Document:

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                                                                     Exhibit 4.2

                            STOCK PURCHASE AGREEMENT

              THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
13th day of December, 2002, by and between Alkermes, Inc., a Pennsylvania
corporation ("Alkermes"), and Eli Lilly and Company, an Indiana corporation
("Lilly").

              WHEREAS, Lilly desires to purchase from Alkermes, and Alkermes
desires to sell to Lilly, certain shares of Alkermes' 2002 Redeemable
Convertible Preferred Stock, on the terms and conditions set forth in this
Agreement; and

              WHEREAS, Lilly and Alkermes desire to agree to certain put, call
and registration rights with respect to the securities to be sold hereunder.

              NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, the parties agree as
follows:

       1.     PURCHASE AND SALE OF STOCK.

              1.1    SALE AND ISSUANCE OF PREFERRED STOCK. Subject to the terms
and conditions of this Agreement, Lilly agrees to purchase and Alkermes agrees
to issue and sell to Lilly 3,000 shares (the "Shares") of Alkermes' 2002
Redeemable Convertible Preferred Stock, $.01 par value per share (the "Preferred
Stock"), for a price per Share of $10,000 and an aggregate purchase price of
$30,000,000 (the "Purchase Price").

              1.2    CLOSING. The closing for the purchase and sale of the
Shares (the "Closing") shall take place at the offices of Alkermes, 88 Cambridge
Street, Cambridge, MA 02139-4136, 10:00 a.m. Massachusetts time, on the third
business day after the date on which the conditions set forth in Articles 5 and
6 shall be satisfied or duly waived, or if Alkermes and Lilly mutually agree on
a different date, the date upon which they have mutually agreed (the "Closing
Date"). At the Closing, Alkermes shall deliver a certificate registered in the
name of Lilly representing the Shares, against delivery to Alkermes by Lilly of
the Purchase Price by wire transfer in immediately available funds to an
Alkermes' bank account specified in written wire transfer instructions supplied
to Lilly by Alkermes at least two business days prior to the Closing.

       2.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF ALKERMES. Alkermes
hereby represents and warrants to Lilly that:

              2.1    CORPORATE STATUS. Alkermes is a corporation duly
incorporated and validly subsisting under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority under its Third
Amended and Restated Articles of Incorporation, as amended (the "Articles"), and
bylaws, as amended, to own and operate its properties and assets and to carry on
its business as now conducted.

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              2.2    AUTHORIZATION. Alkermes has the corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance by Alkermes of this Agreement and the issuance and
delivery of the Shares have been duly authorized by all necessary corporate
action on the part of Alkermes. No approval of the shareholders of Alkermes is
required to enter into this Agreement or to issue the Shares. Alkermes is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a material adverse effect on its
business, properties or financial condition. The Statement With Respect to
Shares governing the terms of the Shares (the "Preferred Share Statement") has
been duly authorized by all necessary corporate action on the part of Alkermes
and has been filed with the Secretary of State of the Commonwealth of
Pennsylvania. This Agreement constitutes a valid and legally binding obligation
of Alkermes, enforceable against Alkermes in accordance with its terms, except
as such may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights in general, by general principles of
equity.

              2.3    VALID ISSUANCE.

                     (a)    The Shares, when issued, sold, delivered and paid
for in accordance with the terms hereof, will be duly and validly issued, fully
paid and nonassessable, free of all liens and charges and not subject to any
preemptive rights, and will not be subject to restrictions on transfer except as
provided by Sections 3.5, 3.8, 3.9 and 3.10; and

                     (b)    Shares of Alkermes' common stock (the "Conversion
Shares") have been duly authorized for issuance upon conversion of the Shares
and, when issued and delivered in accordance with the terms of the Preferred
Share Statement, will be duly and validly issued, fully paid and nonassessable,
free of all liens and charges and not subject to any preemptive rights, and will
not be subject to any restrictions on transfer except as provided by Sections
3.8, 3.9 and 3.10, and based in part upon the representations of Lilly in this
Agreement, will be issued in compliance with all applicable federal and state
securities laws. Three million three hundred thousand (3,300,000) shares of
Alkermes' common stock have been reserved for issuance upon conversion of the
Shares. Within the forty-five (45) days prior to the anticipated file date for
the first New Drug Application filed with the U.S. Food and Drug Administration
of a pulmonary insulin product developed under the Development and License
Agreement by and between Lilly and Advanced Inhalation Research, Inc. dated as
of April 1, 2001, as amended (the "AIR/Lilly Agreement"), and as soon as
practicable and in any event within ten (10) days following the occurrence of
any other event that would permit or require conversion of the Shares, if there
are then any Shares outstanding, Alkermes shall ensure that at least that number
of shares of Alkermes' common stock be reserved for issuance upon conversion of
the Shares equal to the quotient of the liquidation value of the then
outstanding Shares divided by then current market price of a share of Alkermes'
common stock but not exceeding 12,806,982 shares.

              2.4    GOVERNMENT CONSENTS.

                     (a)    Except for notices required or permitted to be filed
with certain state and federal securities commissions after the Closing, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal,

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state or local governmental authority is required on the part of Alkermes, nor
is any waiver, consent or approval of any third party required to be obtained by
Alkermes, in connection with Alkermes' valid execution, delivery or performance
of this Agreement or the issuance, sale of the Shares by Alkermes hereunder or
the conversion of the Shares.

                     (b)    Alkermes shall make any filings required to be made
under applicable state securities laws in connection with the transactions
contemplated by this Agreement, within the applicable stipulated statutory
period before or after the sale of the Shares hereunder, and shall have obtained
such consents or approvals to issue the Shares as may be required pursuant to
such laws.

              2.5    LITIGATION. As of the date of this Agreement, there is no
action, suit, proceeding or investigation pending or currently threatened
against Alkermes which questions the validity of this Agreement or the right of
Alkermes to enter into it or to consummate the transactions contemplated hereby
or which relates in any way to the AIR/Lilly Agreement or the Amendment thereto
attached as Exhibit A (the "Amendment"). Except as disclosed in the SEC Filings
(as defined in Section 2.7), as of the date of this Agreement there is no
action, suit, proceeding or investigation pending or currently threatened which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties, operations,
financial condition, income or, to the best of Alkermes' knowledge, business
prospects of Alkermes and its Subsidiaries (as defined in Section 2.10), taken
as a whole, as presently being conducted.

              2.6    COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery
and performance of this Agreement by Alkermes and the consummation by Alkermes
of the transactions contemplated hereby will not conflict with, or result in any
violation of, or constitute, with or without the passage of time and giving of
notice, either a default under any provision of its Articles or bylaws or of any
instrument, judgment, order, writ, decree or material contract or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
Alkermes. Alkermes is not in violation of its Articles or bylaws, or in default
in the performance or observance of any material provision of any material
instrument or contract to which it is a party or by which it is bound. No third
party has any pre-emptive rights, or rights of first refusal or first
opportunity or similar rights to purchase, or to offer to purchase, all or any
part of the Shares.

              2.7    DISCLOSURE. Alkermes has made available to Lilly (i)
Alkermes' Annual Report on Form 10-K (the "2002 10-K") and Alkermes' Amendment
No.1 to the Annual Report filed on Form 10-K/A, for the fiscal year ended March
31, 2002 (together, the "2002 Annual Report"), as filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); (ii) Alkermes' Proxy Statement for its 2002
Annual Meeting of Shareholders; (iii) Alkermes' Quarterly Report on Form 10-Q
(the "6-30-02 10-Q") and Alkermes' Amendment No. 1 to the Quarterly Report filed
on Form 10-Q/A for the fiscal quarter ended June 30, 2002 and Alkermes'
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002
(the "9-30-02 10-Q," and collectively, the "Quarterly Reports"), as filed with
the SEC pursuant to the Exchange Act, (iv) Alkermes' Current Reports on Form 8-K
dated April 2, 2002, July 1, 2002 and August 27, 2002 (collectively, the
"Current Reports"), and (v) all other reports as filed by Alkermes with the SEC

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since March 31, 2002 (the documents referred to in clauses (i)-(v) above being
referred to hereinafter, collectively, as the "SEC Filings"). As of their
respective dates, the SEC Filings (including all documents incorporated by
reference therein) do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except, in the case of any SEC Filing, any statement or
omission therein which has been corrected or otherwise disclosed or updated in a
subsequent SEC Filing. Since March 31, 2002, Alkermes has timely filed with the
SEC all reports, documents, definitive proxy statements and all other filings
required to be filed with the SEC under the rules and regulations of the SEC,
and all such reports, documents, definitive proxy statements and other filings
complied in all material respects with all applicable requirements of the
Exchange Act, except for the deficiencies in the 2002 10-K and the 6-30-02 10-Q,
which were remedied by the Amendments described above. The audited consolidated
financial statements of Alkermes included or incorporated by reference in the
2002 Annual Report and the unaudited consolidated financial statements of
Alkermes contained in the Quarterly Reports have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis throughout the periods indicated ("GAAP") and with each other,
except as may be indicated therein or in the notes thereto and except that the
unaudited financial statements may not contain all footnotes and adjustments
required by GAAP, and fairly present the financial position of Alkermes and its
consolidated subsidiaries as at the dates thereof and the results of its
operations and statements of cash flows for the periods then ended, subject, in
the case of the unaudited interim consolidated financial statements, to normal
year-end adjustments, and recognizing that the results of operations for interim
periods are not necessarily indicative of Alkermes' operations for any other
interim period or full fiscal year.

              2.8    CHANGES. Between September 30, 2002 and the date of this
Agreement, except as disclosed in the SEC Filings, and except for the changes
resulting from the exchange offer and sale of certain debt as described in
Alkermes' Registration Statement on Form S-4 filed November 6, 2002 and as
amended by the Form S-1/S-4/A filed on November 26, 2002, there has not been:

                     (a)    any change in the assets, liabilities, financial
condition, operating results or, to the best of Alkermes' knowledge, prospects
of Alkermes and its Subsidiaries taken as a whole from that reflected in the
9-30-02 10-Q, except recurring operating losses and other changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse;

                     (b)    any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties or financial condition of Alkermes and its Subsidiaries taken as a
whole (and except that Alkermes expects to continue to incur substantial
operating losses, which may be material);

                     (c)    any waiver or compromise by Alkermes of a material
right or of a material debt owed to it;

                     (d)    any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by Alkermes, except in the ordinary
course of business or which is not

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material to the business, properties or financial condition of Alkermes and its
Subsidiaries taken as a whole (as such business is presently conducted);

                     (e)    any change to a material contract or arrangement by
which Alkermes or any of its assets is bound or subject, or any breach or waiver
of any breach of or under any such contract or amendment (or the occurrence of
any event which would, as result of the passage of time, become or result in
such a breach or waiver);

                     (f)    any sale, assignment or transfer to a third party
that is not an Affiliate (as hereafter defined) of any material patents,
trademarks, copyrights, trade secrets or other intangible assets for
compensation which is less than fair value;

                     (g)    any mortgage, pledge, transfer of a security
interest in, or lien, created by Alkermes, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable, except for
a $6 million sale-leaseback transaction with GE Capital Corporation involving
certain equipment;

                     (h)    any declaration, setting aside or payment or other
distribution in respect of any of Alkermes' capital stock;

                     (i)    any receipt by or on behalf of Alkermes of any
notice from the United States Food and Drug Administration, the United States or
any foreign Patent Office, or any governmental agency or third party of any
claim or adverse occurrence related to any product in development, patent or
trademark of Alkermes; any negative result of any clinical trials conducted or
being conducted by or on behalf of Alkermes; or the notice of cancellation,
termination or material reduction in funding of any client project or program,
except for the termination at the end of November 2002 of two out of four fields
in the development and license agreement between AIR and Glaxo Group Limited; or

                     (j)    any event or condition of any type that has (or will
as a result of the passage of time) materially and adversely affected (or
affect) the business, properties or financial condition or, to the best of
Alkermes' knowledge, the business prospects of Alkermes and its Subsidiaries
taken as a whole.

For purposes of this Agreement the term "Affiliate" means any individual or
entity directly or indirectly controlling, controlled by or under common control
with, a party to this Agreement. Without limiting the foregoing, the direct or
indirect ownership of 50% or more of the outstanding voting securities of an
entity or the right to receive 50% or more of the profits or earnings of an
entity, shall be deemed to constitute control.

              2.9    CAPITALIZATION; OPTIONS AND WARRANTS. Alkermes is
authorized to issue 160,000,000 shares of common stock, $0.01 par value per
share ("Common Stock"), of which 64,356,696 shares were issued and outstanding
as of November 8, 2002, 450,000 shares of Non-Voting Common Stock, $0.01 par
value per share, 382,632 of which are issued and outstanding, 1,550,000 shares
of capital stock, $0.01 par value, issuable in series, none of which is issued
or outstanding, 2,997,000 shares of preferred stock, $0.01 par value per share,
issuable in series, none of which is issued or outstanding, 3,000 shares of 2002
Redeemable Convertible Preferred Stock, none of which is issued or outstanding.
As of November 8, 2002, except for an aggregate

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of 2,952,030 shares of Common Stock reserved for issuance upon conversion of the
outstanding 3 3/4% Convertible Notes due 2007, 15,913,875 shares of Common Stock
authorized for issuance (but unissued) under various stock option and stock
award plans, 382,632 shares of Common Stock to be issued upon conversion of
outstanding shares of Non-Voting Common Stock, there is no outstanding right,
subscription, warrant, call, preemptive right, option or other agreement of any
kind to purchase or otherwise to receive from Alkermes any shares of the capital
stock or any other security of Alkermes and there is no outstanding security of
any kind convertible into or exchangeable for such capital stock.

              2.10   SUBSIDIARIES. Alkermes' only subsidiaries are Alkermes
Controlled Therapeutics, Inc., Alkermes Controlled Therapeutics Inc. II,
Advanced Inhalation Research, Inc., Alkermes Development Corporation II,
Alkermes Europe, Ltd., and Alkermes Investments, Inc. (each a "Subsidiary" and
collectively the "Subsidiaries"). Each United States Subsidiary has been duly
incorporated under the laws of its respective jurisdiction of incorporation.
Each Subsidiary of Alkermes has full corporate power and authority to own or
lease its properties and conduct its business as presently conducted, and is
duly qualified to transact business in all jurisdictions in which the character
of the property owned or leased or the nature of the business transacted by it
requires such qualification (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, operations,
financial condition or income of Alkermes and its Subsidiaries, taken as a
whole. Alkermes owns 100% of the shares of each of its Subsidiaries, free and
clear of any charges or encumbrances, and there are no outstanding options,
warrants, or rights to purchase any securities of any of the Subsidiaries.

              2.11   INTELLECTUAL PROPERTY. Each of Alkermes and its
Subsidiaries owns or possesses adequate rights to use all patents, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names and copyrights which are necessary to conduct its respective business as
described in the SEC Filings. The patents, patent rights, trademarks, service
marks, trade names or copyrights described in the SEC Filings have been
maintained except those for which a lapse would not result in a Material Adverse
Change that is not otherwise disclosed in the SEC Filings; Alkermes has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of Alkermes by others with respect to any valid patent,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names or copyrights that is not disclosed in the SEC Filings; and Alkermes
has not received any notice of, and has no knowledge of, any infringement of or
conflict with asserted rights of others with respect to any valid patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a Material Adverse Effect
that is not described in the SEC Filings. There is no claim being made against
Alkermes regarding patents, patent rights or licenses, inventions, collaborative
research, trade secrets, know-how, trademarks, service marks, trade names or
copyrights that is not described in the SEC Filings. Alkermes and its
subsidiaries do not in the conduct of their businesses as now or proposed to be
conducted infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to Alkermes or any of its
subsidiaries, which such infringement or conflict is reasonably likely to result
in a Material Adverse Change that is not described in the SEC Filings.

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       3.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF LILLY. Lilly hereby
represents and warrants to Alkermes that:

              3.1    CORPORATE STATUS. Lilly is a corporation duly incorporated
and validly existing and in good standing under the laws of the State of
Indiana.

              3.2    AUTHORIZATION. Lilly has the corporate power and authority
to execute and deliver this Agreement and perform its obligations hereunder. The
execution, delivery and performance of this Agreement by Lilly has been duly
authorized by all necessary corporate action on the part of Lilly. This
Agreement constitutes Lilly's valid and legally binding obligation, enforceable
against Lilly in accordance with its terms, except as such may be limited by
bankruptcy, insolvency or other similar laws effecting the enforcement of
creditors' rights in general or by general principles of equity.

              3.3    GOVERNMENT CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Lilly, nor is any waiver, consent or approval of any third party
required to be obtained by Lilly, in connection with Lilly's valid execution,
delivery or performance of its obligations under this Agreement, the purchase of
the Shares by Lilly hereunder or the conversion of the Shares.

              3.4    COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery
and performance of this Agreement by Lilly and the consummation by Lilly of the
transactions contemplated hereby will not conflict with, or result in any
violation of, or constitute, with or without the passage of time and giving of
notice, either a default under any provision of its Certificate of Incorporation
or bylaws or of any instrument, judgment, order, writ, decree or material
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of Lilly.

              3.5    PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares will be
acquired for Lilly's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and Lilly has no present
intention of selling, granting any participation in, or otherwise distributing
the same except in compliance with the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), (unless an exception
therefrom is available). Lilly does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares.

              3.6    INVESTMENT EXPERIENCE. Lilly acknowledges that it can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Shares. Lilly also represents it has not been
organized for the purpose of acquiring the Shares and that Lilly is an
"accredited investor" as that term is defined in Regulation D under the 1933
Act.

              3.7    INFORMATION PROVIDED. Lilly has had full opportunity to ask
any and all questions of the officers of Alkermes and to examine certain
documents of Alkermes, including the 2002 Annual Report and subsequent Quarterly
Reports and its Current Reports.

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              3.8    RESTRICTED SECURITIES. Lilly understands that the Shares
and the Conversion Shares have not been registered under the 1933 Act and
therefore are "restricted securities" under the federal securities laws and that
under such laws and applicable regulations, such Shares and Conversion Shares
may be resold without registration under the 1933 Act only in certain limited
circumstances. In this connection, Lilly represents that it is familiar with SEC
Rule 144 promulgated under the 1933 Act ("Rule 144"), as presently in effect,
and understands the resale limitations imposed thereby and by the 1933 Act.

              3.9    LIMITATIONS ON DISPOSITION. Lilly shall not make any direct
or indirect disposition of all or any portion of the Shares except to an
Affiliate of Lilly and only if such Affiliate agrees in writing to all of
Lilly's obligations under this Agreement and Lilly remains obligated on all such
obligations. Furthermore, Lilly shall not make any disposition of all or any
portion of the Conversion Shares unless and until:

                     (a)    There is then in effect a registration statement
under the 1933 Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or

                     (b)    Lilly shall have furnished Alkermes with an opinion
of counsel, reasonably satisfactory to Alkermes, that such disposition will not
require registration of such Conversion Shares under the 1933 Act because such
disposition is made in accordance with Rule 144 or otherwise.

              3.10   LEGEND. It is understood that the certificates evidencing
the Shares and the Conversion Shares may bear the following legend: "The
Securities evidenced by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are "restricted securities"
as defined in Rule 144 promulgated under the Act. The securities may not be sold
or offered for sale or otherwise distributed except (i) pursuant to an effective
registration statement for the securities under the Act; (ii) in compliance with
Rule 144; or (iii) after receipt of an opinion of counsel reasonably
satisfactory to Alkermes that such registration or compliance is not required as
to said sale, offer or distribution." Alkermes shall be obligated to issue or
cause to be issued promptly unlegended certificates at the request of Lilly if
Lilly shall have obtained an opinion of counsel (which counsel may be counsel to
Alkermes) acceptable to Alkermes to the effect that the securities proposed to
be disposed of may be lawfully so disposed of without registration,
qualification or legend. It is also understood that the certificates evidencing
the Shares may bear the following legend: "The securities evidenced by this
certificate are not transferable in accordance with the terms of a Stock
Purchase Agreement, dated December 13, 2002, on file at the offices of Alkermes,
Inc."

              3.11   VOTING AGREEMENT. In the event that Alkermes seeks to
create, authorize or issue, or reclassify any authorized stock of Alkermes into,
or increase the authorized amount of, any class or series of Alkermes' capital
stock ranking senior to, on parity with, or junior to the 2002 Preferred Stock
as to dividends or as to distributions of assets upon liquidation, dissolution
or winding up of Alkermes, whether voluntary or involuntary, or any obligation
or security convertible into shares of such a class or series, and law would
require the affirmative vote or consent of Lilly as a holder of the 2002
Preferred Stock in order to do so, then Lilly hereby agrees that it will vote in
favor of or consent to such action; except that the foregoing

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voting agreement shall not apply to any proposed class or series of Alkermes'
capital stock that (a) would rank senior to the 2002 Preferred Stock, (b) is
proposed to be issued to all holders of Alkermes' common stock and not to
holder(s) of 2002 Preferred Stock and (c) is not related to a shareholder rights
plan.

       4.     PURCHASE OF SHARES BY ALKERMES.

              4.1    AT THE OPTION OF ALKERMES (CALL).

                     (a)    CALL OPTION; CONSIDERATION. Alkermes, at its option,
may purchase the Shares from Lilly, in whole or in part, at any time or from
time to time on or after January 15, 2005, after determination by the Board of
Directors under Section 1551 of the Pennsylvania Business Corporation Law of
1988, or any successor section ("Section 1551") that the distribution in
connection with such purchase is permitted and subject to the notice provisions
described below, in consideration of a reduction in the royalty rate on the
Launch Product as specified in the AIR/Lilly Agreement; provided that the Shares
shall not be purchased by Alkermes if Lilly, acting in good faith, does not
approve such purchase in writing.

                     (b)    CALL PURCHASE DATE AND CALL NOTICE. In case Alkermes
shall desire to exercise the right to purchase the Shares, in whole or in part,
pursuant to this Section 4.1, it shall fix a date for purchase (the "Call
Purchase Date"). In the case of any purchase under this Section 4.1, Alkermes
will notify (a "Call Notice"), at least five (5) Business Days prior to the Call
Purchase Date, Lilly at its last address and facsimile number as the same appear
on Alkermes' stock records. Such Call Notice shall be sent by facsimile and by
overnight courier. The Call Notice, if sent in the manner herein provided, shall
be conclusively presumed to have been duly given, whether or not Lilly actually
receives such Call Notice. Each such Call Notice shall specify the number of
Shares to be purchased, the Call Purchase Date, the consideration to be paid
therefor, and that such consideration will be paid upon presentation and
surrender of the certificate(s) representing such Shares.

                     (c)    APPROVAL BY LILLY; EFFECTIVE TIME OF CALL PURCHASE.
At least two (2) Business Days prior to the Call Purchase Date, Lilly shall
notify Alkermes in writing that it either approves or disapproves of such
purchase. If the purchase is approved, then: (A) the Shares called for purchase
shall be deemed to be purchased on the Call Purchase Date and the holder of such
Shares shall have no further rights after the Call Purchase Date as a holder of
the shares of 2002 Preferred Stock so purchased and (B) Alkermes shall
immediately so notify the Transfer Agent and the holder of such Shares shall
submit to the Transfer Agent all certificates representing the Shares called for
purchase on or as soon as practicable following the Call Purchase Date. If the
purchase is disapproved, then the Shares called for purchase by that Call Notice
shall not be purchased but shall remain outstanding and Alkermes may not again
call any Shares for purchase under this Section 4.1 in the same calendar year as
the date fixed for purchase in such Call Notice. In the event that Lilly fails
to notify Alkermes of its approval or disapproval of the purchase within the
period set forth above, such holder shall be deemed to have disapproved such
purchase.

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              4.2    AT THE OPTION OF LILLY (PUT).

                     (a)    PUT OPTION; CONSIDERATION. Lilly shall have the
right to require Alkermes to purchase the Shares held by Lilly, in whole or in
part, at any time or from time to time, subject to the notice provisions and
provisions for partial purchase described below, in consideration of a reduction
in the royalty rate on the Launch Product as specified in the AIR/Lilly
Agreement; provided, however, that no Shares will be purchased unless and until
the Board of Directors determines that the distribution in connection with such
purchase is permitted under Section 1551.

                     (b)    PUT PURCHASE DATE; PUT NOTICE. In case Lilly shall
desire to exercise the right to require purchase of the Shares held by Lilly, in
whole or in part, pursuant to this Section 4.2, it shall fix a date for purchase
(the "Put Purchase Date") and notify (a "Put Notice"), at least twenty-five (25)
Business Days and not more than forty-five (45) Business Days before the Put
Purchase Date, Alkermes and the Transfer Agent. Such Put Notice shall be sent by
facsimile and by overnight courier. Each Put Notice shall specify the number of
Shares to be purchased, the Put Purchase Date and the consideration to be paid.

                     (c)    The Board of Directors shall act in good faith in
making its Section 1551 determination, using whatever reasonable method is
permitted under Section 1551 that will allow the purchase of the Shares put to
Alkermes under this Section 4.2. Lilly shall have the right, but not the
obligation, to make a presentation, itself or through experts hired by and at
the expense of Lilly, to the Board of Directors as to any reasonable method
permitted under Section 1551 that the Board of Directors could use to determine
that the purchase of the Shares put to Alkermes is permitted by Section 1551. In
the event the Board of Directors determines that the distribution in connection
with the purchase set forth in a Put Notice is not permitted under Section 1551,
(which determination shall be made only after receipt of a reasoned written
opinion of counsel for Alkermes, a copy of which shall be provided to Lilly)
Alkermes shall purchase as many of the Shares covered by the Put Notice as would
be permitted. On a quarterly basis thereafter until all Shares to be purchased
under this Section 4.2 have been purchased, the Board of Directors shall
determine whether any additional Shares to be purchased under this Section 4.2
may be purchased under Section 1551 and, if so, such additional Shares shall be
purchased on the date of the Board determination (a "1551 Purchase Date") for
the same amount of reduction in royalty as if such Shares were purchased when
first put to Alkermes.

                     (d)    EFFECTIVE TIME OF PURCHASE. The Shares to be
purchased under this Section 4.2 that the Board of Directors determines may be
purchased under Section 1551 shall be deemed to be purchased on the Put Purchase
Date or, if later, on the 1551 Purchase Date and, after such date, the holder of
such shares shall have no further rights as a holder of the Shares so purchased.
The holder of the Shares to be purchased under this Section 4.2 shall submit to
the Transfer Agent all certificates representing such shares on or as soon as
practicable following the Put Purchase Date or the 1551 Purchase Date.

                     (e)    CONVERSION BEFORE PUT PURCHASE DATE. After receiving
the Put Notice and before the Put Purchase Date or, if later, the 1551 Purchase
Date, Alkermes may not exercise its right to (i) convert the Shares to be
purchased according to such Put Notice in accordance with Section 6(a) of the
Preferred Stock Terms or (ii) call for purchase of the Shares

<PAGE>

to be purchased according to such Put Notice in accordance with Section 4.1. If
an Automatic Conversion occurs pursuant to Section 6(c) of the Preferred Share
Statement after Alkermes' receipt of a Put Notice but before the 1551 Purchase
Date, then Lilly may at its option, and upon written notice to Alkermes within
ten (10) days of conversion, either (i) withdraw the Put Notice and retain the
shares of common stock received upon such conversion, or (ii) hold the shares of
common stock received upon conversion of the Shares covered by the Put Notice
until the 1551 Purchase Date at which time Alkermes shall purchase such shares
of common stock for the same amount of reduction in royalty as if such Shares
were being purchased when first put to Alkermes; provided that if Lilly sells or
transfers any of such shares of common stock, there will be no purchase by
Alkermes and no reduction in royalty for such shares.

              4.3    If fewer than all the Shares represented by any certificate
are purchased, a new certificate shall be issued representing the Shares not
purchased without cost to the holder thereof. If a portion of a Share is
purchased, then Alkermes will issue a certificate representing a fractional
Share evidencing the portion of such Share not so purchased.

       5.     CONDITIONS OF LILLY'S OBLIGATIONS.

              5.1    CONDITIONS OF LILLY'S OBLIGATIONS AT THE CLOSING. The
obligations of Lilly to Alkermes at the Closing are subject to the fulfillment
on or before the Closing of each of the following conditions by Alkermes:

                     (a)    REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Alkermes contained in Section 2 hereof shall be true and
correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except for representations and warranties that speak as of a specific date or
time other than the Closing Date (which need only be true and correct in all
material respects as of such date and time).

                     (b)    PERFORMANCE. Alkermes shall have performed and
complied with all covenants, agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.

                     (c)    COMPLIANCE CERTIFICATE. The Chief Executive Officer,
the President or a Vice President of Alkermes shall deliver to Lilly at the
Closing a certificate, in the form attached as Exhibit B hereto, certifying that
the conditions specified in Sections 5.1(a) and (b) hereof have been fulfilled.

                     (d)    GOVERNMENTAL APPROVALS. Any required governmental
approvals shall have been obtained by Alkermes.

                     (e)    EXECUTION OF AMENDMENT TO DEVELOPMENT AND LICENSE
AGREEMENT. Advanced Inhalation Research, Inc. shall have executed the Amendment
attached hereto as Exhibit A.

                     (f)    TENDER OF SHARES. Alkermes shall have issued and
tendered for delivery to Lilly a certificate representing the Shares, subject
only to delivery of the Purchase Price by Lilly in accordance with Section 1.2.

<PAGE>

                     (g)    FILING OF PREFERRED SHARE STATEMENT. Alkermes shall
have filed the Preferred Share Statement with the Secretary of State of the
Commonwealth of Pennsylvania, and provided Lilly with appropriate evidence
thereof.

                     (h)    OPINION. Lilly shall have received an opinion of
Ballard Spahr Andrews & Ingersoll, LLP, counsel to Alkermes, in substantially
the form attached hereto as Exhibit C.

       6.     CONDITIONS OF ALKERMES' OBLIGATIONS.

              6.1    CONDITIONS OF ALKERMES' OBLIGATIONS AT THE CLOSING. The
obligations of Alkermes to Lilly at the Closing are subject to the fulfillment
on or before the Closing of each of the following conditions by Lilly:

                     (a)    REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Lilly contained in Section 3 hereof shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.

                     (b)    PERFORMANCE. Lilly shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.

                     (c)    COMPLIANCE CERTIFICATE. The President or a Vice
President of Lilly shall deliver to Alkermes at the Closing a certificate, in
the form attached as Exhibit D hereto, certifying that the conditions specified
in Sections 6.1(a) and (b) hereof have been fulfilled.

                     (d)    GOVERNMENTAL APPROVALS. Any required governmental
approvals shall have been obtained by Lilly.

                     (e)    EXECUTION OF AMENDMENT. Lilly shall have executed
the Amendment.

                     (f)    PAYMENT OF PURCHASE PRICE. Lilly shall have
delivered to Alkermes the Purchase Price in accordance with Section 1.2, subject
only to the delivery by Alkermes of a certificate representing the Shares.

       7.     REGISTRATION RIGHTS.

              7.1    DEFINITIONS. For purposes of this Section 7:

                     (a)    The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the 1933 Act, and
the declaration or ordering of effectiveness of such registration statement or
document; and

<PAGE>

                     (b)    The term "Registrable Securities" means (1) any
shares of Alkermes' Common Stock issuable upon conversion of the Shares and (2)
any shares of Alkermes' Common Stock issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares described in Section 7.1(b)(1), excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which its rights under this Section 7 are not assigned. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the 1933 Act and such
securities shall have been disposed of in accordance with such registration
statement, (ii) such securities shall have been distributed pursuant to Rule
144, or (iii) such securities shall have ceased to be outstanding.

              7.2    RESALE REGISTRATION. As soon as practicable after
conversion of any of the Preferred Stock into Common Stock (and in no event
later than 30 days after issuing the Common Stock on conversion of any of the
Preferred Stock, unless Alkermes requests a reasonable extension and subject to
the Section 7.6, not longer than 15 days, which request shall not be
unreasonably refused by Lilly and unless the 1933 Act or the regulations
thereunder or the independent auditors of Alkermes do not permit the filing of a
registration statement because of the proximity to Alkermes's fiscal year end,
in which case, Alkermes shall file such registration statement within 5 days
after a filing is again permitted by such regulations or auditors), Alkermes
will prepare and file with the SEC a resale registration statement under Rule
415 of the 1933 Act permitting the resale of the Registrable Securities in
accordance with the intended methods thereof as specified in writing by Lilly
(the "Resale Registration"). For purposes of clarification, in the event that
less than all of the 2002 Preferred Stock is converted on one or more occasions,
Alkermes shall promptly file a new registration statement or an amendment to a
previously filed registration statement on each such occasion and all in
accordance with the provisions of this Section 7.

