Authority pursuant to any Requirement of Law, and all reports, notices, or
statements sent or received by the Parent or any of its Subsidiaries to or from
the holders of any equity interests of the Parent or any of its Subsidiaries
(other than non-material matters as to which disclosure is not required under
applicable securities laws, rules, regulations, or guidelines) or of any Debt of
the Parent or any of its Subsidiaries registered under the Securities Act of
1933 or to or from the trustee under any indenture under which the same is
issued.

         (h) The Obligated Parties will furnish, or cause to be furnished, as
soon as available, but in any event not later than fifteen (15) days after the
Parent's or any of its Subsidiaries' receipt thereof, a copy of all management
reports and management letters prepared by any independent certified public
accountants of the Parent or any other Obligated Party.

         (i) The Obligated Parties will furnish, or cause to be furnished,
promptly after their preparation, copies of any and all proxy statements,
financial statements, and reports which the Parent makes available to its
shareholders or which are made available to any holder of any Debt of any
Obligated Party.

         (j) If requested by the Agent, the Obligated Parties will furnish, or
cause to be furnished, promptly after filing with the IRS or any other
Governmental Authority, a copy of each tax return filed by the Parent or any
Subsidiary of the Parent.

         (k) The Obligated Parties will furnish, or cause to be furnished, as
soon as available, but in any event on or before the third Business Day of each
week for the last Business Day of the preceding week and at such other times,
from time to time, as may be requested by the Agent, a Borrowing Base
Certificate and supporting information in connection therewith.

         (l) The Obligated Parties shall provide, or cause to be provided, to
the Agent the following documents, in form reasonably satisfactory to the Agent:

             (i) within thirty (30) days after the end of each calendar month,
      or more frequently if requested by the Agent, (A) a schedule of each
      Borrower's accounts receivable created since the last such schedule which
      shall be reconciled to the Borrowing Base Certificate and such Borrower's
      general ledger as of such last day of the immediately preceding month, (B)
      information indicating, in the aggregate, the estimated amounts owing to
      any Farm Products Seller, (C) a schedule of Inventory which shall be
      reconciled to the Borrowing Base Certificate and the general ledger as of
      the end of the prior month itemizing and describing the components and
      quantity of all Inventory, the cost thereof, and the location thereof, and
      (D) information regarding any change in the owner or lessor of any leased
      premises, warehouses, processors, or other third parties

                                       26

<PAGE>

         from time to time in possession of any Collateral, and information
         regarding any change in any location where any Collateral is located,
         together with the address of the new location, the name, telephone
         number, and other appropriate contact information of the appropriate
         sales representative, agent, contractor, or other Person at such
         location, a description of the nature of the contractual arrangement at
         such location, and the cost of the Inventory and the net book value of
         Fixed Assets at such location;

              (ii)  within ten (10) Business Days after the end of each calendar
         month, or more frequently if requested by the Agent, (A) an aging of
         each Borrower's trade accounts payable, and (B) a schedule of each
         Borrower's accounts receivable created since the last such schedule
         which (1) shall be as of the last day of the immediately preceding
         month, and (2) shall set forth a detailed aged final balance of all
         then existing accounts receivable specifying the names, addresses (if
         requested by the Agent), and balances due for each Account Debtor
         obligated on an account receivable so listed;

              (iii) as soon as available, but in any event not later than the
         third Business Day of the succeeding week and at such other times as
         may be requested by the Agent, (A) a current schedule of sales,
         collections and credit memos since the date of the then most recent
         report previously provided pursuant to this clause (A), (B) a schedule
         of Inventory which shall be reconciled to the Borrowing Base
         Certificate itemizing and describing the components and quantity of all
         Inventory, the cost thereof, and the location thereof, and (C)
         information indicating the estimated amounts owing to any Farm Products
         Seller;

              (iv)  upon the Agent's request, copies of invoices in connection
         with each Borrower's Accounts, customer statements, credit memos,
         remittance advices and reports, deposit slips, and shipping and
         delivery documents in connection with each Borrower's Accounts and for
         Equipment acquired by each Borrower, purchase orders, and invoices;

              (v)   copies of daily reports from the Parent, in form and
         substance acceptable to the Agent, identifying the aggregate amount of
         Debt or any other obligations of the Borrowers owing to the Commodity
         Credit Corporation, the Liens securing such Debt or other obligations,
         and the Inventory or other property affected by such Liens, which
         reports shall evidence the Borrowers' compliance with the collateral
         requirements described in the definition of the term "Permitted CCC
         Liens", provided that such daily reports shall not be required to be
         delivered to the Agent unless they reflect a change in any of the
         information provided therein as compared to the information provided in
         the then most recent such report delivered to the Agent;

              (vi)  prompt written notice of any material changes to any farm
         bill or any material changes to any tariffs, quotas, or other
         restrictions on imported sugar;

              (vii) on or before ten (10) Business Days after the last day of
         each month and as of the last day of such month, and at such other
         times, from time to time, as may be requested by the Agent, a report
         which (A) summarizes the Hedge Agreements to

                                       27

<PAGE>

         which any Obligated Party is a party, (B) calculates the Parent's and
         its consolidated Subsidiaries' compliance with the risk management
         policy for commodities adopted by the Parent's board of directors, and
         (C) states the type of collateral (which shall not be other than cash)
         which secures the obligations under such Hedge Agreements and the
         aggregate amount of such collateral (cash), provided that such report
         and information regarding Hedge Agreements provided therein may, in
         lieu of the foregoing, be in form and substance agreed to between the
         Parent and the Agent from time to time;

              (viii) such other reports as to the Collateral as the Agent may
         reasonably request from time to time;

              (ix)   with the delivery of each of the foregoing, a certificate
         of the Obligated Parties executed by a Responsible Officer of the
         Parent on behalf of all of the Obligated Parties certifying as to the
         accuracy and completeness of the foregoing.

If any of the Obligated Parties' records or reports of the Collateral are
prepared by an accounting service or other agent, each Obligated Party hereby
authorizes, and shall cause each other Obligated Party to authorize, such
service or agent to deliver such records, reports, and related documents to the
Agent, for distribution to the Lenders.

         (m)  The Obligated Parties will furnish, or cause to be furnished, as
soon as available and in any event within ninety (90) days after the Agent's
request therefor, appraisals of all Real Estate and Equipment of the Obligated
Parties, each of which appraisals shall be in form and substance reasonably
acceptable to the Agent; provided, however, that the Agent may request such
appraisals only (i) on one occasion during the period commencing on January 1,
2004 and continuing through and including the Termination Date (except as
provided in clause (ii) and (iii) below), (ii) on one occasion if and when the
net book value of the Obligated Parties' property, plant, and equipment is less
than $125,000,000 and any of the Term Loans remain outstanding (except as
provided in clause (i) and clause (iii) below), and (iii) at any time and from
time to time after the occurrence and during the continuance of any Event of
Default (in addition to the times specified in clause (i) and clause (ii)
above). In addition, the Obligated Parties will furnish, or cause to be
furnished, to the Agent (A) as soon as available, but in any event not later
than September 30th of each year (commencing September 30, 2003), an appraisal
of all Inventory of the Obligated Parties in form and substance reasonably
acceptable to the Agent that is dated as of a date reasonably acceptable to the
Parent that is no earlier than June 30th of such year and no later than
September 30th of such year and (B) at any time and from time to time after the
occurrence and during the continuance of any Event of Default (in addition to
the times specified in clause (A) above) an appraisal of all Inventory of the
Obligated Parties in form and substance reasonably acceptable to the Agent dated
as of a then current date reasonably acceptable to the Agent. All appraisals
referred to in this clause (m) shall be undertaken by appraisers of recognized
professional standing selected by, or acceptable to, the Agent. Notwithstanding
the foregoing provisions of this clause (m), unless the Agent otherwise informs
the Parent, the Agent and/or its counsel shall order the appraisals referred to
in this clause (m) at the expense of the Borrowers.

         (n)  The Obligated Parties will furnish, or cause to be furnished, such
additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of the Parent or
any Subsidiary of the Parent.

                                       28

<PAGE>

              (o) In the event that the audited Financial Statements of the
Parent and its Subsidiaries as of September 30, 2002 and for the Fiscal Year
then ended and the related report of the Parent's independent certified public
accountants referred to in clause (i) of Section 6.6(a) are not available as of
the Closing Date, the Obligated Parties will cause to be furnished to the Agent,
within fifteen (15) days after the Closing Date, such audited Financial
Statements and report in final form, which audited Financial Statements and
report shall be identical in all material respects to the draft thereof
delivered to the Agent on or before the Closing Date.

     Section 5.3  Notices to the Lender. The Obligated Parties shall notify the
Agent and the Lenders in writing of the following matters at the following
times:

              (a) immediately after a Responsible Officer becomes aware, or
should be aware, of any Default or Event of Default;

              (b) immediately after a Responsible Officer becomes aware, or
should be aware, of the assertion by the holder of any Capital Stock of the
Parent or any Subsidiary of the Parent or the holder of any Debt of the Parent
or any Subsidiary of the Parent in excess of $2,500,000 that a default exists
with respect thereto or that any such Person is not in compliance with the terms
thereof, or the written threat or commencement by such holder of any enforcement
action because of such asserted default or non-compliance;

              (c) immediately after a Responsible Officer becomes aware, or
should be aware, of any event or circumstance which could reasonably be expected
to have, or has resulted in, a Material Adverse Effect;

              (d) immediately after a Responsible Officer becomes aware, or
should be aware, of any pending or threatened (in writing) action, suit,
proceeding, or counterclaim by any Person, or any pending or threatened (in
writing) investigation by a Governmental Authority, which could reasonably be
expected to have, or has resulted in, a Material Adverse Effect;

              (e) immediately after a Responsible Officer becomes aware, or
should be aware, of any pending or threatened (in writing) strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting any
Obligated Party which could reasonably be expected to have, or has resulted in,
a Material Adverse Effect;

              (f) immediately after a Responsible Officer becomes aware, or
should be aware, of any violation of any law, statute, regulation, or ordinance
of a Governmental Authority affecting any Obligated Party which could reasonably
be expected to have, or has resulted in, a Material Adverse Effect;

              (g) immediately after receipt by a Responsible Officer of any
notice of any violation by any Obligated Party of any Environmental Law which
could reasonably be expected to have, or has resulted in, a Material Adverse
Effect or that any Governmental Authority has asserted in writing that any
Obligated Party is not in compliance with any Environmental Law or is
investigating any Obligated Party's compliance therewith where non-compliance
could reasonably be expected to have a Material Adverse Effect;

                                       29

<PAGE>

              (h) immediately after receipt by a Responsible Officer of any
written notice that any Obligated Party is or may be liable to any Person as a
result of the Release or threatened Release of any Contaminant or that any
Obligated Party is subject to investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to the Release or
threatened Release of any Contaminant which, in either case, is reasonably
likely to give rise to liability to one or more Obligated Parties in excess of
$2,500,000;

              (i) immediately after receipt by a Responsible Officer of any
written notice of the imposition of any Environmental Lien against any property
of any Obligated Party securing an amount which could reasonably be expected to
exceed $2,500,000 or the priority of which Environmental Lien supersedes the
priority of the Mortgages;

              (j) any change in any Obligated Party's (i) name as it appears in
the jurisdiction of its incorporation or organization, (ii) jurisdiction of
incorporation or organization, (iii) type of entity, (iv) organizational
identification number, (v) locations of Collateral (other than a change in
location of certain Collateral to a location previously disclosed in writing to
the Agent as being a Collateral location for such Obligated Party and where such
Obligated Party then owns or holds other Collateral), or (vi) trade names under
which such Obligated Party will sell Inventory or create Accounts or to which
instruments in payment of Accounts may be made payable, in each case at least
thirty (30) days prior thereto;

              (k) within ten (10) days after any Responsible Officer of any
Obligated Party or any ERISA Affiliate knows, or has reason to know, that an
ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and
4975 of the Code) of a material nature has occurred, and, when known, any action
taken or threatened by the IRS, the DOL, or the PBGC with respect thereto;

              (l) upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby which could
reasonably be expected to have, or has resulted in, a Material Adverse Effect,
within ten (10) days after the filing thereof with the PBGC, the DOL, or the
IRS, as applicable, copies of the following: (i) each annual report (form 5500
series), including Schedule B thereto, filed with the PBGC, the DOL, or the IRS
with respect to each Plan, (ii) a copy of each funding waiver request filed with
the PBGC, the DOL, or the IRS with respect to any Pension Plan and all
communications received by any Obligated Party or any ERISA Affiliate from the
PBGC, the DOL, or the IRS with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL, or the IRS, with respect to
each Plan by any Obligated Party or any ERISA Affiliate;

              (m) upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan, and within
ten (10) days after receipt thereof by any Obligated Party or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any unfavorable determination letter from the IRS regarding the qualification of
a Plan under Section 401(a) of the Code; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;

                                       30

<PAGE>

           (n) within ten (10) days after the occurrence thereof: (i) any
changes in the benefits of any existing Plan which increase any Obligated
Party's annual costs with respect thereto by an amount in excess of $5,000,000,
or the establishment of any new Plan with annual costs in excess of $2,500,000
or the commencement of employer contributions in excess of $2,500,000 annually
to any Plan to which any Obligated Party or any ERISA Affiliate was not
previously contributing; or (ii) any failure by any Obligated Party or any ERISA
Affiliate to make a required installment or any other required payment to any
Plan in excess of $5,000,000 under Section 412 of the Code on or before the due
date for such installment or payment;

           (o) within ten (10) days after a Responsible Officer of any Obligated
Party or any ERISA Affiliate knows or has reason to know that any of the
following events has occurred or will occur: (i) a Multi-employer Plan has been
or will be terminated; (ii) the administrator or plan sponsor of a
Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the
PBGC has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan;

           (p) immediately after a Responsible Officer becomes aware, or should
be aware, that (i) any payment owing under the Michigan Sugar Notes, the Hormel
Escrow, or the Tyco Escrow has not been paid when due or (ii) any Obligated
Party is obligated to make an unscheduled payment with respect to any Material
Debt (whether pursuant to any guaranty obligation relating thereto or otherwise)
or any other obligation guaranteed by such Borrower;

           (q) immediately after a Responsible Officer becomes aware, or should
be aware, of the commencement of any proceedings contesting any tax, fee,
assessment, or other governmental charge in excess of $2,500,000;

           (r) immediately upon the consummation of any asset disposition or the
receipt of any proceeds requiring a prepayment in accordance with Section 3.4;

           (s) immediately upon the creation or acquisition of any Subsidiary of
the Parent that has not previously executed and/or delivered to the Agent a
Guaranty Agreement or a Guarantor Security Agreement (which notice shall include
the exact legal name of such Subsidiary and its jurisdiction of organization or
incorporation, as well as such other information as the Agent may reasonably
request); and

           (t) immediately upon a Responsible Officer becoming aware of any
information that, if existing or occurring as of the Closing Date, would have
been required to be set forth on Schedule 6.3, 6.4, 6.5, 6.10, 6.11, 6.12, 6.26,
or 6.28 to this Agreement, complete and accurate information supplementing
and/or modifying (as applicable) the information set forth on such Schedule to
update and/or correct any information previously set forth on such Schedule,
provided that nothing in this clause (t) shall relieve the Obligated Parties of
any requirement or obligation to provide prior notice of information to the
extent required by Section 5.3(j) or any other Loan Document.

Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that any Obligated Party or
any ERISA Affiliate, as applicable, has taken or proposes to take with respect
thereto. For purposes of this Section 5.3,

                                       31

<PAGE>

the word "immediately" shall be construed to mean promptly and, in any event, no
later than two (2) Business Days after the initial occurrence of the event or
circumstance in question.

                                   ARTICLE 6.
                     GENERAL WARRANTIES AND REPRESENTATIONS

     Each Obligated Party represents and warrants to the Agent and the Lenders
as follows:

     Section 6.1 Authorization, Validity, and Enforceability of this Agreement
and the other Loan Documents; No Conflicts. Each Obligated Party has the power
and authority to execute, deliver, and perform this Agreement and the other Loan
Documents to which it is a party, to incur the Obligations, and to grant to the
Agent Liens upon the Collateral. Each Obligated Party has taken all necessary
action (including obtaining approval of its stockholders, partners, general
partner(s), members, or other applicable equity owners, if necessary) to
authorize its execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party. This Agreement and the other Loan
Documents to which it is a party have been duly executed and delivered by each
Obligated Party, and constitute the legal, valid, and binding obligations of
each Obligated Party, enforceable against it in accordance with their respective
terms without defense, setoff, or counterclaim. Each Obligated Party's
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or constitute a default under, or result in
or require the creation or imposition of any Lien upon the property of the
Parent or any of its Subsidiaries by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, document, or instrument to which
the Parent or any of its Subsidiaries is a party or which is binding upon any of
them, (b) any Requirement of Law applicable to the Parent or any of its
Subsidiaries, or (c) the certificate or articles of incorporation, bylaws,
limited liability company or partnership agreement, or other organizational or
constituent documents, as the case may be, of the Parent or any of its
Subsidiaries.

     Section 6.2 Validity and Priority of Security Interest. The provisions of
this Agreement, the Borrower Security Agreement, the Mortgages and/or the other
Loan Documents create legal and valid Liens on all the Collateral in favor of
the Agent, for the benefit of the Agent and the Lenders, and such Liens
constitute perfected and continuing Liens on the Collateral, securing the
Obligations, enforceable against the applicable Obligated Party and all third
parties, and having priority over all other Liens on the Collateral (a) except
in the case of Liens described in clause (c), clause (e), and clause (f) of the
definition of Permitted Liens to the extent any such Liens would have priority
over the Agent's Liens pursuant to any Requirement of Law and (b) except for
Liens in certificated vehicles, and Liens perfected only by possession to the
extent the Agent has not obtained or does not maintain possession of such
Collateral.

     Section 6.3 Organization and Qualification. Each of the Obligated Parties
and its Subsidiaries is (a) duly incorporated, formed, or organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
formation, or organization set forth on Schedule 6.3, (b) qualified to do
business and in good standing (as applicable) in each of the jurisdictions set
forth on Schedule 6.3, which jurisdictions are the only jurisdictions in which
qualification is necessary in order for it to own or lease its property and
conduct its business

                                       32

<PAGE>

except where such failure to qualify could not reasonably be expected to result
in a Material Adverse Effect, and (c) has all requisite power and authority to
execute and deliver this Agreement and the other Loan Documents to which it is a
party and to conduct its business and own its property.

     Section 6.4 Corporate Name; Prior Transactions. Except as set forth on
Schedule 6.4, the Obligated Parties have not, during the past five (5) years,
been known by or used any other corporate or fictitious name, or been a party to
any merger or consolidation, or acquired all or substantially all of the assets
of any Person, or acquired any of its property outside of the ordinary course of
business.

     Section 6.5 Capitalization and Subsidiaries. Schedule 6.5 sets forth (a) a
correct and complete list of the name and relationship to the Parent of each and
all of the Parent's Subsidiaries, (b) the location of the chief executive office
of the Parent and each of its Subsidiaries, (c) a true and complete listing of
each class of each of the Parent's Subsidiaries' authorized Capital Stock, of
which all of such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 6.5, and (d) the type of entity of the Parent and each of its
Subsidiaries. With respect to each Obligated Party, Schedule 6.5 sets forth the
employer or taxpayer identification number of each Obligated Party and the
organizational identification number issued by each Obligated Party's
jurisdiction of organization or a statement that no such number has been issued.
Each of the Parent and its Subsidiaries is either a "Borrower" or a "Guarantor"
as such terms are defined in this Agreement.

     Section 6.6 Financial Statements and Projections.

           (a) The Obligated Parties have delivered to the Agent and the Lenders
(i) the audited balance sheet and related statements of income, retained
earnings, cash flow, and changes in stockholders' equity for the Parent and its
Subsidiaries as of September 30, 2002, and for the Fiscal Year then ended,
accompanied by the report thereon of the Parent's independent certified public
accountants or (ii) in the event that such audited Financial Statements and
report referred to in clause (i) preceding are not available, and therefore were
not delivered to the Agent, as of the Closing Date, a draft thereof which is
complete in all respects and identical in all material respects to the audited
Financial Statements and report required to be delivered after the Closing Date
in accordance with Section 5.2(o). The Obligated Parties have also delivered to
the Agent and the Lenders the unaudited balance sheet and related statements of
income and cash flow for the Parent and its Subsidiaries as of October 31, 2002.
All such financial statements have been prepared in accordance with GAAP and
fairly present the financial position of the Parent and its Subsidiaries as of
the dates thereof and their results of operations for the periods then ended
(except with respect to the financial statements dated October 31, 2002, for the
absence of applicable footnotes and subject to normal year-end adjustments).

           (b) The Latest Projections, when submitted to the Agent and the
Lenders as required herein, represent the Obligated Parties' good faith estimate
of the future financial performance of the Obligated Parties for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Obligated Parties

                                       33

<PAGE>

believe are fair and reasonable in light of current and reasonably foreseeable
business conditions at the time submitted to the Agent and the Lenders.

     Section 6.7 Solvency. Each Obligated Party is Solvent immediately prior to
and after giving effect to the Borrowings to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date (if any).

     Section 6.8 Debt. After giving effect to the making of the Loans to be made
on the Closing Date and the issuance of the Letters of Credit to be issued on
the Closing Date (if any), the Obligated Parties have no Debt, except (a) the
Obligations, (b) Debt described on Schedule 6.8, and (c) other Debt entered into
after the Closing Date as permitted by Section 7.13 and reflected in the
Financial Statements delivered pursuant to Section 5.2.

     Section 6.9 Distributions. Since October 31, 2002, no Distribution has been
declared, paid, or made upon or in respect of any Capital Stock of the Parent,
other than the Rights, except as permitted by Section 7.10.

     Section 6.10 Real Estate; Leases. Schedule 6.10 sets forth a correct and
complete list of all Real Estate owned by each Obligated Party, all leases and
subleases of real or personal property by each Obligated Party as lessee or
sublessee (other than leases of personal property as to which it is lessee or
sublessee for which the value of such personal property in the aggregate is less
than $1,000,000), and all leases and subleases of real or personal property by
each Obligated Party as lessor, or sublessor. To the best of each Obligated
Party's knowledge, each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each Obligated Party has good and
indefeasible title in fee simple to the Real Estate identified on Schedule 6.10
as owned by such Obligated Party, or valid leasehold interests in all Real
Estate designated therein as "leased" by such Obligated Party, in each case free
and clear of any and all Liens except Permitted Liens. Each Obligated Party has
good, indefeasible, and merchantable title to all of its other property
reflected on the October 31, 2002 Financial Statements of the Parent and its
Subsidiaries delivered to the Agent and the Lenders, except as disposed of in
the ordinary course of business since the date thereof, free of all Liens except
Permitted Liens.

     Section 6.11 Proprietary Rights. Schedule 6.11 sets forth a correct and
complete list of all of each Obligated Party's patents, patent applications,
trademark and service mark registrations and applications, and copyright
registrations and applications, whether state, U.S., or foreign. None of the
Proprietary Rights listed in Schedule 6.11 is subject to any licensing agreement
or similar arrangement except as set forth on Schedule 6.11. To the best of each
Obligated Party's knowledge after due investigation, the Proprietary Rights
described on Schedule 6.11 constitute all of the property of such type necessary
to the current and anticipated future conduct of the Obligated Parties'
business. To the best of each Obligated Party's knowledge, no slogan or other
advertising device, product, process, method, substance, part, or other material
now employed, or now contemplated to be employed, by any Obligated Party
infringes upon or conflicts with, in any material respect, any rights held by
any other Person. To the best knowledge of each Obligated Party, no claim or
litigation regarding any Obligated Party's Proprietary Rights is pending or
threatened, and no patent, invention, device, application,

                                       34

<PAGE>

principle, or statute, law, rule, regulation, standard, or code is pending or
proposed which could reasonably be expected to have a Material Adverse Effect.

     Section 6.12 Trade Names. All trade names or corporate names under which
any Obligated Party will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
6.12.

     Section 6.13 Litigation. As of the Closing Date, each pending, or to the
best of any Obligated Party's knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, of a
material nature involving any Obligated Party or any of its Subsidiaries or any
of its properties is listed on Schedule 6.13. There is no pending, or to the
best of any Obligated Party's knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority,
involving any Obligated Party or any of its Subsidiaries or any of its
properties, or any basis for any of the foregoing, which could reasonably be
expected to have a Material Adverse Effect.

     Section 6.14 Labor Disputes. As of the Closing Date, except as may be set
forth on Schedule 6.14, (a) there is no collective bargaining agreement or other
labor contract covering employees of any Obligated Party, (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement, (c) to the best knowledge of any Obligated Party after
due investigation, no union or other labor organization is seeking or has
requested to organize, or to be recognized as, a collective bargaining
representative of employees of any Obligated Party or for any similar purpose,
and (d) there is no pending or (to the best of any Obligated Party's knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting any Obligated Party or its
employees.

     Section 6.15 Environmental Laws. As of the Closing Date, except as
otherwise set forth on Schedule 6.15:

           (a) Each Obligated Party and each of its Subsidiaries has complied in
all material respects with all Environmental Laws and neither any Obligated
Party, nor any of its Subsidiaries, nor any of its presently or previously owned
Real Estate or presently conducted or prior operations, is subject to any
enforcement order from or liability agreement with any Governmental Authority or
private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.

           (b) Each Obligated Party and each of its Subsidiaries has obtained
all permits of a material nature necessary for its current operations under
Environmental Laws, and all such permits are in good standing, and each
Obligated Party and each of its Subsidiaries is in compliance, in all material
respects, with all terms and conditions of such permits.

           (c) Neither any Obligated Party nor any of its Subsidiaries, nor, to
the best of any Obligated Party's knowledge, any of its predecessors in
interest, has, in violation of any Environmental Law, stored, treated, or
disposed of any hazardous waste (as defined pursuant to

                                       35

<PAGE>

40 CFR Part 261 or any equivalent Environmental Law) which violation has not
been cured or otherwise handled to the satisfaction of the applicable
Governmental Authority.

            (d)   Neither any Obligated Party nor any of its Subsidiaries has
received any summons, complaint, order, or similar written notice indicating
that it is not currently in compliance with, or that any Governmental Authority
is investigating its compliance with, any Environmental Laws or that it is or
may be liable to any other Person as a result of a Release or threatened Release
of a Contaminant.

            (e)   None of the present or past operations of any Obligated Party
or any of its Subsidiaries is the subject of any investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to a Release or threatened Release of a Contaminant.

            (f)   There is not now, nor to the best of any Obligated Party's
knowledge has there ever been, on or in the Real Estate of any Obligated Party
or any of its Subsidiaries:

                  (i)    any underground storage tanks or surface impoundments,

                  (ii)   any asbestos-containing material, or

                  (iii)  any polychlorinated biphenyls (PCBs) used in hydraulic
            oils, electrical transformers, or other equipment.

            (g)   Neither any Obligated Party nor any of its Subsidiaries has
filed any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment.

            (h)   Neither any Obligated Party nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property) imposing material obligations or
liabilities on any Obligated Party or any of its Subsidiaries with respect to
any remedial action in response to the Release of a Contaminant or
environmentally related claim.

            (i)   None of the products manufactured, distributed, or sold by any
Obligated Party or any of its Subsidiaries contains asbestos containing
material.

            (j)   No Environmental Lien has attached to the Real Estate of any
Obligated Party or any of its Subsidiaries.

     Section 6.16 No Violation of Law. Neither any Obligated Party nor any of
its Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.

     Section 6.17 No Default. Neither any Obligated Party nor any of its
Subsidiaries is in default with respect to any note, indenture, loan agreement,
mortgage, lease, deed, or other agreement to which such Obligated Party or
Subsidiary is a party or by which it is bound, which default could reasonably be
expected to have a Material Adverse Effect.

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<PAGE>

     Section 6.18 ERISA Compliance. As of the Closing Date, except as set forth
on Schedule 6.18:

            (a)   Each Plan is in compliance with the applicable provisions of
ERISA, the Code, and other federal or state law, except where failure to comply
could not (as to each Plan individually and all Plans in the aggregate)
reasonably be expected to have a Material Adverse Effect. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and, to the best knowledge of each Obligated
Party, nothing has occurred which would cause the loss of such qualification.
Each Obligated Party and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

            (b)   There are no pending or, to the best knowledge of any
Obligated Party, threatened claims, actions, or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect.

            (c)   (i) No ERISA Event has occurred or is reasonably expected to
occur, (ii) no Pension Plan has any Unfunded Pension Liability, (iii) neither
any Obligated Party nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan, and (iv)
neither any Obligated Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

     Section 6.19 Taxes. As of the Closing Date, except as set forth on Schedule
6.19, each Obligated Party and its Subsidiaries has filed all federal, state,
and other tax returns and reports required to be filed (or appropriate
extensions have been timely filed), and has paid all federal, state, and other
taxes, assessments, fees, and other governmental charges levied or imposed upon
it or its properties, income, or assets otherwise due and payable unless such
unpaid taxes and assessments would constitute a Permitted Lien or except for any
such unpaid taxes and assessments that are being contested in good faith by
appropriate proceedings diligently pursued and as to which adequate reserves
have been established in accordance with GAAP.

     Section 6.20 Regulated Entities. Neither any Obligated Party nor any of its
Subsidiaries, nor any Person controlling any Obligated Party or any of its
Subsidiaries, is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
Neither any Obligated Party nor any of its Subsidiaries is a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, or a regulated entity under the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.

                                       37

<PAGE>

     Section 6.21 Use of Proceeds; Margin Regulations. The proceeds of the Loans
and Letters of Credit which have been advanced or issued, respectively, have
been used for the purposes specified in Section 7.24. No Obligated Party is
engaged in the business of buying or selling Margin Stock or extending credit
for the purpose of buying or carrying Margin Stock.

     Section 6.22 Copyrights, Patents, Trademarks, Licenses, etc. Each Obligated
Party owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
licenses, rights of way, authorizations and other rights that are reasonably
necessary for the operation of its businesses, in each case, to the best
knowledge of each Obligated Party, without conflict with the rights of any other
Person. To the best knowledge of each Obligated Party, no slogan or other
advertising device, product, process, method, substance, part, or other material
now employed, or now contemplated to be employed, by any Obligated Party or any
of its Subsidiaries infringes upon any rights held by any other Person. To the
best knowledge of each Obligated Party, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle, or any statute, law, rule, regulation, standard, or code
is pending or proposed, which, in either case, could reasonably be expected to
have a Material Adverse Effect.

     Section 6.23 No Material Adverse Change. No Material Adverse Effect has
occurred since the latest date of the Financial Statements delivered to the
Lenders referenced in Section 6.6.

