Document:

Form of Warrant Agreement

Exhibit
    4.1

    

    WARRANT
      AGENCY AGREEMENT

    

    THIS
      WARRANT AGREEMENT (the “Agreement”), dated as of the __ day of __________, 2007,
      is entered into by and between U.S. Dry Cleaning Corporation, a Delaware
      corporation, (hereinafter called the “Company”) and Interwest Transfer Company,
      Inc., (hereinafter called “Warrant Agent”).

    

    W
      I T
      N E S S E T H

    

    WHEREAS,
      pursuant to a Registration Statement on Form SB-2, Registration Statement No.
      333-139689 filed with the Securities and Exchange Commission (the “Commission”)
      relating to the Company’s proposed public offering of its securities (the
“Public Offering”), the Company proposes to issue up to 3,000,000 units (the
“Units”), each Unit consisting of one share of the Common Stock of the Company
      and one Redeemable Common Stock Purchase Warrant (which is initially exercisable
      to purchase one share of Common Stock on the terms and conditions set forth
      in
      this Agreement (a “Warrant”)). The Warrants are subject to certain limitations
      and restrictions as set forth in this Agreement;

    

    WHEREAS,
      the Company desires the Warrant Agent to act on behalf of the Company, and
      the
      Warrant Agent is willing to so act, in connection with the issuance,
      registration, transfer, exchange and exercise of the Warrants;

    

    NOW
      THEREFORE, in consideration of the premises and mutual agreements contained
      herein, it is agreed as follows:

    

    SECTION
      1. Appointment
      of Warrant Agent.

    

    The
      Company hereby appoints the Warrant Agent to act as agent for the Company in
      connection and accordance with this Agreement, and the Warrant Agent hereby
      accepts the appointment.

    

    SECTION
      2. Form
      of Warrant.

    

    The
      text
      of the Warrant and the form of election to purchase shares to be printed on
      the
      reverse thereof shall be substantially as set forth respectively in Exhibit
      A
      hereto.
      The number of shares issuable upon exercise of the Warrants is subject to
      adjustment on the occurrence of certain events, as described herein. The
      Warrants shall be executed on behalf of the Company by a manual or facsimile
      signature of the present or future president, chief executive officer or vice
      president of the Company, under its corporate seal affixed or in facsimile,
      and
      attested to by the secretary or an assistant secretary.

    

    Warrants
      shall be dated as of the closing date of the Offering commenced on ___________,
      2007 (the “Effective Date”). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    SECTION
      3. Countersignature
      and Registration.

    

    The
      Warrant Agent shall maintain books for the transfer and registration of
      Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall
      issue and register the Warrants in the names of the respective holders thereof.
      The Warrants shall be countersigned manually or by facsimile by the Warrant
      Agent (or by any successor to the Warrant Agent then serving under this
      Agreement), and shall not be valid for any purpose unless so countersigned.
      Warrants may be so countersigned, however, by the Warrant Agent, notwithstanding
      that the person whose manual or facsimile signature appears thereon as the
      proper officers of the Company have ceased to be such officers at the time
      of
      such countersignature and delivery.

    

    SECTION
      4. Transfers
      and Exchanges.

    

    The
      Warrant Agent shall not permit the transfer of any Warrant unless authorized
      in
      writing by the Company. Warrants which have been canceled shall be delivered
      upon request by the Warrant Agent to the Company. Warrants may be exchanged
      at
      the option of the holder thereof, when surrendered at the office of the Warrant
      Agent, for another Warrant or Warrants of different denominations, of like
      tenor, and representing in the aggregate the right to purchase a like number
      of
      shares of Common Stock.

    

    SECTION
      5. Exercise
      of Warrants.

    

    Subject
      to the provisions of this Agreement, each registered holder of Warrants shall
      have the right to purchase from the Company, and the Company shall issue and
      sell to such registered holder, the number of fully paid and nonassessable
      shares of Common Stock of the Company specified in the Warrants, upon surrender
      to the Company at the office of the Warrant Agent of such Warrants, with the
      form of election to purchase the Warrants filled out and signed, and upon
      payment to the Company of the Warrant Price, as specified herein. Any Warrant
      may be exercised in whole or in part. In the event of exercise in part, the
      Warrant Agent shall issue and deliver to the Warrant Holder another Warrant
      of
      like tenor representing the unexercised number of shares. Payment for the shares
      upon exercise of Warrants shall be in cash or by certified check to the order
      of
      the Company. Warrants may be exercised for a period of five years beginning
      at
      the Closing of the Offering. No adjustment shall be made for any dividends
      on
      any Common Stock issuable upon exercise of any Warrant. Subject to Section
      5
      hereof, upon surrender of Warrants and payment of the Warrant Price, the Company
      shall issue and cause to be delivered with all reasonable dispatch to, or upon
      the written order of the registered holder of Warrants exercised, and in such
      name or names as the holder shall designate, a certificate or certificates
      representing the shares so purchased, together with cash, as provided in Section
      11 hereof, in respect of any fraction of a share of Common Stock otherwise
      issuable upon surrender. Such certificate or certificates shall be deemed to
      have been issued, and any person so designated to be named therein shall be
      deemed to have become a holder of record of such shares, as of the date of
      surrender of the Warrants and the payment of the Warrant Price; provided,
      however, that if, at the date of surrender of such Warrants and the payment
      of
      such Warrant Price, the transfer books for the Common Stock or other class
      of
      stock purchasable upon the exercise of such Warrants shall be closed, the
      certificates for the shares in respect of which such Warrants are then exercised
      shall be issuable as of the date of which such books shall be opened, whether
      before, on, or after 5:00 p.m., Utah time, on the respective dates of expiration
      of the Warrants, and until such date, the Company shall have no obligation
      or
      duty to deliver any certificate for such shares; provided, further, however,
      that the transfer books, unless otherwise required by law or applicable rule
      of
      any national securities exchange, or bylaw of the Company, shall not be closed
      at any one time for a period in excess of 20 days. The Company, whenever
      requested by the Warrant Agent, will supply the Warrant Agent with Warrants
      duly
      executed on behalf of the Company for such purpose. The Company shall pay all
      taxes and other governmental charges (other than income tax) that may be imposed
      in respect of the issue or delivery of the shares issued upon the exercise
      of
      any Warrants. The Company shall not be required, however, to pay any tax or
      other charge imposed in connection with any transfer involved in the issue
      of
      the any certificate for shares in any name other than that of the Warrant holder
      surrendered in connection with the purchase of such shares, and in such case
      neither the Company nor the Warrant Agent shall be required to issue or deliver
      any stock certificate until such tax or other charge has been paid or it has
      been established to the Company's satisfaction that no tax or charge is
      due.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
 

    SECTION
      6. Call
      Provision.

    

    In
      the
      event that the closing sales price of a share of Common Stock as traded on
      the
      most senior exchange or quotation medium where the shares are quoted equals
      or
      exceeds $5.00 (appropriately adjusted for any stock split, reverse stock split,
      stock dividend or other reclassification or combination of the Common Stock
      occurring after the date hereof) for at least twenty consecutive trading days,
      the Company, upon 30 days prior written notice (the “Notice Period”) given to
      the Warrant holder, shall have the right to call some or all of the then
      outstanding Warrants at a redemption price equal to $0.05 per share of Common
      Stock then purchasable pursuant to the outstanding Warrants. Notwithstanding
      any
      such notice by the Company, the Warrant holder shall have the right to exercise
      any Warrants prior to the end of the Notice Period. In connection with any
      transfer or exchange of less than all of the Warrants, the Company’s right to
      call the Warrants shall apply pro rata to the shares underlying the Warrants
      with respect to the transferring holder and the transferee holder of the
      Warrants.

    

    SECTION
      7. Replacement
      of Warrant.

    

    Upon
      receipt of evidence reasonably satisfactory to the Company of the ownership
      of
      and the loss, theft, destruction or mutilation of this Warrant and (in the
      case
      of loss, theft or destruction) upon delivery of a lost instrument bond (open
      penalty) satisfactory to the Company and Warrant Agent, or (in the case of
      mutilation) upon surrender and cancellation of the mutilated Warrant, the
      Company will execute and the Transfer Agent will countersign and deliver, in
      lieu thereof, a new Warrant of like tenor.

    

    SECTION
      8. Reservation
      of Common Stock.

    

    The
      Company has reserved and shall at all times reserve and keep available out
      of
      its authorized but unissued shares of Common Stock, solely for the purpose
      of
      issuance upon the exercise of this Warrant, such number of shares of Common
      Stock as shall be issuable upon the exercise hereof. The Company covenants
      and
      agrees that, upon exercise of this Warrant and payment of the purchase price
      therefor, all shares of Common Stock issuable upon such exercise shall be duly
      and validly issued, fully paid and nonassessable. The Company will keep a copy
      of this Agreement on file with the Transfer Agent for the Common Stock and
      with
      every subsequent transfer agent for any shares of the Company's capital stock
      issuable upon the exercise of the rights of purchase represented by the
      Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
      from
      time to time such Transfer Agent for stock certificates required to honor
      outstanding Warrants. The Company will supply such Transfer Agent with duly
      executed stock certificates for such purpose and will itself provide or
      otherwise make available any cash which may be required to be paid if the
      Company elects not to issue fractional shares under Section 11 hereof. Any
      Warrant certificates surrendered in the exercise of the rights thereby evidenced
      shall be canceled by the Warrant Agent and shall thereafter be delivered to
      the
      Company, and the Warrant Agent shall confirm to the Company that the number
      of
      shares of Common Stock corresponding to such canceled Warrants have been issued
      upon the exercise of such Warrants. Promptly after the date of expiration of
      the
      Warrants, the Warrant Agent shall certify to the Company the total aggregate
      amount of Warrants then outstanding.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    SECTION
      9. Warrant
      Price.

    

    The
      Warrant price at which Common Stock shall be purchasable shall be $3.50 per
      share at any time during the period commencing at the closing date of the
      Offering and until five years after to closing date of the Offering. The Company
      will confirm the expiration date of each warrant to the Warrant
      Agent.

    

    SECTION
      10. Protection
      Against Dilution.

    

    a. Adjustment
      for Subdivisions, Combinations of Dividends.

    

    In
      case
      the Company shall at any time, or from time to time, after the Effective Date
      subdivide or combine the outstanding shares of Common Stock or declare a
      dividend payable in Common Stock, the exercise price of the Warrants in effect
      immediately prior to the subdivision, combination or record date for such
      dividend payable in Common Stock shall forthwith be proportionately increased,
      in the case of combination, or decreased, in the case of subdivision or dividend
      payable in Common Stock, and each share of Common Stock purchasable upon
      exercise of each Warrant shall be change to the number determined by dividing
      the then current exercise price by the exercise price as adjusted after the
      subdivision, combination or dividend payable in Common Stock. Upon the
      occurrence of any subdivision, combination or dividend, the Company will confirm
      to the Warrant Agent the adjusted exercise price of each outstanding
      warrant.

    

    b. Adjustment
      for Certain Dividends and Distributions.

    

    In
      the
      event the Company at any time, or from time to time, after the Effective Date
      makes or fixes a record date for the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in securities
      of
      the Company other than shares of Common Stock, then and in each such event
      provisions shall be made so that each Warrant holder (the "Holder") shall
      receive upon exercise of the Warrant, in addition to the number of shares of
      Common Stock receivable thereupon, the amount of securities of the Company
      which
      the Holder would have received had its Warrant been exercised into Common Stock
      on the date of such event and had it thereafter, during the period from the
      date
      of such event to and including the date of exercise, retained such securities
      receivable by it as aforesaid during such period, subject to all other
      adjustments called for during such period under this Section 10 with respect
      to
      the rights of the Holder of the Warrant.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    c. Adjustment
      for Reclassification, Exchange and Substitution.

    

    If
      the
      Common Stock issuable upon the exercise of the Warrants is changed into the
      same
      or a different number of shares of any class or classes of stock, whether by
      recapitalization, reclassification or otherwise (other than a subdivision or
      combination of shares or stock dividend or a reorganization, merger,
      consolidation or sale of assets, provided for elsewhere in this Section 10),
      then and in any such event the Holder shall have the right thereafter, upon
      exercise of the Warrant, to receive the kind and amount of stock and other
      securities and property receivable upon such recapitalization, reclassification
      or other change, in an amount equal to the amount that the Holder would have
      been entitled to have had the Holder exercised the Warrant immediately prior
      to
      such recapitalization, reclassification or change, but only to the extent the
      Warrant is actually exercised, all subject to further adjustment as provided
      herein.

    

    d. Reorganization,
      Mergers, Consolidations of Sales of Assets.

    

    If
      at any
      time, or from time to time, there is a capital reorganization of the Common
      Stock (other than a recapitalization, subdivision, combination, reclassification
      or exchange of the Common Stock provided for elsewhere in this Section 10)
      or
      merger or consolidation of the Company with or into another corporation, or
      the
      sale of all or substantially all of the Company's properties and assets to
      any
      other person then, as a part of such reorganization, merger, consolidation
      or
      sale, provision shall be made so that the Holder of each Warrant shall
      thereafter be entitled to receive, upon exercise of each Warrant (and only
      to
      the extent such Warrant is exercised), the number of shares of stock or other
      securities or property of the Company, or of the successor corporation resulting
      from such merger or consolidation or sale, to which a Holder of Common Stock,
      or
      other securities, deliverable upon the exercise of the Warrant would otherwise
      have been entitled on such capital reorganization, merger, consolidation, or
      sale.

    

    SECTION
      11. Fractional
      Interest.

    

    The
      Company shall not be required to issue fractions of Common Stock on the exercise
      of Warrants. If any fraction of a common share would, except for the provisions
      of this Section, be issuable on the exercise of any Warrant (or specified
      portions thereof), the Company shall purchase such fraction for an amount in
      cash equal to the current market value of such fraction based upon the current
      market price of the common share determined in the manner set forth below.
      For
      purposes of this Section, the current market price on each day shall be the
      last
      reported sales price, regular way, in either case on any national securities
      exchange on which the Common Stock is listed or admitted to trading, or, if
      the
      Common Stock is not listed or admitted to trading on any such exchange, the
      average of the bid and asked prices on such day as reported on NASDAQ, or if
      such shares are not then listed on NASDAQ, as furnished by National Quotation
      Bureau Incorporated or any similar organization selected from time to time
      by
      the Company for the purpose. All calculations under this Section shall be made
      to the nearest cent or to the nearest one-hundredth of a share, as the case
      may
      be. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    SECTION
      12. Notices
      of Warrant Holders.

    

    Nothing
      contained in this Warrant shall be construed as conferring upon any Warrant
      Holder hereto the right to vote or to consent or to receive notice as a
      shareholder in respect of any meetings of shareholders for the election of
      directors or any other matter or as having any rights whatsoever as a
      shareholder of the Company. If, however, at any time prior to the expiration
      of
      the Warrant and prior to its exercise, any of the following events shall
      occur:

    

    a. The
      Company shall fix a record date of the Holders of its shares of Common Stock
      for
      the purpose of entitling them to receive a dividend or distribution;
      or

    

    b. The
      Company shall offer to the Holders of its Common Stock any additional shares
      of
      capital stock of the Company or securities convertible into or exchangeable
      for
      shares of capital stock of the Company, or any option (except for options to
      be
      granted to Company's employees pursuant to a stock option plan approved by
      the
      Company's Board of Directors), right or warrant, to subscribe therefor; or
      

     

    c. The
      Company shall call any of the Warrants for redemption; or

    

    d. A
      merger,
      consolidation, dissolution, liquidation or winding up of the Company or a sale
      of all or substantially all of its property, assets and business as an entirety
      shall be proposed;

     

    The
      Company shall give written notice of such event to the Warrant Holder at least
      thirty (30) days prior to the date fixed as a record date or the date of closing
      the transfer books for the determination of the shareholders entitled to
      received such dividend, distribution, convertible or exchangeable securities
      or
      subscription rights, entitled to vote on such proposed dissolution, liquidation,
      winding up or sale, or in the case where Warrants have been called for
      redemption, the Company shall give written notice of such event to the Warrant
      Holder at least thirty (30) days prior to the date fixed as a record date.
      Such
      notice shall specify such record date, the date of closing the transfer books,
      or the redemption date, as the case may be. Failure to give such notice or
      any
      defect therein shall not affect the validity of any action taken in connection
      with the declaration or payment of any such dividends or the issuance of any
      convertible or exchangeable securities, or subscription rights, options or
      warrants or any proposed dissolution, liquidation, winding up, sale or
      redemption.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    All
      notices, requests, consents and other communications hereunder shall be in
      writing and shall be deemed to have been duly made when delivered, or mailed
      by
      U.S. mail, certified mail, postage prepaid, return receipt
      requested:

    a. If
      to any
      Warrant Holder, to the address of such Holder as shown on the books of the
      Company; or 

    

    b. If
      to the
      Company, to the address of the Company on the records of the Warrant
      Agent.

    

    c. If
      to the
      Warrant Agent, to 1981 East 4800 South, Ste. 100, Salt Lake City, UT
      84117.

    

    The
      Company shall cause copies of all financial statements and reports, proxy
      statements and other documents it shall send to its shareholders to be sent
      by
      U.S. mail, postage prepaid, on the date of mailing to such shareholder, to
      each
      registered Warrant Holder at his address appearing on the Warrant register
      as of
      the record date for the determination of the shareholders entitled to such
      documents.

    

    SECTION
      13. Disposition
      of Proceeds on Exercise of Warrants.

    

    a. The
      Warrant Agent shall account promptly to the Company with respect to Warrants
      exercised and concurrently deposit in a special account in a local bank
      designated by the Warrant Agent for the benefit of the Company all moneys
      received by the Warrant Agent for the purchase of common Stock through the
      exercise of such Warrants.

    

    b. The
      Warrant Agent shall keep copies of this Agreement available for inspection
      by
      holders of Warrants during normal business hours.

    

    SECTION
      14. Merger
      or Consolidation or Change of Name of Warrant Agent.

    

    Any
      corporation or company which may succeed to the business of the Warrant Agent
      by
      any merger or consolidation or otherwise to which the Warrant Agent shall be
      a
      party, or any corporation or Company succeeding to the corporate trust business
      of the Warrant Agent, shall be the successor to the Warrant Agent hereunder
      without the execution or filing of any paper or any further act on the part
      of
      any of the parties hereto. In case at the time any of the Warrants shall not
      have been countersigned, any successor to the Warrant Agent may countersign
      such
      Warrants either in the name of the predecessor Warrant Agent or in the name
      of
      the successor Warrant Agent; and in all such cases such Warrant shall have
      the
      full force provided in the Warrant and in this Agreement.

    

    SECTION
      15. Duties
      of Warrant Agent.

    

    The
      Warrant Agent undertakes the duties and obligations imposed by this Agreement
      upon the following terms and conditions, by all of which the Company and the
      Warrant Holders, by their acceptance thereof, shall be bound:

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
 

    a. The
      statements of fact and recitals contained herein and in the Warrants shall
      be
      taken as statements of the Company, and the Warrant Agent assumes no
      responsibility for the correctness of any of the same except such as described
      pertaining to the Warrant Agent or action taken or to be taken by it. The
      Warrant Agent assumes no responsibility with respect to the distribution of
      the
      Warrants except as herein expressly provided.

    

    b. The
      Warrant Agent shall not be responsible for any failure of the Company to comply
      with any of the covenants contained in this Agreement or in the Warrants to
      be
      complied with by the Company.

    

    c. The
      Warrant Agent may consult at any time with counsel satisfactory to it (who
      may
      be counsel for the Company) and the Warrant Agent shall incur no liability
      or
      responsibility to the Company or to any holder of any Warrant in respect of
      any
      action taken, suffered or omitted by it hereunder in good faith and in
      accordance with the opinion or the advice of such counsel.

    

    d. The
      Warrant Agent shall incur no liability or responsibility to the Company or
      to
      any holder of any Warrant for any action taken in reliance on any notice,
      resolution, waiver, consent, order, certificate, or other paper, document or
      instrument believed by it to be genuine and to have been signed, sent or
      presented by the proper party or parties.

    

    e. The
      Company agrees to pay to the Warrant Agent reasonable compensation for all
      services rendered by the Warrant Agent in the execution of this Agreement,
      to
      reimburse the Warrant Agent for all expenses, taxes and governmental charges
      and
      other charges of any kind and nature incurred by the Warrant Agent in the
      execution of this Agreement and to indemnify the Warrant Agent and save it
      harmless against any and all liabilities, including judgments, costs and
      reasonable counsel fees, for anything done or omitted by the Warrant Agent
      in
      the execution of this Agreement except as a result of the Warrant Agent's gross
      negligence, willful misconduct, or bad faith.

    

    f. The
      Warrant Agent shall be under no obligation to institute any action, suit or
      legal proceeding or to take any other action likely to involve expense unless
      the Company or one or more registered holders of Warrants shall furnish the
      Warrant Agent with reasonable security and indemnity acceptable to Warrant
      Agent
      for any costs and expenses which may be incurred, but this provision shall
      not
      affect the power of the Warrant Agent to take such action as the Warrant Agent
      may consider proper, whether with or without any such security or indemnity.
      All
      rights of action under this Agreement or under any of the Warrants may be
      enforced by the Warrant Agent without the possession of any of the Warrants
      or
      the production thereof any trial or other proceeding relating thereto, and
      any
      such action, suit or proceeding instituted by the Warrant Agent shall be brought
      in its name as Warrant Agent, and any recovery of judgment shall be for the
      ratable benefit of the registered holders of the Warrants, as their respective
      rights or interests may appear.

    

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

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
 

    h. The
      Warrant Agent shall act hereunder solely as agent and not in a ministerial
      capacity, and its duties shall be determined solely by the provisions hereof.
      The Warrant Agent shall not be liable for anything which it may do or refrain
      from doing in connection with this Agreement except for its own gross
      negligence, willful misconduct or bad faith.

    

    i. The
      Warrant Agent may execute and exercise any of the rights or powers hereby vested
      in it or perform any duty hereunder either itself or by or through its
      attorneys, agents or employees, and the Warrant Agent shall not be answerable
      or
      accountable for any act, default, neglect or misconduct, provided reasonable
      care had been exercised in the selection and continued employment
      thereof.

    

    j. Any
      request, direction, election, order or demand of the Company shall be
      sufficiently evidenced by an instrument signed in the name of the Company by
      its
      President or a Vice President or its Secretary or an Assistant Secretary or
      its
      Treasurer or an Assistant Treasurer (unless other evidence in respect thereof
      be
      herein specifically prescribed); and any resolution of the Board of Directors
      may be evidenced to the Warrant Agent by a copy thereof certified by the
      Secretary or an Assistant Secretary of the Company.

    

    SECTION
      16. Change
      of Warrant Agent.

