Document:

<PAGE>

                                                                    EXHIBIT 10.1

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                         Dated as of September 29, 2003

                                      among

                      PACKAGING DYNAMICS OPERATING COMPANY,
                                  as Borrower,

                         PACKAGING DYNAMICS CORPORATION,
                                       and
                    The Domestic Subsidiaries of the Borrower
                         from time to time party hereto,
                                 as Guarantors,

                             BANK OF AMERICA, N.A.,
                     as Administrative Agent and L/C Issuer,

                               NATIONAL CITY BANK,
                              as Syndication Agent

                       LASALLE BANK NATIONAL ASSOCIATION,
                             as Documentation Agent,

                                       and

                         The other Lenders party hereto

                         BANC OF AMERICA SECURITIES LLC,
                   as Sole Lead Arranger and Sole Book Runner

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                 <C>
SECTION 1  DEFINITIONS AND ACCOUNTING TERMS.....................................................................     1
         1.1       Definitions..................................................................................     1
         1.2       Other Interpretive Provisions................................................................    31
         1.3       Accounting Terms.............................................................................    32
         1.4       Rounding.....................................................................................    33
         1.5       References to Agreements and Laws............................................................    33
         1.6       Times of Day.................................................................................    33
         1.7       Letter of Credit Amounts.....................................................................    33

SECTION 2  THE COMMITMENTS AND CREDIT EXTENSIONS................................................................    33
         2.1       Revolving Loans and Term Loans...............................................................    33
         2.2       Borrowings, Conversions and Continuations of Loans...........................................    35
         2.3       Letters of Credit............................................................................    37
         2.4       Prepayments..................................................................................    47
         2.5       Termination or Reduction of Aggregate Revolving Commitments..................................    49
         2.6       Repayment of Loans...........................................................................    50
         2.7       Interest.....................................................................................    52
         2.8       Fees.........................................................................................    52
         2.9       Computation of Interest and Fees.............................................................    53
         2.10      Evidence of Debt.............................................................................    53
         2.11      Payments Generally...........................................................................    54
         2.12      Sharing of Payments..........................................................................    56

SECTION 3  TAXES, YIELD PROTECTION AND ILLEGALITY...............................................................    56
         3.1       Taxes........................................................................................    56
         3.2       Illegality...................................................................................    58
         3.3       Inability to Determine Rates.................................................................    58
         3.4       Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.......    59
         3.5       Funding Losses...............................................................................    60
         3.6       Matters Applicable to all Requests for Compensation..........................................    61
         3.7       Survival.....................................................................................    61

SECTION 4  GUARANTY.............................................................................................    61
         4.1       Guaranty of Payment..........................................................................    61
         4.2       Credit Party Obligations Unconditional.......................................................    62
         4.3       Reinstatement................................................................................    63
         4.4       Certain Additional Waivers...................................................................    63
         4.5       Remedies.....................................................................................    64
         4.6       Rights of Contribution.......................................................................    64
         4.7       Guarantee of Payment; Continuing Guarantee...................................................    64

SECTION 5  CONDITIONS PRECEDENT.................................................................................    64
         5.1       Closing Conditions...........................................................................    64
         5.2       Conditions to All Extensions of Credit.......................................................    69
</TABLE>

                                        i

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<TABLE>
<S>                                                                                                                 <C>
SECTION 6  REPRESENTATIONS AND WARRANTIES.......................................................................    69
         6.1       Financial Condition..........................................................................    69
         6.2       No Material Change...........................................................................    70
         6.3       Organization and Good Standing...............................................................    70
         6.4       Due Authorization............................................................................    71
         6.5       No Conflicts.................................................................................    71
         6.6       Consents.....................................................................................    71
         6.7       Enforceable Credit Party Obligations.........................................................    71
         6.8       No Default...................................................................................    72
         6.9       Ownership....................................................................................    72
         6.10      Indebtedness.................................................................................    72
         6.11      Litigation...................................................................................    72
         6.12      Taxes........................................................................................    72
         6.13      Compliance with Law..........................................................................    72
         6.14      ERISA........................................................................................    73
         6.15      Subsidiaries as of the Closing Date..........................................................    74
         6.16      Use of Proceeds..............................................................................    74
         6.17      Government Regulation........................................................................    74
         6.18      Environmental Matters........................................................................    75
         6.19      Intellectual Property........................................................................    76
         6.20      Solvency.....................................................................................    76
         6.21      Investments..................................................................................    76
         6.22      Location of Collateral.......................................................................    77
         6.23      Disclosure...................................................................................    77
         6.24      Licenses, etc................................................................................    77
         6.25      Collateral Documents.........................................................................    77
         6.26      Burdensome Restrictions......................................................................    78
         6.27      Labor Contracts and Disputes.................................................................    78
         6.28      Broker's Fees................................................................................    78
         6.29      Classification as Senior Indebtedness........................................................    78
         6.30      Tax Shelter Regulations......................................................................    78

SECTION 7  AFFIRMATIVE COVENANTS................................................................................    79
         7.1       Information Covenants........................................................................    79
         7.2       Financial Covenants..........................................................................    82
         7.3       Preservation of Existence and Franchises.....................................................    83
         7.4       Books and Records............................................................................    83
         7.5       Compliance with Law..........................................................................    84
         7.6       Payment of Taxes and Claims..................................................................    84
         7.7       Insurance....................................................................................    84
         7.8       Maintenance of Property......................................................................    86
         7.9       Collateral...................................................................................    86
         7.10      Use of Proceeds..............................................................................    86
         7.11      Audits/Inspections...........................................................................    87
         7.12      Additional Subsidiaries......................................................................    87
         7.13      Post-Closing Covenant........................................................................    88
</TABLE>

                                       ii

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<TABLE>
<S>                                                                                                                <C>
SECTION 8  NEGATIVE COVENANTS...................................................................................    89
         8.1       Indebtedness.................................................................................    89
         8.2       Liens........................................................................................    90
         8.3       Nature of Business...........................................................................    90
         8.4       Consolidation; Merger; Dissolution; Liquidation; Winding Up..................................    90
         8.5       Disposition of Assets........................................................................    91
         8.6       Sale Leasebacks..............................................................................    92
         8.7       Investments..................................................................................    92
         8.8       Restricted Payments..........................................................................    92
         8.9       Restrictions on Modifications to and Payments of Certain Indebtedness........................    92
         8.10      Transactions with Affiliates.................................................................    93
         8.11      Fiscal Year; Organizational Documents........................................................    93
         8.12      No Limitations...............................................................................    93
         8.13      Ownership of Subsidiaries; Limitations on Operations of Borrower.............................    94
         8.14      No Other Negative Pledges....................................................................    94
         8.15      No Foreign Subsidiaries......................................................................    95

SECTION 9  EVENTS OF DEFAULT....................................................................................    95
         9.1       Events of Default............................................................................    95
         9.2       Acceleration; Remedies.......................................................................    98
         9.3       Allocation of Payments After Event of Default................................................    99

SECTION 10  ADMINISTRATIVE AGENT................................................................................   100
         10.1      Appointment and Authorization of Administrative Agent........................................   100
         10.2      Delegation of Duties.........................................................................   101
         10.3      Liability of Administrative Agent............................................................   101
         10.4      Reliance by Administrative Agent.............................................................   101
         10.5      Notice of Default............................................................................   102
         10.6      Credit Decision; Disclosure of Information by Administrative Agent...........................   102
         10.7      Indemnification of Administrative Agent......................................................   103
         10.8      Administrative Agent in its Individual Capacity..............................................   103
         10.9      Successor Administrative Agent...............................................................   104
         10.10     Administrative Agent May File Proofs of Claim................................................   104
         10.11     Collateral and Guaranty Matters..............................................................   105
         10.12     Other Agents; Arrangers and Managers.........................................................   106

SECTION 11  MISCELLANEOUS.......................................................................................   106
         11.1      Amendments, Etc..............................................................................   106
         11.2      Notices and Other Communications; Facsimile Copies...........................................   109
         11.3      No Waiver; Cumulative Remedies...............................................................   110
         11.4      Attorney Costs, Expenses and Taxes...........................................................   110
         11.5      Indemnification by the Borrower..............................................................   111
         11.6      Payments Set Aside...........................................................................   112
         11.7      Successors and Assigns.......................................................................   112
         11.8      Confidentiality..............................................................................   115
         11.9      Set-off......................................................................................   116
         11.10     Interest Rate Limitation.....................................................................   116
         11.11     Counterparts.................................................................................   117
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                       <C>
11.12     Integration; Effectiveness; Continuing Agreement.............................................   117
11.13     Survival of Representations and Warranties...................................................   118
11.14     Severability.................................................................................   118
11.15     Tax Forms....................................................................................   118
11.16     Replacement of Lenders.......................................................................   120
11.17     Governing Law................................................................................   121
11.18     Waiver of Right to Trial by Jury.............................................................   121
</TABLE>

                                       iv

<PAGE>

SCHEDULES

Schedule 1.1(a)         Investments
Schedule 1.1(b)         Permitted Liens
Schedule 1.1(c)         Existing Letters of Credit
Schedule 2.1            Pro Rata Shares
Schedule 5.1(e)         Mortgage Properties
Schedule 5.1(h)         Corporate Structure
Schedule 6.10           Indebtedness
Schedule 6.15           Subsidiaries
Schedule 6.19           Intellectual Property
Schedule 6.22(a)        Real Property Locations
Schedule 6.22(b)        Personal Property Locations
Schedule 6.22(c)        Chief Executive Offices
Schedule 6.27           Labor Contract and Disputes
Schedule 7.7            Insurance
Schedule 7.10           Indebtedness Repaid at Closing
Schedule 11.2           Notices

EXHIBITS

Exhibit A               Form of Loan Notice
Exhibit B               Form of Pledge Agreement
Exhibit C               Form of Security Agreement
Exhibit D-1             Form of Revolving Note
Exhibit D-2             Form of Tranche A Term Note
Exhibit D-3             Form of Tranche B Term Note
Exhibit E               Form of Officer's Certificate
Exhibit F               Form of Joinder Agreement
Exhibit G               Form of Assignment and Assumption

                                        v

<PAGE>

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

         THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Credit Agreement"),
is entered into as of September 29, 2003 among PACKAGING DYNAMICS OPERATING
COMPANY, a Delaware corporation (the "Borrower"), PACKAGING DYNAMICS
CORPORATION, a Delaware corporation ("Parent"), and each of the Domestic
Subsidiaries of the Borrower, as Guarantors, the Lenders (as defined herein) and
BANK OF AMERICA, N.A., as Administrative Agent for the Lenders.

                                    RECITALS

         WHEREAS, Packaging Dynamics, L.L.C. and International Converter, Inc.,
as borrowers, Packaging Holdings, L.L.C. and the Domestic Subsidiaries of the
Packaging Dynamics, L.L.C., as guarantors, the lenders party thereto and Bank of
America, N.A., as agent, are parties to that certain Credit Agreement dated as
of November 20, 1998 (as amended and modified, the "Existing Credit Agreement");

         WHEREAS, the Lenders have agreed to refinance the Existing Credit
Agreement on the terms and conditions hereinafter set forth; and

         WHEREAS, in connection with the refinancing of the Existing Credit
Agreement in accordance with the terms hereof, Packaging Dynamics, L.L.C. and
Packaging Holdings, L.L.C. will be merged, and the surviving limited liability
company will be converted to a corporation and renamed Packaging Dynamics
Operating Company.

         NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS

         1.1      DEFINITIONS.

         As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:

                  "Acquisition", by any Person, means the acquisition by such
         Person of all of the Capital Stock or all or substantially all of the
         Property or a division or business unit of another Person, whether or
         not involving a merger or consolidation with such other Person.

                                        1

<PAGE>

                  "Administrative Agent" or "Agent" means Bank of America in its
         capacity as administrative agent under any of the Credit Documents, or
         any successor administrative agent.

                  "Administrative Agent's Office" means the Administrative
         Agent's address and, as appropriate, account as set forth on Schedule
         11.2, or such other address or account as the Administrative Agent may
         from time to time notify the Borrower and the Lenders.

                  "Administrative Questionnaire" means an Administrative
         Questionnaire in a form supplied by the Administrative Agent.

                  "Affiliate" means, with respect to any Person, any other
         Person directly or indirectly controlling (including but not limited to
         all directors and officers of such Person), controlled by or under
         direct or indirect common control with such Person. A Person shall be
         deemed to control another Person if such Person possesses, directly or
         indirectly, the power (a) to vote 10% or more of the securities having
         ordinary voting power for the election of directors, managing general
         partners, members or the equivalent of such Person or (b) to direct or
         cause direction of the management and policies of such Person, whether
         through the ownership of voting securities, by contract or otherwise.

                  "Agent-Related Persons" means the Administrative Agent,
         together with its Affiliates (including, in the case of Bank of America
         in its capacity as the Administrative Agent, the Arranger), and the
         officers, directors, employees, agents and attorneys-in-fact of such
         Persons and Affiliates.

                  "Aggregate Revolving Commitments" means the Revolving
         Commitments of all the Lenders. The initial amount of the Aggregate
         Revolving Commitments in effect on the Closing Date is FORTY MILLION
         DOLLARS ($40,000,000).

                  "Applicable Percentage" means the appropriate applicable
         percentages corresponding to the Leverage Ratio in effect as of the
         most recent Calculation Date as shown below:

                                        2

<PAGE>

<TABLE>
<CAPTION>
                                                                         Applicable Percentage
                                ----------------------------------------------------------------------------------------------------
                                    Eurodollar Rate Loans              Base Rate Loans
                                --------------------------------------------------------------
                                   Revolving                       Revolving
                                   Loans and                      Loans and                        Standby    Commercial
Pricing  Leverage               Tranche A Term  Tranche B Term  Tranche A Term  Tranche B Term    Letter of   Letter of   Commitment
 Level     Ratio                     Loans          Loans           Loans            Loans       Credit Fee   Credit Fee      Fee
------------------------------------------------------------------------------------------------------------------------------------
<S>     <C>                     <C>             <C>             <C>             <C>              <C>          <C>         <C>
   I    < or = 1.5 to 1.0            2.25%          3.50%           1.25%            2.50%          2.25%       1.125%       0.375%
  II  < or = 2.0 to 1.0              2.50%          3.50%           1.50%            2.50%          2.50%       1.250%       0.500%
            but
        > 1.5 to  1.0
  III   < or = 2.75 to 1.0           2.75%          3.50%           1.75%            2.50%          2.75%       1.375%       0.500%
            but
        > 2.0 to  1.0
   IV   < or = 3.50 to 1.0           3.00%          3.50%           2.00%            2.50%          3.00%       1.500%       0.500%
             but
        > 2.75 to 1.0
   V    > 3.50 to 1.0                3.25%          3.50%           2.25%            2.50%          3.25%       1.625%       0.500%
</TABLE>

                  The Applicable Percentage for purposes of calculating the
         applicable interest rate for any day for any Loan, the Applicable
         Percentage of the Commitment Fee for any day for purposes of Section
         2.8(a), the Applicable Percentage of the Standby Letter of Credit Fees
         for any day for purposes of Section 2.3(i)(i) and the Commercial Letter
         of Credit Fees for any day for purposes of Section 2.3(i)(ii) shall, in
         each case, be determined and adjusted quarterly on the date (each a
         "Calculation Date") five (5) Business Days after the date by which the
         Borrower is required to provide the officer's certificate in accordance
         with the provisions of Section 7.1(c); provided that (a) if the
         Borrower fails to provide the officer's certificate required by Section
         7.1(c) on or before the most recent Calculation Date, the Applicable
         Percentages for such Calculation Date shall be based on Pricing Level V
         from such Calculation Date until such time that an appropriate
         officer's certificate is provided whereupon the Pricing Level shall be
         determined by the then current Leverage Ratio and (b) the initial
         Pricing Level on the Closing Date shall be set at Level IV and shall
         remain at Level IV until the first Calculation Date following the
         Closing Date. Each Applicable Percentage shall be effective from one
         Calculation Date until the next Calculation Date. Any adjustment in the
         Applicable Percentages shall be applicable to all existing Loans and
         Letters of Credit as well as any new Loans made or Letters of Credit
         issued.

                  The Borrower shall promptly deliver to the Administrative
         Agent, at the Administrative Agent's Office, at the time the officer's
         certificate is required to be delivered by Section 7.1(c), information
         regarding any change in the Leverage Ratio that would change the
         existing Pricing Level pursuant to the preceding paragraph.

                  "Application Period", in respect of any Asset Disposition, has
         the meaning set forth in Section 8.5.

                  "Approved Fund" means any Fund that is administered or managed
         by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
         Affiliate of an entity that administers or manages a Lender.

                                       3

<PAGE>

                  "Arranger" means BAS, in its capacity as sole lead arranger
         and sole book runner.

                  "Asset Disposition" means any disposition, other than pursuant
         to an Excluded Asset Disposition, of any or all of the Property
         (including without limitation the Capital Stock of a Subsidiary) of any
         Credit Party whether by sale, lease, transfer or otherwise.

                  "Asset Disposition Prepayment Event" means, with respect to
         any Asset Disposition, the failure of the Credit Parties to apply (or
         cause to be applied) the Net Cash Proceeds of such Asset Disposition to
         Eligible Reinvestments during the Application Period for such Asset
         Disposition.

                  "Assignment and Assumption" means an Assignment and Assumption
         substantially in the form of Exhibit G.

                  "Attorney Costs" means and includes all reasonable fees,
         expenses and disbursements of any law firm or other external counsel.

                  "Availability Period" means, with respect to the Revolving
         Commitments, the period from the Closing Date to the earliest of (a)
         the Maturity Date for the Revolving Loans, (b) the date of termination
         of the Aggregate Revolving Commitments pursuant to Section 2.5 and (c)
         the date of termination of the commitment of each Lender to make Loans
         and of the obligation of the L/C Issuer to make L/C Credit Extensions
         pursuant to Section 9.2.

                  "Bank of America" means Bank of America, N.A. or any successor
         thereto.

                  "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
         United States Code, as amended, modified, succeeded or replaced from
         time to time.

                  "Bankruptcy Event" has the meaning set forth in Section
         9.1(f).

                  "BAS" means Banc of America Securities LLC.

                  "Base Rate" means for any day a fluctuating rate per annum
         equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and
         (b) the rate of interest in effect for such day as publicly announced
         from time to time by Bank of America as its "prime rate." The "prime
         rate" is a rate set by Bank of America based upon various factors
         including Bank of America'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 such rate announced by Bank of America
         shall take effect at the opening of business on the day specified in
         the public announcement of such change.

                  "Base Rate Loan" means any Loan bearing interest at a rate
         determined by reference to the Base Rate.

                                        4

<PAGE>

                  "Baxter Springs" means the City of Baxter Springs, Kansas.

                  "Baxter Springs Debt" means the Indebtedness described in
         Schedule 6.10.

                  "Baxter Springs Intercreditor Agreement" means that certain
         Intercreditor Agreement dated as of November 20, 1998 among the Agent,
         the Borrower (as successor to Packaging Dynamics, L.L.C., a Delaware
         limited liability company, and assignee of Bagcraft Corporation of
         America, a Delaware corporation), Bagcraft Acquisition, LLC, Baxter
         Springs and KDOCH, as amended or modified prior to the date hereof, as
         amended or modified in connection with the amendment and restatement of
         the Existing Credit Agreement pursuant to this Credit Agreement, and as
         further amended, modified, restated or supplemented from time to time.

                  "Borrower" has the meaning set forth in the introductory
         paragraph hereto and shall include any successors or permitted assigns
         thereof.

                  "Borrowing" means a borrowing consisting of simultaneous
         Revolving Loans of the same Type and, in the case of Eurodollar Rate
         Loans, having the same Interest Period made by each of the Revolving
         Lenders pursuant to Section 2.1.

                  "Business Day" means any day other than a Saturday, a Sunday,
         a legal holiday or a day on which banking institutions are authorized
         or required by Law or other governmental action to close in Charlotte,
         North Carolina, Chicago, Illinois or New York, New York; provided that
         in the case of Eurodollar Rate Loans, such day is also a day on which
         dealings between banks are carried on in U.S. dollar deposits in the
         London interbank market.

                  "Calculation Date" has the meaning set forth in the definition
         of Applicable Percentage.

                  "Capital Expenditures" means all expenditures of the Credit
         Parties and their Subsidiaries on a consolidated basis which, in
         accordance with GAAP, would be classified as capital expenditures, but
         excluding in any event all obligations of the Credit Parties and their
         Subsidiaries under Capital Leases.

                  "Capital Lease" means, as applied to any Person, any lease of
         any Property (whether real, personal or mixed) by that Person as lessee
         which, in accordance with GAAP, is or should be accounted for as a
         capital lease on the balance sheet of that Person and the amount of
         such obligation shall be the capitalized amount thereof determined in
         accordance with GAAP.

                  "Capital Stock" means (i) in the case of a corporation,
         capital stock, (ii) in the case of an association or business entity,
         any and all shares, interests, participations or rights, in each case
         constituting equity interests that is the equivalent of Capital Stock
         in such association or business entity, or any other equity interest in
         such association or business entity that is the equivalent of capital
         stock, (iii) in the case of a partnership, partnership interests
         (whether general or limited), (iv) in the case of a limited liability

                                        5

<PAGE>

         company, membership interests and (v) any other interest or
         participation that confers on a Person the right to receive a share of
         the profits and losses of, or distributions of Property of, the issuing
         Person.

                  "Cash Collateralize" means to pledge and deposit with or
         deliver to the Administrative Agent, for the benefit of the L/C Issuer
         and the Lenders, as collateral for the L/C Obligations, cash or deposit
         account balances pursuant to documentation in form and substance
         reasonably satisfactory to the Administrative Agent and the L/C Issuer
         (which documents are hereby consented to by the Lenders). Derivatives
         of such term have corresponding meanings.

                  "Cash Equivalents" means (a) securities issued or directly and
         fully guaranteed or insured by the United States of America or any
         agency or instrumentality thereof (provided that the full faith and
         credit of the United States of America is pledged in support thereof)
         having maturities of not more than twelve (12) months from the date of
         acquisition, (b) U.S. dollar denominated time and demand deposits and
         certificates of deposit of (i) any Lender, (ii) any domestic commercial
         bank having capital and surplus in excess of $500,000,000 or (iii) any
         bank whose short-term commercial paper rating from S&P is at least A-1
         or the equivalent thereof or from Moody's is at least P-1 or the
         equivalent thereof (any such bank being an "Approved Bank"), in each
         case with maturities of not more than 270 days from the date of
         acquisition, (c) commercial paper and variable or fixed rate notes
         issued by any Approved Bank (or by the parent company thereof) or any
         variable rate notes issued by, or guaranteed by, any domestic
         corporation rated A-1 (or the equivalent thereof) or better by S&P or
         P-1 (or the equivalent thereof) or better by Moody's and maturing
         within six (6) months of the date of acquisition, (d) repurchase
         agreements entered into by any Person with a bank or trust company
         (including any of the Lenders) or recognized securities dealer having
         capital and surplus in excess of $500,000,000 for direct obligations
         issued by or fully guaranteed by the United States of America in which
         such Person shall have a perfected first priority security interest
         (subject to no other Liens) and having, on the date of purchase
         thereof, a fair market value of at least 100% of the amount of the
         repurchase obligations, (e) investments, classified in accordance with
         GAAP as current assets, in money market investment programs registered
         under the Investment Company Act of 1940, as amended, which are
         administered by reputable financial institutions having capital of at
         least $500,000,000 and the portfolios of which are limited to
         Investments of the character described in the foregoing subdivisions
         (a) through (d) and subdivision (f), and (f) securities with maturities
         of one (1) year or less from the date of acquisition issued or fully
         guaranteed by any state, commonwealth or territory of the United
         States, by any political subdivision or taxing authority of any such
         state, commonwealth or territory or by any foreign government, the
         securities of which state, commonwealth, territory, political
         subdivision, taxing authority or foreign government (as the case may
         be) are rated at the time of the acquisition thereof at least A-1 by
         S&P or P-1 by Moody's or carrying an equivalent rating by an
         internationally recognized rating agency.

                  "Cash Tax Payments" means, for any period, any payments of
         federal, state and other income taxes made by the Credit Parties and
         their Subsidiaries in cash.

                                        6

<PAGE>

                  "Change of Control" means:

                  (a)      an event or series of events by which any "person" or
         "group" (as such terms are used in Sections 13(d) and 14(d) of the
         Exchange Act, but excluding any employee benefit plan of the Parent or
         any of its Subsidiaries, and any person or entity acting in its
         capacity as trustee, agent or other fiduciary or administrator of any
         such plan) other than members of the Sponsor Group becomes the
         "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
         Exchange Act, directly or indirectly, of 35% or more of the Voting
         Stock of the Parent on a fully-diluted basis; or

                  (b)      during any period of twenty-four (24) consecutive
         months, a majority of the members of the board of directors or other
         equivalent governing body of the Parent cease to be composed of
         individuals (i) who were members of that board or equivalent governing
         body on the first day of such period, (ii) whose election or nomination
         to that board or equivalent governing body was approved by individuals
         referred to in clause (i) above constituting at the time of such
         election or nomination at least a majority of that board or equivalent
         governing body or (iii) whose election or nomination to that board or
         other equivalent governing body was approved by individuals referred to
         in clauses (i) and (ii) above constituting at the time of such election
         or nomination at least a majority of that board or equivalent governing
         body; or

                  (c)      the Parent ceases to own and control 100% of the
         Voting Stock of the Borrower on a fully-diluted basis; or

                  (d)      the occurrence of a "change of control" under or as
         defined in the documents entered into in connection with the issuance
         of any Subordinated Indebtedness.

                  "Closing Date" means the date hereof.

                  "Code" means the Internal Revenue Code of 1986 and the rules
         and regulations promulgated thereunder, as amended, modified, succeeded
         or replaced from time to time.

                  "Collateral" means all Property of the Credit Parties in
         which, pursuant to the Collateral Documents, a Lien has been granted in
         favor of the Administrative Agent (on behalf of the Lenders).

                  "Collateral Documents" means the Security Agreement, the
         Pledge Agreement, the Mortgage Documents and such other documents
         executed and delivered in connection with the attachment and perfection
         of the Lenders' security interests in the Property of the Credit
         Parties, including without limitation, UCC financing statements and
         patent and trademark filings with respect to the Intellectual Property
         of the Credit Parties.

                  "Commercial Letter of Credit Fee" has the meaning set forth in
         Section 2.3(i)(ii).

                  "Commitment Fee" has the meaning set forth in Section 2.8(a).

                                        7

<PAGE>

                  "Commitments" means, with respect to each Lender, (a) the
         Revolving Commitment of such Lender, (b) the Tranche A Term Loan
         Commitment of such Lender, (c) the Tranche B Term Loan Commitment of
         such Lender, and (d) the obligation of such Lender to purchase
         participations in L/C Obligations and make L/C Advances.

                  "Construction Loan Documents" shall have the meaning assigned
         to such term in the Baxter Springs Intercreditor Agreement.

                  "Credit Agreement" has the meaning set forth in the preamble
         hereto.

                  "Credit Documents" means this Credit Agreement, the Notes, any
         Joinder Agreement, the Collateral Documents, the Letter of Credit
         Application, and all other related agreements and documents issued or
         delivered by any Credit Party hereunder or thereunder or pursuant
         hereto or thereto.

                  "Credit Extension" means (a) a Borrowing or (b) an L/C Credit
         Extension.

                  "Credit Parties" means the Borrower and the Guarantors and
         "Credit Party" means any one of them.

                  "Credit Party Obligations" means, without duplication, (a) all
         of the obligations of the Credit Parties to the Lenders (including the
         L/C Issuer) and the Administrative Agent, whenever arising, under this
         Credit Agreement, the Notes, the Collateral Documents or any of the
         other Credit Documents to which any Credit Party is a party (including,
         but not limited to, any interest accruing after the occurrence of a
         Bankruptcy Event with respect to any Credit Party, regardless of
         whether such interest is an allowed claim under the Bankruptcy Code)
         and (b) all liabilities and obligations owing from such Credit Party
         arising under Secured Swap Contracts.

                  "Debt Issuance" means the issuance of any Indebtedness for
         borrowed money by a Credit Party, other than Indebtedness permitted by
         Section 8.1.

                  "Debtor Relief Laws" means the Bankruptcy Code, and all other
         liquidation, conservatorship, bankruptcy, assignment for the benefit of
         creditors, moratorium, rearrangement, receivership, insolvency,
         reorganization, or similar debtor relief Laws of the United States or
         other applicable jurisdictions from time to time in effect and
         affecting the rights of creditors generally.

                  "Default" means any event, act or condition which with notice
         or lapse of time, or both, would constitute an Event of Default.

                  "Default Rate" means an interest rate equal to (a) the Base
         Rate plus (b) the Applicable Percentage applicable to Base Rate Loans
         plus (c) 2% per annum; provided, however, that with respect to a
         Eurodollar Rate Loan, the Default Rate shall be an interest rate equal
         to the interest rate (including any Applicable Percentage) otherwise
         applicable

                                        8

<PAGE>

         to such Loan plus 2% per annum, in each case to the fullest extent
         permitted by applicable Laws.

                  "Defaulting Lender" means, at any time, any Lender that, (a)
         has failed to make a Loan or purchase participations in L/C Obligations
         required pursuant to the terms of this Credit Agreement (but only for
         so long as such Loan is not made or such participation is not
         purchased), (b) has failed to pay to the Administrative Agent or any
         Lender an amount owed by such Lender pursuant to the terms of this
         Credit Agreement (but only for so long as such amount has not been
         repaid) or (c) has been deemed insolvent or has become subject to a
         bankruptcy or insolvency proceeding or to a receiver, trustee or
         similar official.

                  "Detroit Paper Mill" means the paper mill owned by IPMC
         Acquisition, L.L.C. and located in or near Detroit, Michigan.

                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Domestic Subsidiary" means any Subsidiary that is organized
         under the Laws of the United States or any political subdivision of the
         United States.

                  "DPM Losses/Gains" has the meaning set forth in the definition
         of Net Income.

                  "EBITDA" means, for any period, with respect to the Parent and
         its Subsidiaries on a consolidated basis, the sum of, without
         duplication,

                  (a)      Net Income for such period, excluding the effect of
         the following:

                           (i)      any extraordinary or other non-recurring
                  gains or losses (including any gain or loss from the sale of
                  Property, but excluding (i.e. including in Net Income for
                  purposes of this clause (a)) any gain or loss from the sale or
                  closure of the Detroit Paper Mill); and

                           (ii)     any non-cash gains or losses (including any
                  non-cash gain or loss resulting from the Stock Option Plan,
                  but excluding (i.e. including in Net Income for purposes of
                  this clause (a)) any non-cash gain or loss from the sale or
                  closure of the Detroit Paper Mill), plus

                  (b)      an amount which, in the determination of Net Income
         for such period, has been deducted for:

                           (i)      Interest Expense for such period;

                           (ii)     total Federal, state, foreign or other
                  income or franchise taxes for such period;

                           (iii)    all depreciation and amortization for such
                  period; and

                                        9

<PAGE>

                           (iv)     cash and non-cash charges and/or losses with
                  respect to the sale of all or part of the Detroit Paper Mill
                  and/or the closure of the Detroit Paper Mill or any part
                  thereof (including, without limitation, severance payments
                  related thereto) in an aggregate amount up to $35,000,000;
                  provided that such charges shall have been incurred on or
                  prior to December 31, 2004, all as determined in accordance
                  with GAAP, minus

                  (c)      cash expenditures related to non-cash charges
         previously added back to Net Income in determining EBITDA (excluding
         any such non-cash charges incurred in connection with the sale or
         closure of the Detroit Paper Mill), plus

                  (d)      the write off of capitalized financing costs existing
         as of the Closing Date.

                  "Eligible Assets" means any assets or any business (or any
         substantial part thereof) used or useful in the same or a similar line
         of business as the Borrower and its Subsidiaries were engaged in on the
         Closing Date (or any reasonable extensions or expansions thereof).

                  "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a
         Lender; (c) an Approved Fund; and (d) any other Person (other than a
         natural person) approved by (i) the Administrative Agent and the L/C
         Issuer, and (ii) unless an Event of Default has occurred and is
         continuing, the Borrower (each such approval not to be unreasonably
         withheld or delayed (it being understood that the Borrower may refuse
         to consent to an assignment to a potential competitor of the
         Borrower)); provided that notwithstanding the foregoing, "Eligible
         Assignee" shall not include the Borrower or any of the Borrower's
         Affiliates (other than accounts managed by Oak Hill Advisors, Inc. or
         its Affiliates) or Subsidiaries.

                  "Eligible Reinvestment" means (a) an acquisition (whether or
         not constituting a capital expenditure, but not constituting an
         Acquisition) of Eligible Assets and (b) a Permitted Acquisition.

                  "Environmental Laws" means any current or future legal
         requirement of any Governmental Authority pertaining to (a) the
         protection of health and the environment, (b) the conservation,
         management, or use of natural resources and wildlife, (c) the
         protection or use of surface water and groundwater or (d) the
         management, manufacture, possession, presence, use, generation,
         transportation, treatment, storage, disposal, release, threatened
         release, abatement, removal, remediation or handling of, or exposure
         to, any hazardous or toxic substance or material or (e) pollution
         (including any release to land surface water and groundwater) and
         includes, without limitation, the Comprehensive Environmental Response,
         Compensation, and Liability Act of 1980, as amended by the Superfund
         Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid
         Waste Disposal Act, as amended by the Resource Conservation and
         Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984,
         42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by
         the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of
         1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of
         1976, 15

                                       10

<PAGE>

         USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App.
         1801 et seq., Occupational Safety and Health Act of 1970, as amended,
         29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq.,
         Emergency Planning and Community Right-to-Know Act of 1986, 42 USC
         11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321
         et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et
         seq., any analogous implementing or successor Law, and any amendment,
         rule, regulation, order, or directive issued thereunder.

                  "Environmental Liability" means any liability, contingent or
         otherwise (including any liability for damages, costs of environmental
         remediation, fines, penalties or indemnities), of the Borrower, any
         other Credit Party or any of their respective Subsidiaries directly or
         indirectly resulting from or based upon (a) violation of any
         Environmental Law, (b) the generation, use, handling, transportation,
         storage, treatment or disposal of any Hazardous Materials, (c) exposure
         to any Hazardous Materials, (d) the release or threatened release of
         any Hazardous Materials into the environment or (e) any contract,
         agreement or other consensual arrangement pursuant to which liability
         is assumed or imposed with respect to any of the foregoing.

                  "Equity Issuance" means any issuance by a Credit Party to any
         Person (other than a Credit Party or, with respect to any issuance by
         the Parent, a member of the Sponsor Group) of (a) shares of its Capital
         Stock or (b) with respect to the Parent, any shares of its Capital
         Stock pursuant to (i) the exercise of options or warrants or (ii) the
         conversion of any debt securities to equity (other than, in each case,
         stock or options issued to managers, officers or directors pursuant to
         stock or option plans or equity plans). The term "Equity Issuance"
         shall not include (A) any Asset Disposition or (B) any Capital Stock of
         the Parent issued (1) as consideration in connection with a Permitted
         Acquisition or (2) where and to the extent the Net Cash Proceeds of
         such issuance are used as consideration in connection with a Permitted
         Acquisition within six (6) months after such issuance; provided that
         75% of such Net Cash Proceeds shall be deposited in an interest bearing
         account (such interest to be for the account of the applicable Credit
         Party) with the Administrative Agent and shall be released (x) to the
         Borrower to consummate such Permitted Acquisition if such Permitted
         Acquisition is consummated within such six (6) month period or (y) if
         such Net Cash Proceeds are not used to consummate such Permitted
         Acquisition, to the Administrative Agent and applied as a mandatory
         prepayment in accordance with the terms of Section 2.4(b)(iv) and
         Section 2.4(c).

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended, and any successor statute thereto, as interpreted by
         the rules and regulations thereunder, all as the same may be in effect
         from time to time. References to sections of ERISA shall be construed
         also to refer to any successor sections.

                  "ERISA Affiliate" means an entity, whether or not
         incorporated, which is under common control with any Credit Party
         within the meaning of Section 4001(a)(14) of ERISA, or is a member of a
         group which includes any Credit Party and which is treated as a single
         employer under Sections 414(b), (c), (m), or (o) of the Code.

                                       11

<PAGE>

                  "Eurodollar Rate" means for any Interest Period with respect
         to any Eurodollar Rate Loan:

                  (a)      the rate per annum equal to the rate determined by
         the Administrative Agent to be the offered rate that appears on the
         page of the Telerate screen (or any successor thereto) that displays an
         average British Bankers Association Interest Settlement Rate for
         deposits in Dollars (for delivery on the first day of such Interest
         Period) with a term equivalent to such Interest Period, determined as
         of approximately 11:00 a.m. (London time) two (2) Business Days prior
         to the first day of such Interest Period, or

                  (b)      if the rate referenced in the preceding clause (a)
         does not appear on such page or service or such page or service shall
         not be available, the rate per annum equal to the rate determined by
         the Administrative Agent to be the offered rate on such other
         comparable publicly available page or service that displays an average
         British Bankers Association Interest Settlement Rate for deposits in
         Dollars (for delivery on the first day of such Interest Period) with a
         term equivalent to such Interest Period, determined as of approximately
         11:00 a.m. (London time) two (2) Business Days prior to the first day
         of such Interest Period, or

                  (c)      if the rates referenced in the preceding clauses (a)
         and (b) are not available, the rate per annum determined by the
         Administrative Agent as the rate of interest at which deposits in
         Dollars for delivery on the first day of such Interest Period in same
         day funds in the approximate amount of the Eurodollar Rate Loan being
         made, continued or converted by Bank of America and with a term
         equivalent to such Interest Period would be offered by Bank of
         America's London Branch to major banks in the London interbank
         eurodollar market at their request at approximately 4:00 p.m. (London
         time) two (2) Business Days prior to the first day of such Interest
         Period.

                  "Eurodollar Rate Loan" means a Loan bearing interest based at
         a rate determined by reference to the Eurodollar Rate.

                  "Event of Default" means any of the events or circumstances
         specified in Section 9.1.

                  "Excess Cash Flow" means, with respect to any fiscal year
         period of the Parent and its Subsidiaries on a consolidated basis, an
         amount equal to, without duplication, (a) EBITDA for such period minus
         (b) Capital Expenditures for such period minus (c) the aggregate cash
         consideration paid during such period for Permitted Acquisitions minus
         (d) Interest Expense for such period minus (e) Cash Tax Payments made
         during such period minus (f) Scheduled Funded Debt Payments for such
         period minus (g) voluntary prepayments made with respect to the Term
         Loans or (to the extent accompanied by a permanent reduction in the
         Revolving Commitment) the Revolving Loans (other than a prepayment
         required under Section 2.4(b)) made during such period minus (h) the
         amount of any dividends paid in cash by the Parent to the extent
         permitted by Section 8.8 minus (i) to the extent added back to Net
         Income in calculating EBITDA for such period

                                       12

<PAGE>

         pursuant to clause (b)(iv) of the definition of EBITDA, cash and
         non-cash charges and/or losses with respect to the sale of all or any
         part of the Detroit Paper Mill or closure of the Detroit Paper Mill or
         any part thereof (including, without limitation, severance payments
         related thereto) minus (j) losses from discontinued operations and,
         prior to the date on which DPM Losses/Gains consisting of operating
         losses are treated as losses from discontinued operations, such DPM
         Losses/Gains plus (k) gains from discontinued operations and, prior to
         the date on which DPM Losses/Gains consisting of operating gains are
         treated as gains from discontinued operations, such DPM Losses/Gains.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder, as
         amended, modified, succeeded or replaced from time to time.

                  "Excluded Asset Disposition" means (a) the sale of inventory
         in the ordinary course of business, (b) the sale or disposition of
         machinery and equipment no longer used or useful in the conduct of such
         Person's business, (c) any Asset Disposition by one Credit Party to
         another Credit Party other than the Parent if (i) the Credit Parties
         shall cause to be executed and delivered such documents, instruments
         and certificates as the Administrative Agent may request so as to cause
         the Credit Parties to be in compliance with the terms of Section 7.9
         after giving effect to such Asset Disposition and (ii) after giving
         effect to such Asset Disposition, no Default or Event of Default
         exists, (d) the lease or sublease of real property interests in the
         ordinary course of business, (e) the license of Intellectual Property
         in the ordinary course of business or by one Credit Party to another
         Credit Party, (f) any casualty or condemnation event provided that the
         Borrower shall comply with Section 7.7, (g) the transfer of Property
         constituting a Permitted Investment or permitted pursuant to Section
         8.4, (h) any Equity Issuance, (i) any Restricted Payment and (j) the
         sale or other disposition of all or part of the Detroit Paper Mill or
         any assets comprising the Detroit Paper Mill to the extent that the Net
         Cash Proceeds of such sale or other disposition do not exceed
         $1,500,000.

                  "Exempt Affiliate Transactions" means (a) advances of working
         capital to any Credit Party other than the Parent, (b) transfers of
         cash and assets to any Credit Party other than the Parent (including
         without limitation transfers of the types referred to in clause (c) of
         the definition of "Excluded Asset Dispositions" set forth in this
         Section 1.1), (c) transactions permitted by Section 8.1, Section 8.4,
         Section 8.7 or Section 8.8, (d) normal compensation and reimbursement
         of expenses of officers and directors and (e) the license of
         Intellectual Property by one Credit Party to another Credit Party.

                  "Existing Credit Agreement" has the meaning set forth in the
         recitals hereto.

                  "Existing Letters of Credit" means the Letters of Credit set
         forth on Schedule 1.1(c) hereto.

                  "Federal Funds Rate" means, for any day, the rate per annum
         (rounded upward, if necessary, to the nearest whole multiple of 1/100
         of 1%) equal to the weighted average of the rates on overnight Federal
         funds transactions with members of the Federal Reserve

                                       13

<PAGE>

         System arranged by Federal funds brokers on such day, as published by
         the Federal Reserve Bank 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 Bank of America on such day on such transactions as
         determined by the Administrative Agent.

                  "Fee Letter" means that certain letter agreement among the
         Borrower, BAS and the Bank of America dated as of July 23, 2003, as
         amended, restated or otherwise modified from time to time.

                  "Fixed Charge Coverage Ratio" means, for the Parent and its
         Subsidiaries as of the last day of any fiscal quarter for the twelve
         (12) month period then ended, the ratio of (a) EBITDA minus Capital
         Expenditures (except Capital Expenditures made in connection with
         Eligible Reinvestments and repairs and replacements pursuant to Section
         7.7 to the extent financed from insurance and/or condemnation proceeds
         or proceeds from any disposition of Property) minus Cash Tax Payments,
         to (b) cash Interest Expense plus Scheduled Funded Debt Payments.

                  "Foreign Lender" means (a) each Lender (or the Administrative
         Agent) that is a foreign person as defined in Treasury Regulations
         Section 1.1441-1(c)(2) or (b) each Lender (or the Administrative Agent)
         that is a wholly-owned domestic entity that is disregarded for United
         States federal tax purposes under Treasury Regulations Section
         301.7701-2(c)(2) as an entity separate from its owner and whose single
         owner is a foreign person within the meaning of Treasury Regulations
         Section 1.1441-1(c)(2).

                  "Foreign Subsidiary" means any Subsidiary that is not a
         Domestic Subsidiary.

                  "Fully Satisfied" means, with respect to the Credit Party
         Obligations as of any date, that, as of such date, (a) all principal of
         and interest accrued to such date which constitute Credit Party
         Obligations shall have been irrevocably paid in full in immediately
         available funds, (b) all fees, expenses and other amounts then due and
         payable which constitute Credit Party Obligations shall have been
         irrevocably paid in immediately available funds, (c) all outstanding
         Letters of Credit shall have been (i) terminated, (ii) fully and
         irrevocably Cash Collateralized or (iii) secured by one or more letters
         of credit on terms and conditions, and with one or more financial
         institutions, reasonably satisfactory to the L/C Issuer and (d) the
         Commitments shall have expired or been terminated in full.

                  "Fund" means any Person (other than a natural person) that is
         (or will be) engaged in making, purchasing, holding or otherwise
         investing in commercial loans and similar extensions of credit in the
         ordinary course of its business.

                  "Funded Debt" of any Person means, without duplication, (a)
         all Indebtedness of such Person for borrowed money, excluding
         intercompany items, (b) all purchase money

                                       14

<PAGE>

         Indebtedness of such Person, (c) the principal portion of all
         obligations of such Person under (i) Capital Leases and (ii) any
         Synthetic Lease, (d) all obligations of such Person, contingent or
         otherwise, relative to the face amount of all letters of credit (other
         than letters of credit supporting trade payables in the ordinary course
         of business), whether or not drawn, and banker's acceptances issued for
         the account of such Person (it being understood that, to the extent an
         undrawn letter of credit supports another obligation consisting of
         Funded Debt, in calculating aggregated Funded Debt only such other
         obligation shall be included), (e) all Guaranty Obligations of such
         Person with respect to Funded Debt of another Person, (f) all Funded
         Debt of another Person secured by a Lien on any Property of such Person
         but only to the extent of the value of such Property, whether or not
         such Funded Debt has been assumed and (g) all Funded Debt of any
         partnership or unincorporated joint venture to the extent such Person
         is legally obligated or has a reasonable expectation of being liable
         with respect thereto, net of the fair market value of any Property of
         such partnership or joint venture.

                  "GAAP" means generally accepted accounting principles in the
         United States in effect from time to time unless otherwise provided in
         Section 1.3.

                  "Governmental Authority" means any nation or government, any
         state or other political subdivision thereof, any agency, authority,
         instrumentality, regulatory body, court, administrative tribunal,
         central bank or other entity exercising executive, legislative,
         judicial, taxing, regulatory or administrative powers or functions of
         or pertaining to government.

                  "Guarantor" means each of the Persons identified as a
         "Guarantor" on the signature pages hereto and each Person which may
         hereafter execute a Joinder Agreement pursuant to Section 7.12.

                  "Guaranty" means the Guaranty made by the Guarantors in favor
         of the Administrative Agent and the Lenders pursuant to Section 4
         hereof.

                  "Guaranty Obligations" means, with respect to any Person,
         without duplication, any obligations (other than endorsements in the
         ordinary course of business of negotiable instruments for deposit or
         collection and other than customary indemnification obligations under
         leases and other contracts) guaranteeing any Indebtedness, leases,
         dividends or other obligations of any other Person in any manner,
         whether direct or indirect, and including without limitation any
         obligation, whether or not contingent, (a) to purchase any such
         Indebtedness or other obligation or any Property constituting security
         therefor, (b) to advance or provide funds or other support for the
         payment or purchase of such Indebtedness or obligation or to maintain
         working capital, solvency or other balance sheet condition of such
         other Person (including, without limitation, maintenance agreements,
         comfort letters, take or pay arrangements, put agreements or similar
         agreements or arrangements) for the benefit of the holder of
         Indebtedness of such other Person, (c) to lease or purchase Property,
         securities or services primarily for the purpose of assuring the owner
         of such Indebtedness or obligation of the payment or performance of
         such Indebtedness or obligations or (d) to otherwise assure or hold
         harmless the owner of such Indebtedness or obligation against loss

                                       15

<PAGE>

         in respect thereof. The amount of any Guaranty Obligation hereunder
         shall (subject to any limitations set forth therein) be deemed to be an
         amount equal to the lesser of (i) the outstanding principal amount (or
         maximum principal amount, if larger) of the Indebtedness in respect of
         which such Guaranty Obligation is made or (ii) the maximum amount for
         which the guarantor or other applicable Person may be liable pursuant
         to the terms of the instrument governing such Guaranty Obligation or,
         if not stated or determinable, the maximum reasonably anticipated
         liability in respect thereof as determined by the guarantor or other
         applicable Person in good faith.

                  "Hazardous Materials" means all explosive or radioactive
         substances or wastes and all hazardous or toxic substances, wastes or
         other pollutants, including petroleum or petroleum distillates,
         asbestos or asbestos-containing materials, polychlorinated biphenyls,
         radon gas, infectious or medical wastes and all other substances or
         wastes of any nature regulated pursuant to any Environmental Law.

                  "Honor Date" has the meaning set forth in Section 2.3(c).