              7.3    OBLIGATIONS OF ALKERMES. Alkermes shall, as expeditiously
as reasonably possible:

                     (a)    With respect to the Resale Registration, use its
best efforts to cause such registration statement to be declared effective by
the SEC as soon as practicable after the filing of the registration statement.
As far in advance as practical before filing such registration statement or any
supplement or amendment thereto (excluding any document incorporated therein by
reference) Alkermes will furnish to Lilly and its counsel copies of reasonably
complete drafts of such registration statement, supplement or amendment proposed
to be filed, and Lilly and its counsel shall have the opportunity to comment on
any information that is contained therein or omitted therefrom and Alkermes will
make the changes reasonably requested by Lilly and its counsel with respect to
such information prior to filing any such registration statement, supplement or
amendment.

                     (b)    With respect to any registration of any Registrable
Securities, prepare and file with the SEC such amendments and supplements to the
registration statement and the prospectus used in connection with the
registration as may be necessary to comply with the provisions of the 1933 Act
with respect to the disposition of all securities covered by the

<PAGE>

registration statement, including at Lilly's request, any amendments or
supplements necessary to reflect any information regarding Lilly or its plan of
distribution, until the earlier of (i) such time as the Shares cease to be
Registrable Securities and (ii) the date on which Lilly is permitted, pursuant
to Rule 144(k), to dispose of the Registrable Securities without registration.

                     (c)    With respect to any registration of any Registrable
Securities, furnish to Lilly such numbers of copies of a prospectus, including a
preliminary prospectus, as then amended or supplemented, in conformity with the
requirements of the 1933 Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by it.

                     (d)    With respect to any registration of any Registrable
Securities, use its best efforts to register and qualify the securities covered
by the Resale Registration under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by Lilly, provided that Alkermes
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions, provided that Alkermes shall execute customary
consents to service of process required by any state's securities laws.

                     (e)    With respect to any registration of any Registrable
Securities, notify Lilly at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and, at
the request of Lilly, as promptly as practicable prepare and furnish Lilly a
reasonable number of copies of a prospectus included in an effective
post-effective amendment or the supplemented prospectus correcting such
misstatement or omission.

              7.4    OBLIGATIONS OF LILLY. It shall be a condition precedent to
the obligations of Alkermes to take any action pursuant to this Section 7 that
Lilly meet the following conditions:

                     (a)    Lilly shall furnish such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required by applicable federal or
state securities laws to effect the registration of the Registrable Securities
under the 1933 Act.

                     (b)    All information specifically with respect to Lilly
furnished to Alkermes by or on behalf of Lilly for use in connection with the
preparation of any registration statement relating to such Registrable
Securities shall be true and correct in all material respects and shall not omit
any material fact necessary to make such information, in light of the
circumstances under which it was made, not misleading.

                     (c)    Lilly shall distribute in connection with the
offering and sale of the Registrable Securities the prospectus or other offering
material permitted by the 1933 Act and prepared by Alkermes, and only such
materials.

<PAGE>

                     (d)    Lilly will comply with the provisions of the
Exchange Act and the regulations thereunder.

                     (e)    To assist Alkermes in qualifying the Registrable
Securities for sale under applicable state securities laws, Lilly will advise
Alkermes of each jurisdiction in which it intends to offer or sell any or all
Registrable Securities, and will agree not to offer or sell any Registrable
Securities in any jurisdiction where the Registrable Securities are not
registered or exempt from registration.

                     (f)    Lilly will inform Alkermes in writing of any and all
sales, or other transfers or dispositions, of any Registrable Securities within
15 calendar days following each such disposition.

              7.5    EXPENSES OF REGISTRATION. Alkermes and Lilly shall each
bear one-half of the out-of-pocket expenses to third parties incurred in
connection with the Resale Registration and any amendment or supplement thereof.
Alkermes shall not be responsible for, and Lilly shall alone bear the following
expenses: (i) brokers' fees or underwriters' discounts and commissions and
transfer taxes, if any, in respect of Registrable Securities; (ii) all
out-of-pocket expenses of Lilly's brokers, dealers or underwriters; and (iii)
all fees and disbursements of counsel and public accountants for Lilly or any
such brokers, dealers or underwriters.

              7.6    COMPANY SUSPENSION. Upon the giving by Alkermes of written
notice to Lilly that in the good faith judgment of Alkermes (i) the filing or
making of offers and sales pursuant to the Resale Registration would require the
public disclosure of material information, the disclosure of which would not
otherwise be required at that time under the Nasdaq Stock Market or New York
Stock Exchange rules or federal securities laws, and (ii) disclosure thereof
would have a material adverse effect on Alkermes or a proposed transaction
involving Alkermes, Alkermes shall have the right to suspend such sales or
postpone such filing; provided, however, that promptly following disclosure of
such information or withdrawal or abandonment of the transaction requiring
suspension or postponement, Alkermes will make such filing or take such steps as
are necessary to permit such offers and sales, as the case may be, and provided
further, that no such suspension shall be in effect for more than sixty (60)
days and all suspensions during any consecutive twelve (12) month period shall
not exceed an aggregate of ninety (90) days. Any suspension under this Section
7.6 will extend, for an amount of time equal to such suspension, the termination
date of any registration rights, or obligations to keep a registration
effective, otherwise provided for in this Agreement.

              7.7    LOCK-UP. Lilly hereby agrees that in the event Alkermes
conducts an offering of its securities through an underwriter and such
underwriter requires certain security holders of Alkermes to enter into lock-up
agreements, Lilly shall agree to the same lock-up agreement required by such
underwriter to be entered into by the directors and senior officers of Alkermes,
provided that the period during which Lilly would be precluded from making sales
does not exceed ninety (90) days.

              7.8    INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 7:

<PAGE>

                     (a)    To the extent permitted by law, Alkermes will
indemnify and hold harmless Lilly, each of its officers and directors, any
underwriter (as defined in the 1933 Act) for Lilly and each person, if any, who
controls Lilly or any such underwriter within the meaning of the 1933 Act or the
Exchange Act (collectively, "Indemnified Lilly Parties"), against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject under the 1933 Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon a claim by a third
party alleging any of the following statements, omissions or violations
(collectively, "Indemnified Violations"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement on
the date it becomes effective, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements thereof, or any
document incident to such registration (such as a Blue Sky qualification or
compliance); (ii) the omission or alleged omission to state a material fact
required to be stated therein, or necessary to make the statements not
misleading; or (iii) any other violation or alleged violation by Alkermes of the
1933 Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or any state securities law,
and Alkermes will reimburse each of the Indemnified Lilly Parties for any legal
(to the extent provided in Section 7.8(c)) and other expenses reasonably
incurred in connection with defending any such Indemnified Violation; provided,
however, that the indemnity agreement contained in this Section 7.8(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of Alkermes (which
consent shall not be unreasonably withheld), nor shall Alkermes be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon an Indemnified Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any of the Indemnified Lilly
Parties, any failure by Lilly to deliver a prospectus or otherwise comply with
the securities laws and any sales by Lilly after notice under Section 7.6; and
provided further, however, that the indemnity provided in this Section 7.8(a)
with respect to any preliminary prospectus shall not apply if the untrue
statement or alleged untrue statement or omission or alleged omission was
corrected in the final prospectus.

                     (b)    To the extent permitted by law, Lilly will indemnify
and hold harmless Alkermes, each of its officers and directors, any underwriter
(as defined in the 1933 Act), any other person selling securities in such
registration statement and each person, if any, who controls Alkermes, any such
underwriter or any such person within the meaning of the 1933 Act or the
Exchange Act (collectively, the "Indemnified Alkermes Parties"), against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject under the 1933 Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon a
claim by a third party alleging any of the following statements or omissions:
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement on the date it becomes effective,
including any preliminary prospectus or final prospectus contained therein, or
any amendments or supplements thereof, or any document incident to such
registration (such as a Blue Sky qualification or compliance); or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading in
which (i) or (ii) arises out of or is based upon any written information
furnished by any of the Indemnified Lilly Parties expressly

<PAGE>

for use in connection with such registration statement or arising out of or
based upon, any failure by Lilly to deliver a prospectus or otherwise comply
with the securities laws and any sales by Lilly after notice under Section 7.6,
and Lilly will reimburse each of the Indemnified Alkermes Parties for any legal
(to the extent provided in Section 7.8(c)) and other expenses reasonably
incurred in connection with defending any such claim, liability, demand, loss or
action; provided, however, that the indemnity agreement contained in this
Section 7.8(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of Lilly (which consent will not be unreasonably withheld); and provided
further, however, that the indemnity provided in this Section 7.8(b) with
respect to any registration statement shall not apply to any untrue statement or
alleged untrue statement or omission or alleged omission in any registration
statement, prospectus or other such document, which statement has been
corrected, in writing, by Lilly and delivered to Alkermes ten (10) days before
the sale from which such loss occurred or, which statement in any prospectus
delivered by Lilly has been corrected in any subsequent prospectus, supplement
or amendment thereof. The indemnity provided hereunder by Lilly shall be limited
to the gross amount received by Lilly in any and all sales of securities
pursuant to such registration statement.

                     (c)    Promptly after receipt by an indemnified party under
this Section 7.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.8, deliver to
the indemnifying party a written notice of the commencement thereof generally
summarizing the claims, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, join with
any other indemnifying party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the indemnifying parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if such indemnified party reasonably determines that a conflict of
interest exists which makes representation by counsel chosen by the indemnifying
party not advisable or if such indemnified party reasonably determines that the
indemnifying party's assumption of the defense does not adequately represent its
interest. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7.8, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 7.8.

                     (d)    If the indemnification provided for in this Section
7 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities, expenses or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, expenses and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by
Alkermes on the one hand and Lilly on the other hand from the offering for
resale of the Registrable Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of Alkermes and Lilly in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or judgments, as well as any other

<PAGE>

relevant equitable considerations. The relative fault of Alkermes and Lilly
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by Alkermes or Lilly and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. It is hereby agreed that it would not
necessarily be equitable if the amount of contribution were determined pro rata
or per capital allocation.

                     (e)    The obligations of Alkermes and Lilly under this
Section 7.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 7, and otherwise.

              7.9    REPORTS UNDER THE EXCHANGE ACT. With a view to making
available to Lilly the benefits of Rule 144 and any other rule or regulation of
the SEC that may at any time permit Lilly to sell securities of Alkermes to the
public without registration, Alkermes agrees, for a period of three years from
the date that all of the Conversion Shares have been issued to:

                     (a)    make and keep public information available, as those
terms are understood and defined in Rule 144;

                     (b)    file with the SEC in a timely manner all reports and
other documents required of Alkermes under the Exchange Act; and

                     (c)    furnish to Lilly, so long as Lilly owns any
Registrable Securities, promptly upon request (i) a written statement by
Alkermes that it has complied with the reporting requirements of Rule 144 and
the Exchange Act, (ii) a copy of the most recent Annual or Quarterly Report of
Alkermes and such other reports and documents so filed by Alkermes, and (iii)
such other information as may be reasonably required in availing Lilly of any
rule or regulation of the SEC which permits the selling of any such securities
without registration.

              7.10   AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Section 7 may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of Alkermes and Lilly. Any amendment or waiver
effected in accordance with this Section 7.10 shall be binding upon each holder
of any Registrable Securities, each future holder of Registrable Securities,
Lilly and Alkermes. Nothing herein shall prevent a holder of Registrable
Securities from waiving its individual rights.

       8.     MISCELLANEOUS.

              8.1    SURVIVAL. The representations, warranties and covenants of
Alkermes and Lilly contained in or made pursuant to this Agreement shall survive
the Closing, and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Lilly or Alkermes.

              8.2    SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,

<PAGE>

remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Neither party shall assign any
of its rights or obligations under this Agreement other than (a) with the
express written permission of the other Party or (b) as incident to the merger
consolidation or reorganization of the assigning party. Notwithstanding the
foregoing, the rights to cause Alkermes to register Registrable Securities
pursuant to this Agreement may be assigned by Lilly to a transferee or assignee
provided that (i) Lilly gives Alkermes written notice of such transfer or
assignment within a reasonable time after consummation thereof, which notice
states the name and address of the transferee or assignee and identifies the
Registrable Securities with respect to which such registration rights are being
transferred or assigned; (ii) the transferee or assignee confirms in writing its
agreement to assume the obligations of Lilly with respect to the transferred
Registrable Securities pursuant to this Agreement, including the indemnification
obligations; (iii) immediately following such transfer or assignment, the
further disposition of such Registrable Securities by the transferee or assignee
is restricted under the Securities Act; (iv) Lilly may assign or transfer such
rights to no more than three (3) persons or entities; and (v) such transferees
or assignees will have no right to further assign or transfer such rights
(except that Lilly may give one assignee the right to further assign such
registration rights to one assignee which assignment must meet the conditions
described in this Section 8.2).

              8.3    GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania as applied to
agreements among Pennsylvania residents entered into and to be performed
entirely within Pennsylvania.

              8.4    COUNTERPARTS. This Agreement shall become binding when any
one or more counterparts hereof, individually or taken together, shall bear the
signatures of Alkermes and Lilly. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, but all of which together shall constitute one
and the same instrument. A facsimile transmission of the signed Agreement shall
be legal and binding on both parties.

              8.5    TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

              8.6    NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be sent by certified mail or courier
service, charges pre-paid, or by facsimile transmission, to the address or
facsimile number specified below:

              If to Alkermes:

                     88 Sidney Street
                     Cambridge, MA 02139-4136
                     Fax No.: (617) 494-9255
                     Attention: Chief Financial Officer

<PAGE>

              If to Lilly:

                     Lilly Corporate Center
                     Indianapolis, Indiana 46285
                     Fax No.: (317) 276-2763
                     Attention: General Counsel

or to such other address or facsimile number as the person may specify in a
notice duly given to the sender as provided herein. A notice will be deemed to
have been given as of the date that is three days after it is deposited in the
United States mail or the date it is delivered by a courier service or, in the
case of facsimile transmission or personal communication, when received.

              8.7    FINDERS' FEES. Each party agrees to indemnify and hold
harmless the other party from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which the indemnifying party or any of
its officers, partners, employees, or representatives is responsible.

              8.8    EXPENSES. Except as otherwise provided in Section 7 hereof,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.

              8.9    PUBLICITY. Neither party, nor any of their respective
Affiliates, shall issue or cause the publication of any press release or other
public announcement with respect to this Agreement or any of the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange or by the SEC. The parties shall cooperate in
determining the date and time of day of the announcement of the execution and
terms of this Agreement, which announcement shall be in the form of the press
release attached as Exhibit E, with such changes as the parties may agree in
writing, and each party will obtain the prior approval by the other party of any
other press release to be issued relating to the announcement of the execution
of this Agreement or the Closing hereunder, which prior approval shall not be
unreasonably withheld or delayed. This Section 8.9 shall not apply to the extent
that any disclosure is of information in the public domain other than through
the fault of the disclosing party in violation hereof.

              8.10   AMENDMENTS AND WAIVERS. This Agreement may not be amended,
supplemented or otherwise modified except by an instrument in writing signed by
both parties that specifically refers to this Agreement. Either party hereto
may, only by an instrument in writing, waive compliance by the other party
hereto with any term or provision of this Agreement on the part of such other
party to be performed or complied with. The waiver by a party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach. Any amended or waiver effected in accordance with this
Section 8.10 shall be binding upon each party and its permitted assigns.

<PAGE>

              8.11   SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
amended to conform, as closely as practicable, to the intent of the parties as
set forth herein or, if such amendment is not possible, such provision shall be
stricken and the remaining provisions will remain in full force and effect.

<PAGE>

                  IN WITNESS WHEREOF, the parties, through their duly authorized
officers, have duly executed this Stock Purchase Agreement as of the date first
above written.

ALKERMES, INC.                             ELI LILLY AND COMPANY

By: /s/ Michael J. Landine               By:  /s/ Sidney Taurel
   ----------------------------------         ----------------------------------
   Name: Michael J. Landine                   Name: Sidney Taurel
   Title: Vice President,                     Title: Chairman, President and
          Corporate Development                      Chief Executive Officer

<PAGE>

                                    EXHIBIT A

                                  THE AMENDMENT

<PAGE>

                                    EXHIBIT B

                         ALKERMES COMPLIANCE CERTIFICATE

<PAGE>

                                    EXHIBIT C

                                 OPINION OF BSAI

<PAGE>

                                    EXHIBIT D

                          LILLY COMPLIANCE CERTIFICATE

<PAGE>

                                    EXHIBIT E

                              FORM OF PRESS RELEASE<PAGE>
                                                                    EXHIBIT 10.1

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

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                      among

                             WILLIAMS-SONOMA, INC.,
                                as the Borrower,

                             BANK OF AMERICA, N.A.,
                     as administrative agent and L/C Issuer,

                              FLEET NATIONAL BANK,
                              THE BANK OF NEW YORK,
                            as co-syndication agents,

                             WELLS FARGO BANK, N.A.,
                              JPMORGAN CHASE BANK,
                           as co-documentation agents,

                                       and

                            the Lenders party hereto

                                   dated as of
                                October 22, 2002

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

                         BANC OF AMERICA SECURITIES LLC
                    Sole Lead Arranger and Sole Book Manager

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>               <C>                                                             <C>
ARTICLE 1         Definitions...............................................................1

        Section 1.1       Definitions.......................................................1

        Section 1.2       Other Interpretive Provisions....................................19

        Section 1.3       Accounting Terms and Determinations..............................20

        Section 1.4       Time of Day......................................................20

        Section 1.5       Letter of Credit Amounts.........................................20

ARTICLE 2         Credit Facility..........................................................21

        Section 2.1       Commitments......................................................21

        Section 2.2       Notes............................................................22

        Section 2.3       Repayment of Loan................................................22

        Section 2.4       Use of Proceeds..................................................22

        Section 2.5       Termination or Reduction of Commitments..........................22

        Section 2.6       Increase of Commitments..........................................22

ARTICLE 3         Letters of Credit........................................................23

        Section 3.1       The Letter of Credit Commitment..................................23

        Section 3.2       Procedures for Issuance and Amendment of Letters of Credit;
                          Auto-Extension Letters of Credit.................................25

        Section 3.3       Drawings and Reimbursements; Funding of Participations...........26

        Section 3.4       Repayment of Participations......................................27

        Section 3.5       Obligations Absolute.............................................28

        Section 3.6       Role of L/C Issuer...............................................29

        Section 3.7       Cash Collateral..................................................29

        Section 3.8       Applicability of ISP98...........................................30

        Section 3.9       Letter of Credit Fees............................................30

        Section 3.10      Fronting Fee and Documentary and Processing Charges Payable
                          to L/C Issuer....................................................30

        Section 3.11      Conflict with Letter of Credit Application.......................31

ARTICLE 4         Interest and Fees........................................................31

        Section 4.1       Interest Rate....................................................31

        Section 4.2       Determinations of Margins and Commitment Fee Rate................31

        Section 4.3       Payment Dates....................................................32

        Section 4.4       Default Interest.................................................32
</TABLE>

                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>               <C>                                                             <C>
        Section 4.5       Conversions and Continuations of Balances........................32

        Section 4.6       Commitment Fee...................................................33

        Section 4.7       Administrative Fee...............................................33

        Section 4.8       Computations.....................................................33

ARTICLE 5         Administrative Matters...................................................33

        Section 5.1       Borrowing Procedure..............................................33

        Section 5.2       Minimum Amounts..................................................34

        Section 5.3       Certain Notices..................................................34

        Section 5.4       Prepayments......................................................35

        Section 5.5       Method of Payment................................................36

        Section 5.6       Pro Rata Treatment...............................................37

        Section 5.7       Sharing of Payments..............................................37

        Section 5.8       Non-Receipt of Funds by the Agent................................38

ARTICLE 6         Change in Circumstances..................................................39

        Section 6.1       Increased Cost and Reduced Return................................39

        Section 6.2       Limitation on Libor Balances and IBOR Balances...................40

        Section 6.3       Illegality.......................................................41

        Section 6.4       Treatment of Affected Balances...................................41

        Section 6.5       Compensation.....................................................42

        Section 6.6       Taxes............................................................42

ARTICLE 7         Guaranties...............................................................43

        Section 7.1       Guaranties.......................................................43

        Section 7.2       New Guarantors...................................................44

ARTICLE 8         Conditions Precedent.....................................................44

        Section 8.1       Conditions to Effectiveness......................................44

        Section 8.2       All Advances.....................................................46

ARTICLE 9         Representations and Warranties...........................................47

        Section 9.1       Existence, Power and Authority...................................47

        Section 9.2       Financial Condition..............................................47

        Section 9.3       Corporate and Similar Action; No Breach..........................48

        Section 9.4       Operation of Business............................................48

        Section 9.5       Litigation and Judgments.........................................48
</TABLE>

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>               <C>                                                             <C>
        Section 9.6       Rights in Properties; Liens......................................48

        Section 9.7       Enforceability...................................................48

        Section 9.8       Approvals........................................................49

        Section 9.9       Debt.............................................................49

        Section 9.10      Taxes............................................................49

        Section 9.11      Margin Securities................................................49

        Section 9.12      ERISA............................................................49

        Section 9.13      Disclosure.......................................................49

        Section 9.14      Subsidiaries; Capitalization.....................................50

        Section 9.15      Material Agreements..............................................50

        Section 9.16      Compliance with Laws.............................................50

        Section 9.17      Investment Company Act...........................................50

        Section 9.18      Public Utility Holding Company Act...............................50

        Section 9.19      Environmental Matters............................................51

        Section 9.20      Broker's Fees....................................................52

        Section 9.21      Employee Matters.................................................52

        Section 9.22      Solvency.........................................................52

ARTICLE 10        Affirmative Covenants....................................................52

        Section 10.1      Reporting Requirements...........................................52

        Section 10.2      Maintenance of Existence; Conduct of Business....................55

        Section 10.3      Maintenance of Properties........................................55

        Section 10.4      Taxes and Claims.................................................55

        Section 10.5      Insurance........................................................55

        Section 10.6      Inspection Rights................................................56

        Section 10.7      Keeping Books and Records........................................56

        Section 10.8      Compliance with Laws.............................................56

        Section 10.9      Compliance with Agreements.......................................56

        Section 10.10     Further Assurances...............................................56

        Section 10.11     ERISA............................................................57

ARTICLE 11        Negative Covenants.......................................................57

        Section 11.1      Debt.............................................................57

        Section 11.2      Limitation on Liens and Restrictions on Subsidiaries.............58
</TABLE>

                                      -iii-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>               <C>                                                             <C>
        Section 11.3      Mergers, Etc.....................................................60

        Section 11.4      Restricted Payments..............................................60

        Section 11.5      Investments......................................................61

        Section 11.6      Limitation on Issuance of Capital Stock of Subsidiaries..........62

        Section 11.7      Transactions with Affiliates.....................................62

        Section 11.8      Disposition of Assets............................................62

        Section 11.9      Lines of Business................................................62

        Section 11.10     Limitations on Restrictions Affecting the Borrower and its
                          Subsidiaries.....................................................63

        Section 11.11     Environmental Protection.........................................63

        Section 11.12     ERISA............................................................63

ARTICLE 12        Financial Covenants......................................................64

        Section 12.1      Leverage Ratio...................................................64

        Section 12.2      Fixed Charge Coverage Ratio......................................64

        Section 12.3      Minimum Tangible Net Worth.......................................64

        Section 12.4      Capital Expenditures.............................................64

ARTICLE 13        Default..................................................................64

        Section 13.1      Events of Default................................................64

        Section 13.2      Remedies.........................................................67

        Section 13.3      Performance by the Agent.........................................68

        Section 13.4      Set-off..........................................................68

        Section 13.5      Continuance of Default...........................................68

ARTICLE 14        The Agent................................................................68

        Section 14.1      Appointment and Authorization of the Agent.......................68

        Section 14.2      Delegation of Duties.............................................69

        Section 14.3      Liability of the Agent...........................................69

        Section 14.4      Reliance by the Agent............................................69

        Section 14.5      Notice of Default................................................70

        Section 14.6      Credit Decision; Disclosure of Information by the Agent..........70

        Section 14.7      Indemnification of the Agent.....................................71

        Section 14.8      The Agent in Individual Capacity.................................71

        Section 14.9      Resignation of the Agent.........................................72
</TABLE>

                                      -iv-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>               <C>                                                             <C>
        Section 14.10     Agent May File Proofs of Claim...................................72

        Section 14.11     Guaranty Matters.................................................73

        Section 14.12     Co-Agents; Lead Managers.........................................73

ARTICLE 15        Miscellaneous............................................................73

        Section 15.1      Attorney Costs, Expenses and Taxes...............................73

        Section 15.2      Indemnification by the Borrower..................................74

        Section 15.3      Limitation of Liability..........................................74

        Section 15.4      No Duty..........................................................75

        Section 15.5      No Fiduciary Relationship........................................75

        Section 15.6      Equitable Relief.................................................75

        Section 15.7      No Waiver; Cumulative Remedies...................................75

        Section 15.8      Successors and Assigns...........................................75

        Section 15.9      Survival.........................................................78

        Section 15.10     Entire Agreement.................................................79

        Section 15.11     Amendments and Waivers...........................................79

        Section 15.12     Maximum Interest Rate............................................80

        Section 15.13     Notices and Other Communications; Facsimile Copies...............80

        Section 15.14     Governing Law; Venue; Service of Process.........................81

        Section 15.15     Counterparts.....................................................82

        Section 15.16     Severability.....................................................82

        Section 15.17     Headings.........................................................82

        Section 15.18     Construction.....................................................82

        Section 15.19     Independence of Covenants........................................82

        Section 15.20     Waiver of Jury Trial.............................................82

        Section 15.21     Confidentiality..................................................83

        Section 15.22     Foreign Lenders..................................................83

        Section 15.23     Amendment and Restatement........................................84
</TABLE>

                                      -v-
<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT A             Form of Revolving Note
EXHIBIT B             Form of Swingline Note
EXHIBIT C             Form of Assignment and Acceptance
EXHIBIT D             Form of Compliance Certificate
EXHIBIT E             Form of Subsidiary Guaranty
EXHIBIT F             Form of Notice of Borrowings, Conversions, Continuations
                      or Prepayments
EXHIBIT G             Form of Joinder Agreement
EXHIBIT H             Form of Acknowledgment of Intercreditor Agreement

                               INDEX TO SCHEDULES

Schedule 1            Existing Letters of Credit
Schedule 9.4          Operation of Business
Schedule 9.5          Litigation and Judgments
Schedule 9.9          Debt
Schedule 9.10         Taxes
Schedule 9.12         ERISA Matters
Schedule 9.14         Subsidiaries; Capitalization
Schedule 9.15         Material Agreements
Schedule 9.19         Environmental Matters
Schedule 9.20         Broker's Fees
Schedule 9.21         Employee Matters
Schedule 11.2         Permitted Liens
Schedule 11.5         Investments
Schedule 15.13        Addresses for Notices

<PAGE>

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

        THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of October 22, 2002, is among WILLIAMS-SONOMA, INC., a corporation duly
organized and validly existing under the laws of the State of California (the
"Borrower"), each of the banks or other lending institutions which is (or which
may from time to time become) a party hereto or any successor or assignee
thereof pursuant to Section 15.8(b) (individually, a "Lender" and, collectively,
the "Lenders"), and BANK OF AMERICA, N.A., a national banking association, as
administrative agent for the Lenders (in its capacity as administrative agent,
together with its successors in such capacity, the "Agent") and as L/C Issuer.

                                R E C I T A L S:

        A. The Borrower has requested that the Lenders extend a $200,000,000
unsecured credit facility to the Borrower in the form of a revolving credit
facility to refinance existing debt of the Borrower, finance capital
expenditures, provide working capital to the Borrower and its Subsidiaries and
for other general corporate purposes.

        B. The Lenders are willing to extend such credit to the Borrower upon
the terms and conditions set forth in this Agreement and the other Loan
Documents.

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

                                    ARTICLE 1

                                   Definitions

        Section 1.1 Definitions. Wherever used in this Agreement, the following
terms have the following meanings:

        "Acknowledgment of Intercreditor Agreement" means an agreement, in
substantially the form of Exhibit H, entered into by a Lender pursuant to
Section 8.1(a)(vii) or an Eligible Assignee pursuant to Section 15.8(b).

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

        "Affected Balances" has the meaning specified in Section 6.4.

        "Affected Libor/IBOR Balances" has the meaning specified in Section 6.5.

        "Affiliate" means, with respect to any Person, any other Person: (a)
that directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds ten percent (10.0%) or more of any
class of Capital Stock of such Person; or (c) ten percent (10.0%) or more of the
Capital Stock of which is directly or indirectly beneficially owned or held by
the Person in

<PAGE>

question. As used in this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership of Capital
Stock, by contract or otherwise; provided, however, in no event shall the Agent
or any Lender be deemed an Affiliate of the Borrower or any Subsidiary of the
Borrower.

        "Agent" has the meaning specified in the introductory paragraph of this
Agreement.

        "Agent-Related Persons" means the Agent (including any successor
administrative agent), each of the Agent's Affiliates (including, in the case of
Bank of America in its capacity as the Agent, the Arranger) and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

         "Agreement" has the meaning specified in the introductory paragraph of
this Agreement, as the same may be amended, restated or otherwise modified.

        "Applicable Lending Office" means, for each Lender and for each Type of
Balance, the "Lending Office" of such Lender (or of an Affiliate of such Lender)
designated for such Type of Balance in such Lender's Administrative
Questionnaire (or, with respect to a Lender that becomes a party to this
Agreement pursuant to an assignment made in accordance with Section 15.8(b), in
the Assignment and Acceptance executed by it) or such other office of such
Lender (or an Affiliate of such Lender) as such Lender may from time to time
specify to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which advances of such Type of Balance are to be
made and maintained.

        "Applicable Rate" has the meaning specified in Section 4.1.

        "Arranger" means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.

        "Asset Disposition" means, with respect to any Person, the disposition,
whether a sale (including any sale/lease-back arrangement), lease, assignment,
transfer or other voluntary disposition of any asset of such Person (including
the sale or other disposition of any Capital Stock of any Subsidiary of such
Person, but excluding any transaction among any of the Borrower and any
Guarantor or any Subsidiary that concurrently therewith becomes a Guarantor)
other than (a) sales of inventory in the ordinary course of business, (b) asset
dispositions which constitute an Investment permitted by Section 11.5, (c)
Permitted Sale-Leasebacks and (d) sales of equipment that is obsolete or no
longer useful in the business of such Person for an aggregate amount not in
excess of $10,000,000 in any Fiscal Year.

        "Assignment and Acceptance" means an assignment and acceptance, in
substantially the form of Exhibit C, entered into by a Lender and an Eligible
Assignee pursuant to Section 15.8(b) and accepted by the Borrower (if required)
and the Agent.

        "Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel and the allocated cost
of internal legal services and all disbursements of internal counsel.

                                       2
<PAGE>

        "Balance" means any of the Base Rate Balance, a Libor Balance or an IBOR
Balance.

        "Bank of America" means Bank of America, N.A. and its successors and
assigns.

        "Bankruptcy Code" has the meaning specified in Section 13.1(e).

        "Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus one-half of one percent (0.50%) and
(b) the rate of interest in effect for such day as publicly announced from time
to time by Bank of America as its "prime rate." Such rate is a rate set by Bank
of America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

        "Base Rate Balance" means the portion of the Loan that bears interest at
a rate based upon the Base Rate.

        "Base Rate Margin" has the meaning specified in Section 4.2.

        "Borrower" has the meaning specified in the introductory paragraph of
this Agreement.

        "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the laws of, or are in
fact closed in, the state of Washington and, if such day relates to any Libor
Balance or IBOR Balance, means any such day on which dealings in Dollar deposits
are conducted by and between banks in the offshore Dollar interbank market.