    

    The
      Warrant Agent may resign and be discharged from its duties under this Agreement
      by giving to the Company notice in writing, and to the holders of the Warrants
      notice by mailing such notice to holders at the addresses appearing on the
      Warrant register, of such resignation, specifying a date when such resignation
      shall take effect. The Warrant Agent may be removed by like notice to the
      Warrant Agent from the Company and by like mailing of notice to the holders
      of
      the Warrants. If the Warrant Agent shall resign or be removed or shall otherwise
      become incapable of acting, the Company shall appoint a successor to the Warrant
      Agent. If the Company shall fail to make such appointment within a period of
      30
      days after the removal or after it has been notified in writing of the
      resignation or incapacity by the resigning or incapacitated Warrant Agent,
      the
      registered holder of any Warrant may apply to any court of competent
      jurisdiction for the appointment of a successor to the Warrant Agent. After
      appointment, the successor warrant agent shall be vested with the same powers,
      right, duties and responsibilities as if it had been originally named as Warrant
      Agent without further act or deed; but the former Warrant Agent shall deliver
      and transfer to the successor warrant agent all canceled Warrants, records
      and
      property at the time held by it hereunder, and execute and deliver any further
      assurance, conveyance, act or deed necessary for the purpose. Failure to file
      or
      mail any notice provided for in this Section, however, or any defect therein,
      shall not affect the legality or validity of the resignation or removal of
      the
      Warrant Agent or the appointment of the successor warrant agent, as the case
      may
      be.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    SECTION
      17. Change
      of Transfer Agent.

    

    Forthwith
      upon the appointment of any Transfer Agent for the Common Stock or of any
      subsequent transfer agent for Common Stock or other shares of the Company's
      capital stock issuable upon the exercise of the rights of purchase represented
      by the Warrants, the Company will file with the Warrant Agent a statement
      setting forth the name and address of such Transfer Agent.

    

    SECTION
      18. Supplements
      and Amendments.

    

    The
      Company and the Warrant Agent may, from time to time, supplement or amend this
      Agreement without the approval of any holders of Warrants in order to cure
      any
      ambiguity or to correct or supplement any provisions contained herein which
      may
      be defective or inconsistent with any other provisions in regard to matters
      or
      questions arising thereunder which the Company and the Warrant Agent may deem
      necessary or desirable and which shall not be inconsistent with the provisions
      of the Warrants and which shall not adversely affect the interests of the
      holders of Warrants.

    

    SECTION
      19. Successors.

     

    All
      the
      covenants, agreements, representations and warranties contained in this
      Agreement shall bind the parties hereto and their respective heirs, executors,
      administrators, distributes, successors and assigns.

    

    SECTION
      20. Change;
      Waiver.

    

    Neither
      this Agreement nor any term hereof may be changed, waived, discharged or
      terminated orally but only by an instrument in writing signed by the party
      against which enforcement of the change, waiver, discharge or termination is
      sought.

    

    SECTION
      21. Headings.

    

    The
      section headings in this Agreement are inserted for the purpose of convenience
      only and shall have no substantive effect.

    

    SECTION
      22. Law
      Governing.

    

    This
      Agreement shall for all purposes be construed and enforced in accordance with,
      and governed by, the internal laws of the State of Utah, without giving effect
      to principles of conflict of laws.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
 

    The
      parties hereto have caused this Agreement to be signed as of the date first
      above written..

     

    

      
        	
                By:
                  __________________________

              	 	
                By:
                  _______________________________

              
	 	 	 
	
                Name:
                  Robert Y. Lee

              	 	
                Name:
                  Kurt Hughes

              
	
                Title:
                  Chief Executive Officer

              	 	
                Title:
                  President

              

      

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    [FORM
      OF
      FACE OF WARRANT CERTIFICATE]

    

    ______Warrants

    

    VOID
      AFTER _____ , 2012

    

    WARRANT
      CERTIFICATE FOR PURCHASE

    OF
      COMMON
      STOCK

    

    U.S.
      DRY
      CLEANING CORPORATION

    

    

    This
      certifies that FOR VALUE RECEIVED ______or registered assigns (the “Registered
      Holder”) is the owner of the number of Warrants (“Warrants”) specified above.
      Each Warrant represented hereby initially entitles the Registered Holder to
      purchase, subject to the terms and conditions set forth in this Warrant
      Certificate and the Warrant Agreement (as hereinafter defined), one fully paid
      and nonassessable share of common stock, par value $0.001 per share (“Common
      Stock”), of U.S. DRY CLEANING CORPORATION, a Delaware corporation (the
“Company”), at any time prior to the Expiration Date (as hereinafter defined),
      unless the Warrants are earlier redeemed, upon the presentation and surrender
      of
      this Warrant Certificate with the Subscription Form on the reverse hereof duly
      executed, at the corporate office of Interwest Transfer Company, Inc., the
      warrant agent, or its successor (the “Warrant Agent”),
      accompanied by payment of $3.50 (the “Exercise Price”) per share of Common Stock
      in lawful money of the United States of America in cash or by official bank
      or
      certified check made payable to U.S. DRY CLEANING CORPORATION, Special
      Account.

    

    This
      Warrant Certificate and each Warrant represented hereby are issued pursuant
      to
      and are subject in all respects to the terms and conditions set forth in the
      Warrant Agreement (the “Warrant Agreement”), dated ______, 2007 by and among the
      Company and the Warrant Agent.

    

    In
      the
      event of certain contingencies provided for in the Warrant Agreement, the
      Exercise Price and the number of shares of Common Stock subject to purchase
      upon
      the exercise of each Warrant represented hereby are subject to modification
      or
      adjustment. Each Warrant represented hereby is exercisable at the option of
      the
      Registered Holder, but no fractional shares of Common Stock will be issued.
      In
      the case of the exercise of less than all the Warrants represented hereby,
      the
      Company shall cancel this Warrant Certificate upon the surrender hereof and
      shall execute, and cause the Warrant Agent to countersign and deliver, a new
      Warrant Certificate of like tenor for the balance of such Warrants.

    

    The
      term
“Expiration Date” shall mean 5:00 P.M. (Utah time) on ______, 2012. If such date
      shall in the State of Utah be a holiday or a day on which banks are authorized
      to close, then the Expiration Date shall mean 5:00 P.M. (Utah time) the next
      following day which in the State of Utah is not a holiday or a day on which
      banks are authorized to close.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    The
      Company shall not be obligated to deliver any securities pursuant to the
      exercise of the Warrants represented hereby unless a registration statement
      under the Securities Act of 1933, as amended, with respect to such securities
      is
      effective. The Company has covenanted and agreed that it will file a
      registration statement and will use its best efforts to cause the same to become
      effective and to keep such registration statement current while any of the
      Warrants are outstanding. The Warrants represented hereby shall not be
      exercisable by a Registered Holder in any state where such exercise would be
      unlawful.

    

    This
      Warrant Certificate is exchangeable, upon the surrender hereof by the Registered
      Holder at the business office of the Warrant Agent, for a new Warrant
      Certificate or Warrant Certificates of like tenor representing an equal
      aggregate number of Warrants, each of such new Warrant Certificates to represent
      such number of Warrants as shall be designated by such Registered Holder at
      the
      time of such surrender.

    

    Prior
      to
      the exercise of any Warrant represented hereby, the Registered Holder shall
      not
      be entitled to any rights of a stockholder of the Company, including, without
      limitation, the right to vote or to receive dividends or other distributions,
      and shall not be entitled to receive any notice of any proceedings of the
      Company, except as provided in the Warrant Agreement.

    

    In
      the
      event that the closing sales price of a share of Common Stock of the Company
      as
      traded on the most senior exchange or quotation medium where the shares are
      quoted equals or exceeds $5.00 (appropriately adjusted for any stock split,
      reverse stock split, stock dividend or other reclassification or combination
      of
      the Common Stock occurring after the date hereof) for at least twenty
      consecutive trading days, the Company, upon 30 days prior written notice (the
      “Notice Period”) given to the Registered Holder, shall have the right to call
      some or all of the then outstanding Warrants at a redemption price equal to
      $0.05 per share of Common Stock then purchasable pursuant to the outstanding
      Warrants. Notwithstanding any such notice by the Company, the Registered Holder
      shall have the right to exercise any Warrants prior to the end of the Notice
      Period.

    

    Prior
      to
      due presentment for registration of transfer hereof, the Company and the Warrant
      Agent may deem and treat the Registered Holder as the absolute owner hereof
      and
      of each Warrant represented hereby (notwithstanding any notations of ownership
      or writing hereon made by anyone other than a duly authorized officer of the
      Company or the Warrant Agent) for all purposes and shall not be affected by
      any
      notice to the contrary.

    

    This
      Warrant Certificate shall be governed by and construed in accordance with the
      laws of the State of Delaware.

    

    This
      Warrant Certificate is not valid unless countersigned by the Warrant
      Agent.

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
      executed, manually or in facsimile, by an officer of the Company thereunto
      duly
      authorized and a facsimile of its corporate seal to be imprinted
      hereon.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

      
        	 	 	
                U.S.
                  DRY CLEANING CORPORATION

              
	 	 	 
	
                Dated:
                  _________ 

              	 	
                By:
                  ________________________________

              
	 	 	
                Name

              
	 	 	
                Title:

              

      

    

    Countersigned:

    

    

    Interwest
      Transfer Company, Inc.

    as
      Warrant Agent

    

    

    By:
      ______________________

    Authorized
      Officer

    

    
       

      
         

        
          

        

      

      
         

      

    

    [FORM
      OF
      REVERSE OF WARRANT CERTIFICATE]

    

    SUBSCRIPTION
      FORM

    

    To
      Be
      Executed by the Registered Holder

    in
      Order
      to Exercise Warrants

    

    The
      undersigned Registered Holder hereby irrevocably elects to exercise
      ______Warrants represented by this Warrant Certificate, and to purchase the
      securities issuable upon the exercise of such Warrants, and requests that
      certificates for such securities shall be issued in the name of

    

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

    ___________________________

    ___________________________

    ___________________________

    ___________________________

    

    [please
      print or type name and address]

    

    and
      be
      delivered to

    

    [please
      print or type name and address]

    

    and
      if
      such number of Warrants shall not be all the Warrants evidenced by this Warrant
      Certificate, that a new Warrant Certificate for the balance of such Warrants
      be
      registered in the name of, and delivered to, the Registered Holder at the
      address stated below.

    

    ____
      Check here if the undersigned Registered Holder is exercising this Warrant
      as
      result of being solicited by Marino Capital Partners, Inc. and is designating
      Marino Capital Partners, Inc. to receive compensation for such exercise in
      accordance to, and to the extent permitted by, NASD Rule
      2710(f)(2)(K)(iv).

     

    
      
        	
                Dated:______
                  

              	 	
                X
                  _______________________________

              
	 	 	 ____________________________
	 	 	 ____________________________
	 	 	 ____________________________
	 	 	
                Address

              
	 	 	 ____________________________
	 	 	
                Taxpayer
                  Identification Number

              
	 	 	 ____________________________
	 	 	
                Signature
                  Guaranteed

              

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ASSIGNMENT

    

    To
      Be
      Executed by the Registered Holder

    in
      Order
      to Assign Warrants

    

    FOR
      VALUE
      RECEIVED, ______hereby sells, assigns and transfers unto

    

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

    ____________________________

    ____________________________

    ____________________________

    ____________________________

    

    [please
      print or type name and address]

    

    ______of
      the Warrants represented by this Warrant Certificate, and hereby irrevocably
      constitutes and appoints ________________________Attorney to transfer this
      Warrant Certificate on the books of the Company, with full power of substitution
      in the premises.

    

    

    Dated:
      ____________                                         X
      ________________________

                
      Signature Guaranteed

    

    

    THE
      SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
      NAME
      AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
      WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
      GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
      AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
      MIDWEST STOCK EXCHANGE.Nu Skin Enterprises, Inc. Exhibit 10.4

CREDIT AGREEMENT

dated as of May 10, 2001

among

NU SKIN ENTERPRISES, INC.,

VARIOUS FINANCIAL INSTITUTIONS,

and

BANK OF AMERICA, N.A.,

 as Administrative Agent

TABLE OF CONTENTS

                                                                            PAGE
SECTION 1  DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
         1.1      Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
         1.2      Other Interpretive Provisions . . . . . . . . . . . . . . . 18

SECTION 2  COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
           LETTER OF CREDIT PROCEDURES. . . . . . . . . . . . . . . . . . . . 19
         2.1      Commitments . . . . . . . . . . . . . . . . . . . . . . . . 19
                  2.1.1    Loans. . . . . . . . . . . . . . . . . . . . . . . 19
                  2.1.2    L/C Commitment . . . . . . . . . . . . . . . . . . 19
         2.2      Loan Procedures . . . . . . . . . . . . . . . . . . . . . . 19
                  2.2.1    Various Types of Loans . . . . . . . . . . . . . . 19
                  2.2.2    Borrowing Procedures . . . . . . . . . . . . . . . 20
                  2.2.3    Conversion and Continuation Procedures . . . . . . 20
         2.3      Letter of Credit Procedures . . . . . . . . . . . . . . . . 21
                  2.3.1    L/C Applications . . . . . . . . . . . . . . . . . 21
                  2.3.2    Participations in Letters of Credit. . . . . . . . 22
                  2.3.3    Reimbursement Obligations. . . . . . . . . . . . . 22
                  2.3.4    Limitation on Obligations of Issuing Lenders . . . 23
                  2.3.5    Funding by Lenders to Issuing Lenders. . . . . . . 23
         2.4      Commitments Several . . . . . . . . . . . . . . . . . . . . 24
         2.5      Certain Conditions. . . . . . . . . . . . . . . . . . . . . 24

SECTION 3  NOTES EVIDENCING LOANS . . . . . . . . . . . . . . . . . . . . . . 24
         3.1      Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
         3.2      Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . 24

SECTION 4  INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
         4.1      Interest Rates. . . . . . . . . . . . . . . . . . . . . . . 24
         4.2      Interest Payment Dates. . . . . . . . . . . . . . . . . . . 25
         4.3      Setting and Notice of Rates . . . . . . . . . . . . . . . . 25
         4.4      Computation of Interest . . . . . . . . . . . . . . . . . . 25

SECTION 5  FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
         5.1      Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . 25
         5.2      Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . 26
         5.3      Letter of Credit Fees . . . . . . . . . . . . . . . . . . . 26
         5.4      Administrative Agent's Fees . . . . . . . . . . . . . . . . 26

SECTION 6         REDUCTION IN THE COMMITMENT AMOUNT; PREPAYMENTS . . . . . . 26
         6.1      Reductions in the Commitment Amount . . . . . . . . . . . . 26

                                   i

                  6.1.1    Voluntary Reductions of the Commitment Amount. . . 26
                  6.1.2    Mandatory Reductions in the Commitment Amount. . . 27
         6.2      Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 27

SECTION 7  MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES. . . . . . . . . . 27
         7.1      Making of Payments. . . . . . . . . . . . . . . . . . . . . 27
         7.2      Application of Certain Payments . . . . . . . . . . . . . . 28
         7.3      Due Date Extension. . . . . . . . . . . . . . . . . . . . . 28
         7.4      Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
         7.5      Proration of Payments . . . . . . . . . . . . . . . . . . . 28
         7.6      Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

SECTION 8  INCREASED COSTS; SPECIAL PROVISIONS FOR YEN LIBOR LOANS
           AND EURODOLLAR LOANS . . . . . . . . . . . . . . . . . . . . . . . 30
         8.1      Increased Costs . . . . . . . . . . . . . . . . . . . . . . 30
         8.2      Basis for Determining Interest Rate Inadequate or Unfair. . 31
         8.3      Changes in Law Rendering Loans Unlawful . . . . . . . . . . 32
         8.4      Funding Losses. . . . . . . . . . . . . . . . . . . . . . . 33
         8.5      Right of Lenders to Fund through Other Offices. . . . . . . 33
         8.6      Discretion of Lenders as to Manner of Funding . . . . . . . 33
         8.7      Mitigation of Circumstances; Replacement of Affected Lender 33
         8.8      Conclusiveness of Statements; Survival of Provisions. . . . 34

SECTION 9  WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
         9.1      Organization, etc . . . . . . . . . . . . . . . . . . . . . 34
         9.2      Authorization; No Conflict. . . . . . . . . . . . . . . . . 34
         9.3      Financial Condition . . . . . . . . . . . . . . . . . . . . 35
         9.4      No Material Adverse Change. . . . . . . . . . . . . . . . . 35
         9.5      Governmental Authorizations; etc. . . . . . . . . . . . . . 35
         9.6      Title to Property; Leases . . . . . . . . . . . . . . . . . 35
         9.7      Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 36
         9.8      Compliance with ERISA . . . . . . . . . . . . . . . . . . . 36
         9.9      Litigation; Observance of Agreements, Statutes and Orders . 37
         9.10     Other Statutes. . . . . . . . . . . . . . . . . . . . . . . 37
         9.11     Licenses, Permits, etc. . . . . . . . . . . . . . . . . . . 37
         9.12     Use of Proceeds; Margin Regulations . . . . . . . . . . . . 38
         9.13     Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
         9.14     Existing Indebtedness; Future Liens . . . . . . . . . . . . 38
         9.15     Environmental Matters . . . . . . . . . . . . . . . . . . . 39
         9.16     Information . . . . . . . . . . . . . . . . . . . . . . . . 39

SECTION 10  COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
         10.1     Reports, Certificates and Other Information . . . . . . . . 40

                                         ii

                  10.1.1   Audit Report . . . . . . . . . . . . . . . . . . . 40
                  10.1.2   Quarterly Reports. . . . . . . . . . . . . . . . . 41
                  10.1.3   Compliance Certificates. . . . . . . . . . . . . . 41
                  10.1.4   SEC and Other Reports. . . . . . . . . . . . . . . 42
                  10.1.5   Notice of Default. . . . . . . . . . . . . . . . . 42
                  10.1.6   Notice of ERISA Matters. . . . . . . . . . . . . . 42
                  10.1.7   Notices from Governmental Authority. . . . . . . . 42
                  10.1.8   Management Reports . . . . . . . . . . . . . . . . 43
         10.2     Inspections . . . . . . . . . . . . . . . . . . . . . . . . 43
         10.3     Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 43
         10.4     Compliance with Laws. . . . . . . . . . . . . . . . . . . . 43
         10.5     Maintenance of Existence, etc . . . . . . . . . . . . . . . 44
         10.6     Maintenance of Properties . . . . . . . . . . . . . . . . . 44
         10.7     Payment of Taxes and Claims . . . . . . . . . . . . . . . . 44
         10.8     Security; Execution of Pledge Agreement and Subsidiary
                  Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . 44
         10.9     Nature of the Business. . . . . . . . . . . . . . . . . . . 46
         10.10    Financial Covenants . . . . . . . . . . . . . . . . . . . . 46
                  10.10.1  Minimum Consolidated Net Worth . . . . . . . . . . 46
                  10.10.2  Minimum Fixed Charges Coverage . . . . . . . . . . 46
         10.11    Limitations on Indebtedness . . . . . . . . . . . . . . . . 46
         10.12    Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
         10.13    Mergers, Consolidations, Sales. . . . . . . . . . . . . . . 49
         10.14    Transactions with Affiliates. . . . . . . . . . . . . . . . 51
         10.15    Restricted Payments . . . . . . . . . . . . . . . . . . . . 51
         10.16    Limitation on Swap Agreements . . . . . . . . . . . . . . . 52
         10.17    Limitation on Margin Stock. . . . . . . . . . . . . . . . . 52
         10.18    Designation of Restricted and Unrestricted Subsidiaries . . 52

SECTION 11  CONDITIONS OF LENDING, ETC. . . . . . . . . . . . . . . . . . . . 53
         11.1     Initial Credit Extension. . . . . . . . . . . . . . . . . . 53
                  11.1.1   Notes. . . . . . . . . . . . . . . . . . . . . . . 53
                  11.1.2   Resolutions. . . . . . . . . . . . . . . . . . . . 53
                  11.1.3   Consents, etc. . . . . . . . . . . . . . . . . . . 53
                  11.1.4   Incumbency and Signature Certificates. . . . . . . 53
                  11.1.5   Subsidiary Guaranty. . . . . . . . . . . . . . . . 53
                  11.1.6   Pledge Agreement . . . . . . . . . . . . . . . . . 53
                  11.1.7   Opinion of Counsel for the Company and the
                           Subsidiary Guarantors. . . . . . . . . . . . . . . 54
                  11.1.8 Closing Certificate. . . . . . . . . . . . . . . . . 54
                  11.1.9 Other. . . . . . . . . . . . . . . . . . . . . . . . 54
         11.2     Conditions. . . . . . . . . . . . . . . . . . . . . . . . . 54
                  11.2.1   Compliance with Warranties, No Default, etc. . . . 54
                  11.2.2   Confirmatory Certificate . . . . . . . . . . . . . 55

                                       iii

SECTION 12  EVENTS OF DEFAULT AND THEIR EFFECT. . . . . . . . . . . . . . . . 55
         12.1     Events of Default . . . . . . . . . . . . . . . . . . . . . 55
                  12.1.1   Non-Payment of the Loans, etc. . . . . . . . . . . 55
                  12.1.2   Non-Compliance with Section 10 . . . . . . . . . . 55
                  12.1.3   Non-Compliance with Provisions of This Agreement . 55
                  12.1.4   Default in Payment of Other Indebtedness . . . . . 56
                  12.1.5   Bankruptcy, Insolvency, etc. . . . . . . . . . . . 56
                  12.1.6   Warranties . . . . . . . . . . . . . . . . . . . . 56
                  12.1.7   Judgments. . . . . . . . . . . . . . . . . . . . . 57
                  12.1.8   Pension Plans. . . . . . . . . . . . . . . . . . . 57
                  12.1.9  Invalidity of Guaranty, etc . . . . . . . . . . . . 57
                  12.1.10  Invalidity of Collateral Documents, etc. . . . . . 57
                  12.1.11  Change of Control. . . . . . . . . . . . . . . . . 57
         12.2     Effect of Event of Default. . . . . . . . . . . . . . . . . 57

SECTION 13  THE ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . . . 58
         13.1     Appointment and Authorization . . . . . . . . . . . . . . . 58
         13.2     Delegation of Duties. . . . . . . . . . . . . . . . . . . . 59
         13.3     Liability of Administrative Agent . . . . . . . . . . . . . 59
         13.4     Reliance by Administrative Agent. . . . . . . . . . . . . . 59
         13.5     Notice of Default . . . . . . . . . . . . . . . . . . . . . 59
         13.6     Credit Decision . . . . . . . . . . . . . . . . . . . . . . 60
         13.7     Indemnification . . . . . . . . . . . . . . . . . . . . . . 60
         13.8     Administrative Agent in Individual Capacity . . . . . . . . 61
         13.9     Successor Administrative Agent. . . . . . . . . . . . . . . 62
         13.10    Withholding Tax . . . . . . . . . . . . . . . . . . . . . . 62
         13.11    Collateral Matters. . . . . . . . . . . . . . . . . . . . . 64
         13.12    Non-Receipt of Funds by the Administrative Agent. . . . . . 64

SECTION 14  GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
         14.1     Waiver; Amendments. . . . . . . . . . . . . . . . . . . . . 64
         14.2     Confirmations . . . . . . . . . . . . . . . . . . . . . . . 65
         14.3     Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 65
         14.4     Computations. . . . . . . . . . . . . . . . . . . . . . . . 65
         14.5     Regulation U. . . . . . . . . . . . . . . . . . . . . . . . 66
         14.6     Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . 66
         14.7     Subsidiary References . . . . . . . . . . . . . . . . . . . 66
         14.8     Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 66
         14.9     Assignments; Participations . . . . . . . . . . . . . . . . 66
                  14.9.1   Assignments. . . . . . . . . . . . . . . . . . . . 67
                  14.9.2   Participations . . . . . . . . . . . . . . . . . . 68
         14.10    Governing Law . . . . . . . . . . . . . . . . . . . . . . . 68
         14.11    Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 69

                                  iv

         14.12    Successors and Assigns. . . . . . . . . . . . . . . . . . . 69
         14.13    Indemnification by the Company. . . . . . . . . . . . . . . 69
         14.14    Forum Selection and Consent to Jurisdiction . . . . . . . . 69
         14.15    Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . 70
         14.16  Judgment Currency . . . . . . . . . . . . . . . . . . . . . . 70

SCHEDULE 1            Existing Letters of Credit
SCHEDULE 1.1          Pricing Schedule
SCHEDULE 2.1          Lenders and Percentages
SCHEDULE 9.4          Material Adverse Change
SCHEDULE 9.7          Subsidiaries
SCHEDULE 9.9          Litigation
SCHEDULE 9.11         Licenses; Permits
SCHEDULE 9.14         Existing Indebtedness
SCHEDULE 10.12        Existing Liens
SCHEDULE 10.19        Excluded Letters of Credit
SCHEDULE 14.3         Addresses for Notices

EXHIBIT A             Form of Note
                         (Section 3.1)
EXHIBIT B             Form of Subsidiary Guaranty
                         (Section 1)
EXHIBIT C             Copy of Pledge Agreement
                         (Section 1)
EXHIBIT D             Form of Assignment Agreement
                         (Section 14.9)
EXHIBIT E-1           Copy of Collateral Agency and Intercreditor Agreement
                         (Section 1)
EXHIBIT E-2           Form of Amendment to Collateral Agency and Intercreditor
                       Agreement
                         (Section 11.1)
EXHIBIT F             Form of Subordination Agreement
                         (Section 1)

                                     v

 CREDIT AGREEMENT

     
    
    This  CREDIT  AGREEMENT  dated as of May 10,  2001 (this
“Agreement”)  is among NU SKIN  ENTERPRISES,  INC.,  a Delaware
corporation (the “Company”), the various financial institutions
that are or may from time to time become  parties  hereto  (together  with their
respective successors and assigns, the “Lenders”),  and BANK OF
AMERICA, N.A. (in its individual capacity,  “Bank of America”),
as administrative agent for the Lenders.