     Section 6.24 Full Disclosure. None of the representations or warranties
made by any Obligated Party in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement, or certificate furnished
by or on behalf of any Obligated Party in connection with the Loan Documents
(including the offering and disclosure materials delivered by or on behalf of
any Obligated Party to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.

     Section 6.25 Material Agreements. As of the Closing Date, Schedule 6.25
sets forth all material agreements and contracts (other than the Loan Documents)
of the Obligated Parties which are required to be publicly disclosed pursuant to
any Requirement of Law since the date of the Parent's annual report for the
Fiscal Year ended September 30, 2002.

     Section 6.26 Bank Accounts. Schedule 6.26 contains a complete and accurate
list of all bank accounts maintained by each Obligated Party with any bank or
other financial institution.

     Section 6.27 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery, or performance by, or enforcement against, any
Obligated Party of this Agreement or any other Loan Document except for (a)
those which have been duly obtained by the Obligated Parties, copies of which
have been provided to the Agent, (b) the filing of financing statements in the
appropriate jurisdictions necessary in accordance with the UCC to perfect a
security interest in the personal

                                       38

<PAGE>

property covered thereby, and (c) the recording of the Mortgages (if any) in the
appropriate real estate records of the jurisdiction in which such real estate is
located.

     Section 6.28 Investment Property.

            (a)   Schedule 6.28 sets forth a correct and complete list of all
Investment Property owned by each Obligated Party. Each Obligated Party is the
legal and beneficial owner of such Investment Property, as so reflected, free
and clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed of
any of its rights or interest therein.

            (b)   To the extent any Obligated Party is the owner of or becomes
the issuer of any Investment Property that is Collateral (each such Person which
issues any such Investment Property being referred to herein as an "Issuer"):
(i) the Issuer's shareholders that are Obligated Parties and the ownership
interest of each such shareholder are as set forth on Schedule 6.5, and each
such shareholder is the registered owner thereof on the books of the Issuer;
(ii) the Issuer acknowledges the Agent's Liens; (iii) to the extent required to
perfect the Agent's Liens or if requested by the Agent, such security interest,
collateral assignment, lien, and pledge in favor of the Agent has been
registered on the books of the Issuer for such purpose as of the date hereof;
and (iv) the Issuer is not aware of any liens, restrictions, or adverse claims
which exist on any such Investment Property other than the Agent's Liens.

     Section 6.29 Common Enterprise. The successful operation and condition of
each of the Obligated Parties is dependent on the continued successful
performance of the functions of the group of the Obligated Parties as a whole
and the successful operation of each of the Obligated Parties is dependent on
the successful performance and operation of each other Obligated Party. Each
Obligated Party expects to derive benefit (and its board of directors or other
governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from successful operations of each of the
other Obligated Parties. Each Obligated Party expects to derive benefit (and the
boards of directors or other governing body of each Obligated Party has
determined that it may reasonably be expected to derive benefit), directly and
indirectly, from the credit extended by the Lenders to the Borrowers hereunder,
both in their separate capacities and as members of the group of companies. Each
Obligated Party has determined that execution, delivery, and performance of this
Agreement and any other Loan Documents to be executed by such Obligated Party is
within its purpose, will be of direct and indirect benefit to such Obligated
Party, and is in its best interest.

     Section 6.30 Affiliate Transactions. As of the Closing Date, except as set
forth on Schedule 6.30, there are no existing or proposed agreements,
arrangements, understandings, or transactions between any Obligated Party and
any of the officers, members, managers, directors, stockholders, parents, other
interest holders, employees, Affiliates, or Subsidiaries of any Obligated Party
or any members of their respective immediate families, and none of the foregoing
Persons are directly or indirectly indebted to or have any direct or indirect
ownership, partnership, or voting interest in any Affiliate of any Obligated
Party or any Person with which any Obligated Party has a business relationship
or which competes with any Obligated Party (other than ownership of two percent
(2.0%) or less of the outstanding Capital Stock of any publicly traded company
that may compete with an Obligated Party).

                                       39

<PAGE>

     Section 6.31 Notices from Farm Products Sellers, etc.

            (a)   No Obligated Party has, within the one (1) year period prior
to the Closing Date, received any written notice pursuant to the applicable
provisions of any Farms Products Law from (i) any Farm Products Seller or (ii)
any lender to any Farm Products Seller or any other Person with a security
interest in the assets of any Farm Products Seller or (iii) the Secretary of
State (or equivalent official) or other governmental Authority of any state,
commonwealth or political subdivision thereof in which any Farm Products
purchased by such Obligated Party are produced, in any case advising or
notifying such Obligated Party of the intention of such Farm Products Seller or
other Person to preserve the benefits of any Lien or trust applicable to any
assets of any Obligated Party established in favor of such Farm Products Seller
or other Person under the provisions of any law or claiming a Lien or security
interest in and to any perishable agricultural commodity or any other Farm
Products which may be or have been purchased by an Obligated Party or any
related or other assets of such Obligated Party (all of the foregoing, together
with any such notices as Obligated Party may at any time hereafter receive,
collectively, the "Farm Products Notices").

            (b)   No Obligated Party is engaged in, and shall not engage in,
raising, fattening, grazing, or other farming operations.

            (c)   Each Obligated Party shall obtain the Agent's written consent
prior to purchasing any Farm Products from a Person who produces such Farm
Products in a state with a central filing system certified by the United States
Secretary of Agriculture, and, to the extent required by applicable law or
necessary to obtain the benefits of any Requirement of Law, register as a buyer
with the Secretary of State of such state (or the designated system operator).
Each Obligated Party shall forward promptly to the Agent a copy of such
registration as well as a copy of all relevant portions of the master list
periodically distributed by any such Secretary of State (or the designated
system operator). Each Obligated Party shall comply with any payment of
obligations in connection with the purchase of any Farm Products imposed by a
secured party as a condition of the waiver or release of a trust or Lien
effective under any Farm Products Law whether or not as a result of direct
notice or the filing under any applicable central filing system. Each Obligated
Party shall also (i) promptly notify the Agent, in writing, of the receipt of
any direct notice received pursuant to any Farm Products Law and provide the
Agent with true and complete copy of the same, and (ii) not later than the fifth
(5th) day of each month, provide to the Agent true and correct copies of all
state filings recorded in any such central filing system in respect of a Person
from whom an Obligated Party has purchased Farm Products within the preceding 12
months.

                                   ARTICLE 7.
                       AFFIRMATIVE AND NEGATIVE COVENANTS

     Each Obligated Party covenants to the Agent and each Lender that, so long
as any of the Obligations remain outstanding or this Agreement or any Commitment
hereunder is in effect, each Obligated Party will keep and perform each of the
following covenants:

     Section 7.1  Taxes and Other Obligations. Except as otherwise permitted by
the terms of this Agreement and permitted statutory exemptions, each Obligated
Party shall, and shall

                                       40

<PAGE>

cause each of its Subsidiaries to, (a) file, prior to delinquency, all tax
returns and other reports that it is required to file, (b) pay, or provide for
the payment, prior to delinquency, of all taxes, fees, assessments, and other
governmental charges against it or upon its property, income, and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves in accordance with GAAP for the payment of all such items, and provide
to the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing, and (c) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors,
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; provided,
however, so long as the Borrowers have notified the Agent in writing, neither
any of the Obligated Parties nor any of its Subsidiaries need pay any tax, fee,
assessment, or governmental charge (i) which it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) for which it has established
proper reserves as required under GAAP, and (iii) for which no Lien (other than
a Permitted Lien) results from such non-payment.

     Section 7.2 Legal Existence and Good Standing. Except as allowed by Section
7.9, each Obligated Party shall, and shall cause each of its Subsidiaries to,
maintain its legal existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such existence and qualification
or good standing could reasonably be expected to have a Material Adverse Effect;
provided, however, that the Parent and each applicable Obligated Party is
permitted to merge, reorganize, consolidate, wind up, liquidate or dissolve the
Subsidiaries of the Parent listed on Schedule 7.2 so long as (a) any net assets
owned by such Subsidiary prior to such action (i) are transferred, free and
clear of any and all Liens other than Permitted Liens, to an Obligated Party not
listed on Schedule 7.2 prior to or concurrently with such action or (ii) will be
owned, free and clear of all Liens other than Permitted Liens, by an Obligated
Party not listed on Schedule 7.2 by operation of law as a result of such action,
(b) notice, including a copy of any documents to be filed in the jurisdiction
where such Subsidiary was formed, is given to the Agent prior to or concurrently
with such action, (c) in connection with any such action which also involves any
Borrower (e.g., a merger or consolidation), such Borrower is the surviving
entity in such action or remains as an entity in existence after giving effect
to such action, and (d) no Default or Event of Default exists at the time of
such action or would result from or exist after giving effect to any such
action.

     Section 7.3 Compliance with Law and Agreements; Maintenance of Licenses.
Each Obligated Party shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act and all Environmental Laws). Each Obligated
Party shall obtain and maintain, and shall cause each of its Subsidiaries to
obtain and maintain, all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date or as permitted by Section 7.17. No Obligated
Party shall modify, amend, or alter its certificate or articles of
incorporation, bylaws, limited liability company operating agreement, limited
partnership agreement, or other similar constituent documents other than in a
manner which does not adversely affect the rights of the Lenders or the Agent.

                                       41

<PAGE>

     Section 7.4 Maintenance of Property; Inspection of Property.

             (a) Each Obligated Party shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.

             (b) Each Obligated Party shall permit representatives and
independent contractors of the Agent to visit and inspect (at the expense of the
Borrowers) any of its properties, to examine its corporate, financial, and
operating records, and make copies thereof or abstracts therefrom and to discuss
its affairs, finances, and accounts with its directors, officers, and
independent public accountants (provided that the Obligated Parties are given at
least three (3) Business Days' prior notice of, and an opportunity to
participate in, any such communication), at such reasonable times during normal
business hours and as soon as may be reasonably desired, upon reasonable advance
notice to such Obligated Party; provided, further, however, when an Event of
Default exists, the Agent or any Lender may do any of the foregoing at the
expense of the Borrowers (to be paid by the Borrowers as provided in Section
13.7) at any time during normal business hours and without advance notice. With
the consent of the Agent, any Lender which desires to accompany the Agent on any
such visitation or inspection may do so at the expense of such Lender except as
may otherwise be provided in Section 13.7. Notwithstanding anything to the
contrary contained herein, the Agent shall have the right, in its discretion
from time to time, to obtain a copy of any report or other information regarding
the polarity of any raw sugar Inventory, including any raw sugar Inventory
in/transit to any Obligated Party, and the Agent shall have the right to request
the delivery to the Agent of all documents, invoices, and bills of lading
relating to any in/transit Inventory if and to the extent possession of the same
is necessary or appropriate to ensure the required perfection or priority of the
Agent's Lien with respect to such documents, invoices, or bills of lading or the
property covered thereby.

     Section 7.5 Insurance.

             (a) Each Obligated Party shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers
having a rating of at least A (or such other ratings within the "A" category as
may be acceptable to the Agent) or better by Best Rating Guide, insurance
against: (i) loss or damage by fire with extended coverage; (ii) theft,
burglary, pilferage, and loss in transit; (iii) public liability and third party
property damage; (iv) larceny, embezzlement, or other criminal liability; (v)
business interruption; (vi) public liability and third party property damage;
and (vii) such other hazards or of such other types as is customary for Persons
engaged in the same or similar business as such Obligated Party, all as the
Agent, in its discretion, or acting at the direction of the Required Lenders,
shall specify, in amounts, and under policies acceptable to the Agent and the
Required Lenders (it being understood that policies in form and substance
acceptable to the Agent in connection with the initial closing of this Agreement
shall be generally acceptable to the Agent and the Required Lenders thereafter
in the absence of a change in law, facts and/or circumstances). Without limiting
the foregoing, in the event that any improved Real Estate covered by a Mortgage
is determined to be located within an area that has been identified by the
Director of the Federal Emergency Management Agency as a Special Flood Hazard
Area ("SFHA"), the applicable Obligated Party shall purchase and maintain flood
insurance on such Real Estate and any

                                       42

<PAGE>

Equipment and Inventory located on such Real Estate. The amount of such flood
insurance will be reasonably determined by the Agent, and shall, at a minimum,
comply with applicable federal regulations as required by the Flood Disaster
Protection Act of 1973, as amended. Each Obligated Party shall also maintain
flood insurance for its Inventory and Equipment which is, at any time, located
in a SFHA.

             (b) For each of the insurance policies issued as required by this
Section 7.5, each Obligated Party shall cause the Agent, for the ratable benefit
of the Agent and the Lenders, to be named as secured party or mortgagee and sole
loss payee or additional insured, in a manner acceptable to the Agent. Each
policy of insurance shall contain a clause or endorsement requiring the insurer
to give not less than thirty (30) days prior written notice to the Agent in the
event of cancellation of such policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Obligated Party or any of its
Subsidiaries, the insured Person or the owner of any premises for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by the Obligated Parties when due or within three (3) Business
Days after when due but in any event prior to delinquency, and certificates of
insurance and, if requested by the Agent or any Lender, photocopies of the
policies shall be delivered to the Agent. If any Obligated Party fails to
procure (or cause to be procured) such insurance or to pay the premiums therefor
when due, the Agent may, and at the direction of the Majority Lenders shall, do
so from the proceeds of Revolving Loans.

     Section 7.6 Insurance and Condemnation Proceeds. Each Obligated Party shall
promptly notify the Agent and the Lenders of any loss, damage, or destruction to
the Collateral or any Real Estate (whether or not any such Real Estate is
Collateral), whether or not covered by insurance, except to the extent that such
loss, damage, or destruction involves an amount, and/or a fair market value,
that is less than $250,000 in the aggregate as to each occurrence or series of
related occurrences. The Agent is hereby authorized to directly collect all
insurance and condemnation proceeds in respect of Collateral and to apply such
proceeds to the reduction of the Obligations or to release such proceeds to the
applicable Obligated Party, as applicable, in accordance with the following
terms and provisions:

             (a) With respect to insurance and condemnation proceeds relating to
Collateral other than Fixed Assets and Inventory, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to the
reduction of the Obligations in the manner provided for in Section 3.8.

             (b) With respect to insurance and condemnation proceeds relating to
Collateral consisting of Fixed Assets, provided no Default or Event of Default
has occurred and is continuing, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall (subject to the proviso below) release to the
applicable Obligated Party the aggregate amount of such insurance and
condemnation proceeds subject to the Borrowers' compliance with all terms and
provisons of this Section 7.6(b); provided, however, that (i) with respect to
all such insurance and condemnation proceeds received which exceed $5,000,000 in
aggregate amount as to each occurrence or series of related occurrences, an
aggregate amount equal to the effective advance

                                       43

<PAGE>

rate (as specified on page II-24 of draft #6 of the Confidential Offering
Memorandum dated as of November 14, 2002) for Equipment multiplied by the
Orderly Liquidation Value of such Equipment (with respect to any Equipment
subject to such replacement, repair, restoration, or rebuilding referred to
below) and an aggregate amount equal to the effective advance rate (as specified
on page II-24 of draft #6 of the Confidential Offering Memorandum dated as of
November 14, 2002) for Real Estate multiplied by the fair market value of such
Real Estate (with respect to any Real Estate subject to such replacement,
repair, restoration, or rebuilding referred to below), in each case as
determined by then most recent appraisals provided to the Agent in accordance
with this Agreement, shall be maintained by the Agent in a cash collateral
account (in which the Agent has a perfected, first priority Lien as security for
the payment and performance of the Obligations) unless and until the same are
needed, after utilization and expenditure of all other funds that are necessary
or appropriate for the completion of such replacement, repair, restoration, or
rebuilding in the manner provided in this Section 7.6(b), to complete such
replacement, repair, restoration, or rebuilding, in which case the same shall be
released by the Agent to the Parent on an as needed basis for such completion,
and (ii) nothwithstanding anything to the contrary contained in this Section
7.6(b), if, at the time of any otherwise applicable release of insurance and
condemnation proceeds by the Agent pursuant to clause (i) of this Section
7.6(b), the Term Loans have not been paid in full, then no such proceeds shall
be released by Agent unless and until such release is approved by the Required
Lenders. The Borrowers shall: (A) use all such proceeds released by the Agent to
replace, repair, restore, or rebuild the affected Fixed Assets with Fixed Assets
of like kind in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage, or
destruction, and commence such replacement, repair, restoration, or rebuilding
within two hundred seventy days (270) after the date of the casualty or
condemnation event to which such proceeds relate and continue the same in a
diligent and expeditious manner thereafter; (B) prior to such replacement,
repair, restoration, or rebuilding, provide the Agent with plans and
specifications for any such replacement, repair, restoration, or rebuilding
which shall be reasonably satisfactory to the Agent; (C) demonstrate, to the
reasonable satisfaction of the Agent, that the funds available to the Borrowers
or other Obligated Parties will be sufficient to complete such replacement,
repair, restoration, or rebuilding in the manner provided therein; and (D) grant
to the Agent, or ensure that the Agent was previously granted, a perfected,
first priority Lien on the replaced, repaired, restored, or rebuilt Fixed Assets
as security for the payment and performance of the Obligations. In all other
circumstances (including, without limitation, if all requirements relating to
replacement, repair, restoration, or rebuilding of the affected Fixed Assets are
not complied with) and with respect to all other such proceeds, the Agent shall
apply all such insurance and condemnation proceeds to the reduction of the
Obligations in the manner provided for in Section 3.4(c) as it relates to the
proceeds of dispositions other than sales of Accounts and Inventory, excluding
the effect of the proviso at the end of Section 3.4(c). Any insurance and
condemnation proceeds to be released pursuant to the foregoing provisions may,
at the option of the Agent, be disbursed from time to time as replacement,
repair, restoration, or rebuilding progresses to pay for the work completed and
in place and such disbursements may, at the Agent's option, be made directly to
the applicable Obligated Party or Obligated Parties or to or through any
contractor or materialman to whom payment is due or to or through a construction
escrow to be maintained by a title insurer acceptable to the Agent.
Notwithstanding anything to the contrary contained in this Section 7.6(b), any
insurance and condemnation proceeds which do not exceed $5,000,000 in

                                       44

<PAGE>

aggregate amount as to any occurrence or series of related occurrences shall be
released to the applicable Obligated Party, and all such proceeds shall be
either (1) used to replace, repair, restore, or rebuild the affected Fixed
Assets in accordance with the preceding terms and provisions of this Section 7.6
(including, without limitation, the requirements set forth in clause (A)
preceding regarding the permitted time period during which such action shall be
taken) but without involvement of the Agent or the Lenders or (2) used to
prepare the Loans in accordance with Section 3.4(b).

     Section 7.7 Environmental Laws.

             (a) Each Obligated Party shall conduct, and shall cause each of its
Subsidiaries to conduct, its business in compliance in all material respects
with all Environmental Laws applicable to it, including those relating to the
generation, handling, use, storage, and disposal of any Contaminant. Each
Obligated Party shall take, and shall cause each of its Subsidiaries to take,
prompt and appropriate action to respond to any non-compliance with
Environmental Laws and shall regularly report to the Agent on such response.

             (b) Without limiting the generality of the foregoing, the Obligated
Parties shall submit to the Agent and the Lenders upon request, but no more
frequently than annually, an update of the status of each environmental
compliance or liability issue known to any of the Obligated Parties concerning
any Obligated Party or any Subsidiary of an Obligated Party or any of their
respective properties or operations (whether past or present), if any. The Agent
or any Lender may request, in which case the Borrowers will promptly furnish or
cause to be promptly furnished to the Agent, copies of technical reports
prepared by any Obligated Party or any Subsidiary of an Obligated Party and its
communications with any Governmental Authority to determine whether such
Obligated Party or Subsidiary of an Obligated Party is proceeding reasonably to
correct, cure, or contest in good faith any alleged non-compliance or
environmental liability, provided that the Agent and the Lenders shall use all
reasonable efforts to cooperate with the Obligated Parties to ensure that the
attorney/client privilege and the statutory audit privilege between the
Obligated Parties and their counsel is maintained to the extent possible with
respect to circumstances as to which it is reasonably determined by the
Obligated Parties that maintenance of such privilege is appropriate. Each
Obligated Party shall, at the Agent's or the Required Lenders' request and at
such Obligated Party's expense, (i) retain an independent environmental engineer
acceptable to the Agent to evaluate any site, including tests if appropriate,
where the non-compliance or alleged non-compliance with Environmental Laws has
occurred and prepare and deliver to the Agent, in sufficient quantity for
distribution by the Agent to the Lenders, a report setting forth the results of
such evaluation, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to the
Agent, in sufficient quantity for distribution by the Agent to the Lenders, a
supplemental report of such engineer whenever the scope of the environmental
problems (if any), or the response thereto or the estimated costs thereof, shall
increase in any material respect.

             (c) The Agent and its representatives shall have the right, at any
reasonable time and upon at least three (3) Business Days advance notice to the
Parent, to enter and visit the Real Estate and any other place where any
property of any Obligated Party is located for the purposes of observing the
Real Estate, taking and removing soil or groundwater samples, and conducting
tests on any part of the Real Estate. The Agent is under no duty, however, to
visit or

                                       45

<PAGE>

observe the Real Estate or to conduct tests, and any such acts by the Agent will
be solely for the purposes of protecting the Agent's Liens and preserving the
Agent and the Lenders' rights under the Loan Documents. No site visit,
observation, or testing by the Agent and the Lenders will result in a waiver of
any Default or Event of Default of any Obligated Party or impose any liability
on the Agent or the Lenders. In no event will any site visit, observation, or
testing by the Agent be a representation that hazardous substances are or are
not present in, on or under the Real Estate, or that there has been or will be
compliance with any Environmental Law. Neither any Obligated Party nor any other
party is entitled to rely on any site visit, observation, or testing by the
Agent. The Agent and the Lenders owe no duty of care to protect the Obligated
Parties or any other party against, or to inform the Obligated Parties or any
other party of, any hazardous substances or any other adverse condition
affecting the Real Estate. The Agent may in its discretion disclose to the
Obligated Parties or to any other party if so required by law any report or
findings made as a result of, or in connection with, any site visit,
observation, or testing by the Agent. The Obligated Parties understand and agree
that the Agent makes no warranty or representation to the Obligated Parties or
any other party regarding the truth, accuracy, or completeness of any such
report or findings that may be disclosed. The Obligated Parties also understand
that depending on the results of any site visit, observation, or testing by the
Agent and disclosed to any Obligated Party, an Obligated Party may have a legal
obligation to notify one or more environmental agencies of the results, that
such reporting requirements are site-specific, and are to be evaluated by the
Obligated Parties without advice or assistance from the Agent. In each instance,
the Agent will give the Obligated Parties reasonable notice before entering the
Real Estate or any other place the Agent is permitted to enter pursuant to this
Section 7.7(c) and the opportunity to accompany (and/or have its representatives
accompany) the Agent or its representatives and split or share any samples
taken. The Agent will make reasonable efforts to avoid interfering with the
Obligated Parties' use of the Real Estate or any other property in exercising
any rights provided hereunder.

     Section 7.8  Compliance with ERISA. Each Obligated Party shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code, and
other federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.

     Section 7.9  Mergers, Consolidations, or Sales. Except as permitted by
Section 7.2, neither any Obligated Party nor any of its Subsidiaries shall enter
into any transaction of merger, reorganization, or consolidation, or transfer,
sell, assign, lease, or otherwise dispose of all or any part of its property, or
wind up, liquidate or dissolve, or agree to do any of the foregoing, except for
the following which are permitted (subject to satisfaction of each of the other
terms and provisions of this Agreement, including, without limitation, Section
3.4 and the conditions or requirements set forth in this Section 7.9 below) if
(but only if) no Default or Event of Default then exists or would result from
the following:

             (a)  sales of Inventory in the ordinary course of its business;

                                       46

<PAGE>

             (b)  sales or other dispositions of Equipment in the ordinary
course of its business that is obsolete or no longer useable by such Obligated
Party in its business with an orderly liquidation value not to exceed $1,000,000
in the aggregate (as to all Obligated Parties and their Subsidiaries) in any
Fiscal Year;

             (c)  sales of Unappraised Assets, the Michigan Sugar Notes, the
Tyco Escrow and the Hormel Escrow, in each case for fair market value;

             (d)  transactions between or among Obligated Parties which are
permitted in accordance with Section 7.15;

             (e)  the sale or other disposition of any Fixed Asset to the extent
such asset is, within ninety (90) days after the date of such sale or other
disposition, replaced with an asset or assets providing the same function having
equal or greater value than the asset sold or otherwise disposed of;

             (f)  the sale in the ordinary course of business of any property
specified in clause (d), (e), (f) or (g) of the definition of the term
"Restricted Investment";

             (g)  the sale or other disposition of assets, other than the
Primary Plants, for which the aggregate amount of Net Proceeds does not exceed
$10,000,000 per transaction or series of related transactions and does not
exceed $15,000,000 in the aggregate for all transactions; provided, however,
that, as a condition to each sale or other disposition referred to in this
clause (g), (i) the aggregate amount of Net Proceeds payable and received in
cash by the Obligated Parties in connection therewith shall not be less than (A)
in the case of Accounts, the book value thereof, (B) in the case of Inventory,
the NRV thereof, (C) in the case of Equipment, the Orderly Liquidation Value
thereof, (D) in the case of Real Estate, the fair market value thereof, and (E)
in the case of all other assets (i.e., other than those referred to in clause
(A), (B), (C), or (D) preceding), the fair market value of such other assets, in
each case as determined by the then most recent appraisals provided to the Agent
in accordance with this Agreement or, with respect to any such assets not
subject to such an appraisal, as determined by the sale price thereof pursuant
to such sale or other disposition; and

             (h)  after the Term Loans (including all accrued interest thereon
and all fees, expenses and other Obligations directly relating thereto) have
been paid in full, the sale or other disposition of assets for fair market value
if (but only if) after giving effect thereto the Borrowers are in pro forma
compliance with the financial covenants set forth in Sections 7.22 and 7.23 (as
if such sale or other disposition had occurred as of the first day of the
earliest Fiscal Quarter which would then be included in the relevant consecutive
Fiscal Quarter period for purposes of determining compliance with Section 7.22
and 7.23 as of the last day of the Fiscal Quarter then most recently ended);
provided, however, that neither the Obligated Parties nor any of their
Subsidiaries may sell any Primary Plant or any material portion thereof without
the prior written consent of the Required Lenders (and the Required Lenders may
elect to waive the requirement in this clause (h) regarding pro forma compliance
with financial covenants in connection with such sale or other disposition);

                                       47

<PAGE>

provided, however, that (i) the sales or other dispositions referred to in
clauses (a) through (h) preceding shall not be permitted unless the Agent, for
the benefit of itself and the Lenders, has a perfected, first priority Lien
(subject only to Permitted Liens) on all proceeds (including, without
limitation, any property or asset received in exchange for or replacement of the
property or asset sold or otherwise disposed of) of such sale or other
disposition at the time of such sale or other disposition, (ii) except for
Permitted IP Dispositions, no trademarks, service marks, tradenames, or other
intellectual property of any material value may be sold or otherwise disposed of
without the prior written consent of the Agent and the Required Lenders, and
(iii) the Borrowers shall at all times retain the full and complete right to
sell all of their Inventory utilizing all trademarks, service marks, tradenames,
and other intellectual property which is, as of the Closing Date, utilized in
connection with the sale thereof, other than packaging Inventory on which is
imprinted or otherwise contained trademarks, service marks, or tradenames which
are not owned by any Borrower or other Obligated Party and on which trademarks,
service marks, tradenames, or other intellectual property of the Borrowers and
the Obligated Parties are not imprinted or otherwise contained. The Obligated
Parties shall apply all proceeds of any such sale or other disposition (other
than any Fixed Assets received in replacement of a sale or other disposition of
any fixed asset pursuant to clause (e) preceding) to the Loans in accordance
with Section 3.4.

     Section 7.10 Distributions; Capital Change; Restricted Investments. Neither
any Obligated Party nor any of its Subsidiaries shall (a) directly or indirectly
declare or make, or incur any liability to make, any Distribution, except
Distributions (i) by a Borrower to another Borrower that is the parent entity of
such Borrower, (ii) by a Borrower to the Parent, (iii) of the Rights, (iv) by
the Parent to redeem all issued and outstanding Rights for an aggregate
consideration not to exceed $250,000 during the term of this Agreement, or (v)
consisting of the issuance of common or preferred stock of the Parent, other
than Disqualified Stock, in accordance with the Shareholders Rights Plan (as
opposed to the making or payment of any Distribution on or with respect to such
stock issued or to be issued), (b) make any change in its capital structure
which could have a Material Adverse Effect, or (c) make any Restricted
Investment.

     Section 7.11 Transactions Resulting in a Material Adverse Effect. Neither
any Obligated Party nor any of its Subsidiaries shall enter into any transaction
which could be reasonably expected to result in a Material Adverse Effect.

     Section 7.12 Guaranties. Neither any Obligated Party nor any of its
Subsidiaries shall make, issue, or become liable on any Guaranty, except (a)
Guaranties of the Debt allowed under Section 7.13 (other than Section 7.13(f)),
(b) Guaranties of the Obligations in favor of the Agent, and (c) any Guaranties
in effect as of the date of this Agreement and described on Schedule 6.8.