        "Capital Expenditures" means, for any period, all expenditures of the
Borrower and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP, including the aggregate amount of all such expenditures
incurred during such period which constitute Capital Lease Obligations.

        "Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal Property, which obligations are
classified and accounted for as a capital lease on a balance sheet of such
Person in accordance with GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.

        "Capital Stock" means corporate stock and any and all shares,
partnership interests, limited liability company interests, membership
interests, equity interests, participations, rights, securities (excluding debt
securities) or other equivalent evidences (however designated) of ownership or
any options, warrants, voting trust certificates or other instruments evidencing
an ownership interest or a right to acquire an ownership interest in a Person
(however designated) issued by any entity (whether a corporation, partnership,
limited liability company or other type of entity).

                                       3
<PAGE>

        "Cash Collateralize" has the meaning specified in Section 3.7.

        "Change of Control" means, with respect to any Person, 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 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 fifty
percent (50.0%) or more of the membership interests of such Person; or (b)
during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of such Person
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) preceding 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 clause (i) and clause
(ii) preceding constituting at the time of such election or nomination at least
a majority of that board or equivalent governing body.

        "Closing Date" has the meaning specified in Section 8.1.

        "Code" means the Internal Revenue Code of 1986.

        "Commitment" means, as to each Lender, the obligation of such Lender to
(a) make advances of funds pursuant to Section 2.1 and (b) purchase
participations in L/C Obligations in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount set forth opposite the name
of such Lender on the signature pages hereto (or if applicable, the most recent
Assignment and Acceptance executed by such Lender) under the heading
"Commitment," as the same may be reduced or terminated pursuant to Section 2.5
or Section 13.2. The aggregate amount of the Commitments as of the Closing Date
equals two hundred million Dollars ($200,000,000).

        "Commitment Fee Rate" has the meaning specified in Section 4.2.

        "Commitment Percentage" means, with respect to each Lender, the
percentage equivalent (carried to nine (9) decimal places) of a fraction, the
numerator of which is the aggregate amount of the Commitment of such Lender (or
if such Commitment has terminated or expired, the outstanding principal amount
of the Revolving Loan of such Lender with respect thereto) and the denominator
of which is the aggregate amount of the Commitments of all of the Lenders (or if
such Commitments have terminated or expired, the outstanding principal amount of
the Revolving Loans of all of the Lenders with respect thereto).

        "Compliance Certificate" means a certificate in substantially the form
of Exhibit D, properly completed and executed by the chief financial officer or
Vice President, Finance of the Borrower.

                                       4
<PAGE>

        "Continue," "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 4.5, from one Interest Period to the next
Interest Period, of a Libor Balance as a Libor Balance or of an IBOR Balance as
an IBOR Balance.

        "Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 4.5 or Article 6 of (a) Balances of one Type under the
Revolving Loan into Balances of the other Type under the Revolving Loan and (b)
Balances of one Type under the Swingline Advances into Balances of the other
Type under the Swingline Advances.

        "Debt" means, with respect to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments; (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than ninety (90) days or that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP; (d) all Capital Lease Obligations of such
Person; (e) Guarantees by such Person of indebtedness, liabilities or
obligations of the kinds described in clauses (a), (b), (c), (d), (f), (g), (h),
(i), (j), (k) and (l) of this definition; (f) all indebtedness, liabilities and
obligations of the types described in the foregoing clauses (a) through (e)
secured by a Lien existing on Property owned by such Person, whether or not the
indebtedness, liabilities and obligations secured thereby have been assumed by
such Person or are non-recourse to such Person; provided, however, that the
amount of such Debt of any Person described in this clause (f) shall, for
purposes of this Agreement, be deemed to be equal to the lesser of (i) the
aggregate unpaid amount of such Debt or (ii) the fair market value of the
Property encumbered, as determined by the Agent in its discretion; (g) all
reimbursement obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances, surety or other bonds and
similar instruments; (h) all liabilities of such Person in respect of unfunded
vested benefits under any Plan (excluding obligations to deliver stock in
respect of stock options or stock ownership plans); (i) all vested obligations
of such Person for the payment of money under any earn-out, noncompete,
consulting or similar arrangements providing for the deferred payment of the
purchase price for any property to the extent that any such obligations are,
according to GAAP, reflected as a capitalized liability on a balance sheet of
such Person; (j) all obligations of such Person to redeem or retire shares of
Capital Stock of such Person; (k) all indebtedness, liabilities and obligations
of such Person under any Hedge Agreement; and (l) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product to which
such Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP. The Debt of any Person shall include the Debt of any
partnership or joint venture in which such Person is a general partner or a
joint venturer, but only to the extent to which there is recourse to such Person
for payment of such Debt.

        "Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.

        "Default Rate" means, in respect of any principal of the Loan or any
other amount payable by the Borrower under any Loan Document, a rate per annum
equal to the sum of two

                                       5
<PAGE>

percent (2.00%), plus the Applicable Rate for the Base Rate Balance as in effect
from time to time (provided that for amounts outstanding as Libor Balances or
IBOR Balances, the "Default Rate" for such principal shall be two percent
(2.00%), plus the Applicable Rate for each Libor Balance or IBOR Balance, as
applicable, for the remainder of the applicable Interest Period as provided in
Section 4.1, and, thereafter, the rate provided for above in this definition).

        "Dollars" and "$" mean lawful money of the U.S.

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

        "EBITDAR" means, for any period, the total of the following calculated
for the Borrower, without duplication, on a consolidated basis for such period:
(a) Net Income; plus (b) any provision for (or less any benefit from) income or
franchise taxes to the extent included in the determination of Net Income; plus
(c) Interest Expense to the extent included in the determination of Net Income;
plus (d) amortization and depreciation expense to the extent included in the
determination of Net Income; plus (e) other non-cash, non-recurring charges to
the extent included in the determination of Net Income; minus (f) other
non-recurring gains to the extent included in the determination of Net Income;
plus (g) all lease and rent expense for any real Property or personal Property
to the extent included in the determination of Net Income.

        "Eligible Assignee" has the meaning specified in Section 15.8(g).

        "Environmental Laws" means any and all federal, state and local laws,
regulations and requirements regulating health, safety or the environment.

        "Environmental Liabilities" means, as to any Person, all indebtedness,
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, expert
and consulting fees and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand,
by any Person, whether based in contract, tort, implied or express warranty,
strict liability or criminal or civil statute, including any Environmental Law,
Permit, order or agreement with any Governmental Authority or other Person,
arising from environmental, health or safety conditions or the Release or
threatened Release of a Hazardous Material into the environment.

        "ERISA" means the Employee Retirement Income Security Act of 1974.

        "ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or any Subsidiary of the Borrower or
is under common control (within the meaning of Section 414(c) of the Code) with
the Borrower or any Subsidiary of the Borrower.

        "Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day, whether or not applicable to any
Lender, under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve

                                       6
<PAGE>

requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Libor Rate for each outstanding Libor Balance
and the IBOR Rate for each outstanding IBOR Balance shall be adjusted
automatically as of the effective date of any change in the Eurodollar Reserve
Percentage. The determination of the Eurodollar Reserve Percentage by the Agent
with respect to the Libor Rate and by Bank of America with respect to the IBOR
Rate shall be conclusive in the absence of manifest error.

        "Event of Default" has the meaning specified in Section 13.1.

        "Existing Letters of Credit" means the letters of credit issued by Bank
of America and listed on Schedule 1 hereto.

        "Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate charged to Bank of America on such day on
such transactions as determined by the Agent and (c) with respect to
determination of the IBOR Rate as of any day and for any Interest Period, the
rate for Federal funds transactions of a duration of such Interest Period as
determined in accordance with clause (a) and clause (b) preceding by Bank of
America.

        "Fee Letter" means the certain letter agreement dated as of September
23, 2002 among the Borrower, the Arranger and Bank of America.

        "Fiscal Period" means one of the three fiscal periods in a Fiscal
Quarter each of which is approximately one calendar month in duration. There are
twelve (12) Fiscal Periods in a Fiscal Year.

        "Fiscal Quarters" means one of four thirteen (13) week or, if
applicable, fourteen (14) week quarters in a Fiscal Year, with the first of such
quarters beginning on the first day of a Fiscal Year and ending on the Sunday of
the thirteenth (or fourteenth, if applicable) week in such quarter.

        "Fiscal Year" means the Borrower's fiscal year for financial accounting
purposes beginning on the Monday following the Sunday nearest January 31 of each
year and ending on the Sunday nearest January 31 of the following year. The
current (as of the date hereof) Fiscal Year of the Borrower will end on February
2, 2003.

        "Fixed Charge Coverage Ratio" means, for any period and determined on a
consolidated basis for the Borrower and its Subsidiaries, the ratio of (a)
EBITDAR for such period to (b) the sum of each of the following for such period
(i) Interest Expense to the extent included in the determination of Net Income,
plus (ii) lease and rent expense for any real Property or personal

                                       7
<PAGE>

Property plus (iii) scheduled principal payments on long-term Debt (including
capital leases) arising during such period.

        "Foreign Lender" means any Lender that is a "foreign corporation,
partnership or trust" within the meaning of the Code.

        "Foreign Subsidiary" means each Subsidiary of the Borrower that is not a
Domestic Subsidiary.

        "Funded Debt" means, with respect to any Person (the "subject Person")
at any time (without duplication): (a) Debt described in clauses (a), (b), (c),
(d), (f) and (g) of the definition of Debt, other than Debt consisting of
Undrawn Trade Letters of Credit, and (b) Guarantees by the subject Person of
Funded Debt (as described in clause (a) preceding) of any other Person.

        "GAAP" means generally accepted accounting principles, applied on a
"consistent basis" (as such phrase is interpreted in accordance with Section
1.3), as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.

        "Governmental Authority" means any nation or government, any federal,
state, county, municipal, parish, provincial, township or other political
subdivision thereof, and any department, commission, board, court, agency or
other instrumentality or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

        "Guarantee" means any indebtedness, liability or obligation, contingent
or otherwise, of any Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person or indemnifying such other Person for any
Debt or other obligation and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay or to maintain financial statement conditions or
otherwise) or (b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment thereof or to
protect the obligee against loss in respect thereof (in whole or in part);
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any Guarantee shall
be deemed to be equal to the lesser of (y) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made or (z) the maximum amount for which such guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Guarantee, unless
such primary obligation and the maximum amount for which such guaranteeing
Person may be liable are not stated or determinable, in which case the amount of
such Guarantee shall be such guaranteeing Person's maximum reasonably
anticipated liability in respect thereof as mutually determined by the Borrower
and the Agent in good faith. The term "Guarantee" used as a verb has a
corresponding meaning.

                                       8
<PAGE>

        "Guarantor" means any Person who is or becomes a party to any Guaranty
of the Obligations or any part thereof, including each Subsidiary of the
Borrower who is a party to the Subsidiary Guaranty pursuant to the terms of
Article 7.

        "Guaranty" means the Subsidiary Guaranty or any other guaranty agreement
executed and delivered by a Person in favor of the Agent, for the benefit of the
Agent and the Lenders, and any and all amendments, restatements or other
modifications thereof, and "Guaranties" means all of such agreements,
collectively.

        "Hazardous Material" means any substance, product, waste, pollutant,
chemical, contaminant, insecticide, pesticide, constituent or material which is
or becomes listed, regulated or addressed under any Environmental Law as a
result of its hazardous or toxic nature.

        "Hedge Agreement" means any agreement, device or arrangement designed to
protect a Person from the fluctuations of interest rates, exchange rates or
forward rates applicable to its assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap, swap or collar protection agreements and forward rate currency or interest
rate options, as the same may be amended or modified and in effect from time to
time, and any cancellation, buy-back, reversal, termination or assignment of any
of the foregoing.

        "IBOR Balance" means any portion of the Swingline Advances that bears
interest at a rate based upon the IBOR Rate.

        "IBOR Base Rate" means the interest rate at which Bank of America's
Grand Cayman Banking Center, Grand Cayman, British West Indies, would offer
Dollar deposits for the applicable Interest Period to other major banks in the
offshore Dollar interbank market.

        "IBOR Interest Period" means, with respect to any IBOR Balance, each
period commencing on the date such Balance is established or Continued or
Converted from the Base Rate Balance under the Swingline Advances to an IBOR
Balance or the last day of the next preceding Interest Period with respect to
such IBOR Balance, and ending one, two, three, four, five, six or seven days
thereafter, as the Borrower may select as provided in Section 4.5 or Section
5.3. Notwithstanding the foregoing: (a) each IBOR Interest Period shall end on a
Business Day; (b) no Interest Period may extend beyond the Maturity Date; and
(c) no more than three (3) IBOR Interest Periods shall be in effect at the same
time.

        "IBOR Rate" means, with respect to any IBOR Balance for the relevant
Interest Period, a rate per annum determined by Bank of America pursuant to the
following formula:

                      IBOR Rate     =              IBOR Base Rate
                                        ------------------------------------
                                        1.00 - Eurodollar Reserve Percentage

        "IBOR Rate Margin" has the meaning specified in Section 4.2.

        "Indemnified Liabilities" has the meaning specified in Section 15.2.

                                       9
<PAGE>

        "Intellectual Property" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark and
service mark registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.

        "Interest Expense" means, for any period and for any Person, the sum of
(a) interest expense of such Person calculated without duplication on a
consolidated basis for such period in accordance with GAAP, plus (b) interest
expenses paid under Hedge Agreements during such period minus (c) interest
payments received under Hedge Agreements during such period.

        "Interest Period" means a Libor Interest Period or an IBOR Interest
Period, as applicable.

        "Investments" has the meaning specified in Section 11.5.

        "Joinder Agreement" means an agreement to be executed by a Person
pursuant to the terms of Section 7.2, in substantially the form of Exhibit G.

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

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

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

        "L/C Issuer" means Bank of America in its capacity as issuer of Letters
of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

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

        "Lender" has the meaning specified in the introductory paragraph of this
Agreement and, as the context requires, includes the L/C Issuer.

        "Letter of Credit" means any letter of credit issued hereunder and shall
include the Existing Letters of Credit. Each Letter of Credit shall be a standby
letter of credit.

        "Letter of Credit Application" means an application and agreement for
the issuance or amendment of a Letter of Credit in such form as shall at any
time be in use by the L/C Issuer.

                                       10
<PAGE>

         "Letter of Credit Sublimit" means an amount equal to $50,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the aggregate
Commitments.

        "Leverage Ratio" means, as of any period end and determined on a
consolidated basis for the Borrower and its Subsidiaries, the ratio of (a) Total
Adjusted Funded Debt to (b) EBITDAR.

        "Libor Balance" means any portion of the Revolving Loan that bears
interest at a rate based upon the Libor Rate.

        "Libor Base Rate" means, with respect to any Libor Interest Period (a)
the rate per annum equal to the rate determined by the Agent to be the offered
rate that appears on the page of the Telerate screen (or any successor thereto)
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, (b) in the event the rate referenced in the preceding clause
(a) does not appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the Agent to be
the offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London time)
two (2) Business Days prior to the first day of such Interest Period or (c) in
the event the rates referenced in clause (a) or clause (b) preceding are not
available, the rate per annum determined by the Agent as the rate of interest
(rounded upward to the next 1/100th of 1%) at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Libor Balance being advanced, Continued or Converted
by Bank of America and with a term equivalent to such Interest Period would be
offered by Bank of America's London Branch to major banks in the offshore Dollar
market at their request at approximately 4:00 p.m. (London time) two (2)
Business Days prior to the first day of such Interest Period. The determination
of the Libor Base Rate by the Agent shall be conclusive in the absence of
manifest error.

        "Libor Interest Period" means with respect to any Libor Balance, each
period commencing on the date such Balance is established or Continued or
Converted from the Base Rate Balance to a Libor Balance, or the last day of the
next preceding Libor Interest Period with respect to such Libor Balance, and
ending one week thereafter or on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower may select as
provided in Section 4.5 or Section 5.3, except that each such Libor Interest
Period which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (a) each Libor
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day); (b) any Libor Interest Period which would otherwise extend beyond the
Maturity Date shall end on the Maturity Date; (c) no more than ten (10) Libor
Interest Periods shall be in effect at the same time; and (d) no Libor Interest
Period for any Libor Balance shall have a duration of less than

                                       11
<PAGE>

one (1) week and, if the Libor Interest Period would otherwise be a shorter
period, the related Libor Balance shall not be available hereunder.

        "Libor Rate" means, with respect to any Libor Balance for the relevant
Interest Period, a rate per annum determined by the Agent pursuant to the
following formula:

                      Libor Rate     =             Libor Base Rate
                                        ------------------------------------
                                        1.00 - Eurodollar Reserve Percentage

        "Libor Rate Margin" has the meaning specified in Section 4.2.

        "Lien" means any lien, mortgage, security interest, tax lien, pledge,
charge, hypothecation, assignment, preference, priority or other encumbrance of
any kind or nature whatsoever (including any conditional sale or title retention
agreement), whether arising by contract, operation of law or otherwise.

        "Loan" means the Revolving Loan and the Swingline Advances.

        "Loan Documents" means this Agreement, the Notes, the Subsidiary
Guaranty, any Joinder Agreement and all other agreements, documents and
instruments now or hereafter executed and/or delivered pursuant to or in
connection with any of the foregoing, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof (excluding any
commitment letter, term sheet or other agreement entered into prior to the
Closing Date).

        "Margin Adjustment Date" has the meaning specified in Section 4.2.

        "Material Adverse Effect" means any material adverse effect, or the
occurrence of any event or the existence of any condition that could reasonably
be expected to have a material adverse effect, on (a) the business or financial
condition, prospects, performance or operations of the Borrower individually or
the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower individually or the Borrower and its Subsidiaries taken as a whole to
pay and perform the obligations for which it or they, as applicable, are
responsible when due or (c) the validity or enforceability of (i) any of the
Loan Documents or (ii) the rights and remedies of the Agent or the Lenders under
any of the Loan Documents.

        "Maturity Date" means the day which is the third anniversary of the
Closing Date.

        "Maximum Rate" has the meaning specified in Section 15.12.

        "Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate at any time within the six (6) year period preceding the
date hereof or hereafter and which is covered by Title IV of ERISA.

        "Net Income" means, for any period and any Person, such Person's
consolidated net income (or loss) determined in accordance with GAAP, but
excluding the income of any other

                                       12
<PAGE>

Person (other than Subsidiaries) in which such Person or any Subsidiary of such
Person has an ownership interest, unless received by such Person or a Subsidiary
of such Person in a cash distribution.

        "Net Proceeds" means (a) in connection with any disposition of Property
of the Borrower or any of its Subsidiaries, the cash proceeds received by such
Person from such disposition (including payments under notes or other debt
Securities received in connection with any such disposition, but only as and
when received) net of (i) the costs of such disposition (including reasonable,
out-of-pocket professional fees and expenses, investment banking fees, financial
advisory fees, taxes, notarial fees, survey costs, title insurance premiums,
required escrow deposits and purchase price adjustments and other customary fees
and expenses, in each case attributable to and actually paid in connection with
such disposition) and (ii) amounts applied to repayment of Debt (other than the
Obligations) secured by a Lien on the Property disposed of and (b) in connection
with issuance of any Securities, the cash proceeds received from such issuance,
net of all costs of such issuance (including reasonable, out-of-pocket
professional fees and expenses, notarial fees, underwriting discounts and
commissions, placement, underwriting or arrangement fees and other customary
fees and expenses) actually paid.

        "Note Agreement" means that certain Note Agreement Re: $40,000,000 7.20%
Senior Notes Due August 8, 2005, dated as of August 1, 1995, entered into by the
Borrower and the "Purchasers" party thereto and each other agreement, document
or instrument entered into or delivered in connection therewith, as such
agreements, documents and instruments may be amended, restated or otherwise
modified from time to time.

        "Notes" means the Revolving Notes and the Swingline Note.

        "Obligations" means any and all (a) obligations, indebtedness and
liabilities of the Borrower to the Agent and the Lenders, or any of them,
arising pursuant to this Agreement or any other Loan Document or otherwise with
respect to the Loan or any Letter of Credit, whether now existing or hereafter
arising, whether direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several, including the obligation of the Borrower to
repay the Loan, interest on the Loan and all fees, costs and expenses (including
Attorney Costs) provided for in the Loan Documents and (b) indebtedness,
liabilities and obligations of the Borrower under any Hedge Agreement that the
Borrower may enter into with the Agent, any Lender or any of their respective
Affiliates if and to the extent that such Hedge Agreement is permitted in
accordance with Section 11.1(i).

        "Offering Memorandum" means the Confidential Offering Memorandum dated
September 2002, prepared and distributed by the Arranger with respect to the
syndication of the Commitments and the Loan evidenced by this Agreement.

        "Original Agreement" means that certain Amended and Restated Credit
Agreement, dated as of August 23, 2000, among the Borrower, Bank of America, as
agent, and the "Lenders" party thereto which originally provided for credit
facilities in an aggregate principal amount of $200,000,000.

        "Other Taxes" has the meaning specified in Section 6.6(b).

                                       13
<PAGE>

        "Outstanding Amount" means (i) with respect to the Loan on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of the Loan, as the case may be,
occurring on such date and (ii) with respect to L/C Obligations on any date, the
amount of such L/C Obligations on such date after giving effect to any L/C
Credit Extension occurring on such date and any other change in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursement of any outstanding unpaid drawing under any Letter of Credit or
any reduction in the maximum amount available for drawing under any Letter of
Credit taking effect on such date.

        "Participant" has the meaning specified in Section 15.8(d).

        "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.

        "Permit" means any permit, certificate, approval order, license or other
authorization.

        "Permitted Acquisition" means any acquisition of the Capital Stock of a
Person or any acquisition of Property which constitutes a significant or
material portion of an existing business of a Person, in each case, in a
transaction that satisfies each of the following requirements:

               (a) No Default; Certificate of Compliance. Both before and after
        giving effect to such acquisition and any advance of the Loan requested
        to be made in connection therewith, no Default exists or will exist or
        would result therefrom, and, not less than five (5) Business Days prior
        to the date of such acquisition, the Borrower shall provide the Agent
        and the Lenders with a certificate duly executed by the chief financial
        officer or Vice President, Finance of the Borrower which represents and
        warrants pro forma compliance with each of the terms and covenants of
        this Agreement as of the date of and after giving effect to such
        acquisition;

               (b) Consideration. The total consideration (whether classified as
        purchase price, noncompete payments or otherwise, and including the
        amount of all Debt incurred, assumed or acquired by the Borrower and its
        Subsidiaries in connection with such acquisition, and without regard to
        whether such amount is paid at closing or paid over time and the Dollar
        value of all other assets, including Capital Stock of the Borrower, to
        be transferred by the purchaser in connection with such acquisition to
        the seller or sellers, all valued in accordance with the applicable
        agreement entered into between the Target and/or the seller and the
        purchaser) to be paid by the Borrower and its Subsidiaries in connection
        with all such acquisitions during any Fiscal Year shall not exceed
        twenty percent (20.0%) of the Borrower's Tangible Net Worth as of the
        end of the immediately preceding Fiscal Year;

               (c) Diligence. The Borrower has completed due diligence to its
        satisfaction on the Target or the Property to be acquired and has
        provided the Agent and the Lenders with copies of all agreements and
        information (including due diligence materials) entered into or received
        by the Borrower or requested by the Agent or any Lender, as the Agent or
        any Lender may reasonably request;

                                       14
<PAGE>

               (d) Structure. If the proposed acquisition is an acquisition of
        the Capital Stock of a Target, the acquisition will be structured so
        that the Target will become a Wholly-Owned Subsidiary; if the proposed
        acquisition is an acquisition of assets, the acquisition will be
        structured so that the Borrower or a Wholly-Owned Subsidiary shall
        acquire such assets; and, if the proposed acquisition is the acquisition
        of a Person, the Board of Directors of such Person has approved such
        acquisition;

               (e) Material Adverse Effect. Neither the Borrower nor any of its
        Subsidiaries shall, as a result of or in connection with any such
        acquisition, assume or incur any contingent liabilities (whether
        relating to environmental, tax, litigation or other matters) that could
        reasonably be expected, as of the date of such acquisition, to result in
        the existence or occurrence of a Material Adverse Effect; and

               (f) Lines of Business. The Target shall be engaged in
        substantially the same line or lines of business, or a business
        reasonably related or complementary thereto, as the Borrower and its
        Subsidiaries.

        "Permitted Liens" means the Liens permitted by Section 11.2.

        "Permitted Sale-Leaseback" means a transaction designed to reduce state
tax liability whereby the Borrower or one of its Subsidiaries sells Property to
another Person which finances the purchase price of such Property by selling
notes to, or otherwise borrowing from, the Borrower or one of its Subsidiaries
and leases such Property to the seller in an operating lease transaction.

        "Person" means any individual, corporation, limited liability company,
business trust, association, company, partnership, joint venture, Governmental
Authority or other entity.

        "Plan" means any employee benefit plan established or maintained by the
Borrower or any ERISA Affiliate and which is subject to Title IV of ERISA.

        "Principal Office" means the office of the Agent, located at 701 Fifth
Avenue, Seattle, Washington 98104.

        "Prohibited Transaction" means any transaction described in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which no statutory or
administrative exemption applies.

        "Projections" means the Borrower's forecasted consolidated (a) balance
sheets, (b) profit and loss statements, (c) cash flow statements and (d)
capitalization statements, all materially consistent with the Borrower's
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.

        "Property" means, for any Person, property or assets of all kinds, real,
personal or mixed, tangible or intangible (including all rights relating
thereto), whether owned or acquired on or after the Closing Date.

                                       15
<PAGE>

        "Quarterly Payment Date" means the last Business Day of each March,
June, September and December of each year, the first of which shall be December
31, 2002.

        "Register" has the meaning specified in Section 15.8(c).

        "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended, modified or supplemented from
time to time or any successor regulation therefor.

        "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended, modified or supplemented from
time to time or any successor regulation therefor.

        "Regulatory Change" means, with respect to any Lender, any change after
the date of this Agreement (other than with respect to taxes excluded by the
first sentence of Section 6.6(a)) in U.S. federal, state or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests (other than with respect to taxes
excluded by the first sentence of Section 6.6(a)) applying to a class of lenders
including such Lender of or under any U.S. federal or state or any foreign laws
or regulations (whether or not having the force of law) by any Governmental
Authority or monetary authority charged with the interpretation or
administration thereof.

        "Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching or
migration of Hazardous Materials into the indoor or outdoor environment or into
or from Property owned or leased by such Person, including the migration of
Hazardous Materials through or in the air, soil, surface water, ground water or
property, in violation of Environmental Laws.

        "Remedial Action" means all actions required under applicable
Environmental Laws to (a) clean up, remove, treat or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of Hazardous Materials or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; provided that "Remedial Action" shall not include such actions taken in
the normal course of business and in material compliance with Environmental
Laws.

        "Reportable Event" means any of the events set forth in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived by the PBGC.

        "Required Lenders" means any combination of Lenders having more than
fifty percent (50.0%) of the sum of the Commitments or, if the Commitments have
terminated, the Total Outstandings (with the aggregate amount of each Lender's
risk participation and funded participation in L/C Obligations being deemed
"held" by such Lender for purposes of this definition).

        "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer or assistant treasurer of the Borrower. Any
document delivered hereunder that is signed by a Responsible Officer of the
Borrower shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of the

                                       16
<PAGE>

Borrower and such Responsible Officer shall be conclusively presumed to have
acted on behalf of the Borrower.

        "Revolving Loan" means, as to any Lender, the advances made by such
Lender pursuant to Section 2.1 (other than Swingline Advances), and, as to all
Lenders, all such advances made or held by the Lenders pursuant to Section 2.1.

        "Revolving Notes" means the promissory notes provided for by Section 2.2
(other than the Swingline Note) and all amendments, restatements or other
modifications thereof.

        "Securities" means any stock, shares, options, warrants, voting trust
certificates or other instruments evidencing an ownership interest or a right to
acquire an ownership interest in a Person or any bonds, debentures, notes or
other evidences of indebtedness for borrowed money, secured or unsecured.

        "Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including contingent liabilities, of such Person,
(b) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person is able
to realize upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital after giving
due consideration to current and anticipated future capital requirements and
current and anticipated future business conduct and the prevailing practice in
the industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

        "Subsidiary" means, (a) when used to determine the relationship of a
Person (the "parent") to another Person, a Person (the "subsidiary") of which an
aggregate of more than fifty percent (50.0%) or more of the Capital Stock is
owned of record or beneficially by the parent, or by one or more Subsidiaries of
the parent, or by the parent and one or more Subsidiaries of the parent, (i) if
the holders of such Capital Stock (A) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or other individuals performing similar functions) of the subsidiary, even
though the right so to vote has been suspended by the happening of such a
contingency or (B) are entitled, as such holders, to vote for the election of a
majority of the directors (or individuals performing similar functions) of the
subsidiary, whether or not the right so to vote exists by reason of the
happening of a contingency or (ii) in the case of Capital Stock which is not
issued by a corporation, if such ownership interests constitute a majority
voting interest and (b) when used with respect to a Plan, ERISA or a provision
of the Code pertaining to employee benefit plans, means, with respect to the
parent, any corporation, trade or business (whether or not incorporated) which
is under common control with the parent

                                       17
<PAGE>

and is treated as a single employer with the parent under Section 414(b) or
Section 414(c) of the Code and the regulations thereunder.

        "Subsidiary Guarantor" means a Subsidiary of the Borrower which is a
Guarantor hereunder.

        "Subsidiary Guaranty" means a guaranty agreement executed and delivered
by a Subsidiary of the Borrower in favor of the Agent, for the benefit of the
Agent and the Lenders, in substantially the form of Exhibit E, as such guaranty
agreement may be amended, restated or otherwise modified from time to time.

        "Swingline Advance" has the meaning specified in Section 2.1.

        "Swingline Note" means the swingline promissory note provided for by
Section 2.2 and all amendments, restatements or other modifications thereof.

        "Tangible Net Worth" means the Borrower's (a) shareholders' equity
(including Capital Stock, additional paid-in capital and retained earnings)
minus (b) all intangible assets, each as determined in accordance with GAAP.

        "Target" means the Person who is to be acquired or whose assets are to
be acquired by the Borrower or a Wholly-Owned Subsidiary in connection with a
Permitted Acquisition.

        "Taxes" has the meaning specified in Section 6.6.

        "Termination Event" means (a) a Reportable Event, (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA or (c) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA or the appointment of a
trustee to administer any Plan.

        "Total Adjusted Funded Debt" means, as of any date of determination,
with respect to the Borrower and its Subsidiaries, (a) the average outstanding
principal balance of all Funded Debt of such Persons as of the end of each of
the immediately preceding twelve (12) Fiscal Periods, plus (b) without
duplication, all lease and rent expense for any real Property for the preceding
four (4) Fiscal Quarters multiplied by eight (8) plus (c) without duplication,
all lease and rent expense for any personal Property for the preceding four (4)
Fiscal Quarters multiplied by three (3).

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

        "Type" means any type of Balance (i.e., a Base Rate Balance, a Libor
Balance or an IBOR Balance).

        "UCC" means the Uniform Commercial Code as in effect from time to time
in the State of California.

                                       18
<PAGE>

        "Undrawn Trade Letter of Credit" means any outstanding commercial or
documentary letter of credit issued for the account of the Borrower or any
Subsidiary of the Borrower under which (a) a drawing for payment has not been
made by the beneficiary, (b) a drawing for payment has been made by the
beneficiary and was timely paid by the Borrower or such Subsidiary in accordance
with the terms thereof and a balance remains undrawn pursuant to the terms
thereof or (c) a drawing has been made and remains unpaid by the Borrower or
such Subsidiary and such drawing has been outstanding for a period not in excess
of three (3) Business Days.

        "Unfunded Vested Accrued Benefits" means, with respect to any Plan at
any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan.

        "Unreimbursed Amount" has the meaning set forth in Section 3.3(a).

        "U.S." means the United States of America.

        "Voting Stock" means Capital Stock of a Person having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or
similar governing body) of such Person (irrespective of whether or not at the
time Capital Stock of any other class or classes of such Person shall have or
might have voting power by reason of the happening of any contingency).