        
     WHEREAS,   the  Company  has  requested  that  the
Lenders provide a revolving credit facility to the Company; and

     
   WHEREAS, the Lenders are willing to extend commitments to make
Loans to the Company hereunder for the purposes provided herein and on the terms
and subject to the conditions set forth herein. 

    
    NOW,   THEREFORE,   in   consideration   of  the  mutual
agreements,  provisions and covenants contained herein, the parties hereto agree
as follows: 

    
    SECTION 1    DEFINITIONS.

    
    1.1    Definitions.
When  used  herein  the  following  terms  shall  have the  following  meanings:

    
    ABN  Amro Facility  means the $10,000,000  credit
facility  evidenced by that certain Grid Note dated as of May 24, 2000  executed
by the  Company  in favor of ABN Amro Bank N.V.,  as  amended,  supplemented  or
modified prior to the date hereof. 

    
    Administrative Agent means Bank of America in its
capacity as  administrative  agent for the Lenders  hereunder  and any successor
thereto in such capacity. 

    
    Affected  Lender  means any Lender that has given
notice to the Company (which has not been rescinded) of (a) any  obligation
by  the  Company  to  pay  any  amount   pursuant   to   Section 7.6
or 8.1 or (b) the  occurrence of any circumstance of the nature
described in Section 8.2 or 8.3. 

    
    Affiliate means, at any time, (a) with respect to
any Person,  any other Person that at such time directly or  indirectly  through
one or more  intermediaries  Controls,  or is Controlled  by, or is under common
Control  with,  such first  Person,  and (b) with respect to the Company and its
Subsidiaries, any Person beneficially owning or holding, directly or indirectly,
5% or more of any class of voting or equity  interests  of the Company or any of
its  Subsidiaries or any  corporation of which the Company and its  Subsidiaries
beneficially own or hold, in the aggregate,  directly or indirectly,  5% or more
of any  class  of  voting  or  equity  interests.  As used  in this  definition,
“Control”  means the possession,  directly or indirectly, of the power
to direct or cause the

1

direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract  or  otherwise.  Unless the context  otherwise  clearly  requires,  any
reference  to an  “Affiliate”  is a reference  to an  Affiliate of the
Company. 

    
    Agent-Related  Persons  means the  Administrative
Agent and any successor  administrative agent arising under Section 13.9,
together  with  their  respective  Affiliates,  and  the  officers,   directors,
employees,   agents  and  attorneys-in-fact  of  such  Persons  and  Affiliates.

    
    Agreement - see the Preamble.

    
    Assignee - see Section 14.9.1.

     
    Assignment Agreement - see Section 14.9.1.

    
    Base  Rate  means  at any  time  the  greater  of
(a) the Federal Funds Rate plus 0.5% and (b) the Prime Rate.

    
    Bank of America - see the Preamble.

    
    Business Day means any day other than a Saturday,
a Sunday or a day on which commercial banks in Charlotte, North Carolina and New
York,  New York are required or  authorized to be closed and (a) with respect to
any borrowing,  payment or rate  determination of Yen LIBOR Loans, any day other
than a Saturday, a Sunday or a day on which commercial banks in Tokyo, Japan and
London,  England are required or authorized to be closed and (b) with respect to
any borrowing,  payment or rate determination of Eurodollar Loans, any day other
than a Saturday,  a Sunday or day on which commercial  banks in London,  England
are required or authorized to be closed. 

    
    Capital  Lease  means,  at any time, a lease with
respect  to  which  the  lessee  is  required   concurrently  to  recognize  the
acquisition  of an asset and the  incurrence of a liability in  accordance  with
GAAP. 

    
    Change  of  Control  means an event or  series of
events by which: 

    
    (a) any “person” or “group” (as such
terms are used in Sections  13(d) and 14(d) of the  Securities  Exchange  Act of
1934, but excluding any (i) Specified  Person and (ii) employee  benefit plan of
such  Person  or its  subsidiaries,  or any  Person  acting in its  capacity  as
trustee, agent or other fiduciary or administrator of any such plan) becomes the
“beneficial  owner”  (as  defined in Rules  13d-3 and 13d-5  under the
Securities  Exchange  Act of 1934,  except that a person shall be deemed to have
“beneficial  ownership”  of all  securities  that such  person has the
right to acquire,  whether such right is  exercisable  immediately or only after
the passage of time),  directly or indirectly,  of (x) 25% or more of the equity
interests  of the Company  and  (y) more 

2

voting equity interests of
the  Company  than  the  aggregate   amount  of  such  voting  equity  interests
beneficially owned by the Specified Persons; or 

    
    (b)  during  any  period  of 12  consecutive  months,  a
majority of the members of the Board of Directors or other equivalent  governing
body of the Company 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. 

    
    Closing  Date means the date of the making of the
initial  Loans,  or the  issuance  of the  initial  Letter of Credit,  hereunder
(whichever occurs first). 

    
    Codemeans the Internal Revenue Code of 1986.

    
    Collateral  Agency  and  Intercreditor  Agreement
means the  Collateral  Agency and  Intercreditor  Agreement,  a copy of which is
attached as Exhibit E-1, by and among the Company,  the Collateral Agent,
the  Administrative  Agent and each of the other Senior Secured  Creditors,  and
acknowledged by the Company and the Subsidiary Guarantors. 

    
    Collateral  Agent  means  State  Street  Bank and
Trust Company of California,  N.A.,  acting in its capacity as collateral  agent
under the  Collateral  Agency and  Intercreditor  Agreement,  together  with its
successors and assigns. 

    
    Collateral  Documents means the Pledge Agreement,
the Subsidiary Guaranty,  the Collateral Agency and Intercreditor  Agreement and
all other documents  evidencing,  securing or relating to the Loans, the payment
of the  indebtedness  evidenced by the Notes and all other  amounts due from the
Company  or any  other  Restricted  Subsidiary  evidenced  or  secured  by  this
Agreement, the Notes or the Collateral Documents. 

    
    Commitment   means,   as  to  any  Lender,   such
Lender’s  commitment to make Loans,  and to issue or participate in Letters
of Credit, under this Agreement. 

    
    Commitment  Amount means $60,000,000,  as reduced
from time to time pursuant to Section 6.1. 

    
    Commitment Fee Rate - see Schedule 1.1.

    
    Company - see the Preamble.

3

    
    Computation  Period  means  each  period  of four
consecutive  quarterly  fiscal  periods  ending  on the last day of a  quarterly
fiscal period. 

    
    Consolidated  Income Available for Fixed  Charges
means, with respect to any period,  Consolidated Net Income for such period plus
all amounts deducted in the computation thereof on account of (a) Fixed Charges,
and (b) taxes imposed on or measured by income or excess  profits of the Company
and the Restricted Subsidiaries. 

    
    Consolidated  Net Income  means,  with respect to
any  period,  the net  income  (or  loss)  of the  Company  and  the  Restricted
Subsidiaries  for such period  (taken as a cumulative  whole),  as determined in
accordance  with GAAP,  after  eliminating  all  offsetting  debits and  credits
between the Company and the Restricted Subsidiaries and all other items required
to be  eliminated in the course of the  preparation  of  consolidated  financial
statements of the Company and the  Restricted  Subsidiaries  in accordance  with
GAAP. 

    
    Consolidated  Net Worth  means,  at any time, (a)
the  consolidated  stockholders’  equity of the Company and the  Restricted
Subsidiaries,  as defined  according to GAAP,  less (b) the sum of (i) to
the extent included in clause (a),  all amounts  attributable to minority
interests,  if any, in the securities of Restricted  Subsidiaries,  and (ii) the
amount by which Restricted  Investments  exceed 20% of the amount  determined in
clause (a). 

    
    Consolidated  Total Assets  means, at any date of
determination,  on a  consolidated  basis  for the  Company  and the  Restricted
Subsidiaries, total assets, determined in
accordance with GAAP. 

    
    Credit   Facility   means  any  credit  facility
providing  for the  borrowing  of money or the issuance of letters of credit (a)
for the Company or (b) for any Restricted  Subsidiary,  if its obligations under
such Credit Facility are guaranteed by the Company. 

    
    Dollar and the sign “$” mean the
lawful money of the United States of America. 

    
    Dollar   Equivalent  means,  with  respect  to  a
specified  amount of any currency,  the amount of Dollars into which such amount
of such  currency  would be  converted,  based on the  applicable  Spot  Rate of
Exchange. 

    
    Domestic  Subsidiary  means,  at any  time,  each
Subsidiary of the Company (a) which is created, organized or domesticated in the
United  States or under the laws of the United  States or any state or territory
thereof,  (b) which was  included as a member of the  Company’s  affiliated
group in the  Company’s  most recent  consolidated  United  States  federal
income tax return,  or (c) the earnings of which were  includable in the taxable
income of the  Company or any other  Domestic  Subsidiary  (to the extent of the
Company’s and/or such other Domestic  Subsidiary’s  ownership interest
of such Subsidiary) in the Company’s most recent consolidated United States
federal income tax return. 

4

    
    EBITDA means, with respect to any period, the sum
of  (i) Consolidated  Net Income for such period  without  giving effect to
extraordinary gains and losses,  gains and losses resulting from changes in GAAP
and one time  non-recurring  income and expenses resulting from acquisitions and
similar events, plus (ii) to the extent deducted in the calculation of
Consolidated  Net Income,  the amount of all interest expense,  depreciation
expense,  amortization  expense,  and income tax expense;  provided  that
EBITDA will include or exclude, as applicable,  acquisitions and divestitures of
Restricted  Subsidiaries or other business units on a pro forma basis as if such
acquisitions or divestitures occurred on the first day of the applicable period.

    
    Effective Date - see Section 11.1.

    
    Environmental  Laws  means  any and all  federal,
state,  local,  and foreign  statutes,  laws,  regulations,  ordinances,  rules,
judgments, orders, decrees, permits, concessions,  grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the protection
of the  environment  or the  release  of any  materials  into  the  environment,
including  but not limited to those  related to hazardous  substances or wastes,
air emissions and discharges to waste or public systems. 

    
    ERISA   means  the  Employee   Retirement  Income
Security Act of 1974, and the rules and regulations  promulgated thereunder from
time to time in effect. 

    
    ERISA  Affiliate  means  any  trade  or  business
(whether or not incorporated) that is treated as a single employer together with
the Company under Section 414 of the Code. 

    
    Eurocurrency   Reserve   Percentage  means,  with
respect to any Eurodollar Loan for any Interest Period, a percentage  (expressed
as a decimal)  equal to the daily  average  during such  Interest  Period of the
percentage in effect on each day of such Interest  Period,  as prescribed by the
FRB  (or  any  successor),   for  determining  the  aggregate   maximum  reserve
requirements  applicable  to  “Eurocurrency  Liabilities”  pursuant to
Regulation D or any other then applicable regulation of the FRB which prescribes
reserve  requirements  applicable  to  “Eurocurrency  Liabilities”  as
presently defined in Regulation D. 

    
    Eurodollar   Loan  means  any  Loan  which  bears
interest at a rate  determined  by reference  to the  Eurodollar  Rate  (Reserve
Adjusted). 

    
    Eurodollar/Yen  LIBOR  Margin  - see  Schedule
1.1. 

    
    Eurodollar  Office  means  with  respect  to  any
Lender the office or offices of such Lender which shall be making or maintaining
the  Eurodollar  Loans of such Lender  hereunder or, if  applicable,  such other
office or offices  through which such Lender  determines the Eurodollar  Rate. A
Eurodollar  Office of any Lender may be, at the option of such Lender,  either a
domestic or foreign office. 

5

    
    Eurodollar   Rate  means,  with  respect  to  any
Eurodollar Loan for any Interest Period, (i) the rate per annum (rounded upward,
if necessary,  to the nearest  1/100 of 1%) equal to the rate  determined by the
Administrative  Agent to be the  offered  rate which  appears on the page of the
Telerate Screen which displays an average British Bankers  Association  Interest
Settlement  Rate (such page currently  being page number 3750) for deposits (for
delivery two Business Days prior to the beginning of such Interest  Period) with
a  term  equivalent  to  the  applicable  Interest  Period,   determined  as  of
approximately  11:00 A.M. (London,  England time) on such date of determination,
or (ii) if the rate  referenced  in the  preceding  clause  (i)  does not
appear on such page or  service  or if such page or  service  shall  cease to be
available, the rate per annum (rounded upward, if necessary, to the nearest five
decimal places) equal to the rate determined by the  Administrative  Agent to be
the offered rate on such other page or other service  which  displays an average
British Bankers Association  Interest Settlement Rate for deposits (for delivery
two Business Days prior to the  beginning of such  Interest  Period) with a term
equivalent to such Interest  Period  determined as of  approximately  11:00 A.M.
(London,  England  time) on such  date of  determination,  or (iii) if the rates
referenced  in  the  preceding   clauses  (i)  and  (ii)  are  not
available,  the rate per annum  equal to the  offered  quotation  rate  (rounded
upward,  if necessary,  to the nearest five decimal places) to first class banks
in the London  interbank  market by the  Administrative  Agent for deposits (for
delivery two Business Days prior to the  beginning of such  Interest  Period) of
amounts in same day funds  comparable to the principal  amount of the Eurodollar
Loan of Bank of  America  included  in the  Eurodollar  borrowing  for which the
Eurodollar  Rate is then being  determined  with a maturity  comparable  to such
Interest Period as of approximately  11:00 A.M.  (London,  England time) on such
date of determination. 

    
    Eurodollar  Rate (Reserve  Adjusted)  means, with
respect  to any  Eurodollar  Loan for any  Interest  Period,  a rate  per  annum
(rounded upwards, if necessary,  to the nearest 1/100 of 1%) determined pursuant
to the following formula: 

    
             
Eurodollar Rate      =   
     Eurodollar Rate

             
  (Reserve Adjusted)      
      1-Eurocurrency

             
             
             
             
        Reserve Percentage

    
    Event   of  Default   means  any  of  the  events
described in Section 12.1. 

    
    Exchange Act means the Securities Exchange Act
of 1934.

    
    Existing  Letters of Credit  means the letters of
credit described by date of issuance,  letter of credit number,  undrawn amount,
name of  beneficiary  and the  date  of  expiry  on  Schedule  1  hereto.

    
    Exemption Representation - see Section 7.6
..

    
    Federal  Funds Rate means,  for any day, the rate
set forth in the weekly  statistical  release  designated as  H.15(519),  or any
successor  publication,  published  by the  Federal  Reserve  Bank  of

6

New York (including any
such successor publication, “H.15(519)”) on the preceding Business Day
opposite  the  caption  “Federal  Funds  (Effective)";  or, if for any
relevant day such rate is not so published on any such  preceding  Business Day,
the  rate  for  such  day  will  be the  arithmetic  mean as  determined  by the
Administrative  Agent of the rates for the last transaction in overnight Federal
funds  arranged  prior to 9:00 a.m.  (New York City time) on that day by each of
three leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent. 

    
    Fixed  Charges means, with respect to any period,
the sum of (i) Interest Expense for such period, and (ii) Lease Rentals for such
period. 

    
    Floating  Rate  Loan  means any Loan which  bears
interest at or by reference to the Base Rate. 

    
    Floating Rate Margin - see Schedule 1.1.

    
    Foreign  Subsidiary  means,  at  any  time,  each
Subsidiary of the Company that is not a Domestic Subsidiary. 

    
    FRB  means the Board of  Governors of the Federal
Reserve System. 

    
    GAAP    means   generally   accepted   accounting
principles  as in effect  from  time to time in the  United  States of  America.

    
    Group - see Section 2.2.1.

    
    Governmental  Authority  means (a) the government
of (i) the United States of America or any state or other political  subdivision
thereof,  or (ii)  Japan or any  political  subdivision  thereof,  or (iii)  any
jurisdiction in which the Company or any Subsidiary  conducts all or any part of
its business,  or which asserts  jurisdiction over any properties of the Company
or  any  Subsidiary,  or  (b)  any  entity  exercising  executive,  legislative,
judicial,  regulatory or administrative functions of, or pertaining to, any such
government. 

    
    Guaranty  means, with respect to any Person,  any
obligation  (except  the  endorsement  in the  ordinary  course of  business  of
negotiable instruments for deposit or collection) of such Person guaranteeing or
in effect  guaranteeing  any  indebtedness,  dividend or other obligation of any
other Person in any manner,  whether directly or indirectly,  including (without
limitation) obligations incurred through an agreement,  contingent or otherwise,
by such Person (a) to purchase such  indebtedness  or obligation or any property
constituting  security  therefor,  (b) to  advance  or supply  funds (i) for the
purchase or payment of such indebtedness or obligation,  or (ii) to maintain any
working  capital  or other  balance  sheet  condition  or any  income  statement
condition of any other Person or  otherwise to advance or make  available  funds
for the purchase or payment of such  indebtedness  or  obligation,  (c) to lease
properties or to purchase  properties  or

7

services  primarily for the
purpose of assuring the owner of such  indebtedness or obligation of the ability
of any other Person to make payment of the  indebtedness  or obligation,  or (d)
otherwise to assure the owner of such indebtedness or obligation against loss in
respect thereof.  In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty,  the indebtedness or other  obligations that are
the subject of such Guaranty  shall be assumed to be direct  obligations of such
obligor. 

    
    Hazardous  Material means any and all pollutants,
toxic or hazardous  wastes or any other  substances  that might pose a hazard to
health or  safety,  the  removal  of which may be  required  or the  generation,
manufacture,  refining,  production,  processing,  treatment, storage, handling,
transportation,  transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or penalized by any
applicable  law  (including  asbestos,  urea  formaldehyde  foam  insulation and
polychlorinated biphenyls). 

    
    Indebtedness with respect to any Person means, at
any time,  without  duplication,  (a) its liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable Preferred Stock, (b)
its  liabilities  for the deferred  purchase price of property  acquired by such
Person  (excluding  accounts  payable arising in the ordinary course of business
but including all liabilities  created or arising under any conditional  sale or
other title  retention  agreement  with respect to any such  property),  (c) all
liabilities appearing on its balance sheet in accordance with GAAP in respect of
Capital Leases,  (d) all liabilities for borrowed money secured by any Lien with
respect to any property  owned by such Person  (whether or not it has assumed or
otherwise become liable for such liabilities),  (e) Securitization  Debt and (f)
any Guaranty (other than the Subsidiary Guaranty) of such Person with respect to
liabilities  of a type  described in any of clauses  (a)  through  (e)
hereof.  Indebtedness  of any Person shall include all  obligations  of such
Person of the character  described in clauses  (a) through  (f) to
the extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is deemed to be extinguished under GAAP. 

    
    Interest  Expense  means,  with  respect  to  the
Company and the Restricted Subsidiaries for any period, the sum, determined on a
consolidated basis in accordance with GAAP, of (a) all interest paid, accrued or
scheduled  for payment on the  Indebtedness  of the  Company and the  Restricted
Subsidiaries  during such period  (including  interest  attributable  to Capital
Leases),  plus  (b) all fees in respect of outstanding  letters of credit
paid,  accrued or  scheduled  for  payment  by the  Company  and the  Restricted
Subsidiaries during such period. 

    
    Interest  Period  means, as to any Yen LIBOR Loan
or Eurodollar  Loan, the period  commencing on the date such Loan is borrowed or
continued as a Yen LIBOR Loan or Eurodollar  Loan or converted into a Eurodollar
Loan and  ending  on the date  one,  two,  three or six  months  thereafter,  as
selected by the Company pursuant to Section 2.2.3;  provided that:

    
            
(a) if any  Interest  Period  would  otherwise  end on a day  that is not a
Business Day, such Interest  Period shall be extended to the following  Business
Day unless the 

8

result of such extension
would be to carry such Interest  Period into another  calendar  month,  in which
event such Interest Period shall end on the preceding Business Day;

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

    

             (c) the
Company  may not select any  Interest  Period  for any Loan which  would  extend
beyond  the  scheduled  Termination  Date or which  would  cause  the  aggregate
principal  amount of all Yen LIBOR Loans and  Eurodollar  Loans having  Interest
Periods ending after the date on which the Commitment  Amount is scheduled to be
reduced pursuant to Section 6.1(d), plus the Stated Amount of all Letters
of Credit scheduled to be outstanding  after such date, to exceed the Commitment
Amount   scheduled   to  be  in  effect  at  the  close  of   business  on  such
date.

