Document:

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                                                                EXHIBIT 10(d)(2)

                                      LEASE

         This lease is made and executed on June 7, 2002, by and between Briohn
Ventures III, LLC, a Wisconsin limited liability company, with its principal
office at W233 N2800 Roundy Circle West, City of Pewaukee, County of Waukesha,
State of Wisconsin, herein referred to as lessor, and Merchants and
Manufacturers Bancorporation, a corporation organized and existing under the
laws of the State of Wisconsin, with its principal office at 14100 W. National
Avenue, City of New Berlin, County of Waukesha, State of Wisconsin, herein
referred to as lessee.

                                   SECTION ONE
                    DEMISE, USE, AND DESCRIPTION OF PREMISES

         Lessor hereby leases to lessee, and lessee leases from lessor, for the
purpose of conducting therein the operation of a bank holding company and a
state or federally chartered commercial bank including all operations ancillary
or supplemental thereto, together with such office and professional offices as
lessee in its sole discretion may deem appropriate, the land, together with the
Improvements (as defined in Section Four, below) to be constructed thereon and
all other building fixtures and improvements located thereon (collectively the
"Premises"), and all rights of ingress and egress, and appurtenances thereto
situated in the City of Brookfield, County of Waukesha, State of Wisconsin, and
more particularly described in the schedule attached hereto as Exhibit "A" and
shown on the Certified Survey Map attached hereto as Exhibit "B", both of which
are made a part hereof.

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                                   SECTION TWO
                                 TERM AND OPTION

         The initial term of this lease shall be for approximately twenty (20)
years, commencing on the date of substantial completion of the Improvements, as
hereafter defined, which is anticipated to be October 1, 2002 ("Commencement
Date") and terminating on the last day of the calendar month during which the
twentieth (20th) anniversary of the lease occurs; provided, however, that if the
Improvements are not substantially complete by October 1, 2002, lessor shall not
have liability for such delay, but the Commencement Date shall be extended until
the date of substantial completion. The actual Commencement Date will be
confirmed in a supplement to this lease setting forth the Commencement Date and
termination date, which supplement will be executed on or about the date of
substantial completion of the Improvements.

         Provided lessee is not in default under this lease at the time of
exercise, lessee shall have two (2) successive options to extend the term of
this lease for periods of five (5) years each; that is, for a total of ten (10)
years, upon written notice of the exercise of each such option given not less
than one (1) year prior to the expiration of the then current lease term. The
use of the word "term" hereunder shall include any extended terms.

                                  SECTION THREE
                                      RENT

         Commencing on the Commencement Date, the annual base rent ("Base Rent")
for the Premises shall be in the amount of $251,743.00 per year, payable monthly
(1/12 of the annual amount) in advance, without demand or offset, on or before
the first (1st) day of each calendar month with the first and last month's Base
Rent prorated accordingly. Base Rent shall be

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increased on the first day of each anniversary of the Commencement Date (or on
the first day of the next calendar month if the Commencement Date occurs on
other than the first day of a month) by the greater of three percent (3%) or one
hundred percent (100%) of the CPI Factor. The CPI Factor means a fraction, the
numerator of which shall be the Consumer Price Index figure most recently
published prior to the date for which the computation is being made, and the
denominator of which shall be the Consumer Price Index figure published closest
to twelve (12) months prior thereto. As used herein, the Consumer Price Index
shall mean the index published by the Bureau of Labor Statistics, United States
Department of Labor entitled "Consumer Price Index, All Urban Consumers, All
Items (1982-1984=100)." If the computation and publication of the Consumer Price
Index is transferred to another governmental bureau, such bureau's publication
shall be substituted for the presently published index. If the Consumer Price
Index is substantially altered, adjustments shall be made to such revised or
altered index to make it comparable to the original index, provided that if the
governmental bureau which produces the Consumer Price Index publishes such
adjustment, then such adjustment as published shall be controlling. In the event
the Consumer Price Index is discontinued, the parties shall accept comparable
statistics on the purchasing power of the consumer dollar as published at the
time of such discontinuation by a responsible financial periodical of recognized
authority to be then chosen by Lessor. Lessee shall make all payments of Base
Rent to lessor at the address set forth below for giving notices to lessor, or
such other address as lessor may from time to time direct by written notice to
lessee.

         Lessee acknowledges that late payment of rent involves additional costs
to lessor for collection and bookkeeping, and, accordingly, lessee agrees that,
if Base Rent due hereunder is not paid by the fifth (5th) business day after it
is due, then lessee shall pay upon demand, as

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additional rent, a late charge equal to five percent (5%) of the amount required
to be paid. The foregoing provision for payment of a late charge shall not be
construed to extend the date for payment of any sums required to be paid by
lessee hereunder or to relieve lessee of its obligation to pay all such sums at
the time or times herein stipulated, and neither the demand for, nor collection
by, lessor of such late charge shall be construed as a cure of lessee's default
in the payment of rent.

                                  SECTION FOUR
                            CONSTRUCTION OF PREMISES

         Lessor has agreed to construct upon the Premises a building having an
aggregate total of approximately fifteen thousand (15,000) square feet of which
there will be approximately ten thousand three hundred (10,300) rentable square
feet above ground, plus a basement of approximately 4,700 square feet (the
"Improvements") as depicted on Exhibit "C" in accordance with the plans and
specifications attached hereto as Exhibit "D". All such work shall be done in a
good and workmanlike manner in compliance with all building codes and
regulations applicable to the Improvements. Lessee's taking possession of the
Premises shall be conclusive evidence that lessee accepts the Premises and that
they are in satisfactory condition except for any punch list of unsatisfactory
items of which lessee gives written notice to lessor within thirty (30) days
after the Commencement Date, which items shall be corrected or repaired by
lessor. Lessee, at its sole cost and expense, shall (a) pay the cost of
constructing the improvements described on Exhibit "D" to the extent such cost
exceeds $1,763,247.00, and (b) perform all other alterations, improvements, and
other work necessary to prepare the Premises for lessee's use. Such amounts
shall be paid on demand directly to the Contractor or Contractors performing
such work or to a title insurance company designated by lessor's first mortgagee
in accordance

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with such disbursement procedures as may be required by such first mortgagee.
All such work by lessee shall be done in accordance with Sections Fourteen and
Twenty-Four, below.

                                  SECTION FIVE
                                 USES PROHIBITED

         Lessee shall not use, or permit the Premises, or any part thereof, to
be used, for any purpose or purposes other than the purpose or purposes set
forth in Section One, above; and no use shall be made or permitted to be made of
the Premises, nor acts done, which will cause a cancellation of any insurance
policy covering the buildings located thereon or any part thereof, nor shall
lessee sell, or permit to be kept, used, or sold, in or about the Premises, any
article which may be prohibited by the standard form of fire insurance policies,
nor shall lessee use or permit the use of the Premises or any part thereof for a
purpose which would violate any covenant or prohibition respecting radius,
location, use or exclusive in any other lease, financing agreement or other
agreement relating to or binding on the Premises. Lessee shall, at its expense,
comply with all requirements, pertaining to the Premises, of any insurance
organization or company, necessary for the maintenance of insurance, as herein
provided, covering any building and appurtenances at any time located on the
Premises.

                                   SECTION SIX
                          WASTE AND NUISANCE PROHIBITED

         Lessee shall not commit, or suffer to be committed, any waste on the
Premises or any nuisance.

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                                  SECTION SEVEN
                                   ABANDONMENT

         Lessee shall not vacate or abandon the Premises at any time during the
term of this lease; and if lessee shall abandon, vacate, or surrender the
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to lessee and left on the Premises shall be deemed to be
abandoned, at the option of lessor, except such property to which lessor may
have a lien.
                                  SECTION EIGHT
                                 ENTRY BY LESSOR

         Lessee shall permit lessor and the agents of lessor to enter into and
on the Premises at all reasonable times for the purpose of inspecting the same,
or for the purpose of posting notices of nonresponsibility for alterations,
additions, or repairs, without any rebate of rent and without any liability to
lessee for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned; and lessee shall permit lessor and its agents, at any time to show
the Premises for sale and to post "For Sale" signs, and within six (6) months
prior to the expiration of this lease, to place on the Premises any usual or
ordinary "To Let" or "To Lease" signs and exhibit the Premises to prospective
tenants at reasonable hours.

                                  SECTION NINE
                                     NOTICES

         All notices, demands, or writings in this lease provided to be given or
made or sent that may be given or made or sent by either party hereto to the
other, shall be deemed to have been fully given or made (a) on the date of
delivery when delivered by hand or when transmitted by confirmed telecopy
actually received by the receiving equipment, (b) on the day when sent by

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receipted overnight courier or delivery service, or (c) three (3) business days
after deposit in the United States mail, certified and postage prepaid, and
addressed as follows:

         To lessor:        Briohn Ventures, LLC
                           W233 N2800 Roundy Circle West
                           Pewaukee, WI  53072
                           Attn:  Brian Byrne
                           Fax:  (262) 524-2206

         To lessee:        Merchants and Manufacturers Bancorporation
                           14100 W. National Avenue
                           New Berlin, WI 53151
                           Attn:  John Krawczyk
                           Fax:  262-827-5614

         The address to which any notice, demand, or writing may be given or
made or sent to any party as above provided may be changed by written notice
given by such party as above provided.

                                   SECTION TEN
                              TAXES AND ASSESSMENTS

         (a) Taxes as additional rental. As additional rental hereunder, lessee
shall pay and discharge as they become due, promptly and before delinquency, all
taxes, assessments, rates, charges, license fees, municipal liens, levies,
excises, or imposts, whether general or special, or ordinary or extraordinary,
of every name, nature, and kind whatsoever, including all governmental charges
of whatsoever name, nature, or kind, which may be levied, assessed, charged, or
imposed, or which may become a lien or charge on the Premises, or any part
thereof, or on lessee's estate hereby created which may be a subject of
taxation, or on lessor by reason of its ownership of the fee underlying this
lease, during the entire term hereof ("Taxes"), saving and excepting only those
taxes hereinafter in this section specifically excepted.

         (b) Assessments affecting improvements. Specifically and without in any
way limiting the generality of the foregoing, lessee shall pay all special
assessments or levies or

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charges made by any municipal or political subdivision for improvements, and
shall pay the same in cash as they shall fall due and before they shall become
delinquent and as required by the act and proceedings under which any such
assessments or levies or charges are made by any municipal or political
subdivision. If the right is given to pay either in one sum or in installments,
lessee may elect either mode of payment and its election shall be binding on
lessor. If by making any such election to pay in installments, any of such
installments shall be payable after the termination of this lease or any
extended term hereof, such installments due after the termination of this lease
shall be the sole responsibility of lessee and shall be paid by lessee prior to
the termination of this lease. All other Taxes payable under this Section shall
be prorated at the commencement, and expiration of the term hereof.

         (c) Escrow of Taxes. Notwithstanding the foregoing, (i) upon the
occurrence of any default by lessee under this lease, including but not limited
to the failure to pay when due any Taxes, or (ii) at any time if required by
lessor's mortgagee, lessee shall thereafter pay all Taxes accruing during the
term of this lease to lessor or its mortgagee in monthly installments on or
before the first day of each calendar month, in advance, in an amount estimated
by lessor or lessor's mortgagee, as the case may be. Upon receipt of all
statements for Taxes due for a calendar year, lessor shall submit to lessee a
written statement of the actual amount of the Taxes for such year and the
amount, if any, theretofore paid by lessee. If the total amount paid by lessee
under this Subsection for any year shall be more or less than the actual amount
due from lessee for such year, as shown in such statement, either lessee shall
pay to lessor the shortfall within ten (10) days after receipt of the statement
or such excess shall be credited against the next installment of taxes due from
lessee to lessor hereunder, as the case may be. All amounts due hereunder shall
be payable to lessor at the place where Base Rent is payable. A copy of a Tax

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bill submitted by lessor to lessee shall at all times be sufficient evidence of
the amount of Taxes levied, assessed or imposed against the Premises to which
such bill relates. Lessor's and lessee's obligations under this Subsection shall
survive the expiration of the term or any extended term. In the event of any
default by lessee under this lease, any such deposits may be used by lessor to
cure the default, but lessor shall be under no obligation to do so and lessee
shall have no authority to direct lessor to apply such deposits against any
obligation of lessee hereunder.

         (d) Taxes excepted. Anything in this section to the contrary
notwithstanding, lessee shall not be required to pay any estate, gift,
inheritance, succession, franchise, income, or excess profits taxes which may be
payable by lessor or lessor's legal representative, successors, or assigns, nor
shall lessee be required to pay any tax that might become due on account of
ownership of property other than that herein leased which may become a lien on
the property herein leased or collectible out of the same.

         (e) Contesting Taxes.

         Lessee or lessor may contest in good faith by appropriate proceedings
any Taxes; provided, however, that lessee must do so at its own expense and must
not then be in default under any term or condition of this lease. Nothing
contained herein, however, shall release lessee of the obligation to pay and
discharge contested Taxes as finally adjudicated, with interest and penalties,
and all other charges directed to be paid in or by any such adjudication. Any
such contest or legal proceeding shall be begun by lessee or lessor as soon as
reasonably possible after the imposition of any contested Taxes and shall be
prosecuted to final adjudication with all reasonable promptness and dispatch;
provided, however, that lessee or lessor may in its discretion consolidate any
proceeding to obtain a reduction in the assessed valuation of the Premises for
tax purposes relating to any tax year with any similar proceeding or proceedings

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relating to one or more other tax years. Notwithstanding anything contained
herein to the contrary, lessee shall pay all such contested items before the
time when the Premises or any part thereof might be forfeited as a result of
nonpayment.

         If lessee contests any Taxes, lessor shall join in the proceedings.
Lessor hereby agrees that the proceedings may be brought in its name, if the
provisions of any law, rule or regulation at the time in effect shall so
require. Lessee shall indemnify and save lessor harmless from any liabilities,
losses, or expenses (including reasonable attorneys fees) in connection with any
such proceedings in which lessor shall join or permit to be brought in its name.
So long as lessee is not in default under any term or condition of this lease,
(i) lessee shall be entitled to any refund of any Taxes, and all penalties or
interest thereon received by lessor which shall have been paid by lessee, or
which shall have previously been paid by lessor but previously reimbursed in
full by lessee and (ii) lessor and lessee shall not, without the other's prior
written approval (which shall not be unreasonably withheld), agree to any
settlement, compromise or other disposition of any such proceedings or
discontinue or withdraw from any such proceedings or accept any refund of any
Taxes as a result of any such proceedings.

         (f) Receipts. Within fifteen (15) days of the date lessee pays any
Taxes, lessee shall obtain and deliver to lessor, receipts or duplicate receipts
or photostatic copies thereof for all such Taxes.

                                 SECTION ELEVEN
                             PERSONAL PROPERTY TAXES

         Lessee shall pay before delinquency all personal property taxes
assessed against personal property and trade fixtures of lessee in or about the
Premises at any time during the term hereof;

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and shall impose on all sublessees the obligation to timely pay all personal
property taxes assessed against each sublessee.

                                 SECTION TWELVE
                     REPAIRS AND DESTRUCTION OF IMPROVEMENTS

         (a) Maintenance of improvements. Throughout the term of this lease,
lessee shall keep the Premises in good condition and repair and be responsible
for all maintenance, repairs and replacements to the Premises, structural and
nonstructural, ordinary or extraordinary, foreseen or unforeseen, including, but
not limited to, all structural repairs and replacements to the foundation,
exterior and/or load bearing walls, roof, gutters and mechanical systems of the
Premises, and all landscaping, sidewalks and parking areas contained in or about
the Premises. Lessee shall make all such repairs and replacements as may be
necessary to maintain the Premises in good condition and, at a minimum, in a
condition consistent with high quality buildings located in the City of
Brookfield, and shall not defer any repair or replacement in anticipation of the
end of the term. Lessee shall keep the Premises in a clean, safe, sanitary and
tenantable condition in a manner compatible with its intended use, shall not
permit any garbage, waste, refuse or dirt of any kind to accumulate in or about
the Premises, shall keep all drives, parking areas, entrances and pedestrian
walkways reasonably free from snow and ice and shall make any repairs,
replacements or improvements which may be required by any laws, rules,
regulations, ordinances or orders of any federal, state, local or other
governmental authority having jurisdiction over the Premises. Lessor shall not
be obligated to make any repairs, replacements, or improvements of any kind,
nature, or description whatsoever to the Premises or any buildings or
improvements thereon.

                                  10(d)(2)-11
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         (b) Maintenance of parking areas; painting; roofing. Lessee shall, at
lessee's expense, maintain in good condition and repair and replace whenever
necessary, all parking areas, sidewalks, curbs, roads, driveways, lighting
standards, landscaping, sewers, water, gas and electrical distribution systems
and facilities, drainage facilities and all signs, both illuminated and
non-illuminated that are now or hereafter on the Premises. Lessee shall maintain
the lines designating the parking spaces in good condition and paint the same as
often as may be necessary so that they are easily discernible at all times.
Lessee, at its expense, shall paint the exterior painted surfaces of all
buildings on the Premises during the term of this lease or any extension hereof,
in a first-class, workmanlike manner with at least one coat of paint. Lessee
shall install as necessary or appropriate new roof covering on or recoat the
roofs of all buildings in the Premises in a first-class, workmanlike manner
throughout the term of this lease; and lessee shall take all reasonable
precautions to insure that the drainage facilities of the various roofs are not
clogged and are in good and operable condition at all times. All this work is to
be performed to the approval of lessor.

         (c) Maintaining appearance of Premises. Lessee, at its expense, shall
maintain the exterior of the buildings, the parking area, landscaping and all
other portions of the Premises visible from the surrounding streets in a
condition consistent with the general area where the property is located, and at
all times shall maintain sightly screens or barricades around any garbage or
storage areas. Fencing and landscaping with proper gardening service and as
presently constituted shall be maintained at all times along the street
frontages of the Premises, except where necessary driveways are maintained, to
insure an attractive appearance.

         (d) Damage to and destruction of improvements. The damage, destruction,
or partial destruction of any Improvements or other improvement which is a part
of the Premises shall not

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release lessee from any obligation hereunder, except as expressly provided in
Section 12(e), below, and in case of damage to or destruction of any such
Improvements or other improvement, lessee, at its own expense, shall promptly
repair and restore the same to a condition as good or better than that which
existed prior to such damage or destruction, and shall be required to restore
any improvements to the Premises made by lessee or any of lessee's personal
property or trade fixtures. Lessor shall make the insurance proceeds available
to lessee for such restoration if and as they are made available to lessor by
lessor's mortgagee, and under such conditions to disbursement as may be required
by lessor or such mortgagee. Should lessor or its mortgagee reasonably determine
that the insurance proceeds are likely to be insufficient for such restoration,
lessee shall provide all necessary additional proceeds for restoration as
reasonably determined by lessor or its mortgagee from time to time. The amounts
provided by lessee shall be held by lessor for the payment for the restoration
of the Premises, and shall be expended before insurance proceeds are expended.
Any excess deposited by lessee not required for the restoration shall be
returned to lessee when the restoration is complete, provided lessee is not then
in default under this lease. Excess insurance proceeds, if any, shall be the
property of lessor.

         (e) Damage or destruction in event of termination. If the damage is
greater than thirty-three percent (33%) of the usable square footage of the
Improvements located on the Premises and (i) lessor reasonably estimates that
restoration cannot be completed within one hundred eighty (180) days or (ii)
damage occurs during the last two (2) years of the term of this lease (unless
lessee exercises its option to extend the term, in which case if damage occurs
in the last 2 years of the extended term), or (iii) if lessor's mortgagee does
not make the insurance proceeds available for restoration, this lease may be
terminated upon thirty (30) days prior written notice thereof given by either
lessee or lessor to the other within thirty (30) days after the

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date of casualty, or thirty (30) days after lessor's mortgagee determines that
it will not make insurance proceeds available for restoration. If this lease is
terminated pursuant to this Subsection, there shall be no obligation on the part
of lessee to repair or restore the building or improvements nor any right on the
part of lessee to receive any proceeds collected under any insurance policies
covering such Improvements or other improvement or any part thereof. On such
termination, rent, Taxes, and any other sums payable by lessee to lessor
hereunder shall be prorated as of the termination date, and in the event any
rent, taxes, or assessments shall have been paid in advance, lessor shall rebate
the same for the unexpired period for which payment shall have been made.

                                SECTION THIRTEEN
                                    UTILITIES

         Lessee shall fully and promptly pay for all water, gas, heat, light,
power, telephone service, and other public utilities of every kind furnished to
the Premises throughout the term hereof, and all other expenses of every kind
whatsoever of or in connection with the use, operation, and maintenance of the
Premises and all activities conducted thereon, and lessor shall have no
responsibility of any kind for any thereof. All amounts due under this Section
Thirteen shall be deemed to be additional rent due under this lease.

                                SECTION FOURTEEN
                                      LIENS

         (a) Lessee's duty to keep Premises free of liens. Lessee shall keep the
Premises and every part thereof free and clear of any and all mechanics',
materialmen's and other liens for or rising out of or in connection with work or
labor done, services performed, or materials or appliances used or furnished for
or in connection with any operations of lessee, any alteration,

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improvement, repairs, or additions which lessee may make or permit or cause to
be made, or any work or construction by, for, or permitted by lessee on or about
the Premises, or any obligations of any kind incurred by lessee. Lessee shall at
all times promptly and fully pay and discharge all claims on which any such lien
may or could be based, and shall indemnify lessor and all of the Premises and
all Improvements and other improvements thereon against all such liens and
claims of liens and suits or other proceedings pertaining thereto. Lessee shall
give lessor written notice not less than sixty (60) days in advance of the
commencement of any construction, or alteration, addition, improvement, or
repair costing in excess of One Thousand Dollars ($1,000.00) in order that
lessor may post appropriate notices of lessor's nonresponsibility, if
appropriate.