     Section 7.13 Debt. Neither any Obligated Party nor any of its Subsidiaries
shall incur or maintain any Debt, other than:

             (a)  the Obligations;

             (b)  the Debt described on Schedule 6.8;

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<PAGE>

             (c)  Capital Leases of Equipment and purchase money secured Debt
incurred to purchase Equipment; provided that (i) the Liens securing such
Capital Leases and purchase money secured Debt shall attach only to the
Equipment acquired by the incurrence of such Capital Leases and purchase money
secured Debt and (ii) the aggregate amount of such Capital Leases and purchase
money secured Debt shall not exceed $7,500,000 at any time;

             (d)  Debt evidencing a refunding, renewal, or extension of the Debt
described in clause (b) and clause (c) preceding, provided that (i) the
principal amount thereof is not increased, (ii) the Liens, if any, securing such
refunded, renewed, or extended Debt do not attach to any assets in addition to
those assets, if any, securing the Debt to be refunded, renewed, or extended,
(iii) no Person that is not initially an obligor or guarantor of such Debt shall
become an obligor or guarantor thereof, and (iv) the terms of such refunding,
renewal, or extension are, in the Agent's reasonable discretion, no less
favorable to such Obligated Party, the Agent, or the Lenders than the original
Debt;

             (e)  Debt owing by an Obligated Party to another Obligated Party
for intercompany loans and advances made for working capital in the ordinary
course of business; provided, however, that (i) the net, aggregate principal
amount of all intercompany loans and advances made by any one or more of the
Borrowers to and owed by any one or more of the Guarantors and at any time
outstanding shall not exceed $10,000,000 (exclusive of such loans and advances
to and owed by Savannah Foods & Industries, Inc. and exclusive of the effects of
the Diamond Crystals Brand Sale), (ii) on or before January 31, 2003, all such
loans and advances made to and owed by any Guarantor shall be evidenced by
promissory notes and shall be secured by Liens on all of the property of such
Guarantor (which are subordinated to the Liens in favor of the Agent pursuant to
the Guaranty Agreement executed by such Guarantor), which promissory notes and
Liens shall be pledged and assigned to the Agent to secure the payment and
performance of the Obligations, and (iii) all such loans and advances made to
and owed by Savannah Foods & Industries, Inc. must be made in the ordinary
course of business consistent with past practices;

             (f)  Guaranties of Debt which are permitted under Section 7.12;

             (g)  Debt under Hedge Agreements entered into in the ordinary
course of business to transfer or mitigate actual risks associated with the
business of the Obligated Parties and not for speculative purposes;

             (h)  Debt of Holly Sugar owed to the Commodity Credit Corporation
and incurred in the ordinary course of business not exceeding $30,000,000 in
aggregate principal amount at any time outstanding, provided that such Debt is
wholly non-recourse to Holly Sugar and the other Obligated Parties and is
secured only by Permitted CCC Liens and the documentation evidencing and
governing such Debt and Liens is in form and substance reasonably satisfactory
to the Agent (provided that such documentation in the form previously provided
to the Agent prior to the Closing Date is satisfactory to the Agent for purposes
of this clause (h));

                                       49

<PAGE>

             (i)  unsecured Debt incurred in the ordinary course of business to
finance the payment of insurance premiums not exceeding $10,000,000 in aggregate
principal amount at any time outstanding; and

             (j)  other unsecured Debt incurred in the ordinary course of
business not exceeding $10,000,000 in aggregate principal amount at any time
outstanding.

     Section 7.14 Prepayment. Neither any Obligated Party nor any of its
Subsidiaries shall voluntarily prepay any Debt except the Obligations in
accordance with this Agreement.

     Section 7.15 Transactions with Affiliates. Except as set forth below,
neither any Obligated Party nor any of its Subsidiaries shall sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), to any Affiliate, or lend or advance money or
property to any Affiliate, or invest in (by capital contribution or otherwise)
or purchase or repurchase any Capital Stock or indebtedness, or any property, of
any Affiliate, or become liable on any Guaranty of the indebtedness, dividends,
or other obligations of any Affiliate. Notwithstanding the foregoing, if no
Event of Default has occurred and is continuing or would result therefrom, an
Obligated Party may (a) engage in transactions with an Affiliate in the ordinary
course of such Obligated Party's business consistent with past practices, in
amounts and upon terms fully disclosed to the Agent and the Required Lenders and
no less favorable to the Obligated Parties and their Subsidiaries than would be
obtained in a comparable arm's-length transaction with a third party who is not
an Affiliate and (b) engage in the following transactions with any other
Obligated Party in the ordinary course of business consistent with past
practices, in each case subject to appropriate cost or similar allocations among
entities: (i) centralized and shared accounting and treasury services; (ii)
centralized and shared credit and risk management services; (iii) centralized
and shared management services; (iv) the purchase and sale of products; (v)
centralized and shared payroll, human resources, benefits, and other personnel
services; (vi) centralized and shared communication services; (vii) centralized
and shared information technology services; (viii) centralized and shared
disaster recovery contingency planning services; (ix) centralized and shared
intellectual property, including licensing thereof; (x) other transactions
expressly permitted by this Agreement; and (xi) similar transactions in the
ordinary course of business consistent with past practices.

     Section 7.16 [Intentionally Omitted.]

     Section 7.17 Business Conducted. Neither any Obligated Party nor any of its
Subsidiaries shall engage, directly or indirectly, in any line of business other
than the businesses in which the Obligated Parties are engaged on the Closing
Date. None of the Foreign Subsidiaries shall own any material property or
assets.

     Section 7.18 Liens. Neither any Obligated Party nor any of its Subsidiaries
shall create, incur, assume, or permit to exist any Lien on any property now
owned or hereafter acquired by it, except Permitted Liens. Other than as set
forth in this Agreement or in connection with the creation or incurrence of any
Debt under Section 7.13(c), no Obligated Party will enter into or become subject
to any Negative Pledge; provided that any Negative Pledge entered into in
connection with the creation of Debt under Section 7.13(c) shall be limited to
the property

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<PAGE>

subject to the purchase money Lien securing such Debt. Without limiting the
generality of, and in addition to, the foregoing, no Obligated Party shall
create, incur, assume, or permit to exist any Negative Pledge on any of the
Unappraised Assets or any Lien on any of the Unappraised Assets except for
Permitted Liens of the type referred to in clause (a), clause (c), clause (e),
or clause (f) of the definition of the term "Permitted Liens."

     Section 7.19 Sale and Leaseback Transactions. Neither any Obligated Party
nor any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for such Person to lease or rent property
that such Person has sold or will sell or otherwise transfer to such Person;
provided, however, that an Obligated Party may enter into such an arrangement
with respect to any asset that has been sold or otherwise disposed of in
accordance with Section 7.9.

     Section 7.20 New Subsidiaries; Addition of Subsidiaries as Borrowers or
Guarantors.

          (a) No Obligated Party shall, without the written consent of the Agent
and the Majority Lenders, directly or indirectly, organize, create, acquire, or
permit to exist any Subsidiary other than those listed on Schedule 6.5;
provided, however, that the consent of the Majority Lenders shall not be
required with respect to the creation of a new Subsidiary of the Parent which is
organized for state tax planning purposes (and the Agent may rely upon a
representation of the Parent regarding the purpose for which any such Subsidiary
is being created). Without limiting the foregoing, promptly upon creation or
acquisition of any Subsidiary by an Obligated Party, other than any Subsidiary
which is organized under Requirements of Law of a jurisdiction other than the
U.S. or a state of the U.S., the Obligated Parties shall propose to the Agent
that such new Subsidiary become, and with the Agent's and the Majority Lenders'
consent pursuant to Section 13.22, if applicable, cause such Subsidiary to
become, either a Borrower or a Guarantor under the Loan Documents.

          (b) In the event that any Obligated Party has any Subsidiary organized
under the laws of the U.S. or any state of the U.S. which is not an Obligated
Party and such Subsidiary owns property with an aggregate book or fair market
value in excess of $500,000 or that has revenue in any Fiscal Year in excess of
$1,000,000, such Obligated Party shall notify the Agent in writing thereof and
propose to the Agent that such Subsidiary become, and with the Agent's and the
Majority Lenders' consent pursuant to Section 13.22, if applicable, cause such
Subsidiary to become, either a Borrower or a Guarantor subject to the terms of
this Agreement. In the event that the Obligated Parties have Subsidiaries
organized under the laws of the U.S. or any state of the U.S. which are not
Obligated Parties and which collectively for all such Subsidiaries own property
with an aggregate book or fair market value in excess of $500,000 or which
collectively for all such Subsidiaries have revenue in any Fiscal Year in excess
of $1,000,000, the Obligated Parties shall propose to the Agent that one or more
of such Subsidiaries become, and with the Agent's and the Majority Lenders'
consent pursuant to Section 13.22, if applicable, cause each such Subsidiary to
become, either a Borrower or a Guarantor subject to the terms of this Agreement
to the extent required to cause the aggregate book or fair market value of all
property owned by such Subsidiaries which are not Obligated Parties to be equal
to or less than $500,000 and to cause the revenue of all such Subsidiaries which
are not Obligated Parties, collectively, to be equal to or less than $1,000,000.

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<PAGE>

          (c)     Any Subsidiary which must be added as either a Borrower or a
Guarantor as provided in this Section 7.20, shall execute and deliver a joinder
agreement and other Loan Documents in form and substance as the Agent may
reasonably require within thirty (30) days of the occurrence of the event which
results in such Subsidiary being required to become either a Borrower or a
Guarantor hereunder.

     Section 7.21 Fiscal Year. Each Obligated Party (other than the Parent)
shall cause the last day of its Fiscal Year to be the same as that of the
Parent. The Parent shall not change the last day of its Fiscal Year.

     Section 7.22 EBITDA.

     On a consolidated basis, the Parent and its consolidated Subsidiaries shall
have EBITDA for each period of four consecutive Fiscal Quarters ending on the
last day of each Fiscal Quarter set forth below (or, with respect to the Fiscal
Quarter ending on September 30, 2003, for the period commencing on January 1,
2003 and ending on September 30, 2003) of not less than the amount set forth
below opposite each such Fiscal Quarter:

      ---------------------------------------------------------------
               Period Ending                        EBITDA
      ---------------------------------------------------------------
            September 30, 2003                    $14,000,000
      ---------------------------------------------------------------
            December 31, 2003                     $22,000,000
      ---------------------------------------------------------------
            March 31, 2004                        $26,000,000
      ---------------------------------------------------------------
            June 30, 2004                         $27,000,000
      ---------------------------------------------------------------
            September 30, 2004                    $29,000,000
      ---------------------------------------------------------------
            December 31, 2004                     $31,000,000
      ---------------------------------------------------------------
            March 31, 2005                        $33,000,000
      ---------------------------------------------------------------
            June 30, 2005                         $35,000,000
      ---------------------------------------------------------------
            September 30, 2005                    $37,000,000
      ---------------------------------------------------------------
            December 31, 2005                     $39,000,000
      ---------------------------------------------------------------

     Section 7.23 Fixed Charge Coverage Ratio. The Parent and its consolidated
Subsidiaries will maintain a Fixed Charge Coverage Ratio for each period of four
consecutive Fiscal Quarters ending on the last day of each Fiscal Quarter set
forth below (or, with respect to the Fiscal Quarter ending on September 30,
2003, for the period commencing on January 1, 2003 and ending on September 30,
2003) of not less than the ratio set forth below opposite each such Fiscal
Quarter:

      ---------------------------------------------------------------
                                               FIXED CHARGE
                   Period Ending              COVERAGE RATIO
      ---------------------------------------------------------------
            September 30, 2003                 0.60 to 1.00
      ---------------------------------------------------------------
            December 31, 2003                  0.70 to 1.00
      ---------------------------------------------------------------
            March 31, 2004                     0.95 to 1.00
      ---------------------------------------------------------------
            June 30, 2004                      0.95 to 1.00
      ---------------------------------------------------------------
            September 30, 2004                 0.95 to 1.00
      ---------------------------------------------------------------
            December 31, 2004                  1.00 to 1.00
      ---------------------------------------------------------------
            March 31, 2005                     1.00 to 1.00
      ---------------------------------------------------------------
            June 30, 2005                      1.00 to 1.00
      ---------------------------------------------------------------
            September 30, 2005                 1.00 to 1.00
      ---------------------------------------------------------------

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<PAGE>

      ---------------------------------------------------------------
                                               FIXED CHARGE
              Period Ending                   COVERAGE RATIO
      ---------------------------------------------------------------
            December 31, 2005                  1.00 to 1.00
      ---------------------------------------------------------------

     Section 7.24 Use of Proceeds. The Borrowers shall use the proceeds of the
Loans (a) with respect to the Loans made on the Closing Date, to repay the
Existing Indebtedness in full and for general working capital purposes (not
otherwise prohibited by this Agreement) of the Borrowers in the ordinary course
of business and (b) with respect to the Loans made after the Closing Date, for
general working capital purposes (not otherwise prohibited by this Agreement) of
the Borrowers in the ordinary course of business. Without limiting the
generality of the foregoing, no portion of the proceeds of any Loans shall be
used, directly or indirectly, by, or transferred to, any Foreign Subsidiary. The
Borrowers shall not use any portion of the Loans proceeds, directly or
indirectly, (i) to buy or carry any Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrowers or others incurred to buy or carry any
Margin Stock, (iii) to extend credit for the purpose of buying or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act. The Borrowers shall use each Letter of
Credit for general working capital purposes (not otherwise prohibited by this
Agreement) of the Borrowers in the ordinary course of business.

     Section 7.25 Solvency. Each Obligated Party shall at all times during the
term of this Agreement remain Solvent.

     Section 7.26 Guaranties of the Obligations; Co-Borrowers.

          (a) Each Person which is a Guarantor, or which is required to become a
Guarantor after the Closing Date pursuant to the terms of this Agreement, shall
guarantee payment and performance of the Obligations pursuant to a Guaranty
Agreement in form and substance satisfactory to the Agent, duly executed by each
such Person. Each Guarantor acknowledges and expressly agrees with the Agent and
each Lender that the Guaranty of such Guarantor is required solely as a
condition to, and is given solely as inducement for and in consideration of,
credit or accommodations extended or to be extended under the Loan Documents to
any or all of the other Borrowers and is not required or given as a condition of
extensions of credit to such Guarantor.

          (b) Each Borrower acknowledges and expressly agrees with the Agent and
each Lender that, with respect to each of the Loans and/or Letters of Credit
that is not used by or for the direct benefit of such Borrower, such Borrower is
required to be a co-borrower and/or primary obligor with respect to the
indebtedness, liabilities and obligations relating thereto solely as a condition
to, and solely as inducement for and in consideration of, credit or
accommodations extended or to be extended under the Loan Documents to any or all
of the other Borrowers and is not required or given as a condition of extensions
of credit used by or for the direct benefit of such Borrower.

     Section 7.27 Landlord and Mortgagee Agreements. The Obligated Parties will
provide to the Agent a landlord's, mortgagee's, or warehouseman's waiver and
consent agreement or subordination and consent agreement, in form and substance
reasonably acceptable to the Agent, duly executed on behalf of each landlord,
mortgagee, or warehouse owner, as the case may be, of any Real Estate or
warehouse on or at which any Collateral is located; provided that (a) the

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<PAGE>

Agent may, in its discretion, defer delivery of any such waiver and consent
agreement or subordination and consent agreement and establish a Reserve with
respect to any Collateral located on or at any Real Estate or warehouse for
which the Agent has not received such acceptable waiver and consent agreement or
subordination and consent agreement, (b) no such waiver and consent agreement or
subordination and consent agreement will be required with respect to any
particular leasehold interest in Real Estate or warehouse as to which the
Collateral located thereon or thereat has a fair market value of $50,000 or
less, provided, further, that the aggregate fair market value of all Collateral
located at any and all leasehold interests in Real Estate and/or any and all
warehouses for which no such waiver and consent agreement or subordination and
consent agreement exists shall not exceed $250,000 at any time, and (c) subject
to clause (a) above, the Obligated Parties shall not be required to provide any
such waiver and consent agreement or subordination and consent agreement prior
to thirty (30) days after the Closing Date.

     Section 7.28 Additional Collateral; Further Assurances.

          (a) Subject to Requirements of Law, each Obligated Party shall cause
any Subsidiary of the Parent which is required to become an Obligated Party
pursuant to the terms of this Agreement to (i) grant Liens to the Agent, for the
benefit of the Agent and the Lenders, pursuant to such documents as the Agent
may reasonably deem necessary and deliver such property, documents, and
instruments as the Agent may request to perfect the Liens of the Agent in the
Collateral of such Subsidiary (ii) execute a Guaranty of the Obligations
pursuant to Section 7.26, in form and substance satisfactory to the Agent, and
(iii) in connection with the foregoing requirements, or either of them, deliver
to the Agent all items of the type required by Section 8.1(a) (as applicable).
Upon execution and delivery of such Loan Documents and other instruments,
certificates, and agreements, such Subsidiary shall automatically become a
Borrower or a Guarantor, as applicable, hereunder and thereupon shall have all
of the rights, benefits, duties, and obligations in such capacity under the Loan
Documents.

          (b) Without limiting the foregoing, each Obligated Party shall, and
shall cause each of the Parent's Subsidiaries which is required to become an
Obligated Party pursuant to the terms of this Agreement to, execute and deliver,
or cause to be executed and delivered, to the Agent such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents.

          (c) Each Obligated Party will deliver to the Agent the following with
respect to each parcel of Real Estate owned by any Obligated Party:

              (i)  a Mortgage in proper form for recording in the jurisdiction
      in which such Real Estate covered thereby is located;

              (ii) ALTA or other mortgagee's title policies, in form and
      substance satisfactory to the Agent, with respect to the Real Estate
      subject to the Mortgages;

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<PAGE>

              (iii) an environmental site assessment, in compliance with
      applicable Requirements of Law, prepared by a credentialed environmental
      consultant acceptable to the Agent;

              (iv)  a boundary survey prepared and certified to the Agent by a
      credentialed surveyor acceptable to the Agent (provided, however, that,
      with respect to the Real Estate in which the Agent is being granted a Lien
      on the Closing Date, no such survey shall be required to be delivered to
      the Agent until thirty (30) days following the Closing Date, at which time
      the Parent will cause the survey exception contained in the mortgagee's
      title policies to be eliminated by amendment or endorsement thereto);

              (v)   an opinion of local counsel with respect to each Mortgage in
      form and substance satisfactory to the Agent; and

              (vi)  such other information, documentation, and certifications,
      in form and substance satisfactory to the Agent, as may be required by the
      Agent.

          (d) In addition to, and without limiting the generality of, the
foregoing provisions of this Section 7.28, each Obligated Party that owns any of
the Unappraised Assets or any interest therein as of the earlier to occur of
ninety (90) days after the Closing Date or the initial date upon which any
Default has occurred will, effective as of such date, grant Liens on such
Unappraised Assets and interests therein to the Agent as security for the
Obligations in accordance with clause (a) of this Section 7.28 (without the
necessity of any request therefor by the Agent).

     Section 7.29 Agricultural Products.

          (a) Each Obligated Party shall at all times comply with all existing
and future Farm Products Notices during their period of effectiveness under any
Farm Products Law, including, without limitation, directions to make payments to
the Farm Products Seller by issuing payment instruments directly to the secured
party with respect to any assets of the Farm Products Seller or jointly payable
to the Farm Products Seller and any secured party with respect to the assets of
such Farm Products Seller, as specified in the Farm Products Notice, so as to
terminate or release the security interest in any Farm Products maintained by
such Farm Products Seller or any secured party with respect to the assets of
such Farm Products Seller under any Farm Products Law.

          (b) Each Obligated Party shall take all other actions as may be
reasonably required, if any, to ensure that any perishable agricultural
commodity (in whatever form) or other Farm Products are purchased free and clear
of any security interest, lien or other claims in favor of any Farm Products
Seller or any secured party with respect to the assets of any Farm Products
Seller.

          (c) Each Obligated Party shall notify the Agent in writing within two
(2) Business Days after receipt by such Obligated Party or any other Obligated
Party of any Farm Products Notice or amendment to a previous Farm Products
Notice, and within such two (2) Business Days, such Obligated Party shall
provide the Agent with a true, correct and complete copy of such Farm Products
Notice or amendment, as the case may be, and including any master

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lists of effective financing statements delivered to such Obligated Party or
such other Obligor pursuant to any Farm Products Law.

         (d) In the event any Obligated Party receives a Farm Products Notice,
the Obligated Party shall pay the related invoice within the payment terms
specified therein and notify the Agent of such receipt; provided, however, that
such invoice may remain unpaid if, and only so long as (i) appropriate legal or
administrative action has been commenced in good faith and is being diligently
pursued or defended by such Obligated Party, (ii) adequate reserves with respect
to such contest are maintained on the books of such Obligated Party, in
accordance with GAAP, (iii) the Agent shall have established a reserve in an
amount at least equal to the amount claimed to be due by such vendor under the
relevant invoice, (iv) such Obligated Party shall promptly pay or discharge such
contested invoice and all additional charges, interest, penalties, and expenses,
if any, and shall deliver to the Agent evidence reasonably acceptable to the
Agent of such payment, if such contest is terminated or discontinued adversely
to such Obligated Party or the conditions set forth in this Section 7.29(d) are
no longer met, and (v) the Agent has not advised such Obligated Party in writing
that the Agent reasonably believes that nonpayment thereof could have or result
in a Material Adverse Effect.

                                   ARTICLE 8.
                              CONDITIONS OF LENDING

     Section 8.1 Conditions Precedent to Making of Loans on the Closing Date.
The obligation of the Lenders to make the initial Revolving Loans and the Term
Loans on the Closing Date, and the obligation of the Agent to cause the Letter
of Credit Issuer to issue any Letter of Credit on the Closing Date, are subject
to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent and each Lender:

         (a) This Agreement and the other Loan Documents shall have been
executed by each party hereto or thereto and the Obligated Parties shall have
performed and complied with all covenants, agreements, and conditions contained
herein or therein which are required to be performed or complied with by the
Obligated Parties on or before the Closing Date. Without limiting the generality
of the foregoing, the Agent shall have received each of the following documents,
all of which shall be satisfactory in form and substance to the Agent and the
Lenders:

             (i)  certified copies of the certificate of incorporation,
     certificate of limited partnership, or comparable organizational document
     of each Obligated Party, with all amendments, if any, certified by the
     appropriate Governmental Authority of the jurisdiction of each Obligated
     Party's organization or formation, and the bylaws, regulations, operating
     agreement, limited partnership agreement, or similar governing agreement or
     document of each Obligated Party, in each case certified by the corporate
     secretary, general partner, or comparable authorized representative of such
     Obligated Party, as applicable as being true and correct and in effect on
     the Closing Date;

             (ii) certificates of incumbency and specimen signatures with
     respect to each individual authorized to execute and deliver this Agreement
     and the other Loan Documents on behalf of each Obligated Party, and any
     other individual executing any document, certificate, or instrument to be
     delivered in connection with this Agreement

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<PAGE>

and the other Loan Documents and, in the case of each Borrower, to request
Borrowings and the issuance of Letters of Credit;

             (iii)  a certificate evidencing the existence of each Obligated
     Party, and certificates evidencing the good standing of each Obligated
     Party in the jurisdiction of its organization and in each other
     jurisdiction in which it is required to be qualified as a foreign business
     entity to transact its business as presently conducted;

             (iv)   certified copies of all action taken by each Obligated Party
     and each other Person executing any document, certificate, or instrument to
     be delivered in connection with this Agreement and the other Loan Documents
     to authorize the execution, delivery, and performance of this Agreement,
     the other Loan Documents, and, with respect to the Borrowers, the
     Borrowings and the issuance of Letters of Credit;

             (v)    a certificate of each Obligated Party signed by a
     Responsible Officer:

                    (A) stating that all of the representations and warranties
          made or deemed to be made under this Agreement are true and correct as
          of the Closing Date, after giving effect to the Loans to be made at
          such time and the application of the proceeds thereof and the issuance
          of any Letter(s) of Credit at such time,

                    (B) stating that no Default or Event of Default exists,

                    (C) specifying the account of the Borrowers which is the
          Designated Account, and

                    (D) certifying as to such other factual matters as may be
          reasonably requested by the Agent;

             (vi)   with respect to any Letter of Credit to be issued, all
     documentation required by Section 1.4, duly executed;

             (vii)  a Revolving Loans Note and a Term Loans Note, payable to the
     order of each Lender in the amount of its Revolving Loans Commitment (with
     respect to the Revolving Loans Note) and its Term Loans Commitment (with
     respect to the Term Loans Note), duly executed and delivered by each
     Borrower, complying with the requirements of Section 1.2(b) and Section
     1.3(c);

             (viii) UCC financing statements with respect to the Collateral as
     may be requested by the Agent, duly authorized by the respective Obligated
     Parties, in all jurisdictions that the Agent may deem necessary or
     desirable in order to perfect the Agent's Liens therein and acknowledgment
     copies of proper financing statements, duly filed on or before the Closing
     Date under the UCC in each jurisdiction the Agent deems necessary or
     desirable in order to perfect the Agent's Liens;

             (ix)   duly executed UCC termination statements or assignments and
     such other instruments, in form and substance satisfactory to the Agent, as
     shall be

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<PAGE>

necessary to terminate and satisfy all Liens on the property of the Obligated
Parties except Permitted Liens;

          (x)     a Copyright Security Agreement, a Patent Security Agreement,
and a Trademark Security Agreement, as applicable, with respect to all
Proprietary Rights, if any, owned by any Obligated Party which must be
registered with any Governmental Authority to perfect the Agent's Liens in such
Proprietary Rights, duly executed by each Obligated Party, as applicable;

          (xi)    the Borrower Security Agreement duly executed and delivered by
each of the Borrowers, a Guarantor Security Agreement duly executed and
delivered by each of the Guarantors, and a Pledge Agreement executed by each
Borrower or other Obligated Party that owns any Capital Stock of any Obligated
Party;

          (xii)   (A) stock certificates and stock powers (duly executed in
blank) for one hundred percent (100%) of the Capital Stock (to the extent
certificated) of each Subsidiary of the Parent which is organized under the laws
of the U.S. or any state thereof, together with acknowledgments executed by the
respective issuers thereof, in form and substance satisfactory to the Agent, (B)
the original of each promissory note or other instrument evidencing any
Collateral, together with an appropriate endorsement thereto, other than the
Existing Holly Finance Notes, (C) "control" agreements (pursuant to the UCC),
each duly executed, as the Agent may request with respect to any deposit account
or any Investment Property listed in Schedule 6.28, and (D) as to each deposit
account of any of the Borrowers, an agreement whereby such Borrower and the
depository bank agree that all collected funds contained or deposited in such
deposit account from time to time are swept, on a daily basis, in a manner
acceptable to the Agent, into a Payment Account;

          (xiii)  a Guaranty Agreement executed by each of the Guarantors;

          (xiv)   a Borrowing Base Certificate effective as of December 31,
2002;

          (xv)    each landlord's or mortgagee's waiver and consent agreement or
subordination and consent agreement required to be provided pursuant to Section
7.27;

          (xvi)   each Blocked Account Agreement duly executed as requested by
the Agent;

          (xvii)  signed opinions of counsel for the Obligated Parties, opining
as to such matters in connection with the transactions contemplated by this
Agreement as the Agent may reasonably request, each such opinion to be in a
form, scope, and substance satisfactory to the Agent, the Lenders, and their
respective counsel;

          (xviii) evidence, in form, scope, and substance, reasonably
satisfactory to the Agent, of all insurance coverage as required by this
Agreement, together with loss payable endorsements in form acceptable to the
Agent;

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<PAGE>

             (xix)  satisfactory evidence that all filings, consents, or
     approvals with or of the shareholders of any Obligated Party, any
     Governmental Authority, or any other third party have been made or
     obtained, as applicable;

             (xx)   the audited financial statements of the Parent and its
     Subsidiaries as of and for the Fiscal Year ended September 30, 2002 and the
     related report of the Parent's independent certified public accountants,
     or, in the event that such audited financial statements and report are not
     available, a draft thereof which is complete in all respects, and the
     unaudited financial statements of the Parent and its Subsidiaries as of and
     for the month ended October 31, 2002;

             (xxi)  the real property documentation described in Section 7.28(c)
     with respect to each parcel of Real Estate owned by any Obligated Party as
     of the Closing Date (other than any Unappraised Assets); and

             (xxii) such other documents and instruments as the Agent or any
     Lender may reasonably request.

         (b) After giving effect to the making of all Revolving Loans (including
any Revolving Loans made to finance the fees and expenses set forth in the
Agent's Letter or otherwise as reimbursement for fees, costs, and expenses then
payable under this Agreement) and issuance of all Letters of Credit and with all
of their obligations current, the Borrowers shall have remaining Availability in
an amount not less than the sum of (i) $20,000,000 plus (ii) the aggregate
amount of all past due accounts payable of the Borrowers in excess of
$2,000,000, provided that the Pre-Petition Accounts Payable shall be excluded
for purposes of this clause (ii).

         (c) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct as if made on such date.

         (d) No Default or Event of Default shall exist or would exist after
giving effect to the Loans to be made and the Letters of Credit to be issued.

         (e) The Borrowers shall have paid all fees and expenses of the Agent
and the Attorney Costs incurred in connection with any of the Loan Documents and
the transactions contemplated thereby to the extent invoiced.

         (f) The Agent and the Lenders shall have had an opportunity to examine
the books of account and other records and files of the Obligated Parties and to
make copies thereof, and to conduct a pre-closing audit which shall include,
without limitation, verification of Inventory, Accounts, and the Borrowing Base,
and the results of such examination and audit shall have been satisfactory to
the Agent and the Lenders in all respects.

         (g) All proceedings taken by the Obligated Parties in connection with
the execution of this Agreement, the Notes, all other Loan Documents, and all
documents and papers relating thereto shall be satisfactory in form, scope, and
substance to the Agent and the Lenders.

         (h) Without in any way limiting any term or provision of the Borrower
Security Agreement, the Agent shall have received any warehouse receipts,
consent and control

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<PAGE>

agreements, subordination agreements, or other documentation the Agent
determines in its sole discretion are necessary to perfect the Agent's Liens in
any Inventory or other Collateral in the possession of any warehouseman, bailee,
or similar Person.

         (i) Without limiting the generality of the items described above, each
of the Obligated Parties and each other Person guaranteeing or securing payment
of the Obligations shall have delivered or caused to be delivered to the Agent
(in form and substance reasonably satisfactory to the Agent), the financial
statements, instruments, resolutions, documents, agreements, certificates,
opinions and other items required by the Agent and the Lenders.

         (j) The Agent shall be satisfied that none of the Obligated Parties are
involved in any offering, placement, or arrangement of any debt securities or
bank financing other than pursuant to this Agreement.

         (k) The Agent shall have received appraisals of the Inventory,
Equipment and Real Estate of the Obligated Parties which are in form and
substance satisfactory to the Agent.

         (l) The Diamond Crystals Brand Sale shall have been consummated in all
material respects in accordance with the terms and provisions of the purchase
and sale agreement and related documentation that has been submitted to the
Agent.

         (m) The Harris Credit Agreement shall have been terminated and all Debt
evidenced or governed thereby shall have been paid in full (other than any
contingent indemnification obligations of the Obligated Parties expressly
provided in the Harris Credit Agreement) and all Liens securing any such Debt
shall have been terminated (provided that it is understood by the Agent and the
Lenders that the letters of credit issued under the Harris Credit Agreement and
outstanding immediately prior the Closing Date will be, as of the Closing Date,
issued under the new letter of credit facility with Harris Trust and Savings
Bank identified on Schedule 6.8 hereto, all of which letters of credit shall be
backed by a Letter of Credit issued hereunder).