    
    Investment  means any investment, made in cash or
by delivery of property,  by the Company or any Restricted Subsidiary (a) in any
Person,  whether by acquisition of stock,  Indebtedness  or other  obligation or
Security, or by loan, Guaranty,  advance,  capital contribution or otherwise; or
(b) in any property. 

    
    Issuing  Lender  means  Bank  of  America  in its
capacity as an issuer of Letters of Credit hereunder and any other Lender which,
with the written  consent of the Company and the  Administrative  Agent,  is the
issuer of one or more Letters of Credit hereunder. 

    
    L/C   Application  means,  with  respect  to  any
request for the issuance of a Letter of Credit,  a letter of credit  application
in the form  being  used by the  applicable  Issuing  Lender at the time of such
request for the type of letter of credit requested. 

    
    Lease  Rentals means, with respect to any period,
the sum of the rental and other  obligations  required  to be paid  during  such
period by the Company or any Restricted Subsidiary as lessee under all leases of
real or  personal  property  (other  than  Capital  Leases) as  determined  on a
consolidated basis for the Company and the Restricted Subsidiaries in accordance
with GAAP. 

    
    Lender  - see the Preamble.  References to
the  “Lenders”  shall  include the  Issuing  Lender;  for  purposes of
clarification only, to the extent that Bank of America (or any successor Issuing
Lender)  may have any rights or  obligations  in  addition to those of the other
Lenders  due to its  status  as  Issuing  Lender,  its  status  as such  will be
specifically referenced. 

    
    Letter of Credit - see Section 2.1.2.

9

    
    Leverage  Ratio  means, as of any date, the ratio
of Total  Indebtedness  as of such date to EBITDA  for the most  recently  ended
period of four consecutive fiscal quarters. 

    
    Lien  means,  with  respect  to any  Person,  any
mortgage,  lien, pledge, charge, security interest or other encumbrance,  or any
interest or title of any vendor,  lessor, lender or other secured party to or of
such Person under any  conditional  sale or other title  retention  agreement or
Capital  Lease,  upon or with  respect to any  property  or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements). 

    
    Loan  Documents means this Agreement,  the Notes,
the Guaranties, the L/C Applications and the Collateral Documents. 

    
    Loans - see Section 2.1.1.

    
    Material  or Materially  means material or
materially,  as the  case  may be,  in  relation  to the  business,  operations,
affairs, financial condition, assets, properties or prospects of the Company and
the Restricted Subsidiaries taken as a whole. 

   
     Material  Adverse  Effect  means a material
adverse effect on (a) the business,  operations,  affairs,  financial condition,
assets or properties of the Company and the Restricted  Subsidiaries  taken as a
whole, or (b) the ability of the Company and the Restricted Subsidiaries,  taken
as a whole, to perform their  obligations  under this Agreement,  the Collateral
Documents or any other Loan Document,  or (c) the validity or  enforceability of
this Agreement, the Collateral Documents or any other Loan Document. 

    
    Material  Domestic Subsidiary means each Domestic
Subsidiary of the Company that also is a Material Subsidiary. 

    
    Material  Foreign  Subsidiary  means each Foreign
Subsidiary of the Company that also is a Material Subsidiary. 

    
    Material  Subsidiaries means, at any time, (a) Nu
Skin Japan Co., Ltd., a Japanese  corporation,  Nu Skin  International,  Inc., a
Utah corporation, NSE Hong Kong, Inc., a Utah corporation, Nu Skin Taiwan, Inc.,
a Utah corporation, and Nu Skin United States, Inc., a Delaware corporation, and
(b) each other  Subsidiary of the Company which (i) had revenues during the four
most  recently  ended  fiscal  quarters  equal to or  greater  than  5.0% of the
consolidated  total  revenues of the Company  and its  Subsidiaries  during such
period or (ii) is an obligor under any Guaranty with respect to the Indebtedness
of  the  Company  under  any  Significant  Credit  Facility;  provided  that  no
Subsidiary  shall be a "Material  Subsidiary"  unless at least a majority of the
voting securities of such Subsidiary are owned by the Company and/or one or more
Wholly-Owned Restricted Subsidiaries.

10

    
    Multiemployer  Plan  means  any  Plan  that  is a
“multiemployer plan” (as such term is defined in Section 4001(a)(3) of
ERISA). 

    
    Note - see Section 3.1.

    
    Officer’s Certificate means a certificate of
a  Senior  Financial  Officer  or of any  other  officer  of the  Company  whose
responsibilities extend to the subject matter of such certificate. 

   
     PBGC  means the  Pension  Benefit  Guaranty
Corporation  referred  to  and  defined  in  ERISA  or  any  successor  thereto.

   
     Percentage   means,  with  respect  to  any
Lender, the percentage specified opposite such Lender’s name on Schedule
2.1,  as  adjusted by any  assignment  pursuant  to  Section  14.9.1.

    
    Permitted Liens - see Section 10.12.

    
    Permitted   Securitization   Program   means  any
transaction or series of transactions that may be entered into by the Company or
any  Restricted  Subsidiary  pursuant  to which the  Company  or any  Restricted
Subsidiary may sell, convey or otherwise transfer to (a) a Securitization Entity
(in the case of a transfer by the Company or any Restricted  Subsidiary) and (b)
any other Person (in the case of a transfer by a Securitization  Entity), or may
grant a security  interest in, any receivables  (whether now existing or arising
or acquired in the future) of the Company or any Restricted Subsidiary,  and any
assets related thereto  including (i) all collateral  securing such receivables,
(ii) all contracts and contract  rights and all guarantees or other  obligations
in respect of such  receivables,  (iii) proceeds of such  receivables,  and (iv)
other assets (including contract rights) that are customarily  transferred or in
respect of which security  interests are customarily  granted in connection with
asset securitization  transactions involving  receivables;  provided that
the resultant Securitization Debt, together with all other Priority Indebtedness
then outstanding, shall not exceed the amount of Priority Indebtedness permitted
by Section 10.11(a)(ii). 

    
    Person    means   an   individual,   partnership,
corporation,  limited  liability  company,  association,  trust,  unincorporated
organization  or  government  (or an agency or political  subdivision  thereof).

   
     Plan   means  an   “employee   benefit
plan”  (as  defined  in  Section  3(3) of  ERISA)  that is or,  within  the
preceding  five  years,  has  been  established  or  maintained,   or  to  which
contributions  are or,  within  the  preceding  five  years,  have  been made or
required to be made,  by the Company or any ERISA  Affiliate  or with respect to
which the Company or any ERISA Affiliate may have any liability. 

    
    Pledge   Agreement  means  the  Pledge  Agreement
executed  by the  Company  in favor of State  Street  Bank and Trust  Company of
California, N.A., as collateral agent, a copy of which is attached as Exhibit
C. 

11

    
    Pledged  Securities  means,  in  respect  of each
Pledgor,   (a)  the  Equity  Securities  owned  by  such  Pledgor  described  in
Schedule  I  attached  to, or otherwise  pledged  pursuant to, the Pledge
Agreement  and the Equity  Securities  owned by such Pledgor of each Person that
becomes a Material  Foreign  Subsidiary,  including all  securities  convertible
into,  and rights,  warrants,  options and other rights to purchase or otherwise
acquire,  any of the foregoing now or hereafter  owned by such Pledgor,  and the
certificates  or other  instruments  representing  any of the  foregoing and any
interest  of  such  Pledgor  in the  entries  on  the  books  of any  securities
intermediary  pertaining  thereto  (the  “Pledged  Shares”),  and  all
dividends,  distributions,  returns of capital, cash, warrants,  option, rights,
instruments,  right to vote or manage  the  business  of the  respective  issuer
pursuant to organizational documents governing the rights and obligations of the
stockholders,  and  other  property  or  proceeds  from  time to time  received,
receivable or otherwise  distributed in respect of or in exchange for any or all
of such  Pledged  Shares;  provided  that the  Pledged  Shares  shall not
include any Equity  Securities  of such issuer in excess of the number of shares
or other equity interests of such issuer  possessing up to but not exceeding 65%
of the voting power of all classes of Equity Securities entitled to vote of such
issuer,  and all  dividends,  cash,  warrants,  rights,  instruments  and  other
property  or  proceeds  from  time to time  received,  receivable  or  otherwise
distributed  in  respect  of or in  exchange  for  any  or all  of  such  Equity
Securities,  and (b) to the extent not covered by clause  (a) above,  all
proceeds of any or all of the foregoing. 

    
    Pledgor  means each  Person who  pledges  Pledged
Securities under the Pledge Agreement. 

    
    Preferred  Stock means any class of capital stock
of a corporation that is preferred over any other class of capital stock of such
corporation  as to the  payment of  dividends  or the payment of any amount upon
liquidation or dissolution of such corporation. 

   
     Prime  Rate means, for any day, the rate of
interest in effect for such day as publicly  announced from time to time by Bank
of  America  in  Charlotte  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 the prime 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.

   
     Priority    Indebtedness   means   (without
duplication)  the  sum of  (a)  any  unsecured  Indebtedness  of the  Restricted
Subsidiaries  other than (i)  guarantees  under the  Subsidiary  Guaranty,  (ii)
Indebtedness  of a Restricted  Subsidiary if (x) the Company has guaranteed such
Indebtedness or is a primary obligor of such Indebtedness, and (y) the holder of
such  Indebtedness  becomes a party to the Collateral  Agency and  Intercreditor
Agreement  (provided that until the holder of such Indebtedness becomes a
party to the Collateral  Agency and Intercreditor  Agreement,  such Indebtedness
will be considered  Priority  Indebtedness),  and (iii) Indebtedness owed to the
Company or any other Restricted Subsidiary,  and (b) Indebtedness of 

12

the  Company and its
Restricted  Subsidiaries  secured by a Lien not permitted by clauses  (a)
through (m) of Section 10.12,  and  (c) Securitization  Debt.

    
    Property  or properties means and includes
each and every interest in any property or asset, whether tangible or intangible
and whether real, personal or mixed. 

    
    QPAM Exemption means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor. 

    
    Required Lenders means Lenders having Percentages
aggregating 51% or more. 

    
    Responsible  Officer  means any Senior  Financial
Officer  and  any  other  officer  of  the  Company  or  its  Subsidiaries  with
responsibility  for the administration of the relevant portion of this Agreement
or any Loan Document. 

    
    Restricted   Investments  means  all  Investments
except any of the following:  (a) property to be used in the ordinary  course of
business; (b) assets arising from the sale of goods and services in the ordinary
course of business;  (c) Investments in one or more  Restricted  Subsidiaries or
any Person that  immediately  becomes a Restricted  Subsidiary;  (d) Investments
existing on the Signing Date; (e)  Investments in  obligations,  maturing within
one year, issued by or guaranteed by the United States of America,  or an agency
thereof, or Canada, or any province thereof;  (f) Investments in tax-exempt
obligations,  maturing  within  one year,  which are rated in one of the top two
rating  classifications  by at least one national rating agency; (g) Investments
in certificates of deposit or banker’s acceptances maturing within one year
issued by Bank of America or other  commercial  banks  which are rated in one of
the top two rating  classifications  by at least one national rating agency; (h)
Investments in commercial  paper,  maturing within 270 days, rated in one of the
top two rating  classifications  by at least one  national  rating  agency;  (i)
Investments in repurchase  agreements;  (j) treasury  stock;  (k) Investments in
money market  instrument  programs  which are  classified  as current  assets in
accordance with GAAP; (l) Investments in foreign currency risk hedging contracts
used in the ordinary course of business;  and (m) Investments in  Securitization
Entities. 

    
    Restricted Subsidiary means any Subsidiary (a) at
least a majority  of the  voting  securities  of which are owned by the  Company
and/or  one or more  Wholly-Owned  Restricted  Subsidiaries,  and (b)  which the
Company has not  designated as an  Unrestricted  Subsidiary  in accordance  with
Section  10.18;  provided  that upon any  Unrestricted  Subsidiary
becoming  a  Material  Subsidiary,  it  shall  immediately  be  deemed  to  be a
Restricted Subsidiary. 

    
    Securities  Act means the Securities Act of 1933.

    
    Security  has the  meaning  set forth in  Section
2(l) of the Securities Act. 

    
    Securitization  Debt  for  the  Company  and  the
Restricted   Subsidiaries   shall  mean,  in   

13

connection  with  any
Permitted  Securitization Program, (a) any amount as to which any Securitization
Entity or other Person has recourse to the Company or any Restricted  Subsidiary
with respect to such Permitted  Securitization  Program by way of a Guaranty and
(b) the amount of any  reserve  account or similar  account or asset shown as an
asset of the Company or a Restricted Subsidiary under GAAP that has been pledged
to any  Securitization  Entity  or any  other  Person  in  connection  with such
Permitted Securitization Program. 

   
     Securitization    Entity   means   a
wholly-owned  Subsidiary (other than a Restricted Subsidiary) of the Company (or
another  Person  in  which  the  Company  or any of its  Subsidiaries  makes  an
investment  and to  which  the  Company  or any  of its  Subsidiaries  transfers
receivables  and related  assets)  that engages in no  activities  other than in
connection with the financing of receivables and that is designated by the Board
of Directors of the Company (as provided below) as a  Securitization  Entity (a)
no  portion  of  the  Indebtedness  or  any  other  obligations  (contingent  or
otherwise) of which (i) is guaranteed by the Company or any of its  Subsidiaries
(excluding  guarantees of obligations (other than the principal of, and interest
on, Indebtedness)  pursuant to Standard  Securitization  Undertakings),  (ii) is
recourse to or obligates the Company or any of its Subsidiaries in any way other
than pursuant to Standard  Securitization  Undertakings,  or (iii)  subjects any
property  or  asset of the  Company  or any  other  Subsidiary  of the  Company,
directly or indirectly,  continently or otherwise,  to the satisfaction thereof,
other than  pursuant to  Standard  Securitization  Undertakings,  (b) with which
neither the  Company  nor any of its  Subsidiaries  has any  material  contract,
agreement, arrangement or understanding other than on terms no less favorable to
the  Company or such  Subsidiary  than those that might be  obtained at the time
from Persons that are not Affiliates of the Company,  other than fees payable in
the ordinary course of business in connection with servicing receivables of such
entity, and (c) to which neither the Company nor any of its Subsidiaries has any
obligation to maintain or preserve  such  entity’s  financial  condition or
cause such entity to achieve certain levels of operating results. 

   
     Senior  Financial  Officer  means the chief
financial officer, principal accounting officer, treasurer or comptroller of the
Company. 

    
    Senior  Notes  means the 3.03%  Senior  Notes due
October 12, 2010 issued by the Company. 

    
    Senior  Note  Purchase  Agreement  means the Note
Purchase Agreement dated October 12, 2000 between the Company and The Prudential
Insurance Company of America. 

    
    Senior  Secured  Creditor  means (a) each Lender,
(b) each holder of a Senior Note, and (c) each lender under a Significant Credit
Facility. 

   
     Significant  Credit  Facility means (a) any
Credit  Facility that has at least  $7,500,000  available to be borrowed  and/or
outstanding  at any time,  and (b) any Credit  Facility if the aggregate  amount
available to be borrowed and/or  outstanding  under all of the Credit Facilities
exceeds $25,000,000 at any time; provided that the term “Significant
Credit Facility”  shall not 

14

include  any  Priority
Indebtedness  to the extent that such  Priority  Indebtedness  is  permitted  by
Section  10.11(a)(ii),  any  Indebtedness  secured by a Lien permitted by
Section  10.12(h),  or  any  Indebtedness  secured  by a  Lien  renewing,
extending  or  replacing   Liens  as  described  in   Section   10.12(m).

    
    Signing   Date   means  the  date  on  which  the
Agreement  has  been  executed  and  delivered  by all of  the  parties  hereto.

    
    Specified  Person  means  each  of (a)  Blake  M.
Roney, Steven J. Lund, Sandra N. Tillotson,  Brooke B. Roney, Nedra Roney, Craig
Bryson or Craig  Tillotson  and (b) the  immediate  family  members  and  trusts
established for the immediate  family members of, and other entities 67% or more
of the equity interests of which are owned by, any of the foregoing individuals.

    
    Spot  Rate of Exchange  means, as of any date for
any amount denominated in any currency other than Dollars, the applicable quoted
spot rate as reported  on the  appropriate  page of the Reuters  Screen at 11:00
A.M.   (London,   England  time)  two  Business  Days  preceding  the  day  such
determination is requested to be made. 

   
     Standard  Securitization Undertakings means
representations,  warranties,  covenants  and  indemnities  entered  into by the
Company  or  any  of  its  Subsidiaries  that  are  reasonably  customary  in  a
receivables securitization transaction. 

   
     Stated  Amount  means,  with respect to any
Letter of Credit at any date of  determination,  the  maximum  aggregate  amount
available  for drawing  thereunder  at any time during the then  ensuing term of
such Letter of Credit under any and all circumstances, plus the aggregate amount
of all  unreimbursed  payments  and  disbursements  under such Letter of Credit.

   
     Subsidiary means, as to any Person, (a) any
corporation  of  which  more  than  50% of the  issued  and  outstanding  Equity
Securities  having  ordinary  voting  power to elect a majority  of the Board of
Directors of such corporation (irrespective of whether at the time capital stock
of any other  class or classes of such  corporation  shall or might have  voting
power  upon  the  occurrence  of any  contingency)  is at the time  directly  or
indirectly owned or controlled by such Person, by such Person and one or more of
its Subsidiaries or by one or more of such Person’s other Subsidiaries, (b)
any partnership,  joint venture,  limited liability company or other association
of which more than 50% of the equity interest  having the power to vote,  direct
or control the management of such partnership,  joint venture, limited liability
company or other association is at the time owned and controlled by such Person,
by such  Person  and one or more of its  Subsidiaries  or by one or more of such
Person’s  other  Subsidiaries,  or (c) any  other  Person  included  in the
financial  statements of such Person on a consolidated basis. Unless the context
otherwise  clearly  requires,  any  reference to a  “Subsidiary”  is a
reference to a Subsidiary of the Company. 

   
     Subsidiary Guarantors means all current and
future Material Domestic Subsidiaries of the 

15

Company. 

   
     Subsidiary  Guaranty  means the  Subsidiary
Guaranty, substantially in the form of Exhibit B. 

   
     Swap  Agreement  means (a) any and all rate
swap  transactions,  basis  swaps,  forward  rate  transactions,  interest  rate
options,  forward  foreign  exchange  transactions,   cap  transactions,   floor
transactions,  collar transactions,  currency swap transactions,  cross-currency
rate swap transactions,  currency options, or any other similar  transactions or
any combination of any of the foregoing (including any options to enter into any
of the foregoing);  provided  that any such transaction is governed by or
subject to a 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., or any other master agreement  published by
any successor organization thereto (any such master agreement, together with any
related schedules,  as amended,  restated,  extended,  supplemented or otherwise
modified in writing from time to time, a  “Master  Agreement”),
including  any such  obligations  or  liabilities  under any  Master  Agreement.

     
    Taxes - see Section 7.6.

  
      Term  Debt means any  Indebtedness of
the  Company or any  Restricted  Subsidiary  other  than (a)  Credit  Facilities
providing  for the  borrowing of money or the issuance of letters of credit on a
revolving  basis or for working  capital,  (b)  Priority  Indebtedness,  and (c)
Indebtedness secured by Liens permitted by clauses (a) through (m)
of Section 10.12. 

  
      Termination Date means the earlier to
occur of  (a) May  10, 2004 or (b) such other date on which the Commitments
shall terminate pursuant to Section 6 or 12. 

   
     Total Indebtedness  means,  at  any
date of determination,  the sum of (i) the total of all Indebtedness of the
Company  and  the  Restricted  Subsidiaries  outstanding  on  such  date,  after
eliminating  all  offsetting  debits and  credits  between  the  Company and the
Restricted  Subsidiaries  and all other items  required to be  eliminated in the
course of the  preparation of consolidated  financial  statements of the Company
and  the  Restricted   Subsidiaries   in  accordance   with  GAAP,   plus
(ii) the  aggregate  amount of  Indebtedness  of the  Company to any of its
Restricted  Subsidiaries that is not subordinated to the Indebtedness  hereunder
pursuant to a subordination  agreement  substantially  in the form of Exhibit
F. 

   
     Total  Outstandings  means  at any time the
sum of (a) the aggregate Dollar  Equivalent  principal amount of all outstanding
Loans plus (b) the Stated Amount of all Letters of Credit. 

  
      Type  of Loan or Borrowing - see
Section 2.2.1. The types of Loans or borrowings under this Agreement
are  as  follows:  Floating  Rate  Loans  or  borrowings,  Yen  LIBOR  Loans  or
borrowings, and Eurodollar Loans or borrowings. 

16

    
    Unmatured  Event  of  Default  means  an event or
condition the occurrence or existence of which would,  with the lapse of time or
the giving of notice or both, become an Event of Default. 

 
       Unrestricted  Subsidiary  means
any Subsidiary which is designated as an Unrestricted  Subsidiary on Schedule
9.8  or is  designated  as such in writing  by the  Company  to each  Lender
pursuant to Section 10.18;  provided that no Material Subsidiary shall be
an Unrestricted Subsidiary. 

  
      Wholly-Owned   Restricted  Subsidiary
means,  at any time, (a) with respect to Domestic  Subsidiaries,  any Restricted
Subsidiary  one hundred  percent (100%) of all of the equity  interests  (except
directors’  qualifying  shares) and voting  interests of which are owned by
any  one or more  of the  Company  and  the  Company’s  other  wholly-owned
Restricted   Subsidiaries  at  such  time,  and  (b)  with  respect  to  Foreign
Subsidiaries, any Restricted Subsidiary ninety-five percent (95%) or more of all
of the equity interests (except  directors’  qualifying  shares) and voting
interests  of  which  are  owned  by any  one or  more  of the  Company  and the
Company’s  other  Wholly-Owned   Restricted   Subsidiaries  at  such  time.

    
    Yen and ¥ mean the lawful currency
of Japan.

  
      Yen  LIBOR  means,  for any Yen LIBOR
Loan for any Interest Period,  the per annum rate (reserve  adjusted as provided
below) of interest,  rounded upwards, if necessary, to the nearest one-sixteenth
of one  percent  (0.0625%),  at  which  Japanese  Yen  deposits  in  immediately
available funds are offered in the interbank  eurodollar  market as presented on
Telerate Page 3750 as of 11:00 A.M., London time, two Business Days prior to the
beginning  of such  Interest  Period,  for  delivery  on the  first  day of such
Interest Period for a period  approximately equal to such Interest Period and in
an amount equal or  comparable to the Yen LIBOR Loan of Bank of America to which
such Interest  Period  relates.  The foregoing rate of interest shall be reserve
adjusted by dividing  Yen LIBOR by one minus the Yen LIBOR  Reserve  Percentage,
with such  quotient  to be  rounded  upward to the  nearest  whole  multiple  of
one-hundredth of one percent (0.01%).  All references in this Agreement or other
Loan  Documents  to Yen LIBOR  shall  mean and  include  the  aforesaid  reserve
adjustment.  “Telerate  Page  3750”  means the display  designated  as
“Page  3750”  (or such  other  page as may  replace  Page 3750) on the
Associated  Press-Dow  Jones  Telerate  Service or such other  service as may be
nominated by the British Bankers’ Association as the information vendor for
the purpose of displaying British Bankers’  Association interest settlement
rates for  Japanese Yen  deposits  or, in the absence of such  availability,  by
reference  to the  average  (rounded  upwards,  if  necessary,  to  the  nearest
one-sixteenth of one percent  (0.0625%)) of the rates at which three major banks
designated by the  Administrative  Agent are offered Japanese Yen deposits at or
about 11:00 A.M.,  London time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market. 