                  "Indebtedness" of any Person means, without duplication, (a)
         all obligations of such Person for borrowed money, (b) all obligations
         of such Person evidenced by bonds, debentures, notes or similar
         instruments, (c) all obligations of such Person under conditional sale
         or other title retention agreements relating to Property purchased by
         such Person to the extent of the value of such Property (other than
         customary reservations or retentions of title under agreements with
         suppliers entered into in the ordinary course of business), (d) all
         obligations, including without limitation intercompany items, of such
         Person issued or assumed as the deferred purchase price of Property or
         services purchased by such Person which would appear as liabilities on
         a balance sheet of such Person (other than trade debt incurred in the
         ordinary course of business and due within six (6) months of the
         incurrence thereof), (e) all Indebtedness of others secured by (or for
         which the holder of such Indebtedness has an existing right, contingent
         or otherwise, to be secured by) any Lien on, or payable out of the
         proceeds of production from, Property owned or acquired by such Person,
         whether or not the obligations secured thereby have been assumed, (f)
         all Guaranty Obligations of such Person with respect to Indebtedness of
         another Person, (g) the principal portion of all obligations of such
         Person under (i) Capital Leases and (ii) any Synthetic Lease, (h) all
         net obligations of such Person in respect of hedging agreements,
         foreign currency exchange obligations, and commodity futures
         agreements, (i) the maximum face amount of all performance and standby
         letters of credit issued or bankers' acceptances facilities created for
         the account of such Person and, without duplication, all drafts drawn
         thereunder (to the extent unreimbursed), (j) all preferred stock issued
         by such Person and required by the terms thereof to be redeemed, or for
         which mandatory sinking fund payments are due by a fixed date, in each
         case prior to the date that this is six (6) months after final Maturity
         Date, (k) the aggregate amount of uncollected accounts receivable of
         such Person subject at such time to a sale of receivables (or similar
         transaction) regardless of whether such transaction is effected without
         recourse to such Person or in a manner that would not be reflected on
         the balance sheet of such Person in accordance with GAAP and (l) all
         preferred Capital Stock issued by such Person and which by the terms
         thereof could be (at the request of the holders thereof or otherwise)
         subject to mandatory sinking fund

                                       16

<PAGE>

         payments, redemption or other acceleration, in each case prior to the
         date that is six (6) months after the final Maturity Date. The
         Indebtedness of any Person shall include the Indebtedness of any
         partnership or unincorporated joint venture in which such Person is
         legally obligated net of any tangible Property of such partnership or
         joint venture.

                  "Indemnified Liabilities" has the meaning set forth in Section
         11.5.

                  "Indemnitees" has the meaning set forth in Section 11.5.

                  "Intellectual Property" has the meaning set forth in Section
         6.19.

                  "Intercreditor Agreement" means any Intercreditor Agreement
         entered into by the Administrative Agent, on behalf of the Lenders,
         with the holders (or representative thereof) of any Subordinated
         Indebtedness, as amended, modified, restated or supplemented from time
         to time.

                  "Interest Expense" means, for any period, with respect to the
         Parent and its Subsidiaries on a consolidated basis, all cash interest
         expense (paid or accrued to be paid), including the interest component
         of payments made under Capital Leases, as determined in accordance with
         GAAP.

                  "Interest Payment Date" means, (a) as to any Loan other than a
         Base Rate Loan, the last day of each Interest Period applicable to such
         Loan and the applicable Maturity Date; provided, however, that if any
         Interest Period for a Eurodollar Rate Loan exceeds three (3) months,
         the respective dates that fall every three (3) months after the
         beginning of such Interest Period shall also be Interest Payment Dates;
         and (b) as to any Base Rate Loan, the last Business Day of each March,
         June, September and December and the applicable Maturity Date.

                  "Interest Period" means, as to each Eurodollar Rate Loan, the
         period commencing on the date such Eurodollar Rate Loan is disbursed or
         converted to or continued as a Eurodollar Rate Loan and ending on the
         date one (1) , two (2) , three (3) or six (6) months thereafter, as
         selected by the Borrower in its Loan Notice; provided that:

                           (i)      any Interest Period that would otherwise end
                  on a day that is not a Business Day shall be extended to the
                  next succeeding Business Day unless such Business Day falls in
                  another calendar month, in which case such Interest Period
                  shall end on the next preceding Business Day;

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

                           (iii)    no Interest Period shall extend beyond the
                  applicable Maturity Date; and

                                       17

<PAGE>

                           (iv)     with regard to Term Loans, no Interest
                  Period shall extend beyond any Principal Amortization Payment
                  Date for such Term Loan unless the portion of applicable Term
                  Loans comprised of Base Rate Loans, together with the portion
                  of applicable Term Loans comprised of Eurodollar Rate Loans
                  with Interest Periods expiring prior to such Principal
                  Amortization Payment Date is greater than or equal to the
                  Principal Amortization Payment due for such Term Loan on such
                  Principal Amortization Payment Date.

                  "Investment" in any Person means (a) the Acquisition (whether
         for cash, Property, services, assumption of Indebtedness, securities or
         otherwise) of such Person or any other acquisition of shares of Capital
         Stock, bonds, notes, debentures, partnership, joint ventures or other
         ownership interests or other securities of such other Person, (b) any
         deposit with, or advance, loan or other extension of credit to, such
         Person (other than deposits made in connection with the purchase of
         equipment or other Property in the ordinary course of business and
         other than prepaid expenses in the ordinary course of business), or (c)
         any other capital contribution to or investment in such Person,
         including, without limitation, any Guaranty Obligation (including any
         support for a letter of credit (including, without limitation, a Letter
         of Credit) issued on behalf of such Person) incurred for the benefit of
         such Person.

                  "Joinder Agreement" means a Joinder Agreement substantially in
         the form of Exhibit F.

                  "KDOCH" means the Kansas Department of Commerce & Housing.

                  "Laws" means, collectively, all international, foreign,
         Federal, state and local statutes, treaties, rules, regulations,
         ordinances and codes, including the interpretation or administration
         thereof by any Governmental Authority charged with the enforcement,
         interpretation or administration thereof, and all applicable
         administrative orders, licenses, authorizations and permits of, and
         agreements with, any Governmental Authority, in each case whether or
         not having the force of Law.

                  "L/C Advance" means, with respect to each Revolving Lender,
         such Revolving Lender's funding of its participation in any L/C
         Borrowing in accordance with its Pro Rata Share.

                  "L/C Borrowing" means an extension of credit resulting from a
         drawing under any Letter of Credit which has not been reimbursed on the
         date when made or refinanced as a Borrowing of Revolving Loans.

                  "L/C Credit Extension" means, with respect to any Letter of
         Credit, the issuance thereof or extension of the expiry date thereof,
         or the renewal or increase of the amount thereof.

                                       18

<PAGE>

                  "L/C Documents" means the Letters of Credit, the Letter of
         Credit Applications and any other documents or agreements executed,
         issued or delivered in connection therewith.

                  "L/C Issuer" means Bank of America in its capacity as issuer
         of Letters of Credit hereunder and any other Revolving Lender in its
         capacity as issuer of Letters of Credit hereunder who has been selected
         by the Borrower and has agreed to be an L/C Issuer hereunder in
         allowance with the terms hereof, or any successor issuer of Letters of
         Credit hereunder.

                  "L/C Obligations" means, as at any date of determination, the
         aggregate undrawn amount of all outstanding Letters of Credit plus the
         aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

                  "Leasehold Mortgage" has the meaning set forth in Section
         5.1(e).

                  "Leasehold Mortgage Properties" has the meaning set forth in
         Section 5.1(e).

                  "Lender" means each Person identified on Schedule 2.1 (so long
         as such Person remains a party hereto in such capacity), and any
         Eligible Assignee which may become a Lender by way of assignment in
         accordance with the terms hereof, together with their successors and
         permitted assigns, individually or collectively, as appropriate.

                  "Lender Affiliate" means, with respect to any Lender, any
         other Person directly or indirectly controlling, controlled by or under
         direct or indirect common control with such Lender. A Person shall be
         deemed to control another Person if such Person possesses, directly or
         indirectly, the power (a) to vote 25% or more of the securities having
         ordinary voting power for the election of directors, managing general
         partners, members or the equivalent of such Person or (b) to direct or
         cause direction of the management and policies of such Person, whether
         through the ownership of voting securities, by contract or otherwise.

                  "Lending Office" means, as to any Lender, the office or
         offices of such Lender described as such in such Lender's
         Administrative Questionnaire, or such other office or offices as a
         Lender may from time to time notify the Borrower and the Administrative
         Agent.

                  "Letter of Credit" means any letter of credit issued
         hereunder, including any Existing Letter of Credit. A Letter of Credit
         may be a standby letter of credit or a commercial letter of credit.

                  "Letter of Credit Application" means an application and
         agreement for the issuance or amendment of a Letter of Credit in the
         form from time to time in use by the L/C Issuer.

                                       19

<PAGE>

                  "Letter of Credit Expiration Date" means the day that is seven
         (7) days prior to the applicable Maturity Date then in effect (or, if
         such day is not a Business Day, the next preceding Business Day).

                  "Letter of Credit Sublimit" means an amount equal to
         $5,000,000. The Letter of Credit Sublimit is part of, and not in
         addition to, the Aggregate Revolving Commitments.

                  "Leverage Ratio" means, as of the last day of any fiscal
         quarter, the ratio of (a) total Funded Debt of the Parent and its
         Subsidiaries on a consolidated basis as of such date, to (b) EBITDA of
         the Parent and its Subsidiaries on a consolidated basis for the twelve
         (12) month period then ended.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
         deposit arrangement, security interest, encumbrance, lien (statutory or
         otherwise), preference, priority or charge of any kind, including,
         without limitation, any agreement to give any of the foregoing, any
         conditional sale or other title retention agreement, and any financing
         lease having the same economic effect as any of the foregoing.

                  "Loan" or "Loans" means the Revolving Loans and the Term Loans
         (or a portion of any Revolving Loan or Term Loan), individually or
         collectively, as appropriate.

                  "Loan Notice" means a notice of (a) a Borrowing, (b) a
         conversion of Loans from one Type to the other, or (c) a continuation
         of Eurodollar Rate Loans, pursuant to Section 2.2(a), which, if in
         writing, shall be substantially in the form of Exhibit A.

                  "Material Adverse Effect" means a material adverse effect,
         after taking into account applicable insurance, if any, on (a) the
         operations, financial condition, business or prospects of the Credit
         Parties taken as a whole, (b) the ability of a Credit Party to perform
         in any material respect its obligations under this Credit Agreement or
         any of the other Credit Documents to which it is a party, or (c) the
         validity or enforceability of this Credit Agreement, any of the other
         Credit Documents, or the rights and remedies of the Lenders hereunder
         or thereunder taken as a whole.

                  "Maturity Date" means (a) as to the Revolving Loans, Letters
         of Credit (and the related L/C Obligations) and Tranche A Term Loans,
         September 29, 2008, and (b) as to the Tranche B Term Loans, September
         29, 2009.

                  "Moody's" means Moody's Investors Service, Inc., or any
         successor or assignee of the business of such company in the business
         of rating securities.

                  "Mortgage Documents" means the Mortgages and the Leasehold
         Mortgages.

                  "Mortgage Policies" has the meaning set forth in Section
         5.1(e).

                  "Mortgages" has the meaning set forth in Section 5.1(e).

                                       20

<PAGE>

                  "Mortgage Properties" has the meaning set forth in Section
         5.1(e).

                  "Multiemployer Plan" means a Plan covered by Title IV of ERISA
         which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3)
         of ERISA.

                  "Multiple Employer Plan" means a Plan covered by Title IV of
         ERISA, other than a Multiemployer Plan, which any Credit Party or any
         ERISA Affiliate and at least one employer other than a Credit Party or
         any ERISA Affiliate are contributing sponsors.

                  "Net Cash Proceeds" means the aggregate cash proceeds received
         from an Asset Disposition, an Equity Issuance or a Debt Issuance net of
         (a) reasonable transaction costs payable to third parties, (b) taxes
         paid or a good faith estimate of the taxes payable with respect to such
         proceeds (including, without duplication, withholding taxes and Cash
         Tax Payments) and (c) with respect to any Asset Disposition, (i) the
         outstanding Indebtedness (including any premium, penalty or make-whole
         amounts related thereto, but excluding the Loans) required to be repaid
         as a result of such Asset Disposition and (ii) appropriate amounts to
         be provided by such Credit Party as a reserve in accordance with GAAP
         against any liabilities associated with the assets sold or disposed of
         in such Asset Disposition and retained by such Credit Party after such
         Asset Disposition, including (A) pension and other post-employment
         benefit liabilities, (B) liabilities related to environmental matters
         and (C) liabilities under any indemnification obligation associated
         with the assets sold or disposed of in such Asset Disposition; provided
         that "Net Cash Proceeds" shall include an amount equal to any reserves
         previously taken against any liabilities associated with any such Asset
         Disposition immediately upon those reserves being determined to be in
         excess of such liabilities.

                  "Net Income" means, for any period, the net income after taxes
         from continuing operations for such period of the Parent and its
         Subsidiaries on a consolidated basis and, prior to the date on which
         operating losses and gains related to the Detroit Paper Mill ("DPM
         Losses/Gains") are treated as losses and gains, respectively, from
         discontinued operations, Net Income shall exclude the effect of such
         DPM Losses/Gains, as determined in accordance with GAAP.

                  "Net Worth" means, as of the last day of any fiscal quarter,
         shareholders' equity or net worth of the Parent and its Subsidiaries on
         a consolidated basis as of such date (excluding the effect of (a) any
         cash and non-cash charges and/or losses that are added back to Net
         Income for all applicable periods in determining EBITDA in accordance
         with the terms of clause (b)(iv) of the definition of EBITDA, (b)
         losses and gains from discontinued operations related to the Detroit
         Paper Mill and (c) prior to the date on which DPM Losses/Gains are
         treated as losses or gains, as applicable, from discontinued
         operations, the DPM Losses/Gains), as determined in accordance with
         GAAP.

                  "Note" or "Notes" means the Revolving Notes and the Term
         Notes, individually or collectively, as appropriate.

                                       21

<PAGE>

                  "Outstanding Amount" means (a) with respect to Revolving Loans
         on any date, the aggregate outstanding principal amount thereof after
         giving effect to any borrowings and prepayments or repayments of
         Revolving Loans, as the case may be, occurring on such date; and (b)
         with respect to any L/C Obligations on any date, the outstanding amount
         of such L/C Obligations on such date after giving effect to any L/C
         Credit Extension occurring on such date and any other changes in the
         aggregate amount of the L/C Obligations as of such date, including as a
         result of any reimbursements of outstanding unpaid drawings under any
         Letters of Credit or any reductions in the maximum amount available for
         drawing under Letters of Credit taking effect on such date.

                  "Parent" has the meaning set forth in the introductory
         paragraph hereto and shall include any successors or permitted assigns
         thereof.

                  "Participant" has the meaning set forth in Section 11.7(d).

                  "PBGC" means the Pension Benefit Guaranty Corporation
         established pursuant to Subtitle A of Title IV of ERISA and any
         successor thereto.

                  "Permitted Acquisition" means any Acquisition by the Borrower
         or any of its Subsidiaries; provided that (a) the Property acquired (or
         the Property of the Person acquired) in such Acquisition is used or
         useful in the same or a similar line of business as the Borrower and
         its Subsidiaries were engaged in on the Closing Date (or any reasonable
         extensions or expansions thereof), (b) the Administrative Agent shall
         have received all items in respect of the Capital Stock or Property
         acquired in such Acquisition (and/or the seller thereof) required to be
         delivered by the terms of Section 7.9 and/or Section 7.12, (c) in the
         case of an Acquisition of the Capital Stock of another Person, the
         board of directors (or other comparable governing body) or
         stockholders, as appropriate, of such Person shall have approved such
         Acquisition, (d) the Borrower shall have delivered to the
         Administrative Agent a Pro Forma Compliance Certificate demonstrating
         that, upon giving effect to such Acquisition on a Pro Forma Basis, the
         Credit Parties shall be in compliance with all of the covenants set
         forth in Section 7.2, (e) the representations and warranties made by
         the Credit Parties in any Credit Document shall be true and correct in
         all material respects at and as if made as of the date of such
         Acquisition (after giving effect thereto) except to the extent such
         representations and warranties expressly relate to an earlier date, (f)
         if such transaction involves the purchase of an interest in a
         partnership between the Borrower (or a Subsidiary of the Borrower) as a
         general partner and entities unaffiliated with the Borrower or such
         Subsidiary as the other partners, such transaction shall be effected by
         having such equity interest acquired by a corporate holding company
         directly or indirectly wholly-owned by the Borrower newly formed for
         the sole purpose of effecting such transaction, (g) after giving effect
         to such Acquisition, there shall be at least $10,000,000 of
         availability existing under the Aggregate Revolving Commitments, (h)
         with respect to any such Acquisition, (i) the aggregate cash
         consideration for such Acquisition (excluding cash proceeds from Equity
         Issuances made and Subordinated Indebtedness incurred in connection
         with such Acquisition) shall not exceed $20,000,000 and (ii) the total
         consideration (including cash and non-cash consideration and any

                                       22

<PAGE>

         assumption of liabilities (other than current working capital
         liabilities not constituting Indebtedness)) for such Acquisition shall
         not exceed $25,000,000, and (i) with respect to all such Acquisitions
         during the term of this Credit Agreement, (i) the aggregate cash
         consideration for such Acquisitions (excluding cash proceeds from
         Equity Issuances made and Subordinated Indebtedness incurred in
         connection with such Acquisitions) shall not exceed $30,000,000 and
         (ii) the total consideration (including cash and non-cash consideration
         and any assumption of liabilities (other than current working capital
         liabilities not constituting Indebtedness)) for such Acquisitions shall
         not exceed $50,000,000.

                  "Permitted Investments" means Investments which are (a) cash
         or Cash Equivalents, (b) accounts receivable or notes receivable
         created, acquired or made in the ordinary course of business and
         payable or dischargeable in accordance with customary trade terms and
         Investments received in satisfaction or partial satisfaction thereof
         from financially troubled account debtors to the extent reasonably
         necessary or desirable in order to prevent or limit loss, (c)
         inventory, raw materials and general intangibles acquired in the
         ordinary course of business, (d) Investments by a Credit Party in
         another Credit Party other than the Parent, (e) to the extent permitted
         by Law, loans to directors, officers or employees (i) in the ordinary
         course of business for reasonable business expenses, not to exceed
         $1,000,000 in aggregate principal amount at any one time outstanding
         and (ii) in connection with their acquisition of Capital Stock of the
         Parent, not to exceed $1,000,000 in aggregate principal amount at any
         one time outstanding; (f) Investments in Capital Expenditures, (g)
         Permitted Acquisitions, (h) Investments existing as of the Closing Date
         and set forth on Schedule 1.1(a), (i) any deposit arrangement permitted
         by Section 8.2, (j) other Investments not to exceed $5,000,000 in the
         aggregate (determined on an incurrence basis and such amount shall be
         increased by the amount of any cash received from such Investments) and
         (k) guaranties of any obligation of another Credit Party (other than
         the Parent) to the extent the incurrence of such primary obligation is
         not prohibited by the terms of this Credit Agreement.

                  "Permitted Liens" means (a) Liens securing Credit Party
         Obligations, (b) Liens for taxes, assessments or other governmental
         charges or levies not yet due or such Liens which are being contested
         in good faith by appropriate proceedings for which adequate reserves
         determined in accordance with GAAP have been established (and as to
         which the Property subject to any such Lien is not yet subject to
         foreclosure, sale, collection, levy or loss on account thereof), (c)
         Liens in respect of Property imposed by Law arising in the ordinary
         course of business such as materialmen's, mechanics', warehousemen's,
         carrier's, landlords' and other nonconsensual statutory Liens which are
         not yet due and payable or which are being contested in good faith by
         appropriate proceedings for which adequate reserves determined in
         accordance with GAAP have been established (and as to which the
         Property subject to any such Lien is not yet subject to foreclosure,
         sale or loss on account thereof), (d) pledges or deposits made in the
         ordinary course of business to secure payment of worker's compensation
         insurance, unemployment insurance, pensions or social security
         programs, (e) Liens arising from good faith deposits or other Liens
         granted in the ordinary course of business in connection with or to
         secure performance of tenders, bids, leases, government contracts,
         performance and return-of-money bonds and other similar

                                       23

<PAGE>

         obligations incurred in the ordinary course of business (other than
         obligations in respect of the payment of borrowed money), (f) Liens
         arising from good faith deposits or other Liens granted in the ordinary
         course of business in connection with or to secure performance of
         statutory obligations and surety and appeal bonds, (g) easements,
         rights-of-way, restrictions (including zoning restrictions),
         restrictive covenants, matters of plat, minor defects or irregularities
         in title and other similar charges or encumbrances not, in any material
         respect, impairing the use of the encumbered Property for its intended
         purposes, (h) Liens securing judgments that would not constitute an
         Event of Default, (i) Liens on Property of any Person securing purchase
         money Indebtedness (including Capital Leases and Synthetic Leases) of
         such Person to the extent permitted under Section 8.1(d); provided that
         any such Lien attaches to such Property concurrently with or within
         ninety (90) days after the acquisition, construction or improvement
         thereof and any such Lien does not at any time encumber Property other
         than the Property financed by such purchase money Indebtedness, (j)
         Liens arising by virtue of any statutory or common law provision
         relating to banker's liens, rights of setoff or similar rights as to
         deposit accounts or other funds maintained with a creditor depository
         institution, (k) Liens existing on the date hereof and identified on
         Schedule 1.1(b); provided that no such Lien shall extend to any
         Property other than the Property subject thereto on the Closing Date,
         (l) any Lien granted in connection with any amendment, restatement,
         supplement, refinancing, renewal, replacement, extension or refunding
         (or successive amendments, restatements, refinancings, supplements,
         extensions or refundings) in whole or in part of any Indebtedness
         permitted by Section 8.1(b) other than the Baxter Springs Debt;
         provided that (i) the principal amount of Indebtedness secured by any
         such Lien does not exceed the principal amount of such Indebtedness
         outstanding immediately prior to such amendment, restatement,
         refinancing, supplement, renewal, replacement, extension or refunding
         and (ii) no such Lien shall extend to any Property other than the
         Property subject thereto on the Closing Date or Property of equivalent
         value, (m) licenses, leases or subleases granted to others (including
         those constituting Excluded Asset Dispositions) not interfering in any
         material respect with the business of any Credit Party, (n) any
         interest or title of a licensor, lessor or sublessor under, leases or
         licenses permitted by this Credit Agreement, (o) Liens deemed to exist
         in connection with Investments in repurchase agreements permitted under
         Section 8.7, (p) Liens on any assets acquired in connection with a
         Permitted Acquisition, provided that such Liens existed at the time of
         consummation of such Permitted Acquisition, were not created in
         contemplation thereof and are not spread to cover other assets, and (q)
         other Liens not otherwise permitted hereunder which secure or relate to
         obligations not exceeding $5,000,000 in the aggregate at any one time
         outstanding.

                  "Person" means any individual, partnership, joint venture,
         firm, corporation, limited liability company, association, trust or
         other enterprise (whether or not incorporated), or any Governmental
         Authority.

                  "Plan" means any employee benefit plan (as defined in Section
         3(3) of ERISA) which is covered by ERISA and with respect to which any
         Credit Party or any ERISA Affiliate is (or, if such plan were
         terminated at such time, would under Section 4069 of ERISA be deemed to
         be) an "employer" within the meaning of Section 3(5) of ERISA.

                                       24

<PAGE>

                  "Pledge Agreement" means the Amended and Restated Pledge
         Agreement dated as of the Closing Date, substantially in the form of
         Exhibit B, to be executed in favor of the Agent by each of the Credit
         Parties, as amended, modified, restated or supplemented from time to
         time.

                  "Principal Amortization Payment" means a principal payment on
         the Term Loans as set forth in Sections 2.6(b) and (c).

                  "Principal Amortization Payment Date" means the date a
         Principal Amortization Payment is due.

                  "Pro Forma Basis" means, for purposes of calculating
         (utilizing the principles set forth in the second paragraph of Section
         1.3) compliance with each of the financial covenants set forth in
         Section 7.2 in respect of a proposed Acquisition, that such Acquisition
         shall be deemed to have occurred as of the first day of the four
         fiscal-quarter period ending as of the most recent fiscal quarter end
         preceding the date of such Acquisition with respect to which the
         Administrative Agent has received the financial statements and
         officer's certificate required to be delivered pursuant to Section
         7.1(a) or (b), as applicable, and Section 7.1(c). For purposes of any
         such calculation of the financial covenants set forth in Section 7.2 in
         respect of a proposed Acquisition:

                           (i)      any Indebtedness incurred by any Credit
                  Party in connection with such Acquisition (A) shall be deemed
                  to have been incurred as of the first day of the applicable
                  period and (B) if such Indebtedness has a floating or formula
                  rate, shall have an implied rate of interest for the
                  applicable period for purposes of this definition determined
                  by utilizing the rate which is or would be in effect with
                  respect to such Indebtedness as at the relevant date of
                  determination; and

                           (ii)     income statement items (whether positive or
                  negative) attributable to the Capital Stock or Property
                  acquired in such Acquisition shall be included to the extent
                  relating to the relevant period.

                  "Pro Forma Compliance Certificate" means a certificate of the
         chief financial officer or treasurer of the Borrower delivered to the
         Administrative Agent in connection with any proposed Acquisition and
         containing reasonably detailed calculations, upon giving effect to such
         Acquisition on a Pro Forma Basis, of each of the financial covenants
         set forth in Section 7.2 as of the most recent fiscal quarter end
         preceding the date of such Acquisition with respect to which the
         Administrative Agent shall have received the financial statements and
         officer's certificate required to be delivered pursuant to Section
         7.1(a) or (b), as applicable, and Section 7.1(c).

                  "Pro Rata Share" means as to each Lender (a) with respect to
         such Lender's Revolving Commitment at any time, a fraction (expressed
         as a percentage, carried out to the ninth decimal place), the numerator
         of which is the amount of the Revolving Commitment of such Lender at
         such time and the denominator of which is the amount of the Aggregate
         Revolving Commitments at such time; provided that if the commitment of

                                       25

<PAGE>

         each Lender to make Revolving Loans and the obligation of the L/C
         Issuer to make L/C Credit Extensions have been terminated pursuant to
         Section 9.2, then the Pro Rata Share of such Lender shall be determined
         based on the Pro Rata Share of such Lender immediately prior to such
         termination and after giving effect to any subsequent assignments made
         pursuant to the terms hereof, (b) with respect to such Lender's
         outstanding Tranche A Term Loan at any time, a fraction (expressed as a
         percentage, carried out to the ninth decimal place), the numerator of
         which is the principal amount of the Tranche A Term Loan held by such
         Lender at such time and the denominator of which is the aggregate
         principal amount of the Tranche A Term Loan at such time and (c) with
         respect to such Lender's outstanding Tranche B Term Loan at any time, a
         fraction (expressed as a percentage, carried out to the ninth decimal
         place), the numerator of which is the principal amount of the Tranche B
         Term Loan held by such Lender at such time and the denominator of which
         is the aggregate principal amount of the Tranche B Term Loan at such
         time. The initial Pro Rata Share of each Lender as of the Closing Date
         is set forth opposite the name of such Lender on Schedule 2.1.

                  "Property" means any interest in any kind of property or
         asset, whether real, personal or mixed, or tangible or intangible.

                  "Real Properties" means the Mortgage Properties, the Leasehold
         Mortgage Properties and such other real properties as the Credit
         Parties may own or lease (as lessee or sublessee) from third parties
         from time to time.

                  "Register" has the meaning set forth in Section 11.7(c).

                  "Regulation U, T or X" means Regulation U, T or X,
         respectively, of the Board of Governors of the Federal Reserve System
         as from time to time in effect and any successor to all or a portion
         thereof.

                  "Reportable Event" means a "reportable event" as defined in
         Section 4043 of ERISA with respect to which the notice requirements to
         the PBGC have not been waived.

                  "Request for Credit Extension" means (a) with respect to a
         Borrowing, conversion or continuation of Loans, a Loan Notice and (b)
         with respect to an L/C Credit Extension, a Letter of Credit
         Application.

                  "Required Lenders" means, at any time, Lenders holding in the
         aggregate more than 50% of (a) the unfunded Commitments (and
         participations therein) and the outstanding Loans, L/C Obligations and
         participations therein or (b) if the Commitments have been terminated,
         the outstanding Loans, L/C Obligations and participations therein. The
         unfunded Commitments of, and the outstanding Loans held or deemed held
         by, any Defaulting Lender shall be excluded for purposes of making a
         determination of Required Lenders.

                  "Required Revolving Lenders" means, at any time, Revolving
         Lenders holding in the aggregate more than 50% of (a) the unfunded
         Revolving Commitments (and

                                       26

<PAGE>

         participations therein) and the outstanding Revolving Loans, L/C
         Obligations and participations therein or (b) if the Revolving
         Commitments have been terminated, the outstanding Revolving Loans, L/C
         Obligations and participations therein. The unfunded Revolving
         Commitments of, and the outstanding Revolving Loans held or deemed held
         by, any Defaulting Lender shall be excluded for purposes of making a
         determination of Required Revolving Lenders.

                  "Responsible Officer" means the chief executive officer,
         president or chief financial officer of a Credit Party. Any document
         delivered hereunder that is signed by a Responsible Officer of a Credit
         Party shall be conclusively presumed to have been authorized by all
         necessary corporate, partnership, limited liability company and/or
         other action on the part of such Credit Party and such Responsible
         Officer shall be conclusively presumed to have acted on behalf of such
         Credit Party.

                  "Restricted Payment" means (i) any dividend or other similar
         payment or distribution, direct or indirect, on account of any shares
         of any Capital Stock, now or hereafter outstanding, in any Credit
         Party, or to the holders, in their capacity as such, of any shares of
         any Capital Stock, now or hereafter outstanding, in any Credit Party
         (other than dividends or distributions payable in the same class of
         Capital Stock in the applicable Person or dividends or distributions
         payable to any Credit Party other than the Parent (directly or
         indirectly through Subsidiaries)), (ii) any redemption, retirement,
         sinking fund or similar payment, purchase or other acquisition for
         value, direct or indirect, of any shares of any Capital Stock, now or
         hereafter outstanding, in any Credit Party, (iii) any payment made to
         retire, or to obtain the surrender of, any outstanding warrants,
         options or other rights to acquire shares of any Capital Stock, now or
         hereafter outstanding, in any Credit Party and (iv) any payment or
         prepayment of any obligations (including without limitation principal,
         interest, premiums and fees) evidenced by, arising under or relating to
         any Subordinated Indebtedness.

                  "Revolving Lender" means any Lender holding a Revolving
         Commitment, as identified on Schedule 2.1, greater than zero, together
         with permitted successors and assigns.

                  "Revolving Commitment" means, with respect to each Revolving
         Lender, the commitment of such Lender to make its portion of the
         Revolving Loans in a principal amount equal to such Lender's "Revolving
         Commitment" as set forth opposite the name of such Lender on Schedule
         2.1 or in the Assignment and Assumption pursuant to which such Lender
         becomes a party hereto, as applicable, in each case as increased or
         decreased from time to time by any assignment with respect thereto
         pursuant to Section 11.7(b).

                  "Revolving Loans" means the Revolving Loans made to the
         Borrower pursuant to Section 2.1(a).

                  "Revolving Note" has the meaning set forth in Section 2.10(a).

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<PAGE>

                  "S&P" means Standard & Poor's Ratings Services, a division of
         The McGraw-Hill Companies, Inc. or any successor or assignee of the
         business of such division in the business of rating securities.

                  "Scheduled Funded Debt Payments" means, as of the end of each
         fiscal quarter of the Borrower, for the Credit Parties and their
         Subsidiaries on a consolidated basis, the sum of all scheduled payments
         of principal on Funded Debt for the applicable period ending on such
         date (including the principal component of payments due on Capital
         Leases and Synthetic Leases during the applicable period ending on such
         date); it being understood that Scheduled Funded Debt Payments shall
         not include voluntary prepayments or the mandatory prepayments of the
         Loans required pursuant to Section 2.4(b).

                  "Secured Swap Contract" means any Swap Contract between any
         Credit Party and any Lender or Affiliate of a Lender.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder, as amended,
         modified, succeeded or replaced from time to time.

                  "Security Agreement" means the Amended and Restated Security
         Agreement dated as of the Closing Date, substantially in the form of
         Exhibit C, to be executed in favor of the Agent by each of the Credit
         Parties, as amended, modified, restated or supplemented from time to
         time.

                  "Senior Leverage Ratio" means, as of the last day of any
         fiscal quarter, the ratio of (a) total Funded Debt (other than
         Subordinated Indebtedness) of the Parent and its Subsidiaries on a
         consolidated basis as of such date, to (b) EBITDA of the Parent and its
         Subsidiaries on a consolidated basis for the twelve (12) month period
         then ended.

                  "Single Employer Plan" means any Plan which is covered by
         Title IV of ERISA, but which is not a Multiemployer Plan.

                  "Solvent" means, with respect to any Person as of a particular
         date, that on such date (a) such Person is able to pay its debts and
         other liabilities, contingent obligations and other commitments as they
         mature in the normal course of business, (b) such Person does not
         intend to, and does not believe that it will, incur debts or
         liabilities beyond such Person's ability to pay as such debts and
         liabilities mature in their ordinary course, (c) such Person is not
         engaged in a business or a transaction, and is not about to engage in a
         business or a transaction, for which such Person's assets would
         constitute unreasonably small capital after giving due consideration to
         the prevailing practice in the industry in which such Person is engaged
         or is to engage, (d) the fair value of the assets of such Person is
         greater than the total amount of liabilities, including, without
         limitation, contingent liabilities, of such Person and (e) the present
         fair salable value of the assets of such Person is not less than the
         amount that will be required to pay the probable liability of such
         Person on its debts as they become absolute and matured. In computing
         the amount of contingent liabilities at any time, it is

                                       28

<PAGE>

         intended that such liabilities will be computed at the amount which, 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.

                  "Sponsor Group" means any of FW Strategic Partners, L.P. (or
         its designee), Keystone, Inc. (or its designee), Packaging Investors,
         LLC, DCBS Investors, L.L.C. and members of the executive management and
         directors of any Credit Party.

                  "Standby Letter of Credit Fee" has the meaning set forth in
         Section 2.3(i)(i).

                  "Stock Option Plan" means any stock option plan, phantom stock
         option plan or similar plan of the Borrower or the Parent, the terms of
         which have been approved by the Administrative Agent.

                  "Subordinated Debt Payment" means any scheduled payment or
         repayment of principal of, premium or interest on, or on account of any
         other obligations arising under, relating to or in respect of, any
         Subordinated Indebtedness.

                  "Subordinated Indebtedness" means any Indebtedness incurred by
         the Parent, on terms and conditions reasonably satisfactory to the
         Administrative Agent, that is specifically subordinated in right of
         payment to the prior payment of the Credit Party Obligations (pursuant
         to an Intercreditor Agreement, if required by the Administrative Agent,
         in form and substance reasonably satisfactory to the Administrative
         Agent) on terms and conditions reasonably satisfactory to the Required
         Lenders; provided that the subordination terms of any such Indebtedness
         shall only be subject to the approval of the Administrative Agent (and
         not the Required Lenders) to the extent such Indebtedness (and the
         terms thereof) (a) does not exceed $10,000,000, (b) matures more than
         six (6) months after the final Maturity Date, (c) limits cash interest
         payments with respect to such Indebtedness to 6%, (d) does not require
         any principal payment or prepayment prior to six (6) months after the
         final Maturity Date and (e) prohibits cash payments of such
         Indebtedness if a Default or an Event of Default exists either before
         or after giving effect to any such payment. The term "Subordinated
         Indebtedness" shall not include any of the Baxter Springs Debt.

                  "Subsidiary" of a Person means a corporation, partnership,
         limited liability company or other business entity of which a majority
         of the shares of Capital Stock having ordinary voting power for the
         election of directors or other governing body (other than Capital Stock
         having such power only by reason of the happening of a contingency) are
         at the time owned, directly, or indirectly through one or more
         intermediaries, or both, by such Person. Unless otherwise specified,
         all references herein to a "Subsidiary" or to "Subsidiaries" shall
         refer to a Subsidiary or Subsidiaries of the Borrower.

                  "Swap Contract" means (a) any and all rate swap transactions,
         basis swaps, credit derivative transactions, forward rate transactions,
         commodity swaps, commodity options, forward commodity contracts, equity
         or equity index swaps or options, bond or bond price or bond index
         swaps or options or forward bond or forward bond price or forward

                                       29

<PAGE>

         bond index transactions, interest rate options, forward foreign
         exchange transactions, cap transactions, floor transactions, collar
         transactions, currency swap transactions, cross-currency rate swap
         transactions, currency options, spot contracts, or any other similar
         transactions or any combination of any of the foregoing (including any
         options to enter into any of the foregoing), whether or not any such
         transaction is governed by or subject to any master agreement, and (b)
         any and all transactions of any kind, and the related confirmations,
         which are subject to the terms and conditions of, or governed by, any
         form of master agreement published by the International Swaps and
         Derivatives Association, Inc., any International Foreign Exchange
         Master Agreement, or any other master agreement (any such master
         agreement, together with any related schedules, a "Master Agreement"),
         including any such obligations or liabilities under any Master
         Agreement.

                  "Synthetic Lease" means any synthetic lease, tax retention
         lease, off-balance sheet loan or similar off-balance sheet financing
         product of such Person where such transaction is considered borrowed
         money indebtedness for tax purposes but is not classified as a Capital
         Lease in accordance with GAAP.

                  "Term Loans" means, collectively, the Tranche A Term Loans and
         the Tranche B Term Loans.

                  "Term Note" means any of the Tranche A Term Notes and the
         Tranche B Term Notes and "Term Notes" means collectively the Tranche A
         Term Notes and the Tranche B Term Notes.

                  "Termination Event" means (a) with respect to any Single
         Employer Plan, the occurrence of a Reportable Event or the substantial
         cessation of operations (within the meaning of Section 4062(e) of
         ERISA); (b) the withdrawal of any Credit Party or any ERISA Affiliate
         from a Multiple Employer Plan during a plan year in which it was a
         substantial employer (as such term is defined in Section 4001(a)(2) of
         ERISA), or the termination of a Multiple Employer Plan; (c) the
         distribution of a notice of intent to terminate or the actual
         termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
         (d) the institution of proceedings to terminate or the actual
         termination of a Plan by the PBGC under Section 4042 of ERISA; (e) any
         event or condition which might reasonably constitute grounds under
         Section 4042 of ERISA for the termination of, or the appointment of a
         trustee to administer, any Plan; or (f) the complete or partial
         withdrawal of any Credit Party or any ERISA Affiliate from a
         Multiemployer Plan.

                  "Title Insurance Company" means Chicago Title Insurance
         Company.

                  "Total Revolving Outstandings" means the aggregate Outstanding
         Amount of all Revolving Loans and all L/C Obligations.

                  "Tranche A Term Lender" means any Lender holding a Tranche A
         Term Loan Commitment greater than zero, together with permitted
         successors and assigns.

                  "Tranche A Term Loan" has the meaning set forth in Section
         2.1(b).

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<PAGE>

                  "Tranche A Term Loan Commitment" means, with respect to each
         Tranche A Term Lender, the commitment of such Lender to make its
         portion of the Tranche A Term Loan in a principal amount equal to such
         Lender's Pro Rata Share of the Tranche A Term Loan.

                  "Tranche A Term Note" has the meaning set forth in Section
         2.10(a).

                  "Tranche B Term Lender" means any Lender holding a Tranche B
         Term Loan Commitment greater than zero, together with permitted
         successors and assigns.

                  "Tranche B Term Loan" has the meaning set forth in Section
         2.1(c).

                  "Tranche B Term Loan Commitment" means, with respect to each
         Tranche B Term Lender, the commitment of such Lender to make its
         portion of the Tranche B Term Loan in a principal amount equal to such
         Lender's Pro Rata Share of the Tranche B Term Loan.

                  "Tranche B Term Note" has the meaning set forth in Section
         2.10(a).

                  "Type" means, with respect to a Loan, its character as a Base
         Rate Loan or a Eurodollar Rate Loan.

                  "UCC" has the meaning set forth in Section 5.1(d).

                  "Unreimbursed Amount" has the meaning set forth in Section
         2.3(c).

                  "Voting Stock" of a corporation means all classes of the
         Capital Stock of such corporation then outstanding and ordinarily
         entitled to vote in the election of directors (or persons performing
         similar functions).

                  "Wholly-Owned Subsidiary" of any Person means any Subsidiary
         100% of whose Voting Stock is at the time owned by such Person directly
         or indirectly through other Wholly-Owned Subsidiaries.

         1.2      OTHER INTERPRETIVE PROVISIONS.

         With reference to this Credit Agreement and each other Credit Document,
unless otherwise specified herein or in such other Credit Document:

                  (a)      The meanings of defined terms are equally applicable
         to the singular and plural forms of the defined terms.

                  (b)      (i) The words "herein," "hereto," "hereof" and
         "hereunder" and words of similar import when used in any Credit
         Document shall refer to such Credit Document as a whole and not to any
         particular provision thereof.

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<PAGE>

                           (ii)     Article, Section, Exhibit and Schedule
                  references are to the Credit Document in which such reference
                  appears.

                           (iii)    The term "including" is by way of example
                  and not limitation.

                           (iv)     The term "documents" includes any and all
                  instruments, documents, agreements, certificates, notices,
                  reports, financial statements and other writings, however
                  evidenced, whether in physical or electronic form.

                  (c)      Section headings herein and in the other Credit
         Documents are included for convenience of reference only and shall not
         affect the interpretation of this Credit Agreement or any other Credit
         Document.

         1.3      ACCOUNTING TERMS.

         Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP as in effect from time to
time; provided that all calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1 (or, prior to the delivery of the first financial statements
pursuant to Section 7.1, consistent with the financial statements described in
Section 6.1(a)); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) the Administrative Agent or the Required Lenders shall so
object in writing within thirty (30) days after delivery of such financial
statements, then such calculations shall be made on a basis consistent with GAAP
as in effect as of the date of the most recent financial statements delivered by
the Borrower to the Administrative Agent to which no such objection shall have
been made.

         Notwithstanding the above, the parties hereto acknowledge and agree
that, for purposes of all calculations made under the financial covenants set
forth in Section 7.2 and for purposes of the definition of "Applicable
Percentage" set forth in Section 1.1, (i)(A) income statement items (whether
positive or negative) attributable to the property disposed of in any Asset
Disposition as contemplated by Section 8.5 shall be excluded to the extent
relating to any period occurring prior to the date of such transaction and (B)
Indebtedness which is retired in connection with any such Asset Disposition
shall be excluded and deemed to have been retired as of the first day of the
applicable period and (ii) income statement items (whether positive or negative)
attributable to any Person or property acquired in any Acquisition contemplated
by the definition of "Permitted Acquisition" set forth in Section 1.1 shall, to
the extent not otherwise included in such income statements items for the Credit
Parties in accordance with GAAP or in accordance with any defined terms set
forth in Section 1.1, be included to the extent relating to any period
applicable in such calculations.

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<PAGE>

         1.4      ROUNDING.

         Any financial ratios required to be maintained by the Borrower pursuant
to Section 7.2 shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places
by which such ratio is expressed herein and rounding the result up or down to
the nearest number (with a rounding-up if there is no nearest number).

         1.5      REFERENCES TO AGREEMENTS AND LAWS.

         Unless otherwise expressly provided herein, (a) references to
organization documents, agreements (including the Credit Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Credit Document; and (b)
references to any Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law.

         1.6      TIMES OF DAY.

         Unless otherwise specified, all references herein to times of day shall
be references to Eastern time (daylight or standard, as applicable).

         1.7      LETTER OF CREDIT AMOUNTS.

         Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to all increases or decreases thereof
contemplated by such Letter of Credit or the Letter of Credit Application
therefor, whether or not such maximum face amount is in effect at such time.

                                    SECTION 2

                      THE COMMITMENTS AND CREDIT EXTENSIONS

         2.1      REVOLVING LOANS AND TERM LOANS.

                  (a)      Revolving Loans. Subject to the terms and conditions
         set forth herein, each Revolving Lender severally agrees to make loans
         (each such loan, a "Revolving Loan") to the Borrower from time to time,
         on any Business Day during the Availability Period, in an aggregate
         amount not to exceed at any time outstanding the amount of such
         Revolving Lender's Revolving Commitment; provided, however, that after
         giving effect to any Borrowing of Revolving Loans, (i) the Total
         Revolving Outstandings shall not exceed the Aggregate Revolving
         Commitments, and (ii) the aggregate Outstanding Amount of the Revolving
         Loans of any Revolving Lender, plus such Revolving Lender's Pro Rata
         Share of the Outstanding Amount of all L/C Obligations shall not exceed
         such

                                       33

<PAGE>

         Revolving Lender's Revolving Commitment. Within the limits of each
         Revolving Lender's Revolving Commitment, and subject to the other terms
         and conditions hereof, the Borrower may borrow under this Section
         2.1(a), prepay under Section 2.4(a), and reborrow under this Section
         2.1(a). Revolving Loans may be Base Rate Loans or Eurodollar Rate
         Loans, as further provided herein; provided, however, all Borrowings
         made on the Closing Date shall be made as Base Rate Loans unless the
         Borrower delivers a Loan Notice and a funding indemnity letter to the
         Administrative Agent three (3) Business Days prior to the Closing Date
         in form and substance reasonably satisfactory to the Administrative
         Agent.

                  (b)      Tranche A Term Loan. Subject to the terms and
         conditions set forth herein, each Tranche A Lender severally agrees to
         make its Pro Rata Share of a term loan (the "Tranche A Term Loan") to
         the Borrower on the Closing Date in an aggregate principal amount of
         THIRTY MILLION DOLLARS ($30,000,000). Amounts repaid on the Tranche A
         Term Loan may not be reborrowed. The Tranche A Term Loan may consist of
         Base Rate Loans or Eurodollar Rate Loans, as further provided herein;
         provided, however, the Tranche A Term Loan shall be made as a Base Rate
         Loan on the Closing Date unless the Borrower delivers a funding
         indemnity letter to the Administrative Agent prior to the Closing Date
         in form and substance reasonably satisfactory to the Administrative
         Agent.

                  (c)      Tranche B Term Loan. Subject to the terms and
         conditions set forth herein, each Tranche B Lender severally agrees to
         make its Pro Rata Share of a term loan (the "Tranche B Term Loan") to
         the Borrower on the Closing Date in an aggregate principal amount of
         FORTY MILLION DOLLARS ($40,000,000). Amounts repaid on the Tranche B
         Term Loan may not be reborrowed. The Tranche B Term Loan may consist of
         Base Rate Loans or Eurodollar Rate Loans, as further provided herein;
         provided, however, the Tranche B Term Loan shall be made as a Base Rate
         Loan on the Closing Date unless the Borrower delivers a funding
         indemnity letter to the Administrative Agent prior to the Closing Date
         in form and substance reasonably satisfactory to the Administrative
         Agent.

                  (d)      Reserve for Baxter Springs Debt. Until such time as
         all of the obligations of the Borrower under the Construction Loan
         Documents shall have been paid in full and Baxter Springs shall have
         released all of its Liens in any Property of the Borrower or any of the
         other Credit Parties, a portion of the Aggregate Revolving Commitments
         in an amount equal to the Reserve Amount shall be reserved to finance
         amounts which become due and payable under the Construction Loan
         Documents as provided in paragraph 19 of the Baxter Springs
         Intercreditor Agreement. For purposes of this subsection (d), the term
         "Reserve Amount" shall mean, at any time, an amount equal to the lesser
         of (i) the then outstanding principal amount of the Indebtedness under
         the Construction Loan Documents and (ii) $700,000. The Reserve Amount
         shall not be available for Revolving Loans made pursuant to Section
         2.2(a). The Reserve Amount shall not be reduced by the making of any
         Revolving Loans pursuant to Section 2.2(b) (except, as contemplated by
         the immediately preceding sentence, to the extent that the making of
         such Revolving Loans reduces the outstanding principal amount of the
         Indebtedness under the Construction Loan Documents).