         (n) The GECC Securitization Facility shall have been terminated, all
Debt evidenced or governed thereby shall have been paid in full (other than any
contingent indemnification obligations of the Obligated Parties expressly
provided in the GECC Securitization Facility), all Liens securing any such Debt
shall have been terminated, and the Borrowers shall have repurchased all
Accounts subject thereto in a manner acceptable to the Agent (and all UCC
financing statements evidencing such repurchase shall have been filed).

The acceptance by the Borrowers of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Obligated Parties to the effect that all of the conditions precedent to the
making of such Loans or issuance of such Letters of Credit have been satisfied,
with the same effect as delivery to the Agent and the Lenders of a certificate
signed by a Responsible Officer of the Obligated Parties, dated the Closing
Date, to such effect.

Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 8.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and

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<PAGE>

deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this Section 8.1, and
(iii) all documents sent to such Lender for approval, consent, or satisfaction
were acceptable to such Lender.

     Section 8.2  Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Loans on the Closing Date, and
the obligation of the Agent to cause the Letter of Credit Issuer to issue any
Letter of Credit shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:

             (a)  the following statements shall be true, and the acceptance by
the Borrowers of any extension of credit shall be deemed to be a statement by
each of the Obligated Parties to the effect set forth in clause (i), clause
(ii), and clause (iii) following with the same effect as the delivery to the
Agent and the Lenders of a certificate signed by a Responsible Officer of each
of the Obligated Parties, dated the date of such extension of credit, stating
that:

                  (i)   the representations and warranties contained in this
     Agreement and the other Loan Documents are correct in all material respects
     on and as of the date of such extension of credit as though made on and as
     of such date, other than any such representation or warranty which relates
     to a specified prior date and except to the extent the Agent and the
     Lenders have been notified in writing by the Obligated Parties that any
     representation or warranty is not correct and the Majority Lenders have
     explicitly waived in writing compliance with such representation or
     warranty;

                  (ii)  no event has occurred and is continuing, or would result
     from such extension of credit, which constitutes a Default or an Event of
     Default; and

                  (iii) no event has occurred and is continuing, or would result
     from such extension of credit, which has had or would have a Material
     Adverse Effect;

             (b)  The Agent shall have received satisfactory evidence that the
Agent has a valid, exclusive (other than Permitted Liens), and perfected first
priority security interest, lien, collateral assignment, and pledge as of such
date in all Collateral as security for the Obligations (excluding Existing
Obligations in the case of property owned by a Newly Obligated Party), to the
extent any such Liens may be perfected under the UCC (but excluding any Liens on
vehicles for which a certificate of title has been issued and Liens perfected
solely by possession, but only to the extent the Agent has not requested
perfection of its Liens in such vehicles or possession of such Collateral), in
each case in form and substance satisfactory to the Agent; provided that upon
the Agent's request, the Obligated Parties shall provide any additional
agreement, document, instrument, certificate, or other item relating to any
other Collateral as may be required for perfection under any Requirement of Law;
and

             (c)  No such Borrowing or issuance of any Letter of Credit shall
exceed the Availability (except as may be expressly permitted by this
Agreement);

provided, however, that the foregoing conditions precedent are not conditions to
the requirement for each Lender participating in or reimbursing the Bank or the
Agent for such Lenders' Pro Rata

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Share, based upon its Revolving Loans Commitment, of any Non-Ratable Loan or
Agent Advance made in accordance with the provisions of Section 1.2(i) or
Section 1.2(j).

                                   ARTICLE 9.
                                DEFAULT; REMEDIES

     Section 9.1  Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:

             (a)  (i) any failure by the Borrowers to pay the principal of any
of  the Loans or any other Obligations when due in accordance with the terms of
this Agreement, (ii) any failure by the Borrowers to pay any accrued interest or
premium on the Loans or any other Obligations within one (1) Business Day after
such amount becomes due in accordance with the terms of this Agreement, or (iii)
any failure by the Borrowers to pay any fee or other amount (other than the
amounts referred to in clause (i) or (ii) preceding) owing under this Agreement
within two (2) Business Days after such fee or other amount becomes due in
accordance with the terms of this Agreement, in each case whether upon demand or
otherwise;

             (b)  any representation or warranty made or deemed made by any
Obligated Party in this Agreement or in any other Loan Document, any Financial
Statement, or any certificate furnished by any Obligated Party at any time to
the Agent or any Lender shall prove to be untrue in any material respect as of
the date on which made, deemed made, or furnished;

             (c)  any default shall occur in the (i) observance or performance
of any of the covenants or agreements contained in Section 7.2 (insofar as it
requires the preservation of the existence of the Obligated Parties), Section
7.5, Section 7.6, or Section 7.9 through Section 7.29, or in Section 3 or
Section 10 of the Borrower Security Agreement or any Guarantor Security
Agreement, (ii) observance or performance of any of the covenants and agreements
contained in Section 5.2, Section 5.3, or Section 7.4(b) and such default shall
continue for three (3) days or more, or (iii) observance or performance of any
of the other covenants or agreements contained in this Agreement other than as
referenced in Section 9.1(a), Section 9.1(b), and clause (i) and clause (ii)
preceding, any other Loan Document, or any other agreement entered into at any
time to which any Obligated Party and the Agent or any Lender are party
(including in respect of any Bank Products) and such default shall continue for
more than thirty (30) days, or if any such agreement or document shall terminate
(other than in accordance with its terms or the terms hereof or with the written
consent of the Agent and the Majority Lenders) or become void or unenforceable
without the written consent of the Agent and the Majority Lenders;

             (d)  any default shall occur with respect to any Debt (other than
the Obligations) of any Obligated Party in an outstanding principal amount which
exceeds $5,000,000, or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed by any
Obligated Party, and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to accelerate or to permit
the holders of any such Debt to accelerate, the maturity of any such Debt, or
any such Debt shall be declared due and payable or be required to be prepaid,
redeemed, or repurchased (other than

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<PAGE>

by a regularly scheduled required prepayment, redemption, or repurchase) prior
to the stated maturity thereof;

             (e)  any Obligated Party shall (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or otherwise commence any
action or proceeding seeking reorganization, arrangement, or readjustment of its
debts or for any other relief under the Bankruptcy Code or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing, or consent to, approve of, or acquiesce in, any such petition, action,
or proceeding, (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar
officer for it or for all or any part of its property, (iii) make an assignment
for the benefit of its creditors, or (iv) be unable generally to pay its debts
as they become due;

             (f)  an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation, or readjustment of the debts of any Obligated Party or for any
other relief under the Bankruptcy Code or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing and such
petition or proceeding shall not be dismissed within sixty (60) days after the
filing or commencement thereof or an order of relief (or comparable order under
any other Requirement of Law) against any Obligated Party shall be entered with
respect thereto;

             (g)  a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for any Obligated Party or for all or any
part of its property shall be appointed or a warrant of attachment, execution,
or similar process shall be issued against any part of the property of any
Obligated Party;

             (h)  any Obligated Party shall file a certificate of dissolution
under any Requirement of Law or shall be liquidated, dissolved, or wound-up
(except in a transaction allowed under Section 7.2 or Section 7.9) or shall
commence or have commenced against it any action or proceeding for dissolution,
winding-up, or liquidation, or shall take any corporate action in furtherance
thereof (and any such action or proceeding commenced against it shall not be
dismissed within sixty (60) days after the filing or commencement thereof);

             (i)  all or any material part of the property of any Obligated
Party shall be nationalized, expropriated, condemned, seized, or otherwise
appropriated, or custody or control of such property or of any Obligated Party
shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a stay of
enforcement is in effect;

             (j)  any Loan Document (other than UCC financing statements (if
any) the effectiveness of which have lapsed as a result of the Agent's failure
to file proper continuation statements as required by the UCC), including any
Guaranty of the Obligations, shall be terminated, revoked, or declared void or
invalid or unenforceable or challenged by any Obligated Party or any other
obligor;

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<PAGE>

             (k)  one or more judgments, orders, decrees, or arbitration awards
is entered against any Obligated Party involving liability in the aggregate for
any or all of the Obligated Parties (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related or unrelated series of transactions, incidents, or
conditions, of $2,500,000 or more, and the same shall remain unsatisfied,
unvacated, and unstayed pending appeal for a period of thirty (30) days after
the entry thereof;

             (l)  any loss, theft, damage, or destruction of any item or items
of Collateral or other property of any Obligated Party occurs which could
reasonably be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;

             (m)  there is filed against any Obligated Party any action, suit,
or proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit,
or proceeding (i) is not dismissed within one hundred twenty (120) days and (ii)
could reasonably be expected to result in the confiscation or forfeiture of any
material portion of the Collateral;

             (n)  for any reason, other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens pursuant
to the Loan Documents, any Loan Document ceases to be in full force and effect
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected, and prior to all
other Liens (other than Permitted Liens which are expressly permitted to have
priority over the Agent's Liens) or is terminated, revoked, or declared void;

             (o)  (i) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted in, or could reasonably be expected to
result in, liability of any Obligated Party under Title IV of ERISA to the
Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess
of $2,500,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds an amount which could reasonably be expected
to have a Material Adverse Effect; or (iii) any Obligated Party or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount
in excess of $2,500,000;

             (p)  there occurs a Change of Control; or

             (q)  there occurs an event or condition having a Material Adverse
Effect.

     Section 9.2  Remedies.

             (a)  If a Default or an Event of Default has occurred and is
continuing, the Agent may, in its discretion, and shall, at the direction of the
Required Lenders, do one or more of the following at any time or times and in
any order, without notice to or demand on any Obligated Party: (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts and/or
Eligible Inventory used in computing the Borrowing Base, or reduce or increase
one or more of the other elements used in computing the Borrowing Base; (ii)
restrict the amount of or refuse to make Revolving Loans; and (iii) restrict or
refuse to provide Letters of Credit. If an Event of Default exists, the Agent
shall, at the direction of the Required Lenders, do one or

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more of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or demand on
any Obligated Party: (A) terminate the Commitments and this Agreement; (B)
declare any or all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of any Event of Default described in Section
9.1(e), Section 9.1(f), Section 9.1(g), or Section 9.1(h), the Commitments shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; (C)
require the Obligated Parties to cash collateralize all outstanding Obligations
with respect to Letters of Credit; and (D) pursue its other rights and remedies
under the Loan Documents and applicable law.

             (b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have, for the benefit of the Agent and the Lenders, in addition to
all other rights of the Agent and the Lenders, the rights and remedies of a
secured party under the Loan Documents and the UCC; (ii) the Agent may, at any
time, take possession of the Collateral and keep it on any Obligated Party's
premises, at no cost to the Agent or any Lender, or remove any part of it to
such other place or places as the Agent may desire, or any Obligated Party
shall, upon the Agent's demand, at such Obligated Party's cost, assemble the
Collateral and make it available to the Agent at a place reasonably convenient
to the Agent; and (iii) the Agent may sell and deliver any Collateral at public
or private sales, for cash, upon credit, or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion, and may, if the
Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring notice to
be given in the following manner, each Obligated Party agrees that any notice by
the Agent of sale, disposition, or other intended action hereunder or in
connection herewith, whether required by the UCC or otherwise, shall constitute
reasonable notice to the Obligated Parties if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or is
delivered personally against receipt, at least five (5) Business Days prior to
such action to the Obligated Parties' address specified in or pursuant to
Section 13.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to any Obligated Party.
In the event the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Obligated Party irrevocably waives: (A) the
posting of any bond, surety, or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. Each Obligated Party agrees that the Agent has no obligation
to preserve rights to the Collateral or marshal any Collateral for the benefit
of any Person. The Agent is hereby granted a license or other right to use,
without charge, each Obligated Party's labels, patents, copyrights, name, trade
secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising, or selling any Collateral,
and each Obligated Party's rights under all licenses and all franchise
agreements shall inure to the Agent's benefit for such purpose. The proceeds of
sale shall be applied first to all expenses of sale, including Attorney Costs,
and then to the Obligations. The Agent will return any excess to the Obligated
Parties and the Obligated Parties shall remain liable for any deficiency.

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          (c)  If an Event of Default occurs and is continuing, each Obligated
Party hereby waives, except as may be prohibited by applicable law, all rights
to notice and hearing prior to the exercise by the Agent of the Agent's rights
to repossess the Collateral without judicial process or to replevy, attach, or
levy upon the Collateral without notice or hearing.

                                  ARTICLE 10.
                              TERM AND TERMINATION

     Section 10.1 Term and Termination. Each of the Commitments shall terminate
and expire on the Stated Termination Date unless sooner terminated in accordance
with the terms hereof. The Agent upon direction from the Required Lenders may
terminate the Commitments, without notice to the Obligated Parties, during the
existence of any Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest, and any early termination or prepayment
fees or penalties but excluding indemnification obligations to the extent no
claim with respect thereto has been asserted and remains unsatisfied) shall
become immediately due and payable and the Borrowers shall immediately arrange
for the cancellation and return of all Letters of Credit then outstanding or, if
permitted by the Agent in its discretion, presentation to the Agent of a
Supporting Letter of Credit or cash collateral as specified in Section 1.4(g).
Notwithstanding the termination of the Commitments or this Agreement, until all
Obligations are indefeasibly paid and performed in full in cash, the Obligated
Parties shall remain bound by the terms of this Agreement and the other Loan
Documents and shall not be relieved of any of their Obligations hereunder or
under any other Loan Document, and the Agent and the Lenders shall retain all
their rights and remedies hereunder and under the other Loan Documents
(including, without limitation, the Agent's Liens in and all rights and remedies
with respect to all then existing and after-arising Collateral).

                                  ARTICLE 11.
          AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

     Section 11.1 Amendments and Waivers.

          (a)  Subject to the remaining terms and provisions of this Section
11.1, no amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by any Obligated
Party therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Lenders (or by the Agent at the written request of the
Majority Lenders) and the Borrowers (which may be evidenced by the signature of
the Parent pursuant to Section 13.21) and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.

          (b)  No waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders and the Obligated Parties (which signatures of the
Obligated Parties may be evidenced by the signature of the Parent pursuant to
Section 13.21) and acknowledged by the Agent, do any of the following:

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          (i)    increase (other than pursuant to an assignment under
Section 11.2) or extend any Commitment of any Lender or amend the second
sentence of Section 1.2(a);

          (ii)   postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees (other than fees
payable to the Agent solely for the Agent's benefit), or other amounts due to
the Lenders (or any of them) hereunder or under any other Loan Document;

          (iii)  reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;

          (iv)   change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;

          (v)    increase any of the percentages set forth in the definition of
the Borrowing Base;

          (vi)   amend this Section 11.1 or any provision of this Agreement
providing for consent or other action by all of the Lenders;

          (vii)  release all or substantially all of the Collateral other than
as may be permitted by Section 12.11;

          (viii) change the definition of "Majority Lenders"; or

          (ix)   increase the Maximum Revolver Amount or the Letter of Credit
Subfacility.

     (c)  No waiver, amendment, or consent shall, unless in writing and signed
by the Required Lenders and the Obligated Parties (which signatures of the
Obligated Parties may be evidenced by the signature of the Parent pursuant to
Section 13.21) and acknowledged by the Agent, do any of the following:

          (i)    amend any provision of Section 1.2(j), other than an amendment
to reduce the percentage of Lenders required to revoke the Agent's authorization
to make Agent Advances which revocation shall not require the signature of any
of the Obligated Parties;

          (ii)   change the definition of "Required Lenders";

          (iii)  amend any provision of Section 3.4; or

          (iv)   amend any provision of Section 7.9.

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          (d)  Notwithstanding the foregoing, (i) the Agent may, in its sole
discretion and notwithstanding the limitations contained in Section 11.1(b)(v)
and Section 11.1(b)(ix) and any other terms of this Agreement, make Non-Ratable
Loans in accordance with Section 1.2(i) and make Agent Advances in accordance
with Section 1.2(j) and no amendment, waiver, or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document and (ii) Schedules 1.2 and 1.3 may be
amended from time to time by the Agent alone to reflect assignments of
Commitments in accordance herewith.

          (e)  If, in connection with any proposed amendment, waiver, or consent
(a "Proposed Change"):

               (i)  requiring the consent of all of the Lenders, the consent of
     the Required Lenders is obtained but the consent of the other Lenders is
     not obtained (any such Lender whose consent is not obtained as described in
     this clause (e) being referred to as a "Non-Consenting Lender"), or

               (ii) requiring the consent of the Required Lenders, the consent
     of the Majority Lenders is obtained but the consent of the other Lenders is
     not obtained,

then, so long as the Agent is not a Non-Consenting Lender, at the Obligated
Parties' request, the Agent (in its individual capacity as a Lender) or an
Eligible Assignee (with the Agent's approval) shall have the right (but not the
obligation) to (A) purchase from each Non-Consenting Lender, and each
Non-Consenting Lender agrees that it shall sell, such Non-Consenting Lender's
outstanding Loans and other Obligations for an amount equal to the principal
balances thereof and all accrued and unpaid interest and fees and other amounts
due and owing by the Borrowers with respect thereto through the date of sale,
without premium or discount, and (B) assume from each Non-Consenting Lender, and
each Non-Consenting Lender agrees that it shall assign, such Non-Consenting
Lender's Commitments for no additional consideration, in each case pursuant to
an Assignment and Acceptance.

          (f)  Notwithstanding the terms of this Section 11.1 above, each
supplement to Schedule 6.3, 6.4, 6.5, 6.10, 6.11, 6.12, 6.26, or 6.28 delivered
by the Obligated Parties pursuant to Section 5.3(t) shall constitute an
amendment to such applicable Schedule upon delivery thereof to the Agent so long
as the Obligated Parties have satisfied in full all terms and provisions
(including, without limitation, conditions or other requirements) set forth
herein (including, without limitation, in Sections 5.3(j), 7.20, 7.26, 7.27, and
7.28 hereof) or in any of the other Loan Documents within the appropriate time
frames prescribed therein as such terms and provisions relate to the changes
reflected in such supplements or the permissibility of any transaction giving
rise to the information therein. No such supplement to any Schedule or
representation shall, except as set forth in this clause (f), amend, supplement,
or otherwise modify any Schedule or representation, and no such supplement to
any Schedule or representation shall be or be deemed a waiver of any Default or
Event of Default resulting from the matters disclosed therein except if and to
the extent that such amendment, supplement, modification, or waiver has been
effected in accordance with the remaining terms and provisions of this Section
11.1.

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     Section 11.2 Assignments; Participations.

          (a)  Any Lender may, with the written consent of the Agent and,
subject to the proviso below, the Parent (which consent shall not be
unreasonably withheld, conditioned or delayed), assign and delegate to one or
more Eligible Assignees (provided that no consent of the Parent shall be
required in the event that a Default or Event of Default has then occurred and
is continuing and no consent of the Agent or the Parent shall be required in
connection with any assignment and delegation by a Lender to an Affiliate of
such Lender or to another Lender) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments, and the other rights and obligations of
such Lender hereunder, in a minimum amount of $10,000,000 and integral amounts
of $5,000,000 in excess thereof or all of such assigning Lender's Loans and
Commitment (provided that, unless an assignor Lender has assigned and delegated
all of its Loans and Commitments, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender retains
Commitments in a minimum aggregate amount of $10,000,000); provided, however,
that the Obligated Parties and the Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
shall have been given to the Obligated Parties and the Agent by such Lender and
the Assignee; (ii) such Lender and its Assignee shall have delivered to the
Obligated Parties and the Agent an Assignment and Acceptance in the form of
Exhibit F (an "Assignment and Acceptance") together with any Note subject to
such assignment, and (iii) the assignor Lender or Assignee has paid to the Agent
a processing fee in the amount of $5,000 (provided that the Agent may, in its
discretion, waive such fee in connection with the initial syndication of the
Commitments). The Borrowers agree to promptly execute and deliver new or
replacement Notes as reasonably requested by the Agent to evidence assignments
of the Loans and Commitments in accordance herewith.

          (b)  From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

          (c)  By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Obligated Parties to the Agent or any Lender in

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the Collateral; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Obligated Parties or the performance or observance by the Obligated Parties of
any of their respective obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender, or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

          (d)  Immediately upon satisfaction of the requirements of Section
11.2(a), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitments allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

          (e)  Any Lender may at any time sell to one or more Participants
participating interests in any Loans and/or Commitments of such Lender, and the
other interests of that Lender (the "originating Lender") hereunder and under
the other Loan Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Obligated Parties and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating Lender's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Lender shall transfer or grant any participating interest under which
the Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document except the matters
set forth in Section 11.1(b)(i), Section 11.1(b)(ii), and Section 11.1(b)(iii),
and (v) all amounts payable by the Borrowers hereunder shall be determined as if
such Lender had not sold such participation.

          (f)  Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Board or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

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                                  ARTICLE 12.
                                   THE AGENT

     Section 12.1   Appointment and Authorization. Each Lender hereby designates
and appoints the Bank (acting in its capacity as the Agent) as its
administrative agent under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 12. The provisions of this
Article 12 are solely for the benefit of the Agent and the Lenders and the
Obligated Parties shall have no rights as a third party beneficiary of any of
the provisions contained herein other than as expressly provided in Section
12.10 and Section 12.11. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 1.2(j), and (c) the exercise of remedies pursuant to Section 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.

     Section 12.2   Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees, or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.

     Section 12.3   Liability of the Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Obligated Party or
Affiliate of any Obligated Party, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement, or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability, or sufficiency

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of this Agreement or any other Loan Document, or for any failure of any
Obligated Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Obligated Party or any Obligated Party's Affiliates.

     Section 12.4   Reliance by the Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement, or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including,
without limitation, counsel to any Obligated Party), independent accountants,
and other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action, subject to Section 12.7 below. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders (or all or such other percentage of Lenders if so required
by Section 11.1) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

     Section 12.5   Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from an Obligated Party referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Article 9; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.

     Section 12.6   Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Obligated Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Obligated Parties and their Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrowers. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals, and decisions in

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taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Obligated Parties. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition, or creditworthiness of any
Obligated Party which may come into the possession of any of the Agent-Related
Persons.

     Section 12.7   Indemnification. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL UPON DEMAND INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
OBLIGATED PARTIES AND WITHOUT LIMITING THE OBLIGATION OF THE OBLIGATED PARTIES
TO DO SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES OF THE AGGREGATE
COMMITMENTS, FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES; PROVIDED,
HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO THE AGENT-RELATED
PERSONS OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES (AS DEFINED HEREIN)
RESULTING SOLELY FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its Pro Rata Share, based upon its Aggregate Commitment, of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings, or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.

     Section 12.8   The Agent in Individual Capacity. The Bank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Obligated Party and its Affiliates as though the Bank were not the Agent
hereunder and without notice to or consent of the Lenders. The Bank or its
Affiliates may receive information regarding any Obligated Party or its
Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of any such Obligated Party or Affiliate),
and the Lenders acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to the Lenders. With respect to its
Loans, the Bank as a Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.

     Section 12.9   Successor Agent. The Agent may resign as Agent upon at least
thirty (30) days prior notice to the Lenders and the Obligated Parties, such
resignation to be effective upon the acceptance of a successor agent to its
appointment as the Agent. In the event the Bank sells all of its Commitments and
Loans as part of a sale, transfer, or other disposition by the Bank of

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substantially all of its loan portfolio, the Bank shall resign as the Agent and
such purchaser or transferee shall become the successor Agent hereunder. Subject
to the foregoing, if the Agent resigns (the "resigning Agent") under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders (the "successor Agent"). If no successor Agent is
appointed prior to the effective date of the resignation of the resigning Agent,
the resigning Agent may appoint, after consulting with the Lenders and the
Obligated Parties, a successor Agent from among the Lenders. Upon the acceptance
of its appointment as the successor Agent, the successor Agent shall succeed to
all the rights, powers, and duties of the resigning Agent and the term "Agent"
shall mean the successor Agent and the resigning Agent's appointment, powers,
and duties as the Agent shall be terminated. After any resigning Agent's
resignation hereunder as the Agent, the provisions of this Article 12 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Agent under this Agreement.

       Section 12.10  Withholding Tax.

               (a)    If any Lender is a "foreign corporation, partnership, or
trust" within the meaning of the Code and such Lender claims exemption from, or
a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:

                      (i)   if such Lender claims an exemption from, or a
       reduction of, withholding tax under a U.S. tax treaty, two (2) properly
       completed and executed IRS Forms W-8BEN and W-8ECI before the payment of
       any interest in the first calendar year and before the payment of any
       interest in each third succeeding calendar year during which interest may
       be paid under this Agreement;

                      (ii)  if such Lender claims that interest paid under this
       Agreement is exempt from U.S. withholding tax because it is effectively
       connected with a U.S. trade or business of such Lender, two (2) properly
       completed and executed copies of IRS Form W-8ECI before the payment of
       any interest is due in the first taxable year of such Lender and in each
       succeeding taxable year of such Lender during which interest may be paid
       under this Agreement, and IRS Form W-9; and

                      (iii) such other form or forms as may be required under
       the Code or other laws of the U.S. as a condition to exemption from, or
       reduction of, U.S. withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

               (b)    If any Lender claims exemption from, or reduction of,
withholding tax under a U.S. tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations owing to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations owing to such Lender. To the extent of such percentage amount, the
Agent will treat such Lender's IRS Form W-8BEN as no longer valid.

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            (c)    If any Lender claiming exemption from U.S. withholding tax by
filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

            (d)    If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by clause (a)
preceding are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

            (e)    If the IRS or any other Governmental Authority of the U.S. or
other jurisdiction asserts a claim that the Agent did not properly withhold tax
from amounts paid to or for the account of any Lender (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section 12.10, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this clause (e)
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.

     Section 12.11 Collateral Matters.

            (a)    The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Liens upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full of all Loans and reimbursement obligations in respect of
Letters of Credit, and the termination or collateralization as provided in
Section 1.4(g) of all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting property being
sold or disposed of if the Obligated Party disposing of such property certifies
to the Agent that the sale or disposition is made in compliance with Section 7.9
(and the Agent may rely conclusively on any such certificate, without further
inquiry); (iii) constituting property in which no Obligated Party owned any
interest at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to an Obligated Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement.
Except as provided above, the Agent will not release any of the Agent's Liens
without the prior written authorization of the Lenders; provided that the Agent
may, in its discretion, release the Agent's Liens on Collateral valued in the
aggregate not in excess of $1,500,000 during each Fiscal Year without the prior
written authorization of the Lenders and, subject to clause (vii) of Section
11.1(b), the Agent may release the Agent's Liens on any other Collateral with
the prior written authorization of the Required Lenders. Upon request by the
Agent or the Obligated Parties at any time, the Lenders will confirm in writing
the Agent's authority to release any Agent's Liens upon particular types or
items of Collateral pursuant to this Section 12.11.

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         (b) Upon receipt by the Agent of any authorization required pursuant to
Section 12.11(a) from the Lenders or the Majority Lenders, as applicable, of the
Agent's authority to release any Agent's Liens upon particular types or items of
Collateral, and upon at least five (5) Business Days prior written request by
the Obligated Parties, the Agent shall (and is hereby irrevocably authorized by
the Lenders to) execute such documents as may be necessary to evidence the
release of the Agent's Liens upon such Collateral; provided, however, that (i)
the Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Obligated Parties in
respect of) all interests retained by the Obligated Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.

         (c) The Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by the Obligated Parties or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the rights,
authorities, and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.

         (d) Each of the Lenders authorizes the Agent to execute and deliver the
Dreyfus Letter Agreement.

     Section 12.12 Restrictions on Actions by the Lenders; Sharing of Payments.

         (a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, setoff against the Obligations, any
amounts owing by such Lender to any Obligated Party or any accounts of any
Obligated Party now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by the Agent, take or cause to be taken any action to enforce its rights under
this Agreement or any other Loan Document or against any Obligated Party,
including the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.

         (b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations owing to such Lender arising under, or relating
to, this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from the Agent pursuant to the terms of this
Agreement, or (ii) payments from the Agent in excess of such Lender's ratable
portion of all such distributions by the Agent, such Lender shall promptly (A)

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turn the same over to the Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(B) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares, based upon the applicable Commitments; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

     Section 12.13 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting Liens, for the benefit of the
Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC
or any other Requirement of Law, can be perfected only by possession. Should any
Lender (other than the Agent) obtain possession of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent's request
therefor, shall deliver such Collateral to the Agent or otherwise deal with such
Collateral in accordance with the Agent's instructions.

     Section 12.14 Payments by the Agent to the Lenders. All payments to be made
by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, delivered with or in the applicable
Assignment and Acceptance), or pursuant to such other wire transfer instructions
as each party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest on
the Revolving Loans, the Term Loans, or otherwise. Unless the Agent receives
notice from the Borrowers prior to the date on which any payment is due to the
Lenders that the Borrowers will not make such payment in full as and when
required, the Agent may assume that the Borrowers have made such payment in full
to the Agent on such date in immediately available funds and the Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrowers have not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

     Section 12.15 Settlement.

         (a) Each Lender's funded portion of the Revolving Loans is intended by
the Lenders to be equal at all times to such Lender's Pro Rata Share, based upon
its Revolving Loans Commitment, of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the Lenders agree
(which agreement shall not be for the benefit of or enforceable by the Obligated
Parties) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among them as to the Revolving Loans,
including the Non-

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Ratable Loans and the Agent Advances, shall take place on a periodic basis in
accordance with the following provisions:

             (i) The Agent shall request settlement (a "Settlement") with the
     Lenders on at least a weekly basis, or on a more frequent basis at the
     Agent's election, (A) on behalf of the Bank, with respect to each
     outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent
     Advance, and (C) with respect to collections received, in each case, by
     notifying the Lenders of such requested Settlement by telecopy, telephone,
     e-mail, or other similar form of transmission, of such requested
     Settlement, no later than 12:00 noon (Los Angeles, California time) on the
     date of such requested Settlement (the "Settlement Date"). Each Lender
     (other than the Bank, in the case of the Non-Ratable Loans, and the Agent
     in the case of the Agent Advances) shall transfer the amount of such
     Lender's Pro Rata Share, based upon its Revolving Loans Commitment, of the
     outstanding principal amount of the Non-Ratable Loans and the Agent
     Advances with respect to which Settlement is requested to the Agent, to
     such account of the Agent as the Agent may designate, not later than 12:00
     noon (Los Angeles, California time), on the Settlement Date applicable
     thereto. Settlements may occur during the continuation of a Default or an
     Event of Default and whether or not the applicable conditions precedent set
     forth in Article 8 have then been satisfied. Such amounts transferred to
     the Agent shall be applied against the amounts of the applicable
     Non-Ratable Loan or Agent Advance and, together with the portion of such
     Non-Ratable Loan or Agent Advance representing the Bank's Pro Rata Share,
     based upon its Revolving Loans Commitment, thereof, shall constitute
     Revolving Loans of such Lenders, respectively. If any such amount is not
     transferred to the Agent by any Lender on the Settlement Date applicable
     thereto, the Agent shall be entitled to recover such amount on demand from
     such Lender together with interest thereon at the Federal Funds Rate for
     the first three (3) days from and after the Settlement Date and thereafter
     at the Interest Rate then applicable to the Base Rate Revolving Loans (1)
     on behalf of the Bank, with respect to each outstanding Non-Ratable Loan
     and (2) for itself, with respect to each Agent Advance.