         (b) Contesting liens. If lessee desires to contest any such lien, it
shall notify lessor of its intention to do so within ten (10) days after the
filing of such lien. In such case, and provided that lessee shall protect lessor
by a good and sufficient surety bond against any such lien and any costs,
liability, or damage arising out of such contest, lessee shall not be in default
hereunder until thirty (30) days after the final determination of the validity
thereof, within which time lessee shall satisfy and discharge such lien to the
extent held valid; but the satisfaction and discharge of any such lien shall
not, in any case, be delayed until execution is had on any judgment rendered
thereon, and such delay shall be a default of lessee hereunder. In the event of
any such contest, lessee shall protect and indemnify lessor against all loss,
expense, and damage resulting therefrom.

                                 SECTION FIFTEEN
                            INDEMNIFICATION OF LESSOR

         Lessor shall not at any time or to any extent whatsoever be liable,
responsible, or in any way accountable for any injury to or death of persons or
loss, destruction or damage to property,

                                  10(d)(2)-15
<PAGE>

including property and employees of lessee, occurring in, on, or about the
Premises or wherever occurring, resulting from any use of or activities on the
Premises, whether such injury, death, loss, destruction, or damage shall be
caused by or in any way result from or arise out of any act, omission, or
negligence of lessee or of any occupant, subtenant, visitor, or user of any
portion of the Premises, or shall result from or be caused by any other matter
or thing, whether of the same kind as or of a different kind than the matters or
things above set forth, and lessee shall forever indemnify lessor against any
and all claims, liability, loss, damage, actions, or causes of action whatsoever
on account of any such injury, claim, demand, death, loss, destruction, or
damage, and any related expense, including attorney's fees.

                                SECTION SIXTEEN
                                ATTORNEYS' FEES

         If any action at law or in equity shall be brought to recover any Base
Rent or additional rent under this lease, or for or on account of any breach of,
or to enforce or interpret any of the provisions of this lease, or for the
recovery of the possession of the Premises, the prevailing party shall be
entitled to recover from the other party, as part of the prevailing party's
costs, reasonable attorneys' fees, the amount of which shall be fixed by the
court and shall be made a part of any judgment or decree rendered.

                                SECTION SEVENTEEN
                              SURRENDER OF PREMISES

         Lessee shall pay the rent and all other sums required to be paid
hereunder in the amounts, at the times, and in the manner herein provided, and
shall keep and perform all the terms and conditions hereof on its part to be
kept and performed and, at the expiration or sooner termination of this lease,
shall peaceably and quietly quit and surrender to lessor the Premises in

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good order and condition subject to the other provisions of this lease. In the
event of the nonperformance by lessee of any of the covenants of lessee
undertaken herein, this lease may be terminated as herein provided.

                                SECTION EIGHTEEN
                               REMEDIES CUMULATIVE

         All remedies hereinbefore and hereafter conferred on lessor shall be
deemed cumulative and no one exclusive of the other or any other remedy
conferred by law.
                                SECTION NINETEEN
                                    INSURANCE

         (a) Insurance coverage of Premises. Lessee shall, at all times during
the term of this lease and at its expense, keep all improvements which are now
or hereafter a part of the Premises insured against loss or damage by fire and
extended coverage hazards and such other risks as are included in an "all-risk"
or "special" policy form for One Hundred per cent (100%) of the full replacement
value of such improvements under a Stipulated Amount Endorsement naming lessor
and the ground lessor under the Ground Lease (as defined in Section Thirty-Six
thereof) as the insureds, as their interest may appear, and with a mortgagee
clause in favor of a Leasehold Mortgage, as defined in the Ground Lease.

         (b) Insurance coverage of fixtures. At all times during the term of
this lease, lessee shall, at its expense, keep all trade fixtures, equipment and
all merchandise and other personal property of lessee or a sublessee of lessee
that may be in the Premises from time to time, insured against loss or damage by
fire and the extended coverage hazards for an amount, that, in lessee's
reasonable judgment, will insure the ability of lessee, and its sublessees to
replace such items.

                                  10(d)(2)-17
<PAGE>

         (c) Commercial liability insurance. Lessee shall, at its expense,
maintain, in effect throughout the term of this lease, general commercial
liability insurance, with a contractual liability endorsement, covering the
Premises and its appurtenances and sidewalks fronting thereon, including the
sidewalk area used for pedestrians or vehicular travel entering or leaving the
Premises, with a combined single limit not less than Five Million Dollars
($5,000,000.00) per occurrence or such higher amounts as lessor deems
commercially reasonable from time to time. Such insurance shall specifically
insure lessee against all liability assumed by it hereunder, as well as
liability imposed by law, and shall name both lessor, and the ground lessor
(under the Ground Lease) as additional insureds, but shall be so endorsed as to
create the same liability on the part of the insurer as though separate policies
had been written for lessor, lessee and the ground lessor.

         (d) Lessor's right to pay premiums on behalf of lessee. All of the
policies of insurance referred to in this Section shall be effected under valid
and enforceable policies issued by insurers of recognized responsibility with a
minimum Alfred M. Best Company, Inc. (or any successor rating organization)
general policyholder's Rating of A-X, shall contain a deductible of no more than
$10,000.00 per occurrence and shall be primary and noncontributing. Lessee
shall, prior to the Commencement Date, pay all of the premiums therefor and
deliver to lessor such policies, or certified copies thereof, including all
endorsements and amendments thereof, confirming the required insurance coverage
and naming lessor's mortgagee, if any, as additional insureds and loss payees as
their respective interests may appear, and in the event of the failure of lessee
either to effect such insurance in the names herein called for within ten (10)
days after the Commencement Date and thereafter at least thirty (30) days prior
to the expiration of any policy, or to pay the premiums therefor when required,
or to deliver such policies or certificates thereof

                                  10(d)(2)-18
<PAGE>

to lessor at least fifteen (15) days before they become effective, lessor shall
be entitled, but shall have no obligation, to effect such insurance and pay the
premiums therefor, which premiums shall be repayable to lessor with the next
installment of rent (as additional rent), and failure to repay the same shall
carry with it the same consequences as failure to pay any installment of rent.
Each insurer mentioned herein shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to lessor, that it
will give lessor thirty (30) days' written notice by registered mail before the
policy or policies in question shall be altered or cancelled. Lessor shall not
unreasonably withhold its approval as to the form of the policies of insurance
or insurance companies. The insurance provided for in subsection (b) of this
section shall not be subject to the provisions of this subsection (d).

         (e) Definition of full replacement value. The term "full replacement
value" of the improvements as used herein shall mean the actual replacement cost
thereof from time to time less exclusions provided in an "all-risk" or "special"
policy. In the event either party believes that the full replacement value (that
is to say, the then replacement cost less exclusions) has increased or
decreased, it shall have the right, but (except as provided below), only at
intervals of not less than one (1) year, to have such full replacement value
redetermined by the fire insurance company which is then carrying the casualty
insurance on the Premises (hereinafter referred to as "impartial appraiser").
The party desiring to have such full replacement value so redetermined by such
impartial appraiser shall forthwith on the submission of such determination to
such impartial appraiser give written notice thereof to the other party hereto.
The determination of such impartial appraiser shall be final and binding on the
parties hereto, and lessee shall forthwith increase (or decrease) the amount of
the insurance carried pursuant to this section as the case may be to the amount
so determined by the impartial appraiser. Such determination

                                  10(d)(2)-19
<PAGE>

shall be binding for a period of one (1) year, and until superseded by agreement
between the parties hereto or by a subsequent redetermination by an impartial
appraiser. The party requesting the redetermination shall pay the entire fee, if
any, of the impartial appraiser. If during any one (1) year lessee shall have
made improvements to the Premises, lessor may have such full replacement value
redetermined at any time after such improvements are made, regardless of when
the full replacement value was last determined.

         (f) Blanket insurance policies. Notwithstanding anything to the
contrary contained within this section, lessee's obligation to carry the
insurance provided for herein may be brought within the coverage of a so-called
blanket policy or policies of insurance carried and maintained by lessee;
provided, however, that the coverage afforded lessor will not be reduced or
diminished or otherwise be different from that which would exist under a
separate policy meeting all of the requirements of this lease by reason of the
use of such blanket policy of insurance, and provided further that the
requirements of subsection (d) of this section are otherwise satisfied.

         (g) Cost of insurance deemed additional rental. The cost of insurance
required to be carried by lessee in this Section shall be deemed to be
additional rental hereunder.

                                 SECTION TWENTY
                            INSOLVENCY AND BANKRUPTCY

         Either (a) the filing by lessee of a voluntary petition in bankruptcy
or the making of an assignment of the benefit of creditors, or (b) the
consenting by lessee to the appointment of a receiver or trustee of all or any
part of its property, or (c) the filing by lessee of a petition or answer
seeking reorganization under the Bankruptcy Code or any other applicable law, or
(d) the filing by lessee of a petition to take advantage of any insolvency act
shall constitute a breach of

                                  10(d)(2)-20
<PAGE>

this lease by lessee. On the occurrence of any such event, this lease shall
terminate thirty (30) days after written notice of termination from lessor to
lessee.

                               SECTION TWENTY-ONE
                                NOTICE OF DEFAULT

         Except as to the provisions of Section Three and Section Twenty hereof,
lessee shall not be deemed to be in default hereunder with respect to the
payment of any moneys as herein required or in the furnishing of any bond or
insurance policy when required herein unless lessor shall first give to lessee
thirty (30) days' written notice of such default and lessee has failed to cure
such default within such thirty (30) day period, provided if any required
insurance would lapse during such grace period, lessor may obtain such insurance
prior to the expiration of such grace period at lessee's expense.

                               SECTION TWENTY-TWO
                                     DEFAULT

         In the event of any default hereunder by lessee, lessor, in addition to
any other rights or remedies it may have, shall have the right to commence any
legal proceedings and to either terminate this lease or, it may from time to
time, without terminating this lease, relet the Premises or any part thereof for
such term or terms (which may be for a term extending beyond the term of this
lease) and at such rental or rentals and on such other terms and conditions as
lessor in its sole discretion may deem advisable with a right to make
alterations and repairs to the Premises; on each such reletting (a) lessee shall
be immediately liable to pay to lessor, in addition to any Base Rent and
additional rent due hereunder, the expenses incurred in connection with such
reletting, including attorneys' fees and costs, and for such alterations and
repairs incurred by lessor, and the amount, if any, by which the rent specified
in this lease for the period of such

                                  10(d)(2)-21
<PAGE>

reletting (up to but not beyond the term of this lease) exceeds the amount
agreed to be paid as rent for the Premises for such period on such reletting; or
(b) at the option of lessor, rents received by lessor from such reletting shall
be applied, first, to the payment of any expenses incurred in connection with
such reletting and of such alteration and repairs; second, to the payment of
Base Rent and additional rent due and unpaid hereunder and the residue, if any,
shall be held by lessor and applied in payment of future rent as the same may
become due and payable hereunder. If lessee has been credited with any Base Rent
to be received by such reletting under (a) hereof, and such rent shall not be
promptly paid to lessor by the new tenant, or if such rentals received from such
reletting under (b) hereof during any month are less than that to be paid during
that month by lessee hereunder, lessee shall pay any such deficiency to lessor.
Such deficiency shall be calculated and paid monthly. No re-entry or taking
possession of the Premises by lessor shall be construed as an election on the
part of lessor to terminate this lease unless a written notice of such intention
is given to lessee or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any such reletting without termination,
lessor may at any time thereafter elect to terminate this lease for such
previous breach. Should lessor at any time terminate this lease for any breach,
in addition to any other remedy lessor may have, lessor may recover from lessee
all damages lessor may incur by reason of such breach, including the cost of
recovering the Premises, and including the worth at the time of such termination
of the excess, if any, of the amount of rent and charges equivalent to the rent
reserved in this lease for the remainder of the stated term over the then
reasonable rental value of the Premises for the remainder of the stated term,
all of which amounts shall be immediately due and payable from lessee to lessor.

                                  10(d)(2)-22
<PAGE>

                              SECTION TWENTY-THREE
                            LESSOR'S RIGHT TO PERFORM

         In the event that lessee by failing or neglecting to do or perform any
act or thing herein provided by it to be done or performed shall be in default
hereunder and such failure shall continue for a period as heretofore described
in Section Twenty-One (except in an emergency, in which case lessor may act
without waiting for the period in Section Twenty-One to expire), then lessor
may, but shall not be required to, do or perform or cause to be done or
performed such act or thing (entering on the Premises for such purposes, if
lessor shall so elect) and lessor shall not be or be held liable or in any way
responsible for any loss, inconvenience, annoyance, or damage resulting to
lessee on account thereof, and lessee shall repay to lessor on demand the entire
expense thereof, including compensation to the agents and employees of lessor.
Any act or thing done by lessor pursuant to the provisions hereof shall not be
or be construed as a waiver of any such default by lessee or waiver of any
covenant, term, or condition herein contained or for the performance thereof or
of any other right or remedy of lessor hereunder or otherwise. All amounts
payable by lessee to lessor under any of the provisions of this lease, if not
paid when the same become due as provided in this lease, shall bear interest
from the date the same become due until paid at the interest rate set forth in
Section Forty hereof.

                               SECTION TWENTY-FOUR
                              ALTERATIONS BY LESSEE

         Subject to the provisions of Section Fourteen hereof, lessee is granted
permission to make nonstructural alterations or improvements to the interior of
the building(s) located on the Premises without lessor's approval, provided the
cost of the same shall not exceed Fifteen Thousand Dollars ($15,000.00) [which
total after the initial term of this lease may be increased

                                  10(d)(2)-23
<PAGE>

at one year intervals to reflect inflation]. Prior to making any nonstructural
alterations or improvements to the interior of the building(s) located on the
Premises that cost in excess of Fifteen Thousand Dollars ($15,000.00) [which
total after the initial term of this lease may be increased at one year
intervals to reflect inflation] or any structural alterations or improvements of
the interior of the building(s) located on the Premises or any alterations or
improvements of the exterior of the building(s) located on the Premises, or
prior to constructing any new improvements on the exterior of the building(s)
located on the Premises, or prior to constructing any new improvements on the
Premises, lessee shall submit to, and obtain, lessor's written approval of plans
and specifications therefor, which approval shall not be unreasonably withheld
by lessor in the case of nonstructural alterations or improvements costing in
excess of Fifteen Thousand Dollars ($15,000.00). Any work done in or to the
Premises by lessee, with or without the approval of lessor, shall comply with
the requirements of any federal, state, or municipal authorities having
jurisdiction. Any permitted alterations or improvements shall be performed by
lessee for its own account and not as an agent for lessor, and lessee shall
provide lessor adequate assurance that all costs thereof shall be paid as and
when due.

                               SECTION TWENTY-FIVE
                             ASSIGNMENT AND SUBLEASE

         Lessee shall not assign this lease and shall not sublease the Premises
or any part thereof, or any right or privilege appurtenant thereto, or suffer
any other person (the agents and employees of lessee excepted) to occupy or use
the Premises, without the prior written consent of lessor, which consent shall
not be unreasonably withheld by lessor; provided, however, that at no time
during the term shall more than fifty percent (50%) of the Premises be subleased
other than to subsidiaries of lessee, and further provided, that by way of
example and without limitation, the

                                  10(d)(2)-24
<PAGE>

parties agree it shall be reasonable for lessor to withhold its consent to an
assignment of lessee's interest in this lease, and to a sublease with respect to
the matters in subsections (i) and (iv), below, if any of the following
situations exist or may exist:

         (i) The use of the Premises by the assignee or sublessee (a
"Transferee") would be different from the Permitted Use set forth in Section One
of this lease; or

         (ii) In lessor's reasonable business judgment, the Transferee lacks
sufficient business reputation or experience to operate a successful business of
the type and quality permitted under this lease; or

         (iii) The present net worth of the Transferee is less than the greater
of lessee's net worth at the Commencement Date or lessee's net worth at the date
of lessee's request for consent; or

         (iv) The transaction would breach any covenant or prohibition
respecting radius, location, use or exclusive in any other lease, financing
agreement, or other agreement relating to or binding on the Premises; or

         (v) The rent to be paid by the Transferee is greater than the rent due
lessor hereunder and lessee fails or refuses to pay to lessor fifty percent
(50%) of such excess amount.

         Further, lessee agrees to submit information to lessor in order to
permit lessor to determine whether any of the foregoing situations exist or may
exist at least fifteen (15) days prior to the proposed transfer. Lessee shall
not have the right or power to request or enter into an assignment or sublease
if lessee shall be in default under any provision of this lease and lessor may
condition any approval of any transaction upon the curing of any default under
this lease prior to the date such assignment or sublease becomes effective.

                                  10(d)(2)-25
<PAGE>

         A consent to one assignment, subletting, occupation, or use by any
other person, shall not be deemed to be a consent to any subsequent assignment,
subletting, occupation, or use by another person. Any such assignment or
subleasing without such consent shall be void and shall, at the option of
lessor, terminate this lease.

         This lease, or any interest therein, shall not be assignable, as to the
interest of lessee, by operation of law, without the written consent of lessor.

         In the event of a subletting or assignment, lessee shall remain
primarily liable to lessor for the performance of all the obligations of lessee
and lessee shall in no way be released from any of its obligations hereunder.

                               SECTION TWENTY-SIX
                           EXERCISE OF EMINENT DOMAIN

(a) Condemnation of all or substantially all of the Premises. If all or
substantially all of the Premises shall be taken under the power of eminent
domain by any public or quasi-public authority, or conveyed by lessor to said
authority in lieu of such taking, this lease shall terminate as of the date
possession of the Premises is required by such authority. Lessor shall be
entitled to all of the proceeds of the condemnation award (provided, however,
that lessee shall have the right pursue such claim or claims as lessee may have
for relocation expenses and such other items which do not reduce the award or
proceeds of sale payable to lessor).

(b) Partial condemnation. If less than substantially all of the Premises is
taken under the power of eminent domain by any public or quasi-public authority,
or conveyed by lessor to said authority in lieu of such taking, lessor with
reasonable promptness after receiving the proceeds of condemnation shall make
the repairs to and alterations of the improvements necessary to create an
architectural unit. Lessor shall be entitled to all the proceeds of the
condemnation award

                                  10(d)(2)-26
<PAGE>

(provided, however, that lessee shall have the right pursue such claim or claims
as lessee may have for relocation expenses and such other items which do not
reduce the award or proceeds of sale payable to lessee). In any event, lessor
shall not be required to expend more than the condemnation proceeds in
effectuating such repairs or alterations and shall only be required to expend
such amounts as lessor's mortgagee makes available for such repairs or
alterations. If the condemnation reduces the size of the building located on the
Premises by ten percent (10%) or more, lessee shall pay a proportionately
reduced rent.

(c) Notice of service of process. Each party shall give the other immediate
notice of the service on them or either of them of any legal process in
connection with any such condemnation proceedings. Each party shall execute and
deliver to the other all instruments that may be required to effectuate the
provisions hereof.

                              SECTION TWENTY-SEVEN
                    SALE OR CONVEYANCE OF PREMISES BY LESSOR

         In the event of any sale or conveyance by lessor of the Premises the
same shall be made subject to this lease and shall operate to release lessor
from any further liability under any of the terms, covenants, and conditions
contained in this lease, whether express or implied, and in such event, lessee
shall look solely to the responsibility of the successor in interest in and to
this lease.

                              SECTION TWENTY-EIGHT
                               SURRENDER OF LEASE

         The voluntary or other surrender of this lease by lessee or a mutual
cancellation thereof shall not work a merger.

                                  10(d)(2)-27
<PAGE>

                               SECTION TWENTY-NINE
                              TRANSFER OF SECURITY

         If any security is given by lessee to secure the faithful performance
of any of the covenants of this lease on the part of lessee, lessor may transfer
or deliver the security, as such, to the purchaser of the reversion, in the
event that the reversion is sold, and thereupon lessor shall be discharged from
any further liability in reference thereto.

                                 SECTION THIRTY
                                     WAIVER

         The waiver by lessor of, or the failure of lessor to take action with
respect to any breach of any term, covenant, or condition herein contained shall
not be deemed to be a waiver of another term, covenant, or condition, or any
subsequent breach of the same or any other term, covenant, or condition herein
contained. The subsequent acceptance of rent hereunder by lessor shall not be
deemed to be a waiver of any preceding breach by lessee of any term, covenant,
or condition of this lease, other than the failure of lessee to pay the
particular rentals so accepted, regardless of lessor's knowledge of such
preceding breach at the time of acceptance of such rent.

                               SECTION THIRTY-ONE
                                 ADDITIONAL RENT

         All amounts payable by lessee under this lease other than Base Rent
shall be deemed to be additional rent.

                               SECTION THIRTY-TWO
                                  HOLDING OVER

         Any holding over after the expiration of the term of this lease, with
the consent of lessor, shall be construed to be a tenancy from month to month,
at the monthly rental required to be paid

                                  10(d)(2)-28
<PAGE>

by lessee for the period immediately prior to the expiration of the term hereof,
and shall otherwise be on the terms and conditions herein specified, so far as
applicable, and in the event lessee shall hold over without the consent of
lessor, lessor may elect to have such holdover construed to be a tenancy from
month to month, at two (2) times the monthly rental and additional rent required
to be paid by lessee for the rental period immediately preceding such hold over.

                              SECTION THIRTY-THREE
                                  PARTIES BOUND

         The covenants and conditions herein contained shall, subject to the
provisions as to assignment, transfer, and subletting, apply to and bind the
heirs, successors, executors, administrators, and assigns of the parties hereto.

                               SECTION THIRTY-FOUR
                   DISPOSITION OF IMPROVEMENTS; TRADE FIXTURES

         Any alterations, improvements, or installations made by lessee to the
Premises pursuant to Section Twenty-Four hereof shall at once become a part of
the realty and belong to lessor, unless lessor requires lessee, at lessee's
expense, to remove any such alterations, improvements, or installations and
repair the damage caused by such removal. On the expiration of this lease or any
sooner termination hereof, lessee shall surrender the Premises and all
improvements thereon to lessor in good, sanitary and neat order, condition and
repair.