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<PAGE>

         2.2      BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

                  (a)      Each Borrowing, each conversion of Loans from one
         Type to the other, and each continuation of Eurodollar Rate Loans shall
         be made upon the irrevocable notice (except as provided in Section 3.3)
         from the Borrower to the Administrative Agent, which may be given by
         telephone (provided that such telephonic notice complies with the
         information requirements of the form of Loan Notice attached hereto).
         Each such notice must be received by the Administrative Agent not later
         than 11:00 a.m. (i) three (3) Business Days prior to the requested date
         of any Borrowing of, conversion to or continuation of Eurodollar Rate
         Loans, and (ii) on the requested date of any Borrowing of Base Rate
         Loans. Each telephonic notice by the Borrower pursuant to this Section
         2.2(a) must be confirmed promptly by delivery to the Administrative
         Agent of a written Loan Notice, appropriately completed and signed by a
         Responsible Officer of the Borrower. Except in the case of a Revolving
         Loan borrowing the proceeds of which are to be applied to make a
         payment under the Construction Loan Documents on behalf of the Borrower
         in accordance with the terms of Section 2.2(b), each Borrowing of,
         conversion to or continuation of Eurodollar Rate Loans shall be in a
         principal amount of $5,000,000 or a whole multiple of $500,000 in
         excess thereof. Except as provided in Section 2.3(c) or in the case of
         a Borrowing of the then entire unborrowed amount of the Aggregate
         Revolving Commitment or in the case of a Revolving Loan borrowing the
         proceeds of which are to be applied to make a payment under the
         Construction Loan Documents on behalf of the Borrower in accordance
         with the terms of Section 2.2(b), each Borrowing of or conversion to
         Base Rate Loans shall be in a principal amount of $500,000 or a whole
         multiple of $100,000 in excess thereof. Each Loan Notice (whether
         telephonic or written) shall specify (A) whether the Borrower is
         requesting a Borrowing, a conversion of Loans from one Type to the
         other, or a continuation of Eurodollar Rate Loans, (B) the requested
         date of the Borrowing, conversion or continuation, as the case may be
         (which shall be a Business Day), (C) the principal amount of Loans to
         be borrowed, converted or continued, (D) the Type of Loans to be
         borrowed or to which existing Loans are to be converted, and (E) if
         applicable, the duration of the Interest Period with respect thereto.
         If the Borrower fails to specify a Type of Loan in a Loan Notice or if
         the Borrower fails to give a timely notice requesting a conversion or
         continuation, then the applicable Loans shall be made as, or converted
         to, Base Rate Loans. Any such automatic conversion to Base Rate Loans
         shall be effective as of the last day of the Interest Period then in
         effect with respect to the applicable Eurodollar Rate Loans. If the
         Borrower requests a Borrowing of, conversion to, or continuation of
         Eurodollar Rate Loans in any such Loan Notice, but fails to specify an
         Interest Period, it will be deemed to have specified an Interest Period
         of one (1) month.

                  (b)      Subject to the other terms and conditions set forth
         herein (including without limitation satisfaction of the conditions
         precedent set forth in Section 5.2), the Borrower hereby agrees that,
         until such time as all of the obligations of the Borrower under the
         Construction Loan Documents shall have been paid in full and Baxter
         Springs shall have released all of its Liens in any Property of the
         Borrower or any of the other Credit Parties, Baxter Springs (or KDOCH
         on behalf of Baxter Springs) shall be authorized to request

                                       35

<PAGE>

         that Revolving Loans be made on behalf of the Borrower for application
         to any obligations which are past due under the Construction Loan
         Documents. Requests for Revolving Loans pursuant to this Section 2.2(b)
         shall be made pursuant to a written Loan Notice signed by either the
         Mayor of Baxter Springs or the Secretary of KDOCH, substantially in
         accordance with the terms of Section 2.2(a) above. The proceeds of each
         Revolving Loan made pursuant to this Section 2.2(b) shall be paid to
         the account and in accordance with the wiring instructions set forth in
         the related Loan Notice for application to the past due obligations of
         the Borrower under the Construction Loan Documents. Revolving Loans
         made pursuant to this Section 2.2(b) on any day shall not exceed the
         aggregate amount of amounts which are past due under the Construction
         Loan Documents on such date. On the date that any Revolving Loans are
         to be made pursuant to this Section 2.2(b), the Administrative Agent
         shall so notify the Borrower and shall send to the Borrower a copy of
         the related Loan Notice. The Borrower hereby agrees (A) that the
         Administrative Agent shall be entitled to rely upon, and shall be fully
         protected in acting upon and in accordance with, any Loan Notice
         delivered by or on behalf of Baxter Springs pursuant to this Section
         2.2(b) and believed in good faith by the Administrative Agent to be
         genuine and correct and to have been signed, sent or made by or on
         behalf of the Mayor of Baxter Springs or the Secretary of KDOCH, even
         if such Loan Notice should in fact prove to be in any or all respects
         invalid, insufficient, inaccurate, fraudulent or forged, (B) that the
         Administrative Agent shall not be required to confirm or verify with
         the Borrower or any other Person the appropriateness or accuracy of any
         Loan Notice delivered by or on behalf of Baxter Springs pursuant to
         this Section 2.2(b), (C) to hold the Administrative Agent and the
         Lenders harmless in respect of any Revolving Loan advances made
         available to Baxter Springs pursuant to and in accordance with the
         terms of this Section 2.2(b), (D) that as between the Borrower and the
         Administrative Agent and the Lenders, the Borrower shall assume all
         risks of the acts of Baxter Springs or KDOCH pursuant to this Section
         2.2(b), (E) that any action taken or omitted by the Administrative
         Agent or any Lender pursuant to or in connection with any Loan Notice
         delivered by or on behalf of Baxter Springs pursuant to this Section
         2.2(b), if taken or omitted in good faith, shall not put the
         Administrative Agent or such Lender under any resulting liability to
         the Borrower or any other Credit Party and (F) the provisions of this
         Section 2.2(b) shall be construed and applied to protect and exculpate
         the Administrative Agent and the Lenders against any and all risks
         involved in the making of Revolving Loan advances pursuant to this
         Section 2.2(b), all of which risks are hereby assumed by the Borrower
         (on behalf of itself and each of the other Credit Parties), provided
         that such provisions shall not be deemed to protect or exculpate the
         Administrative Agent or any Lender in respect of any action or inaction
         of such Person constituting gross negligence or willful misconduct.

                  (c)      Following receipt of a Loan Notice, the
         Administrative Agent shall promptly notify each Revolving Lender of the
         amount of its Pro Rata Share of the applicable Revolving Loans, and if
         no timely notice of a conversion or continuation is provided by the
         Borrower, the Administrative Agent shall notify each applicable Lender
         of the details of any automatic conversion to Base Rate Loans described
         in the preceding subsection. In the case of a Borrowing, each Revolving
         Lender shall make the amount of its Revolving Loan available to the
         Administrative Agent in immediately available funds at the
         Administrative Agent's Office not later than 1:00 p.m. on the Business
         Day

                                       36

<PAGE>

         specified in the applicable Loan Notice. Upon satisfaction of the
         applicable conditions set forth in Section 5.2 (and, if such Borrowing
         is the initial Credit Extension, Section 5.1), the Administrative Agent
         shall make all funds so received available to the Borrower in like
         funds as received by the Administrative Agent either by (i) crediting
         the account of the Borrower on the books of Bank of America with the
         amount of such funds or (ii) wire transfer of such funds, in each case
         in accordance with instructions provided to (and reasonably acceptable
         to) the Administrative Agent by the Borrower; provided, however, that
         if, on the date a Loan Notice with respect to a Borrowing consisting of
         Revolving Loans is given by the Borrower, there are L/C Borrowings
         outstanding, then the proceeds of such Borrowing shall be applied,
         first, to the payment in full of any such L/C Borrowings, and second,
         to the Borrower as provided above.

                  (d)      Subject to Section 3.5, a Eurodollar Rate Loan may be
         continued or converted only on the last day of an Interest Period for
         such Eurodollar Rate Loan. During the existence of a Default or an
         Event of Default, no Loans may be requested as, converted to or
         continued as Eurodollar Rate Loans without the consent of the Required
         Lenders.

                  (e)      The Administrative Agent shall promptly notify the
         Borrower and the Lenders of the interest rate applicable to any
         Interest Period for Eurodollar Rate Loans upon determination of such
         interest rate. The determination of the Eurodollar Rate by the
         Administrative Agent shall be conclusive in the absence of manifest
         error. At any time that Base Rate Loans are outstanding, the
         Administrative Agent shall notify the Borrower and the Lenders of any
         change in Bank of America's prime rate used in determining the Base
         Rate promptly following the public announcement of such change.

                  (f)      After giving effect to all Borrowings, all
         conversions of Loans from one Type to the other, and all continuations
         of Loans as the same Type, there shall not be more than (i) five
         Interest Periods in effect with respect to Revolving Loans, and (ii)
         four Interest Periods in effect with respect to the Term Loans.

         2.3      LETTERS OF CREDIT.

                  (a)      The Letter of Credit Commitment.

                           (i)      Subject to the terms and conditions set
                  forth herein, (A) the L/C Issuer agrees, in reliance upon the
                  agreements of the Revolving Lenders set forth in this Section
                  2.3, (1) from time to time on any Business Day during the
                  period from the Closing Date until the Letter of Credit
                  Expiration Date, to issue Letters of Credit for the account of
                  the Borrower or, subject to the terms of Section 2.3(l), any
                  Subsidiary designated by the Borrower, and to amend or renew
                  Letters of Credit previously issued by it, in accordance with
                  subsection (b) below, and (2) to honor drafts under the
                  Letters of Credit; and (B) the Revolving Lenders severally
                  agree to participate in Letters of Credit issued for the
                  account of the Borrower; provided that the L/C Issuer shall
                  not be obligated to make any L/C Credit Extension with respect
                  to any Letter of Credit, and no Revolving Lender shall be

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<PAGE>

                  obligated to participate in any Letter of Credit if as of the
                  date of such L/C Credit Extension, (x) the Total Revolving
                  Outstandings would exceed the Aggregate Revolving Commitments,
                  (y) the aggregate Outstanding Amount of the Revolving Loans of
                  any Revolving Lender, plus such Revolving Lender's Pro Rata
                  Share of the Outstanding Amount of all L/C Obligations would
                  exceed such Revolving Lender's Revolving Commitment, or (z)
                  the Outstanding Amount of the L/C Obligations would exceed the
                  Letter of Credit Sublimit. Within the foregoing limits, and
                  subject to the terms and conditions hereof, the Borrower's
                  ability to obtain Letters of Credit shall be fully revolving,
                  and accordingly the Borrower may, during the foregoing period,
                  obtain Letters of Credit to replace Letters of Credit that
                  have expired or that have been drawn upon and reimbursed. Each
                  Letter of Credit shall be either (x) a standby letter of
                  credit issued to support the obligations (including pension or
                  insurance obligations), contingent or otherwise, of a Credit
                  Party, or (y) a commercial letter of credit in respect of the
                  purchase of goods or services by the Borrower or any of its
                  Subsidiaries in the ordinary course of business. All Existing
                  Letters of Credit shall be deemed to have been issued pursuant
                  hereto, and from and after the Closing Date shall be subject
                  to and governed by the terms and conditions hereof.

                           (ii)     The L/C Issuer shall be under no obligation
                  to issue any Letter of Credit if:

                                    (A)      any order, judgment or decree of
                           any Governmental Authority or arbitrator shall by its
                           terms purport to enjoin or restrain the L/C Issuer
                           from issuing such Letter of Credit, or any Law
                           applicable to the L/C Issuer or any request or
                           directive (whether or not having the force of law)
                           from any Governmental Authority with jurisdiction
                           over the L/C Issuer shall prohibit, or request that
                           the L/C Issuer refrain from, the issuance of letters
                           of credit generally or such Letter of Credit in
                           particular or shall impose upon the L/C Issuer with
                           respect to such Letter of Credit any restriction,
                           reserve or capital requirement (for which the L/C
                           Issuer is not otherwise compensated hereunder) not in
                           effect on the Closing Date, or shall impose upon the
                           L/C Issuer any unreimbursed loss, cost or expense
                           which was not applicable on the Closing Date and
                           which the L/C Issuer in good faith deems material to
                           it;

                                    (B)      subject to Section 2.3(b)(iii), the
                           expiry date of such requested Letter of Credit would
                           occur more than twelve (12) months after the date of
                           issuance unless all of the Revolving Lenders have
                           approved such expiry date;

                                    (C)      the expiry date of such requested
                           Letter of Credit would occur after the Letter of
                           Credit Expiration Date, unless such Letter of Credit
                           has been Cash Collateralized to the reasonable
                           satisfaction of the Administrative Agent and the L/C
                           Issuer or unless all of the Required Revolving
                           Lenders have approved such expiry date;

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<PAGE>

                                    (D)      the issuance of such Letter of
                           Credit would violate one or more written policies of
                           the L/C Issuer;

                                    (E)      if such Letter of Credit (1) is a
                           standby Letter of Credit, such standby Letter of
                           Credit is in an initial amount less than $500,000 or
                           (2) is a commercial Letter of Credit, such commercial
                           Letter of Credit is in an initial amount less than
                           $250,000; or

                                    (F)      such Letter of Credit is to be used
                           for a purpose other than as specified in Section
                           2.3(a) or is to be denominated in a currency other
                           than Dollars.

                           (iii)    The L/C Issuer shall be under no obligation
                  to amend any Letter of Credit if (A) the L/C Issuer would have
                  no obligation at such time to issue such Letter of Credit in
                  its amended form under the terms hereof, or (B) the
                  beneficiary of such Letter of Credit does not accept the
                  proposed amendment to such Letter of Credit.

                  (b)      Procedures for Issuance and Amendment of Letters of
                           Credit; Automatic Renewal of Letters of Credit.

                           (i)      Each Letter of Credit shall be issued or
                  amended, as the case may be, upon the request of the Borrower
                  delivered to the L/C Issuer (with a copy to the Administrative
                  Agent) in the form of a Letter of Credit Application,
                  appropriately completed and signed by a Responsible Officer of
                  the Borrower. Such Letter of Credit Application must be
                  received by the L/C Issuer and the Administrative Agent not
                  later than 11:00 a.m. at least two (2) Business Days (or such
                  later date and time as the L/C Issuer may agree in a
                  particular instance in its sole discretion) prior to the
                  proposed issuance date or date of amendment, as the case may
                  be. In the case of a request for an initial issuance of a
                  Letter of Credit, such Letter of Credit Application shall
                  specify in form and detail satisfactory to the L/C Issuer: (A)
                  the proposed issuance date of the requested Letter of Credit
                  (which shall be a Business Day); (B) the amount thereof; (C)
                  the expiry date thereof; (D) the name of the account party
                  thereof and the name and address of the beneficiary thereof;
                  (E) the documents to be presented by such beneficiary in case
                  of any drawing thereunder; (F) the full text of any
                  certificate to be presented by such beneficiary in case of any
                  drawing thereunder; and (G) such other matters as the L/C
                  Issuer may reasonably require. In the case of a request for an
                  amendment of any outstanding Letter of Credit, such Letter of
                  Credit Application shall specify in form and detail
                  satisfactory to the L/C Issuer (1) the Letter of Credit to be
                  amended; (2) the proposed date of amendment thereof (which
                  shall be a Business Day); (3) the nature of the proposed
                  amendment; and (4) such other matters as the L/C Issuer may
                  reasonably require.

                                       39

<PAGE>

                           (ii)     Promptly after receipt of any Letter of
                  Credit Application, the L/C Issuer will confirm with the
                  Administrative Agent (by telephone or in writing) that the
                  Administrative Agent has received a copy of such Letter of
                  Credit Application from the Borrower and, if not, the L/C
                  Issuer will provide the Administrative Agent with a copy
                  thereof. Upon receipt by the L/C Issuer of confirmation from
                  the Administrative Agent that the requested issuance or
                  amendment is permitted in accordance with the terms hereof,
                  then, subject to the terms and conditions hereof, the L/C
                  Issuer shall, on the requested date, issue a Letter of Credit
                  for the account of the Borrower or, subject to the terms of
                  Section 2.3(l), any Subsidiary designated by the Borrower, or
                  enter into the applicable amendment, as the case may be, in
                  each case in accordance with the L/C Issuer's usual and
                  customary business practices for commercial and standby
                  letters of credit, as applicable. Immediately upon the
                  issuance of each Letter of Credit, each Revolving Lender shall
                  be deemed to, and hereby irrevocably and unconditionally
                  agrees to, purchase from the L/C Issuer without recourse a
                  risk participation in such Letter of Credit and the
                  obligations arising thereunder and any collateral relating
                  thereto in an amount equal to the product of such Revolving
                  Lender's Pro Rata Share times the amount of such Letter of
                  Credit. On the Closing Date, each Revolving Lender shall be
                  deemed to have purchased from the L/C Issuer without recourse
                  a risk participation in each Existing Letter of Credit and the
                  obligations arising thereunder and any collateral relating
                  thereto in an amount equal to the product of such Revolving
                  Lender's Pro Rata Share times the amount of such Existing
                  Letter of Credit.

                           (iii)    If the Borrower so requests in any
                  applicable Letter of Credit Application, the L/C Issuer may,
                  in its sole and absolute discretion, agree to issue a Letter
                  of Credit that has automatic renewal provisions (each, an
                  "Auto Renewal Letter of Credit"); provided that any such Auto
                  Renewal Letter of Credit must permit the L/C Issuer to prevent
                  any such renewal at least once in each twelve (12) month
                  period (commencing with the date of issuance of such Letter of
                  Credit) by giving prior notice to the Borrower and the
                  beneficiary thereof not later than the day, in each such
                  twelve (12) month period, agreed upon at the time such Letter
                  of Credit is issued (the "Nonrenewal Notice Date"). Unless
                  otherwise directed by the L/C Issuer, the Borrower shall not
                  be required to make a specific request to the L/C Issuer for
                  any such renewal. Once an Auto Renewal Letter of Credit has
                  been issued, the Revolving Lenders shall be deemed to have
                  authorized (but may not require) the L/C Issuer to permit the
                  renewal of such Letter of Credit at any time to an expiry date
                  not later than the Letter of Credit Expiration Date (unless
                  such Letter of Credit has been Cash Collateralized to the
                  reasonable satisfaction of the Administrative Agent and the
                  L/C Issuer in which case such Letter of Credit may be extended
                  beyond the Letter of Credit Expiration Date); provided,
                  however, that the L/C Issuer shall not permit any such renewal
                  if (A) the L/C Issuer has determined that it would have no
                  obligation at such time to issue such Letter of Credit in its
                  renewed form under the terms hereof (by reason of the
                  provisions of Section 2.3(a)(ii) or otherwise), or (B) it has
                  received notice (which may be by telephone or in writing) on
                  or before the day that is five (5)

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<PAGE>

                  Business Days before the Nonrenewal Notice Date (1) from the
                  Administrative Agent, any Lender or the Borrower that one or
                  more of the applicable conditions specified in Section 5.2 is
                  not then satisfied or (2) from the Borrower electing not to
                  agree to such renewal.

                           (iv)     Promptly after its delivery of any Letter of
                  Credit or any amendment to a Letter of Credit to an advising
                  bank with respect thereto or to the beneficiary thereof, the
                  L/C Issuer will also deliver to the Borrower and the
                  Administrative Agent a true and complete copy of such Letter
                  of Credit or amendment. Upon the request of any Lender, the
                  Administrative Agent will deliver to such Lender a list of the
                  Letters of Credit then outstanding.

                  (c)      Drawings and Reimbursements; Funding of
                           Participations.

                           (i)      Upon receipt from the beneficiary of any
                  Letter of Credit of any notice of a drawing under such Letter
                  of Credit, the L/C Issuer shall notify the Borrower and the
                  Administrative Agent thereof. Not later than 11:00 a.m. (or if
                  the notice of drawing on such Letter of Credit is given after
                  11:00 a.m., then not later than 12:00 noon on the next
                  succeeding Business Day) on the date of any payment by the L/C
                  Issuer under a Letter of Credit (each such date, an "Honor
                  Date"), the Borrower shall reimburse the L/C Issuer through
                  the Administrative Agent in an amount equal to the amount of
                  such drawing. If the Borrower fails to so reimburse the L/C
                  Issuer by such time, the Administrative Agent shall promptly
                  notify each Revolving Lender of the Honor Date, the amount of
                  the unreimbursed drawing (the "Unreimbursed Amount"), and the
                  amount of such Revolving Lender's Pro Rata Share thereof. In
                  such event, the Borrower shall be deemed to have requested a
                  Borrowing of Revolving Loans that are Base Rate Loans to be
                  disbursed on the Honor Date in an amount equal to the
                  Unreimbursed Amount, without regard to the minimum and
                  multiples specified in, or the notice requirement of, Section
                  2.2 for the principal amount of Base Rate Loans, but subject
                  to the amount of the unutilized portion of the Aggregate
                  Revolving Commitments and the conditions set forth in Section
                  5.2 (other than the delivery of a Loan Notice). Any notice
                  given by the L/C Issuer or the Administrative Agent pursuant
                  to this Section 2.3(c)(i) may be given by telephone if
                  immediately confirmed in writing; provided that the lack of
                  such an immediate confirmation shall not affect the
                  conclusiveness or binding effect of such notice.

                           (ii)     Each Revolving Lender (including the
                  Revolving Lender acting as L/C Issuer) shall upon any notice
                  pursuant to Section 2.3(c)(i) make funds available to the
                  Administrative Agent for the account of the L/C Issuer at the
                  Administrative Agent's Office in an amount equal to its Pro
                  Rata Share of the Unreimbursed Amount not later than 1:00 p.m.
                  on the Business Day specified in such notice by the
                  Administrative Agent, whereupon, subject to the provisions of
                  Section 2.3(c)(i) and (iii), each Revolving Lender that so
                  makes funds available shall either (A) be deemed to have made
                  a Revolving Loan that is a Base Rate Loan to the Borrower in
                  such amount in accordance with the terms of Section

                                       41

<PAGE>

                  2.3(c)(i) or (B) be deemed to have made an L/C Advance to fund
                  its participation interest in an L/C Borrowing in such amount
                  in accordance with the terms of Section 2.3(c)(iii). The
                  Administrative Agent shall remit the funds so received to the
                  L/C Issuer.

                           (iii)    With respect to any Unreimbursed Amount that
                  is not fully refinanced by a Borrowing of Revolving Loans that
                  are Base Rate Loans because the conditions set forth in
                  Section 5.2 cannot be satisfied (other than delivery of a Loan
                  Notice) or for any other reason, the Borrower shall be deemed
                  to have incurred from the L/C Issuer a L/C Borrowing in the
                  amount of the Unreimbursed Amount that is not so refinanced,
                  which L/C Borrowing shall be due and payable on demand
                  (together with interest) and shall bear interest at the
                  Default Rate. In such event, each Revolving Lender's payment
                  to the Administrative Agent for the account of the L/C Issuer
                  pursuant to Section 2.3(c)(ii) shall be deemed payment in
                  respect of its participation in such L/C Borrowing and shall
                  constitute an L/C Advance from such Revolving Lender in
                  satisfaction of its participation obligation under this
                  Section 2.3.

                           (iv)     Until each Revolving Lender funds its
                  Revolving Loan or L/C Advance pursuant to this Section 2.3(c)
                  to reimburse the L/C Issuer for any Unreimbursed Amount under
                  any Letter of Credit, interest in respect of such Revolving
                  Lender's Pro Rata Share of such amount shall be solely for the
                  account of the L/C Issuer.

                           (v)      Each Revolving Lender's obligation to make
                  Revolving Loans or L/C Advances to reimburse the L/C Issuer
                  for amounts drawn under Letters of Credit, as contemplated by
                  this Section 2.3(c), shall be absolute and unconditional and
                  shall not be affected by any circumstance, including (A) any
                  set-off, counterclaim, recoupment, defense or other right
                  which such Revolving Lender may have against the L/C Issuer,
                  the Borrower or any other Person for any reason whatsoever;
                  (B) the occurrence or continuance of a Default or Event of
                  Default, (C) the failure to satisfy any condition set forth in
                  Section 5.2 or (D) any other occurrence, event or condition,
                  whether or not similar to any of the foregoing; provided,
                  however, that each Revolving Lender's obligation to make
                  Revolving Loans pursuant to this Section 2.3(c) is subject to
                  the conditions set forth in Section 5.2 (other than delivery
                  by the Borrower of a Loan Notice). No such making of an L/C
                  Advance shall relieve or otherwise impair the obligation of
                  the Borrower to reimburse the L/C Issuer for the amount of any
                  payment made by the L/C Issuer under any Letter of Credit,
                  together with interest as provided herein.

                           (vi)     If any Revolving Lender fails to make
                  available to the Administrative Agent for the account of the
                  L/C Issuer any amount required to be paid by such Revolving
                  Lender pursuant to the foregoing provisions of this Section
                  2.3(c) by the time specified in Section 2.3(c)(ii), the L/C
                  Issuer shall be entitled to recover from such Revolving Lender
                  (acting through the Administrative Agent), on demand, such
                  amount with interest thereon for the

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<PAGE>

                  period from the date such payment is required to the date on
                  which such payment is immediately available to the L/C Issuer
                  at a rate per annum equal to the Federal Funds Rate from time
                  to time in effect. A certificate of the L/C Issuer submitted
                  to any Revolving Lender (through the Administrative Agent)
                  with respect to any amounts owing under this clause (vi) shall
                  be conclusive absent manifest error.

                  (d)      Repayment of Participations.

                           (i)      At any time after the L/C Issuer has made a
                  payment under any Letter of Credit and has received from any
                  Revolving Lender such Revolving Lender's L/C Advance in
                  respect of such payment in accordance with Section 2.3(c), if
                  the Administrative Agent receives for the account of the L/C
                  Issuer any payment in respect of the related Unreimbursed
                  Amount or interest thereon (whether directly from the Borrower
                  or otherwise, including proceeds of Cash Collateral applied
                  thereto by the Administrative Agent), the Administrative Agent
                  will distribute to such Revolving Lender its Pro Rata Share
                  thereof (appropriately adjusted, in the case of interest
                  payments, to reflect the period of time during which such
                  Revolving Lender's L/C Advance was outstanding) in the same
                  funds as those received by the Administrative Agent.

                           (ii)     If any payment received by the
                  Administrative Agent for the account of the L/C Issuer
                  pursuant to Section 2.3(c)(i) is required to be returned under
                  any of the circumstances described in Section 11.6 (including
                  pursuant to any settlement entered into by the L/C Issuer in
                  its discretion), each Revolving Lender shall pay to the
                  Administrative Agent for the account of the L/C Issuer its Pro
                  Rata Share thereof on demand of the Administrative Agent, plus
                  interest thereon from the date of such demand to the date such
                  amount is returned by such Revolving Lender, at a rate per
                  annum equal to the Federal Funds Rate from time to time in
                  effect.

                  (e)      Credit Party Obligations Absolute. The obligation of
         the Borrower to reimburse the L/C Issuer for each drawing under each
         Letter of Credit and to repay each L/C Borrowing shall be absolute,
         unconditional and irrevocable, and shall be paid strictly in accordance
         with the terms of this Credit Agreement under all circumstances,
         including the following:

                           (i)      any lack of validity or enforceability of
                  such Letter of Credit, this Credit Agreement, or any other
                  agreement or instrument relating thereto;

                           (ii)     the existence of any claim, counterclaim,
                  set-off, defense or other right that the Borrower may have at
                  any time against any beneficiary or any transferee of such
                  Letter of Credit (or any Person for whom any such beneficiary
                  or any such transferee may be acting), the L/C Issuer or any
                  other Person, whether in connection with this Credit
                  Agreement, the transactions contemplated hereby or by such
                  Letter of Credit or any agreement or instrument relating
                  thereto, or any unrelated transaction;

                                       43

<PAGE>

                           (iii)    any draft, demand, certificate or other
                  document presented under such 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; or any loss or delay in the transmission or otherwise
                  of any document required in order to make a drawing under such
                  Letter of Credit;

                           (iv)     any payment by the L/C Issuer under such
                  Letter of Credit against presentation of a draft or
                  certificate that does not strictly comply with the terms of
                  such Letter of Credit; or any payment made by the L/C Issuer
                  under such Letter of Credit to any Person purporting to be a
                  trustee in bankruptcy, debtor-in-possession, assignee for the
                  benefit of creditors, liquidator, receiver or other
                  representative of or successor to any beneficiary or any
                  transferee of such Letter of Credit, including any arising in
                  connection with any proceeding under any Debtor Relief Law; or

                           (v)      any other circumstance or happening
                  whatsoever, whether or not similar to any of the foregoing,
                  including any other circumstance that might otherwise
                  constitute a defense (other than payment) available to, or a
                  discharge of, the Borrower.

                  The Borrower shall promptly examine a copy of each Letter of
         Credit and each amendment thereto that is delivered to it and, in the
         event of any claim of noncompliance with the Borrower's instructions or
         other irregularity, the Borrower will promptly notify the L/C Issuer.
         The Borrower shall be conclusively deemed to have waived any such claim
         against the L/C Issuer and its correspondents unless such notice is
         given as aforesaid.

                  (f)      Role of L/C Issuer. Each Revolving Lender and the
         Borrower agree that, in paying any drawing under a Letter of Credit,
         the L/C Issuer shall not have any responsibility to obtain any document
         (other than any sight draft, certificates and documents expressly
         required by the Letter of Credit) or to ascertain or inquire as to the
         validity or accuracy of any such document or the authority of the
         Person executing or delivering any such document. None of the L/C
         Issuer, any Agent-Related Person nor any of the respective
         correspondents, participants or assignees of the L/C Issuer shall be
         liable to any Revolving Lender for (i) any action taken or omitted in
         connection herewith at the request or with the approval of the Lenders
         or the Required Revolving Lenders, as applicable; (ii) any action taken
         or omitted in the absence of gross negligence or willful misconduct; or
         (iii) the due execution, effectiveness, validity or enforceability of
         any document or instrument related to any Letter of Credit or Letter of
         Credit Application. The Borrower hereby assumes all risks of the acts
         or omissions of any beneficiary or transferee with respect to its use
         of any Letter of Credit; provided, however, that this assumption is not
         intended to, and shall not, preclude the Borrower's pursuing such
         rights and remedies as it may have against the beneficiary or
         transferee at law or under any other agreement. None of the L/C Issuer,
         any Agent-Related Person, nor any of the respective correspondents,
         participants or assignees of the L/C Issuer, shall be liable or

                                       44

<PAGE>

         responsible for any of the matters described in clauses (i) through (v)
         of Section 2.3(e); provided, however, that anything in such clauses to
         the contrary notwithstanding, the Borrower may have a claim against the
         L/C Issuer or any such Agent-Related Person, correspondent, participant
         or assignee, and the L/C Issuer or any such Agent-Related Person,
         correspondent, participant or assignee may be liable to the Borrower,
         to the extent, but only to the extent, of any direct, as opposed to
         consequential or exemplary, damages suffered by the Borrower which the
         Borrower proves were caused by such party's willful misconduct or gross
         negligence or, with respect to the L/C Issuer only, the L/C Issuer's
         willful failure to pay under any Letter of Credit after the
         presentation to it by the beneficiary of a sight draft and
         certificate(s) strictly complying with the terms and conditions of a
         Letter of Credit. In furtherance and not in limitation of the
         foregoing, the L/C Issuer may accept documents that appear on their
         face to be in order, without responsibility for further investigation,
         regardless of any notice or information to the contrary, and the L/C
         Issuer shall not be responsible for the validity or sufficiency of any
         instrument transferring or assigning or purporting to transfer or
         assign a 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.

                  (g)      Cash Collateral. Upon the request of the
         Administrative Agent, (i) if the L/C Issuer has honored any full or
         partial drawing request under any Letter of Credit and such drawing has
         resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
         Expiration Date, any Letter of Credit may for any reason remain
         outstanding and partially or wholly undrawn, the Borrower shall
         immediately Cash Collateralize the then Outstanding Amount of all L/C
         Obligations (in an amount equal to such Outstanding Amount determined
         as of the date of such L/C Borrowing or the Letter of Credit Expiration
         Date, as the case may be). The Borrower hereby grants to the
         Administrative Agent, for the benefit of the L/C Issuer and the
         Lenders, a security interest in all such cash, deposit accounts and all
         balances therein and all proceeds of the foregoing. Cash collateral
         shall be maintained in blocked, non-interest bearing deposit accounts
         at Bank of America.

                  (h)      Applicability of ISP98 and UCP. Unless otherwise
         expressly agreed by the applicable L/C Issuer and the Borrower when a
         Letter of Credit is issued (including any such agreement applicable to
         an Existing Letter of Credit), (i) the rules of the "International
         Standby Practices 1998" published by the Institute of International
         Banking Law & Practice (or such later version thereof as may be in
         effect at the time of issuance) shall apply to each standby Letter of
         Credit, and (ii) the rules of the Uniform Customs and Practice for
         Documentary Credits, as most recently published by the International
         Chamber of Commerce (the "ICC") at the time of issuance shall apply to
         each commercial Letter of Credit.

                  (i)      Letter of Credit Fees.

                           (i)      The Borrower shall pay to the Administrative
                  Agent for the account of each Revolving Lender in accordance
                  with its Pro Rata Share a fee (the "Standby Letter of Credit
                  Fee") for each standby Letter of Credit equal to the

                                       45

<PAGE>

                  Applicable Percentage times the daily maximum amount available
                  to be drawn under such standby Letter of Credit (whether or
                  not such maximum amount is then in effect under such standby
                  Letter of Credit). The Standby Letter of Credit Fees shall be
                  computed on a quarterly basis in arrears, and shall be due and
                  payable on the first Business Day after the end of each March,
                  June, September and December, commencing with the first such
                  date to occur after the issuance of such standby Letter of
                  Credit, on the Letter of Credit Expiration Date and thereafter
                  on demand. If there is any change in the Applicable Percentage
                  during any quarter, the daily maximum amount of each standby
                  Letter of Credit shall be computed and multiplied by the
                  Applicable Percentage separately for each period during such
                  quarter that such Applicable Percentage was in effect.

                           (ii)     The Borrower shall pay to the Administrative
                  Agent for the account of each Revolving Lender in accordance
                  with its Pro Rata Share a fee (the "Commercial Letter of
                  Credit Fee") for each commercial Letter of Credit equal to the
                  Applicable Percentage times the daily maximum amount available
                  to be drawn under such commercial Letter of Credit (whether or
                  not such maximum amount is then in effect under such
                  commercial Letter of Credit). The Commercial Letter of Credit
                  Fees shall be computed on a quarterly basis in arrears, and
                  shall be due and payable on the first Business Day after the
                  end of each March, June, September and December, commencing
                  with the first such date to occur after the issuance of such
                  commercial Letter of Credit, on the Letter of Credit
                  Expiration Date and thereafter on demand. If there is any
                  change in the Applicable Percentage during any quarter, the
                  daily maximum amount of each commercial Letter of Credit shall
                  be computed and multiplied by the Applicable Percentage
                  separately for each period during such quarter that such
                  Applicable Percentage was in effect.

                  (j)      Fronting Fee and Processing Charges Payable to L/C
         Issuer. The Borrower shall pay directly to the L/C Issuer for its own
         account a fronting fee for each Letter of Credit equal to 0.125% times
         the daily maximum amount available to be drawn under such Letter of
         Credit (whether or not such maximum amount is then in effect under such
         Letter of Credit). Such fronting fee for each Letter of Credit shall be
         computed on a quarterly basis in arrears, and shall be due and payable
         on the first Business Day after the end of each March, June, September
         and December, commencing with the first such date to occur after the
         issuance of such Letter of Credit, on the Letter of Credit Expiration
         Date and thereafter on demand. In addition, the Borrower shall pay
         directly to the L/C Issuer for its own account the customary issuance,
         presentation, amendment and other processing fees, and other standard
         costs and charges, of the L/C Issuer relating to letters of credit as
         from time to time in effect. Such customary fees and standard costs and
         charges are due and payable on demand and are nonrefundable.

                  (k)      Conflict with Letter of Credit Application. In the
         event of any conflict between the terms hereof and the terms of any
         Letter of Credit Application, the terms hereof shall control.

                                       46

<PAGE>

                  (l)      Designation of Subsidiaries as Account Parties.
         Notwithstanding anything to the contrary set forth in this Credit
         Agreement, including without limitation Section 2.3(a), a Letter of
         Credit issued hereunder (including any Existing Letter of Credit) shall
         upon the request of the Borrower be issued for the account of any
         Subsidiary of the Borrower, provided that notwithstanding such request,
         the Borrower shall be the actual account party for all purposes of this
         Credit Agreement for such Letter of Credit and such request shall not
         affect the Borrower's reimbursement obligations hereunder with respect
         to such Letter of Credit.

         2.4      PREPAYMENTS.

                  (a)      Voluntary Prepayments of Loans. The Borrower may,
         upon notice to the Administrative Agent, at any time or from time (i)
         voluntarily prepay Base Rate Loans in whole or in part without premium
         or penalty, and (ii) subject to Section 3.5 hereof, voluntarily prepay
         Eurodollar Rate Loans in whole or in part without premium or penalty;
         provided that (i) such notice must be received by the Administrative
         Agent not later than 11:00 a.m. (A) three (3) Business Days prior to
         any date of prepayment of Eurodollar Rate Loans and (B) on the date of
         prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate
         Loans shall be in a principal amount of $1,000,000 or a whole multiple
         of $100,000 in excess thereof (or, if less, the entire principal amount
         thereof then outstanding); and (iii) any prepayment of Base Rate Loans
         shall be in a principal amount of $500,000 or a whole multiple of
         $100,000 in excess thereof (or, if less, the entire principal amount
         thereof then outstanding). Any such voluntary prepayment shall be
         applied to the outstanding Loans as the Borrower may elect. Each notice
         of a voluntary prepayment pursuant to this Section 2.4(a) shall specify
         the date and amount of such prepayment and the Type(s) of Loans to be
         prepaid. The Administrative Agent will promptly notify each Lender of
         its receipt of each such notice, and of the amount of such Lender's Pro
         Rata Share of such prepayment. If such notice is given by the Borrower,
         the Borrower shall make such prepayment and the payment amount
         specified in such notice shall be due and payable on the date specified
         therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
         by all accrued interest thereon, together with any additional amounts
         required pursuant to Section 3.5. As among the applicable Lenders, each
         such prepayment shall be applied to the Loans of the Lenders in
         accordance with their respective Pro Rata Shares.

                  (b)      Mandatory Prepayments.

                           (i)      Aggregate Revolving Commitments. If for any
                  reason the Total Revolving Outstandings at any time exceed the
                  Aggregate Revolving Commitments then in effect, the Borrower
                  shall immediately prepay Revolving Loans and/or Cash
                  Collateralize the L/C Obligations in an aggregate amount equal
                  to such excess (such prepayment to be applied as set forth in
                  Section 2.4(c) below); provided, however, that the Borrower
                  shall not be required to Cash Collateralize the L/C
                  Obligations pursuant to this Section 2.4(b)(i) unless after
                  the prepayment in full of the Revolving Loans the Total
                  Revolving Outstandings exceed the Letter of Credit Sublimit.

                                       47

<PAGE>

                           (ii)     Excess Cash Flow. Within ten (10) Business
                  Days after the date the audited financial statements are
                  required to be delivered pursuant to Section 7.1(a) for each
                  fiscal year, commencing with the fiscal year ending December
                  31, 2004, the Borrower shall prepay the Loans in an amount
                  equal to 50% of the Excess Cash Flow earned during the
                  preceding fiscal year (such prepayment to be applied as set
                  forth in Section 2.4(c) below).

                           (iii)    (A)      Asset Dispositions. Within three
                           (3) Business Days after the occurrence of any Asset
                           Disposition Prepayment Event, the Borrower shall
                           prepay the Loans and Cash Collateralize the L/C
                           Obligations in an aggregate amount equal to 100% of
                           the Net Cash Proceeds of the related Asset
                           Disposition not applied (or caused to be applied) by
                           the Credit Parties during the related Application
                           Period to make Eligible Reinvestments as contemplated
                           by the terms of Section 8.5(e) (such prepayment to be
                           applied as set forth in Section 2.4(c) below);
                           provided that up to $1,500,000 of the Net Cash
                           Proceeds from the sale or other disposition of all or
                           any portion of the Detroit Paper Mill or any assets
                           comprising the Detroit Paper Mill shall be excluded
                           from the foregoing prepayment requirements.

                                    (B)      Casualty and Condemnation Events.
                           Within three (3) Business Days after the occurrence
                           of any event requiring application of any insurance
                           proceeds to the prepayment of Loans and Cash
                           Collateralization of the L/C Obligations pursuant to
                           Section 7.7(d), the Borrower shall prepay the Loans
                           and Cash Collateralize the L/C Obligations in the
                           amount required by such Section 7.7(d) (such
                           prepayment to be applied as set forth in Section
                           2.4(c) below).

                           (iv)     Issuances of Equity. Within three (3)
                  Business Days after the receipt by a Credit Party of proceeds
                  from any Equity Issuance, the Borrower shall prepay the Loans
                  and Cash Collateralize the L/C Obligations in an amount equal
                  to 75% of the Net Cash Proceeds of such Equity Issuance (such
                  prepayment to be applied as set forth in Section 2.4(c)
                  below).

                           (v)      Issuance of Debt. Within three (3) Business
                  Days after receipt by a Credit Party of proceeds from any Debt
                  Issuance, the Borrower shall prepay the Loans and Cash
                  Collateralize the L/C Obligations in an amount equal to 100%
                  of the Net Cash Proceeds of such Debt Issuance (such
                  prepayment to be applied as set forth in Section 2.4(c)
                  below).

                  (c)      Application of Prepayments. All amounts required to
         be paid pursuant to Section 2.4(b)(i) shall be applied first to
         Revolving Loans and second to Cash Collateralize the L/C Obligations.
         All amounts required to be paid pursuant to Sections 2.4(b)(ii), (iv)
         and (v) above shall be applied first, pro rata to the outstanding
         Tranche A Term Loans and the Tranche B Term Loans and within each
         tranche pro rata among the remaining Principal Amortization Payments,
         until the Term Loans have been paid in full,

                                       48

<PAGE>

         second, to the Revolving Loans (without a corresponding reduction in
         the Aggregate Revolving Commitments), and third, to Cash Collateralize
         the outstanding L/C Obligations. All amounts required to be paid
         pursuant to Section 2.4(b)(iii) above shall be applied first, pro rata
         to the outstanding Revolving Loans (with a corresponding reduction in
         the Aggregate Revolving Commitments), Tranche A Term Loans and Tranche
         B Term Loans (and within each tranche pro rata among the remaining
         Principal Amortization Payments), and second, to Cash Collateralize the
         outstanding L/C Obligations. Within the parameters of the applications
         set forth above, prepayments shall be applied ratably to Base Rate
         Loans and Eurodollar Rate Loans. All prepayments hereunder shall be
         subject to Section 3.5 and shall be accompanied by interest on the
         principal amount prepaid through the date of prepayment. One or more
         holders of the Tranche B Term Loans may decline to accept a mandatory
         prepayment under Sections 2.4(b)(ii), (iii), (iv) or (v) to the extent
         there are sufficient Tranche A Term Loans outstanding (and/or, in the
         case of a mandatory prepayment under Section 2.4(b)(iii), sufficient
         Revolving Loans or L/C Obligations outstanding) to be paid with such
         prepayment, in which case such declined prepayments shall be allocated
         pro rata among the Tranche A Term Loans (and, in the case of a
         mandatory prepayment under Section 2.4(b)(iii), the Revolving Loans and
         L/C Obligations outstanding) and the Tranche B Term Loans held by
         Lenders accepting such prepayments. Notwithstanding anything in this
         Section 2.4(c) to the contrary, the Aggregate Revolving Commitments
         shall not be reduced below $30,000,000 as a result of any reduction of
         the Aggregate Revolving Commitments corresponding to a mandatory
         prepayment of Revolving Loans and/or Cash Collateralization of L/C
         Obligations hereunder.

                  (d)      Eurodollar Prepayment Account. If the Borrower is
         required to make a mandatory prepayment of Eurodollar Rate Loans under
         Section 2.4(b), notwithstanding any term of Section 2.4(b) or (c) to
         the contrary, the Borrower shall have the right, in lieu of making such
         prepayment in full, to deposit an amount equal to such mandatory
         prepayment with the Administrative Agent in a cash collateral account
         maintained (pursuant to documentation reasonably satisfactory to the
         Administrative Agent) by and in the sole dominion and control of the
         Administrative Agent. Any amounts so deposited shall be held by the
         Administrative Agent as collateral for the prepayment of such
         Eurodollar Rate Loans and shall be applied to the prepayment of the
         applicable Eurodollar Rate Loans at the end of the current Interest
         Periods applicable thereto. At the request of the Borrower, amounts so
         deposited shall be invested by the Administrative Agent in Cash
         Equivalents maturing on or prior to the date or dates on which it is
         anticipated that such amounts will be applied to prepay such Eurodollar
         Rate Loans; any interest earned on such Cash Equivalents will be for
         the account of the Borrower and the Borrower will deposit with the
         Administrative Agent the amount of any loss on any such Cash
         Equivalents to the extent necessary in order that the amount of the
         prepayment to be made with the deposited amounts may not be reduced.

         2.5      TERMINATION OR REDUCTION OF AGGREGATE REVOLVING COMMITMENTS.

                  (a)      Voluntary Reductions. The Borrower may, upon notice
         to the Administrative Agent, terminate the Aggregate Revolving
         Commitments, or from time to

                                       49

<PAGE>

         time permanently reduce the Aggregate Revolving Commitments; provided
         that (i) any such notice shall be received by the Administrative Agent
         not later than 11:00 a.m. five (5) Business Days prior to the date of
         termination or reduction, (ii) any such partial reduction shall be in
         an aggregate amount of $5,000,000 or any whole multiple of $1,000,000
         in excess thereof, (iii) the Borrower shall not terminate or reduce the
         Aggregate Revolving Commitments if, after giving effect thereto and to
         any concurrent prepayments hereunder, the Total Revolving Outstandings
         would exceed the Aggregate Revolving Commitments, and (iv) if, after
         giving effect to any reduction of the Aggregate Revolving Commitments,
         the Letter of Credit Sublimit exceeds the amount of the Aggregate
         Revolving Commitments, the Letter of Credit Sublimit shall be
         automatically reduced by the amount of such excess.

                  (b)      Mandatory Reductions. The Aggregate Revolving
         Commitments automatically shall be permanently reduced from time to
         time in accordance with the terms of Section 2.4(c).

                  (c)      General. The Administrative Agent will promptly
         notify the Lenders of any such notice of termination or reduction of
         the Aggregate Revolving Commitments. Any reduction of the Aggregate
         Revolving Commitments shall be applied to the Revolving Commitment of
         each Lender according to its Pro Rata Share. All Commitment Fees
         accrued until the effective date of any termination of the Aggregate
         Revolving Commitments shall be paid on the effective date of such
         termination.

         2.6      REPAYMENT OF LOANS.

                  (a)      Revolving Loans. The Borrower shall repay to the
         Lenders on the applicable Maturity Date the aggregate principal amount
         of Revolving Loans outstanding on such date.

                  (b)      Tranche A Term Loan. The Borrower shall repay the
         outstanding principal amount of the Tranche A Term Loan in twenty (20)
         consecutive quarterly installments (as such installments may hereafter
         be adjusted as a result of prepayments made pursuant to Section 2.4) on
         the last Business Day of each month set forth below and on the
         applicable Maturity Date, unless accelerated sooner pursuant to Section
         9.2:

<TABLE>
<CAPTION>
 PAYMENT DATES         PRINCIPAL AMORTIZATION PAYMENT
-----------------------------------------------------
<S>                    <C>
December, 2003                   $1,000,000
-----------------------------------------------------
  March, 2004                    $1,000,000
-----------------------------------------------------
  June, 2004                     $1,000,000
-----------------------------------------------------
September, 2004                  $1,000,000
-----------------------------------------------------
December, 2004                   $1,250,000
-----------------------------------------------------
  March, 2005                    $1,250,000
-----------------------------------------------------
  June, 2005                     $1,250,000
-----------------------------------------------------
September, 2005                  $1,250,000
</TABLE>

                                       50

<PAGE>

<TABLE>
<S>                              <C>
-------------------------------------------
December, 2005                   $1,500,000
-------------------------------------------
  March, 2006                    $1,500,000
-------------------------------------------
  June, 2006                     $1,500,000
-------------------------------------------
September, 2006                  $1,500,000
-------------------------------------------
December, 2006                   $1,750,000
-------------------------------------------
  March, 2007                    $1,750,000
-------------------------------------------
  June, 2007                     $1,750,000
-------------------------------------------
September, 2007                  $1,750,000
-------------------------------------------
December, 2007                   $2,000,000
-------------------------------------------
  March, 2008                    $2,000,000
-------------------------------------------
  June, 2008                     $2,000,000
-------------------------------------------
 Maturity Date                   $2,000,000
===========================================
</TABLE>

                  (c)      Tranche B Term Loan. The Borrower shall repay the
         outstanding principal amount of the Tranche B Term Loan in twenty-four
         (24) consecutive quarterly installments (as such installments may
         hereafter be adjusted as a result of prepayments made pursuant to
         Section 2.4) on the last Business Day of each month set forth below and
         on the applicable Maturity Date, unless accelerated sooner pursuant to
         Section 9.02:

<TABLE>
<CAPTION>
 PAYMENT DATES         PRINCIPAL AMORTIZATION PAYMENT
-----------------------------------------------------
<S>                    <C>
December, 2003                    $250,000
-----------------------------------------------------
  March, 2004                     $250,000
-----------------------------------------------------
  June, 2004                      $250,000
-----------------------------------------------------
September, 2004                   $250,000
-----------------------------------------------------
December, 2004                    $250,000
-----------------------------------------------------
  March, 2005                     $250,000
-----------------------------------------------------
  June, 2005                      $250,000
-----------------------------------------------------
September, 2005                   $250,000
-----------------------------------------------------
December, 2005                    $250,000
-----------------------------------------------------
  March, 2006                     $250,000
-----------------------------------------------------
  June, 2006                      $250,000
-----------------------------------------------------
September, 2006                   $250,000
-----------------------------------------------------
December, 2006                    $250,000
-----------------------------------------------------
  March, 2007                     $250,000
-----------------------------------------------------
  June, 2007                      $250,000
-----------------------------------------------------
September, 2007                   $250,000
-----------------------------------------------------
December, 2007                    $250,000
-----------------------------------------------------
  March, 2008                     $250,000
-----------------------------------------------------
  June, 2008                      $250,000
-----------------------------------------------------
September, 2008                   $250,000
-----------------------------------------------------
December, 2008                    $250,000
-----------------------------------------------------
  March, 2009                     $250,000
</TABLE>

                                       51

<PAGE>

<TABLE>
<S>                              <C>
  June, 2009                     $ 250,000
--------------------------------------------
 Maturity Date                   $34,250,000
============================================
</TABLE>

         2.7      INTEREST.

                  (a)      Subject to the provisions of subsection (b) below,
         (i) each Eurodollar Rate Loan shall bear interest on the outstanding
         principal amount thereof for each Interest Period at a rate per annum
         equal to the Eurodollar Rate for such Interest Period plus the
         Applicable Percentage; and (ii) each Base Rate Loan shall bear interest
         on the outstanding principal amount thereof from the applicable
         borrowing date to the payment date at a rate per annum equal to the
         Base Rate plus the Applicable Percentage.