        "Wholly-Owned Subsidiary" means any Subsidiary of the Borrower that is
owned 100% by the Borrower and/or a Subsidiary of the Borrower.

        Section 1.2   Other Interpretive Provisions.

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

               (b) (i) The words "hereof", "herein", "hereunder" and words of
               similar import referring to this Agreement refer to this
               Agreement as a whole and not to any particular provision of this
               Agreement. Unless otherwise specified, all Article, Exhibit,
               Section and Schedule references pertain to Articles, Exhibits,
               Sections and Schedules of this Agreement.

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

                      (iii) 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."

               (c) Unless otherwise expressly provided herein, (i) references to
        agreements (including this Agreement) and other contractual instruments
        shall be deemed to include

                                       19
<PAGE>

        all subsequent amendments and other modifications thereto and (ii)
        references to any statute or regulation are to be construed as including
        all statutory and regulatory provisions consolidating, amending,
        replacing, supplementing or interpreting the statute or regulation.

               (d) This Agreement and 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.
        Unless otherwise expressly provided, any reference to any action of the
        Agent or any Lender by way of consent, approval or waiver shall be
        deemed modified by the phrase "in its/their sole discretion."

               (e) Terms used herein that are defined in the UCC, unless
        otherwise defined herein, shall have the meanings specified in the UCC.

        Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Lenders
hereunder shall be prepared, in accordance with GAAP on a "consistent basis"
with those used in the preparation of the financial statements referred to in
Section 9.2. All calculations made for the purposes of determining compliance
with the provisions of this Agreement shall be made by application of GAAP on a
"consistent basis" with those used in the preparation of the financial
statements referred to in Section 9.2. Accounting principles are applied on a
"consistent basis" when the accounting principles applied in a current period
are comparable in all material respects to those accounting principles applied
in a preceding period. Changes in the application of accounting principles which
do not have a material impact on calculating the financial covenants herein
shall be deemed comparable in all material respects to accounting principles
applied in a preceding period. To enable the ready and consistent determination
of compliance by the Borrower with its obligations under this Agreement, the
Borrower will not, nor will it permit any of its Subsidiaries to, change the
manner in which either the last day of its Fiscal Year or the last day of each
of the first three Fiscal Quarters of its Fiscal Year is determined without the
prior written consent of the Required Lenders. If at any time any change in GAAP
would affect the computation of any financial ratio or requirement set forth in
this Agreement, and either the Borrower or the Required Lenders shall so
request, the Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein.

        Section 1.4 Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to San Francisco, California
time.

        Section 1.5 Letter of Credit Amounts. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to mean the maximum face amount of such Letter of Credit after giving
effect to all increases thereof contemplated by such Letter of Credit or the
Letter of Credit Application therefor, whether or not such maximum face amount
is in effect at such time.

                                       20
<PAGE>

                                    ARTICLE 2

                                 Credit Facility

        Section 2.1 Commitments. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make advances to the Borrower from
time to time, subject to the provisions of Section 2.4, from the Closing Date to
the Maturity Date in an aggregate principal amount at any time outstanding up to
but not exceeding the amount of such Lender's Commitment as then in effect;
provided, however, (a) the aggregate Outstanding Amount of (i) the Revolving
Loan outstanding applicable to a Lender plus such Lender's Commitment Percentage
of the Outstanding Amount of all L/C Obligations shall not at any time exceed
such Lender's Commitment and (ii) the Loan (inclusive of such Lender's
obligation to make advances under the Revolving Loan to pay Swingline Advances)
outstanding applicable to a Lender plus such Lender's Commitment Percentage of
the Outstanding Amount of all L/C Obligations shall not at any time exceed such
Lender's Commitment and (b) the Total Outstandings shall not at any time exceed
the aggregate Commitments. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, the Borrower may borrow, prepay and
reborrow hereunder the amount of the Commitments and may establish a Base Rate
Balance and Libor Balances thereunder and, until the Maturity Date, the Borrower
may Continue Libor Balances established under the Revolving Loan or Convert
Balances established under the Revolving Loan as either Libor Balances or Base
Rate Balances into Base Rate Balances or Libor Balances, as applicable.
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower may from time to time request, and Bank of America may in its
discretion from time to time advance (but shall in no event be obligated to
advance), revolving loans which are to be funded solely by Bank of America (the
"Swingline Advances"); provided, however, that (i) the aggregate principal
amount of the Swingline Advances outstanding at any time shall not exceed
fifteen million Dollars ($15,000,000) and the Total Outstandings shall not
exceed the aggregate principal amount of the Commitments and (ii) Bank of
America shall give the Agent and each Lender written notice of the aggregate
outstanding principal amount of the Swingline Advances upon the written request
of the Agent or any Lender (but no more often than once every calendar quarter).
Furthermore, upon one (1) Business Day's prior written notice given by Bank of
America to the Agent and the other Lenders at any time and from time to time
(including at any time following the occurrence of a Default or an Event of
Default) and, in any event, without notice on the Business Day immediately
preceding the Maturity Date, each Lender (including Bank of America) severally
agrees, irrevocably and unconditionally, as provided in the first sentence of
this Section 2.1, and notwithstanding anything to the contrary contained in this
Agreement, any Default or Event of Default or the inability or failure of the
Borrower or any of its Subsidiaries to satisfy any condition precedent to
funding any advance under the Loan contained in Article 8 (which conditions
precedent shall not apply to this sentence), to make an advance under the
Revolving Loan, in the form of a Base Rate Balance, in an amount equal to its
Commitment Percentage of the aggregate principal amount of the Swingline
Advances then outstanding, and the proceeds of such advance under the Revolving
Loan shall be promptly paid by the Agent to Bank of America and applied as a
repayment of the aggregate principal amount of the Swingline Advances then
outstanding. Subject to the other terms and provisions of this Agreement, the
Borrower may borrow, prepay and reborrow hereunder the Swingline Advances and
may establish a Base Rate Balance and IBOR Balances thereunder and, until the
Maturity Date, the Borrower may Continue IBOR Balances established under the
Swingline Advances or

                                       21
<PAGE>

Convert Balances established under the Swingline Advances as either IBOR
Balances or Base Rate Balances into Base Rate Balances or IBOR Balances, as
applicable. Each Type of Balance under the Loan advanced by each Lender shall be
established and maintained at such Lender's Applicable Lending Office for such
Type of Balance.

        Section 2.2 Notes. The portion of the Revolving Loan made by each Lender
shall be evidenced by a single promissory note of the Borrower, in substantially
the form of Exhibit A (a "Revolving Note"), payable to the order of such Lender,
in the maximum principal amount equal to such Lender's Commitment as originally
in effect (or, if greater, its Commitment as thereafter increased) and otherwise
duly completed, and the Swingline Advances made by Bank of America shall be
evidenced by a single promissory note of the Borrower in the maximum original
principal amount of fifteen million Dollars ($15,000,000) payable to the order
of Bank of America in substantially the form of Exhibit B (the "Swingline
Note"), dated the Closing Date.

        Section 2.3 Repayment of Loan. The Borrower shall pay to the Agent, for
the account of the Lenders, (a) the prepayments of the Loan required pursuant to
Section 5.4(a) and (b) the outstanding principal amount of the Loan on the
Maturity Date.

        Section 2.4 Use of Proceeds. Subject to the terms of this Agreement, the
proceeds of the Loan shall be used by the Borrower (a) to renew the Borrower's
existing indebtedness due under the Original Agreement, (b) to finance Capital
Expenditures by the Borrower and (c) for general corporate purposes, including
to finance working capital requirements of the Borrower and its Subsidiaries,
arising in the ordinary course of business.

        Section 2.5 Termination or Reduction of Commitments. The Borrower shall
have the right to terminate fully or to reduce in part the unused portion of the
Commitments at any time and from time to time, provided that: (a) the Borrower
shall not have the right to terminate or reduce in part any unused portion of
the Commitments that could or may be required to be advanced by the Lenders to
refinance Swingline Advances then outstanding; (b) the Borrower shall give the
Agent at least three (3) Business Days' notice of each such termination or
reduction as provided in Section 5.3; and (c) each partial reduction shall be in
an aggregate amount at least equal to $10,000,000 or any multiple of $5,000,000
in excess thereof. The Commitments may not be reinstated after they have been
terminated or reduced. If, after giving effect to any reduction of the
Commitments, the Letter of Credit Sublimit exceeds the amount of the aggregate
Commitments, such sublimit shall be automatically reduced by the amount of such
excess.

        Section 2.6   Increase of Commitments.

               (a) Upon notice to the Agent (who shall promptly notify the
        Lenders), the Borrower may, from time to time prior to the day which is
        the thirty (30) month anniversary of the Closing Date, request an
        increase in the aggregate Commitments up to an aggregate of
        $250,000,000; provided that, in the event the Borrower has reduced the
        Commitments pursuant to Section 2.5, the amount of any increase in the
        Commitments pursuant to this Section 2.6 shall not exceed $50,000,000.
        At the time of sending such notice, the Borrower (in consultation with
        the Agent) shall specify the time period within

                                       22
<PAGE>

        which each Lender is requested to respond to such request. Each Lender
        shall respond within such time period to the Agent as to whether or not
        it agrees to increase its Commitment and, if so, whether by an amount
        equal to or less than its Commitment Percentage of such requested
        increase. Any Lender not responding within such time period shall be
        deemed to have declined to increase its Commitment. The Agent shall
        notify the Borrower and each Lender of the Lenders' responses to each
        request made hereunder. To achieve the full amount of a requested
        increase, the Borrower may also (i) request that one or more other
        Lenders, in their sole and absolute discretion, nonratably increase
        their Commitment(s) and/or (ii) invite additional Eligible Assignees to
        become Lenders under the terms of this Agreement.

               (b) If any Commitments are increased in accordance with this
        Section, the Agent and the Borrower shall determine the effective date
        of such increase (the "Increase Effective Date"). The Agent and the
        Borrower shall promptly confirm in writing to the Lenders the final
        allocation of such increase and the Increase Effective Date. As a
        condition precedent to such increase, the Borrower shall deliver to the
        Agent a certificate dated as of the Increase Effective Date (in
        sufficient copies for each Lender) signed by a Responsible Officer of
        the Borrower (i) certifying and attaching the resolutions adopted by the
        Borrower and each Guarantor approving or consenting to such increase,
        (ii) including a Compliance Certificate demonstrating pro forma
        compliance with Section 12.1 after giving effect to such increase and
        (iii) certifying that before and after giving effect to such increase,
        the representations and warranties contained in Article 9 are true and
        correct on and as of the Increase Effective Date and no Default exists.
        The Borrower shall deliver new or amended Notes reflecting the new or
        increased Commitment of each new or affected Lender as of the Increase
        Effective Date. The Borrower shall prepay any Libor Balances outstanding
        on the Increase Effective Date (and pay any costs incurred in connection
        with such prepayment pursuant to Section 6.5) to the extent necessary to
        keep outstanding Balances ratable with any revised Commitment
        Percentages arising from any nonratable increase in the Commitments
        under this Section.

               (c) This Section shall supersede any provision in Section 15.11
        to the contrary.

                                    ARTICLE 3

                                Letters of Credit

        Section 3.1 The Letter of Credit Commitment.

               (a) Subject to the terms and conditions set forth herein, (i) the
        L/C Issuer agrees, in reliance upon the agreements of the other Lenders
        set forth in this Article 3, (A) from time to time on any Business Day
        during the period from the Closing Date until the Maturity Date, to
        issue Letters of Credit for the account of the Borrower, and to amend or
        extend Letters of Credit previously issued by it, in accordance with
        Section 3.2, and (B) to honor drafts under the Letters of Credit and
        (ii) the Lenders severally agree to participate in Letters of Credit
        issued for the account of the Borrower; provided that the L/C Issuer
        shall not be obligated to make any L/C Credit Extension with respect to
        any

                                       23
<PAGE>

        Letter of Credit, and no Lender shall be obligated to participate in any
        Letter of Credit if as of the date of such L/C Credit Extension, (x) the
        Total Outstandings would exceed the aggregate Commitments, (y) the
        aggregate Outstanding Amount of the portion of the Loan made by any
        Lender, plus such Lender's Commitment Percentage of the Outstanding
        Amount of all L/C Obligations would exceed the amount of such Lender's
        Commitment or (z) the Outstanding Amount of the L/C Obligations would
        exceed the Letter of Credit Sublimit. Within the foregoing limits, and
        subject to the terms and conditions hereof, the Borrower's ability to
        obtain Letters of Credit shall be fully revolving and, accordingly, the
        Borrower may, during the foregoing period, obtain Letters of Credit to
        replace Letters of Credit that have expired or that have been drawn upon
        and reimbursed. All Existing Letters of Credit shall be deemed to have
        been issued pursuant hereto and, from and after the Closing Date, shall
        be subject to and governed by the terms and conditions hereof; without
        limiting the foregoing, each Lender shall be deemed to have purchased
        from the L/C Issuer a risk participation in each Existing Letter of
        Credit on the Closing Date pursuant to Section 3.2(b).

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

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

                      (ii) subject to Section 3.2(c), the expiry date of such
               requested Letter of Credit would occur more than twelve months
               after the date of issuance or last extension, unless the Required
               Lenders have approved such expiry date;

                      (iii) the expiry date of such requested Letter of Credit
               would occur more than one year after the Maturity Date, unless
               all Lenders have approved such expiry date;

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

                      (v) such Letter of Credit is in an initial amount less
               than $250,000 or is to be denominated in a currency other than
               Dollars.

               (c) The L/C Issuer shall be under no obligation to amend any
        Letter of Credit if (i) the L/C Issuer would have no obligation at such
        time to issue such Letter of Credit

                                       24
<PAGE>

        in its amended form under the terms hereof or (ii) the beneficiary of
        such Letter of Credit does not accept the proposed amendment to such
        Letter of Credit.

        Section 3.2 Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.

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

               (b) Promptly after receipt of any Letter of Credit Application,
        the L/C Issuer will confirm with the Agent (by telephone or in writing)
        that the Agent has received a copy of such Letter of Credit Application
        from the Borrower and, if not, the L/C Issuer will provide the Agent
        with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
        the Agent that the requested issuance or amendment is permitted in
        accordance with the terms hereof, then, subject to the terms and
        conditions hereof, the L/C Issuer shall, on the requested date, issue
        such Letter of Credit for the account of the Borrower or enter into such
        amendment, as the case may be, in each case in accordance with the L/C
        Issuer's usual and customary business practices. Immediately upon the
        issuance of each Letter of Credit, each Lender shall be deemed to, and
        hereby irrevocably and unconditionally agrees to, purchase from the L/C
        Issuer a risk participation in such Letter of Credit in an amount equal
        to the product of such Lender's Commitment Percentage times the amount
        of such Letter of Credit.

               (c) If the Borrower so requests in any applicable Letter of
        Credit Application, the L/C Issuer may, in its sole and absolute
        discretion, agree to issue a Letter of Credit that has automatic
        extension provisions (each, an "Auto-Extension Letter of Credit");
        provided that any such Auto-Extension Letter of Credit must permit the
        L/C Issuer to prevent any such extension at least once in each
        twelve-month period (commencing with the date of issuance of such Letter
        of Credit) by giving prior notice to the beneficiary thereof not later
        than a day (the "Nonextension Notice Date") in each such twelve-month

                                       25
<PAGE>

        period to be agreed upon at the time such Letter of Credit is issued.
        Unless otherwise directed by the L/C Issuer, the Borrower shall not be
        required to make a specific request to the L/C Issuer for any such
        extension. Once an Auto-Extension Letter of Credit has been issued, the
        Lenders shall be deemed to have authorized (but may not require) the L/C
        Issuer to permit the extension of such Letter of Credit at any time to
        an expiry date not later than one year after the Maturity Date; provided
        that the L/C Issuer shall not permit any such extension if (i) the L/C
        Issuer has determined that it would have no obligation at such time to
        issue such Letter of Credit in its extended form under the terms hereof
        (by reason of the provisions of Section 3.1(b) or otherwise) or (ii) it
        has received notice (which may be by telephone or in writing) on or
        before the day that is two Business Days before the Nonextension Notice
        Date (A) from the Agent that the Required Lenders have elected not to
        permit such extension or (B) from the Agent, any Lender or the Borrower
        that one or more of the applicable conditions specified in Section 8.2
        is not then satisfied.

               (d) Promptly after its delivery of any Letter of Credit or any
        amendment to a Letter of Credit to an advising bank with respect thereto
        or to the beneficiary thereof, the L/C Issuer will also deliver to the
        Borrower and the Agent a true and complete copy of such Letter of Credit
        or amendment.

        Section 3.3 Drawings and Reimbursements; Funding of Participations.

               (a) Upon receipt from the beneficiary of any Letter of Credit of
        any notice of a drawing under such Letter of Credit, the L/C Issuer
        shall notify the Borrower and the Agent of its receipt of such notice
        and the amount of the requested drawing. Within one (1) Business Day of
        the date of any payment by the L/C Issuer under a Letter of Credit (each
        such date, an "Honor Date"), the Borrower shall reimburse the L/C Issuer
        through the Agent in an amount equal to the amount of such drawing. If
        the Borrower fails to so reimburse the L/C Issuer by such time, the
        Agent shall promptly notify each Lender of the Honor Date, the amount of
        the unreimbursed drawing (the "Unreimbursed Amount") and the amount of
        such Lender's Commitment Percentage thereof. In such event, the Borrower
        shall be deemed to have requested a borrowing to be disbursed on the
        Honor Date of an amount of the Loan in an amount equal to the
        Unreimbursed Amount (which amount shall be a Base Rate Balance), without
        regard to the minimum and multiples specified in Section 5.2 for the
        principal amount of borrowings, but subject to the amount of the
        unutilized portion of the aggregate Commitments and the conditions set
        forth in Section 8.2. Any notice given by the L/C Issuer or the Agent
        pursuant to this Section 3.3(a) may be given by telephone if immediately
        confirmed in writing; provided that the lack of such an immediate
        confirmation shall not affect the conclusiveness or binding effect of
        such notice.

               (b) Each Lender (including the Lender acting as L/C Issuer) shall
        upon any notice pursuant to Section 3.3(a) make funds available to the
        Agent for the account of the L/C Issuer at the Principal Office in an
        amount equal to its Commitment Percentage of the Unreimbursed Amount not
        later than 1:00 p.m. on the Business Day specified in such notice by the
        Agent, whereupon, subject to the provisions of Section 3.3(c), each
        Lender that so makes funds available shall be deemed to have made a
        portion of the Loan

                                       26
<PAGE>

        available to the Borrower in such amount, which portion shall be a Base
        Rate Balance. The Agent shall remit the funds so received to the L/C
        Issuer.

               (c) With respect to any Unreimbursed Amount that is not fully
        refinanced by a borrowing of portions of the Loan because the conditions
        set forth in Section 8.2 cannot be satisfied or for any other reason,
        the Borrower shall be deemed to have incurred from the L/C Issuer an L/C
        Borrowing in the amount of the Unreimbursed Amount that is not so
        refinanced, which L/C Borrowing shall be due and payable on demand
        (together with interest) and shall bear interest at the Default Rate. In
        such event, each Lender's payment to the Agent for the account of the
        L/C Issuer pursuant to Section 3.3(b) shall be deemed payment in respect
        of its participation in such L/C Borrowing and shall constitute an L/C
        Advance from such Lender in satisfaction of its participation obligation
        under this Article 3.

               (d) Until each Lender funds its portion of the Loan or an L/C
        Advance pursuant to this Section 3.3 to reimburse the L/C Issuer for any
        amount drawn under any Letter of Credit, interest in respect of such
        Lender's Commitment Percentage of such amount shall be solely for the
        account of the L/C Issuer.

               (e) Each Lender's obligation to make Loans or L/C Advances to
        reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
        contemplated by this Section 3.3, shall be absolute and unconditional
        and shall not be affected by any circumstance, including (i) any
        set-off, counterclaim, recoupment, defense or other right which such
        Lender may have against the L/C Issuer, the Borrower or any other Person
        for any reason whatsoever, (ii) the occurrence or continuance of a
        Default or (iii) any other occurrence, event or condition, whether or
        not similar to any of the foregoing; provided that each Lender's
        obligation to make available portions of the Loan pursuant to this
        Section 3.3 is subject to the conditions set forth in Section 8.2. No
        such making of an L/C Advance shall relieve or otherwise impair the
        obligation of the Borrower to reimburse the L/C Issuer for the amount of
        any payment made by the L/C Issuer under any Letter of Credit, together
        with interest as provided herein.

               (f) If any Lender fails to make available to the Agent for the
        account of the L/C Issuer any amount required to be paid by such Lender
        pursuant to the foregoing provisions of this Section 3.3 by the time
        specified in Section 3.3(b), the L/C Issuer shall be entitled to recover
        from such Lender (acting through the Agent), on demand, such amount with
        interest thereon for the period from the date such payment is required
        to the date on which such payment is immediately available to the L/C
        Issuer at a rate per annum equal to the Federal Funds Rate from time to
        time in effect. A certificate of the L/C Issuer submitted to any Lender
        (through the Agent) with respect to any amounts owing under this clause
        (f) shall be conclusive absent manifest error.

        Section 3.4 Repayment of Participations.

               (a) At any time after the L/C Issuer has made a payment under any
        Letter of Credit and has received from any Lender such Lender's L/C
        Advance in respect of such payment in accordance with Section 3.3, if
        the Agent receives for the account of the L/C

                                       27
<PAGE>

        Issuer any payment in respect of the related Unreimbursed Amount or
        interest thereon (whether directly from the Borrower or otherwise,
        including proceeds of Cash Collateral applied thereto by the Agent), the
        Agent will distribute to such Lender its Commitment Percentage thereof
        (appropriately adjusted, in the case of interest payments, to reflect
        the period of time during which such Lender's L/C Advance was
        outstanding) in the same funds as those received by the Agent.

               (b) If any payment received by the Agent for the account of the
        L/C Issuer pursuant to Section 3.3(a) is subsequently invalidated,
        declared to be fraudulent or preferential, set aside or required to be
        returned (including pursuant to any settlement entered into by the L/C
        Issuer in its discretion), each Lender shall pay to the Agent for the
        account of the L/C Issuer its Commitment Percentage thereof on demand of
        the Agent, plus interest thereon from the date of such demand to the
        date such amount is returned by such Lender, at a rate per annum equal
        to the Federal Funds Rate from time to time in effect.

        Section 3.5 Obligations Absolute. The obligation of the Borrower to
reimburse the L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

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

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

               (iii) any draft, demand, certificate or other document presented
        under such Letter of Credit proving to be forged, fraudulent, invalid or
        insufficient in any respect or any statement therein being untrue or
        inaccurate in any respect, so long as any such document appeared to
        comply with the terms of such Letter of Credit, or any loss or delay in
        the transmission or otherwise of any document required in order to make
        a drawing under such Letter of Credit;

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

                                       28
<PAGE>

               (v) any other circumstance or happening whatsoever where the L/C
        Issuer has acted in good faith.

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

        Section 3.6 Role of L/C Issuer. Each Lender and the Borrower agree that,
in paying any drawing under a Letter of Credit, the L/C Issuer shall not have
any responsibility to obtain any document (other than any sight draft,
certificate or document expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the
L/C Issuer, any Agent-Related Person nor any of the respective correspondents,
participants or assignees of the L/C Issuer shall be liable to any Lender for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Letter of Credit Application. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided that this assumption is not intended to, and shall
not, preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the L/C Issuer, any Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the L/C Issuer, shall be liable or
responsible for any of the matters described in clauses (i) through (v) of
Section 3.5; provided that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the L/C Issuer, and the
L/C Issuer may be liable to the Borrower, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the L/C Issuer's willful
misconduct or gross negligence or the L/C Issuer's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions of
such Letter of Credit. In furtherance and not in limitation of the foregoing,
the L/C Issuer may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

        Section 3.7 Cash Collateral. If, as of the Maturity Date, any Letter of
Credit may for any reason remain outstanding and partially or wholly undrawn,
the Borrower shall immediately Cash Collateralize the then Outstanding Amount of
all L/C Obligations. For purposes hereof, "Cash Collateralize" means to pledge
and deposit with or deliver to the Agent, for the benefit of the L/C Issuer and
the Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Agent and the L/C

                                       29
<PAGE>

Issuer (which documents are hereby consented to by the Lenders). Derivatives of
such term have corresponding meanings. The Borrower hereby grants to the Agent,
for the benefit of the L/C Issuer and the Lenders, a security interest in all
such cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash collateral shall be maintained in blocked, non-interest-bearing
deposit accounts at Bank of America.

        Section 3.8 Applicability of ISP98. Unless otherwise specified in an
Existing Letter of Credit (or any renewal thereof) or expressly agreed by the
L/C Issuer and the Borrower when a Letter of Credit is issued, the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit.

        Section 3.9 Letter of Credit Fees. The Borrower shall pay to the Agent
for the account of each Lender in accordance with its Commitment Percentage a
Letter of Credit fee for each Letter of Credit equal to the Libor Rate Margin
times the daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit); provided that, while any Event of Default exists, the rate per annum
for Letter of Credit fees shall be increased by 2%. Such letter of credit fees
shall be computed on a quarterly basis in arrears. Such letter of credit fees
shall be due and payable (i) on each Quarterly Payment Date, commencing with the
first such date to occur after the issuance of such Letter of Credit, (ii) on
the Maturity Date, (iii) if any Letters of Credit are outstanding on the
Maturity Date, on the date on which the last of such Letters of Credit to be
outstanding expires or terminates and (iv) on the date on which the
Administrative Agent takes any action described in Section 13.2(a), (b) or (c)
(or on which any of such actions occurs automatically pursuant to the proviso to
Section 13.2) and thereafter on demand. If there is any change in the Libor Rate
Margin during any quarter, the daily maximum amount of each Letter of Credit
shall be computed and multiplied by the Libor Rate Margin separately for each
period during such quarter that such Applicable Rate was in effect.

        Section 3.10 Fronting Fee and Documentary and Processing Charges Payable
to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own
account a fronting fee with respect to each Letter of Credit equal to 0.125% per
annum times the daily maximum amount available to be drawn on such Letter of
Credit, computed for each day such Letter of Credit is outstanding, payable (i)
on each Quarterly Payment Date, commencing with the first such date to occur
after the issuance of such Letter of Credit, (ii) on the Maturity Date, (iii) if
any Letters of Credit are outstanding on the Maturity Date, on the date on which
the last of such Letters of Credit to be outstanding expires or terminates and
(iv) on the date on which the Administrative Agent takes any action described in
Section 13.2(a), (b) or (c) (or on which any of such actions occurs
automatically pursuant to the proviso to Section 13.2) and thereafter on demand.
In addition, the Borrower shall pay directly to the L/C Issuer for its own
account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.

                                       30
<PAGE>

        Section 3.11 Conflict with Letter of Credit Application. In the event of
any conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

                                    ARTICLE 4

                                Interest and Fees

        Section 4.1 Interest Rate. The Borrower shall pay to the Agent, for the
account of each Lender (including Bank of America with respect to the Swingline
Advances), interest on the unpaid principal amount of the Loan made by such
Lender for the period commencing on the date of the initial advance under the
Loan to the date the Loan is due, at a fluctuating rate per annum equal to the
Applicable Rate. The term "Applicable Rate" means:

               (a) during the period that the Loan or any portion thereof is
        outstanding as a Base Rate Balance, the Base Rate, plus the Base Rate
        Margin;

               (b) during the period that the Revolving Loan or any portion
        thereof is outstanding as a Libor Balance or as Libor Balances, the
        Libor Rate, plus the Libor Rate Margin; and

               (c) during the period that any Swingline Advance is outstanding
        as an IBOR Balance or as IBOR Balances, the IBOR Rate, plus the IBOR
        Rate Margin.

        Section 4.2 Determinations of Margins and Commitment Fee Rate. From the
Closing Date to the first Margin Adjustment Date, the margins identified in
Section 4.1 shall be as follows: (a) the margin of interest payable with respect
to the Base Rate Balance (the "Base Rate Margin") shall be zero percent (0.00%);
(b) the margin of interest payable with respect to the Libor Balance (the "Libor
Rate Margin") shall be 0.875%; and (c) the margin of interest payable with
respect to the IBOR Balance (the "IBOR Rate Margin") shall be 0.875%. From the
Closing Date until the first Margin Adjustment Date, the percentage used to
determine fees payable under Section 4.6 (the "Commitment Fee Rate") shall be
0.175%. Upon delivery of the certificate required pursuant to Section 10.1(c)
after the end of each Fiscal Quarter commencing with such certificate delivered
for the Fiscal Quarter ending November 3, 2002, the Commitment Fee Rate, the
Base Rate Margin, the Libor Rate Margin and the IBOR Rate Margin shall
automatically be adjusted to the fee or rate, as applicable, corresponding to
the Leverage Ratio (determined for the preceding twelve (12) Fiscal Periods then
ending) of the Borrower set forth in the following table, such automatic
adjustment to take effect as of the first day of the calendar month following
the date on which such certificate is delivered (the "Margin Adjustment Date").

<TABLE>
<CAPTION>
      =========================================================================================
                                  BASE RATE     LIBOR RATE      IBOR RATE     COMMITMENT FEE
      LEVERAGE RATIO               MARGIN        MARGIN          MARGIN            RATE
      =========================================================================================
      <S>                         <C>           <C>             <C>           <C>
      Greater than or equal to      0.00%          1.50%          1.50%           0.225%
      3.25 to 1.00
      -----------------------------------------------------------------------------------------
      Greater than or equal to      0.00%          1.25%          1.25%            0.20%
      3.00 to 1.00 but less than
      3.25 to 1.00
      -----------------------------------------------------------------------------------------
</TABLE>

                                       31
<PAGE>

<TABLE>
      <S>                         <C>           <C>             <C>           <C>
      -----------------------------------------------------------------------------------------
      Greater than or equal to      0.00%          1.00%          1.00%            0.20%
      2.50 to 1.00 but less
      than 3.00 to 1.00
      -----------------------------------------------------------------------------------------
      Greater than or equal to      0.00%         0.875%          0.875%          0.175%
      2.00 to 1.00 but less
      than 2.50 to 1.00
      -----------------------------------------------------------------------------------------
      Less than 2.00 to 1.00        0.00%          0.75%          0.75%            0.15%
      =========================================================================================
</TABLE>

If the Borrower fails to deliver such certificate with respect to any Fiscal
Quarter which sets forth the Leverage Ratio within the period of time required
by Section 10.1(c): (y) each of the Libor Rate Margin and the IBOR Rate Margin
(each for Interest Periods commencing after the applicable Margin Adjustment
Date) shall automatically be adjusted to one and one-half of one percent (1.50%)
per annum; and (z) the Commitment Fee Rate shall automatically be adjusted to
nine-fortieths of one percent (0.225%) per annum. The automatic adjustments
provided for in the preceding sentence shall take effect as of the date on which
the referenced certificate is due and shall remain in effect until otherwise
adjusted on the date such certificate is actually received in accordance
herewith.

        Section 4.3 Payment Dates. Accrued interest on the Loan shall be due and
payable as follows: (a) in the case of the Base Rate Balance, on each Quarterly
Payment Date and on the Maturity Date; and (b) in the case of each Libor Balance
and each IBOR Balance, (i) on the last day of the Interest Period with respect
thereto, (ii) in the case of an Interest Period greater than three (3) months,
at three (3) month intervals after the first day of such Interest Period and
(iii) on the Maturity Date.

        Section 4.4 Default Interest. Notwithstanding anything to the contrary
contained in this Agreement, during the existence of an Event of Default, the
Borrower will pay to the Agent for the account of each Lender interest at the
applicable Default Rate on any principal of the Loan made by such Lender and (to
the fullest extent permitted by law) any other amount payable by the Borrower
under any Loan Document to or for the account of the Agent or such Lender.