         Lessee shall have the right to remove its trade fixtures from the
Premises at the expiration or other termination of this lease term provided
lessee is not then in default hereunder and provided that lessee shall repair
any damage to the Premises caused by such removal.

                                  10(d)(2)-29
<PAGE>

                               SECTION THIRTY-FIVE
                  PRIOR RIGHT IN THE EVENT OF CONTEMPLATED SALE
                            (RIGHT OF FIRST REFUSAL)

         In the event lessor shall receive a bona fide Offer to Purchase the
Premises ("Offer to Purchase") during the term of this agreement, or any
extension thereof, and the Offer to Purchase shall be satisfactory to lessor,
lessor shall give lessee the privilege of purchasing the Premises at the price
and on the terms of the Offer to Purchase. This privilege shall be given by
notice to lessee in accordance with Section Nine hereof, requiring lessee to
accept the Offer to Purchase in writing and to sign a contract to purchase the
Premises containing the same terms and conditions as the Offer to Purchase
within a period of ten (10) days after the mailing of the notice.

         The failure of lessee to accept the Offer to Purchase and sign the
contract within such period shall nullify and void the privilege of lessee to
purchase the Premises and lessor shall be at liberty to sell the Premises to any
other person, firm, or corporation.

         The rights granted lessee pursuant hereto are personal to the named
lessee and are non-assignable except that lessee shall have the right to assign
this option to any corporation to be formed and owned by lessee, provided the
lease is assigned to such corporation at the same time.

         At the closing of the subject transaction, and when the purchase price
has been paid to lessor, as herein provided, the Premises shall be conveyed to
lessee (or its assignee as hereinabove specified), free and clear of all liens
and encumbrances and exceptions, except as set forth in the Offer to Purchase as
acceptable to lessor; that is, except municipal zoning ordinances; recorded
easements for public utilities serving the property; recorded building and use
restrictions and covenants; general real estate taxes levied in the year of
closing, unless taxes and

                                  10(d)(2)-30
<PAGE>

any other items are obligations of lessee under the terms of this lease, in
which event they shall be lessee's responsibility, and subject to any extant
lease or leases.

         Notwithstanding anything above to the contrary, lessor may at any time
transfer the Premises to Nicholas Logarakis or an entity in which Nicholas
Logarakis holds an interest without triggering the rights of lessee under this
Section Thirty-Five. In addition, if Nicholas Logarakis or an entity in which
Nicholas Logarakis holds an interest becomes the owner of the Premises, then
such owner may make unlimited "estate planning transfers" without triggering the
rights of lessee under this Section Thirty-Five. An "estate planning transfer"
means any transfer to a spouse of any of the owner or owners, issue of any of
the owner or owners, spouse of an issue of any of the owner or owners, or an
entity controlled by or for the benefit of any of the preceding. Further, this
Section Thirty-Five shall not apply to any mortgage lender who acquires the
lessor's interest in the Premises after foreclosure or by deed in lieu of
foreclosure or the purchaser at foreclosure sale or any of their assigns.

                               SECTION THIRTY-SIX
                                  SUBORDINATION

         This lease shall be subordinate to any mortgages or trust deeds that
may hereafter be placed on the Premises and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals, replacements, and
extensions thereof, provided the mortgagee or trustee named in such mortgages or
trust deeds shall agree to recognize the lease of lessee in the event of
foreclosure if lessee is not in default. In the event any mortgagee or trustee
shall elect to have this lease prior to the lien of its mortgage or trust deed
on such mortgagee or trustee giving notice in writing to lessee to that effect,
this lease shall be deemed prior to the lien of such mortgage or trust deed,
whether this lease is dated prior or subsequent to the date of such

                                  10(d)(2)-31
<PAGE>

mortgage or trust deed or the date of recording thereof. Lessee shall execute
and deliver whatever instruments may be required for such purpose, and failing
to do so within twenty (20) days after demand in writing does hereby make,
constitute, and irrevocably appoint lessor as its attorney-in-fact and in its
name, place and stead so to do. Lessor's interest in the Premises is as a lessee
under an approximately 98 year ground lease between Town Center, LLC, as ground
lessor, and lessor, as ground lessee (the "Ground Lease"). This lease and all of
lessee's rights hereunder are subject to the terms and provisions of the Ground
Lease until and unless lessor acquires a fee simple interest in the Premises.
Provided lessee is not in default under this lease, lessor will use its good
faith efforts to comply with all of the terms and conditions of the Ground
Lease.

                              SECTION THIRTY-SEVEN
                               TIME OF THE ESSENCE

         Time is of the essence of this lease, and of each and every covenant,
term, condition and provision hereof.

                              SECTION THIRTY-EIGHT
                                SECTION CAPTIONS

         The captions appearing under the section number designations of this
lease are for convenience only and are not a part of this lease and do not in
any way limit or amplify the terms and provisions of this lease.

                               SECTION THIRTY-NINE
                              ESTOPPEL CERTIFICATES

         Lessee and lessor agree that at any time and from time to time within
ten (10) days after request from lessee or lessor or one of lessee's or lessor's
mortgagees, or proposed purchasers,

                                  10(d)(2)-32
<PAGE>

lessee or lessor shall execute, acknowledge and deliver to the requesting party
a statement in writing certifying (a) that this lease is unmodified and in full
force and effect (or if there have been modifications, specifying the same), and
(b) the dates to which the rent and other charges have been paid, and (c) that,
so far as the lessee or lessor knows, the requesting party is not in default
under any provisions of this lease (or if lessor or lessee knows of any such
default, specifying the same) and (d) such other matters as lessee or lessor or
lessee's or lessor's mortgagee may reasonably require. It is intended that any
such statement may be relied upon by any person proposing to acquire lessee's or
lessor's interest in this lease or any prospective lessor mortgagee.

                                  SECTION FORTY
                                    INTEREST

         Any amount due from lessee to lessor hereunder which is not paid when
due shall bear interest at an annual rate equal to the greater of (i) two
percent (2%) per annum plus the prime rate of interest published from time to
time in the Wall Street Journal-Midwest Edition or (ii) twelve percent (12%) per
annum (but in no event shall such rate of interest exceed the maximum rate of
interest permitted to be charged by law) from the date due until paid,
compounded monthly, but the payment of such interest shall not excuse or cure
any default by lessee under this lease.

                                SECTION FORTY-ONE
                                    NET LEASE

         This lease is intended to be and shall be a "net, net, net" lease, and
the rent and all other sums payable hereunder by lessee (all of which shall be
deemed to be additional rent) shall be

                                  10(d)(2)-33
<PAGE>
paid without notice or demand and without set-off, abatement, suspension,
deduction, or defense. As more particularly set forth herein, lessee shall pay
all taxes, insurance premiums, maintenance, repair and replacement costs and
expenses, utility charges and expenses, and all other costs and expenses, of
whatever nature, relating in any way to the Premises and/or the operation
thereof during the term of this lease. In addition, other than Base Rent and the
purchase price to be paid when lessor purchases the premises demised under the
Ground Lease as set forth in Section Thirty thereof, lessee shall pay, as and
when they come due, any and all other amounts payable by lessor as tenant under
or as a result of the Ground Lease referred to in Section Thirty-Six, above,
including but not limited to all amounts payable with respect to the Premises
under the Declaration of Covenants, Conditions, Easements and Restrictions dated
June 12, 2000, as supplemented by a Supplemental Declaration of Covenants,
Conditions, Easements and Restrictions dated July 16, 2001 (together, the
"Declaration", as such Declaration may be further amended or supplemented). In
the event lessor (or lessor's successor) acquires the fee interest in the
property demised under the Ground Lease, lessee agrees to continue to pay, as
and when due, all amounts payable under the Declaration with respect to the
Premises. Notwithstanding anything above to the contrary, the "net, net, net"
charges shall not include the actual debt service payments of lessor to lessor's
mortgagee (except to the extent set forth in Section Three above) or the
obligations of lessor under this lease. In addition, this lease shall continue
in full force and effect and the obligations of lessee hereunder shall not be
released, discharged, diminished, or otherwise affected by reason of any
restriction on or prevention of or interference with any use of the Premises, or
any part or parts thereof, except as otherwise specifically provided in this
lease. It is expressly understood and agreed that, except as specifically stated
herein to the contrary, lessor shall have no responsibility or obligation,

                                  10(d)(2)-34
<PAGE>

whatsoever, with respect to the Premises or the condition or use thereof during
the term of this lease and shall be absolutely, without limitation, exculpated
from any and all such responsibilities and/or obligations, all such
responsibilities and obligations being those of lessee. In the event the Ground
Lease imposes greater or more stringent obligations on the lessor (in its
capacity as lessee under the Ground Lease) than are imposed on lessee under this
lease, lessee shall comply with the greater or more stringent requirements a
though they were specifically set forth in this lease.

                                SECTION FORTY-TWO
                              WAIVER OF SUBROGATION

         Lessor and lessee, for themselves and all others claiming under them,
including any insurer, waive all rights, including rights of subrogation against
the other for loss, damage, or liability resulting from a risk insured against
by either party, to the extent of any recovery collectible under such insurance;
provided, however, that this waiver shall apply only when permitted by the
applicable policy of insurance.

         The parties shall use good faith efforts to have any and all fire,
extended coverage or any and all liability policies which may be carried
endorsed with the following (or equivalent) clause:

         "This insurance shall not be invalidated should the insured waive in
         writing prior to a loss any and all right of recovery against any party
         for loss occurring to the property described herein."

                               SECTION FORTY-THREE
                            NON-LIABILITY OF LANDLORD

         Lessor shall not be liable to lessee, and lessee hereby waives all
claims against lessor, for any injury or damage to any person or property in or
about the Premises resulting from the

                                  10(d)(2)-35
<PAGE>
Premises, or any part thereof or any equipment thereof, becoming out of repair;
flooding of basements or other areas; damages caused by sprinkling devices,
air-conditioning apparatus, snow, frost, water leakage, steam, excessive heat or
cold, falling plaster, broken glass, sewage, gas, odors or noise or the bursting
or leaking of pipes or plumbing fixtures; any act or neglect of other tenants or
occupants or employees in the Premises; or any other thing or circumstance
whatsoever, whether of a like nature or of a wholly different nature. All
property in or about the Premises belonging to lessee, its agents, employees or
invitees shall be there at the risk of lessee or other person only, and lessor
shall not be liable for damage thereto or theft, misappropriation or loss
thereof. If lessor shall fail to perform any covenant or condition of this lease
upon lessor's part to be performed and, as a consequence of such default, lessee
shall recover a money judgment against lessor, then such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levy thereon against the right, title and interest of lessor in the
Premises and out of rents or other income from the Premises receivable by lessor
and any insurance or condemnation proceeds that are available for use by lessor
and lessor shall not be personally liable for any deficiency.

                               SECTION FORTY-FOUR
                                   CONTINGENCY

         Lessor shall have the right to terminate and cancel this lease by
written notice to lessee within the time limits provided below if the condition
as set forth below is not waived, satisfied and/or fulfilled within the
stipulated time limit.

         Lessor shall, after execution and delivery of this lease, make
application for and thereafter diligently prosecute the securing of all
governmental permits and approvals for the construction of the Improvements. In
the event that all required governmental permits and approvals are not

                                  10(d)(2)-36
<PAGE>

obtained by lessor on or prior to thirty (30) days after the date of this lease,
then lessor may, at its option terminate this lease by giving written notice to
lessee of such termination and, thereupon, this lease shall become null and void
and of no force and effect.

                               SECTION FORTY-FIVE
                                  GOVERNING LAW

         This lease shall be governed by and construed and enforced in
accordance with the laws of the State of Wisconsin.

         IN WITNESS WHEREOF, the parties have executed this lease as of the day
and year first above written.

                              LESSOR:

                              BRIOHN VENTURES III, LLC

                              By:  Briohn Building Corporation, its sole member

                                    By:  /s/ Brian P. Byrne
                                         ---------------------------
                                          Brian P. Byrne, President

STATE OF WISCONSIN         )
                           )  ss.
MILWAUKEE COUNTY           )

         Personally came before me this 7th day of June, 2002, the above named
Brian P. Byrne, President of Briohn Building Corporation, Sole Member of Briohn
Ventures III, LLC, to me known to be the person who executed the foregoing
instrument and acknowledged the same.

                                            s/s Mark O'Neil
                                            ---------------
                                            Notary Public,
                                            My Commission is permanent

                                  10(d)(2)-37
<PAGE>

                                    LESSEE:

                                    M & M BANCORPORATION

                                    By: /s/ Michael J. Murry
                                        --------------------
                                            Michael J. Murry, Chairman

STATE OF WISCONSIN )
                   )  ss.
MILWAUKEE COUNTY   )

         Personally came before me this 7th day of June, 2002, the above named
M & M Bancorporation by Michael J. Murry, its Chairman, to me known to be the
persons who executed the foregoing instrument and acknowledged the same.

/s/ Mark E. O'Neil
------------------
Notary Public,
My Commission is permanent

                                  10(d)(2)-38
<PAGE>

                                    EXHIBIT A
                                LEGAL DESCRIPTION

PARCEL I:

Parcel Seven (7) of CERTIFIED SURVEY MAP NO. 9367, being a Redivision of Parcel
Seven (7) of Certified Survey Map No. 9208, being a part of the Northeast
One-quarter (1/4) of the Northeast One-quarter (1/4) of Section Eight (8), in
Township Seven (7) North, Range Twenty (20) East, in the City of Brookfield,
County of Waukesha, State of Wisconsin, recorded in the Office of the Register
of Deeds for Waukesha County on April 30, 2002, in Volume 85 of Certified Survey
Maps at Pages 143 to 150 inclusive, as Document No. 2795365, excepting therefrom
any and all buildings and building improvements situated or erected on the
described premises.

         Together with non-exclusive easements contained in a Declaration of
Covenants, Conditions, Easements and Restrictions by Town Center, LLC, recorded
on June 5, 2000, as Document No. 2568303 and in a Supplemental Declaration of
Covenants, Conditions, Easements and Restrictions recorded on July 30, 2001, as
Document No. 2681998.

PART OF TAX KEY NO. BRC 1037-999-006 (2001)

PARCEL II:

Any and all buildings and building improvements situated or erected on the
following described premises:

         Parcel Seven (7) of CERTIFIED SURVEY MAP NO. 9367, being a Redivision
of Parcel Seven (7) of Certified Survey Map No. 9208, being a part of the
Northeast One-quarter (1/4) of the Northeast One-quarter (1/4) of Section Eight
(8), in Township Seven (7) North, Range Twenty (20) East, in the City of
Brookfield, County of Waukesha, State of Wisconsin, recorded in the Office of
the Register of Deeds for Waukesha County on April 30, 2002, in Volume 85 of
Certified Survey Maps at Pages 143 to 150 inclusive, as Document No. 2795365.

         Together with non-exclusive easements contained in a Declaration of
Covenants, Conditions, Easements and Restrictions by Town Center, LLC, recorded
on June 5, 2000, as Document No. 2568303 and in a Supplemental Declaration of
Covenants, Conditions, Easements and Restrictions recorded on July 30, 2001, as
Document No. 2681998.

                                  10(d)(2)-39
<PAGE>

                                    EXHIBIT B
                              CERTIFIED SURVEY MAP

                                  10(d)(2)-40
<PAGE>

                                    EXHIBIT C

                                    BUILDING

                                  10(d)(2)-41
<PAGE>

                                    EXHIBIT D
                            PLANS AND SPECIFICATIONS

                                  10(d)(2)-42<PAGE>

                                  EXHIBIT (10e)

                                 EXECUTION COPY

                                CREDIT AGREEMENT

                          Dated as of December 7, 2001

                                      Among

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,

                                 as the Lenders
                                 --------------

                                       and

                             BANK OF AMERICA, N.A.,

                                  as the Agent
                                  ------------

                                       and

                                   UNIFI, INC.

                                       and

                      CERTAIN OF ITS DOMESTIC SUBSIDIARIES,

                                as the Borrowers
                                ----------------

                             BANK OF AMERICA, N.A.,
                     AS SOLE LEAD ARRANGER AND BOOK MANAGER

<PAGE>

                                CREDIT AGREEMENT

                  This Credit Agreement, dated as of December 7, 2001 (this
"Agreement"), among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), Bank of America, N.A. with an office at 600
Peachtree Street N.E., 5th Floor, Atlanta, Georgia 30308, as agent for the
Lenders (in its capacity as agent, the "Agent"), Unifi, Inc., a New York
corporation, with offices at 7201 West Friendly Avenue, Greensboro, North
Carolina 27410 (the "Parent") and the subsidiaries of the Parent listed on the
signature pages hereto, (the Parent and each such subsidiary is individually
hereinafter referred to as a "Borrower" and the Parent together with all such
subsidiaries are hereinafter collectively referred to as the "Borrowers").

                              W I T N E S S E T H:

         WHEREAS, the Borrowers have requested the Lenders to make available to
the Borrowers a revolving line of credit for loans and letters of credit in an
amount not to exceed $150,000,000, and which extensions of credit the Borrowers
will use for the purposes permitted hereunder;

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

         WHEREAS, the Lenders have agreed to make available to the Borrowers a
revolving credit facility upon the terms and conditions set forth in this
Agreement.

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

                                    ARTICLE 1
                           LOANS AND LETTERS OF CREDIT

         1.1 Total Facility.

         Subject to all of the terms and conditions of this Agreement, the
Lenders agree to make available a total credit facility of up to $150,000,000
(the "Total Facility") to the Borrowers from time to time during the term of
this Agreement. The Total Facility shall be composed of a revolving line of
credit consisting of Revolving Loans and Letters of Credit described herein.

<PAGE>

         1.2 Revolving Loans.

                  (a)      (i) Amounts. Subject to the satisfaction of the
         conditions precedent set forth in Article 8, each Lender severally, but
         not jointly, agrees, upon a Borrower's request from time to time on any
         Business Day during the period from the Closing Date to the Termination
         Date, to make revolving loans (the "Revolving Loans") to the Borrowers
         (including Ex-Im Bank Revolving Loans; provided, however, no Lender
         shall have any obligation to extend an Ex-Im Bank Revolving Loan to any
         Borrower after December 7, 2004) in amounts not to exceed such Lender's
         Pro Rata Share of Availability, except for Non-Ratable Loans and Agent
         Advances and, as otherwise set forth herein, with respect to Ex-Im Bank
         Revolving Loans. The Lenders, however, in their unanimous discretion,
         may elect to make Revolving Loans or issue or arrange to have issued
         Letters of Credit in excess of the Borrowing Base on one or more
         occasions, but if they do so, neither the Agent nor the Lenders shall
         be deemed thereby to have changed the limits of the Borrowing Base or
         to be obligated to exceed such limits on any other occasion. If any
         Borrowing would exceed Availability, the Lenders may refuse to make or
         may otherwise restrict the making of Revolving Loans as the Lenders
         determine until such excess has been eliminated, subject to the Agent's
         authority, in its sole discretion, to make Agent Advances pursuant to
         the terms of Section 1.2(i).

                           (ii) At the request of Agent, the Borrowers shall
         execute and deliver to each Lender that so requests a note to evidence
         the Revolving Loan of that Lender. Each such note shall be in the
         principal amount of the Lender's Pro Rata Share of the Revolving Loan
         Commitments, dated the date hereof and substantially in the form of
         Exhibit A (each a "Revolving Loan Note" and, collectively, the
         "Revolving Loan Notes") This Agreement and each Revolving Loan Note, if
         applicable, shall evidence the obligation of the Borrowers to pay the
         outstanding and utilized amount of each Lender's Pro Rata Share of the
         Revolving Loan Commitments, or, if less, such Lender's Pro Rata Share
         of the aggregate unpaid principal amount of all Revolving Loans to the
         Borrowers together with interest thereon as prescribed in Section 1.2.
         The entire unpaid balance of the Revolving Loan and all other
         non-contingent Obligations shall be immediately due and payable in full
         in immediately available funds on the Termination Date.

                  (b) Procedure for Borrowing.

                                    (i) Each Borrowing shall be made upon a
                           Borrower's irrevocable written notice delivered to
                           the Agent in the form of a notice of borrowing
                           ("Notice of Borrowing"), which must be received by
                           the Agent prior to (x) 12:00 noon (Charlotte, North
                           Carolina time) three Business Days prior to the
                           requested Funding Date, in the case of LIBOR Rate
                           Loans and (y) 11:00 a.m. (Charlotte, North Carolina
                           time) on the requested Funding Date, in the case of
                           Base Rate Loans, specifying:

                                             (A) the amount of the Borrowing,
                                    which in the case of a LIBOR Rate Loan must
                                    equal or exceed $3,000,000 (and increments
                                    of $1,000,000 in excess of such amount);

<PAGE>

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

                                             (C) whether the Revolving Loans
                                    requested are to be Base Rate Revolving
                                    Loans or LIBOR Revolving Loans (and if not
                                    specified, it shall be deemed a request for
                                    a Base Rate Revolving Loan); and

                                             (D) the duration of the Interest
                                    Period for LIBOR Revolving Loans (and if not
                                    specified, it shall be deemed a request for
                                    an Interest Period of one month);

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

                                    (ii) In lieu of delivering a Notice of
                           Borrowing, a Borrower may give the Agent telephonic
                           notice of such request for advances to the Designated
                           Account on or before the deadline set forth above.
                           The Agent at all times shall be entitled to rely on
                           such telephonic notice in making such Revolving
                           Loans, regardless of whether any written confirmation
                           is received.

                                    (iii) No Borrower shall have the right to
                           request a LIBOR Rate Loan while a Default or Event of
                           Default has occurred and is continuing.