                  (b)      If any amount payable by the Borrower under any
         Credit Document is not paid when due (after the expiration of any
         applicable grace periods), whether at stated maturity, by acceleration
         or otherwise, such amount shall thereafter bear interest at a
         fluctuating interest rate per annum at all times equal to the Default
         Rate to the fullest extent permitted by applicable Laws. Furthermore,
         while any Event of Default exists, after written notice to the
         Borrower, the Borrower shall pay (i) interest on the principal amount
         of all outstanding Credit Party Obligations which bear interest at a
         fluctuating interest rate per annum at all times equal to the Default
         Rate to the fullest extent permitted by applicable Laws and (ii) all
         Letter of Credit fees and other fees payable pursuant to Section 2.3(i)
         and (j) shall accrue at a per annum rate 2% greater than the rate which
         would otherwise be applicable. Accrued and unpaid interest on past due
         amounts (including interest on past due interest) shall be due and
         payable upon demand.

                  (c)      Interest on each Loan shall be due and payable in
         arrears on each Interest Payment Date applicable thereto and at such
         other times as may be specified herein. Interest hereunder shall be due
         and payable in accordance with the terms hereof before and after
         judgment, and before and after the commencement of any proceeding under
         any Debtor Relief Law.

         2.8      FEES.

         In addition to certain fees described in subsections (i) and (j) of
Section 2.3:

                  (a)      Commitment Fee. The Borrower shall pay to the
         Administrative Agent for the account of each Lender in accordance with
         its Pro Rata Share, a commitment fee (the "Commitment Fee") equal to
         the Applicable Percentage times the actual daily amount by which the
         Aggregate Revolving Commitments exceed the Total Revolving
         Outstandings. The Commitment Fee shall accrue at all times during the
         Availability Period, including at any time during which one or more of
         the conditions in Section 5 is not met, and shall be due and payable
         quarterly in arrears on the last Business Day of each March, June,
         September and December, commencing with the first such date to occur
         after the Closing Date, and on the applicable Maturity Date. The
         Commitment Fee shall be calculated quarterly in arrears, and if there
         is any change in the Applicable

                                       52
<PAGE>

         Percentage during any quarter, the actual daily amount shall be
         computed and multiplied by the Applicable Percentage separately for
         each period during such quarter that such Applicable Percentage was in
         effect.

                  (b)      Other Fees.

                           (i)      The Borrower shall pay to the Arranger and
                  the Administrative Agent for their own respective accounts
                  fees in the amounts and at the times specified in the Fee
                  Letter. Such fees shall be fully earned when paid and shall
                  not be refundable for any reason whatsoever.

                           (ii)     The Borrower shall pay to the Lenders such
                  fees as shall have been separately agreed upon in writing in
                  the amounts and at the times so specified. Such fees shall be
                  fully earned when paid and shall not be refundable for any
                  reason whatsoever.

         2.9      COMPUTATION OF INTEREST AND FEES.

         All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America's "prime rate" shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue
on a Loan, or any portion thereof, for the day on which the Loan or such portion
is paid; provided that any Loan that is repaid on the same day on which it is
made shall, subject to Section 2.11(a), bear interest for one (1) day.

         2.10     EVIDENCE OF DEBT.

                  (a)      The Credit Extensions made by each Lender shall be
         evidenced by one or more accounts or records maintained by such Lender
         and by the Administrative Agent in the ordinary course of business. The
         accounts or records maintained by the Administrative Agent and each
         Lender shall be conclusive absent manifest error of the amount of the
         Credit Extensions made by the Lenders to the Borrower and the interest
         and payments thereon. Any failure to so record or any error in doing so
         shall not, however, limit or otherwise affect the obligation of the
         Borrower hereunder to pay any amount owing with respect to the Credit
         Party Obligations. In the event of any conflict between the accounts
         and records maintained by any Lender and the accounts and records of
         the Administrative Agent in respect of such matters, the accounts and
         records of the Administrative Agent shall control in the absence of
         manifest error. Upon the request of any Lender made through the
         Administrative Agent, the Borrower shall execute and deliver to such
         Lender (through the Administrative Agent) a promissory note which shall
         evidence such Lender's Loans in addition to such accounts or records.
         Each such promissory note shall (i) in the case of Revolving Loans, be
         in the form of Exhibit D-1 (as amended, modified, restated,
         supplemented, extended, renewed, or replaced from time to

                                       53

<PAGE>

         time, a "Revolving Note"), (ii) in the case of the Tranche A Term Loan,
         be in the form of Exhibit D-2 (as amended, modified, restated,
         supplemented, extended, renewed, or replaced from time to time, a
         "Tranche A Term Note") and (iii) in the case of the Tranche B Term
         Loan, be in the form of Exhibit D-3 (as amended, modified, restated,
         supplemented, extended, renewed, or replaced from time to time, a
         "Tranche B Term Note"). Each Lender may attach schedules to its Note or
         Notes and endorse thereon the date, Type (if applicable), amount and
         maturity of its Loans and payments with respect thereto.

                  (b)      In addition to the accounts and records referred to
         in subsection (a), each Lender and the Administrative Agent shall
         maintain in accordance with its usual practice accounts or records
         evidencing the purchases and sales by such Lender of participations in
         Letters of Credit. In the event of any conflict between the accounts
         and records maintained by the Administrative Agent and the accounts and
         records of any Lender in respect of such matters, the accounts and
         records of the Administrative Agent shall control in the absence of
         manifest error.

         2.11     PAYMENTS GENERALLY.

                  (a)      Subject to Section 3.1, all payments to be made by
         the Borrower shall be made without condition or deduction for any
         counterclaim, defense, recoupment or setoff. Except as otherwise
         expressly provided herein, all payments by the Borrower hereunder shall
         be made to the Administrative Agent, for the account of the respective
         Lenders or the L/C Issuer to which such payment is owed, at the
         Administrative Agent's Office in Dollars and in immediately available
         funds, not later than 2:00 p.m. on the date specified herein. The
         Administrative Agent will promptly distribute to the L/C Issuer and/or
         each Lender its Pro Rata Share (or other applicable share as provided
         herein) of such payment in like funds as received by wire transfer to
         such Lender's Lending Office. All payments received by the
         Administrative Agent after 2:00 p.m. shall be deemed received on the
         next succeeding Business Day and any applicable interest or fee shall
         continue to accrue.

                  (b)      If any payment to be made by the Borrower shall come
         due on a day other than a Business Day, payment shall be made on the
         next following Business Day, and such extension of time shall be
         reflected in computing interest or fees, as the case may be.

                  (c)      Unless the Borrower or any Lender has notified the
         Administrative Agent, prior to the date any payment is required to be
         made by it to the Administrative Agent hereunder, that the Borrower or
         such Lender, as the case may be, will not make such payment, the
         Administrative Agent may assume that the Borrower or such Lender, as
         the case may be, has timely made such payment and may (but shall not be
         so required to), in reliance thereon, make available a corresponding
         amount to the Person entitled thereto. If and to the extent that such
         payment was not in fact made to the Administrative Agent in immediately
         available funds, then:

                           (i)      if the Borrower failed to make such payment,
                  each Lender shall forthwith on demand repay to the
                  Administrative Agent the portion of such

                                       54

<PAGE>

                  assumed payment that was made available to such Lender in
                  immediately available funds, together with interest thereon in
                  respect of each day from and including the date such amount
                  was made available by the Administrative Agent to such Lender
                  to the date such amount is repaid to the Administrative Agent
                  in immediately available funds at the Federal Funds Rate from
                  time to time in effect; and

                           (ii)     if any Lender failed to make such payment,
                  such Lender shall forthwith on demand pay to the
                  Administrative Agent the amount thereof in immediately
                  available funds, together with interest thereon for the period
                  from the date such amount was made available by the
                  Administrative Agent to the Borrower to the date such amount
                  is recovered by the Administrative Agent (the "Compensation
                  Period") at a rate per annum equal to the Federal Funds Rate
                  from time to time in effect. If such Lender pays such amount
                  to the Administrative Agent, then such amount shall constitute
                  such Lender's Loan included in the applicable Borrowing. If
                  such Lender does not pay such amount forthwith upon the
                  Administrative Agent's demand therefor, the Administrative
                  Agent may make a demand therefor upon the Borrower, and the
                  Borrower shall pay such amount to the Administrative Agent,
                  together with interest thereon for the Compensation Period at
                  a rate per annum equal to the rate of interest applicable to
                  the applicable Borrowing. Nothing herein shall be deemed to
                  relieve any Lender from its obligation to fulfill its
                  Commitment or to prejudice any rights which the Administrative
                  Agent or the Borrower may have against any Lender as a result
                  of any default by such Lender hereunder.

                  A notice of the Administrative Agent to any Lender or the
         Borrower with respect to any amount owing under this subsection (c)
         shall be conclusive, absent manifest error.

                  (d)      If any Lender makes available to the Administrative
         Agent funds for any Loan to be made by such Lender as provided in the
         foregoing provisions of this Section 2, and such funds are not made
         available to the Borrower by the Administrative Agent because the
         conditions to the applicable Credit Extension set forth in Section 5
         are not satisfied or waived in accordance with the terms hereof, the
         Administrative Agent shall promptly return such funds (in like funds as
         received from such Lender) to such Lender, without interest.

                  (e)      The obligations of the Lenders hereunder to make
         Loans and to fund participations in Letters of Credit are several and
         not joint. The failure of any Lender to make any Loan or to fund any
         such participation on any date required hereunder shall not relieve any
         other Lender of its corresponding obligation to do so on such date, and
         no Lender shall be responsible for the failure of any other Lender to
         so make its Loan or purchase its participation.

                  (f)      Nothing herein shall be deemed to obligate any Lender
         to obtain the funds for any Loan in any particular place or manner or
         to constitute a representation by any

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<PAGE>

         Lender that it has obtained or will obtain the funds for any Loan in
         any particular place or manner.

         2.12     SHARING OF PAYMENTS.

         If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Loans made by it, or the participations in L/C
Obligations held by it, any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its ratable share
(or other share contemplated hereunder) thereof, such Lender shall immediately
(a) notify the Administrative Agent of such fact, and (b) purchase from the
other Lenders such participations in the Loans made by them and/or such
subparticipations in the participations in L/C Obligations held by them, as the
case may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Loans or such participations, as the case may
be, pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender under any
of the circumstances described in Section 11.6 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered,
without further interest thereon. The Borrower agrees that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by Law, exercise all its rights of payment (including the right of
set-off, but subject to Section 11.9) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation. The Administrative Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders following
any such purchases or repayments. Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right to
give all notices, requests, demands, directions and other communications under
this Credit Agreement with respect to the portion of the Credit Party
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Credit Party Obligations purchased.

                                    SECTION 3

                     TAXES, YIELD PROTECTION AND ILLEGALITY

         3.1      TAXES.

                  (a)      Any and all payments by any Credit Party to or for
         the account of the Administrative Agent or any Lender under any Credit
         Document shall be made free and clear of and without deduction for any
         and all present or future taxes, duties, levies, imposts, deductions,
         assessments, fees, withholdings or similar charges, and all liabilities
         with respect thereto, excluding, in the case of the Administrative
         Agent and each Lender,

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<PAGE>

         taxes imposed on or measured by its overall net income, branch profit
         taxes and franchise taxes imposed on it (in lieu of net income taxes),
         by the jurisdiction (or any political subdivision thereof) under the
         Laws of which the Administrative Agent or such Lender, as the case may
         be, is organized or maintains a lending office (all such non-excluded
         taxes, duties, levies, imposts, deductions, assessments, fees,
         withholdings or similar charges, and liabilities being hereinafter
         referred to as "Taxes"). If any Credit Party shall be required by any
         Laws to deduct any Taxes from or in respect of any sum payable under
         any Credit Document to the Administrative Agent or any Lender, (i)
         except as provided in Section 11.15(a), the sum payable shall be
         increased as necessary so that after making all required deductions
         (including deductions applicable to additional sums payable under this
         Section), each of the Administrative Agent and such Lender receives an
         amount equal to the sum it would have received had no such deductions
         been made, (ii) such Credit Party shall make such deductions, (iii)
         such Credit Party shall pay the full amount deducted to the relevant
         taxation authority or other authority in accordance with applicable
         Laws, and (iv) within thirty (30) days after the date of such payment,
         such Credit Party shall furnish to the Administrative Agent (which
         shall forward the same to such Lender) the original or a certified copy
         of a receipt evidencing payment thereof.

                  (b)      In addition, the Borrower agrees to pay any and all
         present or future stamp, court or documentary taxes and any other
         excise or property taxes or charges or similar levies which arise from
         any payment made under any Credit Document or from the execution,
         delivery, performance, enforcement or registration of, or otherwise
         with respect to, any Credit Document (hereinafter referred to as "Other
         Taxes").

                  (c)      If the Borrower shall be required to deduct or pay
         any Taxes or Other Taxes from or in respect of any sum payable under
         any Credit Document to the Administrative Agent or any Lender, the
         Borrower shall also pay to the Administrative Agent or to such Lender,
         as the case may be, at the time interest is paid, such additional
         amount that the Administrative Agent or such Lender specifies is
         necessary to preserve the after-tax yield (after factoring in all
         taxes, including taxes imposed on or measured by net income) that the
         Administrative Agent or such Lender would have received if such Taxes
         or Other Taxes had not been imposed.

                  (d)      The Borrower agrees to indemnify the Administrative
         Agent and each Lender for (i) the full amount of Taxes and Other Taxes
         (including any Taxes or Other Taxes imposed or asserted by any
         jurisdiction on amounts payable under this Section) paid by the
         Administrative Agent and such Lender with respect to amounts received
         under any Credit Document, (ii) amounts payable under Section 3.1(c)
         and (iii) any liability (including additions to tax, penalties,
         interest and expenses) arising therefrom or with respect thereto;
         provided, that the Borrower shall not be required to reimburse the
         Administrative Agent or such Lender in respect of interest, penalties
         or additions to tax attributable to Taxes if such interest, penalties
         or additions to tax are attributable to the gross negligence or willful
         misconduct of the Person seeking reimbursement. Payment under this
         subsection (d) shall be made within thirty (30) days after the date the
         Lender or the Administrative Agent makes demand therefor.

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<PAGE>

                  (e)      If any Lender determines in its reasonable discretion
         that it has actually received any refund of Taxes in connection with
         any deduction or withholding or payment of any additional amount by the
         Borrower pursuant to this Section 3.1, such Person shall reimburse the
         Borrower in an amount equal to such refund, on an after-tax basis and
         net of all expenses incurred by such Person in connection with
         obtaining such refund. The Borrower shall return such amount to the
         applicable Person in the event that such Person is required to repay
         such refund of Taxes. Nothing contained in this Section 3.1(e) shall
         interfere with the right of any Lender to arrange its tax affairs in
         whatever manner it deems fit or require such Person to disclose any
         information or any computations relating to its tax affairs.

         3.2      ILLEGALITY.

         If any Lender reasonably determines that as a result of any Law that
becomes effective on or after the Closing Date, or any change on or after the
Closing Date in or in the interpretation of any Law, in each case that is
applicable to or binding up on such Lender, has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to
determine or charge interest rates based upon the Eurodollar Rate, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
any obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such
Lender notifies the Administrative Agent and the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
the Borrower shall, upon demand from such Lender (with a copy to the
Administrative Agent), prepay or convert all Eurodollar Rate Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted.
Each Lender agrees to designate a different Lending Office if such designation
will avoid the need for such notice and will not, in the good faith judgment of
such Lender, otherwise be materially disadvantageous to such Lender.

         3.3      INABILITY TO DETERMINE RATES.

         If the Required Lenders reasonably determine that by reason of
circumstances arising after the Closing Date adequate and reasonable means do
not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for
any requested Interest Period with respect to a proposed Eurodollar Rate Loan
does not adequately and fairly reflect the cost to such Lenders of funding such
Loan, the Administrative Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such
notice, the Borrower may revoke without premium or penalty any pending request
for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a
Borrowing of

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<PAGE>

Base Rate Loans in the amount specified therein and any outstanding Eurodollar
Rate Loans shall be converted on the last day of the then current Interest
Period to Base Rate Loans.

         3.4      INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY; RESERVES
                  ON EURODOLLAR RATE LOANS.

                  (a)      If any Lender reasonably determines that as a result
         of any Law that becomes effective on or after the Closing Date, or any
         change on or after the Closing Date in or in the interpretation of any
         Law, in each case that is applicable to or binding upon such Lender, or
         such Lender's compliance therewith on or after the Closing Date, there
         shall be any increase in the cost to such Lender (by an amount deemed
         material by such Lender) of agreeing to make or making, funding or
         maintaining Eurodollar Rate Loans or (as the case may be) issuing or
         participating in Letters of Credit, or a reduction in the amount
         received or receivable by such Lender (by an amount deemed material by
         such Lender) in connection with any of the foregoing (excluding for
         purposes of this subsection (a) any such increased costs or reduction
         in amount resulting from (i) Taxes or Other Taxes (as to which Section
         3.1 shall govern), (ii) changes in the basis of taxation of overall net
         income or overall gross income by the United States or any foreign
         jurisdiction or any political subdivision of either thereof under the
         Laws of which such Lender is organized or has its Lending Office, and
         (iii) reserve requirements contemplated by Section 3.4(c)), then from
         time to time within twenty (20) days of written demand by such Lender
         (with a copy to the Administrative Agent), the Borrower shall pay to
         such Lender, subject to Section 3.6(a), such additional amounts as will
         compensate such Lender for such increased cost or reduction.

                  (b)      If any Lender reasonably determines that any Law
         regarding capital adequacy that becomes effective on or after the
         Closing Date, or any change on or after the Closing Date in any Law
         regarding capital adequacy or in the interpretation thereof, in each
         case that is applicable to or binding upon such Lender, or compliance
         by such Lender (or its Lending Office) therewith on or after the
         Closing Date, has the effect of reducing the rate of return on the
         capital of such Lender or any corporation controlling such Lender (by
         an amount deemed material by such Lender) as a consequence of such
         Lender's obligations hereunder (taking into consideration its policies
         with respect to capital adequacy and such Lender's desired return on
         capital) below that which such Lender or corporation could have
         achieved by for such effectiveness, change or compliance, then from
         time to time within twenty (20) days of written demand by such Lender
         (which demand such Lender shall deliver a copy of to the Administrative
         Agent), the Borrower shall pay to such Lender, subject to Section
         3.6(a), such additional amounts as will compensate such Lender for such
         reduction.

                  (c)      The Borrower shall pay to each Lender, as long as
         such Lender shall be required to maintain reserves with respect to
         liabilities or assets consisting of or including Eurocurrency funds or
         deposits (currently known as "Eurocurrency liabilities"), additional
         interest on the unpaid principal amount of each Eurodollar Rate Loan
         equal to the actual costs of such reserves allocated to such Loan by
         such Lender (as determined by such Lender in good faith, which
         determination shall be conclusive absent manifest

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<PAGE>

         error), which shall be due and payable on each date on which interest
         is payable on such Loan, provided the Borrower shall have received at
         least fifteen (15) days' prior notice (with a copy to the
         Administrative Agent) of such additional interest from such Lender. If
         a Lender fails to give notice fifteen (15) days prior to the relevant
         Interest Payment Date, such additional interest shall be due and
         payable fifteen (15) days from receipt of such notice.

         3.5      FUNDING LOSSES.

         Within twenty (20) days of written demand by any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

                  (a)      any continuation, conversion, payment or prepayment
         of any Loan other than a Base Rate Loan on a day other than the last
         day of the Interest Period for such Loan (whether voluntary, mandatory,
         automatic, by reason of acceleration, or otherwise);

                  (b)      any failure by the Borrower (for a reason other than
         the failure of such Lender to make a Loan) to borrow, continue or
         convert any Loan other than a Base Rate Loan on the date or in the
         amount notified by the Borrower; or

                  (c)      any prepayment of a Eurodollar Rate Loan due to any
         assignment of a Eurodollar Rate Loan on a day other than the last day
         of the Interest Period therefor as a result of a request by the
         Borrower pursuant to Section 11.16.

The compensation payable under this Section 3.5 to any applicable Lender shall
be equal to (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrower, convert or continue to
the last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure), in each case at the applicable rate of interest for
such Eurodollar Rate Loan provided for herein (excluding, however, the
Applicable Percentage included therein) minus (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. The Borrower shall also pay
any customary administrative fees charged by such Lender in connection with the
foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.5, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

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<PAGE>

         3.6      MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

                  (a)      Any request for compensation under this Section 3
         shall be accompanied by a certificate of the Administrative Agent or
         any Lender claiming compensation under this Section 3 setting forth the
         additional amount or amounts to be paid to it hereunder (and, in
         reasonable detail, the calculation thereof and/or the basis thereof, to
         the extent applicable). Any such certificate shall be conclusive in the
         absence of manifest error. In determining such amount, the
         Administrative Agent or such Lender may use any reasonable averaging
         and attribution methods.

                  (b)      Upon (i) any Lender making a claim for compensation
         under Section 3.1 or 3.4 (or the Borrower being required to pay an
         additional amount to any Lender or Governmental Authority for the
         account of any Lender under Section 3.4), (ii) any Lender giving notice
         under Section 3.2 of its inability to make, fund or maintain Eurodollar
         Rate Loans, to the extent only such Lender is unable to make, fund or
         maintain Eurodollar Rate Loans at such time, (iii) any Lender not
         making its ratable share of a Loan borrowing available or any Lender
         failing to participate in L/C Obligations or (iv) any Lender becoming
         and continuing as a Defaulting Lender, the Borrower may replace such
         Lender in accordance with Section 11.16.

                  (c)      If any Credit Party is required to pay additional
         amounts to or for the account of any Lender pursuant to Section 3.1 or
         Section 3.4, then such Lender will agree to use reasonable efforts to
         change the jurisdiction of its applicable Lending Office so as to
         eliminate or reduce any such additional payment which may thereafter
         accrue if such change, in the good faith, reasonable judgment of such
         Lender, is not otherwise materially disadvantageous to such Lender.

                  (d)      The Borrower shall not be obligated to indemnify or
         reimburse the Administrative Agent or any Lender for any amounts
         pursuant to Section 3.1 or 3.4 for periods occurring prior to the 180th
         day before the giving of written demand for compensation of such
         amounts by the Administrative Agent or such Lender.

         3.7      SURVIVAL.

         All of the Borrower's obligations under this Section 3 shall survive
termination of the Commitments and repayment of all other Credit Party
Obligations hereunder.

                                    SECTION 4

                                    GUARANTY

         4.1      GUARANTY OF PAYMENT.

         Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Secured Swap Contract, and
the Administrative Agent as

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<PAGE>

hereinafter provided, as primary obligor and not as surety, the prompt payment
of the Credit Party Obligations in full when due (whether at stated maturity, as
a mandatory prepayment, by acceleration, as a mandatory cash collateralization
or otherwise, giving effect to any applicable grace periods) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Credit Party Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise, giving effect to any applicable grace periods),
the Guarantors will, jointly and severally, promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Credit Party Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise,
giving effect to any applicable grace periods) in accordance with the terms of
such extension or renewal.

         Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Secured Swap Contracts, the obligations of
each Guarantor under this Credit Agreement and the other Credit Documents shall
be limited to an aggregate amount equal to the largest amount that would not
render such obligations subject to avoidance under the Debtor Relief Laws or any
comparable provisions of any applicable state Law.

         4.2      CREDIT PARTY OBLIGATIONS UNCONDITIONAL.

         The obligations of the Guarantors under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Secured
Swap Contracts, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable Law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor for amounts paid under this Section 4 until
such time as the Credit Party Obligations (other than contingent indemnity
obligations which by the terms thereof are stated to survive termination of the
Credit Documents) have been Fully Satisfied. Without limiting the generality of
the foregoing, it is agreed that, to the fullest extent permitted by Law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:

                  (a)      at any time or from time to time, without notice to
         any Guarantor, the time for any performance of or compliance with any
         of the Credit Party Obligations shall be extended, or such performance
         or compliance shall be waived;

                  (b)      any of the acts mentioned in any of the provisions of
         any of the Credit Documents, any Secured Swap Contract, or any other
         agreement or instrument referred to in the Credit Documents or such
         Secured Swap Contracts shall be done or omitted;

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<PAGE>

                  (c)      the maturity of any of the Credit Party Obligations
         shall be accelerated, or any of the Credit Party Obligations shall be
         modified, supplemented or amended in any respect, or any right under
         any of the Credit Documents, any Secured Swap Contract, or any other
         agreement or instrument referred to in the Credit Documents or such
         Secured Swap Contracts shall be waived or any other guarantee of any of
         the Credit Party Obligations or any security therefor shall be
         released, impaired or exchanged in whole or in part or otherwise dealt
         with;

                  (d)      any Lien granted to, or in favor of, the
         Administrative Agent or any Lender or Lenders as security for any of
         the Credit Party Obligations shall fail to attach or be perfected; or

                  (e)      any of the Credit Party Obligations shall be
         determined to be void or voidable (including, without limitation, for
         the benefit of any creditor of any Guarantor) or shall be subordinated
         to the claims of any Person (including, without limitation, any
         creditor of any Guarantor).

         With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Administrative Agent or any
Lender exhaust any right, power or remedy or proceed against any Person under
any of the Credit Documents, any Secured Swap Contract, or any other agreement
or instrument referred to in the Credit Documents or such Secured Swap
Contracts, or against any other Person under any other guarantee of, or security
for, any of the Credit Party Obligations.

         4.3      REINSTATEMENT.

         The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar Law.

         4.4      CERTAIN ADDITIONAL WAIVERS.

         Each Guarantor agrees that such Guarantor shall have no right of
recourse to security for the Credit Party Obligations, except through the
exercise of rights of subrogation pursuant to Section 4.2 and through the
exercise of rights of contribution pursuant to Section 4.6.

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<PAGE>

         4.5      REMEDIES.

         The Guarantors agree that, to the fullest extent permitted by Law, as
between the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, the Credit Party Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 (and shall be deemed to
have become automatically due and payable in the circumstances provided in
Section 9.2) for purposes of Section 4.1 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors acknowledge and agree that their obligations hereunder are
secured in accordance with the terms of the Collateral Documents and that the
Lenders and the Administrative Agent may exercise their remedies thereunder in
accordance with the terms thereof.

         4.6      RIGHTS OF CONTRIBUTION.

         The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable Law. Such
contribution rights shall be subordinate and subject in right of payment to the
Credit Party Obligations and no Credit Party shall exercise such rights of
contribution until all Credit Party Obligations have been paid in full and the
Commitments terminated.

         4.7      GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.

         The Guaranty in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.

                                    SECTION 5

                              CONDITIONS PRECEDENT

         5.1      CLOSING CONDITIONS.

         The obligation of each Lender to enter into this Credit Agreement and
make the initial Credit Extension is subject to satisfaction (or waiver by each
of the Lenders) of the following conditions:

                  (a)      Executed Credit Documents. Receipt by the
         Administrative Agent of duly executed copies of (i) this Credit
         Agreement, (ii) the Notes, (iii) the Collateral Documents and (iv) all
         other Credit Documents, each in form and substance reasonably
         acceptable to the Administrative Agent in its sole discretion.

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<PAGE>

                  (b)      Corporate Documents. Receipt by the Administrative
         Agent of the following:

                           (i)      Charter Documents. Copies of the articles or
                  certificates of incorporation, articles of organization or
                  other charter documents of each Credit Party certified to be
                  true and complete as of a recent date by the appropriate
                  Governmental Authority of the state or other jurisdiction of
                  its incorporation or organization and certified by a secretary
                  or assistant secretary of such Credit Party to be true and
                  correct as of the Closing Date;

                           (ii)     Bylaws; Operating Agreement. A copy of the
                  bylaws or operating agreement of each Credit Party certified
                  by a secretary or assistant secretary of such Credit Party to
                  be true and correct as of the Closing Date;

                           (iii)    Resolutions. Copies of resolutions of the
                  Board of Directors or their equivalent of each Credit Party
                  approving and adopting the Credit Documents to which it is a
                  party, the transactions contemplated therein and authorizing
                  execution and delivery thereof, certified by a secretary or
                  assistant secretary of such Credit Party to be true and
                  correct and in force and effect as of the Closing Date;

                           (iv)     Good Standing. Copies of certificates of
                  good standing, existence or its equivalent with respect to
                  each Credit Party certified as of a recent date by the
                  appropriate Governmental Authorities of the state or other
                  jurisdiction of incorporation or organization and each other
                  jurisdiction in which the failure to so qualify and be in good
                  standing would have a Material Adverse Effect; and

                           (v)      Incumbency. An incumbency certificate of
                  each Credit Party certified by a secretary or assistant
                  secretary to be true and correct as of the Closing Date.

                  (c)      Opinions of Counsel. The Administrative Agent shall
         have received, in each case dated as of the Closing Date:

                           (i)      a legal opinion of Skadden, Arps, Slate,
                  Meagher & Flom (Illinois) in form and substance reasonably
                  satisfactory to the Administrative Agent; and

                           (ii)     a legal opinion of special local counsel for
                  each Credit Party not incorporated or organized in the States
                  of Delaware or New York, in each case in form and substance
                  reasonably satisfactory to the Administrative Agent.

                  (d)      Personal Property Collateral. The Administrative
         Agent shall have received, in form and substance reasonably
         satisfactory to the Administrative Agent:

                           (i)      searches of Uniform Commercial Code ("UCC")
                  filings in the jurisdiction of incorporation or organization
                  of each Credit Party, the jurisdiction of the chief executive
                  office of each Credit Party and each jurisdiction where any

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                  Collateral is located or where a filing would have been made
                  in order to perfect the Administrative Agent's security
                  interest in the Collateral under previous versions of Article
                  9 of the UCC, copies of the financing statements on file in
                  such jurisdictions and evidence that no Liens exist other than
                  Permitted Liens;

                           (ii)     UCC financing statements for each
                  appropriate jurisdiction as is necessary, in the
                  Administrative Agent's reasonable discretion, to perfect the
                  Administrative Agent's security interest in the Collateral;

                           (iii)    searches of ownership of intellectual
                  property in the appropriate governmental offices as reasonably
                  requested by the Administrative Agent and such patent,
                  trademark and copyright filings and recordings as are
                  reasonably necessary to perfect the security interest of the
                  Administrative Agent therein in the United States of America;

                           (iv)     all certificates, if any, evidencing any
                  certificated Capital Stock pledged to the Administrative Agent
                  pursuant to the Pledge Agreement, together with duly executed
                  in blank undated stock powers attached thereto; and

                           (v)      to the extent valued in excess of $250,000,
                  each instrument or chattel paper in the possession of a Credit
                  Party, as required by the Security Agreement, together with
                  allonges or assignments as may be reasonably necessary to
                  perfect the Administrative Agent's security interest in such
                  Collateral.

                  (e)      Real Property Collateral. The Administrative Agent
         shall have received, in form and substance reasonably satisfactory to
         the Administrative Agent:

                           (i)      Mortgages. Fully executed and notarized
                  amended and restated mortgages, deeds of trust or deeds to
                  secure debt (each a "Mortgage" and collectively the
                  "Mortgages") encumbering the fee interest of the Credit
                  Parties in each real property asset owned by a Credit Party
                  set forth on Schedule 5.1(e) (each a "Mortgage Property" and
                  collectively the "Mortgage Properties"), together with such
                  UCC-1 financing statements as are necessary with respect to
                  each such Mortgage Property;

                           (ii)     Leasehold Mortgages. Fully executed and
                  notarized leasehold mortgages, deeds of trust or deeds to
                  secure debt, or amendments to leasehold mortgages, deeds of
                  trust or deeds to secure debt (each a "Leasehold Mortgage" and
                  collectively the "Leasehold Mortgages") encumbering the
                  leasehold interest of the Credit Parties in each real property
                  asset leased by a Credit Party set forth on Schedule 5.1(e)
                  (each a "Leasehold Mortgage Property" and collectively the
                  "Leasehold Mortgage Properties"), together with such UCC-1
                  financing statements as are necessary with respect to each
                  such Leasehold Mortgage Property;

                           (iii)    Local Counsel Opinions. An opinion of
                  counsel (which counsel shall be reasonably satisfactory to the
                  Administrative Agent) in the state in which each

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                  Mortgage Property and Leasehold Mortgage Property is located
                  with respect to the enforceability of the Mortgages and
                  Leasehold Mortgages, standard remedies with respect thereto
                  and sufficiency of the form of UCC-1 financing statements to
                  be recorded or filed in such state and such other matters as
                  the Administrative Agent may reasonably request, in form and
                  substance reasonably satisfactory to the Administrative Agent;

                           (iv)     Title Policies. ALTA or other appropriate
                  form mortgagee title insurance policies (the "Mortgage
                  Policies"), or datedown endorsements to existing Mortgage
                  Policies, issued by the Title Insurance Company, in an amount
                  satisfactory to the Administrative Agent with respect to each
                  Real Property (which amount shall not, in any event, exceed
                  the fair market value of such Real Property), assuring the
                  Administrative Agent that the applicable Mortgages or
                  Leasehold Mortgages, as applicable, create valid and
                  enforceable mortgage liens on the respective Real Properties,
                  free and clear of all defects and encumbrances except
                  Permitted Liens, which Mortgage Policies shall be in form and
                  substance reasonably satisfactory to the Administrative Agent
                  and containing such endorsements as shall be reasonably
                  satisfactory to the Administrative Agent and for any other
                  matters that the Administrative Agent may reasonably request,
                  and providing affirmative insurance and such reinsurance as
                  the Administrative Agent may request, all of the foregoing in
                  form and substance reasonably satisfactory to the
                  Administrative Agent;

                           (v)      Surveys. To the extent required to obtain
                  Mortgage Policies (or datedown endorsements to existing
                  Mortgage Policies) containing no survey exception to coverage,
                  maps or plats of as-built surveys of the sites of the Real
                  Properties certified to the Administrative Agent and the Title
                  Insurance Company in a manner reasonably satisfactory to them,
                  dated a date satisfactory to the Administrative Agent and the
                  Title Insurance Company by an independent professional
                  licensed land surveyor reasonably satisfactory to the
                  Administrative Agent and the Title Insurance Company, which
                  maps or plats and the surveys on which they are based shall be
                  sufficient to delete any standard printed survey exception
                  contained in the applicable title policy and be made in
                  accordance with the Minimum Standard Detail Requirements for
                  Land Title Surveys jointly established and adopted by the
                  American Land Title Association and the American Congress on
                  Surveying and Mapping in 1992, and, without limiting the
                  generality of the foregoing, there shall be surveyed and shown
                  on such maps, plats or surveys the following: (A) the
                  locations on such sites of all the buildings, structures and
                  other improvements and the established building setback lines;
                  (B) the lines of streets abutting the sites and width thereof;
                  (C) all access and other easements appurtenant to the sites
                  necessary to use the sites; (D) all roadways, paths,
                  driveways, easements, encroachments and overhanging
                  projections and similar encumbrances affecting the site,
                  whether recorded, apparent from a physical inspection of the
                  sites or otherwise known to the surveyor; (E) any
                  encroachments on any adjoining property by the building
                  structures and improvements on the sites; and (F) if the site
                  is described as being on a filed map, a legend relating the
                  survey to said map; and

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                           (vi)     Flood Certificates. Certification from a
                  registered engineer or land surveyor or other evidence
                  reasonably acceptable to the Administrative Agent that none of
                  the improvements on the Real Properties are located within any
                  area designated by the Director of the Federal Emergency
                  Management Agency as a "special flood hazard" area or if any
                  improvements on the Real Properties are located within a
                  "special flood hazard" area, evidence of a flood insurance
                  policy from a company and in an amount reasonably satisfactory
                  to the Administrative Agent for the applicable portion of the
                  premises, naming the Administrative Agent, for the benefit of
                  the Lenders, as mortgagee.

                  (f)      Evidence of Insurance. Receipt by the Administrative
         Agent of copies of insurance policies or certificates of insurance of
         the Credit Parties evidencing liability and casualty insurance meeting
         the requirements set forth in the Credit Documents, including, but not
         limited to, naming the Administrative Agent as additional insured or
         loss payee on behalf of the Lenders.

                  (g)      Consents. Receipt by the Administrative Agent of
         evidence reasonably satisfactory to the Administrative Agent that the
         representation and warranty set forth in Section 6.6 is true and
         correct in all material respects as of the Closing Date.

                  (h)      Corporate Structure. The corporate capital and
         ownership structure of the Parent and its Subsidiaries shall be as
         described in Schedule 5.1(h).

                  (i)      Officer's Certificates. The Administrative Agent
         shall have received a certificate or certificates executed by the chief
         financial officer or treasurer of the Borrower as of the Closing Date
         stating that, immediately after giving effect to this Credit Agreement,
         the other Credit Documents and all the transactions contemplated
         therein to occur on such date, (i) no Default or Event of Default
         exists, (ii) all representations and warranties contained herein and in
         the other Credit Documents are true and correct in all material
         respects, and (iii) the Credit Parties are in compliance with each of
         the financial covenants set forth in Section 7.2 (calculated using the
         amount of Funded Debt outstanding on the Closing Date and the amounts
         for all other components of such financial covenant calculations as of
         the last day of the most recent month end prior to the Closing Date).

                  (j)      Fees and Expenses. Payment by the Credit Parties of
         the fees and expenses due and payable by them to the Lenders and the
         Administrative Agent, as set forth herein and in the Fee Letter.

                  (k)      Existing Credit Facility. The outstanding obligations
         under the Existing Credit Agreement shall have been refinanced in
         accordance with the terms of this Credit Agreement.

                  (l)      Financial Statements. The Lenders shall have received
         copies of the financial statements referenced in Section 6.1(a).

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         5.2      CONDITIONS TO ALL EXTENSIONS OF CREDIT.

         In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall the L/C Issuer be
required to issue or extend a Letter of Credit unless:

                  (a)      Notice. The Administrative Agent and, if applicable,
         the L/C Issuer shall have received a Request for Credit Extension in
         accordance with the requirements hereof.

                  (b)      Representations and Warranties. The representations
         and warranties made by the Credit Parties in any Credit Document are
         true and correct in all material respects at and as if made as of such
         date except to the extent they expressly relate to an earlier date.

                  (c)      No Default. No Default or Event of Default shall
         exist or be continuing either prior to or after giving effect thereto;
         provided, however, that the existence of any Default or Event of
         Default resulting from the failure of the Borrower to timely make a
         payment under the Construction Loan Documents shall not, in and of
         itself, constitute a failure to satisfy the conditions set forth in
         this subsection (c) in connection with a requested Revolving Loan the
         proceeds of which are to be applied to make such payment under the
         Construction Loan Documents on behalf of the Borrower in accordance
         with the terms of Section 2.2(b).

                  (d)      No Material Adverse Effect. There shall not have
         occurred any Material Adverse Effect since December 31, 2002.

                  (e)      Availability. Immediately after giving effect to the
         making of a Loan (and the application of the proceeds thereof) or to
         the issuance of a Letter of Credit, as the case may be, the Total
         Revolving Outstandings shall not exceed the Aggregate Revolving
         Commitments.

The delivery of each Request for Credit Extension (other than a Loan Notice
requesting only a conversion of Loans to the other Type or a continuation of
Eurodollar Rate Loans) shall constitute a representation and warranty by the
Borrower of the correctness of the matters specified in subsections (b), (c),
(d) and (e) above.

                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES

         The Credit Parties hereby represent to the Administrative Agent and
each Lender that:

         6.1      FINANCIAL CONDITION.

                  (a)      The audited consolidated balance sheets and income
         statements of (i) Packaging Holdings, L.L.C. and its Subsidiaries for
         fiscal years 2000 and 2001 and

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         (ii) the Parent and its Subsidiaries for fiscal year 2002 have
         heretofore been furnished to each Lender. Such financial statements
         (including the notes thereto) (i) have been audited by
         PricewaterhouseCoopers, (ii) have been prepared in accordance with GAAP
         consistently applied throughout the periods covered thereby and (iii)
         present fairly (on the basis disclosed in the footnotes to such
         financial statements) the consolidated financial condition, results of
         operations and cash flows of the Credit Parties covered by such
         financial statements as of such date and for such periods. The
         unaudited interim consolidated and consolidating balance sheets of the
         Parent and its Subsidiaries as of the end of, and the related unaudited
         interim consolidated and consolidating statements of earnings and of
         cash flows for, the six (6) month period ended June 30, 2003 have
         heretofore been furnished to each Lender. Such interim financial
         statements for each such quarterly period, (A) have been prepared in
         accordance with GAAP consistently applied throughout the periods
         covered thereby and (B) present fairly (on the basis disclosed in the
         footnotes to such financial statements) the consolidated and
         consolidating financial condition, results of operations and cash flows
         of the Parent and its Subsidiaries as of such date and for such
         periods, subject to normal year end audit adjustments. During the
         period from June 30, 2003 to and including the Closing Date, there has
         been no sale, transfer or other disposition by the Parent or any of its
         Subsidiaries of any material part of the business or property of the
         Parent and its Subsidiaries taken as a whole, and no purchase or other
         acquisition by any of them of any business or property (including any
         Capital Stock of any other Person) material in relation to the
         consolidated financial condition of the Parent and its Subsidiaries
         taken as a whole, in each case, which is not reflected in the foregoing
         financial statements or in the notes thereto and has not otherwise been
         disclosed in writing to the Lenders on or prior to the Closing Date.

                  (b)      The financial statements delivered to the Lenders
         pursuant to Section 7.1(a) and (b), (i) have been prepared in
         accordance with GAAP and (ii) present fairly (on the basis disclosed in
         the footnotes to such financial statements) the consolidated financial
         condition, results of operations and cash flows of the Parent and its
         Subsidiaries as of such date and for such periods, except in the case
         of financial statements delivered pursuant to Section 7.1(b), subject
         to normal year end audit adjustments and the absence of footnotes.

         6.2      NO MATERIAL CHANGE.

         Since December 31, 2002, there has been no development or event
relating to or affecting a Credit Party which has had or would be reasonably
expected to have a Material Adverse Effect.

         6.3      ORGANIZATION AND GOOD STANDING.

         Each Credit Party (a) is a corporation or limited liability company or
other legal entity duly incorporated or organized, validly existing and in good
standing under the Laws of the State (or other jurisdiction) of its
incorporation or organization, (b) is duly qualified and in good standing as a
foreign organization and authorized to do business in every jurisdiction where
the failure to be so qualified, in good standing or authorized would have a
Material Adverse Effect and (c) has the requisite organizational power and
authority to own its Properties and to carry on its business as now conducted
and as proposed to be conducted.

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         6.4      DUE AUTHORIZATION.

         Each Credit Party (a) has the requisite organizational power and
authority to execute, deliver and perform this Credit Agreement and the other
Credit Documents to which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been authorized by
all necessary organizational action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.

         6.5      NO CONFLICTS.

         Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation, bylaws, articles of organization or operating agreement or other
organizational documents, as applicable, (b) materially violate, materially
contravene or materially conflict with any Law (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or materially conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the violation,
contravention or conflict of which, or default under, would have or might be
reasonably expected to have a Material Adverse Effect, or (d) result in or
require the creation of any Lien (other than Permitted Liens and those Liens
contemplated in or created in connection with the Credit Documents) upon or with
respect to its Properties.

         6.6      CONSENTS.

         Except for consents, approvals and authorizations and orders, filings,
registrations and qualifications (a) which have been obtained or made, (b) as
may be necessary to perfect the security interest of the Administrative Agent in
the Collateral to the extent required under the Collateral Documents and (c) the
failure of which to obtain or make would not reasonably be expected to have a
Material Adverse Effect, no consent, approval, authorization or order of, or
filing, registration or qualification with, any court or Governmental Authority
or third party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.

         6.7      ENFORCEABLE CREDIT PARTY OBLIGATIONS.

         This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium Laws or similar Laws relating to or affecting
creditors' rights generally or by general equitable principles.

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         6.8      NO DEFAULT.

         No Credit Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its Properties is bound
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and continues to
exist except as previously disclosed in writing to the Administrative Agent.

         6.9      OWNERSHIP.

         Other than Permitted Liens, each Credit Party is the owner of (free and
clear of all Liens) and has good and marketable title to, or has a valid
leasehold interest in or license to use, (a) all of its Mortgage Properties and
Leasehold Mortgage Properties (except as indicated on the Mortgage Policies
accepted by the Administrative Agent) and (b) all of its other Property
necessary for the conduct of its business.

         6.10     INDEBTEDNESS.

         The Credit Parties have no Indebtedness except (a) as disclosed in the
financial statements referenced in Section 6.1, (b) as set forth on Schedule
6.10 and (c) as otherwise permitted by this Credit Agreement.

         6.11     LITIGATION.

         There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Credit Party which would have or would be reasonably
expected to have a Material Adverse Effect.

         6.12     TAXES.

         Each Credit Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due and payable (including interest and
penalties) and (b) all other material taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) that are due and payable, except for such taxes (i)
which are not yet delinquent or (ii) that are being contested in good faith and
by proper proceedings, and against which adequate reserves are being maintained
in accordance with GAAP. To the knowledge of the Credit Parties, as of the
Closing Date, there are no material amounts claimed to be due against any of
them by any Governmental Authority.

         6.13     COMPLIANCE WITH LAW.

         Each Credit Party is in compliance with all Laws (including without
limitation Environmental Laws) applicable to it, or to its Properties, unless
such failure to comply would not have or would not be reasonably expected to
have a Material Adverse Effect.

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         6.14     ERISA.

         Except as would not result or be reasonably expected to result in a
Material Adverse Effect:

                  (a)      During the five-year period prior to the date on
         which this representation is made or deemed made: (i) no Termination
         Event has occurred, and, to the knowledge of the Credit Parties, no
         event or condition has occurred or exists as a result of which any
         Termination Event could reasonably be expected to occur, with respect
         to any Plan; (ii) no "accumulated funding deficiency," as such term is
         defined in Section 302 of ERISA and Section 412 of the Code, whether or
         not waived, has occurred with respect to any Plan; (iii) each Plan has
         been maintained, operated, and funded in compliance with its own terms
         and in material compliance with the provisions of ERISA, the Code, and
         any other applicable federal or state Laws; and (iv) no lien in favor
         of the PBGC or a Plan has arisen or is reasonably likely to arise on
         account of any Plan.

                  (b)      The actuarial present value of all "benefit
         liabilities" under each Single Employer Plan (determined within the
         meaning of Section 401(a)(2) of the Code, utilizing the actuarial
         assumptions used to fund such Plans), whether or not vested, did not,
         as of the last annual valuation date prior to the date on which this
         representation is made or deemed made, exceed the current value of the
         assets of such Plan allocable to such accrued liabilities.

                  (c)      Neither a Credit Party nor any ERISA Affiliate has
         incurred, or, to the knowledge of the Credit Parties, are reasonably
         expected to incur, any withdrawal liability under ERISA to any
         Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, any
         of its Subsidiaries nor any ERISA Affiliate has received any
         notification that any Multiemployer Plan is in reorganization (within
         the meaning of Section 4241 of ERISA), is insolvent (within the meaning
         of Section 4245 of ERISA), or has been terminated (within the meaning
         of Title IV of ERISA), and no Multiemployer Plan is, to the best
         knowledge of the Credit Parties, reasonably expected to be in
         reorganization, insolvent, or terminated.