             (ii) Notwithstanding the foregoing, not more than one (1) Business
     Day after demand is made by the Agent (whether before or after the
     occurrence of a Default or an Event of Default and regardless of whether
     the Agent has requested a Settlement with respect to a Non-Ratable Loan or
     Agent Advance), each other Lender (A) shall irrevocably and unconditionally
     purchase and receive from the Bank or the Agent, as applicable, without
     recourse or warranty, an undivided interest and participation in such
     Non-Ratable Loan or Agent Advance equal to such Lender's Pro Rata Share,
     based upon its Revolving Loans Commitment, of such Non-Ratable Loan or
     Agent Advance, and (B) if Settlement has not previously occurred with
     respect to such Non-Ratable Loans or Agent Advances, upon demand by the
     Bank or the Agent, as applicable, shall pay to the Bank or the Agent, as
     applicable, as the purchase price of such participation an amount equal to
     one-hundred percent (100%) of such Lender's Pro Rata Share, based upon its
     Revolving Loans Commitment, of such Non-Ratable Loans or Agent Advances. If
     such amount is not in fact transferred to the Agent by any Lender, the
     Agent shall be entitled to recover such amount on demand from such Lender
     together with interest thereon at the Federal Funds Rate for the first
     three (3) days from and after

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     such demand and thereafter at the Interest Rate then applicable to Base
     Rate Revolving Loans.

             (iii) From and after the date, if any, on which any Lender
     purchases an undivided interest and participation in any Non-Ratable Loan
     or Agent Advance pursuant to clause (ii) preceding, the Agent shall
     promptly distribute to such Lender, such Lender's Pro Rata Share, based
     upon its Revolving Loans Commitment, of all payments of principal and
     interest and all proceeds of Collateral received by the Agent in respect of
     such Non-Ratable Loan or Agent Advance.

             (iv) Between Settlement Dates, to the extent no Agent Advances
     are outstanding, the Agent may pay over to the Bank any payments received
     by the Agent, which in accordance with the terms of this Agreement would be
     applied to the reduction of the Revolving Loans, for application to the
     Bank's Revolving Loans including Non-Ratable Loans. If, as of any
     Settlement Date, collections received since the then immediately preceding
     Settlement Date have been applied to the Bank's Revolving Loans (other than
     to Non-Ratable Loans or Agent Advances in which a Lender has not yet funded
     its purchase of a participation pursuant to clause (ii) preceding), as
     provided for in the previous sentence, the Bank shall pay to the Agent for
     the accounts of the Lenders, to be applied to the outstanding Revolving
     Loans of such Lenders, an amount such that each Lender shall, upon receipt
     of such amount, have, as of such Settlement Date, its Pro Rata Share, based
     upon its Revolving Loans Commitment, of the Revolving Loans. During the
     period between Settlement Dates, the Bank with respect to Non-Ratable
     Loans, the Agent with respect to Agent Advances, and each Lender with
     respect to the Revolving Loans other than Non-Ratable Loans and Agent
     Advances, shall be entitled to interest at the applicable rate or rates
     payable under this Agreement on the actual average daily amount of funds
     employed by the Bank, the Agent, and the other Lenders.

             (v) Unless the Agent has received written notice from a Borrower
     or a Lender to the contrary, the Agent may assume that the applicable
     conditions precedent set forth in Article 8 have been satisfied and the
     requested Borrowing will not exceed the Availability on any Funding Date
     for a Revolving Loans or Non-Ratable Loan.

         (b) The Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares, based upon their
Revolving Loans Commitments. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Loans hereunder, (ii) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (iii) the obligations of each
Lender hereunder shall be several, not joint and several.

         (c) Defaulting Lenders. Unless the Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one (1) Business Day prior to the date of such Borrowing,
that such Lender will not make available

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as and when required hereunder to the Agent such Lender's Pro Rata Share, based
upon its applicable Commitment, of such Borrowing, the Agent may assume that
each Lender has made such amount available to the Agent in immediately available
funds on the Funding Date. Furthermore, the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If any Lender has not transferred its full Pro Rata Share, based upon its
applicable Commitment, to the Agent in immediately available funds and if the
Agent has transferred a corresponding amount to the Borrowers on the Business
Day following such Funding Date, such Lender shall make such amount available to
the Agent, together with interest at the Federal Funds Rate for that day. A
notice by the Agent submitted to any Lender with respect to amounts owing shall
be conclusive, absent manifest error. If each Lender's full Pro Rata Share,
based upon its applicable Commitment, is transferred to the Agent as required,
the amount transferred to the Agent shall constitute such Lender's Loans for all
purposes of this Agreement. If any such amount is not transferred to the Agent
on the Business Day following the Funding Date, the Agent will notify the
Borrowers of such failure to fund and, upon demand by the Agent, the Borrowers
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the Interest Rate applicable at the time to the Loans
comprising that particular Borrowing. The failure of any Lender to make any
Loans on any Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "Defaulting Lender") shall not relieve any
other Lender of its obligation hereunder to make Loans on such Funding Date. No
Lender shall be responsible for any other Lender's failure to advance such other
Lender's Pro Rata Share, based upon its applicable Commitment, of any Borrowing.

         (d) Retention of Defaulting Lender's Payments. The Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by any Borrower
to the Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender
be entitled to the sharing of any payments hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Agent. In its
discretion, the Agent may loan the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so loaned to the Borrowers shall bear interest at the rate applicable to
Base Rate Revolving Loans and for all other purposes of this Agreement shall be
treated as if they were Revolving Loans, provided, however, that for purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender." Until a Defaulting Lender cures its failure to fund its Pro Rata
Share, based upon its Revolving Loans Commitment, of any Borrowing (i) such
Defaulting Lender shall not be entitled to any portion of the Unused Line Fee
and (ii) the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Pro Rata Shares, based upon their Revolving Loans
Commitments, of such requested Borrowing and shall be allocated among such
performing Lenders ratably based upon their relative Revolving Loans
Commitments. This Section shall remain effective with respect to such Lender
until such time as the Defaulting Lender shall no longer be in default of any of
its obligations under this Agreement. The terms of this Section shall not be
construed to increase or otherwise affect any Commitment of any Lender, or
relieve or excuse the performance by any Borrower of its duties and obligations
hereunder.

         (e) Removal of Defaulting Lender. At the Borrowers' request, the Agent
or an Eligible Assignee reasonably acceptable to the Agent and the Borrowers
shall have the right

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(but not the obligation) to purchase from any Defaulting Lender, and each
Defaulting Lender shall, upon such request, (i) sell and assign to the Agent (in
its individual capacity as a Lender) or such Eligible Assignee (with the Agent's
approval), all of the Defaulting Lender's outstanding Loans and other
Obligations for an amount equal to the principal balances thereof and all
accrued and unpaid interest and fees and other amounts due and owing by the
Borrowers with respect thereto through the date of sale, without premium or
discount, and (ii) assign to the Agent (in its individual capacity as a Lender)
or such Eligible Assignee (with the Agent's approval) such Defaulting Lender's
Commitments for no additional consideration. Such sale shall be consummated
promptly after the Agent has arranged for a purchase by the Agent or an Eligible
Assignee pursuant to an Assignment and Acceptance.

     Section 12.16 Letters of Credit; Intra-Lender Issues.

            (a)    Notice of Letter of Credit Balance. On each Settlement Date,
the Agent shall notify each Lender of the issuance of all Letters of Credit
since the prior Settlement Date.

            (b)    Participations in Letters of Credit.

                   (i)    Purchase of Participations. Immediately upon issuance
     of any Letter of Credit in accordance with Section 1.4(d), each Lender
     shall be deemed to have irrevocably and unconditionally purchased and
     received, without recourse or warranty, an undivided interest and
     participation equal to such Lender's Pro Rata Share, based upon its
     Revolving Loans Commitment, of the face amount of such Letter of Credit in
     connection with the issuance of such Letter of Credit (including all
     obligations of the Borrower for whose account such Letter of Credit was
     issued, and any security therefor or guaranty pertaining thereto).

                   (ii)   Sharing of Reimbursement Obligation Payments. Whenever
     the Agent receives a payment from a Borrower on account of reimbursement
     obligations in respect of a Letter of Credit as to which the Agent has
     previously received for the account of the Agent or the Letter of Credit
     Issuer thereof payment from a Lender, the Agent shall promptly pay to such
     Lender such Lender's Pro Rata Share, based upon its Revolving Loans
     Commitment, of such payment from such Borrower. Each such payment shall be
     made by the Agent on the next Settlement Date.

                   (iii)  Documentation. Upon the request of any Lender, the
     Agent shall furnish to such Lender copies of any Letter of Credit,
     reimbursement agreements executed in connection therewith, applications for
     any Letter of Credit, and such other documentation as may reasonably be
     requested by such Lender.

                   (iv)   Obligations Irrevocable. The obligation of each Lender
     to make payments to the Agent with respect to any Letter of Credit or with
     respect to their participation therein or with respect to the Revolving
     Loans made as a result of a drawing under a Letter of Credit and the
     obligation of the Borrowers to make payments to the Agent, for the account
     of the Lenders, with respect to any Letter of Credit shall be irrevocable
     and shall not be subject to any qualification or exception whatsoever,
     including any of the following circumstances:

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                   (A) any lack of validity or enforceability of this Agreement
     or any of the other Loan Documents;

                   (B) the existence of any claim, setoff, defense, or other
     right which any Borrower may have at any time against a beneficiary named
     in a Letter of Credit or any transferee of any Letter of Credit (or any
     Person for whom any such transferee may be acting), any Lender, the Agent,
     the Letter of Credit Issuer, or any other Person, whether in connection
     with this Agreement, any Letter of Credit, the transactions contemplated
     herein or any unrelated transactions (including any underlying transactions
     between such Borrower or any other Person and the beneficiary named in any
     Letter of Credit);

                   (C) any draft, certificate, or any other document presented
     under any Letter of Credit proving to be forged, fraudulent, invalid, or
     insufficient in any respect or any statement therein being untrue or
     inaccurate in any respect;

                   (D) the surrender or impairment of any security for the
          performance or observance of any of the terms of any of the Loan
          Documents;

                   (E) the occurrence of any Default or Event of Default; or

                   (F) the failure of the Borrowers to satisfy the applicable
          conditions precedent set forth in Article 8.

          (c)  Recovery or Avoidance of Payments; Refund of Payments in Error.
In the event any payment by or on behalf of any Borrower received by the Agent
with respect to any Letter of Credit and distributed by the Agent to the Lenders
on account of their respective participations therein is thereafter set aside,
avoided, or recovered from the Agent in connection with any receivership,
liquidation, or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent their respective Pro Rata Shares, based upon their
Revolving Loans Commitments, of such amount set aside, avoided, or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it. Unless the Agent receives notice from the
Borrowers prior to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the Agent may
assume that the Borrowers have made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrowers have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

          (d)  Indemnification by the Lenders. To the extent not reimbursed by
the Borrowers and without limiting the obligations of the Borrowers hereunder,
the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, based upon their Revolving Loans
Commitments, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys'
fees) or

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disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Letter of Credit Issuer in any way relating to or
arising out of any Letter of Credit or the transactions contemplated thereby or
any action taken or omitted by the Letter of Credit Issuer under any Letter of
Credit or any Loan Document in connection therewith; provided that no Lender
shall be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Letter of
Credit Issuer promptly upon demand for its Pro Rata Share, based upon its
Revolving Loans Commitment, of any costs or expenses payable by any Borrower to
the Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is
not promptly reimbursed for such costs and expenses by a Borrower. The agreement
contained in this Section shall survive payment in full of all other
Obligations.

     Section 12.17  Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders.
Each Lender agrees that any action taken by the Agent, the Majority Lenders, or
the Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents, and the exercise by the Agent, the
Majority Lenders, or the Required Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders. The
Lenders acknowledge that the Loans (including, without limitation, the Revolving
Loans, the Term Loans, the Agent Advances and the Non-Ratable Loans), Bank
Products (including Hedge Agreements), and all interest, fees, and expenses
hereunder constitute one Debt, secured pari passu by all of the Collateral.

     Section 12.18  Field Audit and Examination Reports; Disclaimer by the
Lenders. By signing this Agreement, each Lender:

             (a)    is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, the "Reports") prepared by
or on behalf of the Agent;

             (b)    expressly agrees and acknowledges that neither the Bank nor
the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;

             (c)    expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, the Bank, or any other
party performing any audit or examination will inspect only specific information
regarding the Obligated Parties or their properties, as applicable, and will
rely significantly upon the Obligated Parties' books and records, as well as on
representations of the Obligated Parties' personnel;

             (d)    agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute such Reports except to its Participants, or
use any Report in any other manner; and

             (e)    without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a

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Report harmless from any action the indemnifying Lender may take or conclusion
the indemnifying Lender may reach or draw from any Report in connection with any
loans or other credit accommodations that the indemnifying Lender has made or
may make to the Obligated Parties, or the indemnifying Lender's participation
in, or the indemnifying Lender's purchase of, a loan or loans of the Obligated
Parties; and (ii) to pay and protect, and indemnify, defend, and hold the Agent
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.

     Section 12.19 Relation Among the Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.

     Section 12.20 Co-Lead Arrangers, Book Manager and Syndication Agent.
Neither any co-lead arranger, any book manager nor any syndication agent
identified as such on the cover page to this Agreement (a) shall have any right,
power, obligation, liability, responsibility, or duty under this Agreement in
any such capacity or (b) shall have any fiduciary relationship with any Lender.

                                   ARTICLE 13.
                                  MISCELLANEOUS

     Section 13.1  No Waivers; Cumulative Remedies. No failure by the Agent or
any Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement hereto, or in any other agreement between or among
any Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. Subject to
Section 11.1, no waiver by the Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by the
Agent or the Lenders on any occasion shall affect or diminish the Agent's and
each Lender's rights thereafter to require strict performance by the Obligated
Parties of any provision of this Agreement. The Agent and the Lenders may
proceed directly to collect the Obligations without any prior recourse to the
Collateral. The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or any
Lender may have.

     Section 13.2  Severability. The illegality or unenforceability of any
provision of this Agreement, any other Loan Document, or any instrument or
agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement, any other Loan
Document, or any instrument or agreement required hereunder.

     Section 13.3  Governing Law; Choice of Forum; Service of Process.

            (a)    THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT

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OF LAWS PROVISIONS, PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF
THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH
IN ARTICLE 9 OF THE UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

            (b)   ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR
OF THE U.S. LOCATED IN HARRIS COUNTY, TEXAS, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE OBLIGATED PARTIES, THE AGENT, AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE OBLIGATED PARTIES, THE AGENT, AND THE
LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY OTHER AGREEMENT,
DOCUMENT, OR INSTRUMENT RELATED HERETO OR THERETO. NOTWITHSTANDING THE FOREGOING
(i) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OBLIGATED PARTY OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND
(ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS
DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.

            (c)   EACH OBLIGATED PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH OBLIGATED PARTY AT
ITS ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY
LAW.

     Section 13.4 Waiver of Jury Trial. EACH OF THE OBLIGATED PARTIES, THE
LENDERS, AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR

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ANY AGENT-RELATED PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE OBLIGATED PARTIES, THE
LENDERS, AND THE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF
THE PARTIES FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

     Section 13.5 Survival of Representations and Warranties. All
representations and warranties of the Obligated Parties contained in this
Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or their
respective agents.

     Section 13.6 Other Security and Guaranties. The Agent may, without notice
or demand and without affecting the Obligated Parties' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce, or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.

     Section 13.7 Fees and Expenses. The Borrowers agree to pay to the Agent,
for its benefit, on demand, all costs and expenses that the Agent pays or incurs
in connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including Attorney Costs) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the transactions
contemplated thereby; (c) costs and expenses of UCC, lien, and title searches,
title insurance, and environmental audits; (d) taxes, fees, and other charges
for recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of this Agreement); (e) sums paid or incurred to pay any amount or
take any action required of any Obligated Party under the Loan Documents that
such Obligated Party fails to pay or take; (f) costs of appraisals, inspections,
and verifications of the Collateral, including travel, lodging, and meals for
field examinations and inspections of the Collateral and the Obligated Parties'
operations by the Agent, plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $850 per day (or portion thereof) for each Person retained or employed
by the Agent with respect to each field examination or audit); and (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining

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Payment Accounts and lockboxes, and costs and expenses of preserving and
protecting the Collateral. In addition, the Borrowers agree to pay costs and
expenses incurred by the Agent (including Attorney Costs) to the Agent, for its
benefit, on demand, and to the other Lenders for their benefit, on demand, and
all reasonable fees, expenses, and disbursements incurred by such other Lenders
for one law firm retained by such other Lenders (which law firm shall be
appointed with the approval of the Majority Lenders), in each case, paid or
incurred (i) in connection with any workout or restructuring of the Loans, (ii)
in connection with a proceeding of the type described in Section 9.1(e), 9.1(f),
9.1(g), or 9.1(h), (iii) to obtain payment of the Obligations, enforce the
Agent's Liens, sell or otherwise realize upon the Collateral, and otherwise
enforce the provisions of the Loan Documents, or (iv) to defend any claims made
or threatened against the Agent or any Lender arising out of the transactions
contemplated hereby (including preparations for and consultations concerning any
such matters); provided, that the fees, expenses, and disbursements incurred by
such other Lenders (other than the Agent) pursuant to clauses (i), (ii), and
(iii) above shall be paid by the Borrowers only after the occurrence and during
the continuance of an Event of Default. The foregoing shall not be construed to
limit any other provisions of the Loan Documents regarding costs and expenses to
be paid by the Borrowers. All of the foregoing costs and expenses shall be
charged to the Loan Account as Revolving Loans as described in Section 3.7.

     Section 13.8 Notices. Except as otherwise provided herein, all notices,
demands, and requests that any party is required or elects to give to any other
party shall be in writing, or by a telecommunications device capable of creating
a written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail or
courier service, (b) four (4) days after it shall have been mailed by U.S. mail,
first class, certified or registered, with postage prepaid, or (c) in the case
of notice by such a telecommunications device, when properly transmitted, in
each case addressed to the party to be notified as follows:

     If to the Agent or to the Bank:

                    Bank of America, N.A.
                    55 South Lake Avenue, Suite 900
                    Pasadena, California 91101
                    Attention: Business Credit: URGENT
                    Telecopy No.: (626) 397-1275

     If to any Obligated Party:

                    c/o Imperial Sugar Company
                    8016 Highway 90A
                    Sugar Land, Texas  77478
                    Attention: Darrell D. Swank, Chief Financial Officer
                    Telecopy No.: (281) 490-9895

or to such other address as each party may designate for itself by like notice.
For purposes of providing any notice to a Lender, such notice shall be delivered
to such Lender at the address for notices to such Lender set forth on the
signature pages of this Agreement or on the most recent Assignment and
Acceptance to which such Lender is a party. Failure or delay in delivering

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copies of any notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies shall not
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.

     Section 13.9 Waiver of Notices. Unless otherwise expressly provided herein,
each Obligated Party waives presentment, notice of demand or dishonor, protest
as to any instrument, notice of intent to accelerate the Obligations, and notice
of acceleration of the Obligations, as well as any and all other notices to
which it might otherwise be entitled. No notice to or demand on any Obligated
Party which the Agent or any Lender may elect to give shall entitle any
Obligated Party to any or further notice or demand in the same, similar, or
other circumstances.

     Section 13.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by any Obligated Party without the prior written
consent of the Agent and each Lender. The rights and benefits of the Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.

     Section 13.11 Indemnity of the Agent and the Lenders by the Borrowers.

          (a) EACH OBLIGATED PARTY AGREES TO DEFEND, INDEMNIFY, AND HOLD THE
AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, AND ATTORNEYS-IN-FACT
(EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY FEES AND
EXPENSES) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT
ANY TIME FOLLOWING REPAYMENT OF THE LOANS AND OTHER OBLIGATIONS AND THE
TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF ANY
LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR
ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT CONTEMPLATED BY OR REFERRED TO
HEREIN OR THEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR ANY
ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF
THE FOREGOING, INCLUDING WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR
PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED
TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE LOANS, THE
LETTERS OF CREDIT OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY
INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE
"INDEMNIFIED LIABILITIES"); PROVIDED THAT THE OBLIGATED PARTIES SHALL HAVE NO
OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES

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RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION 13.11 SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ALL INDEMNIFIED LIABILITIES ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. THE AGREEMENTS IN THIS
SECTION 13.11 SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.

          (b) EACH OBLIGATED PARTY AGREES TO INDEMNIFY, DEFEND, AND HOLD
HARMLESS THE AGENT AND THE LENDERS FROM ANY LOSS (EXCLUSIVE OF ANY DIMINUTION OF
VALUE OF THE REAL ESTATE COLLATERAL) OR LIABILITY DIRECTLY OR INDIRECTLY ARISING
OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE,
THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A HAZARDOUS SUBSTANCE
RELATING TO ANY OBLIGATED PARTY'S OPERATIONS, BUSINESS, OR PROPERTY, OTHER THAN
SUCH LOSS OR LIABILITY RESULTING SOLELY AND DIRECTLY FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. THIS INDEMNITY WILL APPLY
WHETHER THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY OBLIGATED PARTY'S
PROPERTY OR OPERATIONS OR PROPERTY LEASED TO ANY OBLIGATED PARTY. THE INDEMNITY
INCLUDES BUT IS NOT LIMITED TO ATTORNEY COSTS. THE INDEMNITY EXTENDS TO THE
AGENT AND THE LENDERS, THEIR PARENTS, AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. AS
USED IN THIS CLAUSE (b), "HAZARDOUS SUBSTANCES" MEANS ANY SUBSTANCE, MATERIAL,
OR WASTE THAT IS OR BECOMES DESIGNATED OR REGULATED AS "TOXIC," "HAZARDOUS,"
"POLLUTANT," OR "CONTAMINANT" OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY
FEDERAL, STATE, OR LOCAL LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR
OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING
PETROLEUM OR NATURAL GAS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER
OBLIGATIONS. THE INDEMNIFICATION RIGHTS OF THE AGENT AND THE LENDERS SET FORTH
IN THIS CLAUSE (b) SHALL NOT BE ASSIGNED BY THE AGENT OR THE LENDERS EXCEPT IN
CONNECTION WITH AN ASSIGNMENT OF THE LOANS, THE COMMITMENTS, AND/OR OTHER RIGHTS
UNDER THE LOAN DOCUMENTS OR, AS TO THE AGENT, IN CONNECTION WITH THE APPOINTMENT
OF A SUCCESSOR OR REPLACEMENT AGENT IN ACCORDANCE WITH THIS AGREEMENT.

     Section 13.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY
OBLIGATED PARTY, ANY LENDER, OR OTHER PERSON AGAINST ANY OBLIGATED PARTY, THE
AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS, OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT,

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CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF
CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH OBLIGATED
PARTY AND EACH LENDER, EXCEPT AS MAY BE PROHIBITED BY APPLICABLE LAW, HEREBY
WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER
OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

     Section 13.13 Final Agreement. This Agreement and the other Loan Documents
are intended by the Obligated Parties, the Agent, and the Lenders to be the
final, complete, and exclusive expression of the agreement between them. This
Agreement and the other Loan Documents supersede any and all prior oral or
written agreements relating to the subject matter hereof and thereof. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Obligated Parties and a duly authorized officer of each
of the Agent and the Majority Lenders, the Required Lenders, or all of the
Lenders, as applicable.

     THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS AS WRITTEN,
     REPRESENT THE FINAL AGREEMENTS BETWEEN OR AMONG THE PARTIES REGARDING THE
     SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
     OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
     THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.

     Section 13.14 Counterparts. This Agreement and the other Loan Documents may
be executed in any number of counterparts, and by the Agent, each Lender, and
the Obligated Parties in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same agreement.
Signature pages to this Agreement and the other Loan Documents may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document and a telecopy
of any such executed signature page shall be valid as an original.

     Section 13.15 Captions. The captions contained in this Agreement and the
other Loan Documents are for convenience of reference only, are without
substantive meaning and should not be construed to modify, enlarge, or restrict
any provision.

     Section 13.16 Right of Setoff. In addition to any rights and remedies of
the Agent and the Lenders provided by law, if an Event of Default exists or the
Loans have been accelerated, each of the Agent and the Lenders is authorized at
any time and from time to time, without prior notice to the Obligated Parties,
any such notice being waived by the Obligated Parties to the fullest extent
permitted by law, to setoff and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, the Agent, such Lender or any Affiliate of
such Lender to or for the credit or the account of

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the Obligated Parties against any and all Obligations owing to the Agent or such
Lender, now or hereafter existing, irrespective of whether or not the Agent or
such Lender shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured. Each of
the Agent and the Lenders agrees promptly to notify the Obligated Parties and
the Agent after any such setoff and application made by the Agent or such
Lender, as applicable; provided, however, the failure to give such notice shall
not affect the validity of such setoff and application. NOTWITHSTANDING THE
FOREGOING, THE AGENT AND THE LENDERS AGREE AMONG THEMSELVES, WHICH AGREEMENT IS
NOT WITH OR FOR THE BENEFIT OF ANY OBLIGATED PARTY, THAT NO LENDER SHALL
EXERCISE ANY RIGHT OF SETOFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF ANY OBLIGATED PARTY HELD OR MAINTAINED BY SUCH LENDER
WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

        Section 13.17 Confidentiality.

                (a)   Each Obligated Party hereby consents that the Agent and
each Lender may issue and disseminate to the public general information
describing the credit accommodation entered into pursuant to this Agreement,
including the name and address of the Obligated Parties and a general
description of the Obligated Parties' business and may use each Obligated
Party's name in advertising and other promotional material.

                (b)   Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by any Obligated Party and
provided to the Agent or such Lender by or on behalf of any Obligated Party,
under this Agreement or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than an Obligated
Party, provided that such source is not bound by a confidentiality agreement
with an Obligated Party known to the Agent or such Lender; provided, however,
that the Agent and any Lender may disclose such information (A) at the request
or pursuant to any requirement of any Governmental Authority to which the Agent
or such Lender is subject or in connection with an examination of the Agent or
such Lender by any such Governmental Authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding (including, but not
limited to, any bankruptcy proceeding) to which the Agent, any Lender or their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to the Agent's or such Lender's independent auditors, accountants,
attorneys, and other professional advisors, provided that such Persons have been
informed that such information is required to be kept confidential as and to the
extent required by this Section 13.17; (G) to any prospective Participant or
Assignee, actual or potential, provided that such prospective Participant or
Assignee agrees to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (H) as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which any Obligated Party is party or is deemed party with the Agent or such
Lender; and (I) to its Affiliates.

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     Section 13.18 Conflicts with other Loan Documents. Unless otherwise
expressly provided in this Agreement (or in another Loan Document by specific
reference to the applicable provision contained in this Agreement), if any
provision contained in this Agreement conflicts with any provision of any other
Loan Document, the provision contained in this Agreement shall govern and
control.

     Section 13.19 Joint and Several Liability. All Loans, upon funding, shall
be deemed to be jointly funded to and received by the Borrowers. Each Borrower
jointly and severally agrees to pay, and shall be jointly and severally liable
under this Agreement for, all Obligations (excluding Existing Obligations in the
case of a Newly Obligated Party), regardless of the manner or amount in which
proceeds of the Loans or the Letters of Credit are used, allocated, shared, or
disbursed by or among the Borrowers themselves, or the manner in which the Agent
and/or any Lender accounts for the Loans, Letters of Credit, or other extensions
of credit on its books and records. Each Borrower shall be liable for all
amounts due to the Agent and/or any Lender under this Agreement, regardless of
which Borrower actually receives the Loans, Letters of Credit, or other
extensions of credit hereunder, or the amount of the Loans, Letters of Credit
or, and extensions of credit received, or the manner in which the Agent and/or
such Lender accounts for the Loans, Letters of Credit, or other extensions of
credit on its books and records. Each Borrower's Obligations with respect to the
Loans, Letters of Credit, and other extensions of credit made to it, and such
Borrower's Obligations arising as a result of the joint and several liability of
such Borrower hereunder, with respect to the Loans or Letters of Credit made to
the other Borrowers hereunder, shall be separate and distinct obligations, but
all such Obligations shall be primary obligations of such Borrower. The
Borrowers acknowledge and expressly agree with the Agent and each Lender that
the joint and several liability of each Borrower is required solely as a
condition to, and is given solely as inducement for and in consideration of,
credit or accommodations extended or to be extended under the Loan Documents to
any or all of the other Borrowers and is not required or given as a condition of
extensions of credit to such Borrower. Each Borrower's obligations under this
Agreement shall be separate and distinct obligations. Each Borrower's
obligations under this Agreement shall, to the fullest extent permitted by law,
be unconditional irrespective of (i) the validity or enforceability, avoidance,
or subordination of the Obligations of any other Borrower or of any promissory
note or other document evidencing all or any part of the Obligations of any
other Borrower, (ii) the absence of any attempt to collect the Obligations from
any other Borrower, any Guarantor, or any other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance, or granting of any indulgence by the Agent and/or any
Lender with respect to any provision of any instrument evidencing the
Obligations of any other Borrower or Guarantor, or any part thereof, or any
other agreement now or hereafter executed by any other Borrower or Guarantor and
delivered to the Agent and/or any Lender, (iv) the failure by the Agent and/or
any Lender to take any steps to perfect and maintain its security interest in,
or to preserve its rights to, any security or collateral for the Obligations of
any other Borrower or Guarantor, (v) the Agent's and/or any Lender's election,
in any proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a
security interest by any other Borrower, as debtor-in-possession under Section
364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of the
Agent's and/or any Lender's claim(s) for the repayment of the Obligations of any
other Borrower under Section 502 of the Bankruptcy Code, or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of any other Borrower. With respect to any Borrower's

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<PAGE>

Obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to the Loans, Letters of Credit, or other
extensions of credit made to any of the other Borrowers hereunder, such Borrower
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or any
remedy which the Agent and/or any Lender now has or may hereafter have against
any other Borrower, any endorser or any Guarantor of all or any part of the
Obligations, and any benefit of, and any right to participate in, any security
or collateral given to the Agent and/or any Lender to secure payment of the
Obligations or any other liability of any Borrower to the Agent and/or any
Lender. Upon any Event of Default, the Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against any other
Borrower or any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that the Agent shall be under no
obligation to marshal any assets in favor of any Borrower or against or in
payment of any or all of the Obligations. All representations, warranties,
covenants and agreements of the Borrowers and/or the Obligated Parties under
this Agreement shall be deemed to be the joint and several representations,
warranties, covenants and agreements of each Borrower and/or Obligated Party,
respectively, under this Agreement.