                                    (iv) Notwithstanding any language to the
                           contrary in this Section, each Borrowing that is to
                           be an Ex-Im Bank Revolving Loan must be requested in
                           writing on the form of borrowing notice attached
                           hereto as Exhibit D-1 and must be delivered to the
                           Agent's Export Finance Department at the address set
                           forth in Section 14.8 hereof.

                  (c) Reliance upon Authority. Prior to the Closing Date, the
         Borrowers shall deliver to the Agent, a notice setting forth the
         account of the Borrowers ("Designated Account") to which the Agent is
         authorized to transfer the proceeds of the Revolving Loans requested
         hereunder. The Borrowers may designate a replacement account from time
         to time by written notice. All such Designated Accounts must be
         reasonably satisfactory to the Agent. The Agent is entitled to rely
         conclusively on any person's request for Revolving Loans on behalf of
         the Borrowers, so long as the proceeds thereof are to be transferred to
         the Designated Account. The Agent has no duty to verify the identity of
         any individual representing himself or herself as a person authorized
         by the Borrowers to make such requests on its behalf.

                  (d) No Liability. The Agent shall not incur any liability to
         the Borrowers as a result of acting upon any notice referred to in
         Sections 1.2(b) and (c), which the Agent believes in good faith to have
         been given by an officer or other person duly authorized by

<PAGE>

         the Borrowers to request Revolving Loans on its behalf. The crediting
         of Revolving Loans to the Designated Account conclusively establishes
         the obligation of the Borrowers to repay such Revolving Loans as
         provided herein.

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

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

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

                  (h) Making of Non-Ratable Loans.

                           (i) If Agent elects, with the consent of the Bank, to
                  have the terms of this Section 1.2(h) apply to a requested
                  Borrowing, the Bank shall make a Revolving Loan in the amount
                  of that Borrowing available to the Borrowers on the applicable
                  Funding Date by transferring same day funds to Borrowers'
                  Designated Account. Each Revolving Loan made solely by the
                  Bank pursuant to this Section is herein referred to as a
                  "Non-Ratable Loan", and such Revolving Loans are collectively
                  referred to as the "Non-Ratable Loans." Each Non-Ratable Loan
                  shall be subject to all the terms and conditions applicable to
                  other Revolving Loans except that all payments thereon shall
                  be payable to the Bank solely for its own account. The
                  aggregate amount of Non-Ratable Loans outstanding at any time
                  shall not exceed $5,000,000. The Agent shall not request the
                  Bank to make any Non-Ratable Loan if (A) the Agent has
                  received written notice from any Lender that one or more of
                  the applicable conditions precedent set forth in Article 8
                  will not be satisfied on the requested Funding Date for the
                  applicable Borrowing, or (B) the requested Borrowing would
                  exceed Availability on that Funding Date.

<PAGE>

                           (ii) The Non-Ratable Loans shall be secured by the
                  Agent's Liens in and to the Collateral and shall constitute
                  Base Rate Revolving Loans and Obligations hereunder. Upon
                  Settlement of such Non-Ratable Loans pursuant to Section 12.15
                  hereof, such Loans shall constitute Revolving Loans for all
                  purposes hereunder, including, without limitation, Section
                  2.2(a)(i) hereof.

                  (i) Agent Advances.

                           (i) Subject to the limitations set forth below, the
                  Agent is authorized by the Borrowers and the Lenders, from
                  time to time in the Agent's sole discretion, (A) after the
                  occurrence of a Default or an Event of Default, or (B) at any
                  time that any of the other conditions precedent set forth in
                  Article 8 have not been satisfied, to make Base Rate Revolving
                  Loans to the Borrowers on behalf of the Lenders in an
                  aggregate amount outstanding at any time not to exceed 10% of
                  the Borrowing Base but not in excess of the Maximum Revolver
                  Amount which the Agent, in its reasonable business judgment,
                  deems necessary or desirable (1) to preserve or protect the
                  Collateral, or any portion thereof or (2) to pay any other
                  amount chargeable to the Borrowers pursuant to the terms of
                  this Agreement, including costs, fees and expenses as
                  described in Section 14.7 (any of such advances are herein
                  referred to as "Agent Advances"); provided, that the Majority
                  Lenders may at any time revoke the Agent's authorization to
                  make Agent Advances. Any such revocation must be in writing
                  and shall become effective prospectively upon the Agent's
                  receipt thereof. Agent Advances shall not be made as Ex-Im
                  Bank Revolving Loans.

                           (ii) The Agent Advances shall be secured by the
                  Agent's Liens in and to the Collateral and shall constitute
                  Base Rate Revolving Loans and Obligations hereunder.

                  (j) Making of Ex-Im Bank Revolving Loans.

                           (i) If Agent elects, with the consent of the Bank, to
                  have the terms of this Section 1.2(j) apply to a requested
                  Borrowing and if all other conditions precedent thereto,
                  including without limitation, the qualification of such
                  Revolving Loan as an Ex-Im Bank Guaranteed Loan under the
                  Ex-Im Bank Working Capital Guarantee Program, have been
                  satisfied, the Bank shall make a Revolving Loan in the amount
                  of that Borrowing available to the Borrowers on the applicable
                  Funding Date by transferring same day funds to the Borrowers'
                  Designated Account. Each Revolving Loan made solely by the
                  Bank pursuant to this Section, or any Revolving Loan made
                  under this Agreement that qualifies as an Ex-Im Bank
                  Guaranteed Loan under the Borrowers' Ex-Im Agreement, is
                  herein referred to as an "Ex-Im Bank Revolving Loan", and such
                  Revolving Loans are collectively referred to as the "Ex-Im
                  Bank Revolving Loans". Each Ex-Im Bank Revolving Loan shall be
                  subject to all the terms and conditions applicable to other
                  Revolving Loans, except to the extent of the provisions of the

<PAGE>

                  Borrowers' Ex-Im Agreement, which shall control in the event
                  of any inconsistency. The aggregate amount of Ex-Im Bank
                  Revolving Loans outstanding at any time shall not exceed the
                  limitation set forth in clause (a)(v) of the definition of
                  "Borrowing Base". The Agent shall not request the Bank to make
                  any Ex-Im Bank Revolving Loan if (1) the Agent has received
                  written notice from any Lender that one or more of the
                  applicable conditions precedent set forth in Article 8 will
                  not be satisfied on the requested Funding Date for the
                  applicable Borrowing, or (2) the requested Borrowing would
                  exceed Availability on that Funding Date.

                           (ii) The Ex-Im Bank Revolving Loans shall be secured
                  by the Agent's Liens in and to the Collateral and shall
                  constitute Base Rate Revolving Loans or LIBOR Rate Loans, as
                  the case may be, and Obligations hereunder and shall be
                  guaranteed by the Ex-Im Bank to the extent provided in the
                  Borrowers' Ex-Im Bank Agreement.

         1.3 Letters of Credit.

                  (a) Agreement to Issue or Cause To Issue. Subject to the terms
         and conditions of this Agreement, the Agent agrees (i) to cause the
         Letter of Credit Issuer to issue for the account of the Borrowers one
         or more commercial/documentary and standby letters of credit ("Letter
         of Credit") and/or (ii) to provide credit support or other enhancement
         to a Letter of Credit Issuer acceptable to Agent, which issues a Letter
         of Credit for the account of the Borrowers (any such credit support or
         enhancement being herein referred to as a "Credit Support") from time
         to time during the term of this Agreement.

                  (b) Amounts; Outside Expiration Date. The Agent shall not have
         any obligation to issue or cause to be issued any Letter of Credit or
         to provide Credit Support for any Letter of Credit at any time if: (i)
         the maximum face amount of the requested Letter of Credit is greater
         than the Unused Letter of Credit Subfacility at such time; (ii) the
         maximum undrawn amount of the requested Letter of Credit and all
         commissions, fees, and charges due from the Borrowers in connection
         with the opening thereof would exceed Availability at such time; or
         (iii) such Letter of Credit has an expiration date less than 30 days
         prior to the Stated Termination Date or more than 12 months from the
         date of issuance for standby letters of credit and 180 days for
         documentary letters of credit. With respect to any Letter of Credit
         which contains any "evergreen" or automatic renewal provision, each
         Lender shall be deemed to have consented to any such extension or
         renewal unless any such Lender shall have provided to the Agent,
         written notice that it declines to consent to any such extension or
         renewal at least thirty (30) days prior to the date on which the Letter
         of Credit Issuer is entitled to decline to extend or renew the Letter
         of Credit. If all of the requirements of this Section 1.3 are met and
         no Default or Event of Default has occurred and is continuing, no
         Lender shall decline to consent to any such extension or renewal.

<PAGE>

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

                           (i) The Borrowers shall have delivered to the Letter
                  of Credit Issuer, at such times and in such manner as such
                  Letter of Credit Issuer may prescribe, an application in form
                  and substance satisfactory to such Letter of Credit Issuer and
                  reasonably satisfactory to the Agent for the issuance of the
                  Letter of Credit and such other documents as may be required
                  pursuant to the terms thereof, and the form, terms and purpose
                  of the proposed Letter of Credit shall be reasonably
                  satisfactory to the Agent and the Letter of Credit Issuer; and

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

                  (d) Issuance of Letters of Credit.

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

                           (ii) Responsibilities of the Agent; Issuance. As of
                  the Business Day immediately preceding the requested issuance
                  date of the Letter of Credit, the Agent shall determine the
                  amount of the applicable Unused Letter of Credit Subfacility
                  and Availability. If (x) the face amount of the requested
                  Letter of Credit is less than the Unused Letter of Credit
                  Subfacility and (y) the amount of such requested Letter of
                  Credit and all commissions, fees, and charges due from the
                  Borrowers in connection with the opening thereof would not
                  exceed Availability, the Agent shall cause the Letter of
                  Credit Issuer to issue the requested Letter of Credit on the
                  requested issuance date so long as the other conditions hereof
                  are met.

<PAGE>

                           (iii) No Extensions or Amendment. The Agent shall not
                  be obligated to cause the Letter of Credit Issuer to extend or
                  amend any Letter of Credit issued pursuant hereto unless the
                  requirements of this Section 1.3 are met as though a new
                  Letter of Credit were being requested and issued.

                  (e) Payments Pursuant to Letters of Credit. Each Borrower
         agrees to reimburse immediately the Letter of Credit Issuer for any
         draw under any Letter of Credit and the Agent for the account of the
         Lenders upon any payment pursuant to any Credit Support, and to pay the
         Letter of Credit Issuer the amount of all other charges and fees
         payable to the Letter of Credit Issuer in connection with any Letter of
         Credit immediately when due, irrespective of any claim, setoff, defense
         or other right which any Borrower may have at any time against the
         Letter of Credit Issuer or any other Person. Each drawing under any
         Letter of Credit shall constitute a request by a Borrower to the Agent
         for a Borrowing of a Base Rate Revolving Loan in the amount of such
         drawing. The Funding Date with respect to such borrowing shall be the
         date of such drawing.

                  (f) Indemnification; Exoneration; Power of Attorney.

                           (i) Indemnification. In addition to amounts payable
                  as elsewhere provided in this Section 1.3, the Borrowers
                  agrees to protect, indemnify, pay and save the Lenders and the
                  Agent harmless from and against any and all claims, demands,
                  liabilities, damages, losses, costs, charges and expenses
                  (including reasonable outside attorneys' fees) which any
                  Lender or the Agent (other than a Lender in its capacity as
                  Letter of Credit Issuer) may incur or be subject to as a
                  consequence, direct or indirect, of the issuance of any Letter
                  of Credit or the provision of any Credit Support or
                  enhancement in connection therewith. The Borrowers'
                  obligations under this Section shall survive payment of all
                  other Obligations.

                           (ii) Assumption of Risk by the Borrowers. As among
                  the Borrowers, the Lenders, and the Agent, the Borrowers
                  assume all risks of the acts and omissions of, or misuse of
                  any of the Letters of Credit by, the respective beneficiaries
                  of such Letters of Credit. In furtherance and not in
                  limitation of the foregoing, the Lenders and the Agent shall
                  not be responsible for: (A) the form, validity, sufficiency,
                  accuracy, genuineness or legal effect of any document
                  submitted by any Person in connection with the application for
                  and issuance of and presentation of drafts with respect to any
                  of the Letters of Credit, even if it should prove to be in any
                  or all respects invalid, insufficient, inaccurate, fraudulent
                  or forged; (B) the validity or sufficiency of any instrument
                  transferring or assigning or purporting to transfer or assign
                  any Letter of Credit or the rights or benefits thereunder or
                  proceeds thereof, in whole or in part, which may prove to be
                  invalid or ineffective for any reason; (C) the failure of the
                  beneficiary of any Letter of Credit to comply duly with
                  conditions required in order to draw upon such Letter of
                  Credit; (D) errors, omissions, interruptions, or delays in
                  transmission or delivery of any messages, by mail, cable,
                  telegraph, telex or otherwise, whether or not they be in
                  cipher; (E) errors in interpretation of

<PAGE>

                  technical terms; (F) any loss or delay in the transmission or
                  otherwise of any document required in order to make a drawing
                  under any Letter of Credit or of the proceeds thereof; (G) the
                  misapplication by the beneficiary of any Letter of Credit of
                  the proceeds of any drawing under such Letter of Credit; (H)
                  any consequences arising from causes beyond the control of the
                  Lenders or the Agent, including any act or omission, whether
                  rightful or wrongful, of any present or future de jure or de
                  facto Governmental Authority or (I) the Letter of Credit
                  Issuer's honor of a draw for which the draw or any certificate
                  fails to comply in any respect with the terms of the Letter of
                  Credit. None of the foregoing shall affect, impair or prevent
                  the vesting of any rights or powers of the Agent or any Lender
                  under this Section 1.4(f).

                           (iii) Exoneration. Without limiting the foregoing, no
                  action or omission whatsoever by Agent or any Lender
                  (excluding any Lender in its capacity as a Letter of Credit
                  Issuer) shall result in any liability of Agent or any Lender
                  to the Borrowers, or relieve the Borrowers of any of their
                  obligations hereunder to any such Person.

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

                           (v) Account Party. The Borrowers hereby authorize and
                  direct any Letter of Credit Issuer to name any requesting
                  Borrower as the "Account Party" therein and to deliver to the
                  Agent all instruments, documents and other writings and
                  property received by the Letter of Credit Issuer pursuant to
                  the Letter of Credit, and to accept and rely upon the Agent's
                  instructions and agreements with respect to all matters
                  arising in connection with the Letter of Credit or the
                  application therefor.

                  (g) Supporting Letter of Credit; Cash Collateral. If,
         notwithstanding the provisions of Section 1.3(b) and Section 10.1, any
         Letter of Credit or Credit Support is outstanding upon the termination
         of this Agreement, then upon such termination the Borrowers shall
         deposit with the Agent, for the ratable benefit of the Agent and the
         Lenders, with respect to each Letter of Credit or Credit Support then
         outstanding, either (i) cash in a cash collateral account in an amount
         equal to the greatest amount for which such Letter of Credit or such
         Credit Support may be drawn plus any fees and expenses associated with
         such Letter of Credit or such Credit Support, under which collateral
         account the Agent is entitled to draw amounts necessary to reimburse
         the Agent and the Lenders for payments to be made by the Agent and the
         Lenders under such Letter of Credit or Credit Support and any fees and
         expenses associated with such Letter of Credit or Credit Support or
         (ii) a standby letter of credit (a "Supporting Letter of Credit") in
         form and substance satisfactory to the Agent, issued by an issuer
         satisfactory to the Agent in an amount equal to the greatest amount for
         which such Letter of Credit or such Credit

<PAGE>

         Support may be drawn plus any fees and expenses associated with such
         Letter of Credit or such Credit Support, under which Supporting Letter
         of Credit the Agent is entitled to draw amounts necessary to reimburse
         the Agent and the Lenders for payments to be made by the Agent and the
         Lenders under such Letter of Credit or Credit Support and any fees and
         expenses associated with such Letter of Credit or Credit Support. Such
         cash collateral account or Supporting Letter of Credit shall be held by
         the Agent, for the ratable benefit of the Agent and the Lenders, as
         security for, and to provide for the payment of, the aggregate undrawn
         amount of such Letters of Credit or such Credit Support remaining
         outstanding.

         1.4 Bank Products.

         A Borrower may request and the Agent may, in its sole and absolute
discretion, arrange for such Borrower to obtain from the Bank or the Bank's
Affiliates Bank Products although such Borrower is not required to do so. If
Bank Products are provided by an Affiliate of the Bank, the Borrowers agree to
indemnify and hold the Agent, the Bank and the Lenders harmless from any and all
costs and obligations now or hereafter incurred by the Agent, the Bank or any of
the Lenders which arise from any indemnity given by the Agent to its Affiliates
related to such Bank Products; provided, however, nothing contained herein is
intended to limit any Borrower's rights, with respect to the Bank or its
Affiliates, if any, which arise as a result of the execution of documents by and
between any such Borrower or Borrowers and the Bank which relate to Bank
Products. The agreement contained in this Section shall survive termination of
this Agreement. The Borrowers acknowledge and agree that the obtaining of Bank
Products from the Bank or the Bank's Affiliates (a) is in the sole and absolute
discretion of the Bank or the Bank's Affiliates, and (b) is subject to all rules
and regulations of the Bank or the Bank's Affiliates. Each Borrower agrees that
the Bank is not obligated to provide such services. This paragraph in no way
prohibits any of the Borrowers from obtaining other products from other Lenders
so long as such transaction does not otherwise violate this Agreement.

                                    ARTICLE 2
                                INTEREST AND FEES

         2.1 Interest.

                  (a) Interest Rates. All outstanding Obligations shall bear
         interest on the unpaid principal amount thereof (including, to the
         extent permitted by law, on interest thereon not paid when due) from
         the date made until paid in full in immediately available funds at a
         rate determined by reference to the Base Rate or the LIBOR Rate plus
         the Applicable Margins as set forth below, but not to exceed the
         Maximum Rate. If at any time Loans are outstanding with respect to
         which a Borrower has not delivered to the Agent a notice specifying the
         basis for determining the interest rate applicable thereto in
         accordance herewith, those Loans shall bear interest at a rate
         determined by reference to the Base Rate until notice to the contrary
         has been given to the Agent in accordance with this Agreement and such
         notice has become effective. Except as otherwise provided herein, the
         outstanding Obligations shall bear interest as follows:

<PAGE>

                           (i) For all Base Rate Revolving Loans and other
                  Obligations (other than LIBOR Rate Loans) at a fluctuating per
                  annum rate equal to the Base Rate plus the Applicable Margin;

                           (ii) For all LIBOR Revolving Loans at a per annum
                  rate equal to the LIBOR Rate plus the Applicable Margin.

Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). The Borrowers shall pay to the Agent, for the ratable benefit of
Lenders, interest accrued on all Base Rate Loans in arrears on the first day of
each month hereafter and on the Termination Date. The Borrowers shall pay to the
Agent, for the ratable benefit of Lenders, interest on all LIBOR Rate Loans in
arrears on each LIBOR Interest Payment Date.

                  (b) Default Rate. If any Default or Event of Default occurs
         and is continuing and the Agent or the Required Lenders in their
         discretion so elect, then, while any such Default or Event of Default
         is continuing, all of the Obligations shall bear interest at the
         Default Rate applicable thereto, except in the case of an Event of
         Default under Section 9.1(e), (f), (g) or (h) of this Agreement in each
         of which cases all of the Obligations shall automatically and
         immediately bear interest at the Default Rate applicable thereto.

         2.2 Continuation and Conversion Elections.

                  (a) The Borrowers may:

                           (i) elect, as of any Business Day, in the case of
                  Base Rate Loans to convert any Base Rate Loans (or any part
                  thereof in an amount not less than $3,000,000, or that is in
                  an integral multiple of $1,000,000 in excess thereof) into
                  LIBOR Rate Loans; or

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

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

<PAGE>

                  (b) The Borrowers shall deliver a notice of
         continuation/conversion ("Notice of Continuation/Conversion") to the
         Agent not later than 12:00 noon (Charlotte, North Carolina time) at
         least three (3) Business Days in advance of the Continuation/Conversion
         Date, if the Loans are to be converted into or continued as LIBOR Rate
         Loans and specifying:

                           (i)   the proposed Continuation/Conversion Date;

                           (ii)  the aggregate amount of Loans to be converted
                  or renewed;

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

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

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

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

                  (e) There may not be more than six (6) different LIBOR Rate
         Loans in effect hereunder at any time.

         2.3 Maximum Interest Rate.

         In no event shall any interest rate provided for hereunder exceed the
maximum rate legally chargeable by any Lender under applicable law for such
Lender with respect to loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section 2.3,
have been paid or accrued if the interest rate otherwise set forth in this
Agreement had at all times been in effect, then the Borrowers shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the

<PAGE>

amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have accrued
had the interest rate otherwise set forth in this Agreement, at all times, been
in effect over (b) the amount of interest actually paid or accrued under this
Agreement. If a court of competent jurisdiction determines that the Agent and/or
any Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the Borrowers such excess.

         2.4 Agent Fees.

         The Borrowers agree to pay the Agent on the Closing Date the
arrangement and closing fees (the "Agent Fees") as set forth in the Fee Letter.

         2.5 Unused Line Fee.

         On the first day of each month and on the Termination Date the
Borrowers agree to pay to the Agent, for the account of the Lenders, in
accordance with their respective Pro Rata Shares, an unused line fee (the
"Unused Line Fee") equal to the amount by which the Maximum Revolver Amount
exceeded the sum of the average daily outstanding amount of Revolving Loans and
the average daily undrawn face amount of outstanding Letters of Credit, during
the immediately preceding month or shorter period if calculated for the first
month hereafter or on the Termination Date times (i) 0.25% if the average amount
of the Aggregate Revolver Outstandings for the preceding month exceeded
$100,000,000, (ii) 0.375% if the average amount of the Aggregate Revolver
Outstandings for the preceding month exceeded $50,000,000 but was less than or
equal to $100,000,000 and (iii) 0.50% if the average amount of the Aggregate
Revolver Outstanding for the preceding month was less than or equal to
$50,000,000. The Unused Line Fee shall be computed on the basis of a 360-day
year for the actual number of days elapsed. All principal payments received by
the Agent shall be deemed to be credited to the Borrowers' Loan Account
immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 2.5.