        Section 4.5 Conversions and Continuations of Balances. Subject to
Section 5.2,

               (a) with respect to Balances under the Revolving Loan, the
        Borrower shall have the right from time to time to Convert all or part
        of either the Base Rate Balance or the Libor Balance into a Balance of
        the other Type or to Continue Libor Balances in existence as Libor
        Balances, provided that: (i) the Borrower shall give the Agent notice of
        each such Conversion or Continuation as provided in Section 5.3; (ii)
        subject to Article 6, a Libor Balance may only be Converted on the last
        day of the Interest Period therefor; and (iii) except for Conversions
        into the Base Rate Balance, no Conversions or Continuations shall be
        made without the consent of the Agent and the Required Lenders at any
        time during the existence of a Default and

                                       32
<PAGE>

               (b) with respect to Balances under the Swingline Advances, the
        Borrower shall have the right from time to time to Convert all or part
        of either the Base Rate Balance or the IBOR Balance into a Balance of
        the other Type or to Continue IBOR Balances in existence as IBOR
        Balances, provided that: (i) the Borrower shall give the Agent notice of
        each such Conversion or Continuation as provided in Section 5.3; (ii)
        subject to Article 6, an IBOR Balance may only be Converted on the last
        day of the Interest Period therefor; and (iii) except for Conversions
        into the Base Rate Balance, no Conversions or Continuations shall be
        made without the consent of the Agent and Bank of America at any time
        during the existence of a Default.

        Section 4.6 Commitment Fee. For the period from the Closing Date to the
Maturity Date, the Borrower agrees to pay to the Agent for the account of each
Lender, pro rata according to its Commitment Percentage, a commitment fee equal
to the Commitment Fee Rate (determined according to the provisions of Section
4.2) multiplied by the actual daily amount by which the Commitments exceed the
Total Outstandings (excluding Swingline Advances for this purpose). Accrued
commitment fees under this Section shall be payable in arrears on each Quarterly
Payment Date and on the Maturity Date.

        Section 4.7 Administrative Fee. The Borrower agrees to pay to the Agent
on the Closing Date and on each anniversary thereof the administrative fee
described in the Fee Letter.

        Section 4.8 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) in the period for which interest is payable unless
such calculation would result in a rate that exceeds the Maximum Rate, in which
case interest shall be calculated on the basis of a year of 365 or 366 days, as
the case may be. Notwithstanding anything to the contrary contained in this
Section, interest payable by the Borrower hereunder and under the other Loan
Documents with respect to the Base Rate Balance shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and the actual number of days
elapsed (including the first day but excluding the last day) in the period for
which interest is payable. Each determination of an interest rate by the Agent
shall be conclusive and binding on the Borrower and the Lenders in the absence
of manifest error. The Agent will, at the request of the Borrower or any Lender,
deliver to the Borrower or such Lender, as the case may be, a statement showing
the quotations used by the Agent in determining any interest rate and the
resulting interest rate.

                                    ARTICLE 5

                             Administrative Matters

        Section 5.1 Borrowing Procedure. The Borrower shall give the Agent, and
the Agent will give the Lenders, notice of each borrowing under the Commitments
in accordance with Section 5.3. Not later than 10:00 a.m. on the date specified
for each borrowing under the Commitment, each Lender will make available the
amount of the Loan to be advanced by it on such date to the Agent, at the
Principal Office, in immediately available funds, for the account of the
Borrower. The amounts received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by 1:00 p.m. at
the Borrower's direction by

                                       33
<PAGE>

transferring the same, in immediately available funds by wire transfer,
automated clearinghouse transfer or interbank transfer to (a) a bank account of
the Borrower designated by the Borrower in writing or (b) a Person or Persons
designated by the Borrower in writing; provided that if, on the date the notice
of borrowing with respect to such borrowing is given by the Borrower, there are
L/C Borrowings outstanding, then the proceeds of such borrowing shall be
applied, first, to the payment in full of any such L/C Borrowings, and second,
to the Borrower as provided above.

        Section 5.2 Minimum Amounts. Each borrowing under the Commitments shall
be in an amount equal to $5,000,000 or an integral multiple of $1,000,000 in
excess thereof except that in the case of a Swingline Advance such borrowing may
be in an amount equal to $250,000 or an integral multiple of $250,000 in excess
thereof. Except for Conversions and prepayments pursuant to Section 5.4(a) and
Article 6, each Conversion and prepayment of principal of the Loan shall be in
an amount equal to the minimum amounts set forth in the preceding sentence.
Notwithstanding the foregoing, each borrowing or Continuation under the
Commitments as a Libor Balance or an IBOR Balance (as applicable) and each
Conversion of amounts outstanding as all or a portion of the Base Rate Balance
to a Libor Balance or an IBOR Balance (as applicable) shall be in an amount
equal to the minimum amounts set forth for borrowings in this Section.

        Section 5.3 Certain Notices.

               (a) Notices by the Borrower to the Agent of terminations or
        reductions of Commitments, of borrowings, Conversions, Continuations and
        prepayments of the Loan and of the duration of Interest Periods shall be
        irrevocable and shall be effective only if received by the Agent not
        later than 10:00 a.m. on the Business Day prior to the date of the
        relevant termination, reduction, borrowing, Conversion, Continuation or
        prepayment as specified below:

<TABLE>
<CAPTION>
         ================================================================================
                                   Notice                            Number of Business
                                                                         Days Prior
         ================================================================================
         <S>                                                         <C>
         Borrowing, Conversions, Continuations and prepayment of              0
         Swingline Advances
         --------------------------------------------------------------------------------
         Borrowing of the Revolving Loan as all or a portion of the           1
         Base Rate Balance
         --------------------------------------------------------------------------------
         Borrowing of the Revolving Loan as a Libor Balance                   3
         --------------------------------------------------------------------------------
         Conversions or Continuations of Balances under the                   3
         Revolving Loan and termination or reduction of Commitments
         --------------------------------------------------------------------------------
         Prepayment of the Revolving Loan which is all or a portion           1
         of the Base Rate Balance
         --------------------------------------------------------------------------------
         Prepayment of the Revolving Loan which is a Libor Balance            3
         ================================================================================
</TABLE>

                                       34
<PAGE>

        Any notices of the type described in this Section which are received by
        the Agent after the applicable time set forth above on a Business Day
        shall be deemed to be received and shall be effective on the next
        Business Day. Each such notice of termination or reduction shall specify
        the amount of the Commitments to be terminated or reduced. Each such
        notice of borrowing, Conversion, Continuation or prepayment shall be in
        the form of Exhibit F, appropriately completed by an authorized
        representative of the Borrower, and shall specify: (i) the amount of the
        Loan to be borrowed or prepaid or the Balances to be Converted or
        Continued; (ii) the amount (subject to Section 5.2) to be borrowed (and
        whether any of such borrowing will be a Swingline Advance), Converted,
        Continued or prepaid; (iii) in the case of a Conversion, the Type of
        Balance to result from such Conversion; (iv) in the case of a borrowing,
        the Type of Balance or Balances to be applicable to such borrowing and
        the amounts thereof; (v) in the event a Libor Balance or an IBOR Balance
        is selected, the duration of the Interest Period therefor; and (vi) the
        date of borrowing, Conversion, Continuation or prepayment (which shall
        be a Business Day).

               (b) Any notices by the Borrower of the type described in this
        Section may be made orally or in writing and, if made orally, must be
        confirmed immediately in writing (which may be by telecopy, provided
        that such telecopy is promptly followed by delivery of an original
        signed notice) on the same Business Day on which such oral notice is
        given; provided that any such oral notice shall be deemed to be
        controlling and proper notice in the event of a discrepancy with or
        failure to receive a confirming written notice. The Agent shall notify
        the affected Lenders of the contents of each such notice on the date of
        its receipt of the same or, if received after the applicable time set
        forth above on a Business Day, on the next Business Day. In the event
        the Borrower fails to select the Type of Balance applicable to a
        borrowing of the Loan, or the duration of any Interest Period for any
        Libor Balance or IBOR Balance, within the time period and otherwise as
        provided in this Section, such Balance (if outstanding as a Libor
        Balance or an IBOR Balance) will be automatically Converted into the
        Base Rate Balance on the last day of the Interest Period for such Libor
        Balance or IBOR Balance or (if outstanding as a portion of the Base Rate
        Balance) will remain as, or (if not then outstanding) will be made as, a
        portion of the Base Rate Balance. The Borrower may not borrow under the
        Loan as a Libor Balance or an IBOR Balance, Convert any portion of the
        Base Rate Balance into Libor Balances or IBOR Balances, Continue any
        Libor Balance as a Libor Balance or Continue any IBOR Balance as an IBOR
        Balance if the Applicable Rate for such Libor Balance or IBOR Balance
        (as applicable) would exceed the Maximum Rate.

        Section 5.4   Prepayments.

               (a) Mandatory.

                      (i) Overadvance. If for any reason the Total Outstandings
               at any time exceed the aggregate Commitments then in effect, the
               Borrower shall, within one Business Day after the occurrence
               thereof, prepay the Loan in an amount equal to such excess and/or
               Cash Collateralize the L/C Obligations in an aggregate amount
               equal to such excess or do a combination of the foregoing in an
               aggregate amount

                                       35
<PAGE>

               equal to such excess; provided that the Borrower shall not be
               required to Cash Collateralize the L/C Obligations pursuant to
               this Section 5.4(a) unless after the prepayment in full of the
               Loan the Total Outstandings exceed the aggregate Commitments then
               in effect.

                      (ii) Prepayments from Asset Dispositions. Immediately upon
               receipt by the Borrower or any of its Subsidiaries of the Net
               Proceeds of any Asset Disposition, the Borrower shall make a
               prepayment in respect of the Obligations equal to the amount of
               such Net Proceeds of such Asset Disposition.

                      (iii) Prepayments from Debt Offerings. In the event that
               the Borrower or any Subsidiary of the Borrower incurs any Funded
               Debt (other than Debt permitted by Section 11.1), no later than
               the third Business Day following the incurrence of such Debt, the
               Borrower shall make a prepayment in respect of the Obligations
               equal to the amount of the Net Proceeds of such Debt.

                      (iv) Swingline Advances. Within one (1) Business Day after
               any demand therefor by the Agent or Bank of America, the Borrower
               shall prepay in full the outstanding principal amount of the
               Swingline Advances.

                      (v) Annual "Clean-up" Period. For a period of not less
               than thirty (30) consecutive days during the period between each
               December 1st and the following May 30th, the Borrower shall make
               prepayments of the Loan to the extent that the outstanding
               principal of the Loan shall be equal to or less than $50,000,000
               at all times during such thirty (30) day period.

               (b) Optional. Subject to Section 5.2 and the provisions of this
        clause (b), the Borrower may, at any time and from time to time without
        premium or penalty upon prior notice to the Agent as specified in
        Section 5.3, prepay or repay the Loan in full or in part. Libor Balances
        and IBOR Balances may be prepaid or repaid only on the last day of the
        Interest Period applicable thereto unless the Borrower pays to the
        Agent, for the account of the applicable Lenders or Lender, any amounts
        due under Section 6.5 as a result of such prepayment or repayment.

        Section 5.5 Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest and other amounts to be made by the
Borrower under the Loan Documents shall be made to the Agent at the Principal
Office for the account of each Lender's Applicable Lending Office in Dollars and
in immediately available funds, without condition or deduction for any
counterclaim, defense, recoupment or set-off, not later than 12:00 noon on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). Unless Bank of America expressly agrees otherwise and subject to
Section 5.4(a)(iv), all payments shall be applied as follows: first, with
respect to any outstanding L/C Borrowing until all L/C Borrowings have been paid
in full, second, with respect to the Base Rate Balance outstanding under the
Swingline Advances until such portion of the Loan is repaid in full, third, with
respect to the Base Rate Balance outstanding under the Revolving Loan until such
portion of the Loan is repaid in full and fourth, with respect to the IBOR
Balance outstanding under the Swingline Advances

                                       36
<PAGE>

until such portion of the Loan is paid in full. Subject to the preceding
sentence, the Borrower shall, at the time of making each such payment, specify
to the Agent the sums payable under the Loan Documents to which such payment is
to be applied (and in the event that the Borrower fails to so specify, or if an
Event of Default is in existence, the Agent may apply such payment to the
Obligations in such order and manner as it may elect (subject to the preceding
sentence) in its sole discretion, subject to Section 5.6 and provided that when
applying any such amounts to any Balances, the portion of the Loan outstanding
as the Base Rate Balance shall be prepaid in full prior to any application to
any portion of the Loan outstanding as a Libor Balance or an IBOR Balance). Each
payment received by the Agent under any Loan Document for the account of a
Lender shall be paid to such Lender by 1:00 p.m. on the date the payment is
deemed made to the Agent in immediately available funds, for the account of such
Lender's Applicable Lending Office. Whenever any payment under any Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest and
commitment fee, as the case may be.

        Section 5.6 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each advance of the Revolving Loan shall be made by the Lenders,
each payment of commitment fees under Section 4.6 and each termination or
reduction of the Commitments shall be made, paid or applied (as applicable) pro
rata according to the Lenders' respective Commitment Percentages; (b) the
making, Conversion and Continuation of Balances of a particular Type (other than
Conversions provided for by Section 6.4) shall be made pro rata among the
Lenders holding Balances of such Type according to their respective Commitment
Percentages; and (c) each payment and prepayment of principal of or interest on
the Revolving Loan by the Borrower shall be made to the Agent for the account of
the Lenders pro rata in accordance with the respective unpaid principal amounts
of the Revolving Loan held by each Lender; provided that as long as no default
in the payment of interest exists, payments of interest made when Lenders are
holding different types of Balances applicable to the Revolving Loan as a result
of the application of Section 6.4 shall be made to the Lenders in accordance
with the amount of interest owed to each. If at any time payment, in whole or in
part, of any amount distributed by the Agent hereunder is rescinded or must
otherwise be restored or returned by the Agent as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, then
each Person receiving any portion of such amount agrees, upon demand, to return
the portion of such amount it has received to the Agent.

        Section 5.7 Sharing of Payments. If a Lender shall obtain, on account of
the portion of the Loan made by such Lender or the participations by such Lender
in L/C Obligations and Swingline Advances held by it, any payment (whether
voluntary, involuntary, by right of setoff or otherwise) in excess of its
ratable share (or other share contemplated hereunder) thereof, it shall promptly
purchase from the other Lenders participations in the portions of the Loan made
by them and/or subparticipations in the participations in L/C Obligations and
Swingline Advances held by them, as the case may be, as shall be necessary to
cause such purchasing Lender to share such excess payment pro rata with each of
them. To such end, all of the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if all or any
portion of such excess payment is thereafter rescinded or must otherwise be
restored. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any Lender so purchasing a participation in
accordance with this Section may exercise

                                       37
<PAGE>

all rights of set-off, banker's lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender were a direct creditor
of the Borrower in the amount of such participation. Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness, liability or obligation of the Borrower.

        Section 5.8 Non-Receipt of Funds by the Agent.

               (a) Unless the Borrower or any Lender (as used in this Section,
        the "Payor") has notified the Agent prior to the date any payment to be
        made by the Payor is due, that the Payor does not intend to remit such
        payment, the Agent may, in its sole and absolute discretion, assume that
        the Payor has timely remitted such payment and the Agent may (but shall
        not be required to), in its sole and absolute discretion and in reliance
        thereon, make available such payment to the Person entitled thereto. If
        such payment was not in fact remitted to the Agent in immediately
        available funds, then:

                      (i) if the Borrower failed to make such payment, each
               Lender shall forthwith on demand repay to the Agent the amount of
               such assumed payment made available to such Lender in immediately
               available funds, together with interest thereon in respect of
               each day from the date such amount was made available by the
               Agent to such Lender to the date such amount is repaid to the
               Agent in immediately available funds at the Federal Funds Rate;
               and

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

        A notice by the Agent to any Payor with respect to any amount owing
        under this Section shall be conclusive, absent manifest error.

               (b) The Commitments and other obligations of the Lenders under
        any Loan Document are several and not joint. The default by any Lender
        in making an advance under the Revolving Loan or to fund any
        participation hereunder on any date required hereunder in accordance
        with its Commitment shall not relieve the other Lenders of their
        obligations under any Loan Document. In the event of any default by any
        Lender in

                                       38
<PAGE>

        making any advance under the Revolving Loan, each nondefaulting Lender
        shall be obligated to make its advance under the Revolving Loan but
        shall not be obligated to advance the amount which the defaulting Lender
        was required to advance hereunder. No Lender shall be responsible for
        any act or omission of any other Lender.

                                    ARTICLE 6

                             Change in Circumstances

        Section 6.1 Increased Cost and Reduced Return.

               (a) Increased Cost. If, after the Closing Date, any Regulatory
        Change or compliance by any Lender (or its Applicable Lending Office)
        with any request or directive (whether or not having the force of law)
        of any Governmental Authority, central bank or comparable agency:

                      (i) shall subject such Lender (or its Applicable Lending
               Office) to any tax, duty or other charge with respect to any
               Libor Balances or IBOR Balances, its Note or its obligation to
               make Libor Balances or IBOR Balances available to the Borrower or
               (as the case may be) issuing or participating in Letters of
               Credit, or change the basis of taxation of any amounts payable to
               such Lender (or its Applicable Lending Office) under this
               Agreement or its Note in respect of any Libor Balances or IBOR
               Balances (other than franchise taxes or taxes imposed on or
               measured by the net income of such Lender by the jurisdiction in
               which such Lender is organized, has its principal office or such
               Applicable Lending Office or is doing business);

                      (ii) shall impose, modify or deem applicable any reserve,
               special deposit, assessment or similar requirement (other than
               the Eurodollar Reserve Percentage utilized in the determination
               of the Libor Rate or the IBOR Rate) relating to any extensions of
               credit or other assets of, or any deposits with or other
               liabilities or commitments of, such Lender (or its Applicable
               Lending Office), including the Commitment of such Lender
               hereunder; or

                      (iii) shall impose on such Lender (or its Applicable
               Lending Office), the London interbank market or the offshore
               interbank market (with respect to the IBOR Rate) any other
               condition affecting this Agreement or its Note or any of such
               extensions of credit or liabilities or commitments;

        and the result of any of the foregoing is to increase the cost to such
        Lender (or its Applicable Lending Office) of making, Converting into,
        Continuing or maintaining any Libor Balances or IBOR Balances or to
        reduce any sum received or receivable by such Lender (or its Applicable
        Lending Office) under this Agreement or its Note with respect to any
        Libor Balances or IBOR Balances, then the Borrower shall pay to such
        Lender on demand such amount or amounts as will compensate such Lender
        for such increased cost or reduction. If any Lender requests
        compensation by the Borrower under this Section 6.1(a), the Borrower
        may, by notice to such Lender (with a copy to the Agent),

                                       39
<PAGE>

        suspend the obligation of such Lender to make or maintain Libor Balances
        or IBOR Balances, or to Convert any portion of the Base Rate Balances
        into Libor Balances or IBOR Balances, until the event or condition
        giving rise to such request ceases to be in effect (in which case the
        provisions of Section 6.4 shall be applicable); provided that such
        suspension shall not affect the right of such Lender to receive the
        compensation so requested.

               (b) Capital Adequacy. If, after the date hereof, any Lender shall
        have determined that any Regulatory Change has or would have the effect
        of reducing the rate of return on the capital of such Lender or any
        corporation controlling such Lender as a consequence of such Lender's
        obligations hereunder to a level below that which such Lender or such
        corporation could have achieved but for such adoption, change, request
        or directive (taking into consideration its policies with respect to
        capital adequacy) by an amount deemed by such Lender to be material,
        then from time to time upon demand, the Borrower shall pay to such
        Lender such additional amount or amounts as will compensate such Lender
        for such reduction.

               (c) Claims Under this Section 6.1. Each Lender shall promptly
        notify the Borrower and the Agent of any event of which it has
        knowledge, occurring after the date hereof, which will entitle such
        Lender to compensation pursuant to this Section 6.1 and will designate a
        different Applicable Lending Office if such designation will avoid the
        need for, or reduce the amount of, such compensation and will not, in
        the judgment of such Lender, be otherwise disadvantageous to it. Any
        Lender claiming compensation under this Section 6.1 shall furnish to the
        Borrower and the Agent a statement setting forth the additional amount
        or amounts to be paid to it hereunder, which shall be conclusive in the
        absence of manifest error. In determining such amount, such Lender may
        use any reasonable averaging and attribution methods.

        Section 6.2 Limitation on Libor Balances and IBOR Balances. If on or
prior to the first day of any Interest Period for any Libor Balance or IBOR
Balance:

               (a) the Agent (with respect to the Libor Rate) or Bank of America
        (with respect to the IBOR Rate) determines (which determination shall be
        conclusive) that by reason of circumstances affecting the relevant
        market, adequate and reasonable means do not exist for ascertaining the
        Libor Rate or the IBOR Rate, as applicable, for such Interest Period;

               (b) the Required Lenders determine (which determination shall be
        conclusive) and notify the Agent that the Libor Rate will not adequately
        and fairly reflect the cost to the Lenders of funding Libor Balances for
        such Interest Period; or

               (c) Bank of America determines (which determination shall be
        conclusive) and notifies the Agent that the IBOR Rate will not
        adequately and fairly reflect the cost to Bank of America of funding
        IBOR Balances for such Interest Period;

then the Agent shall give the Borrower prompt notice thereof specifying the
amounts or periods, and so long as such condition remains in effect, the Lenders
shall be under no obligation to make

                                       40
<PAGE>

additional Libor Balances or IBOR Balances (as applicable) available to the
Borrower, Continue Libor Balances or IBOR Balances (as applicable) or to Convert
any portion of the Base Rate Balance into Libor Balances or IBOR Balances (as
applicable) and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Libor Balances or IBOR Balances (as
applicable), either prepay such Libor Balances or IBOR Balances (as applicable)
or Convert such Libor Balances or IBOR Balances (as applicable) into the Base
Rate Balance in accordance with the terms of this Agreement.

        Section 6.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain or fund Libor Balances or IBOR
Balances (as applicable) hereunder, then such Lender shall promptly notify the
Borrower and the Agent thereof and such Lender's obligation to make or Continue
Libor Balances or IBOR Balances (as applicable) and to Convert any portion of
the Base Rate Balance into Libor Balances or IBOR Balances (as applicable) shall
be suspended until such time as such Lender may again make, maintain and fund
Libor Balances or IBOR Balances (as applicable) (in which case the provisions of
Section 6.4 shall be applicable).

        Section 6.4 Treatment of Affected Balances. If the obligation of any
Lender to make a particular Libor Balance or IBOR Balance (as applicable)
available to the Borrower or to Continue or to Convert any portion of the Base
Rate Balance into, Libor Balances or IBOR Balances (as applicable) shall be
suspended pursuant to Section 6.1 or Section 6.3 (Balances of such Type being
herein called "Affected Balances"), such Lender's Affected Balances shall be
automatically Converted into the Base Rate Balances on the last day(s) of the
then current Interest Period(s) for the Affected Balances (or, in the case of a
Conversion required by Section 6.3, on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 6.1 or Section 6.3 that gave rise to such Conversion no longer exist:

               (a) to the extent that such Lender's Affected Balances have been
        so Converted, all payments and prepayments of principal that would
        otherwise be applied to such Lender's Affected Balances shall be applied
        instead to its Base Rate Balance; and

               (b) all advances under the Loan that would otherwise be made or
        Continued by such Lender as Libor Balances or IBOR Balances (as
        applicable) shall be made or Continued instead as part of the Base Rate
        Balance, and all portions of the Base Rate Balance of such Lender that
        would otherwise be Converted into Libor Balances or IBOR Balances (as
        applicable) shall remain as all or a portion of the Base Rate Balance.

With respect to amounts outstanding under the Revolving Loan, if such Lender
gives notice to the Borrower (with a copy to the Agent) that the circumstances
specified in Section 6.1 or Section 6.3 that gave rise to the Conversion of such
Lender's Affected Balances no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) at a time when Libor Balances
made by other Lenders are outstanding, such Lender's Base Rate Balance shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Libor Balances, to the extent necessary so that,
after giving effect thereto, all Balances held by the Lenders holding Libor
Balances and by such Lender are held pro rata (as to

                                       41
<PAGE>

principal amounts, Types and Interest Periods) in accordance with their
respective Commitment Percentages.

        Section 6.5 Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense (including loss of anticipated profits, reemployment of funds obtained
to maintain any Balance, from fees payable to terminate the deposits from which
such funds were obtained, any customary administrative fees charged by the
Lender in connection with the foregoing and any such amounts incurred in
connection with syndication of the Loan) incurred by it as a result of:

               (a) any payment, prepayment or Conversion by the Borrower of a
        Libor Balance or an IBOR Balance for any reason (including the
        acceleration of the Loan pursuant to Section 13.2) on a date other than
        the last day of the Interest Period for such Libor Balance or IBOR
        Balance; or

               (b) any failure by the Borrower for any reason (including the
        failure of any condition precedent specified in Article 8 to be
        satisfied) to borrow, Convert, Continue or prepay a Libor Balance or an
        IBOR Balance on the date for such borrowing, Conversion, Continuation or
        prepayment specified in the relevant notice of borrowing, prepayment,
        Continuation or Conversion under this Agreement.

Notwithstanding the foregoing provisions of this Section 6.5, if at any time the
mandatory prepayment of the Loan pursuant to Section 5.4(a) would result in the
Borrower incurring breakage costs under this Section 6.5 as a result of Libor
Balances or IBOR Balances being prepaid other than on the last day of an
Interest Period applicable thereto (collectively, the "Affected Libor/IBOR
Balances"), then the Borrower may in its sole discretion initially deposit a
portion (up to 100%) of the amounts that otherwise would have been paid in
respect of the Affected Libor/IBOR Balances with the Agent (which deposit, after
giving effect to interest to be earned on such deposit prior to the last day of
the relevant Interest Periods, must be equal in amount to the amount of Affected
Libor/IBOR Balances not immediately prepaid) to be held as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent, with such cash
collateral to be directly applied upon the first occurrence (or occurrences)
thereafter of the last day of an Interest Period applicable to the Affected
Libor/IBOR Balances (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of the Loan equal to the
Affected Libor/IBOR Balances not initially repaid pursuant to this sentence.

        Section 6.6 Taxes.

               (a) Withholding Taxes. Except as otherwise provided in this
        Agreement, any and all payments by the Borrower or any Guarantor to or
        for the account of any Lender or the Agent hereunder or under any other
        Loan Document shall be made free and clear of and without deduction for
        any and all present or future taxes, duties, levies, imposts,
        deductions, charges or withholdings and all liabilities with respect
        thereto, excluding, in the case of each Lender or the Agent (as
        applicable), taxes imposed on or measured by its income and franchise
        taxes imposed on it by the jurisdiction under the laws of which

                                       42
<PAGE>

        such Lender (or its Applicable Lending Office) or the Agent (as the case
        may be) is organized, located or doing business or any political
        subdivision thereof, and excluding in the case of any Foreign Lender
        taxes arising as a result of such Lender's failure to comply with
        Section 15.22 (all such non-excluded taxes, duties, levies, imposts,
        deductions, charges, withholdings and liabilities being hereinafter
        referred to as "Taxes"). If the Borrower or any Guarantor shall be
        required by law to deduct any Taxes from or in respect of any sum
        payable under any Loan Document to any Lender or the Agent (as
        applicable), (i) the sum payable shall be increased as necessary so that
        after making all required deductions (including deductions applicable to
        additional sums payable under this Section 6.6) such Lender or the Agent
        (as applicable) receives an amount equal to the sum it would have
        received had no such deductions been made, (ii) the Borrower or any
        Guarantor, as applicable, shall make such deductions, (iii) the Borrower
        or any Guarantor, as applicable, shall pay the full amount deducted to
        the relevant taxing authority or other authority in accordance with
        applicable law and (iv) the Borrower or any Guarantor, as applicable,
        shall furnish to the Agent the original or a certified copy of a receipt
        evidencing payment thereof.

               (b) Stamp Taxes, Etc. In addition, the Borrower agrees to pay any
        and all present or future stamp or documentary taxes and any other
        excise or property taxes or charges or similar levies which arise from
        any payment made under this Agreement or any other Loan Document or from
        the execution or delivery of, or otherwise with respect to, this
        Agreement or any other Loan Document ("Other Taxes").

               (c) Tax Indemnification. THE BORROWER AGREES TO INDEMNIFY EACH
        LENDER AND THE AGENT-RELATED PERSONS FOR THE FULL AMOUNT OF TAXES AND
        OTHER TAXES (INCLUDING ANY "TAXES" OR "OTHER TAXES" IMPOSED OR ASSERTED
        BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 6.6) PAID BY
        SUCH LENDER OR ANY AGENT-RELATED PERSON (AS THE CASE MAY BE) AND ANY
        LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM
        OR WITH RESPECT THERETO, OTHER THAN PENALTIES, ADDITIONS TO TAX,
        INTEREST AND EXPENSES ARISING AS A RESULT OF GROSS NEGLIGENCE OR WILLFUL
        MISCONDUCT ON THE PART OF SUCH LENDER OR AGENT-RELATED PERSON AND ANY
        TAXES ARISING AS A RESULT OF THE FAILURE OF ANY FOREIGN LENDER TO COMPLY
        WITH THE TERMS OF SECTION 15.22.

                                    ARTICLE 7

                                   Guaranties

        Section 7.1 Guaranties. Each Domestic Subsidiary of the Borrower in
existence as of the Closing Date and any other Subsidiary of the Borrower which
at any time Guarantees the indebtedness, liabilities and obligations of the
Borrower under the Note Agreement (or any Debt of the Borrower or any Domestic
Subsidiary permitted under Section 11.1(k)) shall guarantee payment and
performance of the Obligations pursuant to the Subsidiary Guaranty.
Additionally, the Borrower shall cause one or more of its other Domestic
Subsidiaries (if any) to Guarantee (by

                                       43
<PAGE>

means of the execution and delivery of a Joinder Agreement) payment and
performance of the Obligations pursuant to the Subsidiary Guaranty as follows:
(a) in the event that any Domestic Subsidiary of the Borrower which is not a
Guarantor has assets of a net book value in excess of $10,000,000 or gross
revenue for the most recently completed four (4) Fiscal Quarters in excess of
$10,000,000, the Borrower shall cause such Domestic Subsidiary to become a
Guarantor as provided by Section 7.2 and (b) in the event that the Borrower's
Domestic Subsidiaries which are not previously Guarantors hereunder have assets,
in the aggregate for all such Domestic Subsidiaries, of a net book value in
excess of $75,000,000 or gross revenue for the most recently completed four (4)
Fiscal Quarters in excess of $75,000,000, the Borrower shall cause one or more
of such Subsidiaries to become Guarantors as provided by Section 7.2 with the
effect that the assets and gross revenue of the remaining Domestic Subsidiaries
of the Borrower which are not Guarantors hereunder do not exceed $75,000,000 as
of such date.

        Section 7.2 New Guarantors. In the event that the Borrower is required
to cause one or more of its Subsidiaries to become Guarantors as set forth in
Section 7.1, such new Guarantor or Guarantors (as the case may be) shall,
contemporaneously with the delivery of the financial statements required by
Section 10.1(a) and Section 10.1(b), execute and deliver to the Agent a Joinder
Agreement pursuant to which each such Subsidiary of the Borrower becomes a
Guarantor under this Agreement and such other certificates and documentation,
including the items otherwise required pursuant to Section 8.1, as the Agent may
reasonably request.