     Section 13.20 Contribution and Indemnification among the Borrowers. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Loans made to another Borrower hereunder or other Obligations
incurred directly and primarily by any other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be entitled
to contribution and indemnification from, and be reimbursed by, each of the
other Borrowers in an amount, for each of such other Borrowers, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Borrower's Allocable Amount and the denominator of which is the sum of the
Allocable Amounts of all of the Borrowers. As of any date of determination, the
"Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (b) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification, and reimbursement under this
Section shall be subordinate in right of payment to the prior payment in full of
the Obligations, and no payment shall be made or received by any Borrower with
respect to any such right or claim unless and until all Obligations have been
paid in full and all Commitments have terminated or expired. The provisions of
this Section shall, to the extent expressly inconsistent with any provision in
any Loan Document, supersede such inconsistent provision.

     Section 13.21 Agency of the Parent for each Other Obligated Party. Each of
the other Obligated Parties irrevocably appoints the Parent as its agent for all
purposes relevant to this Agreement, including the giving and receipt of notices
and execution and delivery of all

                                       93

<PAGE>

documents, instruments, and certificates contemplated herein (including, without
limitation, execution and delivery to the Agent of Borrowing Base Certificates,
Notices of Borrowing, and Notices of Continuation/Conversion) and all
modifications hereto. Any acknowledgment, consent, direction, certification, or
other action which might otherwise be valid or effective only if given or taken
by all or any of the Obligated Parties or acting singly, shall be valid and
effective if given or taken only by the Parent, whether or not any of the other
Obligated Parties joins therein, and the Agent and the Lenders shall have no
duty or obligation to make further inquiry with respect to the authority of the
Parent under this Section 13.21, provided that nothing in this Section 13.21
shall limit the effectiveness of, or the right of the Agent and the Lenders to
rely upon, any notice (including without limitation a Notice of Borrowing or a
Notice of Continuation/Conversion), document, instrument, certificate,
acknowledgment, consent, direction, certification, or other action delivered by
any Obligated Party pursuant to this Agreement.

     Section 13.22 Additional Borrowers. Addition of any Person as a Borrower to
this Agreement is subject to approval of the Agent and the Majority Lenders, and
may be conditioned upon such requirements as they may determine in their
discretion, including, without limitation, (a) the furnishing of such financial
and other information as the Agent or any such Lender may request; (b) approval
by all appropriate approval authorities of the Agent and each such Lender; (c)
execution and delivery by the Obligated Parties, such Person, the Agent, and the
Majority Lenders of such agreements and other documentation (including, without
limitation, an amendment to this Agreement or any other Loan Document), and the
furnishing by such Person or any of the Obligated Parties of such certificates,
opinions, and other documentation, as the Agent and any such Lender may request.
Neither the Agent nor any Lender shall have any obligation to approve any such
Person for addition as a party to this Agreement.

     Section 13.23 Express Waivers By the Obligated Parties in Respect of Cross
Guaranties and Cross Collateralization. Each Obligated Party agrees as follows:

             (a)   Each Obligated Party hereby waives: (i) notice of acceptance
of this Agreement; (ii) notice of the making of any Loans, the issuance of any
Letter of Credit, or any other financial accommodations made or extended under
the Loan Documents or the creation or existence of any Obligations; (iii) notice
of the amount of the Obligations, subject, however, to such Obligated Party's
right to make inquiry of the Agent to ascertain the amount of the Obligations at
any reasonable time; (iv) notice of any adverse change in the financial
condition of any other Obligated Party or of any other fact that might increase
such Obligated Party's risk with respect to such other Obligated Party under the
Loan Documents; (v) notice of presentment for payment, demand, protest, and
notice thereof as to any promissory notes or other instruments among the Loan
Documents; and (vii) all other notices (except if such notice is specifically
required to be given to such Obligated Party hereunder or under any of the other
Loan Documents to which such Obligated Party is a party) and demands to which
such Obligated Party might otherwise be entitled;

             (b)   Except as may be prohibited by applicable law, each Obligated
Party hereby waives the right by statute or otherwise to require the Agent or
any Lender to institute suit against any other Obligated Party or to exhaust any
rights and remedies which the Agent or any Lender has or may have against any
other Obligated Party. Each Obligated Party further

                                       94

<PAGE>

waives any defense arising by reason of any disability or other defense of any
other Obligated Party (other than the defense that the Obligations shall have
been fully and finally performed and indefeasibly paid) or by reason of the
cessation from any cause whatsoever of the liability of any such Obligated Party
in respect thereof;

                (c)   Except as may be prohibited by applicable law, each
Obligated Party hereby waives and agrees not to assert against the Agent, any
Lender, or any Letter of Credit Issuer: (i) any defense (legal or equitable),
setoff, counterclaim, or claim which such Obligated Party may now or at any time
hereafter have against any other Obligated Party or any other party liable under
the Loan Documents; (ii) any defense, setoff, counterclaim, or claim of any kind
or nature available to any other Obligated Party against the Agent, any Lender,
the Bank, or any Letter of Credit Issuer, arising directly or indirectly from
the present or future lack of perfection, sufficiency, validity, or
enforceability of the Obligations or any security therefor; (iii) any right or
defense arising by reason of any claim or defense based upon an election of
remedies by the Agent, any Lender, the Bank, or any Letter of Credit Issuer
under any applicable law; or (iv) the benefit of any statute of limitations
affecting any other Obligated Party's liability hereunder; and

                (d)   Each Obligated Party consents and agrees that, without
notice to or by such Obligated Party and without affecting or impairing the
obligations of such Obligated Party hereunder, the Agent may (subject to any
requirement for consent of any of the Lenders to the extent required by this
Agreement), by action or inaction: (i) compromise, settle, extend the duration
or the time for the payment of, or discharge the performance of, or may refuse
to or otherwise not enforce the Loan Documents; (ii) release all or any one or
more parties to any one or more of the Loan Documents or grant other indulgences
to any other Obligated Party in respect thereof; (iii) amend or modify in any
manner and at any time (or from time to time) any of the Loan Documents in
accordance with the terms and provisions of such Loan Documents; or (iv) release
or substitute any Person liable for payment of the Obligations, or enforce,
exchange, release, or waive any security for the Obligations or any Guaranty of
the Obligations.

Each Obligated Party represents and warrants to the Agent and the Lenders that
such Obligated Party is currently informed of the financial condition of all
other Obligated Parties and all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Obligated Party further represents and warrants that such Obligated Party has
read and understands the terms and conditions of the Loan Documents. Each
Obligated Party agrees that neither the Agent, any Lender, the Bank, nor any
Letter of Credit Issuer has any responsibility to inform any Obligated Party of
the financial condition of any other Obligated Party or of any other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.

        Section 13.24 Common Enterprise. The Obligated Parties consist of the
Parent and its Subsidiaries and their business operations are closely integrated
with one another into a single, interdependent and collective, common business
enterprise so that any benefit received by any one of them from the financial
accommodations provided under this Agreement will be to the direct benefit of
the others. The Obligated Parties intend to render services to or for the
benefit of each other, to purchase or sell and supply goods to or from or for
the benefit of the other, make loans, advances, and provide other financial
accommodations to or for the benefit of each

                                       95

<PAGE>

other (as and to the extent permitted by this Agreement) and provide
administrative, marketing, payroll, and management services to or for the
benefit of each other.

        Section 13.25 Certificates of Responsible Officers. Any certificate
provided by a Responsible Officer in connection with this Agreement or any Loan
Document is, unless otherwise expressly stated in such certificate, provided by
such Responsible Officer in his or her capacity as an officer of the applicable
entity and not in his or her individual capacity.

        Section 13.26 Subordination of Intercompany Indebtedness and Liens. Each
of the Borrowers hereby agrees with the Agent and the Lenders that the payment
of any and all principal of and interest on all indebtedness of any Obligated
Party, whether direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, now or hereafter existing, due or to
become due to such Borrower (herein called the "Subordinated Debt") shall in all
respects be subordinate and junior in right of payment and enforcement to the
prior payment and enforcement in full of the Obligations as provided in this
Section 13.26. After the occurrence and during the continuation of any Event of
Default, no payment shall be made on or with respect to any Subordinated Debt
without the prior written consent of the Agent unless and until the Obligations
shall have been paid and performed in full. In the event that any Borrower shall
receive any payment on account of the Subordinated Debt in violation of this
Section 13.26, such Borrower will hold, or cause to be held (as the case may
be), any amount so received in trust for the benefit of the Agent and the
Lenders, and will forthwith deliver, or cause to be delivered (as the case may
be), such payment to the Agent in the form received, to be applied to the
Obligations in accordance with Section 3.8. All Liens, if any, at any time
securing payment of all or any part of the Subordinated Debt (herein called the
"Subordinated Liens") shall be and remain inferior and subordinate to the Liens
securing payment of all or any part of the Obligations, regardless of whether
such Subordinated Liens presently exist or are hereafter created or when such
Subordinated Liens were created, perfected, filed, or recorded (provided that
the foregoing shall not be interpreted or deemed to allow the existence of any
such Liens to the extent otherwise prohibited by this Agreement or the other
Loan Documents). After the occurrence and during the continuation of any Event
of Default, none of the Borrowers shall, without the prior written consent of
the Agent, exercise or enforce any creditors' rights or remedies that it may
have against any Obligated Party, or foreclose, repossess, sequester, or
otherwise institute any action or proceeding (whether judicial or otherwise,
including, without limitation, the commencement of, or joinder in, any
bankruptcy, insolvency, reorganization, liquidation, receivership, or other
debtor relief law) to enforce the Subordinated Debt or any Subordinated Lien on
any assets of any Obligated Party unless and until the Obligations shall have
been paid and performed in full. The terms and provisions of this Section 13.26
are given by the Borrowers as additional rights and benefits to any and all
other subordination agreements heretofore, concurrently herewith, or hereafter
executed by the Borrowers (or any one or more of them) to or in favor of the
Agent or any Lender, and nothing in this Section 13.26 shall be deemed to in any
way negate or replace any other such previous, concurrent, or subsequent
subordination agreements. All promissory notes, ledgers, and other evidences of
the Subordinated Debt, and all mortgages, deed of trusts, security agreements,
assignments, and other security documents, if any, at any time evidencing the
Subordinated Liens, shall contain a specific written notice that the
indebtedness and Liens evidenced thereby are subordinated as provided in this
Section 13.26.

                                       96

<PAGE>

                  [Remainder of page intentionally left blank]

                                       97

<PAGE>

     IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.

                                           THE PARENT, A BORROWER AND
                                           AN OBLIGATED PARTY:

                                           IMPERIAL SUGAR COMPANY

                                           By: /s/ Darrell D. Swank
                                              ----------------------------------
                                           Name:  Darrell D. Swank
                                           Title: Executive Vice President and
                                                  Chief Financial Officer

                                       98

<PAGE>

                                           ADDITIONAL BORROWERS AND
                                           OBLIGATED PARTIES:

                                           FORT BEND UTILITIES COMPANY

                                           By: /s/ William F. Schwer
                                              ----------------------------------
                                           Name:  William F. Schwer
                                           Title: President

                                           HOLLY FINANCE COMPANY

                                           By: /s/ William F. Schwer
                                              ----------------------------------
                                           Name:  William F. Schwer
                                           Title: Senior Vice President

                                           HOLLY SUGAR CORPORATION

                                           By: /s/ William F. Schwer
                                              ----------------------------------
                                           Name:  William F. Schwer
                                           Title: Senior Vice President

                                           IMPERIAL DISTRIBUTING, INC.

                                           By: /s/ William F. Schwer
                                              ----------------------------------
                                           Name:  William F. Schwer
                                           Title: President

                                           IMPERIAL SWEETENER DISTRIBUTORS, INC.

                                           By: /s/ William F. Schwer
                                              ----------------------------------
                                           Name:  William F. Schwer
                                           Title: President

                                           IMPERIAL-SAVANNAH LP

                                       99

<PAGE>

                                          By:    Savannah Molasses & Specialties
                                                 Company
                                          Title: General Partner

                                                 By: /s/ William F. Schwer
                                                    ----------------------------
                                                 Name:  William F. Schwer
                                                 Title: Senior Vice President

                                          RAGUS HOLDINGS, INC.

                                          By: /s/ William F. Schwer
                                             -----------------------------------
                                          Name:  William F. Schwer
                                          Title: President

                                          SAVANNAH FOODS INDUSTRIAL, INC.

                                          By: /s/ William F. Schwer
                                             -----------------------------------
                                          Name:  William F. Schwer
                                          Title: President

                                       100

<PAGE>

                                             AGENT:

                                             BANK OF AMERICA, N.A., as Agent

                                             By:     /s/ Stephen J. King
                                                    ----------------------------
                                             Name:  Stephen J. King
                                             Title: Vice President

                                       101

<PAGE>

                                             LENDERS:

                                             BANK OF AMERICA, N.A.

                                             By:     /s/ Stephen J. King
                                                    ----------------------------
                                             Name:  Stephen J. King
                                             Title: Vice President

                                             Address for Notices:

                                             Bank of America, N.A.
                                             55 South Lake Avenue, Suite 900
                                             Pasadena, California 91101
                                             Attn: Business Credit: URGENT
                                             Telecopy: (626) 397-1273

                                       102

<PAGE>

                                            GENERAL ELECTRIC CAPITAL
                                            CORPORATION:

                                            By:     /s/ John Hanley
                                                   -----------------------------
                                            Name:  John Hanley
                                            Title: Duly Authorized Signatory

                                            Address for Notices:

                                            General Electric Capital Corporation
                                            2611 Internet Blvd., Suite 105
                                            Frisco, Texas  75034
                                            Attn:        John Hanley
                                            Telecopy:    972-334-1224

                                       103

<PAGE>

                                     ANNEX A
                                       to
                                Credit Agreement

           Definitions, Accounting Terms, and Interpretive Provisions

DEFINITIONS:

         Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:

         "Account" and "Accounts" have the meaning specified in the Borrower
Security Agreement.

         "Accommodation Payment" has the meaning specified in Section 13.20.

         "Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper, or General Intangibles (including a
payment intangible).

         "ACH Transactions" means any cash management or related services
including, without limitation, the automated clearinghouse transfer of funds by
the Bank for the account of any Borrower pursuant to agreement or overdrafts.

         "Administrative Reserve" means, as of any date of determination, an
amount equal to the aggregate amount of proceeds of asset dispositions and
proceeds of the Michigan Sugar Notes, the Hormel Escrow, and the Tyco Escrow
which has not been applied to prepay the Loans.

         "Affiliate" means, as to any Person (the "subject Person"), any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, the subject Person or which owns, directly or
indirectly, ten percent (10.0%) or more of the outstanding Capital Stock of the
subject Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.

         "Agent" means the Bank, solely in its capacity as administrative agent
for the Lenders, and any successor administrative agent.

         "Agent Advances" has the meaning specified in Section 1.2(j).

         "Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents, and
attorneys-in-fact of the Agent and its Affiliates.

                                       1

<PAGE>

         "Agent's Letter" means that certain letter agreement, dated as of the
Closing Date, among the Borrowers and the Agent as such letter agreement may be
amended, restated, or otherwise modified from time to time.

         "Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, the Bank, and the Agent pursuant to this
Agreement and the other Loan Documents.

         "Aggregate Commitment" means, at any time with respect to a Lender, the
aggregate amount of the Revolving Loans Commitment and the Term Loans Commitment
of such Lender, and "Aggregate Commitments" means, collectively, the aggregate
amount of the Revolving Loans Commitments and the Term Loans Commitments of all
of the Lenders.

         "Aggregate Revolver Outstandings" means, at any time, the sum of (a)
the aggregate unpaid principal amount of the Revolving Loans, (b) the aggregate
undrawn face amount of all outstanding Letters of Credit, and (c) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit.

         "Agreement" means the Credit Agreement to which this Annex A is
attached, as amended, restated, or otherwise modified from time to time.

         "Allocable Amount" has the meaning specified in Section 13.20.

         "Anniversary Date" means an anniversary of the Closing Date.

         "Applicable Margin" means as follows:

                (a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Loans and Base Rate Term Loans), 0.25%;

                (b) with respect to LIBOR Rate Revolving Loans, 2.75%;

                (c) with respect to Base Rate Term Loans, 0.75%; and

                (d) with respect to LIBOR Rate Term Loans, 3.25%;

provided, however, that, commencing on and after July 1, 2003 and continuing on
the first day of each calendar month thereafter, the "Applicable Margin" for the
calendar month commencing on each such date shall be the applicable percentage
corresponding to the daily average Availability, based upon the Agent's records,
during the immediately preceding calendar month as set forth in the table below:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
     Availability              Base Rate            Base Rate           LIBOR Rate             LIBOR Rate
                            Revolving Loans        Term Loans         Revolving Loans          Term Loans
------------------------------------------------------------------------------------------------------------
 <S>                        <C>                    <C>                <C>                    <C>
 Less than $20,000,000          0.50%                1.00%                3.00%                   3.50%
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       2

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
     Availability              Base Rate          Base Rate         LIBOR Rate          LIBOR Rate
                            Revolving Loans      Term Loans       Revolving Loans       Term Loans
-----------------------------------------------------------------------------------------------------
 <S>                        <C>                  <C>              <C>                 <C>
    Greater than or              0.25%                0.75%             2.75%              3.25%
 equal to $20,000,000
     but less than
      $30,000,000
-----------------------------------------------------------------------------------------------------
 Greater than or equal           0.00%                0.50%             2.50%              3.00%
  to $30,000,000 but
 less than $50,000,000
-----------------------------------------------------------------------------------------------------
 Greater than or equal           0.00%                0.25%             2.25%              2.75%
    to $50,000,000
-----------------------------------------------------------------------------------------------------
</TABLE>

For the purpose of determining any adjustments to the Applicable Margin for any
particular calendar month, the Applicable Margin and such adjustments thereto
shall be based upon the daily average Availability, based upon the Agent's
records, for the immediately preceding calendar month, and such adjustment, if
any, shall become effective prospectively on and after the first day of the
calendar month following the calendar month used to calculate such average
Availability and continuing until further adjustment is made in accordance
herewith. With respect to each determination of the Applicable Margin based upon
the daily average Availability, based upon the Agent's records, for a particular
calendar month, the Borrowers shall, within five (5) Business Days after the
last day of such month, deliver to the Agent and the Lenders a certificate,
signed by a Responsible Officer of the Borrowers, setting forth in reasonable
detail the calculation of the Applicable Margin for the immediately succeeding
calendar month. In the event the Borrowers fail to timely deliver any such
certificate or any related information required to be delivered in accordance
with Section 5.2, or in the event that the Agent determines that the calculation
of the Applicable Margin as set forth in any certificate of the Borrowers is
inaccurate, then the Agent may determine the Applicable Margin (if it is able to
do so) or, in addition to any other remedy provided for in this Agreement, the
Applicable Margin shall be deemed to be equal to the highest level set forth in
the preceding table, until the Applicable Margin is subsequently determined for
any subsequent month in accordance with the terms hereof. If a Default or Event
of Default exists at the time any reduction in the Applicable Margin is to be
implemented, such reduction shall not occur until the first day of the first
calendar month (if any) following the date on which such Default or Event of
Default is waived or cured.

         "Assignee" has the meaning specified in Section 11.2(a).

         "Assignment and Acceptance" has the meaning specified in Section
11.2(a).

         "Attorney Costs" means and includes all reasonable fees, expenses, and
disbursements of any law firm or other counsel engaged by the Agent.

                                       3

<PAGE>

         "Availability" means, at any time, (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, minus (b) the Aggregate Revolver
Outstandings.

         "Bank" means Bank of America, N.A., or any successor entity thereto.

         "Bank Products" means any one or more of the following types of
services or facilities extended to any Obligated Party by the Bank, any Lender,
or any Affiliate of the Bank or any Lender in reliance on the Bank's agreement
to indemnify such Affiliate: (a) credit cards; (b) ACH Transactions; (c) cash
management, including, without limitation, controlled disbursement services; and
(d) Hedge Agreements.

         "Bank Product Reserve" means a Reserve which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided or
outstanding.

         "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
(S) 101 et seq.).

         "Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions, and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.

         "Base Rate Loans" means, collectively, the Base Rate Revolving Loans
and the Base Rate Term Loans.

         "Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.

         "Base Rate Term Loan" means any portion of the Term Loans during any
period in which such portion bears interest based on the Base Rate.

         "Blocked Account Agreement" means an agreement among one or more of the
Borrowers, the Agent, and a Clearing Bank, in form and substance reasonably
satisfactory to the Agent, concerning the collection of payments which represent
the proceeds of Accounts or of any other Collateral.

         "Borrower" means, separately and individually, any of Fort Bend
Utilities Company, a Texas corporation, Holly Finance Company, a Delaware
corporation, Holly Sugar Corporation, a New York corporation, Imperial
Distributing, Inc., a Delaware corporation, Imperial Sugar Company, a Texas
corporation, Imperial Sweetener Distributors, Inc., a Texas corporation,
Imperial-Savannah LP, a Delaware limited partnership, Ragus Holdings, Inc., a
Delaware corporation, and Savannah Foods Industrial, Inc., a Delaware
corporation, and any other Person who becomes a party to this Agreement as a
"Borrower" pursuant to the terms hereof, jointly, severally, and collectively,
and "Borrowers" means all of the foregoing Persons, jointly, severally, and
collectively, as the context requires.

                                       4

<PAGE>

         "Borrower Security Agreement" means the Security Agreement, dated
concurrently herewith, between the Borrowers and the Agent, for the benefit of
the Agent and the Lenders, as such agreement may be amended, restated, or
otherwise modified from time to time.

         "Borrowing" means a borrowing hereunder consisting of Revolving Loans
or Term Loans made on the same day by the Lenders to the Borrowers, or any of
them, or by the Bank (in the case of a Borrowing funded by Non-Ratable Loans) or
by the Agent (in the case of a Borrowing consisting of an Agent Advance), or the
issuance of a Letter of Credit hereunder.

         "Borrowing Base" means, at any time, an amount equal to:

         (a)   the Receivables Advance Rate multiplied by the Net Amount of
Eligible Accounts;

               plus

         (b)   the lesser of:

               (i)   $100,000,000; or

               (ii)  the sum of:

                     (A)  the lesser of:

                          (1) 70% of the amount of Eligible Inventory consisting
                              of raw materials (excluding raw material
                              consisting of beets), or

                          (2) 80% of the NRV of Eligible Inventory consisting of
                              raw materials (excluding raw material consisting
                              of beets); plus

                     (B)  the lesser of:

                          (1) 50% of the amount of Eligible Inventory consisting
                              of raw material consisting of beets, or

                          (2) 80% of the NRV of Eligible Inventory consisting of
                              raw material consisting of beets; plus

                     (C)  the lesser of:

                          (1) $10,000,000; or

                          (2) the lesser of:

                              (i)  50% of the amount of Eligible Inventory
                                   consisting of work-in-process and
                                   by-products, or

                              (ii) 80% of the NRV of Eligible Inventory
                                   consisting of work-in-process and
                                   by-products; plus

                                       5

<PAGE>

               (D)  the lesser of:

                    (1)  70% of the amount of Eligible Inventory consisting of
                         finished goods, or

                    (2)  80% of the NRV of Eligible Inventory consisting of
                         finished goods; minus

     (c)  the sum of:

          (i)    the Fixed Charge Coverage Reserve; plus

          (ii)   the Term Loans Amortization Reserve; plus

          (iii)  the Environmental Compliance Reserve; plus

          (iv)   the Producer Lien Reserve; plus

          (v)    the Bank Product Reserve; plus

          (vi)   the CCC Reserve; plus

          (vii)  the Administrative Reserve; plus

          (viii) such other Reserves from time to time established by the Agent
                 in its reasonable credit judgment.

     "Borrowing Base Certificate" means a certificate by a Responsible Officer
of the Borrowers, or the Parent on behalf of all of the Borrowers, substantially
in the form of Exhibit G (or another form acceptable to the Agent) setting forth
the calculation of the Borrowing Base, including a calculation of each component
thereof (including to the extent a Borrower has received notice of any Reserve
from the Agent, any of the Reserves included in such calculation pursuant to
clause (c) of the definition of Borrowing Base), all in such detail as shall be
reasonably satisfactory to the Agent. All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrowers, or the Parent on behalf of the Borrowers,
and certified to the Agent; provided that the Agent shall have the right to
review and adjust, in the exercise of its reasonable credit judgment, any such
calculation to the extent that such calculation is not in accordance with this
Agreement.

     "Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in Los Angeles, California, or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings, and payments in connection with the LIBOR Rate Loans,
any day that is a Business Day pursuant to clause (a) preceding and that is also
a day on which trading in Dollars is carried on by and between banks in the
London interbank market.

     "Capital Adequacy Regulation" means any guideline, request, or directive of
any central bank or other Governmental Authority, or any other law, rule, or
regulation, whether or not

                                       6

<PAGE>

having the force of law, in each case, regarding capital adequacy of any bank or
of any corporation controlling a bank.

     "Capital Expenditures" means the aggregate of all expenditures for the
acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs, and
improvements) which should be capitalized in accordance with GAAP and all other
expenditures which should be classified as "capital expenditures" in accordance
with GAAP, but excluding any asset acquired with the proceeds of any insurance
or condemnation award.

     "Capital Lease" means any lease of property by an Obligated Party which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Obligated Party.

     "Capital Stock" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (howsoever designated)
issued by any Person.

     "CCC Reserve" means, as of any date of determination, an amount equal to
the remainder of (a) the aggregate principal amount of all Debt owed by any of
the Borrowers to the Commodity Credit Corporation, minus (b) the value of all
Inventory consisting of sugar or sugar-related products secured by a Permitted
CCC Lien, which value is calculated at the loan rate utilized by the Commodity
Credit Corporation in connection with the incurrence of such Debt.

     "Change of Control" means the existence or occurrence of any of the
following: (a) with respect to the Obligated Parties other than the Parent, any
Capital Stock of any Obligated Party is owned, beneficially or of record, by any
Person other than the Parent or any Wholly-Owned Subsidiary of the Parent, (b)
any Person or two or more Persons (other than the Permitted Holders) acting as a
group (as defined in Section 13d-3 of the Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act) of forty percent (40%) or more of
the outstanding shares of voting Capital Stock of the Parent, or (c) with
respect to the Parent, individuals who, as of the Closing Date, constitute the
Board of Directors of the Parent (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Parent;
provided, however, that any individual becoming a director of the Parent
subsequent to the Closing Date whose election or nomination for election by
Parent's shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual (other than an actual member of the Incumbent
Board) whose initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or contest by or on behalf of a Person other than the
Board of Directors of the Parent.

     "Chattel Paper" has the meaning specified in the Borrower Security
Agreement.

     "Clearing Bank" means the Bank or any other banking institution with whom a
Payment Account has been established pursuant to a Blocked Account Agreement.

                                       7

<PAGE>

     "Closing Date" means the date of this Agreement as specified in the
introductory paragraph.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time and any successor statute and the regulations promulgated thereunder.

     "Collateral" means (a) all of the "Collateral" as such term is defined in,
and all of the collateral covered by, the Borrower Security Agreement, any
Pledge Agreement, any Guarantor Security Agreement, any Mortgage, any Blocked
Account Agreement, or any other Loan Document, (b) all now owned or hereafter
acquired Real Estate of any Obligated Party; (c) all now owned or hereafter
acquired personal property, whether tangible or intangible, at any time subject
to the Agent's Liens; and (d) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing; provided, however, that the Unappraised Assets consisting of Real
Estate shall not be required to be subject to a Lien in favor of the Agent as
security for the Obligations until the earlier to occur of (i) ninety (90) days
after the Closing Date or (ii) the initial date upon which any Default has
occurred, in each case assuming that such asset is owned by an Obligated Party
as of such date.

     "Commitment" means, at any time with respect to a Lender, the Revolving
Loans Commitment and/or the Term Loans Commitment of such Lender, as the context
may specify, and "Commitments" means, collectively, the aggregate amount of the
Revolving Loans Commitments and/or the Term Loans Commitments of all of the
Lenders, as the context may specify.

     "Compliance Certificate" has the meaning specified in Section 5.2(d).

     "Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.

     "Continuation/Conversion Date" means the effective date of (a) any
conversion of LIBOR Rate Loans to Base Rate Loans or of Base Rate Loans to LIBOR
Rate Loans or (b) any continuation of LIBOR Rate Loans as LIBOR Rate Loans.

     "Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future copyrights and related licenses and rights,
as such agreement may be amended, restated, or otherwise modified from time to
time.

     "Debt" means, without duplication, with respect to any Person (the "subject
Person"), all liabilities, obligations, and indebtedness of the subject Person
to any other Person, of any kind or nature, now or hereafter owing, arising,
due, or payable, howsoever evidenced, created, incurred, acquired, or owing,
whether primary, secondary, direct, contingent, fixed, or otherwise, consisting
of indebtedness for borrowed money or the deferred purchase price of property,

                                       8

<PAGE>

excluding trade payables, but including, without in any way limiting the
generality of the foregoing:

          (a)  in the case of the Obligated Parties, the Obligations;

          (b)  all indebtedness, liabilities, and obligations of any Person
secured by any Lien on the subject Person's property, even if the subject Person
shall not have assumed or become liable for the payment thereof; provided,
however, that all such indebtedness, liabilities, and obligations which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the subject Person prepared in accordance with GAAP;

          (c)  all indebtedness, liabilities, and obligations created or arising
under any Capital Lease or conditional sale or other title retention agreement
with respect to property used or acquired by the subject Person, even if the
rights and remedies of the lessor, seller, or lender thereunder are limited to
repossession of such property; provided, however, that all such indebtedness,
liabilities, and obligations which are limited in recourse to such property
shall be included in Debt only to the extent of the book value of such property
as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP;

          (d)  all indebtedness, liabilities, and obligations under Guaranties
of Debt;

          (e)  all Off-Balance Sheet Liabilities;

          (f)  all indebtedness, liabilities, and obligations under any Hedge
Agreement (whether contingent or matured);

          (g)  all reimbursement and other indebtedness, liabilities, and
obligations with respect to letters of credit, bankers' acceptances, and surety
bonds, whether or not matured; and

          (h)  all Disqualified Stock.