         2.6 Letter of Credit Fee.

         The Borrowers agree to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, for each Letter of
Credit, a fee (the "Letter of Credit Fee") equal to the Letter of Credit Fee
Percentage per annum in effect from time to time and to Agent for the benefit of
the Letter of Credit Issuer a fronting fee of one eighth of one percent (0.125%)
per annum of the undrawn face amount of each Letter of Credit, and to the Letter
of Credit Issuer, all out-of-pocket costs, fees and expenses incurred by the
Letter of Credit Issuer in connection with the application for, processing of,
issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses shall include a "fronting fee" payable to the Letter of Credit Issuer.
The Letter of Credit Fee shall be payable monthly in arrears on the first day of
each month following any month in which a Letter of Credit is outstanding and on
the

<PAGE>

Termination Date. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.

                                    ARTICLE 3
                            PAYMENTS AND PREPAYMENTS

         3.1 Revolving Loans.

         The Borrowers shall repay the outstanding principal balance of the
Revolving Loans, plus all accrued but unpaid interest thereon, on the
Termination Date. The Borrowers may prepay Revolving Loans at any time without
premium or penalty, and reborrow subject to the terms of this Agreement. In
addition, and without limiting the generality of the foregoing, upon demand the
Borrowers shall pay to the Agent, for account of the Lenders, the amount,
without duplication, by which the Aggregate Revolver Outstandings exceeds the
lesser of the Borrowing Base or the Maximum Revolver Amount.

         3.2 Termination of Facility.

         The Borrowers may terminate this Agreement upon at least ten (10)
Business Days' notice to the Agent and the Lenders, upon (a) the payment in full
of all outstanding Revolving Loans, together with accrued interest thereon, and
the cancellation and return of all outstanding Letters of Credit or issuance of
a supporting letter of credit, in form and substance acceptable to the Agent and
the Letter of Credit Issuer in their sole discretion, pursuant to Section
1.3(g), (b) the payment of the early termination fee set forth below, (c) the
payment in full in immediately available funds of all reimbursable expenses and
other Obligations, and (d) with respect to any LIBOR Rate Loans prepaid, payment
of the amounts due under Section 4.4, if any. If this Agreement is terminated by
the Borrowers at any time prior to the Stated Termination Date, the Borrowers
shall pay to the Agent, for the account of the Lenders, an early termination fee
determined in accordance with the following table:

                    Period during which                  Early Termination
                  early termination occurs                      Fee
         -----------------------------------------   -------------------------

         On or prior to the first Anniversary Date   1% of the Total Facility

         After the first Anniversary Date but on     0.75% of the Total Facility
         or prior to the second Anniversary Date

         After the second Anniversary Date but       0.50% of the Total Facility
         prior to the Stated Termination Date

Notwithstanding the foregoing, the Borrowers, upon notice to the Agent and the
Lenders received no later than October 31, 2002, may permanently reduce the
amount of the Maximum Revolver Amount in integral multiples of $10,000,000;
provided, that (i) after giving effect to such reduction, the Maximum Revolver
Amount shall not be less than $75,000,000, (ii) the

<PAGE>

Aggregate Revolver Outstandings immediately prior to or concurrent with such
permanent reduction shall not be greater than the lesser of the Borrowing Base
or the Maximum Revolver Amount as so reduced and (iii) with respect to any LIBOR
Rate Loans prepaid, payment of the amounts due under Section 4.4, if any. Such
reduction shall be effective January 1, 2003 and no early termination fees shall
be due in connection with such reduction.

         3.3 [Reserved.]

         3.4 [Reserved.]

         3.5 LIBOR Rate Loan Prepayments.

         In connection with any prepayment, if any LIBOR Rate Loans are prepaid
prior to the expiration date of the Interest Period applicable thereto, the
Borrowers shall pay to the Lenders the amounts described in Section 4.4, unless
the Lenders agree to waive such payment.

         3.6 Payments by the Borrowers.

                  (a) All payments to be made by the Borrowers shall be made
         without set-off, recoupment or counterclaim. Except as otherwise
         expressly provided herein, all payments by the Borrowers shall be made
         to the Agent for the account of the Lenders, at the account designated
         by the Agent and shall be made in Dollars and in immediately available
         funds, no later than 12:00 noon (Charlotte, North Carolina time) on the
         date specified herein. Any payment received by the Agent after such
         time shall be deemed (for purposes of calculating interest only) to
         have been received on the following Business Day and any applicable
         interest shall continue to accrue.

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

         3.7 Payments as Revolving Loans.

         At the election of Agent, all payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums, reimbursable expenses and other
sums payable hereunder, may be paid from the proceeds of Revolving Loans made
hereunder. The Borrowers hereby irrevocably authorize the Agent to charge the
Loan Account for the purpose of paying all amounts from time to time due
hereunder and agrees that all such amounts charged shall constitute Revolving
Loans (including Ex-Im Bank Revolving Loans, Non-Ratable Loans and Agent
Advances).

<PAGE>

         3.8 Apportionment, Application and Reversal of Payments.

         Principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders, except for fees payable
solely to Agent and the Letter of Credit Issuer and except as provided in
Section 11.1(b). All payments shall be remitted to the Agent and all such
payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from the Borrowers; second, to pay any fees
or expense reimbursements then due to the Lenders from the Borrowers; third, to
pay interest due in respect of all Loans, including Ex-Im Bank Revolving Loans,
Non-Ratable Loans and Agent Advances; fourth, to pay or prepay principal of the
Non-Ratable Loans and Agent Advances and Ex-Im Bank Revolving Loans; fifth, to
pay or prepay principal of the Revolving Loans (other than Ex-Im Bank Revolving
Loans, Non-Ratable Loans and Agent Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; sixth, to pay an amount to Agent
equal to all outstanding Letter of Credit Obligations to be held as cash
collateral for such Obligations; and seventh, to the payment of any other
Obligation including any amounts relating to Bank Products due to the Agent or
any Lender or any affiliate of a Lender by any Borrower. Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by a
Borrower, or unless an Event of Default has occurred and is continuing, neither
the Agent nor any Lender shall apply any payments which it receives to any LIBOR
Rate Loan, except (a) on the expiration date of the Interest Period applicable
to any such LIBOR Rate Loan, or (b) in the event, and only to the extent, that
there are no outstanding Base Rate Loans and, in any event, the Borrowers shall
pay LIBOR breakage losses in accordance with Section 4.4. The Agent and the
Lenders shall have the continuing and exclusive right to apply and reverse and
reapply any and all such proceeds and payments to any portion of the
Obligations.

         3.9 Indemnity for Returned Payments.

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

<PAGE>

payment or application of proceeds having become final and irrevocable. The
provisions of this Section 3.9 shall survive the termination of this Agreement.

         3.10 Agent's and Lenders' Books and Records; Monthly Statements.

         The Agent shall record the principal amount of the Loans owing to each
Lender, the undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of unpaid reimbursement obligations outstanding with respect to
the Letters of Credit from time to time on its books. In addition, each Lender
may note the date and amount of each payment or prepayment of principal of such
Lender's Loans in its books and records. Failure by Agent or any Lender to make
such notation shall not affect the obligations of the Borrowers with respect to
the Loans or the Letters of Credit. The Borrowers agree that the Agent's and
each Lender's books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in
any action or proceeding arising therefrom, and shall constitute rebuttably
presumptive proof thereof, irrespective of whether any Obligation is also
evidenced by a promissory note or other instrument. The Agent will provide to
the Borrowers a monthly statement of Loans, payments, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on the Borrowers and an account stated (except for reversals and
reapplications of payments made as provided in Section 3.8 and corrections of
errors discovered by the Agent), unless a Borrower notifies the Agent in writing
to the contrary within thirty (30) days after such statement is rendered. In the
event a timely written notice of objections is given by any Borrower, only the
items to which exception is expressly made will be considered to be disputed by
the Borrowers.

                                    ARTICLE 4
                     TAXES, YIELD PROTECTION AND ILLEGALITY

         4.1 Taxes.

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

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

<PAGE>

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

                           (i) the sum payable shall be increased as necessary
                  so that after making all required deductions and withholdings
                  (including deductions and withholdings applicable to
                  additional sums payable under this Section) such Lender or the
                  Agent, as the case may be, receives an amount equal to the sum
                  it would have received had no such deductions or withholdings
                  been made;

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

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

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

                  (d) At the Agent's request, within 30 days after the date of
         any payment by any Borrower of Taxes or Other Taxes, such Borrower
         shall furnish the Agent the original or a certified copy of a receipt
         evidencing payment thereof, or other evidence of payment satisfactory
         to the Agent.

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

         4.2 Illegality.

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

                  (b) If a Lender determines that it is unlawful to maintain any
         LIBOR Rate Loan, the Borrowers shall, upon its receipt of notice of
         such fact and demand from such

<PAGE>

         Lender (with a copy to the Agent), prepay in full such LIBOR Rate Loans
         of that Lender then outstanding, together with interest accrued
         thereon, either on the last day of the Interest Period thereof, if that
         Lender may lawfully continue to maintain such LIBOR Rate Loans to such
         day, or immediately, if that Lender may not lawfully continue to
         maintain such LIBOR Rate Loans. If the Borrowers are required to so
         prepay any LIBOR Rate Loans, then concurrently with such prepayment,
         the Borrowers shall borrow from the affected Lender, in the amount of
         such repayment, a Base Rate Loan.

         4.3 Increased Costs and Reduction of Return.

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

                  (b) If any Lender shall have determined that (i) the
         introduction of any Capital Adequacy Regulation, (ii) any change in any
         Capital Adequacy Regulation, (iii) any change in the interpretation or
         administration of any Capital Adequacy Regulation by any central bank
         or other Governmental Authority charged with the interpretation or
         administration thereof, or (iv) compliance by such Lender or any
         corporation or other entity controlling such Lender with any Capital
         Adequacy Regulation, affects or would affect the amount of capital
         required or expected to be maintained by such Lender or any corporation
         or other entity controlling such Lender and (taking into consideration
         such Lender's or such corporation's or other entity's policies with
         respect to capital adequacy and such Lender's desired return on
         capital) determines that the amount of such capital is increased as a
         consequence of its Commitments, loans, credits or obligations under
         this Agreement, then, upon demand of such Lender to any Borrower
         through the Agent, the Borrowers shall pay to such Lender, from time to
         time as specified by such Lender, additional amounts sufficient to
         compensate such Lender for such increase.

         4.4 Funding Losses.

         The Borrowers shall reimburse each Lender and hold each Lender harmless
from any loss or expense which such Lender may sustain or incur as a consequence
of:

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

                  (b) the failure of any Borrower to borrow, continue or convert
         a Loan after such Borrower has given (or is deemed to have given) a
         Notice of Borrowing or a Notice of Continuation/Conversion; or

<PAGE>

                  (c) the prepayment or other payment (including after
         acceleration thereof) of any LIBOR Rate Loans on a day that is not the
         last day of the relevant Interest Period, except in connection with
         prepayments or other payments made pursuant to Section 4.2 hereof;

including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained.

         4.5 Inability to Determine Rates.

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

         4.6 Certificates of Agent.

         If any Lender claims reimbursement or compensation under this Article
4, Agent shall determine the amount thereof and shall deliver to the Borrowers
(with a copy to the affected Lender) a certificate setting forth in reasonable
detail the amount payable to the affected Lender, and such certificate shall be
conclusive and binding on the Borrowers in the absence of manifest error.

         4.7 Survival.

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

         4.8 Mitigation; Mandatory Assignment.

         Each Lender shall use reasonable efforts to avoid or mitigate any
increased cost or suspension of the availability of an interest rate under
Sections 4.1 through 4.5 above to the greatest extent practicable (including
transferring the Loans to another lending office or Affiliate of a Lender)
unless, in the reasonable opinion of such Lender, such efforts would be likely
to have an adverse effect upon it. In the event a Lender makes a request to the
Borrowers for additional payments in accordance with Section 4.1, 4.2, 4.3 or
4.4, then, provided that no

<PAGE>

Default or Event of Default has occurred and is continuing at such time, the
Borrowers may, at their own expense (such expense to include, without
limitation, any transfer fee payable to the Agent under Section 11.2(a)) and in
its sole discretion, require such Lender to transfer and assign in whole (but
not in part), without recourse (in accordance with and subject to the terms and
conditions of Section 11.2(a)), all of its interests, rights and obligations
under this Agreement to an Eligible Assignee which shall assume such assigned
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (a) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority and (b)
the Borrowers or such assignee shall have paid to the assigning Lender in
immediately available funds the principal of and interest accrued to the date of
such payment on the portion of the Loans hereunder held by such assigning Lender
and all other amounts owed to such assigning Lender hereunder, including amounts
owed pursuant to Sections 4.1 through 4.5 hereof.

                                    ARTICLE 5
                BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

         5.1 Books and Records.

         Each Borrower shall maintain, at all times, correct and complete books,
records and accounts in which complete, correct and timely entries are made of
its transactions in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a). Each
Borrower shall, by means of appropriate entries, reflect in such accounts and in
all Financial Statements proper liabilities and reserves for all taxes and
proper provision for depreciation and amortization of property and bad debts,
all in accordance with GAAP. Each Borrower shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as the Agent
or any Lender shall reasonably require, including, but not limited to, records
of (a) all payments received and all credits and extensions granted with respect
to the Accounts; (b) the return, rejection, repossession, stoppage in transit,
loss, damage, or destruction of any Inventory; and (c) all other dealings
affecting the Collateral.

         5.2 Financial Information.

         The Borrowers shall promptly furnish to each Lender, all such financial
information as the Agent shall reasonably request. Without limiting the
foregoing, the Borrowers will furnish to the Agent, in sufficient copies for
distribution by the Agent to each Lender, in such detail as the Agent or the
Lenders shall request, the following:

                  (a) As soon as available, but in any event not later than
         ninety (90) days after the close of each Fiscal Year, consolidated
         audited balance sheets, and income statements, cash flow statements and
         changes in stockholders' equity for the Parent and its consolidated
         Subsidiaries for such Fiscal Year, and the accompanying notes thereto,
         setting forth in each case in comparative form figures for the previous
         Fiscal Year, all in reasonable detail, fairly presenting the financial
         position and the results of operations of the Parent and its
         consolidated Subsidiaries as at the date thereof and for the Fiscal
         Year
<PAGE>

         then ended, and prepared in accordance with GAAP. Such statements shall
         be examined in accordance with generally accepted auditing standards by
         and, in the case of such statements performed on a consolidated basis,
         accompanied by a report thereon unqualified in any respect of
         independent certified public accountants selected by the Parent and
         reasonably satisfactory to the Agent. The Borrowers hereby authorize
         the Agent, during the existence of a Default or an Event of Default, to
         communicate directly with their certified public accountants and, by
         this provision, authorize those accountants to disclose to the Agent
         any and all financial statements and other supporting financial
         documents and schedules relating to the Borrowers and to discuss
         directly with the Agent the finances and affairs of the Borrowers.

                  (b) As soon as available, and in any event within 45 days
         after the close of each fiscal quarter of the Parent and its
         consolidated Subsidiaries, a consolidated balance sheet and income
         statement of the Parent and its consolidated Subsidiaries, as of the
         end of such fiscal quarter, together with related consolidated
         statements of operations and retained earnings and of cash flows for
         such fiscal quarter, in each case setting forth in comparative form
         consolidated figures for the corresponding period of the preceding
         Fiscal Year, all such financial information described above to be in
         reasonable form and detail and reasonably acceptable to the Agent, and
         accompanied by a certificate of the chief financial officer of the
         Parent to the effect that such quarterly financial statements fairly
         present in all material respects the financial condition of the Parent
         and its consolidated Subsidiaries and have been prepared in accordance
         with GAAP, subject to changes resulting from normal year-end audit
         adjustments.

                  (c) As soon as available, but in any event not later than
         thirty (30) days after the end of each of month, consolidated unaudited
         income statements for the Parent and its consolidated Subsidiaries in
         the form of the monthly management report attached hereto as Exhibit H,
         for such month and for the period from the beginning of the Fiscal Year
         to the end of such month, all in reasonable detail, fairly presenting
         the financial position and results of operations of the Parent and its
         consolidated Subsidiaries as at the date thereof and for such periods,
         and, in each case, in comparable form, figures for the corresponding
         period in the Borrowers' budget, and prepared in accordance with GAAP
         applied consistently with the audited Financial Statements required to
         be delivered pursuant to Section 5.2(a) and subject to quarterly and
         year end adjustments.

                  (d) With each of the audited Financial Statements delivered
         pursuant to Section 5.2(a), a certificate of the independent certified
         public accountants that examined such statement to the effect that they
         have reviewed and are familiar with this Agreement and that, in
         examining such Financial Statements, they did not become aware of any
         fact or condition which then constituted a Default or Event of Default
         with respect to a financial covenant, except for those, if any,
         described in reasonable detail in such certificate.

                  (e) With each of the annual audited Financial Statements
         delivered pursuant to Section 5.2(a), and within forty-five (45) days
         after the end of each fiscal quarter, a certificate of the chief
         financial officer of the Parent setting forth in reasonable detail the

<PAGE>

         calculations required to establish that the Borrowers were in
         compliance with the covenants set forth in Sections 7.22 through 7.24
         during the period covered in such Financial Statements and as at the
         end thereof. Within thirty (30) days after the end of each quarter, a
         certificate of the chief financial officer of the Parent stating that,
         except as explained in reasonable detail in such certificate, (A) all
         of the representations and warranties of the Borrowers contained in
         this Agreement and the other Loan Documents are correct and complete in
         all material respects as at the date of such certificate as if made at
         such time, except for those that speak as of a particular date, (B) the
         Borrowers are, at the date of such certificate, in compliance in all
         material respects with all of its respective covenants and agreements
         in this Agreement and the other Loan Documents, (C) no Default or Event
         of Default then exists or existed during the period covered by the
         Financial Statements for such month, (D) describing and analyzing in
         reasonable detail all material trends, changes, and developments in
         each and all Financial Statements; and (E) explaining the variances of
         the figures in the corresponding budgets and prior Fiscal Year
         financial statements; provided, however, notwithstanding the foregoing,
         it is understood and agreed that delivery of the Parent's applicable
         Form 10-Q within the time period specified above shall satisfy the
         requirements of clauses (D) and (E) above. If such certificate
         discloses that a representation or warranty is not correct or complete,
         or that a covenant has not been complied with, or that a Default or
         Event of Default existed or exists, such certificate shall set forth
         what action the Borrowers have taken or propose to take with respect
         thereto.

                  (f) No sooner than sixty (60) days and not less than thirty
         (30) days prior to the beginning of each Fiscal Year, annual forecasts
         (to include forecasted consolidated balance sheets, income statements
         and cash flow statements) for the Parent and its Subsidiaries as at the
         end of and for each quarter of such Fiscal Year.

                  (g) [Reserved].

                  (h) Promptly upon the filing thereof, copies of all reports,
         if any, to or other documents filed by any of the Borrowers with the
         Securities and Exchange Commission under the Exchange Act, and all
         reports, notices, or statements sent or received by any of the
         Borrowers to or from the holders of any equity interests of the Parent
         (other than routine non-material correspondence and reports sent by
         shareholders of the Parent to the Parent) or any such Subsidiary or of
         any Debt of any of the Borrowers registered under the Securities Act of
         1933 or to or from the trustee under any indenture under which the same
         is issued.

                  (i) As soon as available, but in any event not later than 30
         days after any Borrower's receipt thereof, a copy of all management
         reports and management letters prepared for the Borrowers by any
         independent certified public accountants of the Borrowers.

                  (j) Promptly after their preparation, copies of any and all
         proxy statements, financial statements, and reports which the Parent
         makes available to its shareholders.

<PAGE>

                  (k) If requested by the Agent, promptly after filing with the
         IRS, a copy of each tax return filed by the Parent or by any of the
         other Borrowers.

                  (l) As soon as available, but in any event by Friday following
         the end of each week, a Borrowing Base Certificate for such week and
         concurrently therewith, or more frequently if requested by the Agent, a
         schedule of each Borrower's Accounts created, credits given, cash
         collected and other adjustments to Accounts made since the date of the
         last such schedule and the related Borrowing Base Certificate.

                  (m) On a monthly basis, by the 30th day of the following month
         or, during the existence of a Default or an Event of Default, more
         frequently if requested by the Agent, an aging of each of the
         Borrowers' Accounts, together with a reconciliation to the
         corresponding Borrowing Base and to each of the Borrowers' general
         ledger.

                  (n) On a monthly basis by the 30th day of the following month
         or, during the existence of a Default or an Event of Default, more
         frequently if requested by the Agent, an aging of each of the
         Borrowers' accounts payable.

                  (o) Upon request, a statement of the balance of each of the
         Intercompany Accounts.

                  (p) Such other reports as to the Collateral of the Borrowers
         as the Agent shall reasonably request from time to time.

                  (q) With the delivery of each of the foregoing items in
         clauses (l) through (p), a certificate of the Parent executed by a
         Responsible Officer certifying as to the accuracy and completeness
         thereof.

                  (r) Such additional information as the Agent and/or any Lender
         may from time to time reasonably request regarding the financial and
         business affairs of any Borrower or any Subsidiary.