  
      Yen  LIBOR  Loan means a Loan bearing
interest,  at all times during an Interest Period  applicable to such Loan, at a
fixed rate of interest determined by reference to Yen LIBOR. 

17

  
      Yen  LIBOR Office means, with respect
to any  Lender,  the office or offices of such  Lender  which shall be making or
maintaining the Yen LIBOR Loans of such Lender hereunder.  A Yen LIBOR Office of
any Lender may be, at the option of such  Lender,  either a domestic  or foreign
office. 

   
     Yen   LIBOR   Reserve   Percentage   means,
relative to any Yen LIBOR Loan for any  Interest  Period,  the  maximum  reserve
percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%)
in effect on the date Yen LIBOR for such  Interest  Period is  determined  under
regulations  issued  from  time to time by the FRB,  the  Japanese  Ministry  of
Finance or the Bank of Japan (or any successor  regulatory body) for determining
the maximum reserve requirement (including any emergency,  supplemental or other
marginal reserve  requirement) with respect to Eurocurrency  funding  (currently
referred to as “Eurocurrency liabilities”) having a term comparable to
such Interest Period. 

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

    
    (b)    Section,  clause,
Schedule
and  Exhibit  references  are  to  this Agreement unless otherwise
specified.

    
    (c)    (i)    
The term  "including"  is not limiting and means  "including  without
limitation."

    
             
 (ii)      In the computation of periods of time from a
specified  date to a later  specified  date,  the  word  “from”  means
“from and including”;  the words “to”  and “until”
each mean “to but excluding”,  and the word “through”  means
“to and including.”

    
    (d)    Unless   otherwise  expressly
provided herein,  (i)    
 references  to agreements  (including this Agreement)
and other  contractual  instruments  shall be deemed to include  all  subsequent
amendments  and  other  modifications  thereto,  but  only  to the  extent  such
amendments and other  modifications  are not prohibited by the terms of any Loan
Document,  and  (ii)    
 references  to any  statute  or  regulation  are to be
construed as including all statutory and  regulatory  provisions  consolidating,
amending,  replacing,  supplementing or interpreting such statute or regulation.

    
    (e)    This Agreement and
the other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance
with their terms. 

     
    (f)     This Agreement and
the other Loan Documents are the result of negotiations among and have been
reviewed by counsel to the Administrative Agent, the Company, the Lenders and
the other parties thereto and are the products of all parties. Accordingly, they
shall not be construed against the Administrative Agent or the Lenders merely
because of the Administrative Agent’s or Lenders’ involvement in their
preparation. 

18

    
    SECTION 2    COMMITMENTS OF THE
BANKS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.

    
    2.1    Commitments. On and
subject to the terms and conditions of this Agreement, each of the Lenders,
severally and for itself alone, agrees to make loans to, and to issue or
participate in the issuance of letters of credit for the account of, the Company
as follows: 

    
    2.1.1    Loans. Each Lender
will make loans on a revolving basis (“Loans”) from time to
time before the Termination Date in such Lender’s Percentage of such
aggregate amounts as the Company may from time to time request from all Lenders;
provided that the Total Outstandings will not at any time exceed the
Commitment Amount. 

    
    2.1.2    L/C
Commitment.     (a)  The Issuing Lenders will issue
letters of credit,  in each case  containing  such terms and  conditions  as are
permitted by this  Agreement and are reasonably  satisfactory  to the applicable
Issuing Lender and the Company (each a “Letter of Credit”),  at
the request of and for the account of the Company or any Subsidiary from time to
time  before  the  Termination  Date and  (b) as  more  fully  set forth in
Section 2.3.5,  each Lender  agrees to purchase a  participation  in
each such Letter of Credit;  provided that the aggregate Stated Amount of
all   Letters   of  Credit   shall  not  at  any  time   exceed  the  lesser  of
(i) $5,000,000  and (ii) the  excess, if any, of the Commitment Amount
over the aggregate principal amount of all outstanding Loans. 

    
    2.2    Loan Procedures.

    
    2.2.1    Various  Types  of  Loans .
Each Loan shall be either a Floating Rate Loan, a Yen LIBOR Loan or a Eurodollar
Loan (each a  “type”  of Loan), as the Company shall specify in
the    related    notice   of    borrowing    or    conversion    pursuant    to
Section 2.2.2  or 2.2.3.  Yen LIBOR Loans or  Eurodollar
Loans   having   the   same   Interest    Period   are   sometimes    called   a
“Group”  or  collectively  “Groups”.  Floating
Rate Loans,  Yen LIBOR Loans and Eurodollar Loans may be outstanding at the same
time;  provided  that (i) not more than five different Groups of Yen
LIBOR  Loans  shall be  outstanding  at any one  time,  (ii) the  aggregate
principal amount of each Group of Yen LIBOR Loans shall at all times be at least
¥600,000,000  and an integral multiple of ¥100,000,000,  (iii) not more
than five different  Groups of Eurodollar  Loans shall be outstanding at any one
time and (iv) the aggregate  principal  amount of each Group of Eurodollar Loans
shall  at  all  times  be at  least  $5,000,000  and  an  integral  multiple  of
$1,000,000.  All  borrowings,  conversions  and  repayments  of  Loans  shall be
effected  so that each  Lender  will  have a pro rata  share  (according  to its
Percentage) of all types and Groups of Loans. 

    
    2.2.2    Borrowing
Procedures.  The Company shall give written or telephonic (followed promptly
by written  confirmation  thereof)  notice to the  Administrative  Agent of each
proposed  borrowing  not later  than  (a) in  the case of a  Floating  Rate
borrowing,  noon,  New  York  time,  on the  proposed  date of  such  borrowing,
(b)   in the case of a Yen LIBOR  borrowing,  10:00 A.M., New York time, at
least five Business Days prior to the proposed date of such  borrowing,  and (c)
in the case of a Eurodollar borrowing,  10:00 A.M., New York time, at least
three Business Days

19

prior to the proposed date
of such  borrowing.  Each such notice  shall be  effective  upon  receipt by the
Administrative  Agent, shall be irrevocable,  and shall specify the date, amount
and type of borrowing  and, in the case of a Yen LIBOR or Eurodollar  borrowing,
the initial Interest Period therefor.  Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof. Not later than 2:00 p.m.,
New York time,  on the date of a proposed  borrowing,  each Lender shall provide
the  Administrative  Agent at the office specified by the  Administrative  Agent
with (a) in the case of a Yen  LIBOR  borrowing,  Yen in  immediately  available
funds,  or (b)  in  the  case  of a  Floating  Rate  borrowing  or a  Eurodollar
borrowing,  Dollars in immediately  available  funds, in each case covering such
Lender’s  Percentage of such borrowing  and, so long as the  Administrative
Agent has not received written notice that the conditions precedent set forth in
Section 11  with respect to such borrowing have not been  satisfied,
the  Administrative  Agent shall pay over the requested amount to the Company on
the requested  borrowing  date.  Each borrowing shall be on a Business Day. Each
Floating  Rate  borrowing  shall be in an aggregate  amount of  $1,000,000 or an
integral  multiple  thereof.  Each other  borrowing  shall be in the  applicable
amount required for a Group pursuant to Section 2.2.1. 

    
    2.2.3    Conversion and
Continuation Procedures. (a) Subject to the provisions of Section 2.2.1
,
the Company may, upon irrevocable written notice to the Administrative Agent in
accordance with clause (b) below: 

    
            (i)
       elect,  as  of  any  Business  Day,  to  convert  any
outstanding  Floating  Rate  Loan  into a  Eurodollar  Loan  or any  outstanding
Eurodollar Loan to a Floating Rate Loan; or

    
            (ii)
    elect,  as of the  last day of the  applicable  Interest
Period,  to continue any Group of Yen LIBOR Loans or Eurodollar  Loans having an
Interest  Period  expiring  on such day (or any part  thereof in the  applicable
amount required for a Group pursuant to Section 2.2.1) for a new Interest
Period.

   
     (b)    The  Company shall give
written or telephonic (followed promptly by written confirmation thereof) notice
to the  Administrative  Agent of each proposed  conversion or  continuation  not
later than (i) in the case of conversion of Eurodollar  Loans into Floating Rate
Loans, 11:00 a.m., New York time, on the proposed date of such conversion,  (ii)
in the case of  continuation  of Yen LIBOR Loans,  11:00 a.m., New York time, at
least five Business Days prior to the proposed  date of such  continuation,  and
(iii) in the case of a conversion of Floating Rate Loans into or continuation of
Eurodollar Loans,  11:00 a.m., New York time, at least three Business Days prior
to the proposed  date of such  conversion  or  continuation,  specifying in each
case: 

    
            (1)
  the proposed date of conversion or continuation;

    
            (2)
  the  aggregate  amount and  currency of the Loans to be converted or
continued;

20

    
            (3)
  the  type  of  Loans   resulting  from  the  proposed   conversion
or
continuation; and

    
            (4)
    in the case of continuation of Yen LIBOR Loans or conversion into,
or continuation of,  Eurodollar  Loans,  the duration of the requested  Interest
Period therefor.

  
      (c)  If  upon  expiration  of  any  Interest
Period  applicable to Yen LIBOR Loans, the Company has failed to select timely a
new Interest Period to be applicable to such Yen LIBOR Loans,  the Company shall
be deemed to have  elected  to  continue  such Yen LIBOR  Loans for a  one-month
Interest Period. 

  
      (d)  If  upon  expiration  of  any  Interest
Period applicable to Eurodollar Loans, the Company has failed to select timely a
new Interest Period to be applicable to such Eurodollar Loans, the Company shall
be deemed to have elected to convert such  Eurodollar  Loans into  Floating Rate
Loans effective on the last day of such Interest Period. 

  
      (e)  The Administrative  Agent will promptly
notify  each  Lender of its receipt of a notice of  conversion  or  continuation
pursuant to this Section 2.2.3 or, if no timely notice is provided by the
Company, of the details of any automatic continuation or conversion. 

  
      (f)  Unless the Required  Lenders  otherwise
consent,  during the  existence  of any Event of Default or  Unmatured  Event of
Default,  the Company may not elect to have a Floating Rate Loan  converted into
or continued as a Eurodollar Loan. 

    
    2.3    Letter     of    Credit
Procedures.

    
    2.3.1  L/C Applications.
The Company shall give notice to the Administrative Agent and the applicable
Issuing Lender of the proposed issuance of each Letter of Credit on a Business
Day which is at least three Business Days (or such lesser number of days as the
Administrative Agent and such Issuing Lender shall agree in any particular
instance) prior to the proposed date of issuance of such Letter of Credit. Each
such notice shall be accompanied by an L/C Application, duly executed by the
Company (together with any Subsidiary for the account of which the related
Letter of Credit is to be issued) and in all respects satisfactory to the
Administrative Agent and the applicable Issuing Lender, together with such other
documentation as the Administrative Agent or such Issuing Lender may reasonably
request in support thereof, it being understood that each L/C Application shall
specify, among other things, the date on which the proposed Letter of Credit is
to be issued, whether such Letter of Credit is to be transferable in whole or in
part and the expiration date of such Letter of Credit (which shall not be later
than the Termination Date and shall not result in the aggregate Stated Amount of
all Letters of Credit scheduled to be outstanding after any date on which the
Commitment Amount is scheduled to be reduced pursuant to Section 6.1(d),
plus the aggregate principal amount of all Yen LIBOR Loans and Eurodollar Loans
having Interest Periods ending after such date, to exceed the Commitment Amount
scheduled to be in effect at the close of business on such date). So long as the
applicable Issuing Lender has not received written notice that the conditions
precedent set forth

21

 in Section 11
with respect to the  issuance of such Letter of Credit have not been  satisfied,
such Issuing Lender shall issue such Letter of Credit on the requested  issuance
date. Each Issuing Lender shall promptly advise the Administrative  Agent of the
issuance of each Letter of Credit by such  Issuing  Lender and of any  amendment
thereto,  extension  thereof  or  event  or  circumstance  changing  the  amount
available for drawing thereunder. 

    
    2.3.2  Participations    in    Letters   of
Credit.  Concurrently  with the  issuance  of each  Letter  of  Credit,  the
applicable  Issuing Lender shall be deemed to have sold and  transferred to each
other  Lender,   and  each  other  Lender  shall  be  deemed   irrevocably   and
unconditionally to have purchased and received from such Issuing Lender, without
recourse or warranty, an undivided interest and participation,  to the extent of
such  other  Lender’s   Percentage,  in  such  Letter  of  Credit  and  the
Company’s  reimbursement obligations with respect thereto. For the purposes
of this Agreement,  the unparticipated portion of each Letter of Credit shall be
deemed  to be the  applicable  Issuing  Lender’s  “participation”
therein.  Each Issuing Lender hereby agrees,  upon request of the Administrative
Agent or any Lender, to deliver to such Lender a list of all outstanding Letters
of Credit issued by such Issuing Lender,  together with such information related
thereto as such Lender may reasonably request. 

    
    2.3.3  Reimbursement
Obligations. The Company hereby unconditionally and irrevocably agrees to
reimburse the applicable Issuing Lender for each payment or disbursement made by
such Issuing Lender under any Letter of Credit honoring any demand for payment
made by the beneficiary thereunder, in each case on the date that such payment
or disbursement is made. Any amount not reimbursed on the date of such payment
or disbursement shall bear interest from the date of such payment or
disbursement to the date that such Issuing Lender is reimbursed by the Company
therefor, payable on demand, at a rate per annum equal to the Base Rate from
time to time in effect plus the Floating Rate Margin from time to time in
effect plus, beginning on the third Business Day after receipt of notice
from the Issuing Lender of such payment or disbursement, 2%. The applicable
Issuing Lender shall notify the Company and the Administrative Agent whenever
any demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided, that the failure of such Issuing Lender to so
notify the Company shall not affect the rights of such Issuing Lender or the
Lenders in any manner whatsoever. 

    
    2.3.4  Limitation on Obligations of Issuing
Lenders.  In  determining  whether  to pay under any  Letter of  Credit,  no
Issuing Lender shall have any obligation to the Company or any Lender other than
to confirm  that any  documents  required to be  delivered  under such Letter of
Credit appear to have been delivered and appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted by an Issuing
Lender under or in connection with any Letter of Credit,  if taken or omitted in
the absence of gross  negligence and willful  misconduct,  shall not impose upon
such  Issuing  Lender any  liability  to the Company or any Lender and shall not
reduce or  impair  the  Company’s  reimbursement  obligations  set forth in
Section 2.3.3   or  the  obligations  of  the  Lenders  pursuant  to
Section 2.3.5. 

22

    
    2.3.5  Funding by Lenders
to Issuing Lenders. If an Issuing Lender makes any payment or disbursement
under any Letter of Credit and the Company has not reimbursed such Issuing
Lender in full for such payment or disbursement by noon, New York time, on the
date of such payment or disbursement, or if any reimbursement received by such
Issuing Lender from the Company is or must be returned or rescinded upon or
during any bankruptcy or reorganization of the Company or otherwise, each other
Lender shall be obligated to pay to the Administrative Agent for the account of
such Issuing Lender, in full or partial payment of the purchase price of its
participation in such Letter of Credit, its pro rata share (according to its
Percentage) of such payment or disbursement (but no such payment shall diminish
the obligations of the Company under Section 2.3.3), and upon notice
from the applicable Issuing Lender, the Administrative Agent shall promptly
notify each other Lender thereof. Each other Lender irrevocably and
unconditionally agrees to so pay to the Administrative Agent in immediately
available funds for the applicable Issuing Lender’s account the amount of
such other Lender’s Percentage of such payment or disbursement. If and to
the extent any Lender shall not have made such amount available to the
Administrative Agent by 2:00 P.M., New York time, on the Business Day on which
such Lender receives notice from the Administrative Agent of such payment or
disbursement (it being understood that any such notice received after 1:00 P.M.,
New York time, on any Business Day shall be deemed to have been received on the
next following Business Day), such Lender agrees to pay interest on such amount
to the Administrative Agent for the applicable Issuing Lender’s account
forthwith on demand for each day from the date such amount was to have been
delivered to the Administrative Agent to the date such amount is paid, at a rate
per annum equal to (a) for the first three days after demand, the Federal Funds
Rate from time to time in effect and (b) thereafter, the Base Rate from time to
time in effect. Any Lender’s failure to make available to the
Administrative Agent its Percentage of any such payment or disbursement shall
not relieve any other Lender of its obligation hereunder to make available to
the Administrative Agent such other Lender’s Percentage of such payment,
but no Lender shall be responsible for the failure of any other Lender to make
available to the Administrative Agent such other Lender’s Percentage of any
such payment or disbursement. 

    
    2.4  Commitments Several.
The failure of any Lender to make a requested Loan on any date shall not relieve
any other Lender of its obligation (if any) to make a Loan on such date, but no
Lender shall be responsible for the failure of any other Lender to make any Loan
to be made by such other Lender.

    
    2.5  Certain Conditions.
Notwithstanding any other provision of this Agreement, no Lender shall have an
obligation to make any Loan, to permit the continuation of any Yen LIBOR Loan or
to permit the continuation of or any conversion into any Eurodollar Loan, and no
Issuing Lender shall have any obligation to issue any Letter of Credit, if an
Event of Default or Unmatured Event of Default exists. 

23

    
    SECTION 3    NOTES EVIDENCING LOANS.

    
    3.1    Notes.  The  Loans  of
each   Lender   shall   be   evidenced   by   a   promissory    note   (each   a
“Note”)  payable to the order of such Lender  substantially  in
the form set forth in Exhibit A. 

    
    3.2    Recordkeeping. Each
Lender shall record in its records, or at its option on the schedule attached to
its Note, the date and amount of each Loan made by such Lender, each repayment
or conversion thereof and, in the case of each Yen LIBOR Loan or Eurodollar
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon. 

    
    SECTION 4    INTEREST.

    
    4.1    Interest Rates. The
Company promises to pay interest on the unpaid principal amount of each Loan for
the period commencing on the date of such Loan until such Loan is paid in full
as follows: 

    
    (a)    in  the  case  of a  Loan  in
Dollars, (i) at all times while such Loan is a Floating Rate Loan, at a rate per
annum  equal to the sum of the Base Rate  from  time to time in effect  plus the
Floating  Rate Margin  from time to time in effect;  and (ii) at all times while
such Loan is a  Eurodollar  Loan,  at a rate per  annum  equal to the sum of the
Eurodollar Rate (Reserve  Adjusted)  applicable to each Interest Period for such
Loan plus the  Eurodollar/Yen  LIBOR  Margin  from time to time in  effect;  and

    
    (b)    in the case of a Yen
LIBOR Loan, at a rate per annum equal to the sum of the Yen LIBOR applicable to
each Interest Period for such Loan plus the Eurodollar/Yen LIBOR Margin in
effect; 

provided that upon
request of the Required Lenders at any time an Event of Default exists, the
interest rate applicable to each Loan shall be increased by 2%. 

    
    4.2    Interest           Payment
Dates.  Accrued  interest  on each  Floating  Rate Loan  shall be payable in
arrears on the last  Business  Day of each  calendar  quarter  and at  maturity.
Accrued  interest on each Yen LIBOR Loan and Eurodollar Loan shall be payable on
the last day of each Interest  Period relating to such Loan (and, in the case of
a Yen LIBOR Loan or Eurodollar  Loan with a six-month  Interest  Period,  on the
three-month  anniversary  of the  first  day of  such  Interest  Period)  and at
maturity.  After  maturity,  accrued  interest  on all Loans shall be payable on
demand. 

24

    
    4.3    Setting and Notice of
Rates. (a) The applicable Yen LIBOR for each Interest Period shall be
determined by the Administrative Agent, and notice thereof shall be given by the
Administrative Agent promptly to the Company and each Lender. 

    
    (b)    The   applicable   Eurodollar
Rate for each Interest Period shall be determined by the  Administrative  Agent,
and notice  thereof shall be given by the  Administrative  Agent promptly to the
Company and each Lender. 

    
    (c)      Each  determination  of the
applicable  Yen LIBOR or Eurodollar  Rate by the  Administrative  Agent shall be
conclusive and binding upon the parties  hereto,  in the absence of demonstrable
error. The  Administrative  Agent shall,  upon written request of the Company or
any  Lender,  deliver to the  Company or such  Lender a  statement  showing  the
computations used by the Administrative  Agent in determining any applicable Yen
LIBOR or Eurodollar Rate hereunder. 

    
    4.4    Computation of
Interest. All computations of interest for Floating Rate Loans when the Base
Rate is determined by the Prime Rate shall be made on the basis of a year of 365
or 366 days, as the case may be, and for the actual number of days elapsed. All
other computations of interest shall be made on the basis of a year of 360 days
and for the actual number of days elapsed. The applicable interest rate for each
Floating Rate Loan shall change simultaneously with each change in the Base
Rate. 

    
    4.4    SECTION
5    FEES.

    
    5.1    Commitment   Fee.  The
Company agrees to pay to the Administrative Agent for the account of each Lender
a commitment fee, for the period from the Signing Date to the Termination  Date,
at a rate per annum equal to the Commitment Fee Rate in effect from time to time
of  the  actual  amount  of  the  unused  Dollar   Equivalent   amount  of  such
Lender’s  Percentage of the Commitment  Amount as of the end of each day in
such  period.  For  purposes  of  calculating  usage  under  this  Section,  the
Commitment Amount shall be deemed used to the extent of the aggregate  principal
amount of all outstanding Loans plus the Stated Amount of all Letters of Credit.
Such commitment fee shall be payable in arrears on the last Business Day of each
calendar  quarter  and on the  Termination  Date for any period  then ending for
which such commitment fee shall not have  theretofore  been paid. The commitment
fee shall be computed  for the actual  number of days  elapsed on the basis of a
year of 360 days. 

    
    5.2    Closing Fee. The
Company agrees to pay to the Administrative Agent for the account of the Lenders
pro rata according to their respective Percentages on the Closing Date a closing
fee equal to $480,000 (less any portion of such fee previously paid to the
Lenders by the Company). 

    
    5.3    Letter of Credit Fees.
The  Company  agrees to pay to the  Administrative  Agent for the account of the
Lenders  pro  rata  according  to  their  respective  Percentages  a  letter  of

25

credit fee for each
standby
Letter of Credit in an amount equal to the rate per annum in effect from time to
time  pursuant  to  Schedule  1.1 of the undrawn  amount of such  standby
Letter of Credit (computed for the actual number of days elapsed on the basis of
a year of 360 days);  provided  that upon request of the Required Lenders
at any time an Event of Default  exists,  the rate  applicable  to each  standby
Letter of Credit  shall be  increased  by 2%. Such letter of credit fee shall be
payable in arrears on the last Business Day of each calendar  quarter and on the
Termination  Date for the period from the date of the  issuance of each  standby
Letter of Credit to the date such  payment  is due or, if  earlier,  the date on
which  such  standby  Letter  of Credit  expired  or was  terminated.  After the
Termination  Date,  such  letter  of  credit  fee shall be  payable  on  demand.