                                    ARTICLE 8

                              Conditions Precedent

        Section 8.1 Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Closing Date") each of the conditions precedent set
forth in this Section 8.1 has been satisfied or waived with the consent of the
Lenders (or, with respect to Sections 8.1(a)(xiii) and 8.1(b), with the consent
of the Persons entitled to receive payment). The effectiveness of this Agreement
is subject to the conditions that the Agent shall have received all of the
following in form and substance satisfactory to the Agent and each Lender, and
(except for the Notes) in sufficient copies for the Agent and each Lender:

               (a) Deliveries. The Agent shall have received on or before the
        Closing Date all of the following, each dated (unless otherwise
        indicated) the Closing Date, in form and substance satisfactory to the
        Agent and the Lenders:

                      (i) Resolutions; Authority. For each of the Borrower and
               the Guarantors, resolutions of its board of directors (or similar
               governing body) certified by its Secretary or an Assistant
               Secretary which authorize its execution, delivery and performance
               of the Loan Documents to which it is or is to be a party;

                      (ii) Incumbency Certificate. For each of the Borrower and
               the Guarantors, a certificate of incumbency certified by the
               Secretary or an Assistant Secretary certifying the names of its
               officers (A) who are authorized to sign the Loan Documents to
               which it is or is to be a party (including the certificates
               contemplated herein) together with specimen signatures of each
               such officer and

                                       44
<PAGE>

               (B) who will, until replaced by other officers duly authorized
               for that purpose, act as its representatives for the purposes of
               signing documentation and giving notices and other communications
               in connection with this Agreement and the transactions
               contemplated hereby;

                      (iii) Organizational Documents. For each of the Borrower
               and the Guarantors, the certificate of incorporation, certificate
               of formation, certificate of limited partnership or other similar
               document certified by the Secretary of State of the state of its
               incorporation, formation or organization and dated a current date
               (or, in lieu thereof, a certification from the Secretary of such
               Person that such document has not changed from a certified copy
               thereof previously delivered to the Agent);

                      (iv) Bylaws. For each of the Borrower and the Guarantors,
               the bylaws, operating agreement, partnership agreement or similar
               agreement certified by its Secretary or an Assistant Secretary
               (or, in lieu thereof, a certification from the Secretary of such
               Person that such document has not changed from a certified copy
               thereof previously delivered to the Agent);

                      (v) Governmental Certificates. For each of the Borrower
               and the Guarantors, certificates (dated within thirty (30) days
               of the Closing Date) of the appropriate Governmental Authorities
               of the state of incorporation, formation or organization as to
               its existence and, to the extent applicable, good standing;

                      (vi) Credit Agreement. This Agreement, together with all
               Schedules, Exhibits and other attachments (if any), duly executed
               by the Borrower, the Agent, the L/C Issuer and the Lenders;

                      (vii) [intentionally left blank];

                      (viii) Notes. The Revolving Notes and the Swingline Note
               executed by the Borrower;

                      (ix) Subsidiary Guaranty. A written confirmation of the
               Subsidiary Guaranty executed by each of the Guarantors party
               thereto prior to the date hereof and a Joinder Agreement from
               each Domestic Subsidiary not a party thereto prior to the date
               hereof;

                      (x) Certificate of Compliance. A certificate of the chief
               financial officer or the Vice President, Finance of the Borrower
               setting forth a calculation of the financial covenants in Section
               12.1, Section 12.2 and Section 12.3 as of the Borrower's Fiscal
               Quarter ended August 4, 2002 and stating that the conditions in
               Section 8.2 have been satisfied;

                      (xi) Consents. Copies of all material consents or waivers
               necessary for the execution, delivery and performance by the
               Borrower and each Guarantor of the Loan Documents to which it is
               a party, as the Agent may require;

                                       45
<PAGE>

                      (xii) Opinions of Counsel. Satisfactory opinions of legal
               counsel to the Borrower and the Guarantors as to such matters as
               the Agent may request; and

                      (xiii) Fees. Payment of all fees payable to the Lenders
               including those fees set forth in the Fee Letter;

               (b) Attorney Costs. The Attorney Costs referred to in Section
        15.1 for which statements have been presented shall have been paid in
        full (or shall be paid with the proceeds of the initial advance under
        the Loan made on the Closing Date);

               (c) No Material Adverse Change. As of the Closing Date, no
        material adverse change shall have occurred with respect to (i) the
        business, assets, liabilities (actual or contingent), operations,
        condition (financial or otherwise) or prospects of the Borrower
        (individually) or the Borrower and its Subsidiaries (taken as a whole)
        since February 3, 2002 or (ii) in the facts and information regarding
        such Persons disclosed to the Agent and the Lenders prior to the Closing
        Date; and

               (d) Additional Documentation. The Agent and the Lenders shall
        have received such additional approvals, opinions or other documentation
        as the Agent, the L/C Issuer or any Lender may reasonably request.

        Section 8.2 All Advances. The obligation of each Lender to make any
advance under the Loan (including the initial advance) and the obligation of the
L/C Issuer to make any L/C Credit Extension (including the initial L/C Credit
Extension) is subject to the following additional conditions precedent:

               (a) No Default. No Default shall have occurred and be continuing,
        or would result from such Loan;

               (b) Representations and Warranties. All of the representations
        and warranties contained in Article 9 and in the other Loan Documents
        shall be true and correct in all material respects on and as of the date
        of such Loan or L/C Credit Extension with the same force and effect as
        if such representations and warranties had been made on and as of such
        date except to the extent that such representations and warranties
        relate specifically to another date; and

               (c) No Material Adverse Change. No material adverse change shall
        have occurred with respect to the business, assets, liabilities (actual
        or contingent), operations, condition (financial or otherwise) or
        prospects of the Borrower (individually) or the Borrower and its
        Subsidiaries (taken as a whole) since February 3, 2002.

Each notice of borrowing and request for an L/C Credit Extension by the Borrower
hereunder shall constitute a representation and warranty by the Borrower that
the conditions precedent set forth in this Section 8.2 have been satisfied (both
as of the date of such notice and, unless the Borrower otherwise notifies the
Agent prior to the date of such borrowing or L/C Credit Extension, as
applicable, as of the date of such borrowing or L/C Credit Extension).

                                       46
<PAGE>

                                    ARTICLE 9

                         Representations and Warranties

        To induce the Agent and the Lenders to enter into this Agreement, the
Borrower represents and warrants that the following statements are, and after
giving effect to the transactions contemplated hereby will be, true, correct and
complete:

        Section 9.1 Existence, Power and Authority.

               (a) The Borrower and each of its Subsidiaries: (i) is duly
        organized, validly existing and in good standing under the laws of the
        jurisdiction of its organization; (ii) has all requisite power and
        authority to own its assets and carry on its business as now being or as
        proposed to be conducted; and (iii) is qualified to do business in all
        jurisdictions in which the nature of its business makes such
        qualification necessary and where failure to so qualify would have a
        Material Adverse Effect.

               (b) The Borrower and each of its Subsidiaries has the power and
        authority to execute, deliver and perform its respective obligations
        under the Loan Documents to which it is or may become a party.

        Section 9.2 Financial Condition.

               (a) Financial Statements. The Borrower has delivered to the Agent
        and each Lender (i) audited financial statements of the Borrower and its
        Subsidiaries as of and for the Fiscal Years ended January 30, 2000,
        January 28, 2001 and February 3, 2002 and (ii) unaudited financial
        statements of the Borrower and its Subsidiaries as of and for the
        portion of the current (as of the date hereof) Fiscal Year through the
        period ended August 4, 2002. Such financial statements have been
        prepared in accordance with GAAP (subject to year-end audit adjustments
        and the inclusion of footnotes in the case of the financial statements
        described in clause (ii) preceding), and present fairly the financial
        condition of the Borrower and its Subsidiaries as of the respective
        dates indicated therein and the results of operations for the respective
        periods indicated therein. Neither the Borrower nor any of its
        Subsidiaries has any material contingent liabilities, liabilities for
        taxes, unusual forward or long-term commitments or unrealized or
        anticipated losses from any unfavorable commitments except as referred
        to or reflected in the financial statements referred to in clause (ii)
        preceding. Since the date of the financial statements referred to in
        clause (ii) preceding, no material adverse change has occurred with
        respect to the business, assets, liabilities (actual or contingent),
        operations, condition (financial or otherwise) or prospects of the
        Borrower (individually) or of the Borrower and its Subsidiaries (taken
        as a whole).

               (b) Projections. The Projections delivered and to be delivered by
        the Borrower to the Agent and included in the Offering Memorandum and
        the Projections to be delivered by the Borrower pursuant to Section
        10.1(a) have been and will be prepared by the Borrower in light of the
        past operation of the business of the Borrower and its Subsidiaries. All
        such Projections represent, as of the date thereof, a good faith
        estimate

                                       47
<PAGE>

        by the Borrower and its senior management of the financial conditions
        and performance of the Borrower and its Subsidiaries based on
        assumptions believed to be reasonable at the time made (provided that
        the performance of the Borrower and its Subsidiaries may vary from such
        Projections).

        Section 9.3 Corporate and Similar Action; No Breach. The execution,
delivery and performance by the Borrower and each of its Subsidiaries of the
Loan Documents to which it is or may become a party, compliance with the terms
and provisions thereof, the issuance of Letters of Credit, the borrowings
hereunder and the use of proceeds thereof have been duly authorized by all
requisite action on the part of the Borrower and each of its Subsidiaries,
respectively, and do not and will not (a) violate or conflict with, or result in
a breach of, or require any consent under (i) the articles of incorporation,
bylaws or other organizational documents (as applicable) of such Person, (ii)
any applicable law, rule or regulation or any order, writ, injunction or decree
of any Governmental Authority or arbitrator or (iii) any agreement or instrument
to which such Person is a party or by which any of them or any of their property
is bound or subject or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of such Person.

        Section 9.4 Operation of Business. Each of the Borrower and its
Subsidiaries possesses all material licenses, Permits, franchises, patents,
copyrights, trademarks and tradenames or rights thereto necessary to conduct its
business substantially as now conducted and as presently proposed to be
conducted, and neither the Borrower nor any of its Subsidiaries is in violation
of any valid rights of others with respect to any of the foregoing where such
violation could be expected to have a Material Adverse Effect. Except as set
forth in Schedule 9.4, since February 3, 2002, the Borrower and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual
course.

        Section 9.5 Litigation and Judgments. Except as set forth in Schedule
9.5, there is no action, suit, investigation or proceeding before or by any
Governmental Authority or arbitrator pending or threatened against or affecting
the Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect. As of the Closing Date, except as set forth in
Schedule 9.5, there are no outstanding judgments against the Borrower or any of
its Subsidiaries.

        Section 9.6 Rights in Properties; Liens. The Borrower and each of its
Subsidiaries has good title to or valid leasehold interests in its respective
Properties, real and personal, and none of such Properties or leasehold
interests of the Borrower or any of its Subsidiaries is subject to any Lien,
except as permitted by Section 11.2.

        Section 9.7 Enforceability. The Loan Documents to which the Borrower or
any Subsidiary of the Borrower is a party, when executed and delivered, shall
constitute the legal, valid and binding obligations of the Borrower or such
Subsidiary, as applicable, enforceable against such Person in accordance with
their respective terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement of creditors' rights and
general principles of equity.

                                       48
<PAGE>

        Section 9.8 Approvals. No authorization, approval or consent of, and no
filing or registration with, any Governmental Authority or other third party is
or will be necessary for the execution, delivery or performance by the Borrower
or any Subsidiary of the Borrower of the Loan Documents to which it is or may
become a party, except where the failure to obtain any such authorization,
approval or consent could not reasonably be expected to have a Material Adverse
Effect, or for the validity or enforceability thereof.

        Section 9.9 Debt. Neither the Borrower nor any of its Subsidiaries has
any Debt, except as set forth in Schedule 9.9 or as otherwise permitted by
Section 11.1.

        Section 9.10 Taxes. Except as set forth in Schedule 9.10 or, after the
Closing Date, matters which do not violate Section 10.4, the Borrower and each
Subsidiary of the Borrower have filed all tax returns (federal, state and local)
required to be filed, including all income, franchise, employment, property and
sales tax returns, and have paid all of their respective liabilities for taxes,
assessments, governmental charges and other levies that are due and payable
other than those being contested in good faith by appropriate proceedings
diligently pursued for which adequate reserves have been established in
accordance with GAAP. Except as set forth in Schedule 9.10 or, after the Closing
Date, matters which do not violate Section 10.4, there is no pending
investigation of the Borrower or any Subsidiary of the Borrower by any taxing
authority with respect to any liability for tax or of any pending but unassessed
tax liability of the Borrower or any Subsidiary of the Borrower.

        Section 9.11 Margin Securities. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying margin
stock (within the meaning of Regulation U or Regulation T or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Loan will be used to buy or carry any margin stock or to extend credit to others
for the purpose of buying or carrying margin stock.

        Section 9.12 ERISA. With respect to each Plan, the Borrower and each
Subsidiary of the Borrower is in compliance with all applicable provisions of
ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and
is continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. As of the Closing Date, no
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither the Borrower, any of its
Subsidiaries nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. The Borrower, each Subsidiary of the Borrower and each
ERISA Affiliate have met their minimum funding requirements under ERISA with
respect to each Plan. Except as set forth in Schedule 9.12, the present value of
all vested benefits under each Plan do not exceed the fair market value of all
Plan assets allocable to such benefits, as determined on the most recent
valuation date of the Plan and in accordance with ERISA. Neither the Borrower,
any of its Subsidiaries nor any ERISA Affiliate has any outstanding liability to
the PBGC under ERISA (other than liability for the payment of PBGC premiums in
the ordinary course of business).

        Section 9.13 Disclosure. All factual information furnished by or on
behalf of the Borrower or any Subsidiary of the Borrower to the Agent or any
Lender for purposes of or in

                                       49
<PAGE>

connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information
hereafter furnished by or on behalf of the Borrower or any Subsidiary of the
Borrower to the Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information not
misleading in any material respect at such time in light of the circumstances
under which such information was provided.

        Section 9.14 Subsidiaries; Capitalization. As of the Closing Date, the
Borrower has no other Subsidiaries other than those listed in Schedule 9.14. As
of the Closing Date, Schedule 9.14 sets forth the jurisdiction of incorporation
or organization of the Borrower and its Subsidiaries, the percentage of the
Borrower's ownership of the outstanding Voting Stock of each Subsidiary of the
Borrower, and the authorized, issued and outstanding Capital Stock of the
Borrower and each Subsidiary of the Borrower. All of the outstanding Capital
Stock of the Borrower and its Subsidiaries has been validly issued, is fully
paid, is nonassessable and has not been issued in violation of any preemptive or
similar rights. As of the Closing Date, except as disclosed in Schedule 9.14,
there are (a) no outstanding subscriptions, options, warrants, calls or rights
(including preemptive rights) to acquire, and no outstanding securities or
instruments convertible into, Capital Stock of the Borrower or any of its
Subsidiaries and (b) no shareholder agreements, voting trusts or similar
agreements in effect and binding on any shareholder of (i) to the Borrower's
knowledge, the Borrower or any of its Capital Stock or (ii) any Subsidiary of
the Borrower or any of their respective Capital Stock. All shares of Capital
Stock of the Borrower and its Subsidiaries were issued in compliance with all
applicable state and federal securities laws.

        Section 9.15 Material Agreements. Except as set forth in Schedule 9.15,
neither the Borrower nor any of its Subsidiaries is a party to any indenture,
loan or credit agreement, or to any lease or other agreement or instrument, or
subject to any charter or corporate restriction that could reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries is in default, or has knowledge of facts or circumstances that with
the giving of notice or passage of time or both could be expected to result in a
default, in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument (including any indenture, loan or credit agreement, or any lease or
other similar agreement or instrument) to which it is a party where such default
could be expected to cause a Material Adverse Effect.

        Section 9.16 Compliance with Laws. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, rule, regulation, order or decree of
any Governmental Authority or arbitrator except for violations which could not
be expected to have a Material Adverse Effect.

        Section 9.17 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940.

        Section 9.18 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company" or a "subsidiary company" of
a "holding company" or an

                                       50
<PAGE>

"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935.

        Section 9.19 Environmental Matters.

        Except as disclosed on Schedule 9.19:

               (a) to the Borrower's knowledge, the Borrower, each Subsidiary of
        the Borrower, and all of their respective properties, assets and
        operations are in compliance with all Environmental Laws; neither the
        Borrower nor any of its Subsidiaries has knowledge of, nor has the
        Borrower or any Subsidiary of the Borrower received notice of, any past,
        present or future condition, event, activity, practice or incident which
        interferes with or prevents the compliance or continued compliance of
        the Borrower or its Subsidiaries with all Environmental Laws;

               (b) the Borrower and its Subsidiaries have obtained and
        maintained, and are in material compliance with, all material Permits,
        licenses and authorizations that are required under applicable
        Environmental Laws;

               (c) except in compliance in all material respects with applicable
        Environmental Laws, during the course of the Borrower's or any of its
        Subsidiaries' ownership of or operations on any real Property, there has
        been no generation, treatment, recycling, storage or disposal of
        hazardous waste, as that term is defined in 40 CFR Part 261 or any state
        equivalent, use of underground storage tanks or surface impoundments,
        use of asbestos-containing materials or use of polychlorinated biphenyls
        (PCB) in hydraulic oils, electrical transformers or other equipment that
        could reasonably be expected to have a Material Adverse Effect, and the
        use which the Borrower and its Subsidiaries make and intend to make of
        their respective properties and assets will not result in the use,
        generation, storage, transportation, accumulation, disposal or Release
        of any Hazardous Material on, in or from any of their properties or
        assets that could reasonably be expected to have a Material Adverse
        Effect;

               (d) neither the Borrower, any of its Subsidiaries, nor any of
        their respective currently or previously owned or leased Properties or
        operations is subject to any outstanding or, to their knowledge,
        threatened order from or agreement with any Governmental Authority or
        other Person or subject to any judicial or administrative proceeding
        with respect to (i) failure to comply with Environmental Laws, (ii)
        Remedial Action or (iii) any Environmental Liabilities arising from a
        Release or threatened Release;

               (e) there are no conditions or circumstances associated with the
        currently or previously owned or leased Properties or operations of the
        Borrower or any Subsidiary of the Borrower that could reasonably be
        expected to result in any Environmental Liabilities or to have a
        Material Adverse Effect;

               (f) neither the Borrower nor any of its Subsidiaries is or
        operates a treatment, storage or disposal facility requiring a permit
        under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901
        et seq., the regulations thereunder or any comparable

                                       51
<PAGE>

        provision of state law, and except as would not reasonably be expected
        to have a Material Adverse Effect, each of the Borrower and each
        Subsidiary of the Borrower is in compliance with all applicable
        financial responsibility requirements of all applicable Environmental
        Laws;

               (g) neither the Borrower nor any of its Subsidiaries has filed or
        failed to file any notice required under applicable Environmental Law
        reporting an unauthorized Release; and

               (h) no Lien arising under any Environmental Law has attached to
        any property or revenues of the Borrower or any Subsidiary of the
        Borrower.

        Section 9.20 Broker's Fees. Except as disclosed on Schedule 9.20, no
broker's or finder's fee, commission or similar compensation will be payable by
the Borrower or any Subsidiary of the Borrower with respect to the transactions
contemplated by this Agreement.

        Section 9.21 Employee Matters. Except as set forth on Schedule 9.21, as
of the Closing Date (a) neither the Borrower nor any of its Subsidiaries, nor
any of their respective employees, is subject to any collective bargaining
agreement, (b) no petition for certification or union election is pending with
respect to the employees of the Borrower or any Subsidiary of the Borrower and
no union or collective bargaining unit has sought such certification or
recognition with respect to the employees of the Borrower or any Subsidiary of
the Borrower and (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrower and the
Subsidiaries of the Borrower after due inquiry, threatened between the Borrower
or any Subsidiary of the Borrower and its respective employees.

        Section 9.22 Solvency. Each of the Borrower and the Subsidiary
Guarantors, individually and on a consolidated basis, is Solvent.

                                   ARTICLE 10

                              Affirmative Covenants

        The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder or
any Letter of Credit shall remain outstanding (unless such Letter of Credit is
Cash Collateralized in full), it will perform and observe the following
covenants:

        Section 10.1 Reporting Requirements. The Borrower will furnish to the
Agent and each Lender:

               (a) Annual Financial Statements and Projections. As soon as
        available, and in any event within ninety (90) days after the end of
        each Fiscal Year of the Borrower: (i) a copy of the annual audit report
        of the Borrower for such Fiscal Year containing, on a consolidated
        basis, a balance sheet and statements of income, retained earnings and
        cash flows as at the end of such Fiscal Year and for the Fiscal Year
        then ended, in each case setting forth in comparative form the figures
        for the preceding Fiscal Year, all in reasonable detail and audited and
        certified on an unqualified basis by Deloitte & Touche

                                       52
<PAGE>

        LLP or by other independent certified public accountants of recognized
        standing selected by the Borrower and reasonably acceptable to the
        Agent, to the effect that such report has been prepared in accordance
        with GAAP; (ii) a copy of the annual unaudited report of the Borrower
        and its Subsidiaries for such Fiscal Year containing, on a consolidating
        basis balance sheets and statements of income, retained earnings and
        cash flows as at the end of such Fiscal Year and for the Fiscal Year
        then ended, in each case setting forth in comparative form the figures
        for the preceding Fiscal Year, and in reasonable detail certified by the
        chief financial officer or Vice President, Finance of the Borrower to
        have been prepared in accordance with GAAP and to fairly present the
        financial condition and results of operation of the Borrower and its
        Subsidiaries, on a consolidating basis at the date and for the Fiscal
        Year then ended; and (iii) a copy of Projections for the Borrower's
        Fiscal Year immediately following the Fiscal Year which is the subject
        of the financial statements delivered pursuant to clause (i) preceding;

               (b) Quarterly Financial Statements. As soon as available, and in
        any event within forty-five (45) days after the end of each of the first
        three Fiscal Quarters of each Fiscal Year of the Borrower, beginning
        with the Fiscal Quarter ending August 4, 2002, a copy of an unaudited
        financial report of the Borrower and its Subsidiaries as of the end of
        such Fiscal Quarter and for the portion of the Fiscal Year then ended
        containing, on a consolidated basis, a balance sheet and statements of
        income, retained earnings and cash flows, in each case setting forth in
        comparative form the figures for the corresponding period of the
        preceding Fiscal Year, all in reasonable detail certified by the chief
        financial officer or Vice President, Finance of the Borrower to have
        been prepared in accordance with GAAP and to fairly present the
        financial condition and results of operations of the Borrower and its
        Subsidiaries on a consolidated basis, at the date and for the periods
        indicated therein, subject to year-end audit adjustments and the
        inclusion of footnotes;

               (c) Compliance Certificate. As soon as available, and in any
        event accompanying the financial statements delivered in accordance with
        Section 10.1(a) and Section 10.1(b), a Compliance Certificate, together
        with schedules setting forth the calculations supporting the
        computations therein;

               (d) Notice of Litigation, Etc. Promptly after receipt by the
        Borrower or any Subsidiary of the Borrower of notice of the commencement
        thereof, notice of all actions, suits and proceedings by or before any
        Governmental Authority or arbitrator affecting the Borrower or any
        Subsidiary of the Borrower which, if determined adversely to the
        Borrower or such Subsidiary of the Borrower, could reasonably be
        expected to have a Material Adverse Effect;

               (e) Notice of Default. As soon as possible and in any event
        within two (2) Business Days after the chief executive officer,
        president, chief financial officer, any vice president, secretary,
        assistant secretary, treasurer or any assistant treasurer of the
        Borrower has knowledge of the occurrence of a Default, a written notice
        setting forth the details of such Default and the action that the
        Borrower has taken and proposes to take with respect thereto;

                                       53
<PAGE>

               (f) ERISA. As soon as possible and in any event within thirty
        (30) days after the Borrower or any Subsidiary of the Borrower knows, or
        has reason to know, that

                      (i) any Termination Event with respect to a Plan has
               occurred or will occur,

                      (ii) the aggregate present value of the Unfunded Vested
               Accrued Benefits under all Plans is equal to an amount in excess
               of $0 or

                      (iii) the Borrower or any Subsidiary of the Borrower is in
               "default" (as defined in Section 4219(c)(5) of ERISA) with
               respect to payments to a Multiemployer Plan required by reason of
               the Borrower's or any of its Subsidiaries' complete or partial
               withdrawal (as described in Section 4203 or 4205 of ERISA) from
               such Multiemployer Plan,

        the Borrower will provide the Agent and the Lenders with a certificate
        of its chief financial officer or Vice President, Finance setting forth
        the details of such event and the action which is proposed to be taken
        with respect thereto, together with any notice or filing which may be
        required by the PBGC or any other Governmental Authority with respect to
        such event;

               (g) Notice of Material Adverse Effect. As soon as possible and in
        any event within two (2) Business Days of the discovery of any event or
        condition that could reasonably be expected to have a Material Adverse
        Effect, notice of the same;

               (h) Proxy Statements, Periodic Reporting, Etc. As soon as
        available, one copy of each financial statement, report, notice or proxy
        statement sent by the Borrower or any Subsidiary of the Borrower to its
        stockholders generally and one copy of each regular, periodic or special
        report, registration statement or prospectus filed by the Borrower or
        any Subsidiary of the Borrower with any securities exchange or the
        Securities and Exchange Commission or any successor agency;

               (i) Intercompany Contracts. Promptly upon entering into any such
        arrangement or contract (to the extent permitted by Section 11.7),
        copies or detailed descriptions of all tax sharing, cost allocation,
        overhead attribution and any similar contracts or arrangements between
        the Borrower and any of its Affiliates at any time existing; and

               (j) General Information. Promptly, such other information
        concerning the Borrower or any Subsidiary of the Borrower as the Agent
        or any Lender may from time to time reasonably request.

        Documents required to be delivered pursuant to Section 10.1(a), (b) or
(h) (to the extent any such documents are included in materials otherwise filed
with the Securities and Exchange Commission) may be delivered electronically
and, if so delivered, shall be deemed to have been delivered on the date (i) on
which the Borrower posts such documents, or provides a link thereto, on the
Borrower's website on the Internet at the website address listed on Schedule
15.13 or (ii) on which such documents are posted on the Borrower's behalf on
IntraLinks/IntraAgency or

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<PAGE>

another relevant website, if any, to which each Lender and the Agent have access
(whether a commercial, third-party website or whether sponsored by the Agent);
provided that (i) the Borrower shall deliver paper copies of such documents to
the Agent or any Lender that requests the Borrower to deliver such paper copies
until a written request to cease delivering paper copies is given by the Agent
or such Lender and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Agent and each Lender of the posting of any such documents
and provide to the Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything to the contrary contained
herein, in every instance the Borrower shall be required to provide paper copies
of the Compliance Certificates required by Section 10.1(c) to the Agent and each
of the Lenders. Except for such Compliance Certificates, the Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.

        Section 10.2 Maintenance of Existence; Conduct of Business. Except as
permitted by Section 11.3, the Borrower will, and will cause each Subsidiary of
the Borrower to, preserve and maintain (a) its corporate existence and (b) all
of its leases, privileges, Permits, franchises, qualifications and rights that
are necessary in the ordinary conduct of its business. The Borrower will, and
will cause each Subsidiary of the Borrower to, conduct its business in an
orderly and efficient manner in accordance with good business practices.

        Section 10.3 Maintenance of Properties. Except as permitted by Section
11.3, the Borrower will, and will cause each Subsidiary of the Borrower to,
maintain, keep and preserve all of its material Properties necessary in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.

        Section 10.4 Taxes and Claims. The Borrower will, and will cause each
Subsidiary of the Borrower to, pay or discharge at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments and governmental charges
imposed on it or its income or profits or any of its property and (b) all lawful
claims for labor, material and supplies, which, if unpaid, might become a Lien
upon any of its property; provided that neither the Borrower nor any Subsidiary
of the Borrower shall be required to pay or discharge any tax, levy, assessment
or governmental charge or charge for labor, material and supplies (i) which is
being contested in good faith by appropriate proceedings diligently pursued, and
for which adequate reserves in accordance with GAAP have been established and
(ii) if the failure to pay the same would not result in a Lien on the Property
of the Borrower or a Subsidiary of the Borrower other than a Permitted Lien.

        Section 10.5 Insurance.

               (a) To the extent reasonably available at commercially reasonable
        expense, the Borrower will, and will cause each of its Subsidiaries to,
        keep insured by financially sound and reputable insurers that are not
        Affiliates of the Borrower all Property of a character usually insured
        by responsible businesses engaged in the same or a similar business
        similarly situated against loss or damage of the kinds and in the
        amounts customarily insured against by such corporations or entities and
        carry such other insurance as is usually carried by such businesses.

                                       55
<PAGE>

               (b) If a Default shall have occurred and be continuing, the
        Borrower will, and will cause each of its Subsidiaries to, cause all
        proceeds of insurance paid on account of the loss of or damage to any
        Property of the Borrower or any of its Subsidiaries and all awards of
        compensation for any Property of the Borrower or any of its Subsidiaries
        taken by condemnation or eminent domain to be paid directly to the Agent
        to be applied against the Obligations.

        Section 10.6 Inspection Rights. The Borrower will, and will cause each
of its Subsidiaries to, permit representatives and agents of the Agent and each
Lender, during normal business hours and upon reasonable notice to the Borrower,
to examine, copy and make extracts from the Borrower's or any of such
Subsidiaries' books and records, to visit and inspect the Borrower's or any of
such Subsidiaries' Properties and to discuss the business, operations and
financial condition of the Borrower or any of its Subsidiaries with the officers
and independent certified public accountants of such Person. The Borrower will,
and will cause each of its Subsidiaries to, authorize its accountants in writing
(with a copy to the Agent) to comply with this Section. The Agent or its
representatives may, at any time and from time to time at the Borrower's
expense, conduct field exams for such purposes as the Agent or the Required
Lenders may reasonably request.

        Section 10.7 Keeping Books and Records. The Borrower will, and will
cause each of its Subsidiaries to, maintain proper books of record and account
in which full, true and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.

        Section 10.8 Compliance with Laws. The Borrower will, and will cause
each of its Subsidiaries to, comply in all material respects with all applicable
laws (including all Environmental Laws, ERISA, the Code, Regulation U and
Regulations T and X of the Board of Governors of the Federal Reserve System),
rules, regulations, orders and decrees of a material nature of any Governmental
Authority or arbitrator other than any such laws, rules, regulations, orders and
decrees contested by appropriate actions or proceedings diligently pursued, if
adequate reserves in conformity with GAAP and satisfactory to the Agent are
established with respect thereto and except for violations which could not be
expected to have a Material Adverse Effect.

        Section 10.9 Compliance with Agreements. The Borrower will, and will
cause each of its Subsidiaries to, comply with all agreements, contracts and
instruments binding on it or affecting its properties or business other than
such noncompliance which could not reasonably be expected to have a Material
Adverse Effect.

        Section 10.10 Further Assurances.

               (a) Further Assurance. The Borrower will, and will cause each of
        its Subsidiaries to, execute and/or deliver pursuant to this clause (a)
        such further documentation and take such further action as may be
        reasonably requested by the Required Lenders to carry out the provisions
        and purposes of the Loan Documents.

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<PAGE>

               (b) Subsidiary Joinder. The Borrower shall, and shall cause each
        Domestic Subsidiary of the Borrower to, execute and deliver to the Agent
        such documentation, including a Joinder Agreement, as the Agent may
        require to cause each such Domestic Subsidiary to become a party to the
        Subsidiary Guaranty as required by Article 7.

        Section 10.11 ERISA. With respect to each Plan, the Borrower will, and
will cause each of its Subsidiaries to, comply with all minimum funding
requirements and all other material requirements of ERISA so as not to give rise
to any liability in excess of $5,000,000.