         5.3 Notices to the Lenders.

         Each Borrower shall notify the Agent and the Lenders in writing of the
following matters at the following times:

                  (a) Immediately after becoming aware of any Default or Event
         of Default;

                  (b) Immediately after becoming aware of the assertion by the
         holder of any capital stock of any Borrower or the holder of any Debt
         of any Borrower in a face amount in excess of $1,000,000 that a default
         exists with respect thereto or that such Borrower is not in compliance
         with the terms thereof, or the threat or commencement by such holder of
         any enforcement action because of such asserted default or
         non-compliance;

<PAGE>

                  (c) Immediately after becoming aware of any event or
         circumstance which could have a Material Adverse Effect;

                  (d) Immediately after becoming aware of any pending or
         threatened action, suit, or proceeding, by any Person, or any pending
         or threatened investigation by a Governmental Authority, which could
         reasonably be expected to have a Material Adverse Effect;

                  (e) Immediately after becoming aware of any pending or
         threatened strike, work stoppage, unfair labor practice claim, or other
         labor dispute affecting the Parent or any of the other Borrowers in a
         manner which could reasonably be expected to have a Material Adverse
         Effect;

                  (f) Immediately after becoming aware of any violation of any
         law, statute, regulation, or ordinance of a Governmental Authority
         affecting the Parent or any other Borrower which could reasonably be
         expected to have a Material Adverse Effect;

                  (g) Immediately after receipt of any notice of any violation
         by the Parent or any of its Subsidiaries of any Environmental Law which
         could reasonably be expected to have a Material Adverse Effect or that
         any Governmental Authority has asserted in writing that the Parent or
         any other Borrower is not in compliance with any Environmental Law or
         is investigating the Parent's or such other Borrower's compliance
         therewith;

                  (h) Immediately after receipt of any written notice that the
         Parent or any of its Subsidiaries is or may be liable to any Person as
         a result of the Release or threatened Release of any Contaminant or
         that the Parent or any other Borrower is subject to investigation by
         any Governmental Authority evaluating whether any remedial action is
         needed to respond to the Release or threatened Release of any
         Contaminant which, in either case, is reasonably likely to give rise to
         liability in excess of $1,000,000;

                  (i) Immediately after receipt of any written notice of the
         imposition of any Environmental Lien against any property of the Parent
         or any of its Subsidiaries;

                  (j) Any change in any Borrower's name as it appears in the
         state of its incorporation or other organization, state of
         incorporation or organization, type of entity, organizational
         identification number, locations of Collateral, or form of
         organization, trade names under which such Borrower will sell Inventory
         or create Accounts, or to which instruments in payment of Accounts may
         be made payable, in each case at least thirty (30) days prior thereto;

                  (k) Within fifteen (15) Business Days after the Parent or any
         ERISA Affiliate knows or has reason to know, that a non-exempt
         prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
         the Code) or violation of the fiduciary responsibility rules with
         respect to any Plan has occurred or will occur, and, when known, any
         action taken or threatened by the IRS, the DOL or the PBGC with respect
         thereto;
<PAGE>

                  (l) Upon request, or, in the event that such document reflects
         a significant change with respect to the matters covered thereby,
         within three (3) Business Days after the filing thereof with, or the
         issuance thereof by, the PBGC, the DOL or the IRS, as applicable,
         copies of the following: (i) each annual report (form 5500 series)
         filed with the PBGC, the DOL or the IRS with respect to each Plan, (ii)
         a copy of each other filing or notice filed with the PBGC, the DOL or
         the IRS, with respect to each Plan by either the Parent or any ERISA
         Affiliate, and (iii) any determination letter from the IRS regarding
         the qualification of a Plan under Section 401(a) of the Code;

                  (m) Within fifteen (15) Business Days after any changes in the
         benefits of any existing Plan which increase any Borrower's annual
         costs with respect thereto by an amount in excess of $2,500,000, or the
         establishment of any new Plan or the commencement of contributions to
         any Plan to which the Parent or any ERISA Affiliate was not previously
         contributing;

                  (n) Promptly after becoming aware of any commercial tort claim
         (as defined in the UCC) acquired by it;

                  (o) Promptly after becoming aware of any event or fact which
         could give rise to a material claim by such Borrower for
         indemnification under any of the Assigned Contracts;

                  (p) Immediately if such Borrower knows or has reason to know
         that any application or registration relating to any material patent,
         trademark or copyright (now or hereafter existing) may become abandoned
         or dedicated, or of any adverse determination or development (including
         the institution of, or any such determination or development in, any
         proceeding in the United States Patent and Trademark Office, the United
         States Copyright Office or any court) regarding such Borrower's
         ownership of any material patent, trademark or copyright, its right to
         register the same, or to keep and maintain the same;

                  (q) Promptly after becoming aware that any of the material
         patent, trademark or copyright Collateral is infringed upon, or
         misappropriated or diluted by a third party.

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

                                    ARTICLE 6
                     GENERAL WARRANTIES AND REPRESENTATIONS

         Each Borrower warrants and represents to the Agent and the Lenders as
follows:

<PAGE>

         6.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents.

         The Borrowers have the power and authority to execute, deliver and
perform this Agreement and the other Loan Documents to which it is a party, to
incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. The Borrowers have taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by each Borrower, and
constitute the legal, valid and binding obligations of each Borrower,
enforceable against it in accordance with their respective terms. The Borrowers'
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or result in the imposition of any Lien
upon the property of the Parent or any of its Subsidiaries, by reason of the
terms of (a) any contract, mortgage, lease, agreement, indenture, or instrument
to which any Borrower is a party or which is binding upon it, (b) any
Requirement of Law applicable to any Borrower or any of its Subsidiaries, or (c)
the certificate or articles of incorporation or by-laws or the limited liability
company or limited partnership agreement of any Borrower.

         6.2 Validity and Priority of Security Interest.

         The provisions of this Agreement and the other Loan Documents create
legal and valid Liens on all the Collateral in favor of the Agent, for the
ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, having priority over all
other Liens on the Collateral, except for those Liens identified in clauses (c),
(d) and (e) of the definition of Permitted Liens securing all the Obligations,
and enforceable against the Borrowers and all third parties.

         6.3 [Reserved.]

         6.4 Corporate Name; Prior Transactions.

         Each Borrower has not, during the past five (5) years, been known by or
used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business,
except as set forth on Schedule 6.4.

         6.5 Organization and Qualification.

         Schedule 6.5 is a correct and complete list of the name and
relationship to the Parent of each and all of its Subsidiaries. The Borrowers
are (a) duly incorporated or organized and validly existing in good standing
under the laws of its state of incorporation or organization set forth on
Schedule 6.5, and (b) qualified to do business and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a material adverse effect on any such Borrowers'
business, operations, prospects, property, or

<PAGE>

condition (financial or otherwise) and (c) has all requisite power and authority
to conduct its business and own its property.

         6.6 Financial Statements and Projections.

                  (a) The Parent has delivered to the Agent and the Lenders the
         audited balance sheet and related statements of income, retained
         earnings, cash flows, and changes in stockholders equity for the Parent
         and its consolidated Subsidiaries as of June 24, 2001, and for the
         Fiscal Year then ended, accompanied by the report thereon of the
         Parent's independent certified public accountants, Ernst & Young LLP.
         The Parent has also delivered to the Agent and the Lenders the
         unaudited balance sheet and related statements of income and cash flows
         for the Parent and its consolidated Subsidiaries as of September 25,
         2001. Such financial statements are attached hereto as Exhibit C. All
         such financial statements have been prepared in accordance with GAAP
         and present accurately and fairly in all material respects the
         financial position of the Parent and its consolidated Subsidiaries as
         at the dates thereof and their results of operations for the periods
         then ended.

                  (b) The Latest Projections when submitted to the Lenders as
         required herein represent the Borrowers' best estimate of the future
         financial performance of the Parent and its consolidated Subsidiaries
         for the periods set forth therein. The Latest Projections have been
         prepared on the basis of the assumptions set forth therein, which the
         Borrowers believe are fair and reasonable in light of current and
         reasonably foreseeable business conditions at the time submitted to the
         Lenders.

                  (c) The pro forma balance sheet of the Parent as at September
         25, 2001, attached hereto as Exhibit C, presents fairly and accurately
         the Borrowers' financial condition as at such date after giving effect
         to the transactions contemplated hereby and assuming the Closing Date
         had been such date, and has been prepared in accordance with GAAP.

         6.7 Capitalization.

         The Parent's authorized capital stock consists of 500,000,000 shares of
common stock, par value $0.10 per share, of which 53,825,533 shares are validly
issued and outstanding, fully paid and non-assessable and are owned beneficially
and of record on October 28, 2001. Capitalization for each Subsidiary is set
forth on Schedule 6.7, attached hereto.

         6.8 Solvency.

         Based upon the financial statements for the fiscal year ended June 24,
2001 and the adjustments made in response thereto, each of the Borrowers is
Solvent prior to and after giving effect to the Borrowings to be made on the
Closing Date and the issuance of the Letters of Credit to be issued on the
Closing Date. The Borrowers, on a consolidated basis, are Solvent prior to and
after giving effect to the Borrowings to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date and shall
remain Solvent during the term of

<PAGE>

this Agreement. Each Borrower is able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature.

         6.9 Debt.

         After giving effect to the making of the Revolving Loans to be made on
the Closing Date, the Borrowers have no Debt, except (a) the Obligations, and
(b) Debt described on Schedule 6.9. None of the holders of Debt owed by any
Subsidiary which is not a Borrower has recourse against any Borrower.

         6.10 Distributions.

         Since June 24, 2001, no Distribution has been declared, paid, or made
upon or in respect of any capital stock or other securities of the Borrowers,
other than Distributions to any Borrower.

         6.11 Real Estate; Leases.

         Schedule 6.11 sets forth, as of the Closing Date, a correct and
complete list of all Real Estate owned by the Parent and all Real Estate owned
by any other Borrower, all leases and subleases of real or personal property
held by any Borrower as lessee or sublessee (other than leases of personal
property as to which any Borrower is lessee or sublessee for which the value of
such personal property in the aggregate is less than $2,000,000), and all leases
and subleases of real or personal property held by any Borrower as lessor, or
sublessor. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. The Borrowers have good and
marketable title in fee simple to the Real Estate identified on Schedule 6.11 as
owned by the Borrowers, or valid leasehold interests in all Real Estate
designated therein as "leased" by the Borrowers and the Borrowers have good,
indefeasible, and merchantable title to all of its other property reflected on
the June 24, 2001 Financial Statements delivered to the Agent and the Lenders,
except as disposed of in the ordinary course of business since the date thereof,
free of all Liens except Permitted Liens.

         6.12 Proprietary Rights.

         Schedule 6.12 sets forth a correct and complete list of all of the
Borrowers' Proprietary Rights. None of the Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the best of each Borrower's knowledge, none of the Proprietary Rights
infringes on or conflicts with any other Person's property, and no other
Person's property infringes on or conflicts with the Proprietary Rights. The
Proprietary Rights described on Schedule 6.12 constitute all of the property of
such type necessary to the current and anticipated future conduct of the
businesses of the Borrowers.

<PAGE>

         6.13 Trade Names.

         All trade names or styles under which the Parent or any other Borrower
will sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, are listed on Schedule 6.13.

         6.14 Litigation.

         Except as set forth on Schedule 6.14, there is no pending, or to the
best of each Borrower's knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or to the best of each Borrower's knowledge,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.

         6.15 Labor Disputes.

         Except as set forth on Schedule 6.15, as of the Closing Date (a) there
is no collective bargaining agreement or other labor contract covering employees
of the Borrowers, (b) no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement, (c) no union
or other labor organization is seeking to organize, or to be recognized as, a
collective bargaining unit of employees of the Borrowers or for any similar
purpose, and (d) there is no pending or (to the best of each Borrower's
knowledge) threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting the Parent or any of
the other Borrowers or their employees.

         6.16 Environmental Laws.

                  Except as otherwise disclosed on Schedule 6.16 or except as
         otherwise would not result in or would not be expected to result in a
         Material Adverse Effect:

                  (a) The Parent and its Domestic Subsidiaries have complied in
         all material respects with all Environmental Laws and neither the
         Parent nor any Domestic Subsidiary nor any of its presently owned real
         property or presently conducted operations, nor its previously owned
         real property or prior operations, is subject to any enforcement order
         from or liability agreement with any Governmental Authority or private
         Person respecting (i) compliance with any Environmental Law or (ii) any
         potential liabilities and costs or remedial action arising from the
         Release or threatened Release of a Contaminant.

                  (b) The Parent and its Domestic Subsidiaries have obtained all
         permits necessary for their current operations under Environmental
         Laws, and all such permits are in good standing and the Parent and its
         Domestic Subsidiaries are in compliance with all material terms and
         conditions of such permits.

                  (c) Neither the Parent nor any of its Domestic Subsidiaries,
         nor, to the best of the Borrowers' knowledge, any of its predecessors
         in interest, has in violation of applicable law stored, treated or
         disposed of any hazardous waste.

<PAGE>

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

                  (e) To the best of each Borrower's knowledge, none of the
         present or past operations of the Parent and its Domestic Subsidiaries
         is the subject of any investigation by any Governmental Authority
         evaluating whether any remedial action is needed to respond to a
         Release or threatened Release of a Contaminant.

                  (f) There is not now, nor to the best of each Borrower's
         knowledge has there ever been on or in the Real Estate:

                           (i)   any underground storage tanks or surface
                  impoundments,

                           (ii)  any asbestos-containing material, or

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

         the presence of which has had or could reasonably be expected to have a
         Material Adverse Effect.

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

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

                  (i) None of the products manufactured, distributed or sold by
         the Parent or any of its Domestic Subsidiaries contain asbestos
         containing material.

                  (j) No Environmental Lien has attached to the Real Estate.

         6.17 No Violation of Law.

         None of the Borrowers is in violation of any law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which violation could
reasonably be expected to have a Material Adverse Effect.

<PAGE>

         6.18 No Default.

         None of the Borrowers is in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed, or other agreement to which
such Borrower is a party or by which it is bound, which default could reasonably
be expected to have a Material Adverse Effect.

         6.19 ERISA Compliance.

                  Except as specifically disclosed on Schedule 6.19:

                  (a) Each Plan is in compliance in all material respects with
         the applicable provisions of ERISA, the Code and other federal or state
         law. Each Plan which is intended to qualify under Section 401(a) of the
         Code has received a favorable determination letter from the IRS and to
         the best knowledge of the Borrowers, nothing has occurred which would
         cause the loss of such qualification.

                  (b) Neither the Parent not any ERISA Affiliate sponsors,
         maintains or is obligated to make contributions to any Pension Plan or
         Multi-employer Plan nor has the parent or any ERISA Affiliate
         sponsored, maintained or contributed to any Pension Plan or
         Multi-employer Plan at any time during the six (6) year period ending
         on the date of this Agreement.

                  (c) There are no pending or, to the best knowledge of the
         Parent or its Domestic Subsidiaries, threatened claims, actions or
         lawsuits, or action by any Governmental Authority, with respect to any
         Plan which has resulted or could reasonably be expected to result in a
         Material Adverse Effect. There has been no non-exempt prohibited
         transaction (as defined in Sections 406 of ERISA and 4975 of the Code)
         or violation of the fiduciary responsibility rules with respect to any
         Plan which has resulted or could reasonably be expected to result in a
         Material Adverse Effect.

         6.20 Taxes.

         The Borrowers have filed all federal and other tax returns and reports
required to be filed, and have paid all federal and other taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable unless such unpaid taxes
and assessments would constitute a Permitted Lien.

         6.21 Regulated Entities.

         No Borrower and no Person controlling any Borrower, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. No Borrower
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public utilities
code or law, or any other federal or state statute or regulation limiting its
ability to incur indebtedness.

<PAGE>

         6.22 Use of Proceeds; Margin Regulations.

         The proceeds of the Loans are to be used solely to refinance existing
Debt, to issue standby and commercial letters of credit and for working capital
purposes. Neither the Parent nor any other Borrower is engaged in the business
of purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.

         6.23 Copyrights, Patents, Trademarks and Licenses, etc.

         Except as set forth on Schedule 6.14, the Borrowers own or are licensed
or otherwise have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises, licenses, rights of way,
authorizations and other rights that are reasonably necessary for the operation
of their businesses, without conflict with the rights of any other Person. To
the best knowledge of each Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Parent or any other Borrower infringes upon
any rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of each Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.

         6.24 No Material Adverse Change.

         No Material Adverse Effect has occurred since the latest date of the
annual audited Financial Statements previously delivered to the Lenders.

         6.25 Full Disclosure.

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

         6.26 Material Agreements.

         Schedule 6.26 hereto sets forth as of the Closing Date all material
agreements and contracts to which the Parent or any of the other Borrowers is a
party or is bound as of the date hereof.

<PAGE>

         6.27 Bank Accounts.

         Schedule 6.27 contains as of the Closing Date a complete and accurate
list of all bank accounts maintained by each Borrower with any bank or other
financial institution.

         6.28 Governmental Authorization.

         No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, the Borrowers of this Agreement or any other Loan
Document.

         6.29 Immaterial Subsidiaries.

         No Immaterial Subsidiary has Collateral in excess of $100,000.

                                    ARTICLE 7
                       AFFIRMATIVE AND NEGATIVE COVENANTS

         Each Borrower covenants to the Agent and each Lender that so long as
any of the Obligations remain outstanding or this Agreement is in effect:

         7.1 Taxes and Other Obligations.

         Each Borrower shall, and shall cause each of its Domestic Subsidiaries
to, (a) file when due all tax returns and other reports which it is required to
file; (b) pay, or provide for the payment, when due, of all taxes, fees,
assessments and other governmental charges against it or upon its property,
income and franchises, make all required withholding and other tax deposits, and
establish adequate reserves for the payment of all such items, and provide to
the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (c) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; provided,
however, so long as the Parent has notified the Agent in writing, neither the
Parent nor any of its Subsidiaries need pay any tax, fee, assessment, or
governmental charge (i) it is contesting in good faith by appropriate
proceedings diligently pursued, (ii) as to which the Parent or any Subsidiary,
as the case may be, has established proper reserves as required under GAAP, and
(iii) the nonpayment of which does not result in the imposition of a Lien (other
than a Permitted Lien).

         7.2 Legal Existence and Good Standing.

         Each Borrower shall, and shall cause each of its Domestic Subsidiaries
to, maintain its legal existence and its qualification and good standing in all
jurisdictions in which the failure to

<PAGE>

maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.

         7.3 Compliance with Law and Agreements; Maintenance of Licenses.

         Each Borrower shall comply, and shall cause each Domestic Subsidiary to
comply, in all material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act and all Environmental Laws). Each Borrower
shall obtain and maintain all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. No Borrower shall modify, amend or alter its
certificate or articles of incorporation, or its limited liability company
operating agreement or limited partnership agreement, as applicable, other than
in a manner which does not adversely affect the rights of the Lenders or the
Agent.

         7.4 Maintenance of Property; Inspection of Property.

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

                  (b) Each Borrower shall permit representatives and independent
         contractors of the Agent (at the expense of such Borrower not to exceed
         three (3) times per year during the initial year of this Agreement and
         two (2) times per year for each year thereafter, unless an Event of
         Default has occurred and is continuing) to visit and inspect any of its
         properties, to examine its corporate, financial and operating records,
         and make copies thereof or abstracts therefrom and to discuss its
         affairs, finances and accounts with its officers and independent public
         accountants, at such reasonable times during normal business hours and
         as soon as may be reasonably desired, upon reasonable advance notice to
         such Borrower; provided, however, when an Event of Default exists, the
         Agent or any Lender may do any of the foregoing at the expense of the
         Borrowers at any time during normal business hours and without advance
         notice.

         7.5 Insurance.

                  (a) The Parent shall maintain, and shall cause each of the
         Borrowers to maintain, with financially sound and reputable insurers
         having a rating of at least A+ or better by Best Rating Guide,
         insurance against loss or damage by fire with extended coverage; theft
         and loss in transit; public liability and third party property damage;
         fraud or other criminal liability; business interruption; public
         liability and third party property damage; and such other hazards or of
         such other types as is customary for Persons engaged in the same or
         similar business and, with respect to any insurance covering any
         Collateral, in amounts and under policies reasonably acceptable to the
         Agent and without exclusions for acts of terrorism or other exclusions
         not acceptable to the Agent. The Agent acknowledges that, as of the
         Closing Date, the Borrowers' existing insurance policies and the
         amounts of coverage provided for therein are acceptable.

<PAGE>

                  (b) The Borrowers shall cause the Agent, for the ratable
         benefit of the Agent and the Lenders, to be named as an additional
         insured and with respect to Inventory, as secured party and sole loss
         payee, in each case in a manner acceptable to the Agent. Each policy of
         insurance shall contain a clause or endorsement requiring the insurer
         to give not less than thirty (30) days' prior written notice to the
         Agent in the event of cancellation of the policy for any reason
         whatsoever and a clause or endorsement stating that the interest of the
         Agent shall not be impaired or invalidated by any act or neglect of the
         Parent or any Borrower or the owner of any Real Estate for purposes
         more hazardous than are permitted by such policy and shall contain such
         other terms and conditions as Agent shall require. All premiums for
         such insurance shall be paid by the Borrowers when due, and
         certificates of insurance and, if requested by the Agent or any Lender,
         photocopies of the policies, shall be delivered to the Agent, in each
         case in sufficient quantity for distribution by the Agent to each of
         the Lenders. If the Borrowers fail to procure such insurance or to pay
         the premiums therefor when due, the Agent may, and at the direction of
         the Required Lenders shall, do so from the proceeds of Revolving Loans.

         7.6 Insurance and Condemnation Proceeds.

         The Borrowers shall promptly notify the Agent and the Lenders of any
loss, damage, or destruction to the Collateral, whether or not covered by
insurance in excess of $1,000,000. The Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly and to
apply or remit them as follows: With respect to insurance and condemnation
proceeds relating to Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 3.8.