                  (d)      No prohibited transaction (within the meaning of
         Section 406 of ERISA or Section 4975 of the Code) or breach of
         fiduciary responsibility has occurred with respect to a Plan which has
         subjected or is reasonably likely to subject any Credit Party or any
         ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
         502(l) of ERISA or Section 4975 of the Code, or under any agreement or
         other instrument pursuant to which any Credit Party or any ERISA
         Affiliate has agreed or is required to indemnify any person against any
         such liability.

                  (e)      The present value (determined using actuarial and
         other assumptions which are reasonable with respect to the benefits
         provided and the employees participating) of the liability of each
         Credit Party and each ERISA Affiliate for post-retirement welfare
         benefits to be provided to their current and former employees under
         Plans which are welfare benefit plans (as defined in Section 3(1) of
         ERISA), net of all assets under all such Plans allocable to such
         benefits, are reflected on the most recent audited financial statements
         of the Parent

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         and its Subsidiaries delivered pursuant to Section 5.1(l) or Section
         7.1(a) in accordance with FASB 106.

                  (f)      Each Plan which is a welfare plan (as defined in
         Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section
         4980B of the Code apply has been administered in material compliance
         with such sections.

         6.15     SUBSIDIARIES AS OF THE CLOSING DATE.

         Set forth on Schedule 6.15 is a complete and accurate list as of the
Closing Date of all Subsidiaries of each Credit Party. Information on Schedule
6.15 includes as of the Closing Date jurisdiction of incorporation or
organization, the number of shares of each class of Capital Stock outstanding,
the number and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or purchase and all
other similar rights with respect thereto as of the Closing Date. The
outstanding Capital Stock of all such Subsidiaries is (to the extent applicable)
validly issued, fully paid and non-assessable and is, to the extent owned by
each such Credit Party, directly or indirectly, free and clear of all Liens
(other than Permitted Liens and than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth in Schedule 6.15,
as of the Closing Date neither any Credit Party nor any Subsidiary thereof has
outstanding any securities convertible into or exchangeable for its Capital
Stock nor does any such Person have outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its Capital Stock. As of the Closing Date, none of
the Credit Parties owns any shares of Capital Stock in any Foreign Subsidiaries.

         6.16     USE OF PROCEEDS.

         The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.10. No proceeds of the Loans hereunder have been
or will be used (a) to acquire, directly or indirectly, any security in any
transaction which is subject to Sections 13 or 14 of the Exchange Act
(including, without limitation, Sections 13(d) and 14(d) thereof) or to
refinance any Indebtedness used to acquire any such securities or (b) for the
Acquisition of another Person unless such Acquisition is a Permitted
Acquisition.

         6.17     GOVERNMENT REGULATION.

                  (a)      No part of the Letters of Credit or proceeds of the
         Loans will be used, directly or indirectly, (i) for the purpose of
         purchasing or carrying any "margin stock" within the meaning of
         Regulation U, or (ii) for the purpose of purchasing or carrying or
         trading in any securities if, as a result thereof, the Administrative
         Agent would be required to take any action under Regulation T. If
         requested by any Lender or the Administrative Agent, the Borrower will
         furnish to the Administrative Agent and each Lender a statement to the
         foregoing effect in conformity with the requirements of FR Form U-1
         referred to in Regulation U. No Indebtedness being reduced or retired
         out of the proceeds of the Loans was or will be incurred for the
         purpose of purchasing or

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         carrying any margin stock within the meaning of Regulation U or any
         "margin security" within the meaning of Regulation T. "Margin stock"
         within the meaning of Regulation U does not constitute more than 25% of
         the value of the consolidated assets of the Credit Parties. None of the
         transactions contemplated by the Credit Documents (including, without
         limitation, the direct or indirect use of the proceeds of the Loans)
         will violate or result in a violation of the Securities Act, the
         Exchange Act, regulations issued pursuant to the Securities Act or the
         Exchange Act, or Regulation T, U or X.

                  (b)      No Credit Party is subject to regulation under the
         Public Utility Holding Company Act of 1935, the Federal Power Act or
         the Investment Company Act of 1940, each as amended. In addition, no
         Credit Party is (i) an "investment company" registered or required to
         be registered as such under the Investment Company Act of 1940, as
         amended, and, to the best of its knowledge, is not controlled (as such
         term is defined in the Investment Company Act of 1940, as amended) by
         such a company, or (ii) a "holding company", or a "subsidiary company"
         of a "holding company", or an "affiliate" of a "holding company" or of
         a "subsidiary" of a "holding company", within the meaning of the Public
         Utility Holding Company Act of 1935, as amended.

         6.18     ENVIRONMENTAL MATTERS.

                  (a)      Except as would not cause or reasonably be expected
         to cause a Material Adverse Effect:

                           (i)      Each of the Real Properties and all
                  operations at the Real Properties are in compliance with all
                  applicable Environmental Laws, and there is no violation of
                  any Environmental Law with respect to the Real Properties or
                  the businesses operated by the Credit Parties (the
                  "Businesses").

                           (ii)     No Credit Party has received any written
                  notice of, or inquiry from any Governmental Authority
                  regarding, any violation, alleged violation, non-compliance,
                  liability or potential liability regarding Hazardous Materials
                  or compliance with Environmental Laws with regard to any of
                  the Real Properties or the Businesses.

                           (iii)    Hazardous Materials have not been
                  transported or disposed of from the Real Properties, or
                  generated, treated, stored or disposed of at, on or under any
                  of the Real Properties or any other location, in each case by,
                  or on behalf or with the permission of, a Credit Party in a
                  manner that would give rise to liability under any applicable
                  Environmental Laws.

                           (iv)     No judicial proceeding or governmental or
                  administrative action is pending or, to the knowledge of a
                  Credit Party, threatened, under any Environmental Law to which
                  a Credit Party is a party, nor are there any consent decrees
                  or other decrees, consent orders, administrative orders or
                  other orders, or other administrative or judicial requirements
                  outstanding under any Environmental Law with respect to a
                  Credit Party, the Real Properties or the Businesses.

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                           (v)      There has been no release (including,
                  without limitation, disposal) or threat of release of
                  Hazardous Materials at or from the Real Properties, or arising
                  from or related to the operations of a Credit Party in
                  connection with the Real Properties or otherwise in connection
                  with the Businesses, in violation of or in amounts or in a
                  manner that could give rise to liability under Environmental
                  Laws.

                           (vi)     To the knowledge of the Credit Parties, no
                  Credit Party has assumed any liability of any Person (other
                  than another Credit Party) under any Environmental Law.

                  (b)      Each Credit Party has adopted procedures that are
         designed to (i) ensure that such Credit Party, any of its operations
         and each of the Real Properties owned or leased by such Credit Party
         comply with applicable Environmental Laws and (ii) minimize any
         liabilities or potential liabilities that such Credit Party, any of its
         operations and each of the Real Properties owned or leased by such
         Credit Party may have under applicable Environmental Laws.

         6.19     INTELLECTUAL PROPERTY.

         Each Credit Party owns, or has the legal right to use, all material
trademarks, service marks tradenames, patents, copyrights, technology, know-how,
processes and other trade secrets (the "Intellectual Property") owned or
licensed by it. Set forth on Schedule 6.19 is a list as of the Closing Date of
all registrations and applications for material Intellectual Property owned by
each Credit Party or that any Credit Party has the right to use and a list of
all license agreements to which a Credit Party is a party relating to material
Intellectual Property that any Credit Party has the right to use as of the
Closing Date. Except as provided on Schedule 6.19 or except as would not result
or be reasonably expected to result in a Material Adverse Effect, no claim has
been asserted by any Person against any Credit Party in writing and is pending
challenging or questioning the use of any Intellectual Property owned by a
Credit Party or that any Credit Party has a right to use or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party have
knowledge of any such claim, and to the Credit Parties' knowledge the use of any
Intellectual Property by the Credit Parties does not infringe on the rights of
any Person. Except as set forth on Schedule 6.19, as of the Closing Date, none
of the material Intellectual Property owned by a Credit Party is subject to any
licensing or franchise agreement.

         6.20     SOLVENCY.

         As of the Closing Date, each Credit Party (other than IPMC Acquisition,
L.L.C.) is and, after consummation of the transactions contemplated by this
Credit Agreement, will be Solvent. At any time after the Closing Date, the
Credit Parties on a consolidated basis are Solvent.

         6.21     INVESTMENTS.

         All Investments of each Credit Party are either Permitted Investments
or otherwise permitted by the terms of this Credit Agreement.

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<PAGE>

         6.22     LOCATION OF COLLATERAL.

         Set forth on Schedule 6.22(a) is a list as of the Closing Date of all
Real Properties with street address, county and state where located. Set forth
on Schedule 6.22(b) is a list as of the Closing Date of all locations where any
personal property of a Credit Party is located (other than personal property of
the Credit Parties not in excess of $100,000 in the aggregate), including county
and state where located. Set forth on Schedule 6.22(c) is a list as of the
Closing Date of the chief executive office and principal place of business of
each Credit Party.

         6.23     DISCLOSURE.

         Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or written statement on the date
as of which such agreement, financial statements, document, certificate or
statement is made, certified or furnished to the Lenders by any Credit Party
(including any officer or director of a Credit Party) in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein (in light of the circumstances in which they were
made), taken as a whole, not misleading; provided that projections and
assumptions expressed in the information, exhibits, reports, certificates,
statements and documents so furnished were reasonable based on the information
available at the time so furnished, but no Credit Party makes any representation
or warranty that such projections or assumptions will prove in the future to be
accurate or that any Credit Party will achieve the financial results reflected
therein.

         6.24     LICENSES, ETC.

         The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective businesses
as presently conducted, except where the failure to obtain and hold the same
would not have a Material Adverse Effect.

         6.25     COLLATERAL DOCUMENTS.

         The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens shall (upon the making of all filings and recording required) be perfected
security interests and Liens to the extent required under the Collateral
Documents, prior to all other Liens other than Permitted Liens. Each of the
representations and warranties made by the Credit Parties in the Collateral
Documents is true and correct in all material respects. Notwithstanding the
foregoing, it is understood that certain Collateral can only be perfected upon
the filing of adequate financing statements in appropriate filing offices and/or
the filing and/or recording of notices with the applicable Intellectual Property
recording offices.

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<PAGE>

         6.26     BURDENSOME RESTRICTIONS.

         No Credit Party is a party to any agreement or instrument or any
charter or corporate restriction which, individually or in the aggregate, would
have or be reasonably expected to have a Material Adverse Effect.

         6.27     LABOR CONTRACTS AND DISPUTES.

         Except as disclosed on Schedule 6.27 or except as would not cause or
reasonably be expected to cause a Material Adverse Effect, (a) there is no
collective bargaining agreement or other labor contract covering employees of
any Credit Party; (b) no union or other labor organization is seeking to
organize, or be recognized as, a collective bargaining unit of employees of any
Credit Party; and (c) there is no pending or, to any Credit Party's knowledge,
threatened strike, work stoppage, material unfair lease practice claim or other
material labor dispute against or affecting any Credit Party or its employees.

         6.28     BROKER'S FEES.

         None of the Credit Parties or any of their Subsidiaries has any
obligation to any Person in respect of any finder's, broker's, investment
banking or other similar fee in connection with any of the transactions
contemplated as of the Closing Date under the Credit Documents other than the
closing and other fees payable pursuant to this Credit Agreement and the Fee
Letter and any other fee consented to by the Administrative Agent.

         6.29     CLASSIFICATION AS SENIOR INDEBTEDNESS.

         The Credit Party Obligations constitute "Senior Indebtedness" under and
as defined in any agreement governing any outstanding Subordinated Indebtedness.

         6.30     TAX SHELTER REGULATIONS.

         The Credit Parties do not intend to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4). In the event any Credit Party
determines to take any action inconsistent with such intention, it will promptly
notify the Administrative Agent thereof. If any Credit Party so notifies the
Administrative Agent, the Credit Parties acknowledge that one or more of the
Lenders may treat its Loans and/or its interest in Letters of Credit as part of
a transaction that is subject to Treasury Regulation Section 301.6112-1, and
such Lender or Lenders, as applicable, will maintain the lists and other records
required by such Treasury Regulation.

                                       78

<PAGE>

                                    SECTION 7

                              AFFIRMATIVE COVENANTS

         Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and L/C Obligations, together
with interest and fees and other obligations then due and payable hereunder,
have been paid in full and the Commitments and Letters of Credit hereunder shall
have terminated:

         7.1      INFORMATION COVENANTS.

         The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and (except as otherwise specifically provided below) each
of the Lenders:

                  (a)      Annual Financial Statements. As soon as available,
         and in any event within ninety (90) days after the close of each fiscal
         year of the Parent, a consolidated and consolidating balance sheet and
         income statement of the Parent and its Subsidiaries as of the end of
         such fiscal year, together with related consolidated and consolidating
         statements of operations and consolidated and consolidating statements
         of retained earnings and of cash flows for such fiscal year, setting
         forth in comparative form consolidated and consolidating figures for
         the preceding fiscal year, all such consolidated and consolidating
         financial information described above to be in reasonable form and
         detail and audited by independent certified public accountants of
         recognized national standing reasonably acceptable to the
         Administrative Agent and whose opinion shall be to the effect that such
         financial statements have been prepared in accordance with GAAP and
         shall not be limited or qualified as to the scope of the audit and
         shall not be subject to any "going concern" or like qualification.

                  (b)      Quarterly Financial Statements. As soon as available,
         and in any event within forty-five (45) days after the close of each
         fiscal quarter of the Parent (other than the fourth fiscal quarter, in
         which case ninety (90) days after the end thereof), (i) a consolidated
         and consolidating balance sheet and income statement of the Parent and
         its Subsidiaries as of the end of such fiscal quarter, together with
         related consolidated and consolidating statements of operations and
         retained earnings and of cash flows for such fiscal quarter in each
         case setting forth in comparative form consolidated and consolidating
         figures for the corresponding period of the preceding fiscal year, all
         such financial information described above to be in reasonable form and
         detail and reasonably acceptable to the Administrative Agent, and
         accompanied by a management discussion as to such financial information
         and a certificate of the chief financial officer or treasurer of the
         Parent to the effect that such quarterly financial statements fairly
         present in all material respects the financial condition and results of
         operations of the Parent and its Subsidiaries and have been prepared in
         accordance with GAAP, subject to changes resulting from audit and
         normal year-end audit adjustments and the absence of footnotes.

                  (c)      Officer's Certificate. At the time of delivery of the
         financial statements provided for in Sections 7.1(a) and 7.1(b) above,
         a certificate of the chief financial officer or treasurer of the
         Borrower substantially in the form of Exhibit E, (i) demonstrating

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<PAGE>

         compliance with the financial covenants contained in Section 7.2 by
         calculation thereof as of the end of each such period, (ii)
         demonstrating compliance with any other terms of this Credit Agreement
         as reasonably requested by the Administrative Agent and (iii) stating
         that no Default or Event of Default exists, or if any Default or Event
         of Default does exist, specifying the nature and extent thereof and
         what action the Borrower proposes to take with respect thereto.

                  (d)      Compliance With Certain Provisions of the Credit
         Agreement. Within ninety (90) days after the end of each fiscal year of
         the Parent, the Borrower shall deliver a certificate containing
         information regarding (i) the calculation of Excess Cash Flow, and (ii)
         the amount of any Asset Dispositions where the Net Cash Proceeds
         received or to be received in connection therewith is in excess of
         $1,000,000, Debt Issuances and Equity Issuances that were made during
         the prior fiscal year.

                  (e)      Annual Business Plan and Budgets. Within forty-five
         (45) days after the end of each fiscal year of the Parent, an annual
         business plan and budget of the Parent and its Subsidiaries containing,
         among other things, pro forma monthly financial projections for the
         next fiscal year.

                  (f)      Accountant's Certificate. Within the period for
         delivery of the annual financial statements provided in Section 7.1(a),
         a certificate of the accountants conducting the annual audit stating
         that they have reviewed this Credit Agreement and stating further
         whether, in the course of their audit, they have become aware of any
         Default or Event of Default and, if any such Default or Event of
         Default exists, specifying the nature and extent thereof.

                  (g)      Auditor's Reports. Promptly upon receipt thereof, a
         copy of any "management letter" submitted by independent accountants to
         the Parent or any of its Subsidiaries in connection with any annual,
         interim or special audit of the books of the Parent and its
         Subsidiaries.

                  (h)      Reports. Promptly to the Administrative Agent upon
         transmission or receipt thereof, (a) copies of any public filings and
         registrations with, and reports to or from, the Securities and Exchange
         Commission, or any successor agency, and copies of all financial
         statements, proxy statements, notices and reports as the Parent or any
         of its Subsidiaries shall send to its shareholders generally and (b)
         upon the written request of the Administrative Agent, all written
         reports and written information to and from the United States
         Environmental Protection Agency, or any state or local agency
         responsible for environmental matters, the United States Occupational
         Health and Safety Administration, or any state or local agency
         responsible for health and safety matters, or any successor agencies or
         authorities concerning environmental, health or safety matters.

                  (i)      Notices. Upon a Responsible Officer of a Credit Party
         obtaining knowledge thereof, the Borrower will give written notice to
         the Administrative Agent (i) immediately of the occurrence of an event
         or condition constituting a Default or Event of Default, specifying the
         nature and existence thereof and what action the Borrower proposes to
         take

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<PAGE>

         with respect thereto, and (ii) promptly of the occurrence of any of the
         following with respect to any Credit Party or any of its Subsidiaries:
         (A) the pendency or commencement of any litigation, arbitral or
         governmental proceeding against a Credit Party which would be
         reasonably expected to be adversely determined and, if adversely
         determined, would have or would be reasonably expected to have a
         Material Adverse Effect, or (B) the institution of any proceedings
         against a Credit Party with respect to, or the receipt of written
         notice by such Person of potential liability or responsibility for
         violation, or alleged violation of any Law (including but not limited
         to, any Environmental Law) the violation of which would have or would
         be reasonably expected to have a Material Adverse Effect.

                  (j)      ERISA. Upon any of the Credit Parties or any ERISA
         Affiliate obtaining knowledge thereof, the Borrower will give prompt
         written notice to the Administrative Agent promptly (and in any event
         within two (2) Business Days) of any of the following which would have
         or reasonably be expected to have a Material Adverse Effect: (i) any
         event or condition, including, but not limited to, any Reportable
         Event, that constitutes, or might reasonably lead to, a Termination
         Event; (ii) with respect to any Multiemployer Plan, the receipt of
         notice as prescribed in ERISA or otherwise of any withdrawal liability
         assessed against the Credit Parties or any of their ERISA Affiliates,
         or of a determination that any Multiemployer Plan is in reorganization
         or insolvent (both within the meaning of Title IV of ERISA); (iii) the
         failure to make full payment on or before the due date (including
         extensions) thereof of all amounts which a Credit Party or ERISA
         Affiliate is required to contribute to each Plan pursuant to its terms
         and as required to meet the minimum funding standard set forth in ERISA
         and the Code with respect thereto; or (iv) any change in the funding
         status of any Plan; together, with a description of any such event or
         condition or a copy of any such notice and a statement by the principal
         financial officer of the Borrower briefly setting forth the details
         regarding such event, condition, or notice, and the action, if any,
         which has been or is being taken or is proposed to be taken by the
         Credit Parties with respect thereto. Promptly upon request, a Credit
         Party shall furnish the Administrative Agent with such additional
         information concerning any Plan as may be reasonably requested (and, in
         the case of a Multiemployer Plan, is reasonably available to the Credit
         Parties), including, but not limited to, copies of each annual
         report/return (Form 5500 series), as well as all schedules and
         attachments thereto required to be filed with the Department of Labor
         and/or the Internal Revenue Service pursuant to ERISA and the Code,
         respectively, for each "plan year" (within the meaning of Section 3(39)
         of ERISA).

                  (k)      Environmental.

                           (i)      Upon the written request of the
                  Administrative Agent following the occurrence of any event or
                  the discovery of any condition which the Administrative Agent
                  or the Required Lenders reasonably believe has caused (or
                  could be reasonably expected to cause) the representations and
                  warranties set forth in Section 6.18 to be untrue in any
                  material respect, the Borrower will furnish or cause to be
                  furnished to the Administrative Agent, at the Borrower's
                  expense, a report of an environmental assessment of reasonable
                  scope, form and depth, including, where appropriate, invasive
                  soil or groundwater sampling, by a consultant reasonably
                  acceptable to the Administrative Agent as to the nature and
                  extent of the presence of

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<PAGE>

                  any Hazardous Materials on any property owned, leased or
                  operated by a Credit Party and as to the compliance by the
                  Credit Parties with Environmental Laws. If the Borrower fails
                  to deliver such an environmental report within seventy-five
                  (75) days after receipt of such written request, then the
                  Administrative Agent may arrange for same, and the Credit
                  Parties hereby grant to the Administrative Agent and its
                  representatives access to the Real Properties and a license of
                  a scope reasonably necessary to undertake such an assessment
                  (including, where appropriate, invasive soil or groundwater
                  sampling). The reasonable cost of any assessment arranged for
                  by the Administrative Agent pursuant to this provision will be
                  payable by the Borrower on demand and added to the Credit
                  Party Obligations.

                           (ii)     Each Credit Party will conduct and complete
                  all investigations, studies, sampling, and testing and all
                  remedial, removal, and other actions reasonably necessary with
                  respect to all Hazardous Materials on, from, or affecting any
                  real property owned or leased by a Credit Party to the extent
                  necessary to be in compliance with all Environmental Laws and
                  all other applicable federal, state, and local Laws and with
                  the orders and directives of all Governmental Authorities
                  exercising jurisdiction over such real property to the extent
                  any failure to do so would cause or be reasonably expected to
                  cause a Material Adverse Effect.

                  (l)      Tax Shelter Determination. Promptly after any Credit
         Party has notified the Administrative Agent of any intention by such
         Credit Party to treat the Loans and/or the Letters of Credit and
         related transactions as being a "reportable transaction" (within the
         meaning of Treasury Regulation Section 1.6011-4), a duly completed copy
         of IRS Form 8886 or any successor form.

                  (m)      Other Information. With reasonable promptness upon
         any such request, such other information regarding the business,
         Properties or financial condition of the Credit Parties and their
         Subsidiaries as the Administrative Agent or the Required Lenders may
         reasonably request.

         7.2      FINANCIAL COVENANTS.

                  (a) Leverage Ratio. The Credit Parties shall cause the
         Leverage Ratio, measured as of the last day of each fiscal quarter of
         the Parent, to be less than or equal to the ratio shown below for the
         period corresponding thereto:

<TABLE>
<CAPTION>
                Period                                                       Ratio
--------------------------------------------------------------------------------------
<S>                                                                       <C>
Closing Date through September 30, 2004                                   4.50 to 1.00
--------------------------------------------------------------------------------------
October 1, 2004 through March 31, 2005                                    4.25 to 1.00
--------------------------------------------------------------------------------------
April 1, 2005 and thereafter                                              4.00 to 1.00
--------------------------------------------------------------------------------------
</TABLE>

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<PAGE>

                  (b)      Senior Leverage Ratio. The Credit Parties shall cause
         the Senior Leverage Ratio, measured as of the last day of each fiscal
         quarter of the Parent, to be less than or equal to the ratio shown
         below for the period corresponding thereto:

<TABLE>
<CAPTION>
              Period                                                          Ratio
--------------------------------------------------------------------------------------
<S>                                                                       <C>
Closing Date through September 30, 2004                                   3.50 to 1.00
--------------------------------------------------------------------------------------
October 1, 2004 through March 31, 2005                                    3.25 to 1.00
--------------------------------------------------------------------------------------
April 1, 2005 and thereafter                                              3.00 to 1.00
--------------------------------------------------------------------------------------
</TABLE>

                  (c)      Net Worth. The Credit Parties shall cause Net Worth,
         measured as of the last day of each fiscal quarter of the Parent, to be
         greater than or equal to the sum of the following (determined on a
         cumulative basis): (i) 80% of the Net Worth as of September 30, 2003
         plus (ii) as of the end of each fiscal quarter of the Borrower
         commencing with the fiscal quarter ending December 31, 2003, an amount
         equal to 50% of Net Income of the Parent and its Subsidiaries (to the
         extent positive) for the fiscal quarter then ended plus (iii) as of the
         date of any Equity Issuance, 75% of the amount of Net Cash Proceeds
         from such Equity Issuance.

                  (d)      Fixed Charge Coverage Ratio. The Credit Parties shall
         cause the Fixed Charge Coverage Ratio, measured as of the last day of
         each fiscal quarter of the Parent, to be greater than or equal to the
         ratio shown below for the period corresponding thereto:

<TABLE>
<CAPTION>
                Period                                                       Ratio
--------------------------------------------------------------------------------------
<S>                                                                       <C>
Closing Date through September 30, 2004                                   1.10 to 1.00
--------------------------------------------------------------------------------------
October 1, 2004 through March 31, 2005                                    1.15 to 1.00
--------------------------------------------------------------------------------------
April 1, 2005 and thereafter                                              1.20 to 1.00
--------------------------------------------------------------------------------------
</TABLE>

         7.3      PRESERVATION OF EXISTENCE AND FRANCHISES.

         Each of the Credit Parties will, and will cause each of its
Subsidiaries to, do all things necessary to preserve and keep in full force and
effect its existence, rights, franchises and authority except as permitted by
Section 8.4 or Section 8.5 or unless any such Person determines that any such
rights, franchises or authority is no longer necessary to the conduct of its
business or unless the failure to preserve and keep in full force and effect any
such right, franchise and authority would not have or would not be reasonably
expected to have a Material Adverse Effect.

         7.4      BOOKS AND RECORDS.

         Each of the Credit Parties will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of its
transactions to allow preparation of financial statements in accordance with
GAAP (including the establishment and maintenance of appropriate reserves).

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<PAGE>

         7.5      COMPLIANCE WITH LAW.

         Each of the Credit Parties will, and will cause each of its
Subsidiaries to, comply with all Laws and all restrictions imposed by
Governmental Authorities applicable to it and its property (including, without
limitation, Environmental Laws and ERISA) if non-compliance with any such Law or
restriction would have or would be reasonably expected to have a Material
Adverse Effect.

         7.6      PAYMENT OF TAXES AND CLAIMS.

         Each of the Credit Parties will, and will cause each of its
Subsidiaries to, pay, settle or discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its income or profits,
or upon any of its Properties, before they shall become delinquent and (b) all
lawful claims (including claims for labor, materials and supplies) which, if
unpaid, might give rise to a Lien (other than a Permitted Lien) upon any of its
Properties; provided, however, that a Credit Party or its Subsidiary shall not
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) would give rise to an immediate right
to foreclose or collect on a Lien securing such amounts or (ii) would have or
reasonably be expected to have a Material Adverse Effect.

         7.7      INSURANCE.

                  (a)      Each Credit Party will, and will cause each of its
         Subsidiaries to, at all times maintain in full force and effect
         insurance (including worker's compensation insurance, liability
         insurance, casualty insurance and business interruption insurance) in
         such amounts, covering such risks and liabilities and with such
         deductibles or self-insurance retentions as are in accordance with
         normal industry practice (or as otherwise required by the Collateral
         Documents). The Administrative Agent shall be named as loss payee or
         mortgagee, as its interest may appear, and/or additional insured with
         respect to any such insurance providing coverage in respect of any
         Collateral, and each provider of any such insurance shall agree, by
         endorsement upon the policy or policies issued by it or by independent
         instruments furnished to the Administrative Agent, that it will give
         the Administrative Agent thirty (30) days prior written notice before
         any such policy or policies shall be altered or canceled, and that no
         act or default of any Credit Party, any of its Subsidiaries or any
         other Person shall affect the rights of the Administrative Agent or the
         Lenders under such policy or policies. The present insurance coverage
         of the Credit Parties is outlined as to carrier, policy number,
         expiration date, type and amount on Schedule 7.7.

                  (b)      In case of any material loss of, damage to or
         destruction of any Collateral, such Credit Party (i) shall promptly
         give written notice thereof to the Administrative Agent generally
         describing the nature and extent of such damage or destruction, (ii) in
         the event that such Credit Party receives insurance proceeds on account
         of any such loss of, damage to or destruction of such Collateral in a
         net amount in excess of $1,000,000 (in respect of any insurance event,
         the "Excess Proceeds"), such Credit Party will immediately pay over
         such Excess Proceeds to the Administrative Agent as cash collateral for
         the Credit Party

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<PAGE>

         Obligations and (iii) whether or not the insurance proceeds, if any,
         received on account of such damage or destruction shall be sufficient
         for that purpose, at such Credit Party's cost and expense, will
         promptly repair or replace the Collateral of such Credit Party so lost,
         damaged or destroyed; provided, however, that (A) such Credit Party
         need not repair or replace the Collateral of such Credit Party so lost,
         damaged or destroyed to the extent the failure to make such repair or
         replacement (1) is desirable to the proper conduct of the business of
         such Credit Party in the ordinary course and otherwise in the best
         interest of such Credit Party and (2) would not materially impair the
         rights and benefits of the Administrative Agent or the Lenders under
         the Collateral Documents, any other Credit Document or any Swap
         Contract and (B) in the event that such Credit Party receives insurance
         proceeds on account of any such loss of, damage to or destruction of
         Collateral in a net amount in excess of $1,000,000, such Credit Party
         shall not undertake replacement or restoration of any lost, damaged or
         destroyed Collateral of such Credit Party with insurance proceeds in
         respect thereof unless the Administrative Agent has received evidence
         reasonably satisfactory to it that the Collateral lost, damaged or
         destroyed has been or will be replaced or restored to its condition
         immediately prior to such loss, destruction or other event giving rise
         to the payment of such insurance proceeds; provided, further, however,
         if such Credit Party elects not to repair or replace any lost, damaged
         or destroyed Collateral in accordance with clause (A) above or is not
         permitted to repair or replace such lost, damaged or destroyed
         Collateral pursuant to clause (B) above, such Credit Party may apply
         any related insurance proceeds to an Eligible Reinvestment.

                  (c)      With respect to any Excess Proceeds deposited with
         the Administrative Agent by any Credit Party as provided in the
         subsection (b) above, the Administrative Agent agrees to release such
         Excess Proceeds to such Credit Party for replacement or restoration of
         the portion of the Collateral of such Credit Party lost, damaged or
         destroyed or, subject to the terms of such subsection (b), to make an
         Eligible Reinvestment; provided that, within ninety (90) days from the
         date that the Administrative Agent receives such Excess Proceeds, the
         Administrative Agent shall have received a written application for
         release of such Excess Proceeds from such Credit Party establishing
         satisfaction of the conditions set forth in clause (B) of subsection
         (b) above or that, subject to the terms of such subsection (b), such
         Credit Party plans to apply such proceeds to make an Eligible
         Reinvestment.

                  (d)      Any insurance proceeds received by any Credit Party
         on account of any such loss of, damage to or destruction of Collateral
         that (i) are not applied pursuant to subsection (b) above within the
         period of one hundred eighty (180) days following the date the
         applicable Credit Party receives such proceeds to repair or replace the
         Collateral or, subject to the terms of such subsection (b), to make an
         Eligible Reinvestment, (ii) are not permitted to be applied pursuant to
         clause (B) of such subsection (b) to repair or replace the Collateral
         and are not otherwise applied to make an Eligible Reinvestment in
         accordance with the terms of such subsection (b) within the period of
         one hundred eight (180) days following the date the applicable Credit
         Party receives such proceeds or (iii) constitute Excess Proceeds which
         have been deposited with the Administrative Agent and with respect to
         which the conditions for application to replacement or restoration or
         for making an Eligible Reinvestment or for release set forth in
         subsection (c) above shall not have been met on or before the first
         Business Day following the date ninety (90) days from the date the

                                       85

<PAGE>
         Administrative Agent receives such Excess Proceeds, shall be applied
         (by the Credit Parties or, in the case of Excess Proceeds held by the
         Administrative Agent, by the Administrative Agent) to prepay the Loans
         (and Cash Collateralize the L/C Obligations) in accordance with the
         terms of Section 2.4(b)(iii)(B).

                  (e)      All insurance proceeds shall, to the extent set forth
         in the Collateral Documents, be subject to the security interest of the
         Administrative Agent (for the ratable of the Lenders) under the
         Collateral Documents.

         7.8      MAINTENANCE OF PROPERTY.

         Each of the Credit Parties will, and will cause each of its
Subsidiaries to, maintain and preserve its Properties and equipment material to
the conduct of its business in good repair, working order and condition, normal
wear and tear excepted, and will make, or cause to be made, in such Properties
and equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses
unless any such Credit Party determines any such Properties or equipment are no
longer necessary to the conduct of its business.

         7.9      COLLATERAL.

         If, subsequent to the Closing Date, a Credit Party or any of its
Subsidiaries shall (a) (i) acquire any Property, any Intellectual Property which
is the subject of any application or registration or any securities, in each
case required to be delivered to the Administrative Agent as Collateral
hereunder or under any of the Collateral Documents or (ii) enter into any lease
agreement with respect to any plant, warehouse or other material real property
that is not part of the Real Properties as of the Closing Date, the Borrower
shall promptly notify the Administrative Agent of same, or (b) enter into any
lease agreement with respect to any real property (other than an office
location) not covered by clause (a)(ii) above, the Borrower shall notify the
Administrative Agent of same within ninety (90) days of entering into such lease
agreement. Each Credit Party will, and will cause each of its Subsidiaries to,
take such action (including, but not limited to, the actions similar in scope to
those set forth in Sections 5.1(d) and (e) and Section 7.12), as reasonably
requested by the Administrative Agent and at its own expense, to ensure that the
Administrative Agent (on behalf of the Lenders) has a perfected Lien in all
owned real property and such personal property of the Credit Parties and their
Subsidiaries as and to the extent set forth in the Collateral Documents (whether
now owned or hereafter acquired), subject only to Permitted Liens. Each Credit
Party will, and will cause each of its Subsidiaries to, adhere to the covenants
regarding changing its legal name or state of incorporation or organization as
set forth in the Security Agreement.

         7.10     USE OF PROCEEDS.

         The Credit Parties will, and will cause their Subsidiaries to, use the
proceeds of the Loans solely (a) to refinance indebtedness under the Existing
Credit Agreement, (b) to repay certain existing Indebtedness of the Credit
Parties and their Subsidiaries as set forth on Schedule 7.10, (c) to pay fees
and expenses as required by or incurred in connection with this Credit
Agreement, (d) to provide working capital for the Credit Parties and their
Subsidiaries, (e) for capital expenditures,

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(f) to make any payment when due under the Construction Loan Documents in
accordance with Section 2.2(b) and (g) for general corporate purposes of the
Borrower and its Subsidiaries. The Credit Parties will use the Letters of Credit
solely for the purposes set forth in Section 2.3(a).

         7.11     AUDITS/INSPECTIONS.

         Upon reasonable notice and during normal business hours, each Credit
Party will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Administrative Agent, including, without limitation,
independent accountants, agents, attorneys and appraisers to visit and inspect
such Person's property, including its books and records, its accounts receivable
and inventory, its facilities and its other business assets, and to make
photocopies or photographs thereof and to write down and record any information
such representative obtains and shall permit the Administrative Agent, the
Required Lenders or their representatives to investigate and verify the accuracy
of information provided to the Lenders, and to discuss all such matters with the
officers, employees and representatives of the Credit Parties; provided that (a)
the Administrative Agent and its representatives shall not be entitled to review
and make photocopies or photographs of any document (or portion of any document)
that the disclosure of which to the Administrative Agent and its representatives
would constitute a breach by the applicable Credit Party or any of its
Subsidiaries of a confidentiality or similar agreement entered into, or
confidential terms agreed to (to the extent such confidentiality or similar
agreement or confidential terms were not entered into or agreed to solely in
order to avoid disclosing such document to the Administrative Agent and its
representatives), by such Credit Party or such Subsidiary with respect to such
document (or portion thereof) and (b) the Borrower shall have the right to be
present during any discussion, conversation or meeting with any accountant of
any Credit Party. The Credit Parties agree that the Administrative Agent and its
representatives may conduct an annual audit of the Collateral (or may audit the
Collateral at any time during the existence of an Event of Default), at the
expense of the Borrower.

         7.12     ADDITIONAL SUBSIDIARIES.

         At the time any Person becomes a direct or indirect Subsidiary of a
Credit Party, the Borrower shall so notify the Administrative Agent and promptly
thereafter (but in any event within sixty (60) days after the date thereof) the
Credit Parties shall cause such Person to (a) execute a Joinder Agreement in
substantially the same form as Exhibit F, (b) cause all of the Capital Stock (if
any) of such Person to be delivered to the Administrative Agent (together with
undated stock powers signed in blank) and pledged to the Administrative Agent
pursuant to a pledge agreement in substantially the form of the Pledge Agreement
(or a joinder to the existing Pledge Agreement) or otherwise in a form
reasonably acceptable to the Administrative Agent, (c) pledge its Property to
the Administrative Agent pursuant to a security agreement in substantially the
form of the Security Agreement (or a joinder to the existing Security Agreement)
or otherwise in a form reasonably acceptable to the Administrative Agent, (d) if
such Person has any Subsidiaries, (i) deliver all of the Capital Stock (if any)
of such Subsidiaries owned by it (together with undated stock powers signed in
blank) to the Administrative Agent and (ii) execute an appropriate pledge
agreement (or a joinder to the existing Pledge Agreement) and otherwise in a
form acceptable to the Administrative Agent, (e) if such Person owns any real
property, execute any and all necessary mortgages, deeds of trust, deeds to
secure debt or other

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appropriate real estate collateral documentation, and deliver such title
policies, surveys, environmental reports, flood hazard reports and other
documentation as the Administrative Agent may reasonably request, in each case
in a form reasonably acceptable to the Administrative Agent, (f) if such Person
leases (i) any plant, warehouse or other material real property, to the extent
required by the Administrative Agent, (A) use its commercially reasonable
efforts to obtain the applicable landlord's consent to grant the Administrative
Agent a mortgage Lien on its leasehold interest in such plant warehouse or other
material property and (B) to the extent such landlord's consent is obtained,
execute any and all necessary leasehold mortgages, leasehold deeds of trust,
leasehold deeds to secure debt or other appropriate real estate collateral
documentation, and deliver such title policies, surveys, environmental reports,
flood hazard reports and other documentation as the Administrative Agent may
reasonably request, in each case in a form acceptable to the Administrative
Agent, or (ii) any other real property (other than an office location), use its
commercially reasonable efforts to cause to be delivered to the Administrative
Agent a landlord waiver or estoppel letter with respect thereto in a form
reasonably acceptable to the Administrative Agent and (g) deliver such other
documentation as the Administrative Agent may reasonably request in connection
with the foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
certified resolutions and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and enforceability of
the documentation referred to above), all in form, content and scope reasonably
satisfactory to the Administrative Agent.

         7.13     POST-CLOSING COVENANT.

                  (a)      Baxter Springs Intercreditor Agreement Amendment.
         Within sixty (60) days after the Closing Date (or such extended period
         of time as agreed to by the Administrative Agent), the Borrower shall
         deliver to the Administrative Agent a letter agreement executed by the
         parties to the Baxter Springs Intercreditor Agreement, which letter
         agreement shall amend and modify the Baxter Springs Intercreditor
         Agreement to reference this Credit Agreement and shall otherwise be in
         form and substance reasonably satisfactory to the Administrative Agent.

                  (b)      Environmental Reports. Within ninety (90) days after
         the Closing Date (or such extended period of time as agreed to by the
         Administrative Agent), the Borrower shall deliver to the Administrative
         Agent environmental reports (or updates to existing environmental
         reports) with respect to the Mortgage Properties and the Leasehold
         Mortgage Properties, each in form and substance reasonably satisfactory
         to the Administrative Agent.

                  (c)      Consignment Letters. Within fifteen (15) days after
         the Closing Date (or such extended period of time as agreed to by the
         Administrative Agent), the Borrower shall use its commercially
         reasonable efforts to deliver to the Administrative Agent
         fully-executed consignment letters with respect to those locations
         listed on Schedule 4(h) to the Security Agreement.

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                  (d)      IP Matters. Within ninety (90) days after the Closing
         Date (or such extended period of time as agreed to by the
         Administrative Agent), the Borrower shall provide evidence to the
         Administrative Agent, in form and substance reasonably satisfactory to
         the Administrative Agent, that all breaks in the chain of title of the
         Intellectual Property of the Credit Parties have been corrected in the
         appropriate records of the United States Patent and Trademark Office
         and the United States Copyright Office.

                                    SECTION 8

                               NEGATIVE COVENANTS

         Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and L/C Obligations, together
with interest, fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:

         8.1      INDEBTEDNESS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except the
following:

                  (a)      Indebtedness arising under this Credit Agreement and
         the other Credit Documents;

                  (b)      Indebtedness of the Parent or any of its Subsidiaries
         existing as of the Closing Date and set forth on Schedule 6.10, and
         (except in respect of the Baxter Springs Debt) amendments,
         restatements, supplements, refundings, renewals, refinancings,
         replacements or extensions thereof on terms and conditions no less
         favorable, in the aggregate, to the Parent or such Subsidiary, as
         applicable, than such existing Indebtedness and in a principal amount
         not in excess of that outstanding as of the date of such amendment,
         restatement, supplement, refunding, renewal, refinancing, replacement
         or extension;

                  (c)      Indebtedness owing by a Credit Party (other than the
         Parent) to another Credit Party (other than the Parent);

                  (d)      purchase money Indebtedness of the Borrower or any of
         its Subsidiaries (including Capital Leases and Synthetic Leases) to
         finance the purchase, construction or improvement of fixed assets
         (including equipment); provided that (i) the total of all such
         Indebtedness for all such Persons shall not exceed an aggregate
         principal amount of $5,000,000 at any one time outstanding (in addition
         to any such Indebtedness referred to in subsection (b) above); (ii) no
         such Indebtedness when incurred shall exceed the purchase price or cost
         of construction or improvement of the asset(s) financed; and (iii) no
         such Indebtedness shall be refinanced for a principal amount in excess
         of the principal balance outstanding thereon at the time of such
         refinancing;

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                  (e)      Subordinated Indebtedness of the Parent incurred in
         connection with a Permitted Acquisition in an aggregate principal
         amount not to exceed $25,000,000;

                  (f)      Indebtedness of any Credit Party arising from Swap
         Contracts entered into in the ordinary course of business and not for
         speculative purposes;

                  (g)      guaranties of Indebtedness not prohibited by this
         Credit Agreement;

                  (h)      Indebtedness of a Person existing at the time such
         Person became a Subsidiary of any Credit Party in connection with a
         Permitted Acquisition; provided, that (i) such Indebtedness was not
         created or incurred in contemplation of such Permitted Acquisition and
         (ii) the aggregate outstanding principal amount of such Indebtedness
         for all such Persons shall not exceed $5,000,000 at any time; and

                  (i)      other secured or unsecured Indebtedness hereafter
         incurred by the Borrower or any of its Subsidiaries; provided that (i)
         the credit documentation with respect to such Indebtedness shall not
         contain covenants or default provisions relating to any Credit Party
         that are materially more restrictive than the covenants and default
         provisions contained in the Credit Documents and (ii) the aggregate
         outstanding principal amount of such Indebtedness shall not exceed
         $5,000,000 at any time.

         8.2      LIENS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its Property of any kind (whether real or personal, tangible or intangible),
whether now owned or after acquired, except for Permitted Liens.

         8.3      NATURE OF BUSINESS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
materially alter the character of its business from that conducted as of the
Closing Date or engage in any business other than the business conducted as of
the Closing Date and businesses which are substantially similar or related
thereto or logical extensions thereof.

         8.4      CONSOLIDATION; MERGER; DISSOLUTION; LIQUIDATION; WINDING UP.

         Except in connection with an Asset Disposition permitted by the terms
of Section 8.5, no Credit Party will, nor will it permit any of its Subsidiaries
to, enter into any transaction of merger or consolidation or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution); provided that,
notwithstanding the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries and any Subsidiary of the
Borrower may merge or consolidate with any other Subsidiary of the Borrower or
with the Borrower; provided that in any such case (i) if such transaction
involves the Borrower, the Borrower shall be the continuing or surviving Person
and (ii) the Credit Parties shall cause to be executed and delivered such
documents, instruments and certificates as the Administrative Agent may
reasonably request so as

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to cause the Credit Parties to be in compliance with the terms of Section 7.9
after giving effect to such transaction, (b) the Borrower or any Subsidiary of
the Borrower may merge with any Person that is not a Credit Party in connection
with a Permitted Acquisition if (i) the Borrower or such Subsidiary shall be the
continuing or surviving Person or in the case of a Subsidiary, the surviving
Person is or becomes a Subsidiary upon consummation of such merger and (ii) the
Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Administrative Agent may reasonably request
so as to cause the Credit Parties to be in compliance with the terms of Section
7.9 after giving effect to such transaction and (c) any Wholly-Owned Subsidiary
of the Borrower may dissolve, liquidate or wind up its affairs at any time so
long as the Property of such Wholly-Owned Subsidiary is either (i) transferred
to a Credit Party or (ii) sold in accordance with the terms of Section 8.5, in
each case in connection with such dissolution, liquidation or winding up.

         8.5      DISPOSITION OF ASSETS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
make any Asset Disposition (including, without limitation, any sale and
leaseback transaction) unless (a) the consideration received in connection
therewith shall be cash and/or Cash Equivalents, (b) if such transaction is a
sale and leaseback transaction, such transaction is permitted by the terms of
Section 8.6, (c) such transaction does not involve the sale or other disposition
of a minority equity interest in any Credit Party, (d) with respect to the sale
or other disposition of all or a portion of the Detroit Paper Mill or any assets
comprising the Detroit Paper Mill, the Net Cash Proceeds therefrom in excess of
$1,500,000 are used to prepay the Loans (and Cash Collateralize L/C Obligations)
in accordance with the terms of Section 2.4(b)(iii)(A), (e) the aggregate net
book value of all Asset Dispositions (other than the sale or other disposition
of all or a portion of the Detroit Paper Mill or any assets comprising the
Detroit Paper Mill) by the Credit Parties in all such transactions after the
Closing Date shall not exceed $5,000,000, (f) no later than thirty (30) days
after any Asset Disposition where the expected Net Cash Proceeds to be received
in connection therewith is in excess of $1,000,000, the Administrative Agent and
the Lenders shall have received a certificate of an officer of the Borrower
specifying the date of such Asset Disposition, briefly describing the assets
sold or otherwise disposed of and setting forth the net book value of such
assets, the aggregate consideration and the Net Cash Proceeds to be received for
such assets in connection with such Asset Disposition, and (g) the Credit
Parties shall, within the period of one hundred eighty (180) days following the
consummation of such Asset Disposition (with respect to any such Asset
Disposition, the "Application Period"), apply (or cause to be applied) an amount
equal to the Net Cash Proceeds of such Asset Disposition to (i) make Eligible
Reinvestments or (ii) prepay the Loans (and Cash Collateralize L/C Obligations)
in accordance with the terms of Section 2.4(b)(iii)(A). Pending final
application of the Net Cash Proceeds of any Asset Disposition, the Credit
Parties may apply such Net Cash Proceeds to temporarily reduce the Revolving
Loans or to make Investments in Cash Equivalents.

         Upon a sale of Property permitted by this Section 8.5, the
Administrative Agent shall promptly deliver to the Borrower, upon the Borrower's
request and at the Borrower's expense, such documentation and shall take such
other action as is reasonably necessary to evidence the release of the
Administrative Agent's security interest in such Property, including, without
limitation, any mortgage release, leasehold mortgage release or amendments or
terminations of UCC financing

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statements. The Lenders hereby authorize the Administrative Agent to deliver
such documentation and to take such actions.

         8.6      SALE LEASEBACKS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease of any Property, whether now owned or
hereafter acquired, (a) which such Credit Party has sold or transferred or is to
sell or transfer to any other Person other than a Credit Party or (b) which such
Credit Party intends to use for substantially the same purpose as any other
Property which has been sold or is to be sold or transferred by such Credit
Party to any Person in connection with such lease.

         8.7      INVESTMENTS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
make any Investments except for Permitted Investments.

         8.8      RESTRICTED PAYMENTS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) the Borrower may make dividends or distributions
to the Parent for the purposes of making (i) Subordinated Debt Payments to the
extent permitted by Section 8.9(c), (ii) Federal, state and other income tax
payments that are due and payable by the Parent and other payments for
corporate, administrative and operating expenses of Parent and (iii) the
purchases and dividends contemplated by clauses (c) and (d) below, (b) as
permitted by Section 8.9 or Section 8.10, (c) the purchase of Capital Stock (or
options to purchase Capital Stock) of the Parent from employees, officers or
directors upon the death, disability or termination (voluntarily or
involuntarily) of their employment with the Parent or any of its Subsidiaries
and (d) so long as no Default or Event of Default exists before or would result
immediately after giving effect to any such dividend, the Parent may pay cash
dividends to its shareholders in an amount not to exceed $3,000,000 during any
twelve (12) month period.