                                   ARTICLE 11

                               Negative Covenants

        The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder or
any Letter of Credit shall remain outstanding (unless such Letter of Credit is
Cash Collateralized in full), the Borrower will perform and observe the
following covenants:

        Section 11.1 Debt. The Borrower will not, nor will it permit any
Subsidiary of the Borrower to, incur, create, assume or permit to exist any
Debt, except:

               (a) Debt to the Lenders pursuant to the Loan Documents;

               (b) Debt described on Schedule 9.9 and any extensions, renewals
        or refinancings of such existing Debt so long as (i) the principal
        amount of such Debt after such renewal, extension or refinancing shall
        not exceed the principal amount of such Debt which was outstanding
        immediately prior to such renewal, extension or refinancing and (ii)
        such Debt shall not be secured by any assets other than assets securing
        such Debt, if any, prior to such renewal, extension or refinancing;

               (c) Debt of a Subsidiary Guarantor owed to the Borrower or
        another Subsidiary Guarantor; provided that such Debt must according to
        its terms be fully subordinate in all respects to any of such Subsidiary
        Guarantor's indebtedness, liabilities or obligations to the Agent and
        the Lenders pursuant to any Loan Document;

               (d) Guarantees and other Debt incurred in the ordinary course of
        business with respect to surety and appeal bonds, performance and
        return-of-money bonds, banker's acceptances and other similar
        obligations including those of the type described in Section 11.2(f);

               (e) Debt of the Borrower or any Subsidiary of the Borrower
        constituting purchase money Debt (including Capital Lease Obligations)
        and secured by purchase money Liens permitted by Section 11.2(g), such
        Debt, in the aggregate, not to exceed at any time an amount equal to ten
        percent (10.0%) of the Borrower's Tangible Net Worth;

               (f) Debt of the Borrower or any Subsidiary of the Borrower of the
        type described in clause (l) of the definition of Debt, such Debt, in
        aggregate principal or

                                       57
<PAGE>

        principal equivalent amount, not to exceed at any time an amount equal
        to twenty percent (20.0%) of the Borrower's Tangible Net Worth;

               (g) Debt constituting obligations to reimburse worker's
        compensation insurance companies for claims paid by such companies on
        behalf of the Borrower or any Subsidiary of the Borrower in accordance
        with the policies issued to the Borrower or any such Subsidiary;

               (h)  Debt secured by the Liens permitted by Section 11.2(d) and
        Section 11.2(e);

               (i) unsecured Debt arising under, created by and consisting of
        Hedge Agreements, provided, (i) such Hedge Agreements shall have been
        entered into for the purpose of hedging actual risk and not for
        speculative purposes and (ii) that each counterparty to such Hedge
        Agreement shall be a Lender (or an Affiliate thereof) or shall be rated
        at least AA- by Standard and Poor's Rating Service or Aa3 by Moody's
        Investors Service, Inc.;

               (j) Debt arising from endorsement of negotiable instruments for
        deposit or collection or similar transactions in the ordinary course of
        business of the Borrower or a Subsidiary of the Borrower;

               (k) Debt consisting of commercial letters of credit and
        reimbursement obligations therefor (and Guarantees of such reimbursement
        obligations by Subsidiaries of the Borrower) where the aggregate face
        amount of such letters of credit does not at any time exceed
        $200,000,000; and

               (l) In addition to the Debt described in the foregoing clauses
        (a) through (k), Debt (including with respect to standby letters of
        credit) which does not exceed twenty percent (20%) of the Borrower's
        Tangible Net Worth in aggregate principal amount at any time
        outstanding.

        Section 11.2 Limitation on Liens and Restrictions on Subsidiaries. The
Borrower will not, nor will it permit any Subsidiary of the Borrower to, incur,
create, assume or permit to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except the following:

               (a) existing Liens described on Schedule 11.2 and any extensions,
        renewals or refinancings of the Debt secured by such Liens as permitted
        under Section 11.1(b), provided that (i) no such Lien is expanded to
        cover any additional Property (other than after-acquired title in or on
        such Property and proceeds of the existing collateral) after the Closing
        Date and (ii) no such Lien is spread to secure any additional Debt after
        the Closing Date;

               (b) Liens in favor of the Agent, for the benefit of the Agent and
        the holders of the Obligations;

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<PAGE>

               (c) encumbrances consisting of easements, zoning restrictions or
        other restrictions on the use of real Property that do not (individually
        or in the aggregate) materially detract from the value of the real
        Property encumbered thereby or materially impair the ability of the
        Borrower or such Subsidiary to use such real Property in its business;

               (d) Liens for taxes, assessments or other governmental charges
        (but excluding environmental Liens or Liens under ERISA) that are not
        delinquent or which are being contested in good faith and for which
        adequate reserves have been established in accordance with GAAP;

               (e) contractual or statutory Liens of mechanics, materialmen,
        warehousemen, carriers, landlords or other similar Liens securing
        obligations that are not overdue or are being contested in good faith by
        appropriate proceedings diligently pursued and for which adequate
        reserves have been established in accordance with GAAP and are incurred
        in the ordinary course of business;

               (f) Liens resulting from deposits to secure payments of worker's
        compensation, unemployment insurance or other social security programs
        or to secure the performance of tenders, statutory obligations, leases,
        insurance contracts, surety and appeal bonds, bids and other contracts
        incurred in the ordinary course of business (other than for payment of
        Debt);

               (g) Liens for purchase money obligations and Liens securing
        Capital Lease Obligations; provided that (i) the Debt secured by any
        such Lien is permitted under Section 11.1(e) and (ii) any such Lien
        encumbers only the Property so purchased or leased and the products,
        proceeds (including insurance proceeds), accessions, replacements,
        substitutions and improvements thereto;

               (h) any attachment or judgment Lien not constituting an Event of
        Default;

               (i) any interest or title of a licensor, lessor or sublessor
        under any license or lease and any interest or title of a licensee,
        lessee or sublessee under any license, cross-license or lease in any
        event entered into in the ordinary course of business and not otherwise
        prohibited by the terms of this Agreement;

               (j) Liens against equipment arising from precautionary UCC
        financing statement filings regarding operating leases entered into by
        such Person in the ordinary course of business;

               (k) nonconsensual Liens in favor of banking institutions arising
        as a matter of law and encumbering the deposits (including the right of
        set-off) held by such banking institutions in the ordinary course of
        business; and

               (l) Liens (including statutory and common law liens) in or
        against goods, documents or instruments, including proceeds (including
        insurance proceeds), products, accessions, substitutions and
        replacements related thereto, related to or arising out of

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        commercial or documentary letter of credit transactions, to the extent
        that such letter of credit transactions constitute permitted Debt under
        Section 11.1(k).

        Section 11.3 Mergers, Etc. The Borrower will not, nor will it permit any
Subsidiary of the Borrower to, become a party to a merger or consolidation or
purchase or otherwise acquire all or a substantial part of the business or
Property of any Person or all or a substantial part of the business or Property
of a division or branch of a Person or a majority interest in the Capital Stock
of any Person, or wind up, dissolve or liquidate itself; provided that
notwithstanding the foregoing or any other provision of this Agreement as long
as no Default exists or would result therefrom and provided the Borrower gives
the Agent and the Lenders prior written notice:

               (a) a Subsidiary of the Borrower may wind-up, dissolve or
        liquidate if its Property is transferred to the Borrower or a
        Wholly-Owned Subsidiary;

               (b) any Subsidiary of the Borrower may merge or consolidate with
        the Borrower (provided the Borrower is the surviving entity) or a
        Wholly-Owned Subsidiary (provided the Wholly-Owned Subsidiary is the
        surviving entity);

               (c) the Borrower or any Wholly-Owned Subsidiary may make
        Permitted Acquisitions; and

               (d) to the extent the Required Lenders agree in writing, the
        Borrower or any Wholly-Owned Subsidiary may make additional acquisitions
        not included in Permitted Acquisitions.

        Section 11.4 Restricted Payments. The Borrower will not, nor will it
permit any Subsidiary of the Borrower to, (a) make any prepayment of any Debt
other than (i) the Obligations, (ii) any Debt owed to the Borrower or a
Subsidiary of the Borrower or (iii) regularly scheduled payments of principal
and interest under the Note Agreement or (b) directly or indirectly declare,
order, pay, make or set apart any sum for (i) any redemption, conversion,
exchange, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of any such Person now or hereafter outstanding or (ii) any payment made
to retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of any such Person
now or hereafter outstanding except:

               (x) the Borrower may repurchase its Capital Stock, provided that
        (A) the amount of all such repurchases shall not at any time exceed an
        amount equal to the sum of $100,000,000, plus an amount equal to ten
        percent (10.0%) of the Borrower's Net Income during the period from the
        Closing Date through the end of the Fiscal Quarter ending immediately
        prior to the date of such repurchase and (B) no Default shall be in
        existence at the time of such repurchase; and

               (y) the Borrower may acquire or redeem Capital Stock of the
        Borrower held by any former officer, director or employee of the
        Borrower or beneficiaries of any such Person's estate or trusts created
        by or for the benefit of any such Person or their beneficiaries.

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<PAGE>

        Section 11.5 Investments. The Borrower will not, nor will it permit any
Subsidiary of the Borrower to, make or permit to remain outstanding any advance,
loan, extension of credit or capital contribution to or investment in any
Person, or purchase or own any stocks, bonds, notes, debentures or other
Securities of any Person, or be or become a joint venturer with or partner of
any Person (all the foregoing, herein "Investments"), except:

               (a) Permitted Acquisitions;

               (b) the Borrower or any Wholly-Owned Subsidiary may make
        Investments in Domestic Subsidiaries;

               (c) the Borrower may make Investments in Foreign Subsidiaries
        (subject to the requirements of Section 11.1 and Section 11.3); provided
        that (i) the aggregate amount of all Investments in Foreign Subsidiaries
        shall not exceed an amount equal to fifteen percent (15.0%) of the
        Borrower's assets at the time of making any such Investment and (ii)
        such Investments in Foreign Subsidiaries which constitute advances,
        loans, extensions of credit, bonds, notes or debentures owed to the
        Borrower shall at all times be subordinate in all respects to the
        Obligations or any indebtedness, liability or obligation of such Foreign
        Subsidiary to the Agent and the Lenders (if any) under any Loan Document
        and must otherwise be in compliance with Section 11.1 and Section 11.3;

               (d) the Borrower may, up to an aggregate amount at any time
        outstanding of not more than $20,000,000, make equity investments in
        Affiliates and other Persons and related businesses, excluding
        Subsidiaries of the Borrower;

               (e) readily marketable direct obligations of the U.S. or any
        agency thereof with maturities of one year or less from the date of
        acquisition;

               (f) fully insured certificates of deposit with maturities of one
        year or less from the date of acquisition issued by any commercial bank
        operating in the U.S. having capital and surplus in excess of
        $250,000,000 and repurchase and reverse repurchase obligations entered
        into with any such commercial bank;

               (g) commercial paper of a domestic issuer and equity or debt
        Securities of a domestic issuer if at the time of purchase such paper or
        debt Securities of such issuer is rated in one of the two highest rating
        categories of Standard and Poor's Rating Service or Moody's Investors
        Service, Inc. or any successor thereto;

               (h) Investments received in connection with the settlement of
        delinquent obligations of, and disputes with, customers and suppliers
        and other trade debtors arising in the ordinary course of business;

               (i) Investments in money market mutual funds registered with the
        Securities and Exchange Commission meeting the requirements of Rule 2a-7
        promulgated under the Investment Company Act of 1940, which funds are
        rated in one of the two highest rating categories of Standard and Poor's
        Rating Service or Moody's Investors Service, Inc. or any successor
        thereto;

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<PAGE>

               (j) extensions of trade credit in the ordinary course of
        business;

               (k) to the extent permitted under applicable law, the Borrower
        and any Wholly-Owned Subsidiary may make loans and advances to officers,
        directors and employees in the ordinary course of business and
        consistent with past practices up to an aggregate amount at any time
        outstanding of not more than $5,000,000;

               (l) Investments existing on the Closing Date and listed on
        Schedule 11.5; and

               (m) Investments consisting of purchases of debt Securities or
        other extensions of credit by the Borrower or any Subsidiary of the
        Borrower to the lessor/purchaser in connection with Permitted
        Sale-Leasebacks.

The amount of Investments pursuant to clause (c) preceding shall be the amount
of all cash or other Property invested, loaned, advanced or otherwise
contributed to all Foreign Subsidiaries of the Borrower whether such Investments
are made as a single transaction or as one of a series of transactions, and such
amount shall be determined at the time of making of each Investment or portion
thereof if in connection with a series of transactions.

        Section 11.6 Limitation on Issuance of Capital Stock of Subsidiaries.
The Borrower will not permit any Subsidiary of the Borrower to at any time
issue, sell, assign or otherwise dispose of, except to the Borrower or a
Wholly-Owned Subsidiary or in connection with a Permitted Acquisition, (a) any
Capital Stock of a Subsidiary of the Borrower, (b) any Securities exchangeable
for or convertible into or carrying any rights to acquire any Capital Stock of a
Subsidiary of the Borrower or (c) any option, warrant or other right to acquire
any Capital Stock of a Subsidiary of the Borrower.

        Section 11.7 Transactions with Affiliates. The Borrower will not, nor
will it permit any Subsidiary of the Borrower to, enter into any transaction,
including the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate (as used in this Section 11.7 the term "Affiliate"
shall exclude any Subsidiary of the Borrower) of the Borrower or such Subsidiary
of the Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.

        Section 11.8 Disposition of Assets. The Borrower will not, nor will it
permit any Subsidiary of the Borrower to, sell, lease, assign, transfer or
otherwise voluntarily dispose of any of its Property other than (a) sales of
inventory in the ordinary course of business, (b) Asset Dispositions in the
ordinary course of business in connection with the closing of any retail
location of the Borrower or any Subsidiary of the Borrower and (c) other Asset
Dispositions in any Fiscal Year where the net book value of the assets disposed
of does not exceed 10% of the Borrower's Tangible Net Worth as of the last day
of the immediately preceding Fiscal Year.

        Section 11.9 Lines of Business. The Borrower will not, nor will it
permit any Subsidiary of the Borrower to, engage in any line or lines of
business activity other than the

                                       62
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business activities in which they are engaged on the Closing Date or a business
reasonably related or complementary thereto.

        Section 11.10 Limitations on Restrictions Affecting the Borrower and its
Subsidiaries. Neither the Borrower nor any Subsidiary of the Borrower shall
enter into or assume any agreement (other than the Loan Documents) prohibiting
the creation or assumption of any Lien upon its Properties, whether now owned or
hereafter acquired, other than pursuant to non-assignment provisions of a
Permitted Lien, operating lease or of Debt of the type described in clause (l)
of the definition of Debt and which is restricted solely to the Property which
is the subject of such Permitted Lien or such lease transaction and which does
not prohibit the Borrower or any Subsidiary of the Borrower from granting Liens
to the Agent or any Lender as collateral for the Obligations. Except as provided
herein, the Borrower will not, nor will it permit any Subsidiary of the Borrower
to, directly or indirectly create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of the Borrower or any Subsidiary of the Borrower to (a) pay dividends
or make any other distribution on any of its Capital Stock, (b) pay any Debt
owed to the Borrower or any Subsidiary of the Borrower, (c) make loans or
advances to the Borrower or any Subsidiary of the Borrower, (d) transfer any
Property of the Borrower or any Subsidiary of the Borrower to any other Person,
except pursuant to non-assignment provisions of Permitted Liens, leases and
licenses entered into in the ordinary course of business or (e) make any
prepayment of any of the Obligations.

        Section 11.11 Environmental Protection. The Borrower will not, nor will
it permit any Subsidiary of the Borrower to, (a) use (or permit any tenant to
use) any of its Properties for the handling, processing, storage, transportation
or disposal of any Hazardous Material except in compliance with applicable
Environmental Laws, (b) generate any Hazardous Material except in compliance
with applicable Environmental Laws, (c) conduct any activity that is likely to
cause a Release or threatened Release of any Hazardous Material in violation of
any Environmental Law or (d) otherwise conduct any activity or use any of its
Properties in any manner that in any material respect violates or is likely to
violate any Environmental Law or create any Environmental Liabilities for which
the Borrower or any Subsidiary of the Borrower would be responsible that could
be expected to have a Material Adverse Effect.

        Section 11.12 ERISA. The Borrower will not, nor will it permit any
Subsidiary of the Borrower to:

               (a) allow or take (or permit any ERISA Affiliate to take) any
        action which would cause any unfunded or unreserved liability for
        benefits under any Plan (exclusive of any Multiemployer Plan) in excess
        of $5,000,000 to exist or to be created; or

               (b) with respect to any Multiemployer Plan, allow or take (or
        permit any ERISA Affiliate to take) any action which would cause any
        unfunded or unpaid liability by the Borrower or any ERISA Affiliate to
        any Multiemployer Plan in excess of $5,000,000 to exist or to be
        created, either individually as to any such Plan or in the aggregate as
        to all such Plans.

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                                   ARTICLE 12

                               Financial Covenants

        The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Lender has any Commitment hereunder or
any Letter of Credit shall remain outstanding (unless such Letter of Credit is
Cash Collateralized in full), it will perform and observe the following
financial covenants:

        Section 12.1 Leverage Ratio. As of the end of each Fiscal Quarter, the
Borrower shall not permit the Leverage Ratio calculated as of the end of such
Fiscal Quarter, for the preceding twelve (12) Fiscal Periods then ending, to
exceed 3.50:1.

        Section 12.2 Fixed Charge Coverage Ratio. As of the end of each Fiscal
Quarter, the Borrower shall not permit the Fixed Charge Coverage Ratio,
calculated as of the end of such Fiscal Quarter, for the preceding four (4)
Fiscal Quarter period then ending, to be less than 2.25:1.

        Section 12.3 Minimum Tangible Net Worth. The Borrower shall not permit
its Tangible Net Worth at any time to be less than the total of (a)
$500,000,000, plus (b) seventy-five percent (75.0%) of the Borrower's positive
Net Income for each Fiscal Quarter completed after the Closing Date, plus (c)
one hundred percent (100%) of any increase in Tangible Net Worth attributable to
issuance of equity Securities of the Borrower or any Subsidiary of the Borrower
after the Closing Date minus (d) one hundred percent (100%) of any decrease in
Tangible Net Worth attributable to repurchases after the Closing Date of Capital
Stock of the Borrower permitted under Section 11.4(x).

        Section 12.4 Capital Expenditures. As of the end of each Fiscal Year,
the aggregate amount of all Capital Expenditures of the Borrower and its
Subsidiaries for such Fiscal Year shall not exceed nine percent (9%) of gross
revenue of the Borrower for such Fiscal Year, plus fifty percent (50.0%) of the
amount by which nine percent (9%) of gross revenue of the Borrower for the prior
Fiscal Year (provided that Capital Expenditures were subject to the terms of
this Section 12.4 during such prior Fiscal Year) exceeded Capital Expenditures
during such prior Fiscal Year.

                                   ARTICLE 13

                                     Default

        Section 13.1 Events of Default. Each of the following shall be deemed an
"Event of Default":

               (a) the Borrower shall fail to pay (i) when due any principal
        owing with respect to the Loan or any L/C Obligation payable under any
        Loan Document or any part thereof, (ii) within three (3) Business Days
        of the date due any interest on the Loan or any L/C Obligation or fees
        payable under the Loan Documents or any part thereof or (iii) within
        three (3) Business Days after the date the Borrower receives written
        notice of the

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        failure to pay when due, any other Obligation or any part thereof, or
        any indebtedness, liability or obligation due to any Lender under any
        Hedge Agreement;

               (b) any representation, warranty or certification made or deemed
        made by the Borrower or any Subsidiary of the Borrower (or any of their
        respective officers) in any Loan Document or in any certificate, report,
        notice or financial statement furnished at any time in connection with
        any Loan Document shall be false, misleading or erroneous in any
        material respect when made or deemed to have been made;

               (c) the Borrower or any Subsidiary of the Borrower shall fail to
        perform, observe or comply with any covenant, agreement or term
        contained in Section 2.4, Section 5.4(a), Section 10.1, Section 10.2,
        Section 10.6, Section 10.10, Article 11 (other than related to
        non-consensual Liens under Section 11.2) or Article 12;

               (d) the Borrower or any Subsidiary of the Borrower shall fail to
        perform, observe or comply with any other agreement or term contained in
        any Loan Document (other than as described in Section 13.1(a), Section
        13.1(b) or Section 13.1(c)) and (i) such failure shall continue for a
        period of thirty (30) days after the earlier of (A) the date the Agent
        provides the Borrower with notice thereof or (B) the date the Borrower
        should have notified the Agent thereof in accordance with Section
        10.1(e) or (ii) as otherwise specifically provided by any other Loan
        Document;

               (e) the Borrower or any Subsidiary of the Borrower shall (i)
        apply for or consent to the appointment of, or the taking of possession
        by, a receiver, custodian, trustee, examiner, liquidator or the like of
        itself or of all or a substantial part of its Property, (ii) make a
        general assignment for the benefit of its creditors, (iii) commence a
        voluntary case under the United States Bankruptcy Code (as now or
        hereafter in effect, the "Bankruptcy Code"), (iv) institute any
        proceeding or file a petition seeking to take advantage of any other law
        relating to bankruptcy, insolvency, reorganization, liquidation,
        dissolution, winding-up or composition or readjustment of debts, (v)
        fail to controvert in a timely and appropriate manner, or acquiesce in
        writing to, any petition filed against it in an involuntary case under
        the Bankruptcy Code, (vi) admit in writing its inability to or be
        generally unable to pay its debts as such debts become due or (vii) take
        any corporate action for the purpose of effecting any of the foregoing;

               (f) (i) a proceeding or case shall be commenced, without the
        application, approval or consent of the Borrower or any Subsidiary of
        the Borrower in any court of competent jurisdiction, seeking (A) its
        reorganization, liquidation, dissolution, arrangement or winding-up or
        the composition or readjustment of its debts, (B) the appointment of a
        receiver, custodian, trustee, examiner, liquidator or the like of the
        Borrower or such Subsidiary or of all or any substantial part of its
        Property or (C) similar relief in respect of the Borrower or such
        Subsidiary under any law relating to bankruptcy, insolvency,
        reorganization, winding-up or composition or readjustment of debts, and
        such proceeding or case shall continue undismissed, or an order,
        judgment or decree approving or ordering any of the foregoing shall be
        entered and continue unstayed and in effect, for a period of sixty (60)
        or more days or (ii) an order for relief against the Borrower or any
        Subsidiary shall be entered in an involuntary case under the Bankruptcy
        Code;

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<PAGE>

               (g) the Borrower or any Subsidiary of the Borrower shall fail
        within a period of thirty (30) days after the commencement thereof to
        discharge or obtain a stay of any attachment, sequestration, forfeiture
        or similar proceeding or proceedings involving an aggregate amount in
        excess of $10,000,000 against any of its assets or Properties;

               (h) a final judgment or judgments for the payment of money in
        excess of $10,000,000 in the aggregate (to the extent not paid or fully
        covered by insurance acknowledged by a carrier reasonably acceptable to
        the Agent) shall be rendered by a court or courts against the Borrower
        or any Subsidiary of the Borrower and the same shall not be satisfied,
        discharged or dismissed (or provision shall not be made for such
        satisfaction, discharge or dismissal), or a stay of execution or other
        stay of enforcement thereof shall not be procured, within sixty (60)
        days from the date of entry thereof and the Borrower or any Subsidiary
        of the Borrower, as applicable, shall not, within said period of sixty
        (60) days, or such longer period during which execution of the same
        shall have been stayed, appeal therefrom and cause the execution thereof
        to be stayed during such appeal;

               (i) (i) the Borrower or any Subsidiary of the Borrower shall fail
        to pay when due any principal of or interest on any Debt (other than the
        Obligations) beyond the period of grace (if any) if the aggregate
        principal amount (including undrawn committed or available amounts and
        including amounts owing to all creditors under any combined or
        syndicated credit arrangement) of the affected Debt equals or exceeds
        $10,000,000, or the maturity of any such Debt shall have been
        accelerated or shall have been required to be prepaid prior to the
        stated maturity thereof, (ii) any event shall have occurred with respect
        to any Debt in the aggregate principal amount equal to or in excess of
        $10,000,000 that permits the holder or holders of such Debt or any
        Person acting on behalf of such holder or holders to accelerate the
        maturity thereof or require any prepayment thereof or (iii) any event of
        default shall have occurred under the Note Agreement;

               (j) this Agreement or any other Loan Document shall cease to be
        in full force and effect or shall be declared null and void or the
        validity or enforceability thereof shall be contested or challenged by
        the Borrower or any Subsidiary, or the Borrower or any Subsidiary shall
        deny that it has any further liability or obligation under any of the
        Loan Documents;

               (k) any of the following events shall occur or exist with respect
        to the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
        and in each case, such event or condition, together with all other such
        events or conditions, if any, have subjected or could in the reasonable
        opinion of the Agent or the Required Lenders subject the Borrower or any
        Subsidiary of the Borrower (or any combination thereof) to any tax,
        penalty or other liability to a Plan, a Multiemployer Plan, the PBGC or
        otherwise (or any combination thereof) which in the aggregate could
        reasonably be expected to exceed $5,000,000: (i) any Prohibited
        Transaction involving any Plan; (ii) any Reportable Event with respect
        to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
        intent to terminate any Plan or the termination of any Plan; (iv) any
        event or circumstance that could reasonably be expected to constitute
        grounds entitling the PBGC to institute proceedings under Section 4042
        of ERISA for the termination of, or for the appointment

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<PAGE>

        of a trustee to administer, any Plan, or the institution by the PBGC of
        any such proceedings; or (v) the complete or partial withdrawal under
        Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
        reorganization, insolvency or termination of any Multiemployer Plan;

               (l) the occurrence of any event or condition which constitutes a
        Material Adverse Effect and thirty (30) days shall have passed since
        written notification thereof to the Borrower by the Agent (therein
        identifying such event or condition) without such event or condition
        having been remedied, cured or waived; or

               (m) the occurrence of a Change of Control.

        Section 13.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by the Required Lenders, shall) do
any one or more of the following:

               (a) Acceleration. By notice to the Borrower, declare all
        outstanding principal of and accrued and unpaid interest on the Notes
        and all other amounts payable by the Borrower under the Loan Documents
        immediately due and payable, and the same shall thereupon become
        immediately due and payable, without further notice, demand,
        presentment, notice of dishonor, notice of acceleration, notice of
        intent to accelerate, protest or other formalities of any kind, all of
        which are hereby expressly waived by the Borrower except as where
        required by the specific terms of this Agreement or the other Loan
        Documents;

               (b) Termination of Commitments. Declare the Commitments and any
        obligation of the L/C Issuer to make L/C Credit Extensions to be
        terminated, whereupon such Commitments and obligation shall be
        terminated;

               (c) Cash Collateralization. Require that the Borrower Cash
        Collateralize the L/C Obligations (in an amount equal to the then
        Outstanding Amount thereof);

               (d) Judgment. Reduce any claim to judgment; and

               (e) Rights. Exercise any and all rights and remedies afforded by
        the laws of the State of California, or any other jurisdiction governing
        any of the Loan Documents, by equity or otherwise;

provided, however, that, upon the occurrence of an Event of Default under
Section 13.1(e) or Section 13.1(f) with respect to the Borrower or any
Guarantor, the Commitments of all of the Lenders and any obligation of the L/C
Issuer to make L/C Credit Extensions shall automatically terminate and the
outstanding principal of and accrued and unpaid interest on the Notes and all
other amounts payable by the Borrower or any other party under the Loan
Documents shall thereupon become immediately due and payable, and the obligation
of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Agent or
any Lender, and in each case without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.

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<PAGE>

        Section 13.3 Performance by the Agent. Upon the occurrence of a Default,
if the Borrower or any Guarantor shall fail to perform any agreement in
accordance with the terms of the Loan Documents, the Agent may, and at the
direction of the Required Lenders shall, perform or attempt to perform such
agreement on behalf of the Borrower or such Guarantor, as applicable. In such
event, at the request of the Agent, the Borrower shall promptly pay any amount
expended by the Agent or the Lenders in connection with such performance or
attempted performance, to the Agent at the Principal Office together with
interest thereon at the Default Rate applicable to the Base Rate Balance from
the date of such expenditure to the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent,
the Arranger, nor any Lender shall have any liability or responsibility for the
performance of any obligation of the Borrower or any Guarantor under any Loan
Document.

        Section 13.4 Set-off. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
without notice to the Borrower or any other Person (any such notice being hereby
expressly waived), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the Obligations now or hereafter
existing under any Loan Document, irrespective of whether or not the Agent or
such Lender shall have made any demand under such Loan Documents and although
the Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness. Each Lender
agrees promptly to notify the Borrower (with a copy to the Agent) after any such
set-off and application; provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights and remedies of
each Lender hereunder are in addition to other rights and remedies (including
other rights of set-off) which such Lender may have.

        Section 13.5 Continuance of Default. For purposes of all Loan Documents,
a Default shall be deemed to have continued and exist until the Agent shall have
actually received evidence satisfactory to the Agent that such Default shall
have been remedied.

                                   ARTICLE 14

                                    The Agent

        Section 14.1 Appointment and Authorization of the Agent.

               (a) Each Lender hereby irrevocably (subject to Section 14.9)
        appoints, designates and authorizes the Agent to take such action on its
        behalf under the provisions of this Agreement and each other Loan
        Document and to exercise such powers and perform such duties as are
        expressly delegated to it by the terms of this Agreement or any other
        Loan Document, together with such powers as are reasonably incidental
        thereto. Notwithstanding any provision to the contrary contained
        elsewhere in this Agreement or in any other Loan Document, the Agent
        shall not have any duties or responsibilities, except those expressly
        set forth herein, nor shall the Agent have or be deemed to have any
        fiduciary relationship with any Lender or Participant, and no implied
        covenants, functions, responsibilities, duties, obligations or
        liabilities shall be read into this Agreement or any other Loan Document
        or otherwise exist against the Agent. Without

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<PAGE>

        limiting the generality of the foregoing sentence, the use of the term
        "agent" in this Agreement and in the other Loan Documents with reference
        to the Agent is not intended to connote any fiduciary or other implied
        (or express) obligations arising under agency doctrine of any applicable
        law. Instead, such term is used merely as a matter of market custom, and
        is intended to create or reflect only an administrative relationship
        between independent contracting parties.

               (b) The L/C Issuer shall act on behalf of the Lenders with
        respect to any Letters of Credit issued by it and the documents
        associated therewith, and the L/C Issuer shall have all of the benefits
        and immunities (i) provided to the Agent in this Article 14 with respect
        to any acts taken or omissions suffered by the L/C Issuer in connection
        with Letters of Credit issued by it or proposed to be issued by it and
        the applications and agreements for letters of credit pertaining to such
        Letters of Credit as fully as if the term "Agent" as used in this
        Article 14 and in the definition of "Agent-Related Person" included the
        L/C Issuer with respect to such acts or omissions and (ii) as
        additionally provided herein with respect to the L/C Issuer.

        Section 14.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.

        Section 14.3 Liability of the Agent. No Agent-Related Person shall (a)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein) or (b) be responsible
in any manner to any Lender or Participant for any recital, statement,
representation or warranty made by the Borrower or any other party to any Loan
Document, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or Participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any Subsidiary or
Affiliate thereof.

        Section 14.4 Reliance by the Agent.

               (a) The Agent shall be entitled to rely, and shall be fully
        protected in relying, upon any writing, communication, signature,
        resolution, representation, notice, consent, certificate, affidavit,
        letter, telegram, facsimile, telex or telephone message, electronic mail
        message, statement or other document or conversation believed by it to
        be genuine

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<PAGE>

        and correct and to have been signed, sent or made by the proper Person
        or Persons, and upon advice and statements of legal counsel (including
        counsel to the Borrower or any other Person party to any Loan Document),
        independent accountants and other experts selected by the Agent. The
        Agent shall be fully justified in failing or refusing to take any action
        under any Loan Document unless it shall first receive such advice or
        concurrence of the Required Lenders (or all Lenders, as applicable) as
        the Agent deems appropriate and, if the Agent so requests, it shall
        first be indemnified to its satisfaction by the Lenders against any and
        all liability and expense which may be incurred by the Agent by reason
        of taking or continuing to take any such action. The Agent shall in all
        cases be fully protected in acting, or in refraining from acting, under
        this Agreement or any other Loan Document in accordance with a request
        or consent of the Required Lenders or all Lenders, if required
        hereunder, and such request and any action taken or failure to act
        pursuant thereto shall be binding upon all of the Lenders and
        Participants. Where this Agreement expressly permits or prohibits an
        action unless the Required Lenders otherwise determine, the Agent shall,
        and in all other instances, the Agent may, but shall not be required to,
        initiate any solicitation for the consent or a vote of the Lenders.

               (b) For purposes of determining compliance with the conditions
        specified in Article 8, each Lender and Participant shall be deemed to
        have consented to, approved or accepted, or to be satisfied with, each
        document or other matter either sent by the Agent to each Lender for
        consent, approval, acceptance or satisfaction, or required thereunder to
        be consented to or approved by or acceptable or satisfactory to a
        Lender.

        Section 14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Agent for the account of the Lenders, unless the Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
The Agent will notify the Lenders of its receipt of any such notice. The Agent
shall take such action with respect to such Default as may be directed by the
Required Lenders; provided, however, that unless and until the Agent has
received any such direction, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default as
it shall deem advisable or in the best interest of the Lenders.