     "Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.

     "Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate, plus (b) two
percent (2.00%) per annum. Each Default Rate shall be adjusted simultaneously
with any change in the applicable Interest Rate. In addition, with respect to
Letters of Credit, the Default Rate shall mean the Letter of Credit Fee
Percentage plus two percent (2.00%) per annum.

     "Defaulting Lender" has the meaning specified in Section 12.15(c).

     "Designated Account" has the meaning specified in Section 1.2(d).

     "Diamond Crystals Brand Sale" means the sale by Imperial Sugar Company and
Savannah Foods & Industries, Inc. of the Capital Stock of Diamond Crystal
Holdings, Inc. and

                                       9

<PAGE>

Diamond Crystal Brands, Inc., respectively, pursuant to that certain Stock
Purchase Agreement dated as of December 30, 2002, between Imperial Sugar Company
(as seller) and Hormel Foods Corporation (as buyer), and the related
transactions referred to therein.

     "Disqualified Stock" means any preferred stock or other Capital Stock
issued by any Obligated Party or any of its Subsidiaries that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the occurrence or happening of any event or circumstance,
(a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date that is ninety-one (91) days after the Stated
Termination Date, or (b) requires the declaration or payment of any dividend or
other distribution on or prior to the date that is ninety-one (91) days after
the Stated Termination Date, in each case unless the consideration paid and
payable upon such maturity or redemption (in the case of clause (a) preceding)
or as a result of such dividend or other distribution (in the case of clause (b)
preceding) is payable and solely paid in Capital Stock of the issuer which is
not Disqualified Stock.

     "Distribution" means, with respect to any Person (other than a natural
person): (a) the payment or making of any dividend or other distribution of
property in respect of the Capital Stock (or any options or warrants for, or
other rights with respect to, such Capital Stock) of such Person, other than
distributions solely in such Person's Capital Stock (or any options or warrants
for, or other rights with respect to, such Capital Stock) of the same class; or
(b) the redemption or other acquisition by such Person of any Capital Stock (or
any options or warrants for, or other rights with respect to, such Capital
Stock) of such Person.

     "DOL" means the United States Department of Labor or any successor
department or agency.

     "Dollar" and "$" means dollars in the lawful currency of the U.S. Unless
otherwise specified, all payments under this Agreement shall be made in Dollars.

     "Dreyfus Letter Agreement" means the letter agreement in the form of
Exhibit H attached hereto.

     "EBITDA" means, with respect to any Person for any period, Net Income (a)
plus, without duplication and to the extent deducted in the determination of Net
Income for such fiscal period, (i) Interest Expense, (ii) Federal, state, local,
and foreign income taxes, (iii) depreciation and amortization, (iv) any
restructuring expense, (v) any non-operating losses, and (vi) any unrealized
non-cash losses, (b) minus, without duplication and to the extent included in
the determination of Net Income for such period, (i) any non-operating gains and
(ii) any unrealized non-cash gains. For the purpose of this definition, a
"non-cash loss" is a loss recognized for accounting purposes that involves no
cash expenditure by the subject Person in the current Fiscal Year and a
"non-cash gain" is a gain recognized for accounting purposes that involves no
cash receipt by the subject Person in the current Fiscal Year.

     "Eligible Accounts" means the Accounts of a Borrower which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish in good
faith other criteria of ineligibility, Eligible Accounts

                                       10

<PAGE>

shall not, unless the Agent in its sole discretion elects with the approval of
the Majority Lenders, include any Account:

          (a)  with respect to which more than forty-five (45) days but less
than sixty (60) days have elapsed since the date of the original invoice
therefor; provided, however, that Accounts aggregating up to $4,000,000 in
amount at any time shall not be excluded from Eligible Accounts by virtue of
this clause (a);

          (b)  with respect to which sixty (60) days or more have elapsed since
the date of the original invoice therefor;

          (c)  with respect to which any of the representations, warranties,
covenants, or agreements contained in the Borrower Security Agreement are
incorrect or have been breached;

          (d)  with respect to which Account (or any other Account due from the
same Account Debtor as the Account Debtor on such Account), in whole or in part,
a check, promissory note, draft, trade acceptance, or other instrument for the
payment of money has been received, presented for payment, and returned
uncollected for any reason, unless the Agent, in its discretion, has determined
that such Account shall not be ineligible due to mitigating circumstances;

          (e)  which represents a progress billing (as hereinafter defined) or
as to which the applicable Borrower has extended the time for payment without
the consent of the Agent (for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon such Borrower's completion of any further performance under
such contract or agreement);

          (f)  with respect to which any one or more of the following events has
occurred to the Account Debtor on such Account: (i) death or judicial
declaration of incompetency of such Account Debtor who is a natural person; (ii)
the filing by or against such Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the Bankruptcy Code or any other
bankruptcy, insolvency, or similar laws of the U.S., any state or territory
thereof, or any foreign jurisdiction, now or hereafter in effect; (iii) the
making of any general assignment by such Account Debtor for the benefit of
creditors; (iv) the appointment of a receiver or trustee for such Account Debtor
or for any of the assets of the Account Debtor, including, without limitation,
the appointment of or taking possession by a "custodian," as defined in the
Bankruptcy Code; (v) the institution by or against such Account Debtor of any
other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or
of any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, such Account Debtor;
(vi) the sale, assignment, or transfer of all or any material part of the assets
of such Account Debtor; (vii) the nonpayment generally by such Account Debtor of
its debts as they become due; or (viii) the cessation of the business of such
Account Debtor as a going concern;

                                       11

<PAGE>

          (g)  if fifty percent (50.0%) or more of the aggregate Dollar amount
of outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible pursuant to the other provisions of this definition;

          (h)  owed by an Account Debtor which (i) does not maintain its chief
executive office in the U.S., (ii) is not organized under the laws of the U.S.
or any political subdivision or state thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, except to the extent that such
Account is secured or payable by a letter of credit satisfactory to the Agent in
its discretion;

          (i)  owed by an Account Debtor which is an Affiliate or employee of
such Borrower;

          (j)  except as provided in clause (l) following, with respect to which
either the perfection, enforceability, or validity of the Agent's Liens in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;

          (k)  owed by an Account Debtor to which an Obligated Party or any of
its Affiliates is indebted in any way, or which is subject to any right of
setoff or recoupment by the Account Debtor, unless the Account Debtor has
entered into an agreement acceptable to the Agent to waive setoff rights, or if
the Account Debtor thereon has disputed liability or made any claim with respect
to any other Account due from such Account Debtor, but in each such case only to
the extent of such indebtedness, setoff, recoupment, dispute, or claim;

          (l)  owed by the government of the U.S., or any department, agency,
public corporation, or other instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727 et seq.), and
any other steps necessary to perfect the Agent's Liens therein, or necessary to
ensure the Agent's right to directly enforce the payment of such Account against
the Account Debtor, have been complied with to the Agent's satisfaction with
respect to such Account;

          (m)  owed by any state, municipality, or other political subdivision
of the U.S., or any department, agency, public corporation, or other
instrumentality thereof and as to which the Agent determines that its Lien
therein is not or cannot be perfected or directly enforced against the Account
Debtor;

          (n)  which represents a sale on a bill-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis;

          (o)  which is evidenced by a promissory note or other Instrument or by
Chattel Paper;

          (p)  with respect to which the Agent believes, in the exercise of its
reasonable judgment, that the prospect of collection of such Account is impaired
or that such Account may not be paid by reason of the Account Debtor's financial
inability to pay;

                                       12

<PAGE>

          (q)  with respect to which the Account Debtor is located in any state
requiring the filing of a notice of business activities report or similar report
in order to permit such Borrower to seek judicial enforcement in such state of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed an effective notice of business activities report or
equivalent report, as required by and in compliance with the Requirement of Law
of such state, for the then current year;

          (r)  which arises out of a sale not made in the ordinary course of
such Borrower's business or which represents a rebate due from a vendor;

          (s)  with respect to which the goods giving rise to such Account have
not been shipped and delivered to and accepted by, or have been rejected or
objected to by, the Account Debtor or the services giving rise to such Account
have not been performed by such Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods or
services;

          (t)  owed by an Account Debtor, or group of affiliated Account
Debtors, which is obligated to the Obligated Parties respecting Accounts the
aggregate unpaid balance of which (i) for each of Wal-Mart Stores, Inc. and its
subsidiaries, Sysco Corporation and its subsidiaries, and Royal Ahold and its
subsidiaries, separately, exceeds fifteen percent (15%) of the aggregate unpaid
balance of all Accounts owed to the Borrowers at such time by all of the
Borrowers' Account Debtors, but only to the extent of such excess, and (ii) for
all other Account Debtors of the Borrowers, exceeds ten percent (10%) of the
aggregate unpaid balance of all Accounts owed to the Borrowers at such time by
all of the Borrowers' Account Debtors, but only to the extent of such excess;

          (u)  which is not subject to a first priority and perfected security
interest in favor of the Agent, for the benefit of the Agent and the Lenders;

          (v)  with respect to which such Borrower or the Agent has deemed such
Account as uncollectible or has any reason to believe that such Account is
uncollectible;

          (w)  which is acquired in connection with any acquisition, to the
extent the Agent has not completed an audit of the Accounts acquired in
connection with such acquisition with results satisfactory to the Agent; or

          (x)  which the Agent determines in its reasonable discretion is
ineligible for any other reason.

If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of the Borrowing Base.

     "Eligible Assignee" means (a) a commercial bank, commercial finance
company, or other asset based lender having total assets in excess of
$1,000,000,000, (b) any Lender listed on a signature page of this Agreement, (c)
any Affiliate of any Lender, and (d) if an Event of Default has occurred and is
continuing, any Person reasonably acceptable to the Agent.

                                       13

<PAGE>

     "Eligible Equipment" means any Equipment owned by any Borrower (a) in which
the Agent has a perfected, first priority security interest as security for the
payment and performance of the Obligations, and (b) which has been appraised in
the then most recent appraisal delivered to the Agent in accordance with this
Agreement.

     "Eligible Inventory" means Inventory of the Borrowers consisting of raw
beets, raw sugar, refined sugar, flavorings, finished goods held for resale in
the ordinary course of business of the Borrowers, work-in-process, and
by-products, in each case which are acceptable to the Agent based upon the
criteria set forth below, valued at the lower of cost (on a first-in, first-out
basis) or market value, which the Agent, in its reasonable discretion,
determines to be Eligible Inventory. Without limiting the discretion of the
Agent to establish, in good faith, other criteria of ineligibility, Eligible
Inventory shall not, unless the Agent in its sole discretion elects with the
approval of the Majority Lenders, include any Inventory:

          (a)  that is not owned by a Borrower;

          (b)  that is not subject to a perfected, first priority Lien in favor
of the Agent as security for the Obligations, or that is subject to any other
Lien whatsoever (including, without limitation, any Lien in favor of the
Commodity Credit Corporation, but excluding any Lien described in clause (e) of
the definition of Permitted Liens if (but only if) such Permitted Lien (i) is
junior in priority to the Agent's Liens or subject to Reserves and (ii) does not
impair directly or indirectly the ability of the Agent to realize on or obtain
the full benefit of the Collateral);

          (c)  that is seed, samples, prototypes, supplies, or packing and
shipping materials;

          (d)  that is not in good condition or does not meet all standards
imposed by any Governmental Authority having regulatory authority over such
goods or their use or sale;

          (e)  that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of such Borrower's business,
or that is slow moving or stale;

          (f)  that is obsolete, defective, returned, repossessed, or used goods
taken in trade;

          (g)  that (i) is located outside the U.S. or (ii) is in transit from
vendors or suppliers or (iii) is in transit between a Borrower and another
Borrower or an Affiliate of a Borrower and exceeds $10,000,000 in the aggregate
for all such inter Borrower in-transit Inventory;

          (h)  that is located in a public warehouse or in possession of a
bailee, processor, or other third party or in a facility leased by such
Borrower, if the applicable warehouseman, bailee, processor, third party, or
lessor has not delivered to the Agent a subordination agreement in form and
substance reasonably satisfactory to the Agent (unless the Agent has agreed,
with the consent of the Majority Lenders, that such subordination agreement is
not necessary in order for the Inventory in question to be included as Eligible
Inventory) or if a Reserve for rents, storage charges, processing fees, or
similar charges has not been established for Inventory at that location;

                                       14

<PAGE>

          (i)  that contains or bears any Proprietary Rights licensed to a
Borrower by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of the Borrower
Security Agreement and Section 9.2 without infringing the rights of the licensor
of such Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties other than any royalties due with respect to
the sale or disposition of such Inventory pursuant to the existing license
agreement), and, if the Agent deems it necessary, as to which such Borrower has
not delivered to the Agent a consent or sublicense agreement from such licensor
in form and substance acceptable to the Agent;

          (j)  that is acquired in connection with any acquisition to the extent
the Agent has not completed an audit of such Inventory with results satisfactory
to the Agent;

          (k)  that is not reflected in the details of a current perpetual
inventory report;

          (l)  that is Inventory placed on consignment; or

          (m)  that is Inventory located in warehouse #2, warehouse #3, B bin,
or C bin, in each case at Port Wentworth, Georgia (unless the requested Dreyfus
Letter Agreement with Louis Dreyfus Corporation to the effect that the Agent
will not have any interest in the Inventory at those locations is not in
effect).

If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of the Borrowing Base.

     "Eligible Real Estate" means any Real Estate owned in fee by any Borrower
(a) in which the Agent has a perfected, first priority Lien as security for the
payment and performance of the Obligations, and (b) which has been appraised in
the then most recent appraisal delivered to the Agent in accordance with this
Agreement.

     "Environmental Compliance Reserve" means any Reserve which the Agent
establishes from time to time in its reasonable discretion after prior written
notice to the Borrowers for amounts that are reasonably likely to be expended by
an Obligated Party in order for such Obligated Party and its operations and
property (a) to comply with any notice from a Governmental Authority asserting
material non-compliance with any Environmental Laws or (b) to correct any such
material non-compliance identified in a report or findings delivered to the
Agent pursuant to Section 7.7.

     "Environmental Laws" means all federal, state, or local laws, statutes,
common law duties, rules, regulations, ordinances, and codes, together with all
administrative orders, directed duties, licenses, authorizations, and permits
of, and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety, and land use matters.

     "Environmental Lien" means a Lien in favor of any Governmental Authority or
any other Person for (a) any liability under Environmental Laws or (b) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.

     "Equipment" has the meaning specified in the Borrower Security Agreement.

                                       15

<PAGE>

         "ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with an Obligated Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

         "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan, (b) a withdrawal by an Obligated Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by an Obligated Party or
any ERISA Affiliate from a Multi-employer Plan or notification that a
Multi-employer Plan is in reorganization or insolvent, (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041(c) or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or the termination,
insolvency, or reorganization of a Multi-employer Plan, (e) the occurrence of an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multi-employer Plan, or (f) the
imposition of any liability to the PBGC under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon an
Obligated Party or any ERISA Affiliate.

         "Event of Default" has the meaning specified in Section 9.1.

         "Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.

         "Existing Holly Finance Notes" means that certain (a) promissory note
made by Reader Farms, Inc. payable to the order of Holly Finance Company in the
original principal amount of $95,020, (b) promissory note made by a certain
individual payable to the order of Holly Finance Company in the original
principal amount of $329,345, and (c) promissory note made by a certain
individual payable to the order of Holly Finance Company in the original
principal amount of $5,786, which promissory notes have an outstanding principal
balance as of the Closing Date of approximately $77,532, $143,320, and $2,526,
respectively.

         "Existing Indebtedness" means the Debt evidenced by the Harris Credit
Agreement and the GECC Securitization Facility (which Debt is to be paid in full
with the initial proceeds of the Loans).

         "Existing Obligations" means, with respect to a Newly Obligated Party,
any Obligations which are outstanding and unpaid as of the time such Newly
Obligated Party becomes a Borrower.

         "Farm Products" means all of the Borrowers' now owned or hereafter
existing or acquired farm products of every kind and nature, including, without
limitation, crops, livestock, and supplies used or produced in farming
operations, and products of crops or livestock,

                                       16

<PAGE>

wherever located, including (a) "farm products" (as such term is defined in any
Farm Products Law and/or the Uniform Commercial Code) and (b) "perishable
agricultural commodities" (as such term is defined in any Farm Products Law).

         "Farm Products Law" means (a) the Food Security Act, (b) PACA, or (c)
any other federal, state, or local laws from time to time in effect which
regulate any matters pertaining to Farm Products.

         "Farm Products Notices" has the meaning specified in Section 6.31(a).

         "Farm Products Seller" means, individually and collectively, sellers or
suppliers of any Farm Products or related services to any of the Borrowers or
agents involved in the transaction.

         "Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.00%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Bank on such day on such transactions as determined by the Agent.

         "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.

         "Financial Statements" means, according to the context in which used,
the financial statements referred to in Section 5.2 and Section 6.6 or any other
financial statements required to be given to the Agent or the Lenders pursuant
to this Agreement.

         "Fiscal Quarter" means one of the four three (3) calendar month
measurement periods in a Fiscal Year, with the first of such measurement periods
beginning on the first day of a Fiscal Year and the last of such measurement
periods ending on the last day of such Fiscal Year.

         "Fiscal Year" means, with respect to any Obligated Party, such
Obligated Party's fiscal year for financial accounting purposes. The current
Fiscal Year of the Parent will end on September 30, 2003.

         "Fixed Assets" means, with respect to each Obligated Party, the
Equipment and Real Estate of such Obligated Party.

         "Fixed Charge Coverage Ratio" means, as of the end of any Fiscal
Quarter, the ratio of EBITDA to Fixed Charges.

         "Fixed Charge Coverage Reserve" means a Reserve in the amount of
$5,000,000, which Reserve shall be in effect at all times during the period from
the Closing Date through and including the first Anniversary Date and continuing
after the first Anniversary Date unless and

                                       17

<PAGE>

until the Borrowers' Fixed Charge Coverage Ratio, calculated for a period of
four consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter
which ends on or after the first Anniversary Date, on a consolidated basis,
exceeds 1.00:1.00. For purposes of this definition only, when determining the
Fixed Charge Coverage Ratio, cash restructuring expenses (except for cash
restructuring expenses in the aggregate amount of $3,800,000 presented in the
Borrowers' projections dated as of December 2, 2002) shall not be added to Net
Income for purposes of calculating EBITDA in the numerator of such ratio.

         "Fixed Charges" means, with respect to any Person for any period,
without duplication, the sum of Interest Expense paid or payable in cash,
Capital Expenditures (excluding Capital Expenditures funded with Debt other than
the Loans, but including, without duplication, principal payments with respect
to such Debt), scheduled principal payments of Debt (excluding the Term Loans,
except for purposes of the definition of the term "Trigger Fixed Charge Coverage
Ratio", and excluding any prepayments of the Obligations made pursuant to
Section 3.4(b) or Section 3.4(c)), and Federal, state, local, and foreign
income, franchise or similar taxes, excluding deferred taxes and cash taxes
actually paid directly relating to net gains from asset sales.

         "Food Security Act" means the Food Security Act of 1985, 7 U.S.C.
Section 1631 et. seq., as the same now exists or may hereafter from time to time
be amended, modified, recodified, or supplemented, together with all rules and
regulations thereunder.

         "Foreign  Subsidiary" means HSC Export Corporation, Diamond Crystal
Specialty Foods of Canada, Ltd., or any other Subsidiary of the Parent that is
not incorporated or organized under the laws of the U.S., a state of the U.S.,
or the District of Columbia.

         "Funding Date" means the date on which a Borrowing occurs.

         "GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.

         "GECC Securitization Facility" means the receivables purchase facility
made available to the Parent and certain of its Subsidiaries, as evidenced by
(a) the Receivables Sale Agreement, dated as of August 28, 2001, by and among
the "Originators" from time to time signatories thereto, the Parent, and
Imperial Sugar Securitization, LLC, as the "Buyer" thereunder, (b) the
Receivables Funding Agreement, dated as of August 28, 2001, among Imperial Sugar
Securitization, LLC, as the "Borrower" thereunder, Imperial Distributing, Inc.,
as the "Servicer" thereunder, the financial institutions from time to time
signatories thereto, as the "Lenders" thereunder, and General Electric Capital
Corporation, as a "Lender" and as "Administrative Agent" thereunder, and (c) all
other purchase and sale and related agreements, documents, and instruments
executed or delivered from time to time in connection therewith, in the case of
each of the items referred to in clauses (a), (b) and (c) above, as the same
have been amended, restated, supplemented, or otherwise modified from time to
time prior to the Closing Date.

                                       18

<PAGE>

         "General Intangibles" has the meaning specified in the Borrower
Security Agreement.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing, and any
department, agency, board, commission, tribunal, committee, or instrumentality
of any of the foregoing.

         "Guarantor" means Biomass Corporation, Crown Express, Inc., Diamond
Crystal Specialty Foods Canada Limited, Dixie Crystals Foodservice, Inc., Food
Carrier, Inc., Holly Northwest Company, HSC Export Corporation, ICUBE, Inc.,
Imperial Holly Corporation, Imperial Securitization Corporation, Imperial Sugar
Securitization, LLC, Limestone Products Company, Inc., Menu Magic Foods, Inc.,
Phoenix Packaging Corporation, Savannah Foods & Industries, Inc., Savannah
International Company, Savannah Investment Company, Savannah Molasses &
Specialties Company, Savannah Packaging Company, Savannah Sugar Refining
Corporation, Savannah Total Invert Company, and each other Subsidiary of the
Parent in existence as of the Closing Date which is not a Borrower, and each
other Person which becomes a party to any Guaranty Agreement pursuant to the
terms of this Agreement, and "Guarantors" means all of such Persons,
collectively.

         "Guarantor Security Agreement" means a security agreement in form and
substance satisfactory to the Agent (substantially in the form of the Borrower
Security Agreement) executed by each Guarantor pursuant to which such Guarantor
grants a Lien on its properties and assets to secure payment and performance of
the Obligations, and "Guarantor Security Agreements" means all of such security
agreements.

         "Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.

         "Guaranty Agreement" means a guaranty agreement in form and substance
satisfactory to the Agent executed by a Guarantor pursuant to which such
Guarantor guarantees the payment and performance of the Obligations, and
"Guaranty Agreements" means all of such guaranty agreements executed by the
Guarantors.

         "Harris Credit Agreement" means that certain Restructuring Credit
Agreement, dated as of August 28, 2001, among the Parent, as the "Borrower"
thereunder, the several "Lenders" from time to time parties thereto, and Harris
Trust and Savings Bank, as "Administrative Agent" and "Collateral Agent"
thereunder, as the same has been amended, restated, supplemented, or otherwise
modified from time to time prior to the Closing Date.

                                       19

<PAGE>

         "Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into, which provide for an interest
rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging a Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security, or currency valuations, or
commodity prices.

         "Holly Sugar" means Holly Sugar Corporation, a New York corporation.

         "Hormel Escrow" means the escrow established in accordance with the
Diamond Crystals Brand Sale evidenced by that certain Escrow Agreement dated as
of December 30, 2002, among Hormel Foods Corporation, the Parent, and U.S. Bank
National Association as escrow agent.

         "Indemnified Liabilities" has the meaning specified in Section
13.11(a).

         "Indemnified Person" has the meaning specified in Section 13.11(a).

         "Instruments" has the meaning specified in the Borrower Security
Agreement.

         "Intercompany Accounts" means all assets and liabilities, however
arising, which are due to the Parent or a Subsidiary of the Parent from, which
are due from the Parent or a Subsidiary of the Parent to, or which otherwise
arise from any transaction by the Parent or a Subsidiary of the Parent with, any
Affiliate of the Parent or a Subsidiary of the Parent.

         "Interest Expense" means, with respect to any Person for any period,
the interest expense of such Person for such period, determined in accordance
with GAAP and the discount or implied interest component of Off-Balance Sheet
Liabilities (including amortization of discount and deferred financing fees).

         "Interest Period" means, with respect to any LIBOR Rate Loan, the
period commencing on the Funding Date of such Loan or on the
Continuation/Conversion Date on which such Loan is continued as or converted
into a LIBOR Rate Loan, and ending on the date one, two, or three months
thereafter as selected by a Borrower in its Notice of Borrowing or Notice of
Continuation/Conversion, provided that:

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

                  (b) any Interest Period pertaining to a LIBOR Rate Loan 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 the calendar month at the
end of such Interest Period; and

                  (c) no Interest Period shall extend beyond the Stated
Termination Date.

                                       20

<PAGE>

     "Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.

     "Inventory" has the meaning specified in the Borrower Security Agreement.

     "Investment Property" has the meaning specified in the Borrower Security
Agreement.

     "IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.

     "ISLP" means Imperial-Savannah LP, a Delaware limited partnership.

     "Issuer" has the meaning prescribed for such term in Section 6.28(b).

     "Latest Projections" means: (a) on the Closing Date and thereafter until
the Agent receives new projections pursuant to Section 5.2(e), the projections
of the Borrowers' financial condition, results of operations, and cash flows, in
each case for the period commencing on October 1, 2002 and ending on December
31, 2005 and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
Section 5.2(e).

     "Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding.

     "Letter of Credit" has the meaning specified in Section 1.4(a).

     "Letter of Credit Fee" has the meaning specified in Section 2.5.

     "Letter of Credit Fee Percentage" means, with respect to any Letter of
Credit issued hereunder, on any date of determination, a per annum percentage
equal to the Applicable Margin for LIBOR Rate Revolving Loans as of such date of
determination.

     "Letter of Credit Issuer" means the Bank, any Affiliate of the Bank, or any
other financial institution that issues any Letter of Credit pursuant to this
Agreement.

     "Letter of Credit Subfacility" means (a) $65,000,000 for a period of ninety
(90) days after the Closing Date and (b) $50,000,000 at all times thereafter;
provided, however, that $15,000,000 of the amount referred to in clause (a)
preceding shall be utilized only for the purpose of replacing letters of credit
existing as of the Closing Date which were issued pursuant to the Harris Credit
Agreement.

     "LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan, the
Termination Date and the last day of each Interest Period applicable to such
Loan or, with respect to each Interest Period of greater than three months in
duration, the last day of the third month of such Interest Period and the last
day of such Interest Period.

                                       21

<PAGE>

     "LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the rate of interest per annum determined pursuant to the following
formula:

          LIBOR Rate =              Offshore Base Rate
                          ------------------------------------
                          1.00 - Eurodollar Reserve Percentage

          Where,

          "Eurodollar Reserve Percentage" means, for any day during any Interest
          Period, the reserve percentage (expressed as a decimal, rounded upward
          to the next 1/100th of 1.00%) in effect on such day applicable to
          member banks under regulations issued from time to time by the Federal
          Reserve Board for determining the maximum reserve requirement
          (including any emergency, supplemental, or other marginal reserve
          requirement) with respect to Eurocurrency funding (currently referred
          to as "Eurocurrency liabilities"). The LIBOR Rate for each outstanding
          LIBOR Rate Loan shall be adjusted automatically as of the effective
          date of any change in the Eurodollar Reserve Percentage.

          "Offshore Base Rate" means the rate per annum appearing on Page 3750
          of the Dow Jones Market Service (or any successor page) as the London
          interbank offered rate for deposits in Dollars at approximately 11:00
          a.m. (London time) two Business Days prior to the first day of such
          Interest Period for a term comparable to such Interest Period. If for
          any reason such rate is not available, the Offshore Base Rate shall
          be, for any Interest Period, the rate per annum appearing on Reuters
          Screen LIBO Page as the London interbank offered rate for deposits in
          Dollars at approximately 11:00 a.m. (London time) two Business Days
          prior to the first day of such Interest Period for a term comparable
          to such Interest Period; provided, however, if more than one rate is
          specified on Reuters Screen LIBO Page, the applicable rate shall be
          the arithmetic mean of all such rates. If for any reason none of the
          foregoing rates is available, the Offshore Base Rate shall be, for any
          Interest Period, the rate per annum determined by the Agent as the
          rate of interest at which Dollar deposits in the approximate amount of
          the LIBOR Rate Loan comprising part of such Borrowing would be offered
          by the Bank's London Branch to major banks in the offshore Dollar
          market at their request at or about 11:00 a.m. (London time) two
          Business Days prior to the first day of such Interest Period for a
          term comparable to such Interest Period.

     "LIBOR Rate Loans" means, collectively, the LIBOR Rate Revolving Loans and
the LIBOR Rate Term Loans.

     "LIBOR Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.

     "LIBOR Rate Term Loan" means any portion of a Term Loans during any period
in which such portion bears interest based on the LIBOR Rate.

                                       22

<PAGE>

     "Lien" means (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment, or bailment for security purposes, (b) to the extent not included
under clause (a) preceding, any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease, or other title exception
or encumbrance affecting property, and (c) any contingent or other agreement to
provide any of the foregoing.

     "Loan" means any loan or advance provided for in Article 1 (including any
Revolving Loans, Term Loans, Non-Ratable Loans, or Agent Advances), and "Loans"
means all of such loans or advances.

     "Loan Account" means the loan account of the Borrowers, which account shall
be maintained by or at the direction of the Agent, to which all payments with
respect to the Obligations shall be made by the Borrowers.

     "Loan Documents" means, collectively, this Agreement, the Revolving Loans
Notes, the Term Loans Notes, the Guaranties, the Borrower Security Agreement,
the Pledge Agreements, the Guarantor Security Agreements, the Mortgages, the
Copyright Security Agreements, the Patent Security Agreements, the Trademark
Security Agreements, the Blocked Account Agreements, any control agreements
relating to any deposit accounts or investment property, any Hedge Agreement
entered into with the approval of the Agent and any other agreements,
certificates, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing, or otherwise relating to the Obligations,
the Collateral, or any other aspect of the transactions contemplated by this
Agreement.

     "Majority Lenders" means, at any time, Lenders whose Pro Rata Shares of the
Aggregate Commitments aggregate more than fifty percent (50.0%) of the Aggregate
Commitments.

     "Mandatory Prepayment Percentage" means:

          (a)  with respect to the portion of the Net Proceeds of an asset
disposition that constitute 125% or less of the value of the assets subject to
such disposition, 100% of such Net Proceeds;

          (b)  with respect to the portion of the Net Proceeds of an asset
disposition that constitute greater than 125% and equal to or less than 150% of
the value of the assets subject to such disposition, 50% of such Net Proceeds;

          (c)  with respect to the portion of the Net Proceeds of an asset
disposition that constitute greater than 150% and equal to or less than 200% of
the value of the assets subject to such disposition, 25% of such Net Proceeds;
and

          (d)  with respect to the portion of the Net Proceeds of an asset
disposition that constitute greater than 200% of the value of the assets subject
to such disposition, 0% of such Net Proceeds.