    
    (b)    The Company agrees to
pay to the Administrative Agent for the account of the Lenders pro rata
according to their respective Percentages a letter of credit fee for each
commercial Letter of Credit in an amount equal to the greater of 0.125% of the
face amount of such Letter of Credit and $100. Such letter of credit fee shall
be payable for each commercial Letter of Credit on the earlier of the last
Business Day of the calendar quarter in which such Letter of Credit is issued
and the Termination Date. 

    
     (c)   The
Company  agrees to pay each  Issuing  Lender a fronting  fee for each  Letter of
Credit issued by such Issuing Lender in an amount  separately  agreed to between
the Company and such Issuing Lender. 

    
    (d)     In addition, with
respect to each Letter of Credit, the Company agrees to pay to the applicable
Issuing Lender, for its own account, such fees and expenses as such Issuing
Lender customarily requires in connection with the issuance, negotiation,
processing and/or administration of letters of credit in similar situations.
 

    
    5.4    Administrative Agents
Fees. The Company agrees to pay to the Administrative Agent such
administrative
agent’s fees as are mutually agreed to from time to time by the Company and
the Administrative Agent. 

    
    SECTION 6    REDUCTION IN THE
COMMITMENT AMOUNT; PREPAYMENTS.

    
    6.1    Reductions in the
Commitment Amount.

    
    6.1.1    
Voluntary Reductions of the Commitment Amount. The Company may from time
to
time on at least five Business Days’ prior written notice received by the
Administrative Agent (which shall promptly advise each Lender thereof)
permanently reduce the Commitment Amount to an amount not less than the Total
Outstandings. Any such reduction shall be in an amount not less than $5,000,000
or a higher integral multiple of $1,000,000. The Company may at any time on like
notice terminate the Commitments upon payment in full of all Loans and all other
obligations of the Company hereunder and cash collateralization in full,
pursuant to documentation in form and substance reasonably satisfactory to the
Administrative Agent, of all

26

obligations  arising with
respect to Letters of Credit.  All  reductions  of the  Commitment  Amount shall
reduce the amounts of the Commitments of the Lenders pro rata according to their
respective Percentages. 

    
    6.1.2    Mandatory Reductions
in the Commitment Amount. The Commitment Amount shall be
reduced by $15,000,000 on each anniversary of the Signing Date. 

    
    6.2    Prepayments.

    
    (a)    
Voluntary Prepayments. The Company may from time to time prepay the Loans
in whole or in part; provided that the Company shall give the
Administrative Agent (which shall promptly advise each Lender) notice thereof
not later than 11:00 A.M., New York time, on the day of such prepayment (which
shall be a Business Day), specifying the Loans to be prepaid and the date and
amount of prepayment. Each partial prepayment of Floating Rate Loans and
Eurodollar Loans shall be in an aggregate principal amount of $1,000,000 or an
integral multiple thereof and each partial prepayment of Yen LIBOR Loans shall
be in an aggregate principal amount of ¥100,000,000 or an integral multiple
thereof. After giving effect to any partial prepayment, each borrowing of Yen
LIBOR Loans and Eurodollar Loans shall be in the applicable amount required for
a Group pursuant to Section 2.2.1. 

    
    (b)    
Mandatory Prepayments. On each date on which the Commitment Amount is
reduced pursuant to Section 6.1.2, the Company shall prepay Loans in the
amount, if any, by which the Total Outstandings exceed the Commitments after
giving effect to such reduction. 

    
    (c)    
All Prepayments. All prepayments shall be applied to prepay the Loans of
the Banks pro rata according to their respective Percentages. Any prepayment of
a Yen LIBOR Loan or Eurodollar Loan on a day other than the last day of an
Interest Period therefor shall include interest on the principal amount being
repaid and shall be subject to Section 8.4 

    
    SECTION 7    MAKING AND PRORATION
 OF PAYMENTS; SETOFF; TAXES.

    
    7.1    Making of Payments.
All payments of principal of or interest on the Notes, and of all fees, shall be
made by the Company to the Administrative Agent in immediately available funds
at the office specified by the Administrative Agent not later than 1:00 P.M.,
New York time, on the date due; and funds received after that hour shall be
deemed to have been received by the Administrative Agent on the next following
Business Day. The Administrative Agent shall promptly remit to each Lender its
share of all such payments received in collected funds by the Administrative
Agent for the account of such Lender. 

    
    All payments under Section 8.1 shall be made by
the Company directly to the Lender entitled thereto. 

27

    
    7.2    Application of Certain
Payments. Each payment of principal shall be applied to such Loans as the
Company shall direct by notice to be received by the Administrative Agent on or
before the date of such payment or, in the absence of such notice, as the
Administrative Agent shall determine in its discretion. Concurrently with each
remittance to any Lender of its share of any such payment, the Administrative
Agent shall advise such Lender as to the application of such payment. 

    
    7.3    Due Date Extension.
If any payment of principal or interest with respect to any of the Loans, or of
any fees, falls due on a day which is not a Business Day, then such due date
shall be extended to the immediately following Business Day (unless, in the case
of a Yen LIBOR Loan or Eurodollar Loan, such immediately following Business Day
is the first Business Day of a calendar month, in which case such date shall be
the immediately preceding Business Day) and, in the case of principal,
additional interest shall accrue and be payable for the period of any such
extension. 

    
    7.4    Setoff. The Company
agrees that the Administrative Agent and each Lender have all rights of set-off
and bankers’ lien provided by applicable law, and in addition thereto, the
Company agrees that at any time any Event of Default exists, the Administrative
Agent and each Lender may apply to the payment of any obligations of the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Company then or thereafter with the Administrative
Agent or such Lender. 

    
    7.5    Proration of Payments.
 If any Lender shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise, but excluding any payment
pursuant to Section 8.7 or 14.9) on account of principal of or
interest on any Loan (or on account of its participation in any Letter of
Credit) in excess of its pro rata share of payments and other recoveries
obtained by all Lenders on account of principal of and interest on Loans (or
such participation) then held by them, such Lender shall purchase from the other
Lenders such participation in the Loans (or sub-participation in Letters of
Credit) held by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them;
provided that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery.

    
    7.6    Taxes. (a) All
payments
of principal of, and interest on, the Loans and all other amounts payable
hereunder shall be made free and clear of and without deduction for any present
or future income, excise, stamp or franchise taxes and other taxes, fees,
duties, withholdings or other charges of any nature whatsoever imposed by any
taxing authority, but excluding franchise taxes and taxes imposed on or measured
by any Lender’s net income or receipts (all non-excluded items being called
“Taxes”). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will: 

28

    
    (i)    
pay directly to the relevant authority the full amount required to be so
withheld or deducted;

    
    (ii)    promptly  forward  to  the
Administrative  Agent  an official receipt or other documentation satisfactory
to the Administrative Agent evidencing such payment to such authority; and

    
    (iii)    
(except to the extent such withholding or deduction would not be required if
such Lender’s Exemption Representation were true) pay to the Administrative
Agent for the account of the Lenders such additional amount or amounts as is
necessary to ensure that the net amount actually received by each Lender will
equal the full amount such Lender would have received had no such withholding or
deduction been required. 

Moreover, if any Taxes are
directly asserted against the Administrative Agent or any Lender with respect to
any payment received by the Administrative Agent or such Lender hereunder, the
Administrative Agent or such Lender may pay such Taxes and the Company will
(except to the extent such Taxes are payable by a Lender and would not have been
payable if such Lender’s Exemption Representation were true) promptly pay
such additional amounts (including any penalty, interest and expense) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Taxes not been asserted. 

    
    (b)    If the Company fails
to pay any Taxes when due to the appropriate taxing authority or fails to remit
to the Administrative Agent, for the account of the respective Lenders, the
required receipts or other required documentary evidence, the Company shall
indemnify the Lenders for any incremental Taxes, interest or penalties that may
become payable by any Lender as a result of any such failure. For purposes of
this Section 7.6, a distribution hereunder by the Administrative Agent or
any Lender to or for the account of any Lender shall be deemed a payment by the
Company. 

    
    (c)     Each Lender
represents and warrants (such Lender’s “Exemption
Representation”) to the Company and the Administrative Agent that, as
of the date of this Agreement (or, in the case of an Assignee, the date it
becomes a party hereto), it is entitled to receive payments hereunder without
any deduction or withholding for or on account of any Taxes imposed by the
United States of America or any political subdivision or taxing authority
thereof. 

    
    (d)     Upon the request from
time to time of the Company or the Administrative Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States of
America shall execute and deliver to the Company and the Administrative Agent
one or more (as the Company or the Administrative Agent may reasonably request)
United States Internal Revenue Service Forms W-8ECI or W-8BEN or such other
forms or documents, appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender is exempt from withholding
or deduction of Taxes. 

29

    
    (e)     If, and to the extent
that, any Lender shall obtain a credit, relief or remission for, or repayment
of, any Taxes indemnified or paid by the Company pursuant to this Section
7.6, such Lender agrees to promptly notify the Company thereof and thereupon
enter into negotiations in good faith with the Company to determine the basis on
which an equitable reimbursement of such Taxes can be made to the Company.
 

    
    (f)     All obligations of
the Company and the Lenders under this Section 7.6 shall survive
repayment of the Loans, cancellation of the Notes, cancellation or expiration of
the Letters of Credit and any termination of this Agreement. 

    
    (g)    
Notwithstanding the foregoing provisions of this Section 7.6 if any
Lender fails to notify the Company of any event or circumstance which will
entitle such Lender to compensation pursuant to this Section 7.6 within
180 days after such Lender obtains knowledge of such event or circumstance, then
such Lender shall not be entitled to compensation from the Company for any
amount arising prior to the date which is 180 days before the date on which such
Lender notifies the Company of such event or circumstance. 

    
    SECTION 8    
 INCREASED COSTS; SPECIAL PROVISIONS FOR YEN LIBOR LOANS AND EURODOLLAR LOANS.

     
    8.1    Increased Costs
..  
(a)    If, after the date hereof,  the adoption of any applicable law,
rule or regulation,  or any change therein,  or any change in the interpretation
or  administration  thereof  by any  Governmental  Authority,  central  bank  or
comparable agency charged with the interpretation or administration  thereof, or
compliance by any Lender (or any Yen LIBOR Office or  Eurodollar  Office of such
Lender) with any request or  directive  (whether or not having the force of law)
of any such authority, central bank or comparable agency

     
   (i)    
shall subject any Lender (or any Yen LIBOR Office or Eurodollar Office of such
Lender) to any tax, duty or other charge with respect to its Yen LIBOR Loans or
Eurodollar Loans, its Note or its obligation to make Yen LIBOR Loans or
Eurodollar Loans, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on its Yen LIBOR Loans or Eurodollar
Loans or any other amounts due under this Agreement in respect of its Yen LIBOR
Loans or Eurodollar Loans or its obligation to make Yen LIBOR Loans or
Eurodollar Loans (except for changes in the rate of tax on the overall net
income of such Lender or its Yen LIBOR Office or Eurodollar Office imposed by
the jurisdiction in which such Lender’s principal executive office, Yen
LIBOR Office or Eurodollar Office is located); or 

    
    (ii)    
shall impose, modify or deem applicable any reserve (including any reserve
imposed by the FRB, but excluding any reserve included in the determination of
interest rates pursuant to Section  4), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any Lender (or any Yen LIBOR Office or Eurodollar Office of such
Lender); or 

30

    
    (iii)
shall impose on any Lender (or its Yen LIBOR Office or Eurodollar Office) any
other condition affecting its Yen LIBOR Loans or Eurodollar Loans, its Note or
its obligation to make Yen LIBOR Loans or Eurodollar Loans; 

and the result of any of
the foregoing is to increase the cost to (or in the case of Regulation D of the
FRB, to impose a cost on) such Lender (or any Yen LIBOR Office or Eurodollar
Office of such Lender) of making or maintaining any Yen LIBOR Loan or Eurodollar
Loan, or to reduce the amount of any sum received or receivable by such Lender
(or its Yen LIBOR Office or Eurodollar Office) under this Agreement or under its
Note with respect thereto, then within 10 days after demand by such Lender
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail, a copy
of which shall be furnished to the Administrative Agent), the Company shall pay
directly to such Lender such additional amount as will compensate such Lender
for such increased cost or such reduction. 

    
    (b)    If     any    Lender    shall
reasonably  determine that the adoption or phase-in of any applicable  law, rule
or regulation  regarding capital adequacy,  or any change therein, or any change
in the interpretation or administration  thereof by any Governmental  Authority,
central  bank  or  comparable   agency  charged  with  the   interpretation   or
administration  thereof,  or compliance by any Lender or any Person  controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such  authority,  central bank or comparable
agency,  has or would  have the  effect of  reducing  the rate of return on such
Lender's or such controlling  Person's capital as a consequence of such Lender's
obligations  hereunder or under any Letter of Credit to a level below that which
such  Lender  or such  controlling  Person  could  have  achieved  but for  such
adoption,  change or compliance (taking into consideration such Lender's or such
controlling  Person's  policies  with respect to capital  adequacy) by an amount
deemed by such Lender or such controlling Person to be material,  then from time
to time,  within 10 days after  demand by such  Lender  (which  demand  shall be
accompanied  by a  statement  setting  forth  the basis  for such  demand  and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the  Administrative  Agent),  the Company  shall pay to such Lender
such  additional  amount  or  amounts  as will  compensate  such  Lender or such
controlling Person for such reduction.

    
    (c)          Notwithstanding     the
foregoing  provisions  of this  Section  8.1, if any Lender  fails to notify the
Company of any event or circumstance which will entitle such Lender
to compensation  pursuant to this Section 8.1 within 180 days after
such Lender obtains  knowledge of such event or  circumstance,  then such Lender
shall not be entitled to  compensation  from the Company for any amount  arising
prior  to the  date  which is 180 days  before  the  date on which  such  Lender
notifies the Company of such event or circumstance.

    
     8.2     
Basis for Determining Interest Rate Inadequate or Unfair. If with respect to the
relevant Loan for any Interest Period:

31

    
    (a)    
deposits in Yen or Dollars, as applicable, in the relevant amounts are not being
offered to the Administrative Agent in the interbank eurodollar market for such
Interest Period, or the Administrative Agent otherwise reasonably determines
(which determination shall be binding and conclusive on the Company) that by
reason of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Yen LIBOR or
Eurodollar Rate; or 

    
    (b)    
Lenders having an aggregate Percentage of 40% or more advise the Administrative
Agent that Yen LIBOR or the Eurodollar Rate (Reserve Adjusted) as determined by
the Administrative Agent will not adequately and fairly reflect the cost to such
Lenders of maintaining or funding Yen LIBOR Loans or Eurodollar Loans, as the
case may be, for such Interest Period (taking into account any amount to which
such Lenders may be entitled under Section 8.1) or that the making or
funding of Yen LIBOR Loans or Eurodollar Loans has become impracticable as a
result of an event occurring after the date of this Agreement which in the
opinion of such Lenders materially affects such Loans; 

then the
Administrative Agent shall promptly notify the other parties thereof and, so
long as such circumstances shall continue, (x) no Lender shall be under any
obligation to make or convert into Eurodollar Loans or Yen LIBOR Loans, as
applicable, (y) on the last day of the current Interest Period for each Yen
LIBOR Loan, such Loan shall be repaid in full, and (z) on the last day of the
current Interest Period for each Eurodollar Loan, such Loan shall (unless then
repaid) automatically convert to a Floating Rate Loan. 

    
    8.3    
Changes in Law Rendering Loans Unlawful.  If any change in (including the
adoption  of any new)  applicable  laws or  regulations,  or any  change  in the
interpretation  of applicable  laws or regulations by any  governmental or other
regulatory body charged with the administration  thereof,  should make it (or in
the good faith judgment of any Lender cause a substantial question as to whether
it is) unlawful for any Lender to make, maintain or fund Eurodollar Loans or Yen
LIBOR Loans, then such Lender shall promptly notify the Company and the
Administrative Agent and, so long as such circumstances shall continue:

    
    (a)      In the  case of  Eurodollar
Loans,  (i)  such  Lender  shall  have no  obligation  to make or  convert  into
Eurodollar  Loans (but  shall make  Floating  Rate Loans  concurrently  with the
making of or conversion  into  Eurodollar  Loans by the Lenders which are not so
affected, in each case in an amount equal to such Lender's pro rata share of all
Eurodollar  Loans  which  would be made or  converted  into at such  time in the
absence of such  circumstances) and (ii) on the last day of the current Interest
Period for each  Eurodollar  Loan of such  Lender  (or,  in any  event,  on such
earlier  date  as  may  be  required  by  the  relevant   law,   regulation   or
interpretation),  such  Eurodollar  Loan  shall,  unless  then  repaid  in full,
automatically convert to a Floating Rate Loan. Each Floating Rate Loan made by a
Lender which,  but for the  circumstances  described in the foregoing  sentence,
would be a Eurodollar Loan (an "Affected Loan") shall remain outstanding
for the

32

same period as the Group of  Eurodollar  Loans of which such Affected Loan would
be a part absent such circumstances.

    
    (b)      In the  case  of Yen  LIBOR
Loans, (i) no Lender shall have any obligation to make or continue any Yen LIBOR
Loans and (ii) on the last day of the current Interest Period for each borrowing
of Yen LIBOR Loans, such Yen LIBOR Loans shall be paid in full.

    
    8.4    Funding   Losses.  The
Company  hereby  agrees that upon demand by any Lender  (which  demand  shall be
accompanied by a statement setting forth the basis for the amount being claimed,
a copy of which shall be furnished  to the  Administrative  Agent),  the Company
will indemnify such Lender against any net loss or expense which such Lender may
sustain or incur  (including  any net loss or expense  incurred by reason of the
liquidation or  reemployment  of deposits or other funds acquired by such Lender
to fund or  maintain  any Yen LIBOR  Loan or  Eurodollar  Loan),  as  reasonably
determined  by such  Lender,  as a  result  of (a) any  payment,  prepayment  or
conversion  of any Yen LIBOR Loan or  Eurodollar  Loan of such  Lender on a date
other  than the last day of an  Interest  Period  for such Loan  (including  any
prepayment or conversion  pursuant to Section  8.3) or (b) any failure of
the Company to borrow, continue or convert any Loan on a date specified therefor
in a notice of  borrowing or  conversion  pursuant to this  Agreement.  For this
purpose,  all notices to the  Administrative  Agent  pursuant to this  Agreement
shall be deemed to be irrevocable.

    
    8.5    Right  of  Lenders to Fund
through  Other  Offices.  Each  Lender  may,  if it so elects,  fulfill  its
commitment  as to any Yen LIBOR  Loan or  Eurodollar  Loan by  causing a foreign
branch or  affiliate  of such  Lender to make such Loan;  provided  that in such
event for the purposes of this  Agreement such Loan shall be deemed to have been
made by such Lender and the  obligation  of the Company to repay such Loan shall
nevertheless  be to such Lender and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or affiliate.

    
    8.6    Discretion  of  Lenders as
to Manner of Funding. Notwithstanding any provision of this Agreement to the
contrary,  each Lender shall be entitled to fund and maintain its funding of all
or any part of its  Loans  in any  manner  it sees  fit,  it  being  understood,
however,  that for the purposes of this Agreement all  determinations  hereunder
shall be made as if such  Lender had  actually  funded and  maintained  each Yen
LIBOR Loan and Eurodollar Loan during each Interest Period for such Loan through
the purchase of deposits having a maturity corresponding to such Interest Period
and bearing an interest  rate equal to the Yen LIBOR  (prior to  adjustment  for
reserves) or the Eurodollar Rate for such Interest Period, as the case may be.

    
    8.7           Mitigation       of
Circumstances;  Replacement  of  Affected  Lender.  (a)  Each  Lender  shall
promptly notify the Company and the  Administrative  Agent of any event of which
it has  knowledge  which  will  result in,  and will use  reasonable  commercial
efforts  available  to it  (and  not,  in such  Lender's  good  faith  judgment,
otherwise  disadvantageous  to  such  Lender)  to  mitigate  or  avoid,  (i) any
obligation  by the  Company to pay any amount  pursuant to Section 7.6 or
8.1 or
(ii) the occurrence of any circumstance of the nature described in Section
8.2
or 8.3

33

    
      (and, if any Lender has given notice of any such event
described in clause  (i) or (ii)  above and thereafter  such event
ceases to exist,  such  Lender  shall  promptly  so notify the  Company  and the
Administrative  Agent).  Without  limiting  the  foregoing,   each  Lender  will
designate a different  funding office if such  designation will avoid (or reduce
the  cost to the  Company  of) any  event  described  in  clause  (i)  or
(ii)  of the preceding  sentence and such  designation  will not, in such
Lender's sole good faith judgment, be otherwise disadvantageous to such Lender.

    
    (b)     At any time any Lender is an
Affected Lender, the Company may replace such Affected Lender as a party to this
Agreement  with one or more other  banks or  financial  institutions  reasonably
satisfactory to the Administrative  Agent (and upon notice from the Company such
Affected  Lender shall assign pursuant to an Assignment  Agreement,  and without
recourse or warranty, its Commitment,  its Loans, its Note, its participation in
Letters of Credit, and all of its other rights and obligations hereunder to such
replacement bank(s) or other financial institution(s) for a purchase price equal
to the sum of the  principal  amount of the Loans so  assigned,  all accrued and
unpaid interest  thereon,  its ratable share of all accrued and unpaid fees, any
amounts payable under  Section  8.4 as a result of such Lender  receiving
payment of any Yen LIBOR Loan or Eurodollar Loan prior to the end of an Interest
Period  therefor  and  all  other  obligations  owed  to  such  Affected  Lender
hereunder).

    
    8.8    
 Conclusiveness of Statements; Survival of Provisions. Determinations and
statements of any Lender pursuant to Section 8.1, 8.2,  8.3 or 8.4
shall be  conclusive  absent  demonstrable  error.  Lenders  may use  reasonable
averaging and attribution methods in determining  compensation under Sections
8.1 and  8.4,  and the  provisions  of such  Sections  shall  survive
repayment of the Loans, cancellation of the Notes, cancellation or expiration of
the Letters of Credit and any termination of this Agreement.

    
    SECTION 9    WARRANTIES.

    
    To  induce the  Administrative  Agent and the Lenders to
enter into this  Agreement  and to induce the Lenders to make Loans and issue or
purchase participations in Letters of Credit hereunder,  the Company warrants to
the Administrative Agent and the Lenders that:

    
    9.1    Organization, etc. The
Company is a corporation  duly organized,  validly existing and in good standing
under the laws of its jurisdiction of incorporation,  and is duly qualified as a
foreign  corporation and is in good standing in each  jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate  power and authority to own or hold under lease the properties
it purports to own or hold under  lease,  to transact  the business it transacts
and proposes to transact, to execute and deliver this Agreement,  the Collateral
Documents  to which it is a party and the Notes,  and to perform the  provisions
hereof and thereof.