        Section 14.6 Credit Decision; Disclosure of Information by the Agent.
Each Lender and Participant acknowledges that no Agent-Related Person has made
any representation or warranty to such Lender or Participant, and that no act by
the Agent hereinafter taken, including any consent to and acceptance of any
assignment or review of the affairs of the Borrower or any of its Subsidiaries
or Affiliates, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender or Participant as to any matter,
including whether any Agent-Related Person has disclosed material information in
its possession. Each Lender, including any Lender by assignment, and each
Participant represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower and its Subsidiaries and
Affiliates, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and each such Lender or

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<PAGE>

Participant has made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Lender and Participant also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as such Lender or Participant shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and Affiliates. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent herein, the Agent shall not
have any duty or responsibility to provide any Lender or Participant with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower or
any of its Subsidiaries or Affiliates which may come into the possession of any
Agent-Related Person.

        Section 14.7 Indemnification of the Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to do
so), pro rata, and hold harmless each Agent-Related Person from and against any
and all Indemnified Liabilities incurred by it; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct; provided, further, that no action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrower. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.

        Section 14.8 The Agent in Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrower and its Affiliates as though Bank of America were not the Agent or L/C
Issuer hereunder and without notice to or consent of the Lenders. The Lenders
and Participants acknowledge that, pursuant to such activities, Bank of America
or its Affiliates may receive information regarding the Borrower and its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Affiliate) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With
respect to its Balances, Bank of America shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Agent or the L/C Issuer, and the terms "Lender" and "Lenders" shall
include Bank of America in its individual capacity.

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        Section 14.9 Resignation of the Agent. The Agent may, and at the request
of the Required Lenders shall, resign as the Agent upon thirty (30) days' notice
to the Lenders; provided that any such resignation by Bank of America shall also
constitute its resignation as L/C Issuer. If the Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be consented to by the Borrower at all times other than during the existence of
an Event of Default (which consent of the Borrower shall not be unreasonably
withheld or delayed). If no successor administrative agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrower, a successor administrative agent
from among the Lenders. Upon the acceptance of its appointment as successor
administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Agent and L/C Issuer, and the respective terms "Agent" and "L/C Issuer"
shall mean such successor administrative agent and Letter of Credit issuer, and
the retiring Agent's appointment, powers and duties as the Agent shall be
terminated and the retiring L/C Issuer's rights, powers and duties as such shall
be terminated, without any other or further act or deed on the part of such
retiring L/C Issuer or any other Lender, other than the obligation of the
successor L/C Issuer to issue letters of credit in substitution for the Letters
of Credit, if any, outstanding at the time of such succession or to make other
arrangements satisfactory to the retiring L/C Issuer to effectively assume the
obligations of the retiring L/C Issuer with respect to such Letters of Credit.
After any retiring Agent's resignation hereunder as the Agent, the provisions of
this Article 14, Section 15.1, and Section 15.2 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Agent under this
Agreement. If no successor administrative agent has accepted appointment as the
Agent by the date which is thirty (30) days following a retiring Agent's notice
of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of the Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.

        Section 14.10 Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Borrower or any Guarantor, the Agent (irrespective of whether the principal
of the Loan or any L/C Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise

                      (i) to file and prove a claim for the whole amount of the
               principal and interest owing and unpaid in respect of the Loan,
               L/C Obligations and all other Obligations that are owing and
               unpaid and to file such other documents as may be necessary or
               advisable in order to have the claims of the Lenders and the
               Agent (including any claim for the reasonable compensation,
               expenses, disbursements and advances of the Lenders and the Agent
               and their respective agents and counsel and all other amounts due
               the Lenders and the Agent under Sections 3.9, 3.10, 4.6, 4.7 and
               15.1) allowed in such judicial proceeding; and

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

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the Agent
shall consent to the making of such payments directly to the Lenders, to pay to
the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 4.7 and 15.1.

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

        Section 14.11 Guaranty Matters. The Lenders irrevocably authorize the
Agent, at its option and in its discretion, to release any Guarantor from its
obligations under the Guaranties if such Person ceases to be a Subsidiary of the
Borrower as a result of a transaction permitted hereunder. Upon request by the
Agent at any time, the Required Lenders will confirm in writing the Agent's
authority to release any Guarantor from its obligations under the Guaranty
pursuant to this Section 14.11.

        Section 14.12 Co-Agents; Lead Managers. None of the Lenders identified
on the facing page or signature pages of this Agreement as a "co-agent" or other
similar title shall have any right, power, obligation, liability, responsibility
or duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders or other Persons so
identified as a "co-agent" or other similar title shall have or be deemed to
have any fiduciary relationship with any Lender. Each Lender acknowledges that
it has not relied, and will not rely, on any of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

                                   ARTICLE 15

                                  Miscellaneous

        Section 15.1 Attorney Costs, Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Agent for, promptly after presentation of supporting
documents, all reasonable costs and expenses incurred in connection with the
development, preparation, negotiation and execution of this Agreement and the
other Loan Documents and any amendment, waiver, consent or other modification of
the provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated) and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs
and (b) to pay or reimburse the Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any "workout"
or restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any insolvency law), including all Attorney
Costs. The foregoing costs and expenses shall include all search, filing,
recording, title insurance and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Agent and the cost of
independent public accountants and other outside

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experts retained by the Agent or any Lender. All amounts due under this Section
15.1 shall be payable within thirty (30) Business Days after demand therefor.
The agreements in this Section shall survive the termination of the Commitments
and repayment of all other Obligations.

        Section 15.2 Indemnification by the Borrower. Whether or not the
transactions contemplated hereby are consummated, the Borrower shall indemnify
and hold harmless each Agent-Related Person, each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including Attorney Costs)
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against any such Indemnitee in any way relating to or arising out
of or in connection with (a) the execution, delivery, enforcement, performance
or administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby or
the consummation of the transactions contemplated thereby, (b) any Commitment,
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (c) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any Environmental Liability related in any way to
the Borrower or any Subsidiary or Affiliate of the Borrower or (d) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"), in all cases, whether or not caused by or arising, in whole or in
part, out of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements have resulted from the gross
negligence or willful misconduct of such Indemnitee. No Indemnitee shall be
liable for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement. All amounts due under
this Section 15.2 shall be payable within thirty (30) Business Days after demand
therefor. The agreements in this Section shall survive the resignation of the
Agent, the replacement of any Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

        Section 15.3 Limitation of Liability. No Agent-Related Person, Lender or
any Affiliate, officer, director, employee, attorney or agent thereof shall have
any liability with respect to the Borrower for and, by the execution of the Loan
Documents to which it is a party, each other party to any Loan Document, hereby
waives, releases, and agrees not to sue any of them upon, any claim for, any
special, indirect, incidental, consequential or punitive damages suffered or
incurred by any such Person in connection with, arising out of, or in any way
related to any of the Loan Documents, or any of the transactions contemplated by
any of the Loan Documents.

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        Section 15.4 No Duty. All attorneys, accountants, appraisers and other
professional Persons and consultants retained by any of the Agent, the Arranger
or any Lender shall have the right to act exclusively in the interest of Agent,
the Arranger and the Lenders and shall have no duty of disclosure, duty of
loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to the Borrower or any Guarantor, any shareholders of the Borrower or
any Guarantor or any other Person.

        Section 15.5 No Fiduciary Relationship. The relationship between the
Borrower and the Guarantors on the one hand and the Agent, the Arranger and the
Lenders on the other is solely that of debtor and creditor, and neither any of
the Agent, the Arranger nor any Lender has any fiduciary or other special
relationship with the Borrower or any Guarantor, and no term or condition of any
of the Loan Documents shall be construed so as to deem the relationship between
the Borrower and the Guarantors on the one hand and any of the Agent, the
Arranger and each Lender on the other to be other than that of debtor and
creditor.

        Section 15.6 Equitable Relief. The Borrower recognizes that in the event
the Borrower or any Guarantor fails to pay, perform, observe or discharge any or
all of the Obligations under the Loan Documents, any remedy at law may prove to
be inadequate relief to the Agent and the Lenders. The Borrower therefore agrees
that the Agent and the Lenders, if the Agent or the Required Lenders so request,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

        Section 15.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided for in the Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.

        Section 15.8 Successors and Assigns.

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

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<PAGE>

               (b) Any Lender may at any time assign to one or more Eligible
        Assignees all or a portion of its rights and obligations under this
        Agreement (including all or a portion of its Commitment and the portion
        of the Loan (including for purposes of this clause (b), participations
        in L/C Obligations) at the time owing to it); provided that (i) except
        in the case of an assignment of the entire remaining amount of the
        assigning Lender's Commitment and the portion of the Loan at the time
        owing to it or in the case of an assignment to a Lender or an Affiliate
        of a Lender or an Approved Fund with respect to a Lender, the aggregate
        amount of the Commitment (which for this purpose includes the Loan
        outstanding thereunder) subject to each such assignment, determined as
        of the date the Assignment and Assumption with respect to such
        assignment is delivered to the Agent or, if "Trade Date" is specified in
        the Assignment and Assumption, as of the Trade Date, shall not be less
        than $10,000,000 unless each of the Agent and, so long as no Event of
        Default has occurred and is continuing, the Borrower otherwise consents
        (which consent of the Borrower shall not be unreasonably withheld or
        delayed), (ii) each partial assignment shall be made as an assignment of
        a proportionate part of all the assigning Lender's rights and
        obligations under this Agreement with respect to the portion of the Loan
        or the Commitment assigned, (iii) any assignment of a Commitment must be
        approved by the Agent and the L/C Issuer unless the Person that is the
        proposed assignee is itself a Lender (whether or not the proposed
        assignee would otherwise qualify as an Eligible Assignee) and (iv) the
        parties to each assignment shall execute and deliver to the Agent an
        Assignment and Assumption and an Acknowledgement of Intercreditor
        Agreement, together with a processing and recordation fee of $3,500.
        Subject to acceptance and recording thereof by the Agent pursuant to
        clause (c) of this Section, from and after the effective date specified
        in each Assignment and Assumption, the Eligible Assignee thereunder
        shall be a party to this Agreement and, to the extent of the interest
        assigned by such Assignment and Assumption, have the rights and
        obligations of a Lender under this Agreement, and the assigning Lender
        thereunder shall, to the extent of the interest assigned by such
        Assignment and Assumption, be released from its obligations under this
        Agreement (and, in the case of an Assignment and Assumption covering all
        of the assigning Lender's rights and obligations under this Agreement,
        such Lender shall cease to be a party hereto but shall continue to be
        entitled to the benefits of Sections 6.1, 6.5, 6.6, 15.1 and 15.2 with
        respect to facts and circumstances occurring prior to the effective date
        of such assignment). Upon request, the Borrower (at its expense) shall
        execute and deliver a Note to the assignee Lender and, if applicable,
        shall deliver a replacement Note to the assignor Lender. Any assignment
        or transfer by a Lender of rights or obligations under this Agreement
        that does not comply with this clause (b) shall be treated for purposes
        of this Agreement as a sale by such Lender of a participation in such
        rights and obligations in accordance with clause (d) of this Section.
        From time to time upon request of the Borrower, the Agent will inform
        the Borrower of the identities of all Lenders and their respective
        Commitments.

               (c) The Agent, acting solely for this purpose as an agent of the
        Borrower, shall maintain at the Principal Office a copy of each
        Assignment and Assumption delivered to it and a register for the
        recordation of the names and addresses of the Lenders, and the
        Commitments of, and principal amounts of the portion of the Loan and L/C
        Obligations owing to, each Lender pursuant to the terms hereof from time
        to time (the "Register"). The entries in the Register shall be
        conclusive, and the Borrower, the

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        Agent and the Lenders may treat each Person whose name is recorded in
        the Register pursuant to the terms hereof as a Lender hereunder for all
        purposes of this Agreement, notwithstanding notice to the contrary, and
        any request, authority or consent of any Person who, at the time of
        making such request or giving such authority or consent, is listed in
        the Register as the Lender shall be conclusive and binding on any
        subsequent holder, assignee, or transferee of the corresponding
        Commitments or Obligations. The Register shall be available for
        inspection by the Borrower and any Lender, at any reasonable time and
        from time to time upon reasonable prior notice.

               (d) Any Lender may at any time, without the consent of, but with
        notice to, the Borrower and the Agent, sell participations to any Person
        (other than a natural person or the Borrower or any of the Borrower's
        Affiliates or Subsidiaries) (each, a "Participant") in all or a portion
        of such Lender's rights and/or obligations under this Agreement
        (including all or a portion of its Commitment and/or the Loan (including
        such Lender's participations in L/C Obligations) owing to it); provided
        that (i) such Lender's obligations under this Agreement shall remain
        unchanged, (ii) such Lender shall remain solely responsible to the other
        parties hereto for the performance of such obligations and (iii) the
        Borrower, the Agent and the other Lenders shall continue to deal solely
        and directly with such Lender in connection with such Lender's rights
        and obligations under this Agreement. Any agreement or instrument
        pursuant to which a Lender sells such a participation shall provide that
        such Lender shall retain the sole right to enforce this Agreement and to
        approve any amendment, modification or waiver of any provision of this
        Agreement; provided that a Lender selling a participation may, in any
        agreement with a Participant, give such Participant the right to consent
        to any matter which (A) extends the Maturity Date as to such Participant
        or any other date upon which any payment of money is due to such
        Participant, (B) reduces the rate of interest owing to such Participant,
        any fee or any other monetary amount owing to such Participant, (C)
        reduces the amount of any installment of principal owing to such
        Participant or (D) releases all or substantially all of the Guarantors
        of their obligations under the Subsidiary Guaranty. Subject to clause
        (e) of this Section, the Borrower agrees that each Participant shall be
        entitled to the benefits of Sections 6.1, 6.5 and 6.6 to the same extent
        as if it were a Lender and had acquired its interest by assignment
        pursuant to clause (b) of this Section. To the extent permitted by law,
        each Participant shall be also entitled to the benefits of Section 13.4
        as though it were a Lender, provided such Participant agrees to be
        subject to Section 5.7 as though it were a Lender.

               (e) A Participant shall not be entitled to receive any greater
        payment under Section 6.1 or 6.5 than the applicable Lender would have
        been entitled to receive with respect to the participation sold to such
        Participant, unless the sale of the participation to such Participant is
        made with the Borrower's prior written consent. A Participant that would
        be a Foreign Lender if it were a Lender shall not be entitled to the
        benefits of Section 6.5 unless such Participant agrees, for the benefit
        of the Borrower, to comply with Section 15.22 as though it were a Lender
        (it being understood that the Agent and the Borrower shall be third
        party beneficiaries of such covenant).

               (f) Any Lender may at any time pledge or assign a security
        interest in all or any portion of its rights under this Agreement
        (including under its Note, if any) to secure

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        obligations of such Lender, including any pledge or assignment to secure
        obligations to a Federal Reserve Bank; provided that no such pledge or
        assignment shall release such Lender from any of its obligations
        hereunder or substitute any such pledgee or assignee for such Lender as
        a party hereto.

               (g) As used herein, the following terms have the following
        meanings:

               "Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a
               Lender, (iii) an Approved Fund and (iv) any other Person (other
               than a natural person) approved by (x) the Agent and the L/C
               Issuer and (y) unless an Event of Default has occurred and is
               continuing, the Borrower (which approval of the Borrower shall
               not be unreasonably withheld or delayed); provided that
               notwithstanding the foregoing, "Eligible Assignee" shall not
               include the Borrower or any of the Borrower's Affiliates or
               Subsidiaries.

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

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

               (h) Notwithstanding anything to the contrary contained herein, if
        at any time Bank of America assigns all of its Commitment and portions
        of the Loan owing to it pursuant to clause (b) above, Bank of America
        may, upon 30 days' notice to the Borrower and the Lenders, resign as L/C
        Issuer. In the event of any such resignation as L/C Issuer, the Borrower
        shall be entitled to appoint from among the Lenders a successor L/C
        Issuer hereunder (and upon acceptance of such appointment by a Lender,
        such Lender shall be such successor L/C Issuer); provided that no
        failure by the Borrower to appoint any such successor shall affect the
        resignation of Bank of America as L/C Issuer. If Bank of America resigns
        as L/C Issuer, it shall retain all the rights and obligations of the L/C
        Issuer hereunder with respect to all Letters of Credit outstanding as of
        the effective date of its resignation as L/C Issuer and all L/C
        Obligations with respect thereto (including the right to require the
        Lenders to fund Base Rate Balances or fund risk participations in
        Unreimbursed Amounts pursuant to Section 3.3).

        Section 15.9 Survival. All representations and warranties made hereunder
and in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and
delivery hereof and thereof. Such representations and warranties have been or
will be relied upon by the Agent and each Lender, regardless of any
investigation made by the Agent or any Lender or on their behalf and
notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default at the time of any extension of credit hereunder, and shall continue
in full force and effect as long as the Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding. Without prejudice to the survival of any other

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obligation of the Borrower hereunder, the obligations under Article 6, Section
14.7, Section 15.1 and Section 15.2 shall survive repayment of the Notes and
termination of the Commitments.

        Section 15.10 Entire Agreement. This Agreement, together with the other
Loan Documents and any letter agreements referred to herein, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and supersedes all prior agreements, written or oral, on the subject matter
hereof. In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall
control and govern; provided that the inclusion of supplemental rights or
remedies in favor of the Agent or the Lenders in any other Loan Document shall
not be deemed a conflict with this Agreement. Each Loan Document was drafted
with the joint participation of the respective parties thereto and shall be
construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.

        Section 15.11 Amendments and Waivers. Any provision of any Loan Document
may be amended or waived and any consent to any departure by the Borrower
therefrom may be granted if, but only if, such amendment, waiver or consent is
in writing and is signed by the Borrower, and the Required Lenders; provided
that no such amendment, waiver or consent shall:

               (a) waive any condition set forth in Section 8.1(a) without the
        written consent of each Lender;

               (b) extend or increase the Commitment of any Lender (or reinstate
        any Commitment theretofore terminated) without the written consent of
        such Lender;

               (c) postpone any date fixed by this Agreement or any other Loan
        Document for any payment of principal, interest, fees or other amounts
        due to the Lenders (or any of them) hereunder or under any other Loan
        Document without the written consent of each Lender directly affected
        thereby;

               (d) reduce the principal of, or the rate of interest specified
        herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the
        second proviso to this Section 15.11) any fees or other amounts payable
        hereunder or under any other Loan Document without the written consent
        of each Lender directly affected thereby, provided that only the consent
        of the Required Lenders shall be necessary to amend the definition of
        "Default Rate" or to waive any obligation of the Borrower to pay
        interest at the Default Rate;

               (e) change Section 5.7 in a manner that would alter the pro rata
        sharing of payments required thereby without the written consent of each
        Lender;

               (f) change any provision of this Section or the definition of
        "Required Lenders" or any other provision hereof specifying the number
        or percentage of Lenders required to amend, waive or otherwise modify
        any rights hereunder or make any determination or grant any consent
        hereunder, without the written consent of each Lender; or

               (g) release all or substantially all the Guarantors from the
        Guaranty without the written consent of each Lender;

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and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it, (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Agent in addition to the Lenders required above, affect the rights or duties
of the Agent under this Agreement or any other Loan Document and (iii) the Fee
Letter may be amended, or rights or privileges thereunder waived, in a writing
executed only by the parties thereto.

        Section 15.12 Maximum Interest Rate. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable law (the "Maximum Rate"). If the Agent or any
Lender shall receive interest in an amount that exceeds the Maximum Rate, the
excessive interest shall be applied to the principal of the Obligations or, if
it exceeds the unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged or received by the Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable law, (a) characterize any payment that is not principal as an
expense, fee or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof and (c) amortize, prorate, allocate and spread in equal
or unequal parts the total amount of interest throughout the contemplated term
of the Obligations.

        Section 15.13 Notices and Other Communications; Facsimile Copies.

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

                      (i) if to the Borrower, the Agent or the L/C Issuer, to
               the address, facsimile number, electronic mail address or
               telephone number specified for such Person on Schedule 15.13 or
               to such other address, facsimile number, electronic mail address
               or telephone number as shall be designated by such party in a
               notice to the other parties; and

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

        All such notices and other communications shall be deemed to be given or
        made upon the earlier to occur of (i) actual receipt by the relevant
        party hereto and (ii) (A) if delivered by hand or by courier, when
        signed for by or on behalf of the relevant party hereto, (B) if
        delivered by mail, four Business Days after deposit in the mails,
        postage prepaid, (C) if

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<PAGE>

        delivered by facsimile, when sent and receipt of such delivery has been
        confirmed by telephone from the receiving party and (D) if delivered by
        electronic mail (which form of delivery is subject to the provisions of
        clause (c) below), when delivered; provided that notices and other
        communications to the Agent and the L/C Issuer pursuant to Article 3 and
        Article 4 shall not be effective until actually received by such Person.
        In no event shall a voicemail message be effective as a notice,
        communication or confirmation hereunder.

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

               (c) Limited Use of Electronic Mail. Electronic mail and Internet
        and intranet websites may be used only to distribute routine
        communications, such as financial statements and other information as
        provided in Section 10.1, and to distribute Loan Documents for execution
        by the parties thereto, and may not be used for any other purpose.

               (d) Reliance by Agent and Lenders. The Agent and the Lenders
        shall be entitled to rely and act upon any notice (including telephonic
        notices of borrowing, Conversion and Continuation) purportedly given by
        or on behalf of the Borrower even if (i) such notices were not made in a
        manner specified herein, were incomplete or were not preceded or
        followed by any other form of notice specified herein or (ii) the terms
        thereof, as understood by the recipient, varied from any confirmation
        thereof. The Borrower shall indemnify each Agent-Related Person and each
        Lender from all losses, costs, expenses and liabilities resulting from
        the reliance by such Person on each notice purportedly given by or on
        behalf of the Borrower. All telephonic notices to and other
        communications with the Agent may be recorded by the Agent, and each of
        the parties hereto hereby consents to such recording.

        Section 15.14 Governing Law; Venue; Service of Process.

               (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
        ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
        AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
        THAT THE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
        FEDERAL LAW.

               (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
        OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
        CALIFORNIA OR OF THE UNITED STATES FOR SUCH STATE, AND BY EXECUTION AND
        DELIVERY OF THIS AGREEMENT,

                                       81
<PAGE>

        THE BORROWER, THE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN
        RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
        COURTS. THE BORROWER, THE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY
        OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
        THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
        TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN
        RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE
        BORROWER, THE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY
        SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
        MEANS PERMITTED BY THE LAWS OF SUCH STATE.

        Section 15.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

        Section 15.16 Severability. Any provision of any Loan Document held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of such Loan Document and the effect thereof shall
be confined to the provision held to be invalid or illegal.

        Section 15.17 Headings. The headings, captions and arrangements used in
this Agreement are for convenience of reference only and shall not affect the
interpretation of this Agreement.

        Section 15.18 Construction. The Borrower, each Guarantor (by its
execution of the Loan Documents to which it is a party), the Agent and each
Lender acknowledges that each of them has had the benefit of legal counsel of
its own choice and has been afforded an opportunity to review the Loan Documents
with its legal counsel and that the Loan Documents shall be construed as if
jointly drafted by the parties thereto.

        Section 15.19 Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.

        Section 15.20 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE

                                       82
<PAGE>

OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

        Section 15.21 Confidentiality. The Agent, each Lender and each
Participant shall use any confidential non-public information concerning the
Borrower and its Subsidiaries that is furnished to the Agent or such Lender by
or on behalf of the Borrower and its Subsidiaries in connection with the Loan
Documents (collectively, "Confidential Information") solely for the purpose of
evaluating and providing products and services to them and administering and
enforcing the Loan Documents, and it will hold the Confidential Information in
confidence. Notwithstanding the foregoing, the Agent and each Lender may
disclose Confidential Information (a) to their Affiliates or any of their or
their Affiliates' directors, officers, employees, auditors, counsel, advisors or
representatives (collectively, the "Representatives") whom it determines need to
know such information for the purposes set forth in this Section, (b) to any
bank or financial institution or other entity to which such Lender has assigned
or desires to assign an interest or participation in the Loan Documents or the
Obligations, provided that any such foregoing recipient of such Confidential
Information agrees to keep such Confidential Information confidential as
specified herein, (c) to any Governmental Authority having or claiming to have
authority to regulate or oversee any aspect of the Agent's or such Lender's
business or that of their Representatives in connection with the exercise of
such authority or claimed authority, (d) to the extent necessary or appropriate
to effect or preserve the Agent's or such Lender's or any of their Affiliates'
security (if any) for any Obligation or to enforce any right or remedy or in
connection with any claims asserted by or against the Agent or such Lender or
any of their Representatives and (e) pursuant to any subpoena or any similar
legal process. For purposes hereof, the term "Confidential Information" shall
not include information that (x) is in the Agent's or a Lender's possession
prior to its being provided by or on behalf of the Borrower or any of its
Subsidiaries; provided that such information is not known by the Agent or such
Lender to be subject to another confidentiality agreement with, or other legal
or contractual obligation of confidentiality to, the Borrower or any of its
Subsidiaries, (y) is or becomes publicly available (other than through a breach
hereof by the Agent or such Lender) or (z) becomes available to the Agent or
such Lender on a nonconfidential basis; provided, further, that the source of
such information was not known by the Agent or such Lender to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.

        Section 15.22 Foreign Lenders. Each Foreign Lender shall deliver to the
Agent, prior to receipt of any payment subject to withholding under the Code (or
after accepting an assignment of an interest herein), two (2) duly signed
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement) or such other evidence satisfactory to the Borrower
and the Agent that such Foreign Lender is entitled to an exemption from, or
reduction of, U.S. withholding tax. Thereafter and from time to time, each such
Foreign Lender shall (a) promptly submit to the Agent such additional duly

                                       83
<PAGE>

completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant U.S. taxing authorities) as
may then be available under then current U.S. laws and regulations to avoid, or
such evidence as is satisfactory to the Borrower and the Agent of any available
exemption from or reduction of, U.S. withholding taxes in respect of all
payments to be made to such Foreign Lender by the Borrower pursuant to this
Agreement, (b) promptly notify the Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction and (c) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Foreign Lender, and as may be reasonably necessary (including
the re-designation of its Applicable Lending Office) to avoid any requirement of
applicable laws that the Borrower make any deduction or withholding for taxes
from amounts payable to such Foreign Lender. If such Foreign Lender fails to
deliver the above forms or other documentation, then the Agent may withhold from
any interest payment to such Foreign Lender an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction. If any Governmental Authority asserts that the Agent did not
properly withhold any tax or other amount from payments made in respect of such
Foreign Lender, such Foreign Lender shall indemnify the Agent therefor,
including all penalties and interest, any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, and costs and expenses
(including Attorney Costs) of the Agent. The obligation of the Lenders under
this Section shall survive the payment of all Obligations and the resignation or
replacement of the Agent.

        Section 15.23 Amendment and Restatement. This Agreement amends, restates
and replaces in its entirety the Original Agreement. All rights, benefits,
indebtedness, interest, liabilities and obligations of the parties to the
Original Agreement are hereby amended, restated, replaced and superseded in
their entirety according to the terms and provisions set forth herein. All
indebtedness, liabilities and obligations under the Original Agreement,
including all promissory notes executed by the Borrower pursuant thereto, are
hereby renewed by this Agreement, the Notes and the other Loan Documents
executed by the Borrower pursuant to this Agreement and shall, from and after
the Closing Date, be governed by this Agreement and the other Loan Documents.
The Borrower represents and warrants that as of the date hereof there are no
claims or offsets against, or defenses or counterclaims to, its obligations
under this Agreement, the Original Agreement or any of the other agreements,
documents or instruments executed in connection herewith or therewith. To induce
the Agent and the Lenders to enter into this Agreement, the Borrower waives any
and all such claims, offsets, defenses and counterclaims, whether known or
unknown, arising prior to the Closing Date and relating to the Original
Agreement or this Agreement.

                  [Remainder of page intentionally left blank]

                                       84
<PAGE>

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

                                             BORROWER:

                                             WILLIAMS-SONOMA, INC.

                                             By: /s/ SHARON L. MCCOLLAM
                                                --------------------------------
                                             Name: SHARON L. MCCOLLAM
                                                  ------------------------------
                                             Title: SVP & CFO
                                                   -----------------------------

                                      S-1
<PAGE>

                                             AGENT:

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

                                             By: /s/ DORA A. BROWN
                                                --------------------------------
                                             Name: DORA A. BROWN
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-2
<PAGE>

                                             LENDERS:

                                             BANK OF AMERICA, N.A., as a Lender
                                             and as L/C Issuer
Commitment:
        $49,000,000

                                             By: /s/ LISA M. THOMAS
                                                --------------------------------
                                             Name: LISA M. THOMAS
                                                  ------------------------------
                                             Title: SENIOR VICE PRESIDENT
                                                   -----------------------------

                                      S-3
<PAGE>

                                             FLEET NATIONAL BANK
Commitment:
        $30,000,000

                                             By: /s/ PETER L. GRISWOLD
                                                --------------------------------
                                             Name: PETER L. GRISWOLD
                                                  ------------------------------
                                             Title: MANAGING DIRECTOR
                                                   -----------------------------

                                      S-4
<PAGE>

                                             THE BANK OF NEW YORK
Commitment:
        $30,000,000

                                             By: /s/ CHARLOTTE SOHN FUIKS
                                                --------------------------------
                                             Name: CHARLOTTE SOHN FUIKS
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-5
<PAGE>

                                             WELLS FARGO BANK, N.A., as a Lender
Commitment:
        $20,000,000

                                             By: /s/ KATRINA FLOWERS
                                                --------------------------------
                                             Name: KATRINA FLOWERS
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                             By: /s/ ROGER FLEISCHMANN
                                                --------------------------------
                                             Name: ROGER FLEISCHMANN
                                                  ------------------------------
                                             Title: SVP AND MANAGER
                                                   -----------------------------

                                      S-6
<PAGE>

                                             JPMORGAN CHASE BANK
Commitment:
        $20,000,000

                                             By: /s/ JAMES A. KNIGHT
                                                --------------------------------
                                             Name: JAMES A. KNIGHT
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-7
<PAGE>

                                             UNION BANK OF CALIFORNIA, N.A.
Commitment:
        $17,000,000

                                             By: /s/ THERESA L. ROCHA
                                                --------------------------------
                                             Name: THERESA L. ROCHA
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-8
<PAGE>

                                             U.S. BANK NATIONAL ASSOCIATION
Commitment:
        $17,000,000

                                             By: /s/ GREGORY L. DRYDEN
                                                --------------------------------
                                             Name: GREGORY L. DRYDEN
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-9
<PAGE>

                                             NATIONAL CITY BANK
Commitment:
        $17,000,000

                                             By: /s/ THOMAS E. REDMOND
                                                --------------------------------
                                             Name: THOMAS E. REDMOND
                                                  ------------------------------
                                             Title: VICE PRESIDENT
                                                   -----------------------------

                                      S-10
<PAGE>

                                    EXHIBIT A

                             Form of Revolving Note

                                      A-1
<PAGE>

                                    EXHIBIT B

                             Form of Swingline Note

                                      B-1
<PAGE>

                                    EXHIBIT C

                        Form of Assignment and Acceptance

                                      C-1

<PAGE>

                                    EXHIBIT D

                         Form of Compliance Certificate

                                      D-1

<PAGE>

                                    EXHIBIT E

                           Form of Subsidiary Guaranty

                                      E-1

<PAGE>

                                    EXHIBIT F

     Form of Notice of Borrowings, Conversions, Continuations or Prepayments

                                      F-1

<PAGE>

                                    EXHIBIT G

                            Form of Joinder Agreement

                                      G-1

<PAGE>

                                    EXHIBIT H

              Form of Acknowledgment of Intercreditor Agreement

                                      S-1

<PAGE>

                                   Schedule 1

                                      H-1

<PAGE>

                                  Schedule 9.4

<PAGE>

                                  Schedule 9.5

<PAGE>

                                  Schedule 9.9

<PAGE>

                                  Schedule 9.10

<PAGE>

                                  Schedule 9.12

<PAGE>

                                  Schedule 9.14

<PAGE>

                                  Schedule 9.15

<PAGE>

                                  Schedule 9.19

<PAGE>

                                  Schedule 9.20

<PAGE>

                                  Schedule 9.21

<PAGE>

                                  Schedule 11.2

<PAGE>

                                  Schedule 11.5

<PAGE>

                                 Schedule 15.13

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