         7.7 Environmental Laws.

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

                  (b) The Agent or any Lender may request copies of technical
         reports prepared by the Borrowers and their communications with any
         Governmental Authority to determine whether the Borrowers are
         proceeding reasonably to correct, cure or contest in good faith any
         alleged non-compliance or environmental liability. The Borrowers shall,
         at the Agent's or the Required Lenders' request and at the Borrowers'
         expense, (i) retain an independent environmental engineer acceptable to
         the Agent to evaluate the site, including tests if appropriate, where
         the non-compliance or alleged non-compliance with Environmental Laws
         has occurred and prepare and deliver to the Agent, in sufficient
         quantity for distribution by the Agent to the Lenders, a report setting
         forth the results of

<PAGE>

         such evaluation, a proposed plan for responding to any environmental
         problems described therein, and an estimate of the costs thereof, and
         (ii) provide to the Agent and the Lenders a supplemental report of such
         engineer whenever the scope of the environmental problems, or the
         response thereto or the estimated costs thereof, shall increase in any
         material respect.

         7.8 Compliance with ERISA; Pension and Multi-employer Plans.

         Each Borrower shall, and shall cause each of its ERISA Affiliates to:
(a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) not engage in a non-exempt prohibited transaction
(as defined in Sections 406 of ERISA and 4975 of the Code) or violation of the
fiduciary responsibility rules with respect to any Plan which could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Parent nor any ERISA Affiliate shall adopt, sponsor, maintain or become
obligated to make contributions to any Pension Plan or Multi-employer Plan.

         7.9 Mergers, Consolidations or Sales.

         No Borrower shall enter into any transaction of merger, reorganization,
or consolidation, or transfer, sell, assign, lease, or otherwise dispose of all
or any part of its property, or wind up, liquidate or dissolve, or agree to do
any of the foregoing, except (a) for sales of Inventory in the ordinary course
of its business, (b) for sales or other dispositions of Equipment and other
assets (other than Collateral included in the Borrowing Base and the proceeds
thereof) in the ordinary course of business that are obsolete or no longer used
or required by such Borrower in its business, (c) for mergers or consolidations
of one Borrower with or into another Borrower, (d) for mergers or consolidations
of any Subsidiary with or into another Subsidiary; provided that if one of such
Subsidiaries is a Borrower, then such Borrower shall be the surviving entity,
(e) for the sale of the Corporate Headquarters, (f) the sale of Cimtec
Automation, Inc. and (g) for sales of Accounts to Factors pursuant to the
Factoring Agreements.

         7.10 Distributions; Capital Change; Restricted Investments.

         No Borrower shall (a) directly or indirectly declare or make, or incur
any liability to make Distributions (provided, however, (x) Distributions may be
made to the Parent or any Borrower from any of its Subsidiaries and (y)
Distributions may be made by the Parent so long as (i) the aggregate amount of
all such Distributions in any calendar year, commencing with the year 2002,
shall not exceed $10,000,000, (ii) the aggregate amount of all such
Distributions during the term of this Agreement shall not exceed $25,000,000,
(iii) except as provided in the proviso immediately below, Availability shall be
at least $25,000,000 after giving effect thereto, (iv) the Fixed Charge Coverage
Ratio shall not be less than 1.0 to 1.0, after giving effect to the making of
such Distributions on a pro forma basis and (v) no Default or Event of Default
shall exist prior to or immediately after the making of any such Distributions;
provided, however, that if Availability would be less than $25,000,000 but
greater than or equal to $10,000,000 after giving effect to the making of any
such Distributions, notwithstanding the foregoing, such Distributions by the
Parent may be made in accordance with and subject to the other

<PAGE>

requirements of this clause (y) if after giving effect to the making thereof,
the Fixed Charge Coverage Ratio would not be less than 1.10 to 1.0 and the
Leverage Ratio would not be greater than 5.0 to 1.0, determined on a pro forma
basis), (b) make any change in its capital structure which could have a Material
Adverse Effect or (c) make any Restricted Investments. For purposes of clause
(y) of this Section 7.10, "pro forma basis" shall mean that compliance with the
financial covenants referred to in this Section 7.10 shall be determined on the
basis of the financial statements and related numbers for the four consecutive
fiscal quarters ending with the fiscal quarter immediately preceding the date on
which any such Distributions are to be made and giving effect to the making of
such Distributions as if they were made on the first day of the four consecutive
fiscal quarters ending with such fiscal quarter.

         7.11 Transactions Affecting Collateral or Obligations.

         No Borrower shall enter into any transaction which would be reasonably
expected to have a Material Adverse Effect.

         7.12 Guaranties.

         Without the prior consent of the Majority Lenders, no Borrower shall
make, issue, or become liable on any Guaranty, except Guaranties of the
Obligations in favor of the Agent.

         7.13 Debt.

         No Borrower shall incur or maintain any Debt, other than: (a) the
Obligations; (b) Debt described on Schedule 6.9; (c) Capital Leases of Equipment
and purchase money secured Debt incurred to purchase Equipment provided that (i)
Liens securing the same attach only to the Equipment acquired by the incurrence
of such Debt, and (ii) the aggregate amount of such Debt (including Capital
Leases) outstanding does not exceed $45,000,000 at any time; (d) Debt evidencing
a refunding, renewal or extension of the Debt described on Schedule 6.9;
provided that (i) the principal amount thereof is not increased, (ii) the Liens,
if any, securing such refunded, renewed or extended Debt do not attach to any
assets in addition to those assets, if any, securing the Debt to be refunded,
renewed or extended, (iii) no Person that is not an obligor or guarantor of such
Debt as of the Closing Date shall become an obligor or guarantor thereof, and
(iv) the terms of such refunding, renewal or extension are no less favorable to
the Borrowers, the Agent or the Lenders than the original Debt; (e) Derivative
Obligations of the Borrowers in respect of Hedging Agreements entered into in
order to manage existing or anticipated interest rate or exchange rate risks and
not for speculative purposes; (f) Debt of the Borrowers arising under the
Indenture in an aggregate principal amount not to exceed $250,000,000 at any one
time during the term of this Agreement and renewals and refinancings thereof on
terms and conditions no less favorable to the Borrowers than the terms and
conditions contained in the Indenture and in a principal amount not in excess of
the principal balance outstanding under the Indenture at the time of such
refinancing, (g) mortgage Debt not to exceed $8,500,000 incurred to finance the
purchase of the Corporate Headquarters and (h)(i) unsecured Debt in connection
with Permitted Acquisitions on terms and conditions satisfactory to the Agent
and the Majority Lenders and (ii) secured Debt in connection with Permitted
Acquisitions that is fully subordinated to the Obligations hereunder, is secured
only by property newly-acquired in connection with the related Permitted
Acquisition and

<PAGE>

is otherwise on terms and conditions satisfactory to the Agent and the Majority
Lenders, provided, however, that in either case no such Debt shall be permitted
unless (A) except as provided in the proviso immediately below, Availability
shall be at least $25,000,000 after giving effect to the incurrence of such
Debt, (B) the Fixed Charge Coverage Ratio shall not be less than 1.0 to 1.0,
after giving effect to the incurrence of such Debt on a pro forma basis and (C)
no Default or Event of Default shall exist prior to or immediately after the
incurrence of any such Debt; provided, further, that if Availability would be
less than $25,000,000 but greater than or equal to $10,000,000 after giving
effect to the incurrence of such Debt, notwithstanding the foregoing, such Debt
may be incurred in accordance with and subject to the other requirements of this
clause (h)(i) or (ii) if after giving effect to the incurrence thereof, the
Fixed Charge Coverage Ratio would not be less than 1.10 to 1.0 and the Leverage
Ratio would not be greater than 5.0 to 1.0, determined on a pro forma basis. For
purposes of clause (h) of this Section 7.13, "pro forma basis" shall mean that
compliance with the financial covenants referred to in this Section 7.13 shall
be determined on the basis of the financial statements and related numbers for
the four consecutive fiscal quarters ending with the fiscal quarter immediately
preceding the date on which any such Debt is to be incurred and giving effect to
the incurrence of such Debt and the consummation of the related Permitted
Acquisition as if they occurred on the first day of the four consecutive fiscal
quarters ending with such fiscal quarter.

         7.14 Prepayment.

         No Borrower shall voluntarily prepay any Debt, except (i) the
Obligations in accordance with the terms of this Agreement and (ii) provided no
Default or Event of Default exists prior to or immediately after the making of
such prepayments, Debt payments not to exceed $2,000,000 in the aggregate in any
fiscal year.

         7.15 Transactions with Affiliates.

         Except as set forth below, no Borrower shall, sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), to any Affiliate, or lend or advance money or
property to any Affiliate, or invest in (by capital contribution or otherwise)
or purchase or repurchase any stock or indebtedness, or any property, of any
Affiliate, or become liable on any Guaranty of the indebtedness, dividends, or
other obligations of any Affiliate. Notwithstanding the foregoing, while no
Event of Default has occurred and is continuing, any Borrower may engage in
transactions with Affiliates in the ordinary course of business consistent with
past practices, in amounts and upon terms no less favorable to such than would
be obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate. Upon the occurrence of an Event of Default and during the
continuation thereof, no Borrower shall engage in such affiliate transactions
unless such Borrower has previously notified the Agent and obtained the Agent's
prior consent to such transaction, such consent not to be unreasonably withheld.

<PAGE>

         7.16 Investment Banking and Finder's Fees.

         No Borrower shall pay or agree to pay, or reimburse any other party
with respect to, any investment banking or similar or related fee, underwriter's
fee, finder's fee, or broker's fee to any Person in connection with this
Agreement. The Borrowers shall defend and indemnify the Agent and the Lenders
against and hold them harmless from all claims of any Person that the Borrowers
are obligated to pay for any such fees, and all costs and expenses (including
attorneys' fees) incurred by the Agent and/or any Lender in connection
therewith.

         7.17 Business Conducted.

         Without the prior consent of the Majority Lenders, no Borrower shall
engage directly or indirectly, in any line of business other than the businesses
in which the Borrowers are engaged on the Closing Date and any other similar or
related businesses.

         7.18 Liens.

         No Borrower shall create, incur, assume, or permit to exist any Lien on
any property now owned or hereafter acquired by any of them, except Permitted
Liens, and Liens, if any, in effect as of the Closing Date described in Schedule
6.9 securing Debt described in Schedule 6.9 and Liens securing Capital Leases
and purchase money Debt permitted in Section 7.13.

         7.19 Sale and Leaseback Transactions.

         No Borrower shall, directly or indirectly, enter into any arrangement
with any Person providing for such Borrower to lease or rent property that the
Parent or any of its Subsidiaries has sold or will sell or otherwise transfer to
such Person unless no Default or Event of Default has occurred and is continuing
or would occur as a result of such transaction.

         7.20 Subsidiaries.

         Each Borrower shall cause any Domestic Subsidiary acquired or formed
after the Closing Date (other than an Immaterial Subsidiary) to become a
Borrower hereunder and to pledge its assets constituting Collateral in favor of
the Agent as provided in the Security Agreement by becoming a party to a Joinder
Agreement. If any Immaterial Subsidiary ceases to be an Immaterial Subsidiary,
then the Borrowers shall cause such Subsidiary to become a Borrower hereunder
and to pledge its assets in favor of the Agent as provided in the Security
Agreement by becoming a party to a Joinder Agreement.

         7.21 Fiscal Year.

         No Borrower shall change its Fiscal Year.

<PAGE>

         7.22 Capital Expenditures.

         The Borrowers shall not make or incur any Capital Expenditure if, after
giving effect thereto, the aggregate amount of all Capital Expenditures by the
Borrowers on a consolidated basis would exceed during any Fiscal Year the sum of
(i) $30,000,000 plus (ii) seventy-five percent (75%) of the unused amount
available for Capital Expenditures under this Section 7.22 for the immediately
preceding Fiscal Year (excluding any carry forward available from prior Fiscal
Years and excluding the purchase price paid by the Borrowers for the Corporate
Headquarters up to $8,500,000 unless such property is not resold by the
Borrowers to a third party within six months following the initial purchase
thereof by the Borrowers).

         7.23 Fixed Charge Coverage Ratio.

         If Availability is less than $25,000,000 at any time during any fiscal
quarter, the Borrowers will maintain a Fixed Charge Coverage Ratio of not less
than 1.1 to 1.0 as of the last day of each such fiscal quarter.

         7.24 Leverage Ratio.

         If Availability is less than $25,000,000 at any time during any fiscal
quarter, the Borrowers will maintain a Leverage Ratio of not greater than 5.0 to
1.0 as of the last day of each such fiscal quarter.

         7.25 Use of Proceeds.

         No Borrower shall, or shall suffer or permit any Subsidiary to, use any
portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry
Margin Stock, (ii) to repay or otherwise refinance indebtedness of a Borrower or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.

         7.26 Interest Rate Protection.

         The Borrowers shall, within 120 days of the Closing Date and continuing
thereafter until all Obligations are paid in full and the Commitments have been
terminated, maintain Hedge Agreements on terms acceptable to the Agent, with
financial institution(s) reasonably acceptable to the Agent, the effect of which
shall be to limit the interest rate payable by the Borrowers with respect to at
least thirty percent (30%) of the initial Borrowings under this Agreement.

         7.27 Bank Accounts.

         Without the prior consent of the Agent, neither the Parent nor any
other Borrower shall open, maintain or otherwise have any checking, savings or
other accounts at any bank or other financial institution, or any other account
where money is or may be deposited or maintained with any Person, other than the
accounts set forth on Schedule 6.27 hereto, on and after the Closing Date,
except for such other accounts which are subject to a tri-party lockbox or other

<PAGE>

blocked account agreement satisfactory to the Agent or which do not have a
balance in excess of $100,000 in the aggregate at any time. All such deposit
accounts, other than payroll accounts, shall be under the sole dominion and
control of the Agent in accordance with the provisions of the Security
Agreement.

         7.28 Factoring Credit Balances and Inventory.

         As of the date of each Borrowing Base Certificate delivered to Agent,
each Factoring Credit Balance listed thereon as an Eligible Factoring Credit
Balance shall be an Eligible Factoring Credit Balance and all Inventory listed
thereon as Eligible Inventory shall be Eligible Inventory. No Borrower has made,
or will make, any agreement with any Factor for any extension of time for the
payment of any Factoring Credit Balance, any compromise or settlement for less
than the full amount thereof, any release of any Factor from liability therefor,
or any deduction therefrom except a discount or allowance for prompt or early
payment allowed by such Borrower in the ordinary course of its business
consistent with historical practice and as previously disclosed to Agent in
writing. Schedule 7.28 sets forth each contract of each Borrower with any Factor
which gives such Factor the right (under such contract, under common law or
otherwise) to offset any Accounts for Borrowers' failure to perform under such
contract and each Borrower has obtained an offset waiver for each such contract
in form and substance satisfactory to Agent. With respect to the Factoring
Credit Balances pledged as collateral pursuant to any Loan Document (a) the
amounts shown on all invoices, statements and reports which may be delivered to
the Agent with respect thereto are actually and absolutely owing to the relevant
party as indicated thereon and are not in any way contingent; (b) no payments
have been or shall be made thereon except payments immediately delivered to the
applicable accounts described in Schedule 6.27 or the Agent as required
hereunder or under the Security Agreement; and (c) to each Borrower's knowledge
all Factors have the capacity to contract. A Borrower shall notify Agent
promptly of any event or circumstance which to such Borrower's knowledge would
cause Agent to consider any then existing Factoring Credit Balance or Inventory
as no longer constituting Eligible Factoring Credit Balances or Eligible
Inventory, as the case may be.

         7.29 Modification of Agreements.

         (a) The Parent shall not, nor shall it permit any other Borrower to,
amend, restate, supplement, modify or terminate the Indenture or any agreement,
document or instrument relating thereto without the prior written consent of the
Agent and the Majority Lenders. The Parent shall not, nor shall it permit any
other Borrower to, terminate any Factoring Agreement without the prior written
consent of the Agent and the Majority Lenders. The Parent shall not, nor shall
it permit any other Borrower to, amend or modify any Factoring Agreement or any
agreement, document or instrument relating thereto in any material respect that
would adversely affect the interests of the Lenders hereunder without the prior
written consent of the Agent and the Majority Lenders. For purposes of this
Agreement, but without limiting the foregoing, a change in the rate of interest
or commissions, fees or collection days charged by a Factor under a Factoring
Agreement shall not be deemed a material term of such Factoring Agreement.

<PAGE>

         (b) No Borrower will amend, supplement or otherwise modify the terms of
its organizational documents in any manner adverse to the Lenders without the
prior written consent of the Agent and the Majority Lenders.

         7.30 Restrictions on Subsidiary Distributions.

         The Parent will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Subsidiary
to (a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by the Parent or any
Subsidiary, or pay any Debt owed to the Parent or any Subsidiary, (b) make loans
or advances to the Parent or any of its Subsidiaries, or (c) transfer any of its
properties or assets to a Borrower, except for such encumbrances or restrictions
existing under or by reason of applicable laws or the Agreement.

         7.31 Factors.

         The Borrowers shall not change any of their Factors without the prior
written consent of the Agent, such consent not to be unreasonably withheld.

         7.32 Further Assurances.

         The Borrowers shall execute and deliver, or cause to be executed and
delivered, to the Agent and/or the Lenders such documents and agreements, and
shall take or cause to be taken such actions, as the Agent or any Lender may,
from time to time, request to carry out the terms and conditions of this
Agreement and the other Loan Documents. Upon the purchase of the Corporate
Headquarters by one or more of the Borrowers, the Borrowers shall simultaneously
therewith grant to the Agent for the benefit of the Lenders a mortgage on the
Corporate Headquarters to secure the Obligations, in form and substance
satisfactory to the Agent, accompanied by adequate title insurance, flood
certification, survey and such other typical real estate financing requirements
as the Agent may request.

                                    ARTICLE 8
                              CONDITIONS OF LENDING

         8.1 Conditions Precedent to Making of Loans on the Closing Date.

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

                  (a) This Agreement and the other Loan Documents (other than
         the Borrowers' Ex-Im Agreement and other documents relating
         specifically to Ex-Im Bank Revolving Loans) shall have been executed by
         each party thereto and the Borrowers shall have performed and complied
         with all covenants, agreements and conditions contained herein

<PAGE>

         and the other Loan Documents which are required to be performed or
         complied with by the Borrowers before or on such Closing Date.

                  (b) Upon making the Revolving Loans (including such Revolving
         Loans made to finance the Agent Fees or otherwise as reimbursement for
         fees, costs and expenses then payable under this Agreement) and with
         all its obligations current, the Borrowers shall have Availability of
         at least $25,000,000.

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

                  (d) No Default or Event of Default shall have occurred and be
         continuing after giving effect to the Loans to be made and the Letters
         of Credit to be issued on the Closing Date.

                  (e) The Agent and the Lenders shall have received such
         opinions of counsel for the Borrowers as the Agent or any Lender shall
         request, each such opinion to be in a form, scope, and substance
         satisfactory to the Agent, the Lenders, and their respective counsel
         and shall include among other things, an opinion that this Agreement
         does not cause a violation under the Indenture.

                  (f) The Agent shall have received:

                           (i) acknowledgment copies of proper financing
                  statements, duly filed on or before the Closing Date under the
                  UCC of all jurisdictions that the Agent may deem necessary or
                  desirable in order to perfect the Agent's Liens; and

                           (ii) duly executed UCC-3 Termination Statements and
                  such other instruments, in form and substance satisfactory to
                  the Agent, as shall be necessary to terminate and satisfy all
                  Liens on the Property of the Borrowers except Permitted Liens.

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

                  (h) The Agent shall have received evidence, in form, scope,
         and substance, reasonably satisfactory to the Agent, of all insurance
         coverage as required by this Agreement with satisfactory insurance
         certificates naming the Agent as loss payee or additional insured, as
         appropriate.

                  (i) The Agent and the Lenders shall have had an opportunity,
         if they so choose, to examine the books of account and other records
         and files of the Borrowers and to make copies thereof, and to conduct a
         pre-closing audit which shall include, without limitation, verification
         of Inventory, Accounts, and the Borrowing Base, and the results

<PAGE>

         of such examination and audit shall have been satisfactory to the Agent
         and the Lenders in all respects.

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

                  (k) The completion by the Agent of its due diligence in
         connection with the Loan Documents, with the results thereof being
         acceptable to the Agent.

                  (l) The Agent shall have received evidence satisfactory to it
         that all of the Debt of the Borrowers under the Existing Credit
         Agreement and the Wachovia Asset Securitization has been paid in full
         (or will be paid in full with the proceeds of the initial Loans made
         hereunder), all documents executed or delivered in connection therewith
         have been terminated and all Liens granted in connection therewith have
         been released or are agreed to be released upon such repayment in full.

                  (m) The Agent shall have received (a) a statement of sources
         and uses of funds covering all payments reasonably expected to be made
         by the Borrowers in connection with the transactions contemplated by
         the Loan Documents to be consummated on the Closing Date, including an
         itemized estimate of all fees, expenses and other closing costs and (b)
         payment instructions with respect to each wire transfer to be made by
         the Agent on behalf of the Lenders or the Borrowers on the Closing Date
         setting forth the amount of such transfer, the purpose of such
         transfer, the name and number of the account to which such transfer is
         to be made, the name and ABA number of the bank or other financial
         institution where such account is located and the name and telephone
         number of an individual that can be contacted to confirm receipt of
         such transfer.

                  (n) Receipt by the Agent of an Account Designation Letter.

                  (o) Without limiting the generality of the items described
         above, the Borrowers and each Person guarantying or securing payment of
         the Obligations shall have delivered or caused to be delivered to the
         Agent (in form and substance reasonably satisfactory to the Agent), the
         financial statements, instruments, resolutions, documents, agreements,
         certificates, opinions and other items set forth on the "Closing
         Checklist" delivered by the Agent to the Borrowers prior to the Closing
         Date.

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

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

<PAGE>

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

         8.2 Conditions Precedent to Each Loan.

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

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

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

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

                  (b) No such Borrowing shall exceed Availability, provided,
         however, that the foregoing conditions precedent are not conditions to
         each Lender participating in or reimbursing the Bank or the Agent for
         such Lenders' Pro Rata Share of any Ex-Im Bank Revolving Loans,
         Non-Ratable Loan or Agent Advance made in accordance with the
         provisions of Sections 1.2(h) and (i).