         8.9      RESTRICTIONS ON MODIFICATIONS TO AND PAYMENTS OF CERTAIN
                  INDEBTEDNESS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) if any Default or Event of Default has occurred and is continuing or would
be directly or indirectly caused as a result thereof, (i) amend or modify (or
permit the amendment or modification of) any of the terms of any Indebtedness if
such amendment or modification would add or change any terms in a manner
materially adverse to the issuer of such Indebtedness, or shorten the final
maturity or average life to maturity or require any payment to be made sooner
than originally scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (ii) make (or give any notice
with respect thereto) any voluntary or optional payment or prepayment or
optional redemption or optional acquisition for value of (including, without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of, any other

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Indebtedness (including, without limitation, any Subordinated Indebtedness), (b)
amend or modify any of the terms of any Subordinated Indebtedness without the
prior written consent of the Required Lenders or (c) make any Subordinated Debt
Payment; provided, however, the Parent may make a Subordinated Debt Payment if
such payment is not made in violation of the subordination provisions governing
the applicable Subordinated Indebtedness that are approved in accordance with
the terms of the definition of Subordinated Indebtedness. Notwithstanding
anything to the contrary contained in this Section 8.9, the Borrower shall be
permitted to prepay any of the Baxter Springs Debt at any time that a Default or
Event of Default has occurred and is continuing under Section 9.1(g)(ii)(A)(2)
in respect of the Baxter Springs Debt and no other Default or Event of Default
is then existing.

         8.10     TRANSACTIONS WITH AFFILIATES.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
enter into any transaction or series of transactions, whether or not in the
ordinary course of business, with any officer, director, shareholder, Subsidiary
or Affiliate other than (i) Exempt Affiliate Transactions and (ii) those
transactions that are on terms and conditions substantially as favorable as
would be obtainable in a comparable arm's-length transaction with a Person other
than an officer, director, shareholder, Subsidiary or Affiliate.

         8.11     FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) change its fiscal year or (b) in any manner that would (i) cause or
reasonably be expected to cause a Default or an Event of Default or (ii)
reasonably be likely to materially adversely affect the rights of the Lenders,
change its organizational documents.

         8.12     NO LIMITATIONS.

         Except as contemplated by or in connection with any Indebtedness
permitted by Section 8.1, no Credit Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual encumbrance
or restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's Capital Stock,
(b) pay any Indebtedness owed to any other Credit Party, (c) make loans or
advances to any other Credit Party or (d) transfer any of its property to any
other Credit Party, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for encumbrances or restrictions existing under or by
reason of (i) customary non-assignment or net worth provisions in any lease
governing a leasehold interest, customary non-assignment provisions in any
license to any Credit Party of intellectual property owned by a third party (or
with respect to which such third party has a right to use) or customary
non-assignment provisions in other contracts which are not material to the
business and operations of the Credit Parties, (ii) this Credit Agreement and
the other Credit Documents, (iii) applicable Law, (iv) any Permitted Lien or any
document or instrument governing any Permitted Lien; provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien, (v) any agreement governing the Baxter Springs Debt, as in
effect as of the Closing Date and (vi) customary conditions and restrictions

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contained in any agreement relating to the sale of any Property not prohibited
under the Credit Agreement pending the consummation of such sale, but only with
respect to the Property to be sold.

         8.13     OWNERSHIP OF SUBSIDIARIES; LIMITATIONS ON OPERATIONS OF
                  BORROWER.

         Notwithstanding any other provisions of this Credit Agreement to the
contrary:

                  (a)      The Credit Parties will not permit any direct or
         indirect Subsidiary of the Borrower to (i) permit any Person (other
         than the Borrower or any Wholly - Owned Subsidiary of the Borrower) to
         own any Capital Stock in any Subsidiary of the Borrower, (ii) permit
         any Subsidiary of the Borrower to issue Capital Stock (except to the
         Borrower or to a Wholly - Owned Subsidiary of the Borrower), (iii)
         permit, create, incur, assume or suffer to exist any Lien (other than a
         Permitted Lien) on any Capital Stock in such Subsidiary, except
         pursuant to the Credit Documents and (iv) notwithstanding anything to
         the contrary contained in clause (ii) above, permit any Subsidiary of
         the Borrower to issue any shares of preferred Capital Stock.

                  (b)      The Parent shall not (i) own or lease any Property
         other than the Capital Stock of its Subsidiaries and cash to pay
         operating expenses and other obligations permitted under the Credit
         Documents, (ii) have any liabilities other than (A) the liabilities
         permitted under the Credit Documents, (B) Indebtedness permitted
         pursuant to Section 8.1, (C) tax liabilities in the ordinary course of
         business, (D) liabilities in connection with the issuance of its
         equity, (E) liabilities in connection with Permitted Acquisitions and
         (F) corporate, administrative and operating expenses in the ordinary
         course of business and (iii) engage in any business other than (A)
         owning the Capital Stock of its Subsidiaries, activities incidental or
         related thereto and activities required to maintain its status as a
         registered public company, (B) acting as a Guarantor hereunder and
         pledging its Property to the Administrative Agent, for the benefit of
         the Lenders, pursuant to the Collateral Documents to which it is a
         party and (C) engaging in activities related to Permitted Acquisitions.

         8.14     NO OTHER NEGATIVE PLEDGES.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
enter into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its Property, whether
now owned or hereafter acquired, or requiring the grant of any security for any
obligation if security is given for any other obligation, except (a) pursuant to
customary non - assignment or net worth provisions in any lease governing a
leasehold interest or customary non - assignment any other contracts which are
not material to the business and operations of the Credit Parties, (b) pursuant
to this Credit Agreement and the other Credit Documents, (c) in connection with
any Permitted Lien or any document or instrument governing any Permitted Lien;
provided that any such restriction contained therein relates only to the asset
or assets subject to such Permitted Lien, (d) pursuant to applicable Law, (e)
pursuant to any agreement governing the Baxter Springs Debt, as in effect as of
the Closing Date and (f) pursuant to customary restrictions and conditions
contained in any agreement relating to the

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         sale of any Property not prohibited by the Credit Agreement pending the
         consummation of such sale, but only with respect to Property to be
         sold.

         8.15     NO FOREIGN SUBSIDIARIES.

         No Credit Party will, nor will it permit any of its Subsidiaries to,
create, acquire or permit to exist any Foreign Subsidiary.

                                    SECTION 9

                                EVENTS OF DEFAULT

         9.1      EVENTS OF DEFAULT.

         An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
Default"):

                  (a)      Payment. Any Credit Party shall default in the
         payment (i) when due of any principal of any of the Loans or any L/C
         Obligation or (ii) within three (3) Business Days of when due of any
         interest on the Loans or on any L/C Obligation or any fees or other
         amounts owing hereunder, under any of the other Credit Documents or in
         connection herewith.

                  (b)      Representations. Any representation, warranty or
         statement made or deemed to be made by any Credit Party herein, in any
         of the other Credit Documents, or in any statement or certificate
         delivered or required to be delivered pursuant hereto or thereto shall
         prove untrue in any material respect on the date as of which it was
         made or deemed to have been made.

                  (c)      Covenants. Any Credit Party shall:

                           (i)      default in the due performance or observance
                  of any term, covenant or agreement contained in Sections
                  7.1(i)(i), 7.2, 7.3, 7.9, 7.10 or Section 8 inclusive;

                           (ii)     default in the due performance or observance
                  by it of any term, covenant or agreement contained in Section
                  7.1 (other than Section 7.1(i)(i)) and such default shall
                  continue unremedied for a period of at least five (5) Business
                  Days after the earlier of a Responsible Officer of a Credit
                  Party becoming aware of such default or notice thereof being
                  given by the Administrative Agent; or

                           (iii)    default in the due performance or observance
                  by it of any term, covenant or agreement (other than those
                  referred to in subsections (a), (b) or (c)(i) or (ii) of this
                  Section 9.1) contained in this Credit Agreement and such
                  default shall continue unremedied for a period of at least
                  thirty (30) days after the earlier of a

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                  Responsible Officer of a Credit Party becoming aware of such
                  default or notice thereof being given by the Administrative
                  Agent.

                  (d)      Other Credit Documents; Failure of Agreements. (i)
         Any Credit Party shall default in the due performance or observance of
         any term, covenant or agreement in any of the other Credit Documents
         (other than the Credit Agreement) and such default shall continue
         unremedied for a period of at least thirty (30) days after the earlier
         of a Responsible Officer of a Credit Party becoming aware of such
         default or notice thereof given by the Administrative Agent, or (ii)
         any Credit Document shall fail to be in full force and effect or any
         Credit Party shall so assert or any Credit Document shall fail to give
         the Administrative Agent and/or the Lenders the security interests,
         Liens, rights, powers and privileges purported to be created thereby.

                  (e)      Guaranties. Except as the result of or in connection
         with a dissolution, merger or disposition of a Subsidiary of any Credit
         Party not prohibited by Section 8.4 or Section 8.5, the Guaranty given
         by any Guarantor hereunder (including any Person after the Closing Date
         in accordance with Section 7.12) or any provision thereof shall cease
         to be in full force and effect, or any Guarantor hereunder or any
         Person acting by or on behalf of such Guarantor shall deny or disaffirm
         such Guarantor's obligations under such Guaranty.

                  (f)      Bankruptcy, etc. The occurrence of any of the
         following (each a "Bankruptcy Event"): (i) a court or governmental
         agency having jurisdiction in the premises shall enter a decree or
         order for relief in respect of any Credit Party in an involuntary case
         under any applicable bankruptcy, insolvency or other similar Law now or
         hereafter in effect, or appoint a receiver, liquidator, assignee,
         custodian, trustee, sequestrator or similar official of any Credit
         Party or for any substantial part of its property or ordering the
         winding up or liquidation of its affairs; or (ii) an involuntary case
         under any applicable bankruptcy, insolvency or other similar Law now or
         hereafter in effect is commenced against any Credit Party and such
         petition remains unstayed and in effect for a period of sixty (60)
         consecutive days; or (iii) any Credit Party shall commence a voluntary
         case under any applicable bankruptcy, insolvency or other similar Law
         now or hereafter in effect, or consent to the entry of an order for
         relief in an involuntary case under any such Law, or consent to the
         appointment or taking possession by a receiver, liquidator, assignee,
         custodian, trustee, sequestrator or similar official of such Person or
         any substantial part of its property or make any general assignment for
         the benefit of creditors; or (iv) any Credit Party shall admit in
         writing its inability to pay its debts generally as they become due or
         any action shall be taken by such Person in furtherance of any of the
         aforesaid purposes.

                  (g)      Defaults under Other Agreements.

                           (i)      A Credit Party shall default in the due
                  performance or observance (beyond the applicable grace period
                  with respect thereto) of any material obligation or condition
                  of any contract or lease to which it is a party and such
                  default would have or would be reasonably expected to have a
                  Material Adverse Effect; or

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                           (ii)     With respect to any Indebtedness in excess
                   of $1,000,000 (other than Indebtedness outstanding under this
                  Credit Agreement) of a Credit Party (A) such Person shall (1)
                  default in any payment (beyond the applicable grace period
                  with respect thereto, if any) with respect to any such
                  Indebtedness, or (2) default (after giving effect to any
                  applicable grace period) in the observance or performance of
                  any term, condition or agreement relating to such Indebtedness
                  contained in any instrument or agreement evidencing, securing
                  or relating thereto, or any other event or condition shall
                  occur or condition exist, the effect of which default or other
                  event or condition is to cause, or permit (without regard to
                  any notice requirement), the holder or holders of such
                  Indebtedness (or trustee or agent on behalf of such holders)
                  to cause any such Indebtedness to become due prior to its
                  stated maturity (other than a regularly scheduled payment or
                  mandatory prepayment); or (B) any such Indebtedness shall be
                  declared due and payable, or required to be prepaid other than
                  by a regularly scheduled or required prepayment prior to the
                  stated maturity thereof; or (C) any such Indebtedness shall
                  mature and remain unpaid.

                  (h)      Judgments. One or more judgments, orders, or decrees
         shall be entered against any one or more of the Credit Parties
         involving a liability of $1,000,000 or more in the aggregate (to the
         extent not paid or covered by insurance provided by a carrier who has
         not denied coverage) and such judgments, orders or decrees (i) are the
         subject of any enforcement proceeding commenced by any creditor or (ii)
         shall continue unsatisfied, undischarged and unstayed for a period
         ending on the first to occur of (A) the last day on which such
         judgment, order or decree becomes final and unappealable or (B) sixty
         (60) days.

                  (i)      ERISA. The occurrence of any of the following events
         or conditions which in the aggregate would have a Material Adverse
         Effect: (A) any "accumulated funding deficiency," as such term is
         defined in Section 302 of ERISA and Section 412 of the Code, whether or
         not waived, shall exist with respect to any Plan, or any lien shall
         arise on the assets of any Credit Party or any ERISA Affiliate in favor
         of the PBGC or a Plan; (B) a Termination Event shall occur with respect
         to a Single Employer Plan, which is, in the reasonable opinion of the
         Administrative Agent, likely to result in the termination of such Plan
         for purposes of Title IV of ERISA; (C) a Termination Event shall occur
         with respect to a Multiemployer Plan or Multiple Employer Plan, which
         is, in the reasonable opinion of the Administrative Agent, likely to
         result in (i) the termination of such Plan for purposes of Title IV of
         ERISA, or (ii) any Credit Party or any ERISA Affiliate incurring any
         liability in connection with a withdrawal from, reorganization of
         (within the meaning of Section 4241 of ERISA), or insolvency (within
         the meaning of Section 4245 of ERISA) of such Plan; or (D) any
         prohibited transaction (within the meaning of Section 406 of ERISA or
         Section 4975 of the Code) or breach of fiduciary responsibility shall
         occur which may subject any Credit Party or any ERISA Affiliate to any
         liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
         Section 4975 of the Code, or under any agreement or other instrument
         pursuant to which any Credit Party or any ERISA Affiliate has agreed or
         is required to indemnify any person against any such liability.

                  (j)      Ownership. There shall occur a Change of Control.

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                  (k)      Classification as Senior Indebtedness. The Credit
         Party Obligations shall at any time fail to constitute "Senior
         Indebtedness" under and as defined in any agreement governing any
         outstanding Subordinated Indebtedness.

         9.2      ACCELERATION; REMEDIES.

         Upon the occurrence, and during the continuance, of an Event of
Default, the Administrative Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Borrower, take the following actions
without prejudice to the rights of the Administrative Agent or any Lender to
enforce its claims against the Credit Parties, except as otherwise specifically
provided for herein:

                  (a)      Termination of Commitments. Declare the Commitments
         terminated whereupon the Commitments shall be immediately terminated.

                  (b)      Acceleration of Loans. Declare the unpaid principal
         of and any accrued interest in respect of all Loans, all L/C
         Obligations and any and all other Credit Party Obligations of any and
         every kind owing by a Credit Party to any of the Lenders hereunder to
         be due whereupon the same shall be immediately due and payable without
         presentment, demand, protest or other notice of any kind, all of which
         are hereby waived by the Credit Parties.

                  (c)      Cash Collateral. Direct the Borrower to pay (and the
         Borrower agrees that upon receipt of such notice, or upon the
         occurrence of a Bankruptcy Event, it will immediately pay) to the
         Administrative Agent Cash Collateral to be held by the Administrative
         Agent, for the benefit of the Lenders, in a cash collateral account as
         additional security for the L/C Obligations in respect of subsequent
         drawings under all then outstanding Letters of Credit in an amount
         equal to the maximum aggregate amount which may be drawn under all
         Letters of Credits then outstanding.

                  (d)      Enforcement of Rights. Enforce any and all rights and
         interests created and existing under the Credit Documents and any and
         all rights under applicable Laws, including, without limitation, all
         rights and remedies existing under the Collateral Documents, all rights
         and remedies against a Guarantor and all rights of set-off.

Notwithstanding the foregoing, if a Bankruptcy Event shall occur, then the
Commitments shall automatically terminate and all Loans, all L/C Obligations,
all accrued interest in respect thereof, all accrued and unpaid fees and other
Credit Party Obligations owing to the Lenders hereunder and under the other
Credit Documents shall immediately become due and payable without the giving of
any notice or other action by the Administrative Agent or the Lenders, which
notice or other action is expressly waived by the Credit Parties.

Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by Law, a
separate right of payment and shall be

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considered a separate "creditor" holding a separate "claim" within the meaning
of Section 101(5) of the Bankruptcy Code or any other insolvency statute.

         9.3      ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.

         Notwithstanding any other provisions of this Credit Agreement, after
the exercise of remedies by the Administrative Agent or the Lenders pursuant to
Section 9.2 (or after the Commitments shall automatically terminate and the
Loans (with accrued interest thereon) and all other amounts under the Credit
Documents (including without limitation the maximum amount of all contingent
liabilities under Letters of Credit) shall automatically become due and payable
in accordance with the terms of such Section), all amounts collected or received
by the Administrative Agent or any Lender on account of amounts outstanding
under any of the Credit Documents or in respect of the Collateral shall be paid
over or delivered as follows:

                  FIRST, to the payment of all reasonable out - of - pocket
         costs and expenses (including without limitation reasonable Attorney
         Costs) of the Administrative Agent or any of the Lenders in connection
         with enforcing the rights of the Administrative Agent and the Lenders
         under the Credit Documents and any protective advances made by the
         Administrative Agent or any of the Lenders with respect to the
         Collateral under or pursuant to the terms of the Collateral Documents;

                  SECOND, to payment of any fees, indemnities, expenses and
         other amounts (including Attorney Costs and amounts payable under
         Section 3) owed to the Administrative Agent, the L/C Issuer or any
         Lender;

                  THIRD, to payment of that portion of the Credit Party
         Obligations constituting accrued and unpaid interest on the Loans and
         L/C Borrowings, and including with respect to any Secured Swap
         Contract, any fees, premiums and scheduled periodic payments due under
         such Secured Swap Contract, ratably among the Lenders (and any
         Affiliate of a Lender party to a Secured Swap Contract) as set forth
         below;

                  FOURTH, to payment of that portion of the Credit Party
         Obligations constituting unpaid principal of the Loans, L/C Borrowings
         and any breakage, termination or other payments pursuant to Secured
         Swap Contracts, and to Cash Collateralize the undrawn amounts of
         Letters of Credit, ratably among the Lenders (and any Affiliate of a
         Lender party to a Secured Swap Contract) as set forth below; and

                  FIFTH, to the payment of the surplus, if any, to whoever may
         be lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders (and Affiliates of Lenders party to
Secured Swap Contracts) shall receive an amount equal to its pro rata share
(based on the proportion that the then outstanding Loans, L/C Obligations and
net payment obligations under Secured Swap Contracts held by such Lender bears
to the aggregate then outstanding Loans, L/C Obligations and obligations under
Secured Swap Contracts) of amounts

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available to be applied; and (c) to the extent that any amounts available for
distribution pursuant to clause "FOURTH" above are attributable to the issued
but undrawn amount of outstanding Letters of Credit, such amounts shall be held
by the Administrative Agent as Cash Collateral and applied (i) first, to
reimburse the L/C Issuer or, to the extent participated to the Lenders, the
Lenders from time to time for any drawings under such Letters of Credit and (ii)
then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clause "FOURTH" above in the manner
provided in this Section 9.3.

                                   SECTION 10

                              ADMINISTRATIVE AGENT

         10.1     APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.

                  (a)      Each Lender hereby irrevocably appoints, designates
         and authorizes the Administrative Agent to take such action on its
         behalf under the provisions of this Credit Agreement and each other
         Credit Document and to exercise such powers and perform such duties as
         are expressly delegated to it by the terms of this Credit Agreement or
         any other Credit Document, together with such powers as are reasonably
         incidental thereto. Notwithstanding any provision to the contrary
         contained elsewhere herein or in any other Credit Document, the
         Administrative Agent shall not have any duties or responsibilities,
         except those expressly set forth herein, nor shall the Administrative
         Agent have or be deemed to have any fiduciary relationship with any
         Lender or participant, and no implied covenants, functions,
         responsibilities, duties, obligations or liabilities shall be read into
         this Credit Agreement or any other Credit Document or otherwise exist
         against the Administrative Agent. Without limiting the generality of
         the foregoing sentence, the use of the term "agent" herein and in the
         other Credit Documents with reference to the Administrative 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.

                  (b)      The L/C Issuer shall act on behalf of the Lenders
         with respect to any Letters of Credit issued by it and the documents
         associated therewith, and the L/C Issuer shall have all of the benefits
         and immunities (i) provided to the Administrative Agent in this Section
         10 with respect to any acts taken or omissions suffered by the L/C
         Issuer in connection with Letters of Credit issued by it or proposed to
         be issued by it and the applications and agreements for letters of
         credit pertaining to such Letters of Credit as fully as if the term
         "Administrative Agent" as used in this Section 10 and in the definition
         of "Agent - Related Person" included the L/C Issuer with respect to
         such acts or omissions, and (ii) as additionally provided herein with
         respect to the L/C Issuer.

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         10.2     DELEGATION OF DUTIES.

         The Administrative Agent may execute any of its duties under this
Credit Agreement or any other Credit Document by or through agents, employees or
attorneys - in - fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney - in - fact that it selects in the absence of gross
negligence or willful misconduct.

         10.3     LIABILITY OF ADMINISTRATIVE AGENT.

         No Agent - Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or warranty
made by any Credit Party or any officer thereof, contained herein or in any
other Credit Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Credit Agreement or any other Credit Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Credit Agreement or any other Credit Document, or for any failure of any
Credit Party or any other party to any Credit Document to perform its
obligations hereunder or thereunder. No Agent - Related Person shall be under
any obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Credit Agreement or any other Credit Document, or to inspect the
Properties, books or records of any Credit Party or any Affiliate thereof.

         10.4     RELIANCE BY ADMINISTRATIVE AGENT.

                  (a)      The Administrative Agent shall be entitled to rely,
         and shall be fully protected in relying, upon any writing,
         communication, signature, resolution, representation, notice, consent,
         certificate, affidavit, letter, telegram, facsimile, telex or telephone
         message, electronic mail message, statement or other document or
         conversation reasonably 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 counsel to any
         Credit Party), independent accountants and other experts selected by
         the Administrative Agent. The Administrative Agent shall be fully
         justified in failing or refusing to take any action under any Credit
         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. The Administrative
         Agent shall in all cases be fully protected in acting, or in refraining
         from acting, under this Credit Agreement or any other Credit Document
         in accordance with a request or consent of the Required Lenders (or
         such greater number of Lenders as may be expressly required hereby in
         any instance) and

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         such request and any action taken or failure to act pursuant thereto
         shall be binding upon all the Lenders.

                  (b)      For purposes of determining compliance with the
         conditions specified in Section 5.1, each Lender that has signed this
         Credit Agreement shall be deemed to have consented to, approved or
         accepted or to be satisfied with, each document or other matter
         required thereunder to be consented to or approved by or acceptable or
         satisfactory to a Lender unless the Administrative Agent shall have
         received notice from such Lender prior to the proposed Closing Date
         specifying its objection thereto.

         10.5     NOTICE OF DEFAULT.

         The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Borrower referring
to this Credit Agreement and specifying and describing the Default that has
occurred. The Administrative Agent will notify the Lenders of its receipt of any
such notice. The Administrative Agent shall take such action with respect to
such Default as may be directed by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Administrative Agent has
received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable or in the best interest of the
Lenders.

         10.6     CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE
AGENT.

         Each Lender acknowledges that no Agent - Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Credit Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent - Related
Person to any Lender as to any matter, including whether Agent - Related Persons
have disclosed material information in their possession. Each Lender represents
to the Administrative 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 Credit Parties and their respective Subsidiaries, and
all applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Credit
Agreement and to extend credit to the Borrower hereunder. 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 taking or not taking action under this Credit Agreement and the
other Credit 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 Borrower and the other Credit
Parties. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent herein, the
Administrative Agent shall not have any duty or

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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 of the Credit Parties or any of their
respective Affiliates which may come into the possession of any Agent - Related
Person.

         10.7     INDEMNIFICATION OF ADMINISTRATIVE AGENT.

         Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand each Agent - Related Person (to the
extent not reimbursed by or on behalf of any Credit Party and without limiting
the obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent - Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent - Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent - Related
Person's own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or out - of
- pocket expenses (including Attorney Costs) incurred by the Administrative
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 Credit Agreement, any other Credit Document, or any
document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive termination of the
Commitments, the payment of all Credit Party Obligations and the resignation of
the Administrative Agent.

         10.8     ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.

         Bank of America 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 each of the Credit Parties and their respective
Affiliates as though Bank of America were not the Administrative Agent or the
L/C Issuer hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Credit Party or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of such Credit Party or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, Bank of America shall have the same rights and
powers under this Credit Agreement as any other Lender and may exercise such
rights and powers as though it were not the Administrative Agent or the L/C
Issuer, and the terms "Lender" and "Lenders" include Bank of America in its
individual capacity.

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         10.9     SUCCESSOR ADMINISTRATIVE AGENT.

         The Administrative Agent may resign as Administrative Agent upon thirty
(30) days' notice to the Lenders; provided that any such resignation by Bank of
America shall also constitute its resignation as L/C Issuer. If the
Administrative Agent resigns under this Credit Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed).
If no successor administrative agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Borrower, a successor
administrative agent from among the Lenders. Upon the acceptance of its
appointment as successor administrative agent hereunder, the Person acting as
such successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and, unless the Borrower and the
Lenders choose to appoint an L/C Issuer that is different than the
Administrative Agent, L/C Issuer and the respective terms "Administrative Agent"
and "L/C Issuer" shall mean such successor administrative agent and Letter of
Credit issuer, and the retiring Administrative Agent's appointment, powers and
duties as Administrative Agent shall be terminated and the retiring L/C Issuer's
rights, powers and duties as such shall be terminated, without any other or
further act or deed on the part of such retiring L/C Issuer or any other Lender,
other than the obligation of the successor L/C Issuer to issue letters of credit
in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or to make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 10
and Sections 11.4 and 11.5 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Credit
Agreement. If no successor administrative agent has accepted appointment as
Administrative Agent by the date which is thirty (30) days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor
administrative agent as provided for above.

         10.10    ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM.

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

                  (a)      to file and prove a claim for the whole amount of the
         principal and interest owing and unpaid in respect of the Loans, L/C
         Obligations and all other Credit Party Obligations that are owing and
         unpaid and to file such other documents as may be

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         necessary or advisable in order to have the claims of the Lenders and
         the Administrative Agent (including any claim for the reasonable
         compensation, expenses, disbursements and advances of the Lenders and
         the Administrative Agent and their respective agents and counsel and
         all other amounts due the Lenders and the Administrative Agent under
         Sections 2.3(i) and (j), 2.8 and 11.4) allowed in such judicial
         proceeding; and

                  (b)      to collect and receive any monies or other property
         payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.8 and 11.4.

         Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Credit Party Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any Lender
in any such proceeding.

         10.11    COLLATERAL AND GUARANTY MATTERS.

         The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion,

                  (a)      to release any Lien on any property granted to or
         held by the Administrative Agent under any Credit Document (i) upon
         termination of the Commitments and payment in full of all Credit Party
         Obligations (other than contingent indemnification obligations) and the
         expiration or termination of all Letters of Credit, (ii) that is
         transferred or to be transferred as part of or in connection with any
         disposition of Property that is permitted hereunder or under any other
         Credit Document, or (iii) subject to Section 11.1, if approved,
         authorized or ratified in writing by the Required Lenders;

                  (b)      to subordinate any Lien on any Property granted to or
         held by the Administrative Agent under any Credit Document to the
         holder of any Lien on such Property that is permitted by clause (i) of
         the definition of Permitted Liens; and

                  (c)      to release any Guarantor from its obligations under
         the Guaranty if such Person ceases to be a Subsidiary as a result of a
         transaction permitted hereunder.

         Upon request by the Administrative Agent at any time, the Required
Lenders will confirm in writing the Administrative Agent's authority to release
or subordinate its interest in

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particular types or items of Property, or to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 10.11.

         10.12    OTHER AGENTS; ARRANGERS AND MANAGERS.

         None of the Lenders or other Persons identified on the facing page or
signature pages of this Credit Agreement as a "syndication agent,"
"documentation agent," "co - agent," "book manager," "book runner," "lead
manager," "arranger," "lead arranger" or "co - arranger" shall have any right,
power, obligation, liability, responsibility or duty under this Credit Agreement
other than, in the case of such Lenders, those applicable to all Lenders as
such. Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into this
Credit Agreement or in taking or not taking action hereunder.

                                   SECTION 11

                                  MISCELLANEOUS

         11.1     AMENDMENTS, ETC.

         No amendment or waiver of any provision of this Credit Agreement or any
other Credit Document, and no consent to any departure by the Borrower or any
other Credit Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Borrower or the applicable Credit Party, as the case
may be, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such amendment, waiver or consent shall:

                  (a)      extend or increase the Commitment of any Lender (or
         reinstate any Commitment terminated pursuant to Section 9.2) without
         the written consent of such Lender (it being understood and agreed that
         a waiver of any condition precedent set forth in Section 5.2 or of any
         Default or Event of Default or mandatory reduction in the Commitments
         shall not constitute a change in the terms of any Commitment of any
         Lender);

                  (b)      (i) postpone any date fixed by this Credit Agreement
         or any other Credit Document for any payment (excluding mandatory
         prepayments) of principal, interest or fees due to the Lenders (or any
         of them) hereunder or under any other Credit Document without the
         written consent of each Lender directly affected thereby or (ii)
         postpone any date fixed by this Credit Agreement or any other Credit
         Document for any payment of any reimbursement or indemnification
         obligation hereunder or under any other Credit Document without the
         written consent of each Lender possessing a reimbursement right or
         indemnification right that has accrued or is due and payable at such
         time;

                  (c)      (i) reduce the principal of, or the rate of interest
         specified herein on, any Loan or L/C Borrowing, or any fees payable
         hereunder or under any other Credit

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         Document without the written consent of each Lender directly affected
         thereby; provided, however, that only the consent of the Required
         Lenders shall be necessary to amend the definition of "Default Rate" or
         to waive any obligation of the Borrower to pay interest at the Default
         Rate, or (ii) reduce the amount of any reimbursement or indemnification
         obligation hereunder or under any other Credit Document without the
         written consent of each Lender possessing a reimbursement right or
         indemnification right that has accrued or is due and payable at such
         time;

                  (d)      change Section 2.12 or Section 9.3 in a manner that
         would alter the pro rata sharing of payments among the Lenders required
         thereby without the written consent of each Lender;

                  (e)      change any provision of this Section 11.1 (provided
         that class vote provisions in this Section may be amended with the
         approval of a majority of each class (without the need for the approval
         of each member of each class)) or the definition of "Required Lenders"
         or any other provision hereof requiring the consent of each Lender to
         amend, waive or otherwise modify such provision or any rights
         thereunder, without the written consent of each Lender;

                  (f)      except as the result of or in connection with an
         Asset Disposition not prohibited by Section 8.5, release all or
         substantially all of the Collateral;

                  (g)      except as the result of or in connection with a
         dissolution, merger or disposition of a Credit Party not prohibited by
         Section 8.4 or Section 8.5, release the Borrower or all or
         substantially all of the other Credit Parties from its or their
         obligations under the Credit Documents without the written consent of
         each Lender;

                  (h)      without the consent of the Required Revolving Lenders
         (other than Defaulting Lenders), waive any Default or Event of Default
         (or amend any provision of any Credit Document that results in any
         outstanding Default or Event of Default being cured or terminated)
         solely for purposes of Section 5.2(c); provided, however, that only the
         consent of the Required Revolving Lenders shall be necessary to waive
         any such outstanding Default or Event of Default solely for purposes of
         Section 5.2(c);

                  (i)      without the consent of Lenders (other than Defaulting
         Lenders) holding in the aggregate at least a majority of the
         outstanding Tranche A Term Loan (and participations therein) and a
         majority of the outstanding Tranche B Term Loan (and participations
         therein), (i) amend, change, waive, discharge or terminate Section 9.3
         so as to alter the manner of application of any payment in respect of
         the Credit Party Obligations or proceeds of Collateral or (ii) amend,
         change, waive, discharge or terminate Section 2.4(c) so as to alter the
         manner of application of proceeds of any mandatory prepayment required
         by Section 2.4(b)(ii), (iii), (iv) or (v) hereof, in each case only to
         the extent such amendment, change, waiver, discharge or termination
         directly affects such Lenders;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of

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the L/C Issuer under this Credit Agreement or any Letter of Credit Application
relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Credit Agreement or any
other Credit Document; (iii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto;
(iv) a Letter of Credit may be amended in accordance with the terms of Section
2.3(b)(i) and (ii); and (v) the execution of any Joinder Agreement by the
Administrative Agent, the Borrower and the new Subsidiary or Subsidiaries party
thereto, and any update to the Schedules hereto and to the Collateral Documents
made in accordance with the terms of such Joinder Agreement, shall not require
the approval of any Lender.

         For the avoidance of doubt and notwithstanding any provision to the
contrary contained in this Section 11.1, this Credit Agreement may be amended
(or amended and restated) with the written consent of the Credit Parties and the
Required Lenders (x) to increase the aggregate Commitments of the Lenders (by
the addition of new Lenders or increasing the individual Commitments of existing
Lenders that consent thereto), (y) to add one or more additional tranches of
Loans to the Credit Agreement and to permit the extensions of credit from time
to time outstanding thereunder and the accrued interest and fees in respect
thereof (collectively, the "Additional Extensions of Credit") to share ratably
in the benefits of this Credit Agreement and other Credit Documents with the
other then outstanding Credit Party Obligations and (z) to include appropriately
the Lenders holding such credit facilities in any determination of the Required
Lenders; provided, however, that no such amendment shall permit the Additional
Extensions of Credit to share ratably with or with preference to the Term Loans
in the application of mandatory prepayments without the consent of Lenders
(other than Defaulting Lenders) holding in the aggregate at least a majority of
the outstanding Tranche A Term Loan (and participations therein) and a majority
of the outstanding Tranche B Term Loan (and participations therein), or
otherwise to share ratably with or with preference to the Revolving Loans
without the consent of the Lenders holding a majority of the outstanding
Revolving Loans.

         Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender.

         Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders shall determine whether
or not to allow a Credit Party to use cash collateral in the context of a
bankruptcy or insolvency proceeding and such determination shall be binding on
all of the Lenders.

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         11.2     NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES.

                  (a)      General. Unless otherwise expressly provided herein,
         all notices and other communications provided for hereunder shall be in
         writing (including by facsimile transmission). All such written notices
         shall be mailed (by certified or registered mail, postage prepaid),
         faxed or delivered to the applicable address, facsimile number or
         (subject to subsection (c) below) electronic mail address, and all
         notices and other communications expressly permitted hereunder to be
         given by telephone shall be made to the applicable telephone number, as
         follows:

                           (i)      if to the Borrower, the Administrative Agent
                  or the L/C Issuer, to the address, facsimile number,
                  electronic mail address or telephone number specified for such
                  Person on Schedule 11.2 or to such other address, facsimile
                  number, electronic mail address or telephone number as shall
                  be designated by such party in a notice to the other parties;
                  and

                           (ii)     if to any other Lender, to the address,
                  facsimile number, electronic mail address or telephone number
                  specified in its Administrative Questionnaire or to such other
                  address, facsimile number, electronic mail address or
                  telephone number as shall be designated by such party in a
                  notice to the Borrower, the Administrative Agent and the L/C
                  Issuer.

                  All such notices and other communications shall be deemed to
         be given or made upon the earlier to occur of (A) actual receipt by the
         relevant party hereto and (B) (1) if delivered by hand or by courier,
         when signed for by or on behalf of the relevant party hereto; (2) if
         delivered by mail (by certified or registered mail, postage prepaid),
         four (4) Business Days after deposit in the mails; (3) if delivered by
         facsimile, when sent and receipt has been confirmed by telephone; and
         (4) if delivered by electronic mail (which form of delivery is subject
         to the provisions of subsection (c) below), when delivered; provided,
         however, that notices and other communications to the Administrative
         Agent and the L/C Issuer pursuant to Section 2 shall not be effective
         until actually received by such Person. In no event shall a voicemail
         message be effective as a notice, communication or confirmation
         hereunder.

                  (b)      Effectiveness of Facsimile Documents and Signatures.
         Credit Documents may be transmitted and/or signed by facsimile. The
         effectiveness of any such documents and signatures shall, subject to
         applicable Law, have the same force and effect as manually - signed
         originals and shall be binding on all Credit Parties, the
         Administrative Agent and the Lenders. The Administrative Agent may also
         require that any such documents and signatures be confirmed by a
         manually - signed original thereof; provided, however, that the failure
         to request or deliver the same shall not limit the effectiveness of any
         facsimile document or signature.

                  (c)      Limited Use of Electronic Mail. Electronic mail and
         Internet and intranet websites may be used only to distribute routine
         communications, such as financial statements and other information as
         provided in Section 7.1, and to distribute Credit

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         Documents for execution by the parties thereto, and may not be used for
         any other purpose except as deemed reasonable and appropriate by the
         Administrative Agent after consultation with the Borrower.

                  (d)      Reliance by Administrative Agent and Lenders. The
         Administrative Agent and the Lenders shall be entitled to rely and act
         upon any notices (including telephonic Loan Notices) reasonably
         believed by the Administrative Agent and any such Lenders to have been
         given by or on behalf of the Borrower even if (i) such notices were not
         made in a manner specified herein, were incomplete or were not preceded
         or followed by any other form of notice specified herein, or (ii) the
         terms thereof, as understood by the recipient, varied from any
         confirmation thereof. The Borrower shall indemnify each Agent - Related
         Person and each Lender from all losses, costs, expenses and liabilities
         resulting from the reliance by such Person on each notice reasonably
         believed to have been given by or on behalf of the Borrower. All
         telephonic notices to and other communications with (i) the credit
         services group of the Administrative Agent and (ii) any other division
         or group within the Administrative Agent (which notifies the Borrower
         in writing after the Closing Date of such fact), may be recorded by
         such group or division of the Administrative Agent, and each of the
         parties hereto hereby consents to such recording.

         11.3     NO WAIVER; CUMULATIVE REMEDIES.

         No failure by any Lender or the Administrative Agent to exercise, and
no delay by any such Person in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by Law.

         11.4     ATTORNEY COSTS, EXPENSES AND TAXES.

         The Credit Parties jointly and severally agree (a) to pay or reimburse
the Administrative Agent for all reasonable out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of this
Credit Agreement and the other Credit Documents and any amendment, waiver,
consent or other modification of the provisions hereof and thereof (whether or
not the transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, (b) to pay or reimburse the
Administrative Agent for all costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Credit Agreement or the other Credit Documents (including all such
costs and expenses incurred during any "workout" or restructuring in respect of
the Credit Party Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs and (c) to
pay or reimburse each Lender for all costs and expenses incurred during the
existence of an Event of Default in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Credit
Agreement or the other Credit Documents (including all such costs and expenses
incurred during

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any "workout" or restructuring in respect of the Credit Party Obligations and
during any legal proceeding, including any proceeding under any Debtor Relief
Law), including all Attorney Costs. The foregoing costs and expenses shall
include all reasonable search, filing, recording, title insurance and appraisal
charges and fees and taxes related thereto, and other out - of - pocket expenses
incurred by the Administrative Agent and the cost of independent public
accountants and other outside experts retained by the Administrative Agent. All
amounts due under this Section 11.4 shall be payable within ten (10) Business
Days after demand therefor. The agreements in this Section shall survive the
termination of the Commitments and repayment of all other Credit Party
Obligations.

         11.5     INDEMNIFICATION BY THE BORROWER.

         Whether or not the transactions contemplated hereby are consummated,
the Credit Parties jointly and severally shall indemnify and hold harmless each
Agent - Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents and attorneys - in - fact (collectively the
"Indemnitees") from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (a)
the execution, delivery, enforcement, performance or administration of any
Credit Document or the consummation of the transactions contemplated thereby,
(b) any Commitment, Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (c) any actual or alleged presence or release of Hazardous Materials on
or from any property currently or formerly owned or operated by any Credit Party
or any Subsidiary thereof, or any Environmental Liability related in any way to
any Credit Party or any Subsidiary thereof, or (d) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"), in all cases, whether or not caused by or arising, in whole or in
part, out of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Credit Agreement,
except to the extent such damages are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee, nor shall any Indemnitee
have any liability for any indirect, consequential or punitive damages relating
to this Credit Agreement or any other Credit Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 11.5 shall be payable within
ten (10) Business Days after

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written demand therefor. The agreements in this Section shall survive the
resignation of the Administrative Agent, the replacement of any Lender, the
termination of the Commitments and the repayment, satisfaction or discharge of
all the other Credit Party Obligations.

         11.6     PAYMENTS SET ASIDE.

         To the extent that any payment by or on behalf of any Credit Party is
made to the Administrative Agent or any Lender, or the Administrative Agent or
any Lender exercises its right of set - off, and such payment or the proceeds of
such set - off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set - off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
applicable share of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time to
time in effect.

         11.7     SUCCESSORS AND ASSIGNS.

                  (a)      The provisions of this Credit Agreement shall be
         binding upon and inure to the benefit of the parties hereto and their
         respective successors and assigns permitted hereby, except that the
         Borrower may not assign or otherwise transfer any of its rights or
         obligations hereunder without the prior written consent of each Lender
         and no Lender may assign or otherwise transfer any of its rights or
         obligations hereunder except (i) to an Eligible Assignee in accordance
         with the provisions of subsection (b) of this Section, (ii) by way of
         participation in accordance with the provisions of subsection (d) of
         this Section, or (iii) by way of pledge or assignment of a security
         interest subject to the restrictions of subsection (f) or (g) of this
         Section (and any other attempted assignment or transfer by any party
         hereto shall be null and void). Nothing in this Credit Agreement,
         expressed or implied, shall be construed to confer upon any Person
         (other than the parties hereto, their respective successors and assigns
         permitted hereby, Participants to the extent provided in subsection (d)
         of this Section and, to the extent expressly contemplated hereby, the
         Indemnitees) any legal or equitable right, remedy or claim under or by
         reason of this Credit Agreement.

                  (b) Any Lender may at any time assign to one or more Eligible
         Assignees all or a portion of its rights and obligations under this
         Credit Agreement (including all or a portion of its Commitment and the
         Loans (including for purposes of this subsection (b), participations in
         L/C Obligations) at the time owing to it); provided that (i) except in
         the case of an assignment of the entire remaining amount of the
         assigning Lender's Commitment and the Loans at the time owing to it,
         the aggregate amount of the Commitment (which for this purpose includes
         Loans outstanding thereunder) subject to each such assignment,
         determined as of the date the Assignment and Assumption with

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         respect to such assignment is delivered to the Administrative Agent or,
         if "Trade Date" is specified in the Assignment and Assumption, as of
         the Trade Date, (A) if such Commitment assigned is a Revolving
         Commitment, shall not be less than $2,500,000 and (B) if such
         Commitment assigned is a Tranche A Term Loan Commitment or a Tranche B
         Term Loan Commitment, shall not be less than $1,000,000, in each case
         unless each of the Administrative Agent and, so long as no Event of
         Default has occurred and is continuing, the Borrower otherwise consents
         (each such consent not to be unreasonably withheld or delayed); (ii)
         any assignment of a Revolving Commitment must be approved by the
         Administrative Agent and the L/C Issuer unless the Person that is the
         proposed assignee is itself a Revolving Lender (whether or not the
         proposed assignee would otherwise qualify as an Eligible Assignee); and
         (iii) the parties to each assignment shall execute and deliver to the
         Administrative Agent an Assignment and Assumption, together with a
         processing and recordation fee of $3,500, with only one such fee
         payable in the case of substantially contemporaneous assignments to
         Approved Funds or Affiliates of a single Lender; provided that such
         processing and recordation fee shall not be required for any assignment
         from a Lender to an Affiliate of such Lender and shall not be
         reimbursed by any Credit Party. Subject to acceptance and recording
         thereof by the Administrative Agent pursuant to subsection (c) of this
         Section, from and after the effective date specified in each Assignment
         and Assumption, the Eligible Assignee thereunder shall be a party to
         this Credit Agreement and, to the extent of the interest assigned by
         such Assignment and Assumption, have the rights and obligations of a
         Lender under this Credit Agreement, and the assigning Lender thereunder
         shall, to the extent of the interest assigned by such Assignment and
         Assumption, be released from its obligations under this Credit
         Agreement (and, in the case of an Assignment and Assumption covering
         all of the assigning Lender's rights and obligations under this Credit
         Agreement, such Lender shall cease to be a party hereto but shall
         continue to be entitled to the benefits of Sections 3.1, 3.4, 3.5, 11.4
         and 11.5 with respect to facts and circumstances occurring prior to the
         effective date of such assignment). Upon request, the Borrower (at its
         expense) shall execute and deliver a Note to the assignee Lender. Any
         assignment or transfer by a Lender of rights or obligations under this
         Credit Agreement that does not comply with this subsection shall be
         treated for purposes of this Credit Agreement as a sale by such Lender
         of a participation in such rights and obligations in accordance with
         subsection (d) of this Section.

                  (c)      The Administrative Agent, acting solely for this
         purpose as an agent of the Borrower, shall maintain at the
         Administrative Agent's Office a copy of each Assignment and Assumption
         delivered to it and a register for the recordation of the names and
         addresses of the Lenders, and the Commitments of, and principal amounts
         of the Loans and L/C Obligations owing to, each Lender pursuant to the
         terms hereof from time to time (the "Register"). The entries in the
         Register shall be conclusive absent manifest error, and the Borrower,
         the Administrative Agent and the Lenders may treat each Person whose
         name is recorded in the Register pursuant to the terms hereof as a
         Lender hereunder for all purposes of this Credit Agreement,
         notwithstanding notice to the contrary. The Register shall be available
         for inspection by the Borrower and any Lender, at any reasonable time
         and from time to time upon reasonable prior notice.

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                  (d)      Any Lender may at any time, without the consent of,
         or notice to, the Borrower or the Administrative Agent, sell
         participations to any Person (other than a natural person or the
         Borrower or any of the Borrower's Affiliates (other than accounts
         managed by Oak Hill Advisors, Inc. or its Affiliates) or Subsidiaries)
         (each, a "Participant") in all or a portion of such Lender's rights
         and/or obligations under this Credit Agreement (including all or a
         portion of its Commitment and/or the Loans (including such Lender's
         participations in L/C Obligations) owing to it); provided that (i) such
         Lender's obligations under this Credit Agreement shall remain
         unchanged, (ii) such Lender shall remain solely responsible to the
         other parties hereto for the performance of such obligations and (iii)
         the Borrower, the Administrative Agent and the other Lenders shall
         continue to deal solely and directly with such Lender in connection
         with such Lender's rights and obligations under this Credit Agreement.
         Any agreement or instrument pursuant to which a Lender sells such a
         participation shall provide that such Lender shall retain the sole
         right to enforce this Credit Agreement and to approve any amendment,
         modification or waiver of any provision of this Credit Agreement;
         provided that such agreement or instrument may provide that such Lender
         will not, without the consent of the Participant, agree to any
         amendment, waiver or other modification described in clauses (a), (b)
         and (c) of the first proviso to Section 11.1 that directly affects such
         Participant. Subject to subsection (e) of this Section, the Borrower
         agrees that each Participant shall be entitled to the benefits of
         Sections 3.1, 3.4 and 3.5 to the same extent as if it were a Lender and
         had acquired its interest by assignment pursuant to subsection (b) of
         this Section. To the extent permitted by Law, each Participant also
         shall be entitled to the benefits of Section 11.9 as though it were a
         Lender, provided such Participant agrees to be subject to Section 2.12
         as though it were a Lender.

                  (e)      A Participant shall not be entitled to receive any
         greater payment under Section 3.1, 3.4 of 3.5 than the applicable
         Lender would have been entitled to receive with respect to the
         participation sold to such Participant, unless the Borrower consents
         otherwise. A Participant that would be a Foreign Lender if it were a
         Lender shall not be entitled to the benefits of Section 3.1 unless the
         Borrower is notified of the participation sold to such Participant and
         such Participant agrees, for the benefit of the Borrower, to comply
         with Section 11.15 as though it were a Lender.

                  (f)      Any Lender may at any time pledge or assign a
         security interest in all or any portion of its rights under this Credit
         Agreement (including under its Note, if any) to secure obligations of
         such Lender, including any pledge or assignment to secure obligations,
         to a Federal Reserve Bank; provided that no such pledge or assignment
         shall release such Lender from any of its obligations hereunder or
         substitute any such pledgee or assignee for such Lender as a party
         hereto.