34

    
    9.2    Authorization;          No
Conflict.  This Agreement,  the Notes and the Collateral  Documents to which
the  Company is a party have been duly  authorized  by all  necessary  corporate
action on the part of the Company, and this Agreement and each of the Collateral
Documents to which it is a party  constitutes,  and upon  execution and delivery
thereof each Note will constitute,  a legal, valid and binding obligation of the
Company  enforceable against the Company in accordance with its terms, except as
such  enforceability  may be limited by (a) applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other similar laws  affecting the  enforcement of
creditors' rights generally, and (b) general principles of equity (regardless of
whether such  enforceability is considered in a proceeding in equity or at law).
The execution,  delivery and performance by the Company of this  Agreement,  the
Notes  and  each  other  Loan  Document  to  which  it is a party  will  not (i)
contravene, result in any breach of, or constitute a default under, or result in
the  creation  of any Lien in  respect  of any  property  of the  Company or any
Subsidiary under, any indenture, mortgage, deed of trust, loan, note purchase or
credit agreement,  corporate charter or bylaws, or any other Material agreement,
lease or instrument to which the Company or any  Subsidiary is bound or by which
the Company or any Subsidiary or any of their respective properties may be bound
or  affected,  (ii)  conflict  with or result  in a breach of any of the  terms,
conditions or provisions of any order, judgment,  decree or ruling of any court,
arbitrator  or  Governmental   Authority   applicable  to  the  Company  or  any
Subsidiary,  or (iii)  violate  any  provision  of any  statute or other rule or
regulation  of any  Governmental  Authority  applicable  to the  Company  or any
Subsidiary.

    
    9.3    Financial   Condition.
The audited consolidated  financial statements of the Company and its Restricted
Subsidiaries for the fiscal years ending December 31, 1998 and December 31, 1999
and the audited  consolidated  and  consolidating  financial  statements  of the
Company  and its  Subsidiaries  for the fiscal year ending  December  31,  2000,
copies of which in each case have been  furnished  prior to the Signing  Date to
each Lender which is a party hereto on the Signing Date  (including in each case
the related  schedules  and notes) fairly  present in all material  respects the
consolidated  financial position of the Company and the Restricted  Subsidiaries
as of the  respective  dates  specified in such  Schedule  and the  consolidated
results  of their  operations  and cash  flows  for the  respective  periods  so
specified and have been prepared in accordance  with GAAP  consistently  applied
throughout  the  periods  involved  except  as set  forth in the  notes  thereto
(subject,  in the case of any interim financial  statements,  to normal year-end
adjustments).

    
    9.4       No   Material   Adverse
Change.  Since December 31, 2000, except as disclosed in Schedule 9.4
and in publicly  available SEC filings prior to the date hereof,  there has been
no Material  adverse  change in the  financial  condition,  operations,  assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole.

    
           9.5           Governmental
Authorizations;   etc.   No  consent,   approval  or  authorization  of,  or
registration, filing or declaration with, any Governmental Authority is required
in connection with the execution,  delivery or performance by the Company or any
of its Restricted Subsidiaries of this Agreement or the other Loan Documents.

35

    
    9.6    
Title to Property;  Leases.  The Company and the Restricted  Subsidiaries
have good and sufficient title to their respective  properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent  audited  balance  sheet  referred to in Section 9.4 or purported to
have been acquired by the Company or any Restricted  Subsidiary  after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement or the Collateral
Documents.  All leases that  individually  or in the  aggregate are Material are
valid and subsisting and are in full force and effect in all material respects.

    

    9.7    Subsidiaries
..  
(a)  Schedule  9.7 contains (except as noted therein)  complete
and  correct  lists  (i) of the  Company's  Subsidiaries,  showing,  as to  each
Subsidiary, the correct name thereof, the jurisdiction of its organization,  the
percentage  of shares  of each  class of its  capital  stock or  similar  equity
interests outstanding owned by the Company and each other Subsidiary and whether
such Subsidiary is a Restricted  Subsidiary or an Unrestricted  Subsidiary,  and
whether  such  Subsidiary  is a  Material  Subsidiary,  (ii)  of  the  Company's
Affiliates,  other than Subsidiaries,  and (iii) of the Company's  directors and
senior officers.

    
    (b)    
All of the  outstanding  shares of capital stock or similar equity  interests of
each Subsidiary  shown in Schedule  9.7 as being owned by the Company and
its Subsidiaries have been validly issued,  are fully paid and nonassessable and
are  owned by the  Company  or  another  Subsidiary  free and  clear of any Lien
(except for Permitted Liens, directors' qualifying shares, shares required to be
owned  by  Persons  pursuant  to  applicable   foreign  laws  regarding  foreign
ownership, or as otherwise disclosed in Schedule 9.7).

    
    (c)    
Each  Subsidiary  identified in  Schedule  9.7 is a corporation  or other
legal entity duly  organized,  validly  existing and in good standing  under the
laws of its  jurisdiction  of  organization,  and is duly qualified as a foreign
corporation  or other legal entity and is in good standing in each  jurisdiction
in which such  qualification is required by law, other than those  jurisdictions
as to which the  failure  to be so  qualified  or in good  standing  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse  Effect.  Each such  Subsidiary  has the  corporate  or other  power and
authority to own or hold under lease the  properties  it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

    
    (d)    
No  Material  Subsidiary,  is a party  to,  or  otherwise  subject  to any legal
restriction or any agreement (other than this Agreement,  the agreements  listed
on  Schedule  9.7 and  customary  limitations  imposed by  corporate  law
statutes)  restricting the ability of such Material  Subsidiary to pay dividends
out of profits or make any other similar distributions of profits to the Company
or any of its  Subsidiaries  that owns  outstanding  shares of capital  stock or
similar equity interests of such Material Subsidiary.

    
    9.8          Compliance      with
ERISA.   (a)  The  Company  and  each  ERISA  Affiliate  have  operated  and
administered  each Plan in compliance  with all applicable  laws except for such

36

instances of  noncompliance  as have not resulted in and could not reasonably be
expected  to result in a Material  Adverse  Effect.  Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax  provisions of the Code  relating to employee  benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has  occurred  or exists  that could  reasonably  be  expected  to result in the
incurrence of any such  liability by the Company or any ERISA  Affiliate,  or in
the  imposition  of any Lien on any of the rights,  properties  or assets of the
Company or any ERISA  Affiliate,  in either  case  pursuant  to Title I or IV of
ERISA or to such penalty or excise tax  provisions  or to Section  401(a)(29) or
412 of the  Code,  other  than  such  liabilities  or  Liens  as  would  not be,
individually or in the aggregate, Material.

    
    (b)    
Neither the Company nor any ERISA Affiliate  maintains a "single  employer plan"
or a Multiemployer Plan that is subject to Title IV of ERISA.

    
    (c)    The  Company  and  its  ERISA
Affiliates  have not  incurred  withdrawal  liabilities  (and are not subject to
contingent  withdrawal  liabilities)  under  Section  4201 or 4204 of  ERISA  in
respect of Multiemployer  Plans other than such liabilities that individually or
in the aggregate are not material.

    
    (d)    
The expected postretirement benefit obligation (determined as of the last day of
the Company's  most  recently  ended fiscal year in  accordance  with  Financial
Accounting  Standards  Board  Statement No. 106,  without  regard to liabilities
attributable to continuation  coverage mandated by Section 4980B of the Code) of
the Company and its Subsidiaries is not Material or has otherwise been disclosed
in the most  recent  consolidated  financial  statements  of the Company and its
Subsidiaries referenced in Section 9.4 of this Agreement.

    
    (e)       The execution and delivery
of this  Agreement  and the other  Loan  Documents  and the  making of Loans and
issuance of Letters of Credit hereunder will not involve any transaction that is
subject to the  prohibitions of Section 406 of ERISA or in connection with which
a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code.

    
    9.9     Litigation; Observance of
Agreements, Statutes and Orders. (a) Except as disclosed in Schedule 9.9
,
there are no actions,  suits or proceedings  pending or, to the knowledge of the
Company,  threatened  against or affecting the Company or any  Subsidiary or any
property of the Company or any  Subsidiary in any court or before any arbitrator
of any kind or before or by any Governmental Authority that,  individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

    
    (b)     Neither the Company nor any
Restricted Subsidiary is in default under any term of any agreement
or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or
regulation (including Environmental Laws) of any

37

Governmental Authority, which default or violation, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

    
    9.10    Other       Statutes.
Neither the Company nor any Restricted Subsidiary is subject to regulation under
the Investment  Company Act of 1940, the Public Utility  Holding  Company Act of
1935, the Interstate Commerce Act, or the Federal Power Act.

    
    9.11          Licenses,  Permits,
etc.  Except  as  disclosed  in  Schedule  9.11,  (a)  the  Company  and the
Restricted  Subsidiaries  own or  possess  all  licenses,  permits,  franchises,
authorizations,  patents, copyrights, service marks, trademarks and trade names,
or rights thereto,  that individually or in the aggregate are Material,  without
any known Material conflict with the rights of others, (b) to the best knowledge
of the Company,  no product of the Company infringes in any Material respect any
license, permit,  franchise,  authorization,  patent,  copyright,  service mark,
trademark,  trade name or other right owned by any other Person;  and (c) to the
best knowledge of the Company,  there is no Material  violation by any Person of
any right of the  Company  or any  Restricted  Subsidiary  with  respect  to any
patent, copyright,  service mark, trademark,  trade name or other right owned or
used by the Company or any Restricted Subsidiary.

    
    9.12    Use  of Proceeds;  Margin
Regulations.  The Company  will apply the  proceeds of the Loans for general
corporate   purposes   (including   repurchases   of  stock  of  the   Company);
provided  that no part of the  proceeds  from  the  making  of  Loans  or
issuance of Letters of Credit hereunder will be used, directly or indirectly, so
as to involve the Company or any Lender in a violation  of  Regulation  U of the
FRB (12 CFR 221) or  Regulation  X of the FRB (12 CFR 224),  or to  involve  any
broker or dealer in a violation of Regulation T of the FRB (12 CFR 220).  Margin
stock does not constitute more than 5% of the value of the  consolidated  assets
of the Company and its  Subsidiaries  and the Company  does not have any present
intention  that margin stock will  constitute  more than 5% of the value of such
assets. As used in this Section,  the term "margin stock" shall have the
 meaning assigned to it in said Regulation U.

    
    9.13    Taxes.   The  Company
and its  Subsidiaries  have filed all tax returns that are required to have been
filed in any  jurisdiction  (other than those tax returns which  individually or
collectively  are not  Material),  and have paid all  taxes  shown to be due and
payable on such returns and all other taxes and assessments  levied upon them or
their  properties,  assets,  income or franchises,  to the extent such taxes and
assessments have become due and payable and before they have become  delinquent,
except for any taxes and assessments (i) the amount of which is not individually
or in the aggregate Material,  or (ii) the amount,  applicability or validity of
which is currently being contested in good faith by appropriate  proceedings and
with  respect  to which the  Company  or a  Subsidiary,  as the case may be, has
established  adequate  reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could  reasonably be expected to have
a Material  Adverse Effect.  The charges,  accruals and reserves on the books of
the Company and its Subsidiaries in respect of federal, state or other taxes for
all fiscal periods are adequate in accordance  with GAAP. The federal income tax
liabilities  of the Company and its  Subsidiaries  have been  resolved  with the
Internal  Revenue  

 38

Service and paid for all
fiscal  years up to and  including  the  fiscal  year  ending  on  December  31,
1996.

    
    9.14    Existing    Indebtedness;
Future Liens.  (a) Except as described  therein,  Schedule 9.14 sets forth a
complete and correct list of all outstanding Indebtedness, separately listed for
each such item of  Indebtedness  of  $2,000,000  or more, of the Company and the
Restricted Subsidiaries as of the Signing Date.

    
    (b)    (i)  Neither  the Company nor
any  Restricted  Subsidiary  is in default in the  payment of any  principal  or
interest on any Indebtedness of the Company or such Restricted  Subsidiary,  and
(ii) no event or  condition  exists  with  respect  to any  Indebtedness  of the
Company or any Restricted  Subsidiary  that would permit (or that with notice or
the lapse of time,  or both,  would  permit)  one or more  Persons to cause such
Indebtedness  to become due and payable before its stated maturity or before its
regularly  scheduled  dates of payment,  except for  Indebtedness  described  in
clauses  (i) and (ii) which, in aggregate  principal amount,  does
not exceed $5,000,000.

    
    (c)      Neither the Company nor any
Restricted  Subsidiary  has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,  whether
now owned or  hereafter  acquired,  to be  subject  to a Lien not  permitted  by
ection 10.12.

    
                9.15    Environmental
Matters.  Neither the Company nor any of its  Subsidiaries  has knowledge of
any claim or has received any notice of any claim,  and no  proceeding  has been
instituted  raising any claim against the Company or any of its  Subsidiaries or
any of their  respective  real  properties  now or  formerly  owned,  leased  or
operated by any of them or other assets,  alleging any damage to the environment
or violation of any Environmental  Laws, except, in each case, such as could not
reasonably  be  expected  to  result in a  Material  Adverse  Effect.  Except as
otherwise disclosed to the Lenders in writing,

    
    (a)      neither the Company nor any
of its  Subsidiaries  has  knowledge  of any facts  which would give rise to any
claim,  public or private,  of violation of Environmental  Laws or damage to the
environment  emanating  from,  occurring  on or  in  any  way  related  to  real
properties now or formerly owned,  leased or operated by any of them or to other
assets or their use,  except,  in each  case,  such as could not  reasonably  be
expected to result in a Material Adverse Effect;

    
    (b)      neither the Company nor any
of its Subsidiaries has stored any Hazardous Materials on real properties now or
formerly  owned,  leased or operated by any of them in a manner  contrary to any
Environmental  Laws and has not disposed of any Hazardous  Materials in a manner
contrary  to any  Environmental  Laws,  in each case in any  manner  that  could
reasonably be expected to result in a Material Adverse Effect; and

39

    
    (c)      all  buildings  on all real
properties  now  owned,  leased  or  operated  by  the  Company  or  any  of its
Subsidiaries are in compliance with all applicable  Environmental  Laws,  except
where failure to comply could not reasonably be expected to result in a Material
Adverse Effect.

    
    9.16    Information.   As  of
the  Signing  Date,   the  Closing  Date  and  each  other  date  on  which  the
representation and warranty in this Section 9.16 is made, all information
previously  or  contemporaneously  furnished  in writing  by the  Company or any
Subsidiary  to any Lender for purposes of or in connection  with this  Agreement
and the transactions contemplated hereby is, taken as a whole, true and accurate
in every material  respect on the date as of which such  information is dated or
certified,  and none of such  information is incomplete by omitting to state any
material fact necessary to make such  information not misleading in light of the
circumstances under which made (it being recognized by the Administrative  Agent
and the Lenders that (a) any projections  and forecasts  provided by the Company
are based on good faith estimates and assumptions  believed by the Company to be
reasonable as of the date of the applicable  projections or assumptions and that
actual results during the period or periods covered by any such  projections and
forecasts  will likely differ from  projected or forecasted  results and (b) any
information provided by the Company or any Subsidiary with respect to any Person
or assets acquired or to be acquired by the Company or any Subsidiary shall, for
all periods prior to the date of such  acquisition,  be limited to the knowledge
of the Company or the acquiring Subsidiary after reasonable inquiry).

    
    SECTION 10    COVENANTS.

    
      Until the expiration or termination of the Commitments
and  thereafter  until all  obligations  of the Company  hereunder and under the
other  Loan  Documents  are paid in full and all  Letters  of  Credit  have been
terminated,  the Company  agrees that,  unless at any time the Required  Lenders
shall otherwise expressly consent in writing, it will:

    
    10.1    Reports, Certificates and

Other  Information.  Furnish to the  Administrative  Agent (with  sufficient
copies to provide one to each Lender):

    
    10.1.1    Audit       Report.
Promptly when  available and in any event within 120 days (or if sooner,  on the
date consolidated  statements are required to be delivered to any other creditor
of the  Company)  after the end of each  fiscal year of the  Company,  duplicate
copies of, a consolidated  and a consolidating  balance sheet of the Company and
its Subsidiaries, as at the end of such year, and consolidated and consolidating
statements  of  income,  changes in  shareholders'  equity and cash flows of the
Company  and its  Subsidiaries,  for such  year,  setting  forth in each case in
comparative  form the figures for the previous  fiscal year,  all in  reasonable
detail,   prepared  in  accordance  with  GAAP,  which  consolidated   financial
statements  shall be accompanied by an opinion thereon of independent  certified
public accountants of recognized  national  standing,  which opinion shall state
that such  consolidated  financial  statements  present fairly,  in all material
respects,  the financial position of the companies being reported upon and their
results of operations  and cash flows and have been prepared in conformity  with
GAAP,  and that the  examination  of such  accountants  in connection  with such
consolidated  financial  statements  has 

40

been made in accordance with generally  accepted  auditing  standards,  and that
such audit  provides a reasonable  basis for such opinion in the  circumstances,
and which  consolidating  financial  statements  shall be  certified by a Senior
Financial Officer as fairly presenting,  in all material respects, the financial
position of the companies  being reported on and their results of operations and
cash  flows,   subject  to  changes   resulting   from   year-end   adjustments;
provided  that the delivery within the time period specified above of the
Company's  Annual  Report on Form 10-K for such fiscal year  (together  with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance  with the  requirements  therefor
and filed with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this Section 10.1.1 to provide consolidated
financial
statements so long as such Annual Report on Form 10-K includes the  consolidated
financial  statements  identified in clauses  (i) and (ii)  above;
provided  further that such consolidating financial statements shall show
the elimination of all Unrestricted  Subsidiaries and the resultant consolidated
financial statements of the Company and its Restricted Subsidiaries.

    
    10.1.2    Quarterly  Reports.
Promptly when  available  and in any event within 60 days (or if sooner,  on the
date consolidated  statements are required to be delivered to any other creditor
of the Company)  after the end of each  quarterly  fiscal  period in each fiscal
year of the Company  (other than the last  quarterly  fiscal period of each such
fiscal year),  duplicate  copies of a consolidated  and a consolidating  balance
sheet of the Company and its  Subsidiaries  as at the end of such  quarter,  and
consolidated and  consolidating  statements of income,  changes in shareholders'
equity and cash flows of the Company and its Subsidiaries,  for such quarter and
(in the case of the second  and third  quarters)  for the  portion of the fiscal
year ending with such quarter,  setting forth in each case in  comparative  form
the figures for the  corresponding  periods in the previous  fiscal year, all in
reasonable  detail,  prepared in  accordance  with GAAP  applicable to quarterly
financial statements  generally,  and certified by a Senior Financial Officer as
fairly  presenting,  in all material  respects,  the  financial  position of the
companies  being  reported on and their  results of  operations  and cash flows,
subject to changes  resulting from year-end  adjustments;  provided  that
delivery  within  the time  period  specified  above of copies of the  Company's
Quarterly  Report on Form 10-Q  prepared  in  compliance  with the  requirements
therefor and filed with the Securities and Exchange  Commission  shall be deemed
to  satisfy  the   requirements  of  this   Section   10.1.2  to  provide
consolidated  financial statements so long as such Quarterly Report on Form 10-Q
includes the consolidated  financial statements identified in clauses (i)
and  (ii)  above;  provided   further,   that  such  consolidating
financial statements shall show the elimination of all Unrestricted Subsidiaries
and the  resultant  consolidated  financial  statements  of the  Company and its
Restricted Subsidiaries;.

    
    10.1.3                 Compliance
Certificates.  Together with each set of financial statements delivered to a
Lender pursuant to Sections 10.1.1 and 10.1.2,  a certificate of a
Senior Financial Officer setting forth (a) the information  (including  detailed
calculations)  required  in  order  to  establish  whether  the  Company  was in
compliance  with the  requirements  of  Sections  10.10 and  10.11
during the  quarterly  or annual  period  covered by the  statements  then being
furnished  (including with respect to each such Section,  where applicable,  the
calculations of the maximum or

41

minimum amount,  ratio or
percentage,  as the case may be,  permissible  under the terms of such Sections,
and the  calculation of the amount,  ratio or percentage  then in existence) and
(b) a statement that such officer has reviewed the relevant terms hereof and has
made,  or  caused  to be made,  under  his or her  supervision,  a review of the
transactions  and  conditions  of the  Company  and its  Subsidiaries  from  the
beginning of the quarterly or annual period covered by the statements then being
furnished  to the date of the  certificate  and that such review  shall not have
disclosed  the  existence  during  such  period of any  condition  or event that
constitutes an Event of Default or an Unmatured Event of Default or, if any such
condition  or event  existed or exists  (including  any such event or  condition
resulting  from the failure of the Company or any  Subsidiary to comply with any
Environmental  Law),  specifying the nature and period of existence  thereof and
what  action  the  Company  shall have taken or  proposes  to take with  respect
thereto.

      
    10.1.4    SEC      and      Other
Reports.  Promptly  upon  their  becoming  available,  one  copy of (i) each
financial  statement,  report,  notice or proxy statement sent by the Company or
any Subsidiary to public securities holders generally,  and (ii) each regular or
periodic  report,  each  registration  statement  (without  exhibits  except  as
expressly  requested by such Lender),  and each  prospectus  and all  amendments
thereto filed by the Company or any Subsidiary  with the Securities and Exchange
Commission  and of all  press  releases  and  other  statements  made  available
generally  by the  Company or any  Material  Domestic  Subsidiary  to the public
concerning developments that are Material.

    
    10.1.5     Notice of Default.
Promptly,  and in any  event  within  five  days,  after a  Responsible  Officer
becoming  aware of the  existence of any Event of Default or Unmatured  Event of
Default or that any Person has given any notice or taken any action with respect
to a claimed default  hereunder or that any Person has given any notice or taken
any  action  with  respect  to a  claimed  default  of the type  referred  to in
Section  12.1.5,  a written  notice  specifying  the nature and period of
existence thereof and what action the Company is taking or proposes to take with
respect thereto.

    
    10.1.6    Notice     of     ERISA
Matters.  Promptly, and in any event within fifteen days after a Responsible
Officer  becoming aware of any of the following,  a written notice setting forth
the  nature  thereof  and the  action,  if any,  that  the  Company  or an ERISA
Affiliate  proposes to take with respect thereto,  with respect to any Plan, (i)
any reportable event, as defined in Section 4043(b) of ERISA and the regulations
thereunder,  for which  notice  thereof  has not been  waived  pursuant  to such
regulations as in effect on the date hereof,  which could reasonably be expected
to have a  Material  Adverse  Effect,  (ii) the  taking  by the PBGC of steps to
institute,  or the threatening by the PBGC of the  institution  of,  proceedings
under  Section 4042 of ERISA for the  termination  of, or the  appointment  of a
trustee to  administer,  any Plan,  or the  receipt by the  Company or any ERISA
Affiliate of a notice from a Multiemployer  Plan that such action has been taken
by the PBGC with respect to such  Multiemployer  Plan, which could reasonably be
expected to have a Material Adverse Effect,  or (iii) any event,  transaction or
condition that could result in the incurrence of any liability by the Company or
any ERISA Affiliate  pursuant to Title I

42

 or IV of ERISA or the penalty or excise
tax  provisions  of the Code  relating  to  employee  benefit  plans,  or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA  Affiliate  pursuant  to Title I or IV of ERISA or such  penalty or
excise tax provisions,  if such liability or Lien, taken together with any other
such liabilities or Liens then existing,  could reasonably be expected to have a
Material Adverse Effect.