                                       23

<PAGE>

For purposes of this definition, the value of the assets subject to a
disposition shall be determined separately for each of the following categories
of assets: (i) Accounts, (ii) Inventory, (iii) Equipment, (iv) Real Estate, and
(v) other assets. Also for purposes of this definition, the value of each of
such categories of assets shall be as follows: (A) with respect to Accounts, the
book value of such Accounts, (B) with respect to Inventory, the NRV of such
Inventory, (C) with respect to Equipment, the Orderly Liquidation Value of such
Equipment, (D) with respect to Real Estate, the fair market value of such Real
Estate, and (E) with respect to all other assets (i.e., assets other than those
referred to in clause (A), (B), (C), or (D) preceding), the fair market value of
such other assets, in each case as determined by the then most recent appraisals
provided to the Agent in accordance with this Agreement or, with respect to any
such assets not subject to such an appraisal, as determined by the sales price
thereof pursuant to the applicable sale or other disposition thereof.

     "Margin Stock" means "margin stock" as such term is defined in Regulation
T, U, or X of the Federal Reserve Board.

     "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the value, condition, use, or availability of the
Collateral or upon the operations, business, properties, or condition (financial
or otherwise) of the Obligated Parties taken as a whole, the Collateral, or any
other guarantor of the Obligations, (b) a material impairment of the ability of
any Obligated Party to perform under any Loan Document to which it is a party,
or (c) a material adverse effect upon the legality, validity, binding effect, or
enforceability against any Obligated Party of any Loan Document to which it is a
party.

     "Material Debt" means any Debt (other than the Obligations) of any
Obligated Party in an outstanding principal amount which equals or exceeds
$2,500,000.

     "Maximum Rate" means, at any time, the maximum rate of interest the Lenders
may lawfully contract for, charge, or receive in respect of the Obligations as
allowed by any Requirement of Law. For purposes of determining the Maximum Rate
under the Requirements of Law of the State of Texas, the applicable rate ceiling
shall be (a) the "weekly ceiling" described in and computed in accordance with
the provisions of Section 303.003 of the Texas Finance Code, as amended or (b)
if the parties subsequently contract as allowed by any Requirement of Law, the
"quarterly ceiling" or the "annualized ceiling" computed pursuant to Section
303.008 of the Texas Finance Code, as amended; provided, however, that at any
time the "weekly ceiling", the "quarterly ceiling", or the "annualized ceiling"
shall be less than eighteen percent (18.0%) per annum or more than twenty-four
percent (24.0%) per annum, the provisions of Section 303.009(a) and Section
303.009(b) of the Texas Finance Code, as amended, shall control for purposes of
such determination, as applicable.

     "Maximum Revolver Amount" means $140,000,000.

     "Michigan Sugar Notes" means that certain (a) Term A Note dated February
12, 2002, in the original principal amount of $15,000,000 made by Michigan Sugar
Beet Growers, Inc. payable to the order of Imperial Sugar Company and (b) Term B
Note dated February 12, 2002, in the original principal amount of $1,000,000
made by Michigan Sugar Beet Growers, Inc.

                                       24

<PAGE>

payable to the order of Imperial Sugar Company, as the same may be amended,
restated, replaced, or otherwise modified from time to time.

     "Mortgage" means and includes any mortgage, deed of trust, deed to secure
debt, assignment, or other instrument executed and delivered by any Obligated
Party to or for the benefit of the Agent by which the Agent, for the benefit of
the Agent and the Lenders, acquires a Lien on any Real Estate or a collateral
assignment of such Obligated Party's interest under a lease of Real Estate, and
any amendment, modification, or supplement thereto.

     "Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current calendar year
or the immediately preceding six (6) calendar years contributed to by an
Obligated Party or any ERISA Affiliate.

     "Negative Pledge" means any agreement, contract, or other arrangement
whereby any Obligated Party is prohibited from, or would otherwise be in default
of as a result of, creating, assuming, incurring, or suffering to exist,
directly or indirectly, any Lien on any of its assets or property in favor of
the Agent under the Loan Documents.

     "Net Amount of Eligible Accounts" means, at any time, the gross amount of
Eligible Accounts less sales, excise, or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes, and other defenses of any nature at any time issued,
owing, granted, outstanding, available, or claimed.

     "Net Income" means, with respect to any Person for any period, the net
income (or net loss) of such Person for such period after giving effect to
deduction of or provision for all operating expenses, all taxes and reserves
(including, without limitation, reserves for deferred taxes), and all other
proper deductions, all determined in accordance with GAAP.

     "Net Proceeds" means the proceeds of or from any asset disposition, net of
(a) commissions and other reasonable and customary transaction costs, fees, and
expenses properly attributable to such transaction and payable by the Borrowers
in connection therewith (in each case, paid to non-Affiliates), (b) transfer
taxes, (c) amounts payable to holders of senior Liens (to the extent such Liens
constitute Permitted Liens hereunder), if any, and (d) income taxes paid or
reasonably estimated to be payable within twelve (12) months of such
disposition.

     "Newly Obligated Party" means each Person, if any, who becomes party to
this Agreement as a Borrower effective as of any date after the Closing Date.

     "Non-Ratable Loan" and "Non-Ratable Loans" have the respective meanings
specified in Section 1.2(i).

     "Notice of Borrowing" has the meaning specified in Section 1.2(c).

     "Notice of Continuation/Conversion" has the meaning specified in Section
2.2(b).

     "NRV" means, as to any particular class of Inventory, the net recovery
value of such class of Inventory, expressed as a percentage, as determined by
the Agent based upon the then current appraisal of such Inventory acceptable to
the Agent and delivered to the Agent in

                                       25

<PAGE>

accordance with this Agreement. As of the Closing Date and until a subsequent
acceptable appraisal of Inventory is delivered to the Agent, such net recovery
value shall be determined by the appraisal of Imperial Sugar, Inc. effective as
of September 6, 2002 performed by Hilco Appraisal Services, LLC.

         "Obligated Party" means each of the Borrowers and the Guarantors,
individually, and "Obligated Parties" means all of such Persons, collectively.

         "Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrowers
and the other Obligated Parties, or any of them, to the Agent and/or any Lender,
arising under or pursuant to this Agreement or any of the other Loan Documents,
whether or not evidenced by any note, or other instrument, agreement, or
document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification, or otherwise, whether
direct or indirect, absolute or contingent, due or to become due, primary or
secondary, as principal or guarantor, and including all principal, interest,
charges, expenses, fees, attorneys' fees, filing fees, and any other sums
chargeable to any Borrower or other Obligated Party hereunder or under any of
the other Loan Documents. "Obligations" includes, without limitation, (a) all
reimbursement obligations, debts, liabilities, and other obligations now or
hereafter arising from or in connection with, or constituting, the Loans or the
Letters of Credit and (b) all debts, liabilities, and obligations now or
hereafter arising from or in connection with Bank Products; provided, however,
that notwithstanding the foregoing, in the case of and with regard to or in
connection with any Newly Obligated Party, the term "Obligations," wherever in
any manner used in the Loan Documents, excludes Existing Obligations.

         "Off-Balance Sheet Liabilities" means, with respect to any Person, (a)
any repurchase indebtedness, liability, or obligation of such Person with
respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability, or obligation of such Person under any sale and
leaseback transaction which is not a Capital Lease, (c) any indebtedness,
liability, or obligation of such Person under any synthetic, off-balance sheet,
or tax retention lease, or (d) any indebtedness, liability, or obligation
arising with respect to any other transaction, or agreement for the use or
possession of an asset or property, which is the functional equivalent, or takes
the place, of borrowing but which does not constitute a liability on the balance
sheet of such Person.

         "Orderly Liquidation Value" means, with respect to Inventory or
Equipment of any Person, the orderly liquidation value thereof as determined in
a manner acceptable to the Agent by an experienced and reputable independent
appraiser acceptable to the Agent, net of all costs of liquidation thereof.

         "Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies (excluding, in
the case of each Lender and the Agent, income taxes or franchise taxes which are
imposed on or measured by each Lender's or the Agent's net income) which arise
from any payment made hereunder or from the execution, delivery, or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.

                                       26

<PAGE>

         "PACA" means the Perishable Agricultural Commodities Act of 1930, 7
U.S.C. ss. 499A et seq., as the same now exists or may hereafter from time to
time be amended, modified, recodified, or supplemented, together with all rules
and regulations thereunder.

         "Parent" means Imperial Sugar Company, a Texas corporation.

         "Participant" means any commercial bank, financial institution, or
other Person not an Affiliate of the Obligated Parties who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.

         "Patent Security Agreement" means any Patent Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future patents and related licenses and rights, as
such agreement may be amended, restated, or otherwise modified from time to
time.

         "Payment Account" means each bank account established pursuant to or in
connection with the Borrower Security Agreement or a Guarantor Security
Agreement to which the funds of a Borrower or a Guarantor (including proceeds of
Accounts and other Collateral) are deposited or credited, and which is
maintained in the name of the Agent or a Borrower or a Guarantor, as the Agent
may determine, on terms acceptable to the Agent.

         "PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.

         "Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Obligated Party or any ERISA
Affiliate sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a Multi-employer Plan has made
contributions at any time during the immediately preceding five (5) plan years.

         "Permitted CCC Lien" means any Lien securing Debt of any Borrower to
the Commodity Credit Corporation which meets each of the following requirements:
(a) the Debt secured by such Lien is permitted in accordance with clause (h) of
Section 7.13; (b) such Lien does not at any time encumber any property or asset
other than the specific sugar or sugar-related products financed by such Debt
and does not expressly attach to proceeds of such sugar or sugar-related
products; (c) the amount of sugar or sugar-related products secured by such Lien
is, at all times during the existence of such Lien, adequate collateral to pay
in full all Debt secured by such Lien without the need to make any cash
payments; (d) the Parent monitors the collateral coverage requirement described
in clause (c) preceding and reports to the Agent, as and when required by clause
(v) of Section 5.2(l), compliance with such requirement; and (e) such Lien is
promptly released upon the payment of such Debt.

         "Permitted Holders" means Lehman Brothers Inc.

         "Permitted IP Dispositions" means (a) any non-exclusive licensing of
intellectual property rights for fair value which could not reasonably be
expected to have any material

                                       27

<PAGE>

adverse effect on any Obligated Party and (b) any sale or other disposition of
intellectual property rights for fair value which could not reasonably be
expected to have any material adverse effect on any Obligated Party other than a
sale or other disposition of trademarks, service marks, tradenames, or other
intellectual property relating to the Imperial, Dixie Crystals, Spreckels, or
Holly brands or any derivation or variation thereof.

         "Permitted Liens" means:

                  (a) the Agent's Liens;

                  (b) Liens, if any, which are described on Schedule A on the
Closing Date and Liens resulting from the refinancing of the related Debt
secured by such Liens as of the Closing Date, provided that such refinancing is
on the same or substantially similar terms, the Debt secured thereby shall not
be increased, and the Liens shall not cover any additional property;

                  (c) Liens for taxes, fees, assessments, or other charges of a
Governmental Authority which are not delinquent or statutory Liens for taxes,
fees, assessments, or other charges of a Governmental Authority in an amount not
to exceed $2,500,000; provided that the payment of such taxes which are due and
payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established in accordance with GAAP on the applicable Obligated Party's books
and records and a stay of enforcement of any such Lien is in effect;

                  (d) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment of,
obligations under worker's compensation, unemployment insurance, social
security, and other similar laws, or to secure the performance of bids, tenders,
or contracts (other than for the repayment of Debt) or to secure indemnity,
performance, or other similar bonds for the performance of bids, tenders, or
contracts (other than for the repayment of Debt) or to secure statutory
obligations (other than liens arising under ERISA or Environmental Liens) or
surety or appeal bonds, or to secure indemnity, performance, or other similar
bonds;

                  (e) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, and other similar Persons,
provided that if any such Lien arises from the nonpayment of such claims or
demands when due, such claims or demands (i) do not exceed $2,500,000 in the
aggregate and (ii) are being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established in accordance with GAAP on the applicable Obligated Party's
books and records and a stay of enforcement of any such Lien is in effect;

                  (f) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances, or
title defects, affecting any Real Estate, provided that any such Liens do not in
the aggregate materially detract from the value of such Real Estate based on its
present use or materially interfere with its use in the ordinary conduct of an
Obligated Party's business;

                                       28

<PAGE>

                  (g) Liens which constitute purchase money Liens and secure
Debt permitted under clause (c) of Section 7.13;

                  (h) Liens arising from judgments and attachments in connection
with court proceedings, provided that the attachment or enforcement of such
Liens would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate financial reserves
have been established on the applicable Obligated Party's books and records in
accordance with GAAP, no material property is subject to a material risk of loss
or forfeiture, the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles), and a stay of
execution pending appeal or proceeding for review is in effect;

                  (i) Permitted CCC Liens;

                  (j) any interest or title of a lessor under any lease entered
into by any Obligated Party or any of its Subsidiaries (and not prohibited by
this Agreement) in the ordinary course of business and covering only the
property or assets so leased;

                  (k) rights of lessees of property or assets owned by any
Obligated Party or any of its Subsidiaries, in each case as lessor, not
interfering with the normal conduct of the Obligated Party's or its
Subsidiaries' business, in each case relating to leases entered into in the
ordinary course of business (and not prohibited by this Agreement) and relating
to only the property or assets so leased; and

                  (l) Liens in favor of any counter party to a commodity Hedge
Agreement entered into by an Obligated Party in the ordinary course of its
business (and not prohibited by this Agreement), provided that such Liens (i) do
not at any time encumber any property or asset other than cash not to exceed the
aggregate amount thereof reasonably required by the counter party to secure the
obligations of such Obligated Party under such commodity Hedge Agreement and
(ii) are not evidenced by any UCC financing statement or similar filing.

         "Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.

         "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Obligated Party sponsors or maintains or to which any Obligated
Party makes, is making, or is obligated to make contributions and includes any
Pension Plan.

         "Pledge Agreement" means a pledge agreement in form and substance
satisfactory to the Agent executed by a Borrower or another Obligated Party
pursuant to which such Person pledges the Capital Stock of any other Obligated
Party to the Agent as security for the payment and performance of the
Obligations.

         "Pre-Petition Accounts Payable" means accounts payable that (a) arose
prior to January 16, 2001 (the date the Parent and substantially all of its
Subsidiaries filed petitions for relief under Chapter 11 of the U.S. Bankruptcy
Code), (b) were allowed under the Parent's plan of reorganization, and (c)
remain outstanding as of the Closing Date.

                                       29

<PAGE>

         "Primary Plants" means the refineries, plants, facilities, equipment,
and other fixed assets of the Obligated Parties (or any one or more of them)
located at or near Port Wentworth, Georgia (also known as the Savannah Sugar
Refinery) and Gramercy, Louisiana (also known as the Colonial Sugar Refinery).

         "Producer Lien Reserve" means a Reserve in the amount equal to the
aggregate amount of all accounts payable then due and owing by any Borrower to
any Farm Products Seller, including, without limitation, a seller or supplier of
sugar cane (but not processed raw sugar) or sugar beets (provided that if any
such accounts payable are paid and such payment is reported in writing to the
Agent, the Agent shall reduce the Producer Lien Reserve by the amount of such
payment).

         "Proprietary Rights" has the meaning specified in the Borrower Security
Agreement.

         "Pro Rata Share" means, with respect to a Lender and as to the
Revolving Loans Commitment, the Term Loans Commitment or the Aggregate
Commitment of such Lender, as applicable based upon the context in which such
term is used, a fraction (expressed as a percentage), (a) the numerator of which
is the amount of the outstanding Revolving Loans Commitment, Term Loans
Commitment or Aggregate Commitment (as applicable) of such Lender (or if such
applicable Commitment has terminated or expired, the outstanding principal
amount of the Revolving Loans and the face amount of the Letters of Credit (in
the case of the Revolving Loans Commitment), the outstanding principal amount of
the Term Loans (in the case of the Term Loans Commitment) or the outstanding
principal amount of the Loans and the face amount of the Letters of Credit (in
the case of the Aggregate Commitment), respectively, of such Lender) and (b) the
denominator of which is the sum of the amounts of the outstanding Revolving
Loans Commitments, Term Loans Commitments or Aggregate Commitments (as
applicable) of all of the Lenders (or if such applicable Commitments have
terminated or expired, the outstanding principal amount of the Revolving Loans
and the face amount of the Letters of Credit (in the case of the Revolving Loans
Commitments), the outstanding principal amount of the Term Loans (in the case of
the Term Loans Commitments) or the outstanding principal amount of the Loans and
the face amount of the Letters of Credit (in the case of the Aggregate
Commitments), respectively, of all of such Lenders), in each case giving effect
to a Lender's participation in Non-Ratable Loans and Agent Advances. For
purposes of calculating the Lenders' Pro Rata Share of the Revolving Loans
Commitments, no Agent Advance or Non-Ratable Loan shall be taken into account.

         "Real Estate" means, with respect to any Person, all of such Person's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds, and future interests, together with all of
such Person's now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto, and the easements appurtenant thereto.

         "Receivables Advance Rate" means eighty-five percent (85%) (subject to
adjustment as hereinafter provided), so long as the "Dilution Percentage", as
hereinafter defined, of such Accounts does not exceed seven and one-half percent
(7.5%) based on a rolling three-calendar-month average. If the Dilution
Percentage for any such three-calendar-month period exceeds seven and one-half
percent (7.5%) (the "Excess Dilution Percentage"), then the Receivables Advance
Rate for the following month shall be reduced by two percentage points (2.0%)
for each

                                       30

<PAGE>

one percentage point (1.0%) of Excess Dilution Percentage. Thereafter, if the
Dilution Percentage for any such three-calendar-month period equals or is less
than 7.5%, the Receivables Advance Rate will be increased to eighty-five percent
(85.0%). "Dilution Percentage" means the percentage obtained by dividing (A) all
credits, adjustments, allowances, discounts, write-offs, rebates,
contra-accounts, and other non-cash offsets incurred in any month which reduce
the value of Accounts, provided that credit and rebills within five (5) Business
Days due to billing errors shall be excluded for purposes of calculating
"Dilution Percentage", by (B) the gross amount of all Accounts created by
Borrower in such calendar month.

         "Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater, or Real Estate or other property.

         "Report" has the meaning specified in Section 12.18(a).

         "Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.

         "Required Lenders" means, at any time, Lenders whose Pro Rata Shares of
the Aggregate Commitments aggregate more than sixty-six and two-thirds of one
percent (66-2/3%) of the Aggregate Commitments.

         "Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

         "Reserve" or "Reserves" means a reserve or reserves that limit the
availability of credit hereunder, consisting of, for example and without
limitation, reserves against Availability, Eligible Accounts, or Eligible
Inventory, established by the Agent from time to time in the Agent's reasonable
credit judgment. Without limiting the generality of the foregoing, the following
reserves shall be deemed to be a reasonable exercise of the Agent's credit
judgment: (a) the Bank Product Reserve, Environmental Compliance Reserve, Fixed
Charge Coverage Reserve, Producer Lien Reserve, Term Loan Amortization Reserve,
the CCC Reserve, and the Administrative Reserve; (b) reserves for accrued,
unpaid interest on the Obligations; (c) reserves for rent at leased locations
subject to statutory or contractual landlord liens; (d) reserves for Inventory
shrinkage; (e) reserves for customs charges; (f) reserves for dilution of
Accounts; (g) reserves for warehousemen's or bailees' charges; and (h) reserves
for taxes, fees, assessments, and other governmental charges which are due and
unpaid.

         "Responsible Officer" means, with respect to any Obligated Party, the
chief executive officer, or the president, or any other officer having
substantially the same authority and responsibility, or, with respect to
compliance with financial covenants, the preparation of Borrowing Base
Certificates, and certificates with respect to determination of the Applicable

                                       31

<PAGE>

Margin, the chief financial officer, the treasurer, or the chief accounting
officer of such Obligated Party, or any other officer having substantially the
same authority and responsibility. Furthermore, with respect to Section 5.3 of
this Agreement only, the term "Responsible Officer" shall include, in addition
to each of the Persons described in the immediately preceding sentence, any
other officer, manager, or other member of management (including, without
limitation, all vice presidents) and any assistant officer, assistant manager,
or other assistant member of management.

         "Restricted Investment" means, with respect to any Obligated Party, any
acquisition of property by such Obligated Party in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other assets
or property, or a loan, advance, capital contribution, or subscription (each of
the foregoing an "Investment"), except the following if made at a time when no
Event of Default exists or would result therefrom: (a) acquisitions of Equipment
to be used in the business of such Obligated Party so long as the acquisition
costs thereof constitute Capital Expenditures permitted hereunder; (b)
acquisitions of Inventory in the ordinary course of business of such Obligated
Party; (c) acquisitions of other current assets acquired in the ordinary course
of business of such Obligated Party; (d) investments in direct obligations of
the U.S., or any agency thereof, or obligations guaranteed by the U.S., provided
that such obligations mature within one year from the date of acquisition
thereof; (e) investments in certificates of deposit maturing within one year
from the date of investment, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the U.S. or any state thereof having
capital and surplus aggregating at least $100,000,000; (f) investments in
commercial paper given a rating of "A2" or better by Standard & Poor's
Corporation or "P2" or better by Moody's Investors Service, Inc. and maturing
not more than ninety (90) days from the date of creation thereof; and (g) Hedge
Agreements.

         "Revolving Loans Commitment" means, at any time with respect to a
Lender, the principal amount set forth beside such Lender's name under the
heading "Revolving Loans Commitment" on Schedule 1.2 attached to the Agreement
or, if different, on the signature page of the most recent Assignment and
Acceptance to which such Lender is a party, as such Revolving Loans Commitment
may be adjusted from time to time in accordance with the provisions of Section
11.1 and Section 11.2, and "Revolving Loans Commitments" means, collectively,
the aggregate amount of the Revolving Loans Commitments of all of the Lenders.

         "Revolving Loans Note" and "Revolving Loans Notes" have the meanings
specified in Section 1.2(b).

         "Revolving Loans" has the meaning specified in Section 1.2 and includes
each Agent Advance and Non-Ratable Loan.

         "Rights" means rights to purchase Capital Stock of the Parent, other
than Disqualified Stock, issued pursuant to the Shareholder Rights Plan.

         "Savannah" means Savannah Foods Industrial, Inc., a Delaware
corporation.

         "Settlement" and "Settlement Date" have the meanings specified in
Section 12.15(a)(i).

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<PAGE>

         "Shareholder Rights Plan" means the shareholder rights plan provided
for by the Rights Agreement dated as of December 20, 2002 between the Parent and
The Bank of New York which provides for the distribution to shareholders of
rights to purchase Capital Stock of the Parent other than Disqualified Stock (it
being agreed and understood that such agreement shall not relate to, or permit
any Distribution of, any Disqualified Stock).

         "Solvent" means, when used with respect to any Person, that at the time
of determination:

               (a) the assets of such Person, at a fair valuation, are in excess
of the total amount of its debts (including contingent liabilities);

               (b) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute and
matured;

               (c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and

               (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

         "Stated Termination Date" means December 31, 2005.

         "Subsidiary" means, with respect to any Person (the "subject Person"),
any corporation, association, partnership, limited liability company, joint
venture, or other business entity of which more than fifty percent (50.0%) of
the voting Capital Stock or other Capital Stock is owned or controlled directly
or indirectly by the subject Person, or one or more of the Subsidiaries of the
subject Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of an
Obligated Party.

         "Supporting Letter of Credit" has the meaning specified in Section
1.4(g).

         "Syndication Agent" means General Electric Capital Corporation in its
capacity as syndication agent with respect to this Agreement, the Loans and the
Commitments.

         "Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, income taxes or franchise
taxes which are imposed on or measured by the Agent's or such Lender's net
income in the jurisdiction (whether federal, state, or local and including any
political subdivision thereof) under the laws of which the Agent or such Lender,
as the case may be, is organized or maintains a lending office.

         "Term Loan" and "Term Loans" has the meaning specified in Section
1.3(a).

                                       33

<PAGE>

         "Term Loans Amortization Reserve" means a Reserve in the amount of
$7,000,000, which Reserve shall be in effect at all times during the period from
the Closing Date through and including the first Anniversary Date and continuing
after the first Anniversary Date unless and until the Borrowers achieve the
Trigger Fixed Charge Coverage Ratio, calculated on a rolling four Fiscal Quarter
basis, for two consecutive Fiscal Quarters, which Reserve shall be reinstated
thereafter as and to the extent provided hereafter in this definition. Once the
Borrowers achieve such Trigger Fixed Charge Coverage Ratio for two consecutive
Fiscal Quarters, the Fixed Charge Coverage Ratio, for purposes of this
definition, will thereafter be calculated as of the last day of each calendar
month for the twelve-month period then ended, and the Term Loans Amortization
Reserve will be immediately reinstated if the Borrowers' Fixed Charge Coverage
Ratio falls below the Trigger Fixed Charge Coverage Ratio based upon any such
calculation. At any time thereafter, the Term Loans Amortization Reserve shall
be removed if the Borrowers again meet the Trigger Fixed Charge Coverage Ratio,
calculated on a rolling four Fiscal Quarter basis, for two consecutive Fiscal
Quarters; provided, however, that such Reserve may be again reinstated as
provided in the immediately preceding sentence, and so on again.

         "Term Loans Amount" means $35,000,000.

         "Term Loans Collateral Deficiency Amount" means, as of any date of
determination, the positive remainder, if any, of (a) the aggregate outstanding
principal amount of the Term Loans minus (b) the sum of (i) the fair market
value of the Borrowers' Eligible Real Estate, plus (ii) the Orderly Liquidation
Value of the Borrowers' Eligible Equipment, in each case as determined by the
then most recent appraisals of Real Estate and Equipment satisfactory to the
Agent delivered in accordance with Section 5.2(m) of this Agreement.

         "Term Loans Commitment" means, at any time with respect to a Lender,
the principal amount set forth beside such Lender's name under the heading "Term
Loans Commitment" on Schedule 1.3 attached to the Agreement or, if different, on
the signature page of the most recent Assignment and Acceptance to which such
Lender is a party, as such Term Loans Commitment may be adjusted from time to
time in accordance with the provisions of Section 11.1 or Section 11.2, and
"Term Loans Commitments" means, collectively, the aggregate amount of the Term
Loans Commitments of all of the Lenders.

         "Term Loans Note" and "Term Loans Notes" have the meaning specified in
Section 1.3(c).

         "Termination Date" means the earliest to occur of (a) the Stated
Termination Date, (b) the date the Total Facility is terminated (i) by the
Borrowers pursuant to Section 3.2 or (ii) pursuant to Section 9.2, and (c) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of this Agreement.

         "Total Facility" has the meaning specified in Section 1.1.

         "Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by an Obligated Party to the Agent, for the benefit of
the Agent and the Lenders, to evidence and perfect the Agent's Liens in such
Obligated Party's present and future trademarks

                                       34

<PAGE>

and related licenses and rights, as such agreement may be amended, restated, or
otherwise modified from time to time.

         "Trigger Fixed Charge Coverage Ratio" means that the Fixed Charge
Coverage Ratio of the Parent and its Subsidiaries, on a consolidated basis,
exceeds 1:05 to 1:00. For purposes of this definition only, when determining the
Fixed Charge Coverage Ratio, (a) cash restructuring expenses (except for cash
restructuring expenses in the aggregate amount of $3,800,000 presented in the
Borrowers' projections dated as of December 2, 2002) shall not be added to Net
Income for purposes of calculating EBITDA in the numerator of such ratio and (b)
scheduled principal payments of the Term Loans shall be included in the
denominator for purposes of calculating Fixed Charges in the denominator of such
ratio.

         "Tyco Escrow" means the escrow evidenced and governed by that certain
Escrow Agreement among Diamond Crystal Brands, Inc., Imperial Sugar Company,
Tyco International (US) Inc., Sunbelt Manufacturing, Inc. and The Bank of New
York dated as of December 10, 2001.

         "UCC" means the Uniform Commercial Code (or any successor statute), as
in effect from time to time, of the State of Texas or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection of security interests; provided that to the extent that
the UCC is used to define any term herein or in any other documents and such
term is defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.

         "Unappraised Assets" means the property and assets identified on
Schedule B attached hereto.

         "Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year, based on the most recent actuarial report.

         "Unused Letter of Credit Subfacility" means an amount equal to the
Letter of Credit Subfacility minus the sum of (a) the aggregate undrawn amount
of all outstanding Letters of Credit, plus, without duplication, (b) the
aggregate unpaid reimbursement obligations with respect to all Letters of
Credit.

         "Unused Line Fee" has the meaning specified in Section 2.4.

         "U.S." means the United States of America.

         "Wholly-Owned Subsidiary", when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.

                                       35

<PAGE>

ACCOUNTING TERMS:

         Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given to such term in
accordance with GAAP, and all financial computations in this Agreement shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.

INTERPRETIVE PROVISIONS:

         Wherever used in this Agreement,

               (a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Terms used herein that are
defined in the UCC and are not otherwise defined herein shall have the meanings
specified therefor in the UCC.

               (b) The words "hereof," "herein," "hereunder," and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Section, Schedule, and Exhibit references are to this Agreement
unless otherwise specified. The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices, and other
writings, however evidenced. The term "including" is not limiting and means
"including, without limitation." In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including." The word "or" is not exclusive. The words
"hereof," "herein," "hereunder", and similar words refer to the Agreement as a
whole and not to any particular provision of the Agreement; and Subsection,
Section, Schedule, and Exhibit references are to the Agreement unless otherwise
specified.

               (c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, and other
modifications thereto, but only to the extent such amendments, restatements, and
other modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing, or interpreting the statute or regulation.

               (d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

               (e) This Agreement and the other Loan Documents may use several
different limitations, tests, or measurements to regulate the same or similar
matters. All such limitations, tests, and measurements are cumulative and shall
each be performed in accordance with their terms.

               (f) For purposes of Section 9.1, a breach of a financial covenant
contained in Section 7.22 or Section 7.23 shall be deemed to have occurred as of
any date of determination thereof by the Agent or as of the last day of any
specified measuring period, as applicable,

                                       36

<PAGE>

regardless of when the Financial Statements reflecting such breach are delivered
to the Agent and the Lenders.

         (g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, each Lender,
and the Obligated Parties and are the products of all parties. Accordingly, this
Agreement and the other Loan Documents shall not be construed against the Agent,
the Lender, or the Obligated Parties merely because of their respective
involvement in their preparation.

                                       37

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