                  (g)      Notwithstanding anything to the contrary contained
         herein, any Lender that is a Fund may create a security interest in all
         or any portion of the Loans owing to it and the Note, if any, held by
         it to the trustee for holders of obligations owed, or securities
         issued, by such Fund as security for such obligations or securities;
         provided that unless and until such trustee actually becomes a Lender
         in compliance with the other provisions of this Section 11.7, (i) no
         such pledge shall release the pledging Lender from any of its

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         obligations under the Credit Documents and (ii) such trustee shall not
         be entitled to exercise any of the rights of a Lender under the Credit
         Documents even though such trustee may have acquired ownership rights
         with respect to the pledged interest through foreclosure or otherwise.

                  (h)      Notwithstanding anything to the contrary contained
         herein, if at any time Bank of America assigns all of its Commitment
         and Loans pursuant to subsection (b) above, Bank of America may, upon
         thirty (30) days' notice to the Borrower and the Lenders, resign as L/C
         Issuer. In the event of any such resignation as L/C Issuer, the
         Borrower shall be entitled to appoint from among the Lenders a
         successor L/C Issuer hereunder; provided, however, that no failure by
         the Borrower to appoint any such successor shall affect the resignation
         of Bank of America as L/C Issuer. If Bank of America resigns as L/C
         Issuer, it shall retain all the rights and obligations of the L/C
         Issuer hereunder with respect to all Letters of Credit outstanding as
         of the effective date of its resignation as L/C Issuer and all L/C
         Obligations with respect thereto (including the right to require the
         Lenders to make Revolving Loans or fund risk participations in
         Unreimbursed Amounts pursuant to Section 2.3(c)).

         11.8     CONFIDENTIALITY.

         Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable Laws or by any subpoena or
similar legal process; (d) to any other party to this Credit Agreement; (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Credit Agreement or the enforcement of rights
hereunder; (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any Eligible Assignee of or Participant
in, or any prospective Eligible Assignee of or Participant in, any of its rights
or obligations under this Credit Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty's or prospective counterparty's professional advisor) to any credit
derivative transaction relating to obligations of the Credit Parties; (g) with
the consent of the Borrower; (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than a Credit Party and such information from such
source is not, to such Lender's or the Administrative Agent's actual knowledge,
subject to an obligation of confidentiality; or (i) to the National Association
of Insurance Commissioners or any other similar organization. In addition, the
Administrative Agent and the Lenders may disclose the existence of this Credit
Agreement and information about this Credit Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Administrative Agent and the Lenders in connection with the administration and
management of this Credit Agreement, the other Credit Documents, the
Commitments, and the Credit Extensions; provided, however, the Administrative
Agent and the Lenders may not disclose non-

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public financial information regarding any Credit Party to such market data
collectors and other service providers. For the purposes of this Section,
"Information" means all information received from any Credit Party relating to
any Credit Party or its business, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by any Credit Party. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything herein to the contrary, "Information" shall not include, and the
Administrative Agent and each Lender may disclose without limitation of any
kind, any information with respect to the "tax treatment" and "tax structure"
(in each case, within the meaning of Treasury Regulation Section 1.6011 - 4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent or
such Lender relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby.

         11.9     SET-OFF.

         In addition to any rights and remedies of the Lenders provided by Law,
upon the occurrence and during the continuance of any Event of Default, each
Lender is authorized, subject to the terms of Section 2.12, at any time and from
time to time, without prior notice to the Borrower or any other Credit Party,
any such notice being waived by each Credit Party to the fullest extent
permitted by Law, to set off 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, such Lender (or any Lender Affiliate, branch
or agent of such Lender) to or for the credit or the account of the respective
Credit Parties against any and all Credit Party Obligations owing to such Lender
hereunder or under any other Credit Document, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Credit Agreement or any other Credit Document and
although such Credit Party Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
indebtedness. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set - off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set - off and application. Notwithstanding the foregoing
the parties hereto agree that the Lenders' rights of set off with respect to
Cash Collateral are subject to the rights of the Administrative Agent (on behalf
of the Lenders) with respect to such Cash Collateral pursuant to the terms of
the control or similar agreement related to such account and the other
Collateral Documents.

         11.10    INTEREST RATE LIMITATION.

         Notwithstanding anything to the contrary contained in any Credit
Document, the interest paid or agreed to be paid under the Credit Documents
shall not exceed the maximum rate of non - usurious interest permitted by
applicable Law (the "Maximum Rate"). If the Administrative

                                      116
<PAGE>

Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Credit Party Obligations hereunder.

         11.11    COUNTERPARTS.

         This Credit Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

         11.12    INTEGRATION; EFFECTIVENESS; CONTINUING AGREEMENT.

                  (a)      This Credit Agreement, together with the other Credit
         Documents, comprises the complete and integrated agreement of the
         parties on the subject matter hereof and thereof and supersedes all
         prior agreements, written or oral, on such subject matter. In the event
         of any conflict between the provisions of this Credit Agreement and
         those of any other Credit Document, the provisions of this Credit
         Agreement shall control; provided that the inclusion of supplemental
         rights or remedies in favor of the Administrative Agent or the Lenders
         in any other Credit Document shall not be deemed a conflict with this
         Credit Agreement. Each Credit Document was drafted with the joint
         participation of the respective parties thereto and shall be construed
         neither against nor in favor of any party, but rather in accordance
         with the fair meaning thereof.

                  (b)      This Credit Agreement shall become effective at such
         time when all of the conditions set forth in Section 5.1 have been
         satisfied or waived by the Lenders and it shall have been executed by
         the Borrower, the Guarantors and the Administrative Agent, and the
         Administrative Agent shall have received copies hereof (telefaxed or
         otherwise) which, when taken together, bear the signatures of each
         Lender, and thereafter this Credit Agreement shall be binding upon and
         inure to the benefit of the Borrower, the Guarantors, the
         Administrative Agent and each Lender and their respective successors
         and permitted assigns. At such time as this Credit Agreement becomes
         effective pursuant to the terms of the immediately preceding sentence,
         the Existing Credit Agreement automatically shall be deemed amended and
         restated in its entirety by this Credit Agreement and the related
         refinancing, and the Credit Parties and the Lenders party to the
         Existing Credit Agreement shall no longer have any obligations
         thereunder (other than those obligations in the Existing Credit
         Agreement that expressly survive the termination thereof).

                  (c)      This Credit Agreement shall be a continuing agreement
         and shall remain in full force and effect until all Loans, L/C
         Obligations, interest, fees and other Credit Party Obligations (other
         than those obligations that expressly survive the termination of this
         Credit Agreement) have been paid in full and all Commitments and
         Letters of Credit have been terminated. Upon termination, the Credit
         Parties shall have no further obligations (other

                                      117
<PAGE>

         than those obligations that expressly survive the termination of this
         Credit Agreement) under the Credit Documents and the Administrative
         Agent shall, at the request and expense of the Borrower, deliver all
         the Collateral in its possession to the Borrower and release all Liens
         on the Collateral; provided that should any payment, in whole or in
         part, of the Credit Party Obligations be rescinded or otherwise
         required to be restored or returned by the Administrative Agent or any
         Lender, whether as a result of any proceedings in bankruptcy or
         reorganization or otherwise, then the Credit Documents shall
         automatically be reinstated and all Liens of the Administrative Agent
         shall reattach to the Collateral and all amounts required to be
         restored or returned and all costs and expenses incurred by the
         Administrative Agent or any Lender in connection therewith shall be
         deemed included as part of the Credit Party Obligations.

         11.13    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

         All representations and warranties made hereunder and in any other
Credit Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof. Such representations and warranties have been or will be relied
upon by the Administrative Agent and each Lender, regardless of any
investigation made by the Administrative Agent or any Lender or on their behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Commitment remains
outstanding, any Loan or any other Credit Party Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

         11.14    SEVERABILITY.

         If any provision of this Credit Agreement or the other Credit Documents
is held to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Credit Agreement and the
other Credit Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

                  11.15    TAX FORMS.

                  (a)      (i)      Each Foreign Lender shall deliver to the
                  Borrower and the Administrative Agent, prior to receipt of any
                  payment under any Credit Document (or upon accepting an
                  assignment of an interest herein), two duly signed completed
                  copies of either IRS Form W - 8BEN or any successor thereto
                  (relating to such Foreign Lender and entitling it to a
                  complete exemption from U.S. withholding tax on all payments
                  to be made to such Foreign Lender by the Borrower pursuant to
                  this Credit Agreement) or IRS Form W - 8ECI or any successor
                  thereto (relating to all payments to be made to such Foreign
                  Lender by the Borrower pursuant to this Credit Agreement) or
                  such other evidence

                                      118
<PAGE>

                  satisfactory to the Borrower and the Administrative Agent that
                  such Foreign Lender is entitled to a complete exemption from
                  U.S. withholding tax, including any exemption pursuant to
                  Section 881(c) of the Code. Thereafter and from time to time,
                  each such Foreign Lender shall (A) promptly submit to the
                  Administrative Agent such additional duly completed and signed
                  copies of one of such forms (or such successor forms as shall
                  be adopted from time to time by the relevant United States
                  taxing authorities) as may then be available under then
                  current United States Laws and regulations to avoid, or such
                  evidence as is satisfactory to the Borrower and the
                  Administrative Agent of any available exemption from or
                  reduction of, United States withholding taxes in respect of
                  all payments to be made to such Foreign Lender by the Borrower
                  pursuant to this Credit Agreement, (B) promptly notify the
                  Administrative Agent of any change in circumstances which
                  would modify or render invalid any claimed exemption or
                  reduction, and (C) take such steps as shall not be materially
                  disadvantageous to it, in the reasonable judgment of such
                  Lender, and as may be reasonably necessary (including the re -
                  designation of its Lending Office) to avoid any requirement of
                  applicable Laws that the Borrower make any deduction or
                  withholding for taxes from amounts payable to such Foreign
                  Lender.

                           (ii)     Each Foreign Lender, to the extent it does
                  not act or ceases to act for its own account with respect to
                  any portion of any sums paid or payable to such Lender under
                  any of the Credit Documents (for example, in the case of a
                  typical participation by such Lender), shall deliver to the
                  Administrative Agent on the date when such Foreign Lender
                  ceases to act for its own account with respect to any portion
                  of any such sums paid or payable, and at such other times as
                  may be necessary in the determination of the Administrative
                  Agent (in the reasonable exercise of its discretion), (A) two
                  duly signed completed copies of the forms or statements
                  required to be provided by such Lender as set forth above, to
                  establish the portion of any such sums paid or payable with
                  respect to which such Lender acts for its own account that is
                  not subject to U.S. withholding tax, and (B) two duly signed
                  completed copies of IRS Form W - 8IMY (or any successor
                  thereto), together with any information such Lender chooses to
                  transmit with such form, and any other certificate or
                  statement of exemption required under the Code, to establish
                  that such Lender is not acting for its own account with
                  respect to a portion of any such sums payable to such Lender.

                           (iii)    The Borrower shall not be required to pay
                  any additional amount to any Foreign Lender under Section 3.1
                  (A) with respect to any Taxes required to be deducted or
                  withheld on the basis of the information, certificates or
                  statements of exemption such Lender transmits with an IRS Form
                  W - 8IMY pursuant to this Section 11.15(a) or (B) if such
                  Lender shall have failed to satisfy the foregoing provisions
                  of this Section 11.15(a); provided that if such Lender shall
                  have satisfied the requirement of this Section 11.15(a) on the
                  date such Lender became a Lender or ceased to act for its own
                  account with respect to any payment under any of the Credit
                  Documents, nothing in this Section 11.15(a) shall relieve the
                  Borrower of its obligation to pay any amounts pursuant to
                  Section 3.1 in the event

                                      119
<PAGE>

                  that, as a result of any change in any applicable Law, treaty
                  or governmental rule, regulation or order, or any change in
                  the interpretation, administration or application thereof,
                  such Lender is no longer properly entitled to deliver forms,
                  certificates or other evidence at a subsequent date
                  establishing the fact that such Lender or other Person for the
                  account of which such Lender receives any sums payable under
                  any of the Credit Documents is not subject to withholding or
                  is subject to withholding at a reduced rate.

                           (iv)     The Administrative Agent may, without
                  reduction, withhold any Taxes required to be deducted and
                  withheld from any payment under any of the Credit Documents
                  with respect to which the Borrower is not required to pay
                  additional amounts under this Section 11.15(a).

                  (b)      Each Lender that is a "United States person" within
         the meaning of Section 7701(a)(30) of the Code shall deliver to the
         Administrative Agent two duly signed completed copies of IRS Form W -
         9. If such Lender fails to deliver such forms, then the Administrative
         Agent may withhold from any interest payment to such Lender an amount
         equivalent to the applicable back - up withholding tax imposed by the
         Code, without reduction.

                  (c)      If any Governmental Authority asserts that the
         Administrative Agent did not properly withhold or backup withhold, as
         the case may be, any tax or other amount from payments made to or for
         the account of any Lender, such Lender shall indemnify the
         Administrative Agent therefor, including all penalties and interest,
         any taxes imposed by any jurisdiction on the amounts payable to the
         Administrative Agent under this Section, and costs and expenses
         (including Attorney Costs) of the Administrative Agent. The obligation
         of the Lenders under this Section shall survive the termination of the
         Commitments, repayment of all other Credit Party Obligations hereunder
         and the resignation of the Administrative Agent.

         11.16    REPLACEMENT OF LENDERS.

         Under any circumstances set forth herein providing that the Borrower
shall have the right to replace a Lender as a party to this Credit Agreement,
the Borrower may, upon notice to such Lender and the Administrative Agent,
replace such Lender by causing such Lender to assign, and such Lender shall
assign, its Commitment and outstanding Loans (with the assignment fee to be paid
by the Eligible Assignee in such instance) at par (unless otherwise consented to
by such Lender) pursuant to Section 11.7(b) to one or more other Lenders or
Eligible Assignees procured by the Borrower. The Borrower shall (x) pay in full
all principal, interest, fees and other amounts owing to such Lender through the
date of replacement (including any amounts payable pursuant to Section 3.5) and
(y) release such Lender from its obligations under the Credit Documents. Any
Lender being replaced shall execute and deliver an Assignment and Assumption
with respect to such Lender's Commitment and outstanding Loans and
participations in L/C Obligations.

                                      120
<PAGE>

         11.17    GOVERNING LAW.

                  (a)      THIS CREDIT AGREEMENT SHALL BE GOVERNED BY, AND
         CONSTRUED IN ACCORDANCE WITH, the LAW OF THE STATE OF NEW YORK;
         PROVIDED THAT THE ADMINISTRATIVE Agent AND EACH LENDER SHALL RETAIN ALL
         RIGHTS ARISING UNDER FEDERAL LAW.

                  (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
         CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE
         COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE
         UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION
         AND DELIVERY OF THIS CREDIT AGREEMENT, EACH OF THE CREDIT PARTIES, THE
         Administrative Agent AND EACH LENDER CONSENTS, FOR ITSELF AND IN
         RESPECT OF ITS PROPERTY, TO THE NON - EXCLUSIVE JURISDICTION OF THOSE
         COURTS. EACH OF THE CREDIT PARTIES, THE ADMINISTRATIVE Agent AND EACH
         LENDER 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 ANY CREDIT DOCUMENT OR
         OTHER DOCUMENT RELATED THERETO. EACH OF THE CREDIT PARTIES, THE
         Administrative Agent AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY
         SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
         MEANS PERMITTED BY THE LAW OF SUCH STATE.

         11.18    WAIVER OF RIGHT TO TRIAL BY JURY.

         EACH PARTY TO THIS CREDIT AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
ANY CREDIT DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS CREDIT AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      121
<PAGE>

         Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                           PACKAGING DYNAMICS OPERATING COMPANY,
                                    a Delaware corporation

                                    By: /s/ Henry C. Newell
                                        -----------------------------------
                                    Name: Henry C. Newell
                                    Title: Chief Financial Officer

GUARANTORS:                         PACKAGING DYNAMICS CORPORATION,
                                    a Delaware corporation

                                    BAGCRAFT PACKAGING, L.L.C.
                                    (f/k/a BAGCRAFT ACQUISITION, L.L.C.),
                                    a Delaware limited liability company

                                    INTERNATIONAL CONVERTER, INC.,
                                    a Delaware corporation

                                    IPMC ACQUISITION, L.L.C.,
                                    a Delaware limited liability company

                                    WOLF PACKAGING INC.,
                                    an Iowa corporation

                                    By: /s/ Henry C. Newell
                                        ----------------------------------
                                    Name: Henry C. Newell
                                    Title: Chief Financial Officer

<PAGE>

ADMINISTRATIVE AGENT
AND LENDERS:

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

                                   By: /s/ Mary F. Edwards
                                       ----------------------------------
                                   Name: Mary F. Edwards
                                   Title: Assistant Vice President

                            (Signatures Continued)

                                           Packaging Dynamics Operating Company
                                              Credit Agreement - September 2003
                                                                 Signature Page
<PAGE>

                                    BANK OF AMERICA, N.A.,
                                    as a Lender and as L/C Issuer

                                    By: /s/ Richard C. Hardison
                                        ----------------------------------
                                    Name: Richard Hardison
                                    Title: Vice President

                             (Signatures Continued)

                                            Packaging Dynamics Operating Company
                                               Credit Agreement - September 2003
                                                                  Signature Page
<PAGE>

                                    NATIONAL CITY BANK

                                    By: /s/ Stephanie Pass
                                        ----------------------------------
                                    Name: Stephanie Pass
                                    Title: Vice President

                                            Packaging Dynamics Operating Company
                                               Credit Agreement - September 2003
                                                                  Signature Page
<PAGE>

                                    THE NORTHERN TRUST COMPANY

                                    By: /s/ Roger McDougal
                                        ----------------------------------
                                    Name: Roger McDougal
                                    Title: Second Vice President

                                            Packaging Dynamics Operating Company
                                               Credit Agreement - September 2003
                                                                  Signature Page
<PAGE>

                                    FIFTH THIRD BANK (CHICAGO)

                                    By: /s/ Joshua L. Van Manen
                                        ----------------------------------
                                    Name: Joshua L. Van Manen
                                    Title: AVP

                                                                  Signature Page

<PAGE>

                                    BANK OF SCOTLAND

                                    By: /s/ Joseph Fratus
                                        -----------------------
                                    Name: Joseph Fratus
                                    Title: First Vice President

                                                                  Signature Page

<PAGE>

                                    LASALLE BANK NATIONAL ASSOCIATION

                                    By: /s/ Edward Kruschka
                                        --------------------------------
                                    Name: Edward Kruschka
                                    Title: Commercial Banking Officer

                                                                  Signature Page<PAGE>

                                                                    EXHIBIT 10.2

                         Packaging Dynamics Corporation
                           Merrill Lynch Nonqualified
                  Deferred Compensation Plan Adoption Agreement

         The Packaging Dynamics Corporation Merrill Lynch Nonqualified Deferred
Compensation Plan Adoption Agreement is hereby amended, effective the date set
forth below, in the following respects:

         1.       To permit the Employer to make Discretionary Incentive
                  Contributions under Section 5C of the Adoption Agreement based
                  upon a percentage (as determined from time to time by the
                  Employer) of the Participants' Compensation (as defined in
                  Section 4 of the Adoption Agreement).

         2.       To amend the vesting schedule for Matching Deferrals and
                  Discretionary Incentive Contributions under Sections 6A and 6C
                  of the Adoption Agreement so that a Participant will vest in
                  his Matching Deferrals and Discretionary Incentive
                  Contributions as set forth in such sections (with credit being
                  given for years of service occurring prior to the time a
                  Matching Deferral or Discretionary Incentive Contribution is
                  made).

         Executed by the parties hereto on the date indicated below.

Dated: As of January 1, 2003

                                                  PACKAGING DYNAMICS CORPORATION

                                                  By:  /s/ Phillip D. Harris
                                                       -------------------------
                                                       Title: President & CEO

<PAGE>

FUTURECOMP(TM) SERVICE

Client Information Form

(THIS FORM MUST BE FILLED OUT DIRECTLY BY THE EMPLOYER SPONSORING THE PLAN.)

Employer Information

PACKAGING DYNAMICS CORPORATION
--------------------------------------------------------------------------------
Name

3900 WEST 43 RD STREET
--------------------------------------------------------------------------------
Address

CHICAGO                        IL                                   60632
--------------------------------------------------------------------------------
City                           State                                ZIP Code

HANK NEWELL                    VICE PRESIDENT & CHIEF FINANCIAL OFFICER
--------------------------------------------------------------------------------
Primary Contact                Title

(773) 843-8000                 (773) 254-8136
--------------------------------------------------------------------------------
Telephone Number               Fax Number

32-0009217                     APPX. 2000/ FLEXIBLE PACKAGING
--------------------------------------------------------------------------------
Employer Identification Number Number of Employees/ Nature of Business

Plan Information

PACKAGING DYNAMICS CORPORATION DEFERRED COMPENSATION PLAN
--------------------------------------------------------------------------------
Name of Nonqualified Deferred Compensation Plan

10-20                          12/31
--------------------------------------------------------------------------------
Total Number of Employees      Plan Year-End Date
Eligible for Your Plan

                               APPROX $50,000 - $100,000 INITIALLY
--------------------------------------------------------------------------------
Total Plan Assets              Anticipated Annual Contributions

                               MONTHLY
--------------------------------------------------------------------------------
Anticipated Date of First      Frequency of Contributions (e.g., Annually,
Contribution                   Quarterly, Monthly)

Administrative Service Provider/Recordkeeper (if any)

PACKAGING DYNAMICS CORPORATION
--------------------------------------------------------------------------------
Name

3900 WEST 43RD STREET
--------------------------------------------------------------------------------
Address

CHICAGO                        IL                                   60632
--------------------------------------------------------------------------------
City                           State                                Zip Code

HANK NEWELL                    VICE PRESIDENT & CHIEF FINANCIAL OFFICER
--------------------------------------------------------------------------------
Primary Contact                Title

(773) 843-8000                 (773) 254-8136
--------------------------------------------------------------------------------
Telephone Number               Fax Number

2
<PAGE>

Plan Sponsor Bank for Fund Transfers (To be completed if plan assets are to be
transferred from a bank, if your company has an existing deferred compensation
plan.)

________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
City                           State                                ZIP Code
________________________________________________________________________________
Account Number
________________________________________________________________________________
Primary Contact                Title
________________________________________________________________________________
Telephone Number               Fax Number

If you are transferring assets from an existing deferred compensation plan,
please provide a copy of the plan document, the Board Resolution adopting the
existing plan and your trust statement.

Investment Information

Account Type: (Check [X] either "Pooled account" or "Individual participant
accounts.")

  [ ] Pooled account. If checked, list the investment options (using Merrill
      Lynch Asset Management, L.P. [MLAM] mutual funds):

       1._________________________________  4.__________________________________

       2._________________________________  5.__________________________________

       3._________________________________  6.__________________________________

       Please list any additional funds, as necessary, on a separate sheet.

       The plan's money fund designation will be:

       [ ] CMA(R) Money Fund [ ] CMA Government Securities Fund [ ] CMA
           Tax-Exempt Money Fund

       Individual participant accounts. Investment options as noted in the
       brochure are available through your Financial Consultant.
                                                                               3
<PAGE>

FUTURECOMP(TM) SERVICE

SIGNATURE CARD

The employer represents that the individual(s) signing below are authorized to
act in respect to all matters pertaining to the Trust and that the client
information provided on this form is correct as stated.

By:

/s/ Phillip D. Harris 30 Apr 03 PHILLIP D. HARRIS   PRESIDENT & CEO
--------------------------------------------------------------------------------
Signature/Date                  Print Name          Title

/s/ Henry C. Newell 4/30/03     HENRY C. NEWELL     VP & CFO
--------------------------------------------------------------------------------
Signature/Date                  Print Name          Title

________________________________________________________________________________
Signature/Date                  Print Name          Title

To BE COMPLETED BY THE FINANCIAL CONSULTANT

All deferred compensation account documents should be forwarded to:

                                           For overnight delivery the address is
          Merrill Lynch Trust                 Merrill Lynch Trust
   Employee Benefit Trust Operations          Employee Benefit Trust Operations
              Box 30532                       300 Davidson Ave., 2nd Floor West
   New Brunswick, New Jersey 08989-0532       Somerset, New Jersey 08873

________________________________________________________________________________
Name of Financial Consultant            Financial Consultant ID Number
________________________________________________________________________________
Address
________________________________________________________________________________
City                                    State                    Zip Code
________________________________________________________________________________
Telephone Number                        Fax Number
________________________________________________________________________________
Office Prefix                           Office Wire Call

4
<PAGE>

Board Resolution

(HIGHLIGHTED AREAS WILL BE COMPLETED BY MERRILL LYNCH TRUST.)

BOARD OF DIRECTORS RESOLUTION OF

(Plan Sponsor) PACKAGING DYNAMICS CORP, held at CHICAGO, IL on day of
11/19/2002. at - o'clock in the -

There were present:

FRANK V. TANNURA presided as Chairman of the meeting and HENRY C. NEWELL acted
as Secretary or Witness of the meeting.

It was stated that the purpose of the Resolution was to consider and discuss the
adoption of the attached (DEFERRED COMP PLAN and the) Trust Agreement containing
the terms and conditions governing the relationship between Merrill Lynch Trust
and (Plan Sponsor) PACKAGING DYNAMICS CORP with respect to the appointment of
Merrill Lynch Trust as Trustee of said Trust by the Corporation (1) and the
termination ____________ as the current trustee) effective _____/_____ 19____
and the discussion of the proposed adoption and appointment (and termination)
was in order.

         Following a discussion thereof, upon motion duly made, seconded and
unanimously carried, it was

         Resolved, that the attached (Plan and) Trust Agreement is adopted and
that Merrill Lynch Trust shall be appointed as Trustee of the trust established
under (PACKAGING DYNAMICS DEFERRED CORP. PLAN which was adopted by resolution
of the Board on ___) (and - Trust Company, which had been serving as Trustee of
said Trust, is hereby relieved of and such position) effective as of -/ -, 19-:
and

         Resolved Further that the proper officers of the Corporation are, and
each of them is, hereby authorized and directed, in the name of and on behalf of
the Corporation, to execute and deliver the Trust Agreement, and to do all other
things, including the execution of all other documents and the designation of
other individuals to represent the Corporation in matters pertaining to the
Trust, that they deem necessary or appropriate to implement the foregoing
resolution, or such other matters pertaining to the Trust. There being no
further business before the meeting, the same was on motion duly made, seconded
and carried, duly adjourned.

Witness

/s/ Henry C. Newell                                          Secretary
---------------------------                                 --------------------
Authorized Officer or Principal                             Secretary or Witness

(1) In connection with its adoption of a Nonqualified Deferred Compensation
Plan.

                                                                               5
<PAGE>

FUTURECOMP(TM) SERVICE

Plan Participant Identification Form

(INSTRUCTIONS TO EMPLOYER: COMPLETE ON BEHALF OF ACTIVE PARTICIPANTS IN THE PLAN
AND ONLY IF INDIVIDUAL ACCOUNTS ARE TO BE ESTABLISHED.)

   PACKAGING DYNAMICS CORPORATION, 3900 WEST 43RD STREET, CHICAGO IL 60632
   ----------------------------------------------------------------------------
   Name and Address of Employer:

   PHILLIP D. HARRIS
   ----------------------------------------------------------------------------
1. Name of Active Participant

   C/o PACKAGING DYNAMICS CORPORATION, 3900 W. 43RD ST., CHICAGO IL 60632
   ----------------------------------------------------------------------------
   Address

   ###-##-####                                         A
   ----------------------------------------------------------------------------
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   FRANK V. TANNURA
   ----------------------------------------------------------------------------
2. Name of Active Participant

   ###-##-####                                         A
   ----------------------------------------------------------------------------
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   HENRY C. NEWELL
   ----------------------------------------------------------------------------
3. Name of Active Participant

   ----------------------------------------------------------------------------
   Address

   --------------------------                          A
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   THOMAS J. WOLF
   ----------------------------------------------------------------------------
4. Name of Active Participant

   635 1/2 AVENUE G FORT MADISON IA 52627
   ----------------------------------------------------------------------------
   Address

   ###-##-####                                         A
   ----------------------------------------------------------------------------
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   RANDY VAN ANTWERP
   ----------------------------------------------------------------------------
5. Name of Active Participant

   6418 TROTWOOD ST. PORTAGE MI 49024
   ----------------------------------------------------------------------------
   Address

   ###-##-####                                         A
   ----------------------------------------------------------------------------
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

6
<PAGE>

   JEREMY S. LAWRENCE
   ----------------------------------------------------------------------------
6. Name of Active Participant

   4805 NEWPORT LN RACINE WI 53403
   ----------------------------------------------------------------------------
   Address

   ###-##-####                                         A
   ----------------------------------------------------------------------------
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   _____________________________________________________________________________
7. Name of Active Participant
   _____________________________________________________________________________
   Address
   _____________________________________________________________________________
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   _____________________________________________________________________________
8. Name of Active Participant
   _____________________________________________________________________________
   Address
   _____________________________________________________________________________
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   _____________________________________________________________________________
9. Name of Active Participant
   _____________________________________________________________________________
   Address
   _____________________________________________________________________________
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

   _____________________________________________________________________________
10. Name of Active Participant
   _____________________________________________________________________________
   Address
   _____________________________________________________________________________
   Social Security Number       Money Fund Designation: select and write A, B or
                                C per participant(2)

Please attach additional sheets if necessary.

(2)Select "A" for CMA Money Fund; "B" for CMA Tax-Exempt Money FUND:"C" for CMA
Government Securities Fund.

                                                                               7
<PAGE>

FUTURECOMP(TM) SERVICE

The Merrill Lynch Nonqualified Deferred Compensation Plan Trust Agreement.
(HIGHLIGHTED AREAS WILL BE COMPLETED BY MERRILL LYNCH TRUST.)

TRUST UNDER: PACKAGING DYNAMICS CORPORATION DEFERRED COMPENSATION PLAN(3)

This Agreement made this day of 1/1/2003, by and between PACKAGING DYNAMICS
CORP. (Company) and Merril Lynch Trust Company (Trustee)

WHEREAS, Company has adopted the Nonqualified Deferred Compensation Plan
identified above and such other Plan(s) as are listed in Appendix A.

WHEREAS, Company has incurred or expects to incur liability under the terms of
 such Plan(s) with respect to the Individuals participating in such Plan(s).

WHEREAS, Company wishes to establish a trust (the "Trust" and to contribute to
the Trust assets that shall be held therein,subject to the claims of Company's
creditors in the event of the Company's insolvency, as herein defined, until
paid to Plan participants and their beneficiaries in such manner and at such
times as specified in the Plan(s);

WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plan(s) as an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees for purpose of
Title [of the Employee Retirement Income Security Act of 1974;

WHEREAS, it is the intention of Company to make contributions to the Trust to
provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plan (s);

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:

PLEASE COMPLETE THE FOLLOWING INSTRUCTIONS.

1. WRITE THE NAME OF YOUR COMPANY AND THE DATE ON THE RIGHT, WRITE THE PLAN
   NAME(S) IN APPENDIX A (ON PAGES 15 AND 17) OR THIS DOCUMENT

2. EXECUTE SECOND SIGNATURE (ON PAGES 15 AND 17), IF REQUIRED. WRITE NAME OF
   COMPANY AND OBTAIN SIGNATURE OF AUTHORIZED PERSON. THE FIRST OF THE SIGNATURE
   PAGES IS FOR YOUR COMPANY AND THE SECOND IS FOR MERRIL LYNCH TRUST. HOWEVER,
   BOTH SIGNED COPIES SHOULD BE RETURNED WITH THE TRUST AGREEMENT FOR TRUSTEE
   EXECUTION. AN EXECUTED ORIGINAL OF THE ENTIRE TRUST DOCUMENT WILL BE SENT
   BACK TO YOU UPON ACCEPTANCE OF YOUR ACCOUNT.

3. DESCRIBE CASH OR SECURITIES TO BE INITIALLY CONTRIBUTED IN APPENDIX B (ON
   PAGE 15 AND 17).

4. COMPLETE Section 16, Effective Date (ON PAGES 15 AND 17).

5. RETURN COMPLETED TRUST AGREEMENT WITH YOUR APPLICATION.

This trust is intended to comply with the model grantor trust requirements of
Revenue Procedure 92-64. While Merrill Lynch believes that this Trust Agreement
complies with the Revenue Procedure. It provides no assurance that modifications
to the additional terms contained herein would not be required by the Internal
Revenue Service during the review process in the event the Company were to apply
for a rulling as to the [ILLEGIBLE] consequences of its plan and this trust if
the Company desires to obtain such a rulling from the Internal Revenue Service:
a copy of this Trust Agreement with all substituted or additional language
underlined as required by the Revenue Procedure, is available through your
Merril Lynch Financial Consultant.

8
<PAGE>

Section 1. Establishment of Trust.

(a) Company hereby deposits with Trustee in trust such cash and/or marketable
    securities, if any, listed in Appendix B, which shall became the principal
    of the Trust to be held, administered and disposed of by Trustee as provided
    in this Trust Agreement.

(b) The Trust hereby established shall be irrevocable.

(c) The Trust is intended to be a grantor trust of which Company is the grantor,
    within the meaning of subpart E, part I. subchapter J, chapter 1, subtitle A
    of the Internal Revenue Code of 1986, as amended, and shall be construed
     accordingly.

(d) The principal of the Trust, and any earnings thereon, shall be held separate
    and apart from other funds of Company and shall be used exclusively for the
    uses and purposes of Plan participants and general creditors as herein set
    forth. Plan participants and their beneficiaries shall have no preferred
    claim on, or any beneficial ownership interest in, any assets of the Trust.
    Any rights created under the Plan(s) and this Trust Agreement shall be mere
    unsecured contractual rights of Plan participants and their beneficiaries
    against Company. Any assets held by the Trust will be subject to the claims
    of Company's general creditors under federal and state law in the event of
    insolvency, as defined in Section 3(a) herein.

(e) Company, in its sole discretion, may at any time, or from time to time,
    make additional deposits of cash or other property in trust with Trustee to
    augment the principal to be held, administered and disposed of by Trustee as
    provided in this Trust Agreement. Neither Trustee nor any Plan participant
    or beneficiary shall have any right to compel such additional deposits.

(f) Trustee shall not be obligated to receive such cash and/or property unless
    prior thereto Trustee has agreed that such cash and/or property is
    acceptable to Trustee and Trustee has received such reconciliation,
    allocation investment or other information concerning, or representation
    with respect to, the cash and/or property as Trustee may require. Trustee
    shall have no duty or authority to (a) require any deposits to be made under
    the Plan or to Trustee; (b) compute any amount to be deposited under the
    Plan to Trustee; or (c) determine whether amounts received by Trustee comply
    with the Plan. Assets of the Trust may, in Trustee's discretion, be held
    in an account with an affiliate of Trustee.

Section 2. Payments to Plan Participants and Their Beneficiaries.

(a) With respect to each Plan participant, Company shall deliver to Trustee a
    schedule (the "Payment Schedule") that indicates the amounts payable in
    respect of the Participant (and his or her beneficiaries), that provides a
    formula or other instructions acceptable to Trustee for determining the
    amounts so payable, the form in which such amounts are to be paid (as
    provided for or available under the Plan(s)), and the time of commencement
    for payment of such amounts. The Payment Schedule shall be delivered to
    Trustee not more than 30 business days nor fewer than 15 business days prior
    to the first date on which a payment is to be made to the Plan participant.
    Any change to a Payment Schedule shall be delivered to Trustee not more than
    30 days nor fewer than 15 days prior to the date on which the first payment
    is to be made in accordance with the changed Payment Schedule, Except as
    otherwise provided herein. Trustee shall make payments to Plan participants
    and their beneficiaries in accordance with such Payment Schedule. The
    Trustee shall make provisions for the reporting and withholding of any
    federal, state or local taxes that may be required to be withheld with
    respect to the payment of benefits pursuant to the terms of the Plan(s) and
    shall pay amounts withheld to the appropriate taxing authorities or
    determine that such amounts have been reported, withheld and paid by
    Company. It being understood among the parties hereto mat (1) Company shall
    on a timely basis provide Trustee specific information as to the amount of
    taxes to be withheld and (2) Company shall be obligated to receive such
    withheld taxes from Trustee and properly pay and report such amounts to the
    appropriate taxing authorities.

(b) The entitlement of a Plan participant or his or her beneficiaries to
    benefits under the Plan(s) shall be determined by Company or such party as
    it shall designate under the Plans(s), and any claim for such benefits shall
    be considered and reviewed under the procedures set out in the Plan(s).

(c) Company may make payment of benefits directly to Plan participants or their
    beneficiaries as they become due under the terms of the Plan(s). Company
    shall notify Trustee of its decision to make payment of benefits directly
    prior to the time amounts are payable to participants or their
    beneficiaries. In addition, if the principal of the Trust, and any earnings
    thereon, are not sufficient to make payments of benefits in accordance with
    the terms of the Plan(s). Company shall make the balance of each payment as
    it fails due. Trustee shall notify Company where principal and earnings are
    not sufficient.

(d) Trustee shall have no responsibility to determine whether the Trust is
    sufficient to meet the liabilities under the Plan(s), and shall not be
    liable for payments or Plan(s) liabilities in excess of the value of the
    Trust's assets.

Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When
Company is Insolvent.

(a) Trustee shall cease payment of benefits to Plan participants and their
    beneficiaries if the Company is insolvent. Company shall be considered
    "insolvent" for purposes of this Trust Agreement if (i) Company is unable to
    pay its debts as they become due, or (ii) Company is subject to a pending
    proceeding as a debtor under the United States Bankruptcy Code.

                                                                               9
<PAGE>

FUTURECOMP(SM) SERVICE

(b)  At all times during the continuance of this Trust as provided in Section
     1(d) hereof, the principal and income of the Trust shall be subject to
     claims of general creditors of Company under federal and state law as set
     forth below.

     (1)  The Board of Directors and the Chief Executive Officer of Company (or,
          if there is no Chief Executive Officer, the highest ranking officer)
          shall have the duty to inform Trustee in writing of Company's
          insolvency. If a person claiming to be a creditor of Company alleges
          in writing to Trustee that Company has become insolvent, Trustee shall
          determine whether Company is insolvent and, pending such
          determination. Trustee shall discontinue payment of benefits to Plan
          participants or their beneficiaries.

     (2)  Unless Trustee has actual knowledge of Company's insolvency, or has
          received notice from Company or a person claiming to be a creditor
          alleging that Company is insolvent. Trustee shall have no duty to
          inquire whether Company is insolvent. Trustee may in all events rely
          on such evidence concerning Company's solvency as may be furnished to
          Trustee and that provides Trustee with a reasonable basis for making a
          determination concerning Company's solvency.

     (3)  If at any time Trustee has determined that Company is insolvent,
          Trustee shall discontinue payments to Plan participants or their
          beneficiaries and shall hold the assets of the Trust for the benefit
          of Company's general creditors. Nothing in this Trust Agreement shall
          in any way diminish any rights of Plan participants or their
          beneficiaries to pursue their rights as general creditors of Company
          with respect to benefits due under the Plan(s) or otherwise.

     (4)  Trustee shall resume the payment of benefits to Plan participants or
          their beneficiaries in accordance with Section 2 of this Trust
          Agreement only after Trustee has determined that Company is not
          insolvent (or is no longer insolvent).

(c)  Provided that there are sufficient assets, if Trustee discontinues the
     payment of benefits from the Trust pursuant to Section 3(b) hereof and
     subsequent))' resumes such payments, the first payment following such
     discontinuance shall include the aggregate amount of all payments due to
     Plan participants or their beneficiaries under the terms of the Plan(s) for
     the period of such discontinuance, less the aggregate amount of my payments
     made to Plan participants provided for hereunder during any such period of
     discontinuance; provided that Company has given Trustee the Information
     with respect to such payments made during the period of discontinuance
     prior to resumption to payments of Trustee.

Section 4. Payments to Company.

Except as provided in Section 3 hereof, since the Trust is irrevocable in
accordance with Section 1(b) hereof, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan(s).

Section 5. Investment Authority.

(a)  Trustee shall invest and reinvest the principal and income of the Trust as
     directed by the Company (including directions that the Trustee follow Plan
     participants' deemed investment elections made in accordance with the terms
     of (the Plan), which directions may be changed from time to time, all in
     accordance with procedures established by the Trustee. The Trustee may
     limit the categories of assets in which the Trust may be invested.

(b)  The Trustee may invest in securities (including stock or rights to acquire
     stock) or obligations issued by Company. All rights associated with assets
     of the Trust shall be exercised by Trustee or the person designated by
     Trustee, and shall in no event be exercised by or rest with Plan
     participants, except that voting rights with respect to Trust assets will
     be exercised by Company unless an investment adviser has been appointed
     pursuant to Section 5 (d) and voting authority has been delegated to such
     investment advisor.

(c)  Company shall have the right at any time, and from dine to time in its sole
     discretion, to substitute assets of equal fair market value for any asset
     held by the Trust. This right is exercised by Company in a nonfiductary
     capacity without the approval or consent of any person in a fiduciary
     capacity.

(d)  The Company may appoint one or more investment managers, including any
     entitles affiliated with the Trustee, who shall have the power to manage,
     acquire, or dispose of such portion of the assets of the Trust as the
     Company shall determine subject to the following:

     (1)  An Investment manager shall act in accordance with the provisions of
          an investment management agreement entered into between it and the
          Company, an executed copy of which investment management agreement
          shall be filed with the Trustee:

     (2)  Each such investment manager must be registered as an investment
          adviser under the investment Advisers Act of 1940, and shall provide
          investment advice on a discretionary or nondiscretionary basis with
          respect to that portion of the assets of the Trust as the Company
          shall specify from time to time by written direction (s) to the
          Trustee;

     (3)  The indicia of ownership of the assets of the Trust shall be held by
          the Trustee at all times;

     (4)  Any entity affiliated with the Trustee may act as broker or dealer to
          execute transactions, including the purchase of any securities
          directly

10

<PAGE>

          distributed, underwritten, or issued by an entity affiliated with the
          Trustee, at standard commission rates, mark-ups or concessions, and to
          provide other management or investment services with respect to such
          trust including the custody of assets;

     (5)  Any direction given to the Trustee by an investment manager shall be
          given in writing or given orally and confirmed in writing as soon as
          practicable. Alternatively, an investment manager may provide
          investment instructions directly to the broker or dealer and receipt
          by the Trustee of a confirmation of the transaction from the broker or
          dealer shall be conclusive evidence of such transactions. In either
          case, the Trustee shall have the authority within 24 hours of receipt
          of such direction from the investment manager or confirmation of a
          transaction to instruct the investment manager to rescind the
          transaction if the Trustee finds that the investment is inconsistent
          with its operational or administrative requirements; and

     (6)  The Trustee may pay any such investment manager for any such services
          from the assets at the Trust without reduction for any fees or
          compensation paid to the Trustee for its services as trustee.

Notwithstanding any other provision of the Agreement, with respect to the
investment of the assets of the Trust managed by an investment manager; the
Trustee shall have only the duty to follow the directions of the investment
manager and the Trustee shall not be liable to anyone:

     (i)   for an act or omission of the investment manager with respect to the
           investment of such assets;

     (ii)  for failing to act with respect to the investment of such assets
           absent direction from the investment manager; or

     (iii) for failing to invest, periodically review or otherwise deal with the
           investment of such assets.

In the event the Company is "insolvent" for purposes of Section 3 of this Trust
Agreement and the Company fails to provide effective investment instructions to
the Trustee as provided in Section 5(a) of this Trust Agreement, the Trustee may
appoint one or more Investment advisers who are registered as investment
advisers under the Investment Advisers Act of 1940, who may be affiliates of
Trustee, to provide investment advice on a discretionary or non-discretionary
basis with respect to all or a specified portion of the assets of the Trust.

(e)  Subject to Section 5(a), Trustee, or Trustee's designee, is authorized and
     empowered:

     (1)  To invest and reinvest Trust assets, together with the income
          therefrom, in common stock, preferred stock convertible preferred
          stock, bonds, debentures, convertible debentures and bonds, mortgages,
          notes, commercial paper and other evidences of indebtedness (including
          those issued by Trustee), shares of mutual funds (which funds may be
          sponsored, managed or offered by an affiliate of Trustee), guaranteed
          investment contracts, bank investment contracts, other securities,
          policies of life Insurance, annuity contracts, options, options to buy
          or sell securities or other assets, and all other property of any type
          (personal, real or mixed, and tangible or intangible);

     (2)  To deposit or invest all or any part of the assets of the Trust in
          savings accounts or certificates of deposit or  Other deposits in a
          bank or savings and loan association or other depository institution,
          including Trustee or any of its affiliates, provided with respect to
          such deposits with Trustee or an affiliate the deposits bear a
          reasonable interest rate;

     (3)  To hold, manage, improve, repair and control all property, real or
          personal, forming part of the Trust; to sell, convey, transfer,
          exchange, partition, lease for any term, even extending beyond the
          duration of this Trust, and otherwise dispose of the same from time to
          time;.

     (4)  To hold in cash, without liability for interest, such portion of the
          Trust as is pending investments, or payment of expenses, or the
          distribution of benefits;

     (5)  To take such actions as may be necessary or desirable to protect the
          Trust from loss due to the default on mortgages held in the, Trust
          including the appointment of agents or trustees in such other
          jurisdictions as may seem desirable, to transfer property to such
          agents or trustees, to grant to such agents such powers as are
          necessary or desirable to protect the Trust, to direct such agent or
          trustee, or to delegate such power to direct, and to remove such agent
          or trustee;

     (6)  To settle, compromise or abandon all claims and demands in favor of or
          against the trust;

     (7)  To exercise all of the further rights, powers, options and privileges
          granted, provided for, or vested in trustees generally under the laws
          of the state in which Trustee has its principal plan of business, so
          that the powers conferred upon Trustee herein shall not be in
          limitation of any authority conferred by law, but shall be in addition
          thereto;

     (8)  To borrow money from any source and to execute promissory notes,
          mortgages or other obligations and to pledge or mortgage any trust
          assets as security; and

                                                                              11

<PAGE>

FUTURECOMP(SM) SERVICE

     (9)  To maintain accounts at, execute transactions through, and lend on an
          adequately secured basis stocks, bonds or other securities to, any
          brokerage or other firm, Including any firm that is an affiliate of
          Trustee.

Section 6. Additional Powers of Trustee.

To the extent necessary or which it deems appropriate to Implement its powers
under Section 5 or otherwise to fulfill any of its duties and responsibilities
as Trustee of the Trust, Trustee shall have the following additional powers and
authority:

(a)  To register securities, or any other property, in its name or in the name
     of any nominee, including the name of any affiliate or the nominee name
     designated by any affiliate, with or without indication of the capacity in
     which property shall be held, or to hold securities in bearer form and to
     deposit any securities or other property in a depository or clearing
     corporation:

(b)  To designate and engage the services of, and to delegate powers and
     responsibilities to, such agents, representatives, advisers, counsel and
     accountants as Trustee considers necessary or appropriate, any of whom may
     be an affiliate of Trustee or a person who renders services to such an
     affiliate and as a part of its expenses under this Trust Agreement, to pay
     their reasonable expenses and compensation:

(c)  To make, execute and deliver, as Trustee, any and all deeds, leases,
     mortgages, conveyances, waivers, releases or other instruments in writing
     necessary or appropriate for the accomplishment of any of the powers listed
     in this Trust Agreement; and

(d)  Generally to do all other acts that Trustee deems necessary or appropriate
     for the protection of the Trust.

Section 7. Disposition of Income.

During the term of this Trust all income received by the Trust, net of expenses
and taxes, shall be accumulated and reinvested.

Section 8. Accounting by Trustee.

Trustee shall keep accurate and detailed records of all investments, receipts,
disbursements, and all other transactions required to be made, including such
specific records as shall be agreed upon in writing between Company and Trustee.
Within 90 days following the close of each calendar year and within 90 days
after removal or resignation of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust during such year of during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investment purchase and sold with the cost of net proceeds of such purchases or
sales (accrued interest paid or receivable being shown separately), and showing
all cash, securities and other property held in the Trust at the end of such
year or as of the data of such removal or resignation, as the case may be.
Trustee may satisfy its obligation under this Section 8 by rendering to Company
monthly statements setting forth the information required by this Section
separately for the month covered by the statement.

Section 9. Responsibility and Indemnity of Trustee.