     
        10.1.7        Notices    from
Governmental Authority. Promptly, and in any event within 30 days of receipt
thereof,  copies of any notice to the Company or any Subsidiary from any federal
or state Governmental  Authority relating to any order, ruling, statute or other
law or regulation that could  reasonably be expected to have a Material  Adverse
Effect.

    
                 10.1.8    Management
Reports.  With  reasonable  promptness,  such  other  data  and  information
relating to the business,  operations,  affairs, financial condition,  assets or
properties of the Company or any of its  Subsidiaries or relating to the ability
of the Company to perform  its  obligations  hereunder  and under the other Loan
Documents as from time to time may be reasonably requested by any Lender.

    
    10.2    Inspections.   Permit
the  representatives  of each Lender to (a) if no Event of Default or  Unmatured
Event of Default then exists,  at the expense of such Lender and upon reasonable
prior  notice to the Company,  to visit the  principal  executive  office of the
Company,  to discuss the  affairs,  finances and accounts of the Company and its
Subsidiaries with the Company's officers,  and (with the consent of the Company,
which  consent  will  not  be  unreasonably  withheld)  its  independent  public
accountants,  and (with the consent of the  Company,  which  consent will not be
unreasonably  withheld) to visit the other offices and properties of the Company
and each Restricted  Subsidiary,  all at such  reasonable  times during business
hours and as often as may be reasonably requested in writing and (b) if an Event
of Default or  Unmatured  Event of Default  then  exists,  at the expense of the
Company to visit and inspect any of the offices or  properties of the Company or
any  Subsidiary,  to examine all their  respective  books of  account,  records,
reports and other papers, to make copies and extracts therefrom,  and to discuss
their respective  affairs,  finances and accounts with their respective officers
and independent public accountants (and by this provision the Company authorizes
said  accountants  to discuss the affairs,  finances and accounts of the Company
and its  Subsidiaries),  all at such  reasonable  times  and as  often as may be
requested.

    
    10.3    Insurance.  Maintain,
and will cause each of the Restricted Subsidiaries to maintain, with financially
sound  and  reputable  insurers,  insurance  with  respect  to their  respective
properties and businesses  against such  casualties and  contingencies,  of such
types, on such terms and in such amounts  (including  deductibles,  co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established  reputations  engaged in the
same or a similar business and similarly situated.

    
    10.4    Compliance with Laws.
Comply,  and cause each of its Subsidiaries to comply with all laws,  ordinances
or governmental rules or regulations to which each of them is subject,

43

 including  Environmental
Laws,  and will  obtain  and  maintain  in effect  all  licenses,  certificates,
permits,  franchises  and other  governmental  authorizations  necessary  to the
ownership of their  respective  properties or to the conduct of their respective
businesses,  in each case to the extent necessary to ensure that  non-compliance
with such laws,  ordinances or governmental  rules or regulations or failures to
obtain or maintain in effect such licenses,  certificates,  permits,  franchises
and  other  governmental  authorizations  could  not,  individually  or  in  the
aggregate, reasonably be expected to have a Material Adverse Effect.

    
    10.5          Maintenance      of
Existence,  etc.  Preserve  and keep in full force and effect its  corporate
existence.  Subject  to  Section  10.13,  the  Company  will at all times
preserve  and keep in full  force and  effect the  corporate  existence  of each
Restricted   Subsidiary   (unless  merged  into  the  Company  or  a  Restricted
Subsidiary)  and all rights and  franchises  of the Company  and the  Restricted
Subsidiaries  unless, in the good faith judgment of the Company, the termination
of or failure to  preserve  and keep in full  force and  effect  such  corporate
existence,  right or franchise could not, individually or in the aggregate, have
a Material Adverse Effect.

     
    10.6          Maintenance      of
Properties. Maintain and keep, and cause each of the Restricted Subsidiaries
to maintain  and keep,  or cause to be  maintained  and kept,  their  respective
properties in good repair, working order and condition (other than ordinary wear
and tear),  so that the  business  carried  on in  connection  therewith  may be
properly  conducted at all times;  provided  that this Section shall not prevent
the Company or any Restricted  Subsidiary from  discontinuing  the operation and
the maintenance of any of its properties if such  discontinuance is desirable in
the  conduct  of  its  business  and  the  Company  has   concluded   that  such
discontinuance  could  not,  individually  or in the  aggregate,  reasonably  be
expected to have a Material Adverse Effect.

    
    10.7    Payment   of  Taxes   and
Claims.  File,  and cause each of its  Subsidiaries  to file all tax returns
required  to be filed in any  jurisdiction  and to pay and  discharge  all taxes
shown to be due and payable on such  returns and all other  taxes,  assessments,
governmental  charges,  or levies  imposed  on them or any of their  properties,
assets,  income or  franchises,  to the extent such taxes and  assessments  have
become due and payable and before they have become delinquent and all claims for
which  sums have  become  due and  payable  that have or might  become a Lien on
properties or assets of the Company or any Subsidiary; provided that neither the
Company nor any Subsidiary  need pay any such tax or assessment or claims if (i)
the amount,  applicability  or validity  thereof is  contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate  proceedings,
and the Company or such Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary, or (ii) the
nonpayment of all such taxes and  assessments  and claims in the aggregate could
not reasonably be expected to have a Material Adverse Effect.

    
    10.8    Security;   Execution  of
Pledge  Agreement and  Subsidiary  Guaranty.  (a) Within five days after the
Company  or any of its  Restricted  Subsidiaries  acquires  a  Material  Foreign
Subsidiary  or  within  five  days  after  the  Company  delivers  consolidating
financial  statements  pursuant  to  Section  10.1  showing  that  any of
Company's existing Subsidiaries has become a

44

    
       Material  Foreign   Subsidiary,   cause  the  Pledged
Securities  of such  Material  Foreign  Subsidiary  to be pledged  pursuant to a
supplement to the Pledge Agreement  (unless a pledge of such Pledged  Securities
(x) is legally  unobtainable  or (y) the consent of a Governmental  Authority is
required in order to obtain such pledge and such  consent has not been  obtained
after the Company's commercially  reasonable efforts to obtain such consent, and
Company delivers an opinion of outside counsel, in form and substance reasonably
satisfactory  to the  Administrative  Agent and its counsel,  to the effect that
such pledge was not legally  obtainable or such consent was not  obtained).  The
Company shall promptly take all actions as may be necessary or desirable to give
to the Collateral  Agent,  for the ratable  benefit of the Lenders and the other
Senior  Secured  Creditors,  a valid and  perfected  first  priority Lien on and
security interest in the Pledged  Securities of such Material Foreign Subsidiary
and shall  promptly  deliver to the  Collateral  Agent (i) a  supplement  to the
Pledge  Agreement  executed by each  Pledgor of the Pledged  Securities  of such
Material Foreign Subsidiary,  (ii) a certificate executed by the secretary or an
assistant  secretary of each Pledgor as to (a) the  incumbency and signatures of
the officers of such Pledgor  executing the supplement to the Pledge  Agreement,
and (b) the fact that the attached resolutions of the Board of Directors of such
Pledgor authorizing the execution, delivery and performance of the supplement to
the Pledge  Agreement are in full force and effect and have not been modified or
rescinded, (iii) at the request of the Administrative Agent, a favorable opinion
of counsel, in form and substance reasonably  satisfactory to the Administrative
Agent and its counsel,  as to (a) the due organization and good standing of such
Pledgor,  (b) the due  authorization,  execution and delivery by such Pledgor of
the supplement to the Pledge Agreement, (c) the enforceability of the supplement
to the Pledge Agreement,  and (d) such other matters as the Required Lenders may
reasonably  request,  all  of the  foregoing  to be  satisfactory  in  form  and
substance to the Administrative Agent and its counsel;  provided that the
opinion  described in this  clause  (iii)  may be given by the  Company's
in-house counsel and may contain reasonable assumptions, if necessary,  relating
to the fact  that  such  counsel  may not be  admitted  to  practice  law in the
applicable   jurisdiction,   and  (iv)  such  other  assurances,   certificates,
documents,   consents  or  opinions  as  the  Required  Lenders  reasonably  may
require.

    
    (b)      Within  five days after the
Company or any of its  Restricted  Subsidiaries  acquires  a  Material  Domestic
Subsidiary  or  within  five  days  after  the  Company  delivers  consolidating
financial  statements  pursuant  to  Section  10.1  showing  that  any of
Company's existing  Subsidiaries has become a Material Domestic  Subsidiary (but
not later  than the time when  such  Material  Domestic  Subsidiary  provides  a
Guaranty or co-obligor  agreement to the lenders party to any Significant Credit
Facility) (x) cause such Material Domestic  Subsidiary to execute and deliver to
the Administrative  Agent a counterpart of the Subsidiary  Guaranty,  and (y) if
the lenders party to such Significant  Credit Facility are not then party to the
Collateral Agency and Intercreditor  Agreement (either directly or through their
agent) cause such  lenders  (either  directly or through  their agent) to become
party to the Collateral  Agency and Intercreditor  Agreement.  The Company shall
promptly deliver to the Administrative  Agent, together with such counterpart of
the  Subsidiary   Guaranty  (i)  certified  copies  of  such  Material  Domestic
Subsidiary's  Articles or  Certificate  of  Incorporation,  together with a good
standing  certificate  from the  Secretary of State of the  jurisdiction  of its
incorporation,  each to be dated a recent  date prior to their  delivery  to the

45

Administrative Agent, (ii) a copy of such Material Domestic Subsidiary's Bylaws,
certified by its corporate secretary or an assistant corporate secretary as of a
recent  date  prior to  their  delivery  to the  Administrative  Agent,  (iii) a
certificate executed by the secretary or an assistant secretary of such Material
Domestic  Subsidiary as to (a) the  incumbency and signatures of the officers of
such Material  Domestic  Subsidiary  executing the counterpart of the Subsidiary
Guaranty,  and (b) the  fact  that  the  attached  resolutions  of the  Board of
Directors  of such  Material  Domestic  Subsidiary  authorizing  the  execution,
delivery and  performance of the  counterpart of the Subsidiary  Guaranty are in
full force and  effect  and have not been  modified  or  rescinded,  (iv) at the
request  of the  Administrative  Agent,  a  favorable  opinion of counsel to the
Company and such Material Domestic Subsidiary,  in form and substance reasonably
satisfactory  to the  Administrative  Agent and its  counsel,  as to (a) the due
organization and good standing of such Material Domestic Subsidiary, (b) the due
authorization,  execution and delivery by such Material  Domestic  Subsidiary of
the  counterpart  of the  Subsidiary  Guaranty,  (c) the  enforceability  of the
counterpart of the Material Domestic  Subsidiary,  and (d) such other matters as
the  Required  Lenders  may  reasonably  request,  all  of the  foregoing  to be
satisfactory in form and substance to the Administrative  Agent and its counsel;
provided, that the opinion described in clause (iv) above may be given by
the  Company's  in-house  counsel and may  contain  reasonable  assumptions,  if
necessary,  relating to the fact that  counsel to the Company and such  Material
Domestic  Subsidiary  may not be  admitted  to  practice  law in the  applicable
jurisdiction, and (v) such other assurances,  certificates,  documents, consents
or opinions as the Required Lenders reasonably may require.

    
    10.9    Nature       of       the
Business.  Not, and not permit any Restricted  Subsidiary,  to engage in any
business if, as a result,  the general nature of the business of the Company and
the Restricted Subsidiaries, taken as a whole, which would then be engaged in by
the Company and the Restricted  Subsidiaries would be substantially changed from
the general nature of the business  engaged in by the Company and the Restricted
Subsidiaries, taken as a whole, on the Signing Date.

    
    10.10    Financial Covenants.

    
    10.10.1      Minimum Consolidated
Net Worth.  Not, at any time, permit  Consolidated Net Worth to be less than
the  sum  of  (i)  $271,935,200,  (ii)  an  aggregate  amount  equal  to  60% of
Consolidated Net Income (but, in each case, only if a positive number) earned in
(a) the six months ended  December 31, 2000,  and (b) each complete  fiscal year
thereafter,  and (iii) 50% of the net  proceeds  realized by the Company and its
Restricted  Subsidiaries from the sale of Equity  Securities  subsequent to June
30, 2000,  excluding  issuances of Equity  Securities  upon exercise of employee
stock  options  or rights  under any  employee  benefit  plans  (excluding  such
exercise by any Person who owns greater than 5% of the Equity  Securities of the
Company),  issuances of Equity Securities in connection with acquisitions by the
Company and its Restricted Subsidiaries, and reissuances of up to $60,000,000 of
treasury securities purchased by the Company after the Signing Date.

46

    
        10.10.2       Minimum   Fixed
Charges  Coverage.  Not permit,  as of the end of each fiscal quarter of the
Company,  the ratio of Consolidated  Income Available for Fixed Charges to Fixed
Charges,  for the period  consisting  of such fiscal  quarter and the  preceding
three fiscal quarters, to be less than 2.75 to 1.0.

    
          10.11    Limitations     on
Indebtedness.  (a) Not  permit  at any  time  (i) the  Leverage  Ratio to be
greater  than  1.85 to 1.0,  or (ii)  Priority  Indebtedness  to  exceed  13% of
Consolidated Net Worth.

    
    (b)      Not,  and  not  permit  any
Restricted  Subsidiary to, incur,  assume or create any  Indebtedness  under any
Significant  Credit Facility  unless each of the lenders under such  Significant
Credit  Facility  immediately  becomes  a party  to the  Collateral  Agency  and
Intercreditor Agreement.

    
    10.12    Liens.
Not, and not permit any of the Restricted Subsidiaries to directly or indirectly
create, incur, assume or permit to exist (upon the happening of a contingency or
otherwise)  any Lien on or with respect to any property or asset  (including any
document  or  instrument  in respect  of goods or  accounts  receivable)  of the
Company or any Restricted  Subsidiary,  whether now owned or hereafter acquired,
or any income or profits  therefrom  (unless the Company makes,  or causes to be
made,  effective provision whereby the Notes will be equally and ratably secured
with any and all other obligations thereby secured, such security to be pursuant
to an agreement reasonably satisfactory to the Required Lenders and, in any such
case,  the Notes shall have the benefit,  to the fullest  extent that,  and with
such priority as, the Administrative Agent and the Lenders may be entitled under
applicable  law,  of any  equitable  Lien  on  such  property),  except  for the
following (which are collectively referred to as "Permitted Liens"):

    
    (a)    Liens  for taxes, assessments
or other  governmental  charges  which are not yet  delinquent or that are being
contested in good faith;

    
    (b)    Liens   incidental   to   the
conduct of  business  or the  ownership  of  properties  and  assets  (including
landlords',  carriers',  warehousemen's,  mechanics'  materialmen's,  and  other
similar Liens) and Liens to secure the performance of bids,  tenders,  leases or
trade contracts, or to secure statutory obligations (including obligations under
workers   compensation,   unemployment   insurance  and  other  social  security
legislation),  surety or appeal  bonds or other Liens  incurred in the  ordinary
course of business and not in connection with the borrowing of money;

    
    (c)        Liens    resulting   from
judgments,  unless such judgments are not, within 60 days,  discharged or stayed
pending  appeal,  or shall not have  been  discharged  within 60 days  after the
expiration of any such stay;

47

    
    (d)      Liens securing Indebtedness
of a Restricted  Subsidiary owed to the Company or to a Wholly-Owned  Restricted
Subsidiary;

    
    (e)    Liens  in  existence  on  the
Signing Date and reflected in Schedule 10.12;

    
    (f)      minor survey exceptions and
the like which do not Materially detract from the value of such property;

    
    (g)          leases,      subleases,
easements, rights of way, restrictions and other similar charges or encumbrances
incidental to the ownership of property or assets or the ordinary conduct of the
Company's or any of the  Restricted  Subsidiaries'  businesses;  provided
that the  aggregate  of such Liens do not  Materially  detract from the value of
such property;

    
    (h)       Liens  (i)   existing   on
property  at the time of its  acquisition  or  construction  by the Company or a
Restricted Subsidiary and not created in contemplation thereof; (ii) on property
created  contemporaneously  with  its  acquisition  or  within  180  days of the
acquisition or completion of construction  or improvement  thereof to secure the
purchase price or cost of  construction or improvement  thereof,  including such
Liens arising under Capital Leases; or (iii) existing on property of a Person at
the time such  Person is  acquired  by,  consolidated  with,  or merged into the
Company or a Restricted  Subsidiary  and not created in  contemplation  thereof;
provided that such Liens shall attach solely to the property  acquired
or constructed and the principal amount of the Indebtedness  secured by the Lien
shall not exceed the  principal  amount of such  Indebtedness  just prior to the
time such Person is consolidated with or merged into the Company or a Restricted
Subsidiary;

    
    (i)    Liens  on  receivables of the
Company or a Restricted  Subsidiary and the related assets of the type specified
in  clauses  (i)  through  (iv)  in the  definition  of "Permitted
Securitization Program" in connection with any Permitted Securitization Program;

    
    (j)    Liens in favor of the Lenders
and the other  Senior  Secured  Creditors  party to the  Collateral  Agency  and
Intercreditor  Agreement in connection with the pledge of the Pledged Securities
of each Material Foreign Subsidiary;

    
    (k)      banker's  Liens and similar
Liens  (including  set-off rights) in respect of bank deposits;  provided
that any such Liens held by parties to the Collateral  Agency and  Intercreditor
Agreement  will  be  governed  by and  subject  to  the  Collateral  Agency  and
Intercreditor Agreement;

    
    (l)      Liens in  favor of  customs
and revenue  authorities  as a matter of law to secure  payment of custom duties
and in connection  with the  importation of goods in the ordinary  course of the
Company's and its Subsidiaries' business;

    
    (m)    
any Lien renewing, extending or replacing Liens permitted by clauses (e),
(h),
 and

48

(i)  of  this
Section 10.12; provided that (i) the principal amount of the Indebtedness
secured is neither  increased  nor the  maturity  thereof  changed to an earlier
date,  (ii)  such  Lien  is  not  extended  to any  other  property,  and  (iii)
immediately after such extension,  renewal or refunding,  no Event of Default or
Unmatured Event of Default would exist; and

    
    (n)        other   Liens    securing
Indebtedness not otherwise  permitted by clauses (a) through (m) of this Section
10.12;  provided that Priority  Indebtedness  shall not, at any time,  exceed an
amount equal to 13% of Consolidated Net Worth.

 Any  Lien  originally
incurred in compliance with clause (n) of this Section  10.12 may
be  renewed,  extended  or  replaced  so long as the  conditions  set  forth  in
clauses  (i), (ii) and (iii) of clause (m) of this  Section  10.12
are satisfied.

    
    10.13    Mergers, Consolidations,
Sales. (a) Not, and not permit any Restricted Subsidiary to consolidate with
or merge with any other Person  unless  immediately  after giving  effect to any
consolidation  or merger no Event of Default or Ummatured Event of Default would
exist and:

    
    (i)  in the  case  of a  consolidation  or  merger  of a
Restricted  Subsidiary,  (x) the Company or another Restricted Subsidiary is the
surviving or continuing corporation, (y) the surviving or continuing corporation
is or immediately becomes a Restricted Subsidiary,  or (z) such consolidation or
merger, if considered as the sale of the assets of such Restricted Subsidiary to
such  other  Person,  would  be  permitted  by  Section   10.11(b);   and

    
    (ii)
in the case of a consolidation or merger of the Company, the successor
corporation or surviving corporation which results from such consolidation or
merger (the “surviving corporation”), if not the Company, (A) is a
solvent United States corporation, (B) executes and delivers to each Lender its
assumption of (x) the due and punctual payment of the principal of and premium,
if any, and interest on the Loans, and (y) the due and punctual performance and
observation of all of the covenants in this Agreement, the Collateral Documents
and each other Loan Document to be performed or observed by the Company, and (C)
furnishes to each Lender an opinion of counsel, reasonably satisfactory to the
Required Lenders, to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles. 

    
    (b)      Not sell, lease (as lessor)
or  otherwise  transfer  all or  substantially  all of its  assets  in a  single
transaction or series of  transactions  to any Person unless  immediately  after
giving  effect  thereto no Event of Default or Unmatured  Event of Default would
exist and:

49

    
    (i)    the  successor corporation to
which all or substantially all of the Company's assets have been sold, leased or
transferred  (the  "successor  corporation")  is a solvent  United States
corporation, and

    
    (ii)
the successor corporation executes and delivers to each Lender its assumption of
the due and punctual payment of the principal of and premium, if any, and
interest on the Loans, and the due and punctual performance and observation of
all of the covenants in this Agreement, the Collateral Documents and each other
Loan Document to be performed or observed by the Company and shall furnish to
the Administrative Agent an opinion of counsel, reasonably satisfactory to the
Required Lenders, to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of such successor corporation enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles. 

    
      No  such  conveyance,  transfer  or  lease  of  all or
substantially  all of the  assets  of the  Company  shall  have  the  effect  of
releasing the Company or any successor  corporation that shall  theretofore have
become such in the manner  prescribed  in this Section  10.13 from its liability
under this Agreement or the other Loan Documents.

    
    (c)      Not,  and  not  permit  any
Restricted  Subsidiary  to,  sell,  lease  (as  lessor),  transfer,  abandon  or
otherwise  dispose  of  assets  to  any  Person;  provided  that  the  foregoing
restrictions do not apply to:

    
    (i)     the sale, lease, transfer or
other  disposition  of assets of the Company to a Restricted  Subsidiary or of a
Restricted Subsidiary to the Company or another Restricted Subsidiary;

    
    (ii)    
the sale in the ordinary course of business of inventory held for sale, or
equipment, fixtures, supplies or materials that are no longer required in the
operation of the business of the Company or any Restricted Subsidiary or are
obsolete; 

   
     (iii)    
the sale of property of the Company or any Restricted Subsidiary and the
Company’s or any Restricted Subsidiary’s subsequent lease, as lessee,
of the same property, within 270 days following the acquisition or construction
of such property; 

    
    (iv)    
the sale of assets of the Company or any Restricted Subsidiary for cash or other
property to a Person or Persons (other than an Affiliate) if (A) such assets
(valued at net book value) do not constitute a “substantial part” of
the assets of the Company and the Restricted Subsidiaries, (B) in the opinion of
a Responsible Officer of the Company, the sale is for fair value and is in the
best interests of the Company, and (C) immediately after giving effect to the
transaction, no Event of Default or Unmatured Event of Default would exist; or

50

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]