(a)  Trustee shall act with the care, skin, prudence and diligence under the
     circumstances then prevailing that a prudent person acting in like capacity
     and familiar with such matters would use in the conduct of an enterprise
     of a like character and with like aims, provided, however, that Trustee
     shall incur no liability to any person for any action taken pursuant to a
     direction, request or approval given by Company which is contemplated by,
     and in conformity with, the terms of the Plant(s) and this Trust and is
     given in writing by Company, or in such other manner prescribed by the
     Trustee. Trustee shall also incur no liability to any person for any
     failure to act in the absence of direction, request or approval from
     Company that is contemplated by, and in conformity with, the terms of this
     Trust. In the event of a dispute between Company and a party, Trustee may
     apply to a court of competent jurisdiction to resolve the dispute.

(b)  Company hereby indemnifies Trustee and each of its affiliates (collectively
     the "Indemnified Parties") against, and shall hold them harmless from, any
     and all loss, claims, liability, and expense, including reasonable
     attorneys fees, imposed upon or incurred by any Indemnified Party as a
     result of any acts taken, or any failure to act, in accordance with the
     directions from Company or any designee of Company, or by reason of the
     Indemnified Party's good faith execution of its duties with respect to the
     Trust, including, but not limited to, Its holding of assets of the Trust.
     Company's obligations in the foregoing regard to be satisfied promptly by
     Company, provided that in the event the loss, claim, liability or expense
     involved is determined by a no-longer-appealable final judgement entered in
     a lawsuit or proceeding to have resulted from the gross negligence or
     willful misconduct of Trustee, Trustee shall promptly on request thereafter
     return to Company any amount previously received by Trustee under this
     Section with respect do such loss, claim, liability or expense. If Company
     does not pay such costs, expenses and liabilities in a reasonably timely
     manner. Trustee may obtain payment from the Trust without direction from
     Company.

(c)  Trustee may consult with legal counsel (who may also be counsel for Company
     generally) with respect to any of its duties or obligations hereunder.

(d)  Trustee may hire agents, accountants, actuaries, investment advisers,
     financial consultants or other professionals to assist it in performing any
     of its duties or obligations hereunder.

12

<PAGE>

(e)  Trustee shall have, without exclusion, all powers conferred on Trustee by
     applicable law, unless expressly provided otherwise herein, provided,
     however, that if an insurance policy is held as an asset of the Trust.
     Trustee shall have no power to name a beneficiary of the policy other than
     the Trust, to assign the policy (as distinct from conversion of the policy
     to a different form) other than to a successor Trustee, or to loan to any
     person the proceeds of any borrowing against such policy.

(f)  However, notwithstanding the provisions of Section 9(e) above. Trustee may
     loan to Company the proceeds of any borrowing against an insurance policy
     held as an asset of the Trust.

(g)  Notwithstanding any powers to Trustee pursuant to this Trust Agreement or
     to applicable law. Trustee shall not have any power that could give this
     Trust the objective of carrying on a business and dividing the gains
     therefrom, within the meaning of section 301.7701-2 of the Procedure and
     Administrative Regulations promulgated pursuant to the Internal Revenue
     Code.

Section 10. Compensation and Expenses of Trustee.

Trustee is authorized, unless otherwise agreed by Trustee, to withdraw from the
Trust without direction from Company the amount of its fees in accordance
with the fee schedule agreed to by Company and Trustee. Company shall pay all
administrative expenses, hut if not so paid, the expenses shall be paid from the
Trust.

Section 11. Resignation and Removal of Trustee.

(a)  Trustee may resign at any time by written notice to Company, which shall be
     effective 30 days after receipt of such notice unless Company and Trustee
     agree otherwise.

(b)  Trustee may be removed by Company on 30 days notice or upon shorter notice,
     accepted by Trustee.

(c)  Upon resignation or removal of Trustee and appointment of successor
     Trustee, all assets shall subsequently be transferred to the successor
     Trustee. The transfer shall be completed within 60 days after receipt of
     notice of resignation, removal or transfer, unless Company extends the time
     limit, provided that Trustee is provided assurance by Company satisfactory
     to Trustee that all fees and expenses reasonably anticipated will be paid.

(d)  If Trustee resigns or is removed, a successor shall be applied, in
     accordance with Section 12 hereof, by the effective date of resignation or
     removal under paragraph(s) (a) or (b) of this section. If no such
     appointment has been made, Trustee may apply to a court of competent
     jurisdiction for appointment of a successor or for instructions. All
     expenses of Trustee in connection with the proceeding shall be allowed as
     administrative expenses of the Trust.

(e)  Upon settlement of the account and transfer of the Trust assets to the
     successor Trustee, all rights and privileges under this Trust Agreement
     shall vest in the successor Trustee and all responsibility and liability of
     Trustee with respect to the Trust and assets thereof shall terminate.
     subject only to the requirement that Trustee execute all necessary
     documents to transfer the Trust assets to the successor Trustee.

Section 12. Appointment of Successor.

(a)  If Trustee resigns or is removed in accordance with Section 11(a) or (b)
     hereof. Company may appoint any third party, such as a bank trust
     department or other party that may be granted corporate trustee powers
     under state law, as a successor to replace Trustee upon resignation or
     removal. The appointment shall be effective when accepted in writing
     by the new Trustee, who shall have all of the rights and powers of the
     former Trustee, including ownership rights in the Trust assets. The former
     Trustee shall execute any instrument necessary or reasonably requested by
     Company or the successor. Trustee to evidence the transfer.

(b)  The successor Trustee need not examine the records and acts of any prior
     Trustee and may retain or dispose of existing Trust assets, subject to
     Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
     and Company shall indemnify and defend the successor Trustee from any claim
     or liability resulting from any action or Inaction of any prior Trustee or
     from any other past event, or any condition existing at the time it becomes
     successor Trustee.

Section 13. Amendment or Termination.

(a)  This Trust Agreement may be amended by a written instrument executed by
     Trustee and Company. Notwithstanding the foregoing, no such amendment shall
     conflict with the terms of the Plan(s) or shall make the Trust revocable
     since the Trust is irrevocable in accordance with Section 1(b) hereof:

(b)  The Trust shall not terminate until the date on which Plan participants
     and their beneficiaries are no longer entitled to benefits pursuant to the
     terms of the Plan(s). Upon termination of the Trust any assets remaining
     in the Trust shall be returned to Company.

(c)  Upon written approval of participants or beneficials ended to payment of
     benefits pursuant to the terms of the Plan(s), Company may terminate this
     Trust prior to the time all benefit payments under the Plan(s) have been
     made. All assets in the Trust at termination shall be returned to Company.

                                                                              13

<PAGE>

FUTURECOMP(SM) SERVICE

Section 14. Miscellaneous.

(a)  Any provision of this Trust Agreement prohibited by law shall be
     ineffective to the extent of any such prohibition, without invalidating the
     remaining provisions hereof.

(b)  Benefits payable to Plan participants and their beneficiaries under this
     Trust Agreement may not be anticipated, assigned (either at law or in
     equity), alienated, pledged, encumbered or subjected to attachment,
     garnishment, levy, execution or other legal or equitable process.

(c)  This Trust Agreement and its enforcement shall be governed by and construed
     in accordance with the laws of the state in which Trustee has its principal
     place of business.

(d)  The provisions of Sections 2(d),3(b)(3), 9(b) and 15 of this Agreement
     shall survive termination of this Agreement.

(e)  The rights, duties, responsibilities, obligations and liabilities of
     Trustee are as set forth in this Trust Agreement, and no provision of the
     Plan(s) or any other documents shall affect such rights, responsibilities,
     obligations and liabilities. If there is a conflict between provisions of
     the Plan(s) and this Trust Agreement with respect to any subject involving
     Trustee, including but not limited to the responsibilities, authority or
     powers of Trustee, the provisions of this Trust Agreement shall be
     controlling.

(f)  For purposes of this Trust Change of control shall mean: The purchase or
     other acquisition by any person, entity or group of persons, within the
     meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
     ("Act"), or any comparable successor provisions, of beneficial ownership
     (within the meaning of Rule 13d-3 promugated under the Act) of 30 percent
     or more of either the outstanding shares of common stock or the combined
     voting power of Company's then outstanding voting securities entitled to
     vote generally, or the approval by the stockholders of Company of a
     reorganization, merger, or consolidation, in each case, with respect to
     which persons who were stockholders of Company immediately prior to such
     reorganization, merger be consolidation do not, immediately there-after,
     own more than 50 percent of the combined voting power entitled to vote
     generally in the election of directors of the reorganized, merged or
     consolidated Company's then outstanding securities, or a liquidation or
     dissolution of Company or of the sale of all or substantially all of
     Company's assets.

Section 15 Arbitration

     -    Arbitration is final and binding on the parties.

     -    The parties waive their right to seek remedies in court, including the
          right to jury trial.

     -    Pre-arbitration discovery is generally more limited than, and
          different from, court proceedings.

     -    The arbitrators' award is not required to include factual findings or
          legal reasoning and any party's right to appeal or seek modification
          of rulings by the arbitrators is strictly limited.

     -    The panel of arbitrators will typically include a minority of
          arbitrators who were or are affiliated with the securities industry.

Company agrees that all controversies that may arise between Company and either
or both the Trustee and its affiliate Merrill Lynch, Pierce, Fenner & Smith
Incorporated("MLPF&S") in connection with the Trust, including, but not limited
to, those involving transactions, or the construction, performance, or breach of
this or any other agreement between Company and either or both the Trustee and
MLPF&S, whether entered into prior, on, or subsequent to the date hereof, shall
be determined by arbitration. Any arbitrations under this agreement shall be
conducted only before the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., or arbitration facility provided by any other exchange of which
MLPF&S is a member, the National Association of Securities Dealers, Inc., or the
Municipal Securities Rulemaking Board, and in accordance with Its arbitration
rules then in force. Company may elect in the first instance whether arbitration
shall be conducted before the New York Stock Exchange, Inc. the American Stock
Exchange, Inc. other exchange of which MLPF&S is a member, the National
Association of Securities dealers, Inc. or the Municipal Securities Rulemaking
Board, but if Company fails to make such election, by registered letter or
telegram addressed to Merrill Lynch Trust, Employee Benefit Trust Operations,
P.O. Box 30532, New Brunswick, New Jersey 08989-0532, before the expiration of
five days after receipt of a written request from MLPF&S and /or the Trustee to
make such election, then MLPF&S and/or the Trustee may make such election.
Judgment upon the award of arbitrators may be entered in any court, state or
federal, having jurisdiction. No person shall bring a putative or certified
class action to arbitration, not seek to enforce any predispute arbitration
agreement against any person who has initiated in court a putative class action;
who is a member of putative class who has not opted out of the class with
respect to any claims encompassed by the putative class action until:

     (i)   the class certification is denied

     (ii)  the class is decertified; or

     (iii) the customer is excluded from the class by the court Such for
           bearance to enforce an agreement to arbitrate shall not constitute a
           waives of any rights under this agreement except to the extent stated
           herein.

14

<PAGE>

Section 16. Effective Date.

     The effective date of this Trust Agreement shall be 1/1/2003.

IN WITNESS WHEREOF, Company and the Trustee have Executed this Trust Agreement
each by action of a duly authorized person.

     By signing this Agreement, the undersigned Company acknowledges (1) that,
     in accordance with Section 15 of this Agreement, Company is agreeing in
     advance to arbitrate any controversies that may arise with either or both
     the Trustee or MLPF&S and (2) receipt of a copy of this Agreement.

PACKAGING DYNAMICS CORPORATION
--------------------------------------------------------------------------------
(Company)

/s/ Phillip D Harris
--------------------------------------------------------------------------------
By:

PHILIP D. HARRIS, PRESIDENT & CEO
--------------------------------------------------------------------------------
Name/Title:

Add second signature if required:

HENRY C. NEWELL, VICE PRESIDENT & CFO
--------------------------------------------------------------------------------
By:

[ILLEGIBLE]
--------------------------------------------------------------------------------
Name/Title:

________________________________________________________________________________
By:

________________________________________________________________________________
Name/Title:

Appendix A
Name of Nonqualified Deferred Compensation Plan(s):

 PACKING DYNAMICS DEFERRED COMPENSATION PLAN
--------------------------------------------------------------------------------
Plan

________________________________________________________________________________
Plan

Appendix B

________________________________________________________________________________
Deposit of cash and/or marketable securities to the Trust:

________________________________________________________________________________
Class: $
________________________________________________________________________________
Marketable Securities:

                                 "Company Copy"

                                                                              15
<PAGE>

FUTURECOMP(SM) SERVICE

                              [CLIENT'S LETTERHEAD]

[INSERT NAME AND ADDRESS
OF MERRILL LYNCH TRUST ENTITY]

Dear (          ):

[Insert name of Company] (the "Company") has entered into a trust agreement (the
"Trust Agreement") with [Insert Name of Merrill Lynch Trust entity] (the
"Trustee"). Pursuant to Section 5 of the Trust Agreement, the Company may direct
the Trustee to invest trust assets in accordance with the deemed investment
elections of participants in the [Insert Name of Deferred Compensation Plan]
(the "Plan"), subject to procedures established by the Trustee. Please consider
this letter to the Company's standing investment direction to the Trustee to
follow the deemed investment directions of the Plan participants set forth on
Schedule A attached hereto with respect to assets held in trust. This investment
direction will remain in effect until other investment directions are
communicated in writing to you by the Company.

Sincerely.

[Insert Name of Company]

By: ___________________________

Title: ________________________

Date: _________________________

INVESTMENT DIRECTION LETTER

For your convenience, the sample letter at the left has been provided to help
instruct those with participant-directed accounts. It should be placed on
company letterhead and returned with the completed Forms Booklet.

16
<PAGE>

Section 16. Effective Date.

         The effective date of this Trust Agreement shall be 1/1, 2003.

IN WITNESS WHEREOF, Company and the Trustee have executed this Trust Agreement
each by action of a duly authorized person.

         By signing this Agreement, the undersigned Company acknowledges (1)
         that, in accordance with Section 15 of this Agreement, Company is
         agreeing in advance to arbitrate any controversies that may arise with
         either or both the Trustee or MLPF&S and (2) receipt of a copy of this
         Agreement.

PACKAGING DYNAMICS CORPORATION
(Company)

-s-PHILLIP D. HARRIS
--------------------------------------------------------------------------------
By:

PHILLIP D. HARRIS, PRESIDENT & CEO
Name /Title:

Add second signature if required:
HENRY C. NEWELL, VICE PRESIDENT & CEO
--------------------------------------------------------------------------------
BY:

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

Name/Title

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

Name/Title

Appendix A
Name of Nonqualified Deferred Compensation Plan(s):

PACKAGING DYNAMICS DEFERRED COMPENSATION PLAN
--------------------------------------------------------------------------------
Plan

--------------------------------------------------------------------------------
Plan

Appendix B
Deposit of cash and/or marketable securities to the Trust:

--------------------------------------------------------------------------------
Cash:

--------------------------------------------------------------------------------
Marketable Securities:

                           "Merrill Lynch Trust Copy"

                                                                              17
<PAGE>

THE MERRILL LYNCH NONQUALIFIED DEFERRED COMPENSATION PLAN

ARTICLE 1--INTRODUCTION

1.1 Purpose of Plan

The Employer has adopted the Plan set forth herein to provide a means by which
certain employees may elect to defer receipt of designated percentages or
amounts of their Compensation and to provide a means for certain other deferrals
of Compensation.

1.2 Status of Plan

The Plan is intended to be "a plan that is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a
select group of Management or highly compensated employees" within the
meaning of Sections 201(2) and 301 (a) (3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), and shall be interpreted and administered to the
extent possible in a manner consistent with that intent.

ARTICLE 2--DEFINITIONS

Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:

2.1 Account means, for each Participant, the account established for his or her
benefit under Section 5.1.

2.2 Adoption Agreement means the Merrill Lynch Special Nonqualified Deferred
Compensation Plan for Select Employees Adoption Agreement signed by the
Employer to establish the Plan and containing all the options selected by the
Employer, as the same may be amended from time to time.

2.3 Change of Control means (a) the purchase or other acquisition in one or more
transactions other than from the Employer, by any individual, entity or group of
persons, within the meaning of section 13(d)(3) or 14(d) of the Securities
Exchange Act of 1934 or any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13d-3 of Securities Exchange Act of 1934)
of 30% or more of either the outstanding shares of common stock or the combined
voting power of the Employer's then outstanding voting securities entitled to
vote generally, or (b) the approval by the stockholders of the Employer of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not immediately thereafter own more
than 50% of the combined voting power of the reorganized, merged or consolidated
Employer's then outstanding securities that are entitled to vote generally in
the election of directors or (c) the sale of substantially all of the Employer's
assets.

2.4 Code means the Internal Revenue Code of 1986, as amended from time to time.
Reference to any section or subsection of the Code includes reference to any
comparable or succeeding provisions of any legislation that amends, supplements
or replaces such section or subsection.

2.5 Compensation has the meaning elected by the Employer in the Adoption
Agreement.

2.6 Effective Date means the date chosen in the Adoption Agreement as of
which the Plan first becomes effective.

2.7 Election Form means the participation election form as approved and
prescribed by the Plan Administrator.

                                                                               1
<PAGE>

FUTURECOMP(SM) PLAN DOCUMENT

2.8 Elective Deferral means the portion of Compensation that is deferred by a
Participant under Section 4.1.

2.9 Eligible Employee means, on the Effective Date or on any Entry Date
thereafter, each employee of the Employer who satisfies the criteria established
in the Adoption Agreement

2.10 Employer means the corporation referred to in the Adoption Agreement, any
successor to all or a major portion of the Employer's assets or business that
assumes the obligations of the Employer, and each other entity that is
affiliated with the Employer, which adopts the Plan with the consent of the
Employer, provided that the Employer that signs the Adoption Agreement shall
have the sole power to amend this Plan and shall be the Plan Administrator if no
other person or entity is so serving at any time.

2.11 ERISA means the Employee Retirement Income Security Act of 1974; as amended
from time to time. Reference to any section or subsection of ERISA includes
reference to any comparable or succeeding provisions of any legislation that
amends, supplements or replaces such section or subsection.

2.12 Incentive Contribution means a discretionary additional contribution made
by the Employer as described in Section 4.3.

2.13 Insolvent means either (i) the Employer is unable to pay its debts as they
become due, or (ii) the Employer is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.

2.14 Matching Deferral means a deferral for the benefit of a Participant
as described in Section 4.2.

2.15 Participant means any individual who participates in the Plan in
accordance, with Article 3.

2.16 Plan means the Employer's plan in the form of the Merrill Lynch Special
Nonqualified Deferred Compensation Plan for Select Employees and the Adoption
Agreement and all amendments thereto.

2.17 Plan Administrator means the person, persons or entity designated by the
Employer in the Adoption Agreement to administer the Plan and to serve as the
agent for Company" with respect to the Trust as contemplated by the agreement
establishing the Trust. If no such person or entity is so serving at any time,
the Employer shall be the Plan Administrator.

2.18 Plan Year means the 12-month period chosen in the Adoption Agreement.

2.19 Total and Permanent Disability means the inability of a Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less then 12 months, and the permanence and degree of which shall be
supported by medical evidence satisfactory to the Plan Administrator.

2.20 Trust means the trust established by the Employer that identifies the Plan
as a plan with respect to which assets are to be held by the Trustee.

2.21 Trustee means the trustee or trustees under the Trust.

2.22 Year of Service means the computation period and service requirement
elected in the Adoption Agreement.

2
<PAGE>

ARTICLE 3 -- PARTICIPATION

3.1 Commencement of Participation

Any individual who elects to defer part of his or her Compensation in accordance
with Section 4.1 shall become a Participant in the Plan as of the date such
deferrals commence in accordance with Section 4.1. Any individual who is not
already a Participant and whose Account is credited with an Incentive
Contribution shall become a Participant as of the date such amount is credited.

3.2 Continued Participation

A Participant in the Plan shall continue to be a Participant so long as any
amount remains credited to his or her Account.

ARTICLE 4 -- ELECTIVE AND MATCHING DEFERRALS

4.1 Elective Deferrals

An individual who is an Eligible Employee on the Effective Date may, by
completing an Election Form and filing it with the Plan Administrator within 30
days following the Effective Date, elect to defer a percentage or dollar amount
of one or more payments of Compensation, on such terms as the Plan
Administrator may permit, which are payable to the Participant after the date on
which the individual files the Election Form. Any individual who becomes an
Eligible Employee after the Effective Date may, by completing an Election Form
and filing it with the Plan Administrator within 30 days following the date on
which the Plan Administrator gives such individual written notice that the
individual an Eligible Employee, elect to defer a percentage or dollar amount
of one or more payments of Compensation, on such terms as the Plan Administrator
may permit, which are payable to the Participant after the date on which the
individual files the Election Form. Any Eligible Employee who has not otherwise
initially elected to defer Compensation in accordance with this Section 4.1 may
elect to defer a percentage or dollar amount of one or more payments of
Compensation, on such terms as the Plan Administrator may permit, commencing
with Compensation paid in the next succeeding Plan Year, by completing an
Election Form prior to the first day of such succeeding Plan Year. A
Participant's Compensation shall be reduced in accordance with the Participant's
election hereunder and amounts deferred hereunder shall be paid by the Employer
to the Trust as soon as administratively feasible and credited to the
Participant's Account as of the date the amounts are received by the Trustee.

An election to defer a percentage or dollar amount of Compensation for any Plan
Year shall apply for subsequent Plan Years unless changed or revoked. A
Participant may change or revoke his or her deferral election as of the first
day of any Plan Year by giving written notice to the Plan Administrator before
such first day (or any such earlier date as the Plan Administrator may
prescribe).

4.2 Matching Deferrals

After each payroll period, monthly, quarterly, or annually, at the Employer's
discretion, the Employer shall contribute to the Trust Matching Deferrals equal
to the rate of Matching Contribution selected by the Employer and multiplied by
the amount of the Elective Deferrals credited to the Participants' Accounts for
such period under Section 4.1. Each Matching Deferral will be credited, as of
the later of the date it is received by the trustee or the date the Trustee
receives from the Plan Administrator such instructions as the Trustee may
reasonably require to allocate the amount received among the asset accounts
maintained by the Trustee, to the Participants' Accounts pro rata in accordance
with the amount of Elective Deferrals of each Participant, which are taken into
account in calculating the Matching Deferral.

                                                                               3
<PAGE>

FUTURECOMP(SM) PLAN DOCUMENT

4.3 Incentive Contributions

In addition to other contributions provided for under the Plan, the Employer
may, in its sole discretion, select one or more Eligible Employees to receive an
Incentive Contribution to his or her Account on such terms as the Employer shall
specify at the time it makes the contribution. For example, the Employer may
contribute an amount to a Participant's Account and condition the payment of
that amount and accrued earnings thereon upon the Participant remaining employed
by the Employer for an additional specified period of time. The terms specified
by the Employer shall supersede any other provision of this Plan as regards
Incentive Contributions and earnings with respect thereto, provided that if the
Employer does not specify a method of distribution, the Incentive Contribution
shall be distributed in a manner consistent with the election last made by the
particular Participant prior to the year in which the Incentive Contribution is
made. The Employer, in its discretion, may permit the Participant to designate a
distribution schedule for a particular Incentive Contribution provided that such
designation is made prior to the time that the Employer finally determines that
the Participant will receive the Incentive Contribution.

ARTICLE 5--ACCOUNTS

5.1 Accounts

The Plan Administrator shall establish an Account for each Participant
reflecting Elective Deferrals, Matching Deferrals and Incentive Contributions
made for the Participant's benefit together with any adjustments for income,
gain or loss and any, payments from the Account. The Plan Administrator may
cause the Trustee to maintain and invest separate asset accounts corresponding
to each Participant's Account. The Plan Administrator shall establish
sub-accounts for each Participant who has more than one election in effect under
Section 7.1 and such other sub accounts as are necessary for the proper
administration of the Plan. As of the last business day of each calendar
quarter, the Plan Administrator shall provide the Participant with a statement
or his or her Account reflecting the income, gains and losses (realized and
unrealized), amounts of deferrals, and distributions of such Account since the
prior statement.

5.2 Deemed Investments

(a) For purposes of measuring the amounts to be credited (or debited) to a
Participant's Account, a Participant or the Participant investment advisor may
select, from the investment options or other investment media selected by the
Plan Administrator and approved by the Employer, the investments in which all or
part of his or her Account shall be deemed to be invested. In no event shall any
Participant be entitled to have any such investments made other than on a deemed
basis. The Accounts maintained pursuant to this Plan are for bookkeeping
purposes only, and neither the Employer nor the Trustee is under any obligation
to invest any amounts credited to such Accounts.

(b) The Participant or the Participant's investment advisor shall make an
investment designation (on the Election Form used to elect to defer Compensation
under Section 4.1 or in such other manner as specified by the Plan Administrator
or the Employer) which shall remain effective until another valid direction has
been made by the Participant or the Participant's investment advisor. The
Participant or the Participant's investment advisor may amend the Participant's
investment designation at such times and in such manner as prescribed by the
Plan Adminstrator. A timely change to the Participant's investment designation
shall become effective as soon as

4

<PAGE>

administratively practicable in accordance with procedures established by the
Plan Administrator. The investment options or investment media deemed to be made
available to the Participant, and any limitation on the maximum or minimum
percentages of the Participant's Account that may be deemed to be invested in
any particular option or investment, shall be the same as from time to time
communicated to the Participant by the Plan Administrator.

(c) The Participant's appointment of an investment advisor to act on his or her
behalf under subsection (a.), shall not be effective until the Participant
notifies the Employer of such appointment in a manner acceptable to the
Employer. The removal of any Participant's investment advisor shall not be
effective until the Participant notifies the Employer of the removal in a manner
acceptable to the Employer.

(d) The Trustee shall invest assets of the Trust in accordance with the terms
and provisions of the trust agreement that establishes and governs the Trust.

ARTICLE 6--VESTING

6.1 General

A Participant shall be immediately vested in i.e., shall have a nonforfeitable
right to, all Elective Deferrals, and all income and gain attributable thereto,
credited to his or her Account. A Participant shall become vested in the portion
of his or her Account attributable to Matching Deferrals and income and gain
attributable thereto in accordance with the schedule selected by the Employer in
the Adoption Agreement, subject to earlier vesting in accordance with Sections
6.3, 6.4, and 6.5.

6.2 Vesting Service

For purposes of applying the vesting schedule in the Adoption Agreement, a
Participant shall be considered to have completed a Year of Service for
each complete year of full-time service with the Employer or an Affiliate,
measured from the Participant's first date of such employment, unless the
Employer also maintains a 401(k) plan that is qualified under section 401(a)
of the Internal Revenue Code in which the Participant participates, in which
case the rules governing vesting service under that plan shall also be
controlling under this Plan.

6.3 Change of Control

A Participant shall become fully vested in his or her Account immediately prior
to a Change of Control of the Employer.

6.4 Death or Disability

A Participant shall become fully vested in his or her Account immediately prior
to termination of the Participant's employment by reason of the Participant's
death or Total and Permanent Disability. Whether a Participant's termination of
employment is by reason of the Participant's Total and Permanent Disability
shall be determined by the Plan Administrator in its sole discretion.

6.5 Insolvency

A Participant shall become fully vested in his or her Account immediately prior
to the Employer becoming Insolvent, in which case the participant will have the
same rights as general creditor of the Employer with respect to his her Account
balance.

                                                                               5

<PAGE>

FUTURECOMP(SM) PLAN DOCUMENT

ARTICLE 7--PAYMENTS

7.1 Election as to Time and Form of Payment

A Participant shall elect (on the Election Form used to elect to defer
Compensation under Section 4.1) the date at which the Elective Deferrals and
vested Matching Deferrals (including any earnings attributable thereto) will
commence to be paid to the Participant. The Participant shall also elect thereon
for payments to be paid in either:

    a.   a single lump-sum payment: or

    b.   annual installments over a period elected by the Participant up to 10
         years, the amount of each installment to equal the balance of his or
         her Account immediately prior to the installment divided by the number
         of installments remaining to be paid.

Each such election will be effective for the Plan Year for which it is made and
succeeding Plan Years, unless changed by the Participant. Any change will be
effective only for Elective Deferrals and Matching Deferrals made for the first
Plan Year beginning after the date on which the Election Form containing the
change is filed with the Plan Administrator. Except as provided in Sections 7.2,
7.3, 7.4 or 7.5, payment of a Participant's Account shall be made in accordance
with the Participant's elections under this Section 7.1.

7.2 Change of Control

As soon as possible following a Change of Control of the Employer, each
Participant shall be paid his or her entire Account balance (including any
amount vested pursuant to Section 6.3) in a single lump sum.

7.3 Termination of Employment

Upon termination of a Participant's employment for any reason other than death
and prior to the attainment of the Retirement Age specified in the
Adoption Agreement, the vested portion of the Participant's Account (including
any portion vested pursuant to Section 6.4 as a consequence of the Participant's
Total and Permanent Disability) shall be paid to the Participant in a single
lump sum as soon as practicable following the date of such termination;
provided, however, that the Plan Administrator, in its sole discretion, may pay
out a Participant's Account balance in annual installments if the Participant's
employment terminates by reason of the Participant's Total and Permanent
Disability.

7.4 Death

If a Participant dies prior to the complete distribution of his or her Account,
the balance of the Account shall be paid as soon as practicable to the
Participant's designated beneficiary or beneficiaries, in the form elected by
the Participant under either of the following options:

     a.  a single lump-sum payment; or

     b.  annual installments over a period elected by the Participant up to 10
         years, the amount of each installment to equal the balance of the
         Account immediately prior to the installment divided by the number of
         installments remaining to be paid.

Any designation of beneficiary and form of payment of such beneficiary shall be
made by the Participant on an Election Form filed with the Plan Administrator
and may be changed by the participant at any time by filling another Election
Form containing the revised instructions. If no beneficiary is designated or no
designated beneficiary survives the Participant, payment shall be made to the
Participant's surviving spouse, or, if none, to his or her issue per stirpes, in
a single payment. If no spouse or issue survives the Participant, payment shall
be made in a single lump sum to the Participant's estate.

<PAGE>

7.5 Unforeseen Emergency

If a Participant suffers an unforeseen emergency, as defined herein, the Plan
Administrator, in its sole discretion, may pay to the Participant only that
portion, if any, of the vested portion of his or her Account that the Plan
Administrator determines is necessary to satisfy the emergency need, including
any amounts necessary to pay any federal, state or local income taxes reasonably
anticipated to result from the distribution. A Participant requesting an
emergency payment shall apply for the payment in writing in a form approved by
the Plan Administrator and shall provide such additional information as the Plan
Administrator may require. For purposes of this paragraph, "unforeseen
emergency" means an immediate and heavy financial need resulting from any of the
following:

    a. expenses which are not covered by insurance and which the Participant or
       his or her spouse or dependent has incurred as a result of, or is
       required to incur in order to receive medical care;

    b. the need to prevent eviction of a Participant from his or her principal
       residence or foreclosure on the mortgage of the Participant's principal
       residence; or

    c. any other circumstance that is determined by the Plan Administrator
       in its sole discretion to constitute an unforeseen emergency which is not
       covered by insurance and which cannot reasonably be relieved by the
       liquidation of the Participant's assets.

7.6 Forfeiture of Non-vested Amounts

To the extent that any amounts credited to a Participant's Account are not
vested at the time such amounts are otherwise payable under Sections 7,1 or 7.3,
such amounts shall be forfeited and shall be used to satisfy the Employer's
obligation to make contributions to the Trust under the Plan.

7.7 Taxes

All federal, state or local taxes that the Plan Administrator determines are
required to be withheld from any payments made pursuant to this Article 7 shall
be withheld.

ARTICLE 8--PLAN ADMINISTRATOR

8.1 Plan Administration and Interpretation

The Plan Administrator shall oversee the administration of the Plan. The Plan
Administrator shall have complete control and authority to determine rights and
benefits and all claims, demands and actions arising out of the provisions of
the Plan of any Participant, beneficiary, deceased Participant, or other person
having or claiming to have any interest under the Plan. The plan Administrator
shall have complete discretion to interpret the Plan and to decide all matters
under the Plan. Such interpretation and decision shall be final, conclusive and
binding on all Participants and any person claiming under or through any
Participant in the absence of clear and convincing evidence that the Plan
Administrator acted arbitrarily and capriciously. Any individual(s) serving as
Plan Administrator who is a Participant will not vote or act on any matter
relating solely to himself or herself. When making a determination or
calculation, the Plan Administrator shall be ended to rely on information
furnished by a Participant, a beneficiary, the Employer or the Trustee. The Plan
Administrator shall have the responsibility for complying with any reporting and
disclosure requirements of ERISA.

<PAGE>

8.2 Powers, Duties, Procedures, Etc.

The Plan Administrator shall have such powers and duties, may adopt such rules
and tables, may act in accordance with such procedures, may appoint such
officers or agents, may delegate such powers and duties, may receive such
reimbursements and compensation, and shall follow such claims and appeal
procedures with respect to the Plan as it may establish.

8.3 Information

To enable the plan Administrator to perform its functions, the Employer shall
supply full and timely information to the Plan Administrator on all matters
relating to the compensation of Participants, their employment, retirement,
death, termination of employment, and such other pertinent facts as the Plan
Administrator may require.

8.4 Indemnification of Plan Administrator

The Employer agrees to indemnify and to defend to the fullest extent permitted
by law any officer(s) or employee(s) who serve as Plan Administrator (including
any such individual who formerly served as Plan Administrator) against all
liabilities, damages, costs and expenses (including attorneys' fees and amounts
paid in settlement of any claims approved by the Employer) occasioned by any
act or omission to act in connection with the Plan, if such act or omission is
in good faith.

ARTICLE 9--AMENDMENT AND TERMINATION

9.1 Amendments

The Employer shall have the right to amend the Plan from time to time, subject
to Section 9.3, by an Instrument in writing which has been executed on the
Employer's behalf by its duly authorized officer.

9.2 Termination of Plan

This Plan is strictly a voluntary undertaking on the part of the Employer and
shall not be deemed to constitute a contract between the Employer and any
Eligible Employee (or any other employee) or a consideration for, or an
inducement or condition of employment for, the performance of the services by
any Eligible Employee (or other employee). The Employer reserves the right to
terminate the Plan at any time, subject to Section 9.3, by an instrument in
writing which has been executed on the Employer's behalf by its duly authorized
officer. Upon termination of the Plan, the Employer may (a) elect to continue to
maintain the Trust to pay benefits hereunder as they become due as if the Plan
had not terminated or (b) direct the Trustee to pay promptly to Participants (or
their beneficiaries) the vested balance of their Accounts. For purposes of the
preceding sentence in the event the Employer chooses to implement clause(b),
the Account balances of all Participants who are in the employ of the
Employer at the time the Trustee is directed to pay such balances shall become
fully vested and nonforfeitable. After Participants and their beneficiaries are
paid all Plan benefits to which they are entitled, all remaining assets of the
Trust attributable to Participants who terminated employment with the Employer
prior to termination of the Plan and who were not fully vested in their Accounts
under Article 6 at that time shall be returned to the Employer.

9.3 Existing Rights

No amendment or termination of the Plan shall adversely affect the rights of any
Participant with respect to amounts that have been credited to his or her
Account prior to the date of such amendment or termination.

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ARTICLE 10--MISCELLANEOUS

10.1 No Funding

The Plan constitutes a mere promise by the Employer to make payments in
accordance with the terms of the Plan, and Participants and beneficiaries shall
have the status of general unsecured creditors of the Employer. Nothing in the
Plan will be construed to give any employee or any other person rights to any
specific assets of the Employer or of any other person. In all events, it is the
intent of the Employer that the Plan be treated as unfunded For tax purposes and
for purposes of Title I of ERISA.

10.2 Non-Assignability

None of the benefits, payments, proceeds or claims of any Participant or
beneficiary shall be subject to any claim of any creditor of any Participant or
beneficiary and, in particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor of such Participant or
beneficiary, nor shall any Participant or benificiary have any right to
alienate, anticipate, commute, pledge encumber or assign any of the benifits or
payments or proceeds that he or she may expect to receive, contigently or
otherwise under the Plan.

10.3 Limitation of Participants' Rights

Nothing contained in the Plan shall confer upon any person a right to be
employed or to continue in the employ of the Employer, or interfere in any way
with the right of the Employer to terminate the employment of a Participant in
the Plan at any time, with or without cause.

10.4 Participants Bound

Any action with respect to the Plan taken by the Plan Administrator or the
Employer or the Trustee or any action authorized by or taken at the direction of
the Plan Administrator, the Employer or the Trustee shall be conclusive upon all
Participants and beneficiaries entitled to benefits under the Plan.

10.5 Receipt and Release

Any payment to any Participant or beneficiary in accordance with the provisions
of the Plan shall, to the extent thereof, be in full satisfaction of all claims
against the Employer, the Plan Administrator and the Trustee under the Plan, and
the Plan Administrator may require such Participant or beneficiary, as a
condition precedent to such payment to execute a receipt and release to such
effect. If any Participant or beneficiary is determined by the Plan
Administrator to be incompetent by reason of physical or mental disability
(including minority) to give a valid receipt and release, the Plan Administrator
may cause the payment, or payments becoming due to such person to be made to
another person for his or her benefit without responsibility on the part of the
Plan Administrator the Employer or the Trustee to follow the application of such
funds.

10.6 Governing Law

The Plan shall be construed, administered, and governed in all respects under
and by the laws of the state in which the Employer maintains its primary place
of business. If any provision shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.

10.7 Headings and Subheadings

Headings and Subheadings in this Plan are inserted for convenience only and are
not to be considered in the construction of the provisions hereof.

                                                                               9
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FUTURECOMP(SM) ADOPTION AGREEMENT

The Merrill Lynch Nonqualified Deferred Compensation Plan Adoption Agreement

Please complete the information requested in the Adoption Agreement to establish
the specific provisions of your plan. You do not have to provide a copy to your
Financial Consultant. (Only the Merrill Lynch account-opening agreements and an
original executed copy of the associated Trust Agreement need to be returned to
Merrill Lynch at the address printed on those forms.) This document and the
Merrill Lynch Nonqualified Deferred Compensation Plan document govern the rights
of Plan participants and should, therefore, be disclosed to participants and
retained as part of your permanent records.

1. EMPLOYER INFORMATION

A. Name of Plan:

B. Name and address of employer sponsoring the Plan. Please provide employer's
business name.

PACKAGING DYNAMICS CORPORATION
--------------------------------------------------------------------------------
Business Name

3900 WEST 43RD STREET
--------------------------------------------------------------------------------
Address

CHICAGO,
--------------------------------------------------------------------------------
City

ILLINOIS                                                 60632
--------------------------------------------------------------------------------
State                                                   ZIP Code

C. Provide employer's primary contact for the Plan and telephone and fax
numbers. Also include the employer's tax identification number.

HENRY C. NEWELL (HANK)
--------------------------------------------------------------------------------
Primary Contact

VICE PRESIDENT & CFO
--------------------------------------------------------------------------------
Title

(773) 843-8000
--------------------------------------------------------------------------------
Telephone Number

(773) 254-8134
--------------------------------------------------------------------------------
Fax Number

32-0009217
--------------------------------------------------------------------------------
Employer Tax Identification Number

D. Give the first day of the 12-month period for which the employer pays taxes:
12-31

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2. PLAN INFORMATION

A. What is the effective date of the Plan? 1/1/03

B. Plan Year End. Your "Plan Year" is the 12-consecutive-month period for
which you credit elective and matching deferrals and keep Plan records. Enter
the last day of your Plan Year. For example, if you use the calendar year as
your Plan Year, enter "December 31." If you use a different 12- month period--
for instance, if your business is on a fiscal year calendar-- enter the last day
of your fiscal year, e.g. "July 31". DECEMBER 31.

3. ELIGIBLE EMPLOYEES

The following persons or classes of persons shall be Participants (enter the
names or positions of individuals eligible to participate or the criteria used
to identify Participants; e.g., "Those key employees of the Company selected
by the Compensation Committee of the Board of Directors").

THOSE KEY EMPLOYEES SELECTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS.

4. COMPENSATION

Compensation is used to determine the amount of Elective Deferrals a Participant
can elect, Compensation under the Plan is defined as (select one):

[ ]  The Participant's wages, salaries, fees for professional services and
     other amounts received (without regard to whether or not an amount is paid
     in cash) for personal services actually rendered in the course of
     employment with the Employer or an Affiliate to the extent that the amounts
     are includable in gross income, including but not limited to commissions
     paid to salesmen, compensation for services on the basis of a percentage of
     profits, commissions on insurance premiums, tips, bonuses, fringe benefits,
     reimbursements, and expense allowances, but not including those items
     excludable from the definition of compensation under Treas, Reg. section
     1.415-2(d)(3).

[ ]  The regular or base salary payable to the individual by the Employer or an
     Affiliate, excluding commissions and bonuses.

[X]  The cash compensation payable to the individual by the Employer or an
     Affiliate, including any commissions and bonuses.

[ ]  The cash bonuses payable to the individual by the Employer or an
     Affiliate. For purposes of the Plan, Compensation will be determined
     before giving effect to Elective Deferrals and other salary reduction
     amounts that are not included in the Participant's gross income under Code
     section 125,401(k), 402(h) or 403(b).

                                                                              11
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FUTURECOMP(SM) ADOPTION AGREEMENT

5. CONTRIBUTIONS

A. ELECTIVE DEFERRALS. Participants may elect to reduce their Compensation and
to have Elective Deferrals credited to their Accounts by making an election
under the Plan (which may be changed each year for later Plan Years as described
in the Plan), but no Participant may defer more than 100 % (1% to 100%) of his
or her Compensation for a Plan Year.

B. MATCHING DEFERRALS. If the Employer elects to match Elective Deferrals,
specify the matching rate and indicate the amount of the Participant's Elective
Deferrals that will be matched. You may also elect to decide each year whether
Matching Deferrals will be made and, if so, what that year's matching rate will
be.

For example, the Employer may decide to credit a Matching Deferral of, for
example, 50 cents for each dollar of a Participant's Elective Deferrals, but
limit the match to the first 5% of Compensation deferred by the Participant. If
you want to set a maximum dollar amount on the amount of Elective Deferrals that
will be matched, insert the dollar amount and interval over which that amount is
to be measured. For example, you could say that you will not match Elective
Deferrals in excess $1,000 per month. Matching Deferrals can be made after each
payroll period, monthly, quarterly or annually, at the Employer's discretion.
Matching Deferrals will be subject to the vesting schedule selected in Item 6A.

Select One;

[ ] No Matching Deferrals will be credited

[ ] The Employer will credit Matching Deferrals for each Participant equal to
    ____%  of the first_______% of the Participant's Compensation which is
    elected as an Elective Deferral but no Matching Deferral will be made on
    Elective Deferrals in excess of $_____________per_____________(specify time
    period if applicable).

[X] The Employer will decide from year to year whether Matching Deferrals
    will be made and will notify Participants annually of the manner in which
    Matching Deferrals will be calculated for the subsequent year.

C. DISCRETIONARY INCENTIVE CONTRIBUTIONS. The Employer may make Discretionary..
Incentive Contributions in any amounts the Employer selects. These contributions
will be subject to the vesting schedule selected in Item 6C.

The Employer will make Discretionary Incentive Contributions under the Plan.
[X] Yes [ ] No

6. VESTING OF MATCHING DEFERRALS AND DISCRETIONARY INCENTIVE CONTRIBUTIONS

A. VESTING SCHEDULE FOR MATCHING DEFERRALS.

Indicate how the portion of a Participant's Account attributable to Matching
Deferrals is to vest.

Matching Deferrals vest in accordance with the following schedule (select one):-

[ ] 100% immediate.                       [X] Other Vesting Schedule (specify):

[ ] 100% after ______years of service.    0-2 YRS 0%

[ ] 20% after______years of service and an additional 20% for each year
thereafter.                               3+ YRS 100%

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B. VESTING SERVICE

Indicate whether you will give credit for vesting service for time spent with a
predecessor employer, and if so, specify the maximum number of years and the
type of predecessor service for which credit will be given. For vesting purposes
(select one):

[X]    Service with a predecessor employer will not be considered.

[ ]    Service (up to a maximum of___years) with the following employer(s) will
       be considered:

       _________________________________________________________________________

       _________________________________________________________________________

       _________________________________________________________________________

C. VESTING SCHEDULE FOR DISCRETIONARY INCENTIVE CONTRIBUTIONS

Indicate how the portion of a Participant's Account attributable to
Discretionary Incentive Contributions is to vest.

Unless otherwise specified by the Employer at the time a Discretionary Incentive
Contribution is made, Discretionary Incentive Contributions vest in accordance
with the following schedule (select one):

[ ]    100% immediate.

[ ]    100% after ___ years of service.

[ ]    20% after ___ years of service and an additional 20% for each year
       thereafter.

[X]    Other vesting schedule (specify):

       0-2 YRS O%

       3+ YRS 100%

7. ACCOUNTS

If it is desired that the Trust assets be invested in accordance with
Participants' deemed investments, each Participant's Account balance should be
invested as a separate account, otherwise the Account balances of all
Participants may be invested as a single fund (select one):

[x]    Account balances are to be invested separately.

[ ]    Account balances are to be invested as a single fund.

                                                                              13
<PAGE>

FUTURECOMP(TM) ADOPTION AGREEMENT

8. INVESTMENTS

INVESTMENT DIRECTION. The Employer may direct the investment of Trust assets or
direct the Trustee to invest Trust assets in accordance with Participants'
deemed investment elections (select one):

[ ]    Trust assets are to be invested in accordance with Participants' deemed
       investment elections made in accordance with the terms of the Plan, until
       further notice from the Employer.

[ ]    Trust assets are to be invested in accordance with the Employer's
       attached investment instructions, until further notice from the Employer.

9. RETIREMENT AGE

The Retirement Age under the Plan is age 65. A Participant terminating
employment before Retirement Age for reasons other than death or Total and
Permanent Disability will not be entitled to receive any installment payments
elected on the Election Form.

10. WITHDRAWALS WHILE WORKING

WITHDRAWALS FOR UNFORESEEN EMERGENCY. If you check the first box, Participants
may make withdrawals while working in the event they encounter an unforeseen
emergency. They generally can withdraw the vested portion of their Accounts.

NOTE: Withdrawals are strictly limited as described in Plan Section 7.5 (see
page 6). It is the Plan Administrator's responsibility to ensure that the limits
are being followed. Excess withdrawals may result in loss of the tax deferral on
all amounts credited under the Plan for benefit of all Participants.

Withdrawals of the vested portion of a Participants Account for unforeseen
emergencies (select one):

[x]    Are permitted to the full extent allowable under the Plan.

[ ]    Are not permitted.

14
<PAGE>

11. ADMINISTRATION

Plan Administrator. The Plan Administrator is legally responsible for the
operation of the Plan, including:

      *     Keeping track of which employees are eligible to participate in the
            Plan and the date each employee becomes eligible to participate.

      *     Maintaining Participants' Accounts, Including all sub-accounts
            required for different contribution types and payment elections, and
            keeping track of all elections made by Participants under the Plan
            and any other relevant information.

      *     Transmitting important communications to the Participants, and
            obtaining relevant information from Participants such as changes in
            investment selections.

      *     Filing important reports required to be submitted to governmental
            agencies.

The Plan Administrator will be the person or persons identified below:

Name HENRY C. NEWELL

Title VICE PRESIDENT & CFO

________________________________________
Name
________________________________________
Title
________________________________________
Name
________________________________________
Title

                                                                              15
<PAGE>

12. SIGNATURES

After reviewing the Adoption Agreement, enter the current date and the name of
the Employer. The signature of the Employer or the person signing for the
Employer must be witnessed. Note that the person signing for the Employer must
be authorized to do so, such as by a resolution of the Employer's board of
directors or governing bylaws.

While the Merrill Lynch Nonqualified Deferred Compensation Plan for Select
Employees, including this Adoption Agreement, has been designed in a manner to
permit Participants to defer federal income tax on amounts credited to their
accounts until the amounts are actually paid, neither Merrill Lynch, Pierce,
Fenner & Smith Incorporated, the sponsor of this document, nor any of its
affiliates ("Merrill Lynch") provide any assurances of that result in the
Employer's particular situation or assume any responsibility in this regard.
Please consult your tax advisor regarding the tax consequences of this Plan to
you and your employees and the advisability of submitting this document to the
Internal Revenue Service to obtain a ruling concerning those consequences. In
addition, please consult your independent legal counsel with respect to
securities law issues. By signing this Adoption Agreement, the Employer
acknowledges that no representations or warranties as to the tax consequences to
the Employer and Participants of the operation of this Plan have been made by
Merrill Lynch.

Name of Employer (Print or Type) PACKAGING DYNAMICS CORPORATION

By: PHILLIP D. HARRIS

-s- PHILLIP D. HARRIS
--------------------------------
Authorized Signature

Print Name and Title PRESIDENT & CEO

________________________________________
Date:

WITNESS: HENRY C. NEWELL

-s- HENRY C. NEWELL
--------------------------------
Signature

Print Name and Title VICE PRESIDENT & CFO

16

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