                                    ARTICLE 9
                                DEFAULT; REMEDIES

         9.1 Events of Default.

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

<PAGE>

                  (a) any failure by any Borrower to pay the principal of or
         interest or premium on any of the Obligations or any fee or other
         amount owing hereunder when due, whether upon demand or otherwise and,
         with respect only to the failure to pay interest, such failure shall
         continue for three (3) days or more;

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

                  (c) (i) any default shall occur in the observance or
         performance of any of the covenants and agreements contained in
         Sections 7.2, 7.5, 7.9-7.27, or Section 11 of the Security Agreement,
         (ii) any default shall occur in the observance or performance of any of
         the covenants and agreements contained in Sections 5.2 or 5.3 and such
         default shall continue for five (5) days or more, or, if such default
         is capable of being cured, five (5) days following the Borrowers'
         receipt of notice of the occurrence of any such Event of Default from
         any Lender or the Agent or following the date on which any Borrower
         obtained knowledge thereof; or (iii) any default shall occur in the
         observance or performance of any of the other covenants or agreements
         contained in any other Section of this Agreement or any other Loan
         Document, any other Loan Documents, or any other agreement entered into
         at any time to which any Borrower and the Agent or any Lender are party
         (including in respect of any Bank Products) and such default shall
         continue for fifteen (15) days or more, or, if such default is capable
         of being cured, fifteen (15) days following the Borrowers' receipt of
         notice of the occurrence of any such Event of Default from any Lender
         or the Agent or following the date on which any Borrower obtained
         knowledge thereof;

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

                  (e) the Parent or any other Borrower shall (i) file a
         voluntary petition in bankruptcy or file a voluntary petition or an
         answer or otherwise commence any action or proceeding seeking
         reorganization, arrangement or readjustment of its debts or for any
         other relief under the federal Bankruptcy Code, as amended, or under
         any other bankruptcy or insolvency act or law, state or federal, now or
         hereafter existing, or consent to, approve of, or acquiesce in, any
         such petition, action or proceeding; (ii) apply for or acquiesce in the
         appointment of a receiver, assignee, liquidator, sequestrator,
         custodian,

<PAGE>

         monitor, trustee or similar officer for it or for all or any part of
         its property; (iii) make an assignment for the benefit of creditors; or
         (iv) be unable generally to pay its debts as they become due;

                  (f) an involuntary petition shall be filed or an action or
         proceeding otherwise commenced seeking reorganization, arrangement,
         consolidation or readjustment of the debts of the Parent or any other
         Borrower or for any other relief under the federal Bankruptcy Code, as
         amended, or under any other bankruptcy or insolvency act or law, state
         or federal, now or hereafter existing and such petition or proceeding
         shall not be dismissed within thirty (30) days after the filing or
         commencement thereof or an order of relief shall be entered with
         respect thereto;

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

                  (h) the Parent or any other Borrower shall file a certificate
         of dissolution under applicable state law or shall be liquidated,
         dissolved or wound-up or shall commence or have commenced against it
         any action or proceeding for dissolution, winding-up or liquidation, or
         shall take any corporate action in furtherance thereof;

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

                  (j) any Loan Document shall be terminated, revoked or declared
         void or invalid or unenforceable or challenged by any Borrower;

                  (k) one or more judgments, orders, decrees or arbitration
         awards is entered against any Borrower involving in the aggregate
         liability (to the extent not covered by independent third-party
         insurance as to which the insurer does not dispute coverage) as to any
         single or related or unrelated series of transactions, incidents or
         conditions, in an amount equal to the lesser of fifty percent (50%) of
         Availability or $5,000,000, and the same shall remain unsatisfied,
         unvacated and unstayed pending appeal for a period of thirty (30) days
         after the entry thereof;

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

                  (m) there is filed against the Parent or any other Borrower
         any action, suit or proceeding under any federal or state racketeering
         statute (including the Racketeer

<PAGE>

         Influenced and Corrupt Organization Act of 1970), which action, suit or
         proceeding (i) is not dismissed within one hundred twenty (120) days,
         and (ii) could reasonably be expected to result in the confiscation or
         forfeiture of any material portion of the Collateral;

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

                  (o) there occurs a Change of Control; or

                  (p) there occurs an event having a Material Adverse Effect.

         9.2 Remedies.

                  (a) If a Default or an Event of Default exists, the Agent may,
         in its discretion, and shall, at the direction of the Required Lenders,
         do one or more of the following at any time or times and in any order,
         upon notice to or demand on any Borrower: (i) reduce the Maximum
         Revolver Amount, or the advance rates against Eligible Accounts and/or
         Eligible Inventory used in computing the Borrowing Base, or reduce one
         or more of the other elements used in computing the Borrowing Base;
         (ii) restrict the amount of or refuse to make Revolving Loans; and
         (iii) restrict or refuse to provide Letters of Credit or Credit
         Support. If an Event of Default exists, the Agent shall, at the
         direction of the Required Lenders, do one or more of the following, in
         addition to the actions described in the preceding sentence, at any
         time or times and in any order, upon notice to or demand on the
         Borrowers: (A) terminate the Commitments and this Agreement; (B)
         declare any or all Obligations to be immediately due and payable;
         provided, however, that upon the occurrence of any Event of Default
         described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h), the
         Commitments shall automatically and immediately expire and all
         Obligations shall automatically become immediately due and payable
         without notice or demand of any kind; (C) require the Borrowers to cash
         collateralize all outstanding Letter of Credit Obligations; and (D)
         pursue its other rights and remedies under the Loan Documents and
         applicable law.

                  (b) If an Event of Default has occurred and is continuing: (i)
         the Agent shall have for the benefit of the Lenders, in addition to all
         other rights of the Agent and the Lenders, the rights and remedies of a
         secured party under the Loan Documents and the UCC; (ii) the Agent may,
         at any time, take possession of the Collateral and keep it on any
         Borrower's premises, at no cost to the Agent or any Lender, or remove
         any part of it to such other place or places as the Agent may desire,
         or the Borrowers shall, upon the Agent's demand, at the Borrowers'
         cost, assemble the Collateral and make it available to the Agent at a
         place reasonably convenient to the Agent; and (iii) the Agent may sell
         and deliver any Collateral at public or private sales, for cash, upon
         credit or otherwise, at such

<PAGE>

         prices and upon such terms as the Agent deems advisable, in its sole
         discretion, and may, if the Agent deems it reasonable, postpone or
         adjourn any sale of the Collateral by an announcement at the time and
         place of sale or of such postponed or adjourned sale without giving a
         new notice of sale. Without in any way requiring notice to be given in
         the following manner, each Borrower agrees that any notice by the Agent
         of sale, disposition or other intended action hereunder or in
         connection herewith, whether required by the UCC or otherwise, shall
         constitute reasonable notice to each Borrower if such notice is mailed
         by registered or certified mail, return receipt requested, postage
         prepaid, or is delivered personally against receipt, at least five (5)
         Business Days prior to such action to each Borrower's address specified
         in or pursuant to Section 14.8. If any Collateral is sold on terms
         other than payment in full at the time of sale, no credit shall be
         given against the Obligations until the Agent or the Lenders receive
         payment, and if the buyer defaults in payment, the Agent may resell the
         Collateral without further notice to any Borrower. In the event the
         Agent seeks to take possession of all or any portion of the Collateral
         by judicial process, each Borrower irrevocably waives: (A) the posting
         of any bond, surety or security with respect thereto which might
         otherwise be required; (B) any demand for possession prior to the
         commencement of any suit or action to recover the Collateral; and (C)
         any requirement that the Agent retain possession and not dispose of any
         Collateral until after trial or final judgment. Each Borrower agrees
         that the Agent has no obligation to preserve rights to the Collateral
         or marshal any Collateral for the benefit of any Person. The Agent is
         hereby granted a license or other right to use, without charge, the
         Borrowers' labels, patents, copyrights, name, trade secrets, trade
         names, trademarks, and advertising matter, or any similar property, in
         completing production of, advertising or selling any Collateral, and
         the Borrowers' rights under all licenses and all franchise agreements
         shall inure to the Agent's benefit for such purpose. The proceeds of
         sale shall be applied first to all expenses of sale, including
         attorneys' fees, and then to the Obligations. The Agent will return any
         excess to the Borrowers and the Borrowers shall remain liable for any
         deficiency.

                  (c) If an Event of Default occurs, each Borrower hereby waives
         all rights to notice and hearing prior to the exercise by the Agent of
         the Agent's rights to repossess the Collateral without judicial process
         or to reply, attach or levy upon the Collateral without notice or
         hearing.

                                   ARTICLE 10
                              TERM AND TERMINATION

         10.1 Term and Termination.

         The term of this Agreement shall end on the Stated Termination Date
unless sooner terminated in accordance with the terms hereof. The Agent upon
direction from the Required Lenders may terminate this Agreement upon the
occurrence of an Event of Default by the giving of such notice as may be
required pursuant to Section 9.2(a). Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest and any early termination or prepayment
fees or penalties)

<PAGE>

shall become immediately due and payable and the Borrowers shall immediately
arrange for the cancellation and return of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in immediately available funds, the
Borrowers shall remain bound by the terms of this Agreement and shall not be
relieved of any of its Obligations hereunder or under any other Loan Document,
and the Agent and the Lenders shall retain all their rights and remedies
hereunder (including the Agent's Liens in and all rights and remedies with
respect to all then existing and after-arising Collateral).

                                   ARTICLE 11
                      AMENDMENTS; WAIVERS; PARTICIPATIONS;
                             ASSIGNMENTS; SUCCESSORS

         11.1 Amendments and Waivers.

                  (a) No amendment or waiver of any provision of this Agreement
         or any other Loan Document, and no consent with respect to any
         departure by the Borrowers therefrom, shall be effective unless the
         same shall be in writing and signed by the Majority Lenders (or by the
         Agent at the written request of the Majority Lenders) and the Borrowers
         and then any such waiver or consent shall be effective only in the
         specific instance and for the specific purpose for which given;
         provided, however, that no such waiver, amendment, or consent shall,
         unless in writing and signed by all the Lenders and the Borrowers and
         acknowledged by the Agent, do any of the following:

                           (i) increase or extend the Commitment of any Lender;

                           (ii) postpone or delay 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;

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

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

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

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

                           (vii) release any Guaranties of the Obligations or
                  release Collateral other than as permitted by Section 12.11;

<PAGE>

                           (viii) change the definitions of "Majority Lenders"
                  or "Required Lenders"; or

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

provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (v) and (ix) above and any other terms of this
Agreement, make Agent Advances in accordance with Section 1.2(i) and, provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and provided further, that Schedule 1.2
hereto (Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith. Notwithstanding the
limitations contained in Section 11.1(a) above, the Lenders acknowledge that the
Borrowers intend to apply to the Ex-Im Bank for qualification under the Ex-Im
Bank Working Capital Guarantee Program after the Closing Date. To the extent the
Agent approves the form of the documents governing Borrowers' application,
Lenders to this Agreement as of the date of such approval shall execute any
amendments without any amendment fee that may be necessary in the reasonable
discretion of Agent to this Agreement and to the other Loan Documents to enable
the Agent and the Lenders to make Ex-Im Bank Revolving Loans to the Borrowers on
the terms contained herein and in the Borrowers' Ex-Im Agreement (provided
however, that in no event shall the provisions of such documents amend or
eliminate the ten percent (10%) reserve requirement relating to Ex-Im Bank
Revolving Loans set forth in clause (i) in the definition of "Reserves").

                  (b) If any fees are paid to the Lenders as consideration for
         amendments, waivers or consents with respect to this Agreement, at
         Agent's election, such fees may be paid only to those Lenders that
         agree to such amendments, waivers or consents within the time specified
         for submission thereof.

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

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

                           (ii) requiring the consent of Required Lenders, the
                  consent of Majority Lenders is obtained,

then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers'
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal

<PAGE>

balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.

         11.2 Assignments; Participations.

                  (a) Any Lender may, with the written consent of the Agent
         (which consent shall not be unreasonably withheld), assign and delegate
         to one or more Eligible Assignees (provided that no consent of the
         Agent shall be required in connection with any assignment and
         delegation by a Lender to an Affiliate of such Lender) (each an
         "Assignee") all, or any ratable part of all, of the Loans, the
         Commitments and the other rights and obligations of such Lender
         hereunder, in a minimum amount of $5,000,000 (provided that, unless an
         assignor Lender has assigned and delegated all of its Loans and
         Commitments, no such assignment and/or delegation shall be permitted
         unless, after giving effect thereto, such assignor Lender retains a
         Commitment in a minimum amount of $5,000,000; provided, however, that
         the Borrowers and the Agent may continue to deal solely and directly
         with such Lender in connection with the interest so assigned to an
         Assignee until (i) written notice of such assignment, together with
         payment instructions, addresses and related information with respect to
         the Assignee, shall have been given to the Borrowers and the Agent by
         such Lender and the Assignee; (ii) such Lender and its Assignee shall
         have delivered to the Borrowers and the Agent an Assignment and
         Acceptance in the form of Exhibit F ("Assignment and Acceptance")
         together with any note or notes subject to such assignment and (iii)
         the assignor Lender or Assignee has paid to the Agent a processing fee
         in the amount of $3,500. The Borrowers agree to promptly execute and
         deliver new promissory notes and replacement promissory notes as
         reasonably requested by the Agent to evidence assignments of the Loans
         and Commitments in accordance herewith.

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

                  (c) By executing and delivering an Assignment and Acceptance,
         the assigning Lender thereunder and the Assignee thereunder confirm to
         and agree with each other and the other parties hereto as follows: (i)
         other than as provided in such Assignment and Acceptance, such
         assigning Lender makes no representation or warranty and assumes no
         responsibility with respect to any statements, warranties or
         representations made in or in connection with this Agreement or the
         execution, legality, validity, enforceability,

<PAGE>

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

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

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

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

<PAGE>

         Reserve Bank may enforce such pledge or security interest in any manner
         permitted under applicable law.

                                   ARTICLE 12
                                    THE AGENT

         12.1 Appointment and Authorization.

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

         12.2 Delegation of Duties.

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

<PAGE>

         12.3 Liability of Agent.

         None of the Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by the Borrowers or Affiliate of any Borrower,
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 any 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 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 Borrowers or any of the Borrowers'
Affiliates.

         12.4 Reliance by Agent.

         The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Borrowers), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. 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 so required by Section 11.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

         12.5 Notice of Default.

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

<PAGE>

         12.6 Credit Decision.

         Each Lender acknowledges that none of the Agent-Related Persons has
made any representation or warranty to it, and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrowers and
their Affiliates, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and their Affiliates, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
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 Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrowers
which may come into the possession of any of the Agent-Related Persons.

         12.7 Indemnification.

         Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or on behalf of the Borrowers and without limiting the
obligation of the Borrowers to do so), in accordance with their Pro Rata Shares,
from and against any and all Indemnified Liabilities as such term is defined in
Section 14.11; provided, however, that no Lender shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its Pro Rata Share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.

         12.8 Agent in Individual Capacity.

         The Bank and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Parent and its Subsidiaries and Affiliates as though
the Bank were not the Agent hereunder and without notice to or consent of the
Lenders. The Bank or its Affiliates may receive information regarding the
Parent, each

<PAGE>

Borrower, its Affiliates and Account Debtors (including information that may be
subject to confidentiality obligations in favor of Parent or any other Borrower)
and the Lenders acknowledge that the Bank shall be under no obligation to
provide such information to them. With respect to its Loans, the Bank shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" include the Bank in its individual capacity.

         12.9 Successor Agent.

         The Agent may resign as Agent upon at least 30 days' prior notice to
the Lenders and the Borrowers, such resignation to be effective upon the
acceptance of a successor agent to its appointment as Agent. In the event the
Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer
or other disposition by the Bank of substantially all of its loan portfolio, the
Bank shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. Subject to the foregoing, if the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor 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 Borrowers, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article 12 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.

         12.10 Withholding Tax.

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

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

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

<PAGE>

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

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

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

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

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

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

         12.11 Collateral Matters.

                  (a) The Lenders hereby irrevocably authorize the Agent, at its
         option and in its sole discretion, to release any Agent's Liens upon
         any Collateral (i) upon the termination of the Commitments and payment
         and satisfaction in full by Borrowers of all

<PAGE>

         Loans and reimbursement obligations in respect of Letters of Credit and
         Credit Support, and the termination of all outstanding Letters of
         Credit (whether or not any of such obligations are due) and all other
         Obligations; (ii) constituting property being sold or disposed of in
         compliance with Section 7.9 (including the sale of the Corporate
         Headquarters); provided, that the Borrowers shall promptly notify the
         Agent of any sale or disposition of such property having a value in
         excess of $2,000,000, (iii) constituting property in which the
         Borrowers owned no interest at the time the Lien was granted or at any
         time thereafter; or (iv) constituting property leased to a Borrower
         under a lease which has expired or been terminated in a transaction
         permitted under this Agreement. Except as provided above, the Agent
         will not release any of the Agent's Liens without the prior written
         authorization of the Lenders; provided that the Agent may, in its
         discretion, release the Agent's Liens on Collateral valued in the
         aggregate not in excess of $500,000 during each Fiscal Year without the
         prior written authorization of the Lenders and the Agent may release
         the Agent's Liens on Collateral valued in the aggregate not in excess
         of $1,000,000 during each Fiscal Year with the prior written
         authorization of Required Lenders. Upon request by the Agent or the
         Borrowers at any time, the Lenders will confirm in writing the Agent's
         authority to release any Agent's Liens upon particular types or items
         of Collateral pursuant to this Section 12.11.

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

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

<PAGE>

         12.12 Restrictions on Actions by Lenders; Sharing of Payments.

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

                  (b) If at any time or times any Lender shall receive (i) by
         payment, foreclosure, setoff or otherwise, any proceeds of Collateral
         or any payments with respect to the Obligations of the Borrowers to
         such Lender arising under, or relating to, this Agreement or the other
         Loan Documents, except for any such proceeds or payments received by
         such Lender from the Agent pursuant to the terms of this Agreement, or
         (ii) payments from the Agent in excess of such Lender's ratable portion
         of all such distributions by the Agent, such Lender shall promptly (A)
         turn the same over to the Agent, in kind, and with such endorsements as
         may be required to negotiate the same to the Agent, or in same day
         funds, as applicable, for the account of all of the Lenders and for
         application to the Obligations in accordance with the applicable
         provisions of this Agreement, or (B) purchase, without recourse or
         warranty, an undivided interest and participation in the Obligations
         owed to the other Lenders so that such excess payment received shall be
         applied ratably as among the Lenders in accordance with their Pro Rata
         Shares; provided, however, that if all or part of such excess payment
         received by the purchasing party is thereafter recovered from it, those
         purchases of participations shall be rescinded in whole or in part, as
         applicable, and the applicable portion of the purchase price paid
         therefor shall be returned to such purchasing party, but without
         interest except to the extent that such purchasing party is required to
         pay interest in connection with the recovery of the excess payment.

         12.13 Agency for Perfection.

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

         12.14 Payments by Agent to Lenders.

         All payments to be made by the Agent to the Lenders shall be made by
bank wire transfer or internal transfer of immediately available funds to each
Lender pursuant to wire transfer instructions delivered in writing to the Agent
on or prior to the Closing Date (or if such Lender is

<PAGE>

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

         12.15 Settlement.

                  (a)      (i) Each Lender's funded portion of the Revolving
                  Loans is intended by the Lenders to be equal at all times to
                  such Lender's Pro Rata Share of the outstanding Revolving
                  Loans. Notwithstanding such agreement, the Agent, the Bank,
                  and the other Lenders agree (which agreement shall not be for
                  the benefit of or enforceable by the Borrowers) that in order
                  to facilitate the administration of this Agreement and the
                  other Loan Documents, settlement among them as to the
                  Revolving Loans, including the Ex-Im Bank Revolving Loans, the
                  Non-Ratable Loans and the Agent Advances shall take place on a
                  periodic basis in accordance with the following provisions:

                           (ii) The Agent shall request settlement
                  ("Settlement") with the Lenders on at least a weekly basis, or
                  on a more frequent basis at Agent's election, (A) on behalf of
                  the Bank, with respect to each outstanding Non-Ratable Loan,
                  (B) Ex-Im Bank Revolving Loans, (C) for itself, with respect
                  to each Agent Advance, and (D) with respect to collections
                  received, in each case, by notifying the Lenders of such
                  requested Settlement by telecopy, telephone or other similar
                  form of transmission, of such requested Settlement, no later
                  than 12:00 noon (Charlotte, North Carolina time) on the date
                  of such requested Settlement (the "Settlement Date"). Each
                  Lender (other than the Bank, in the case of Ex-Im Bank
                  Revolving Loans, Non-Ratable Loans and the Agent in the case
                  of Agent Advances) shall transfer the amount of such Lender's
                  Pro Rata Share of the outstanding principal amount of the
                  Ex-Im Bank Revolving Loans, Non-Ratable Loans and Agent
                  Advances with respect to each Settlement to the Agent, to
                  Agent's account, not later than 2:00 p.m. (Charlotte, North
                  Carolina time), on the Settlement Date applicable thereto.
                  Settlements may occur during the continuation of a Default or
                  an Event of Default and whether or not the applicable
                  conditions precedent set forth in Article 8 have then been
                  satisfied. Such amounts made available to the Agent shall be
                  applied against the amounts of the applicable Ex-Im Bank
                  Revolving Loans, Non-Ratable Loan or Agent Advance and,
                  together with the portion of such Ex-Im Bank Revolving Loans,
                  Non-Ratable Loan or Agent

<PAGE>

                  Advance representing the Bank's Pro Rata Share thereof, shall
                  constitute Revolving Loans of such Lenders. If any such amount
                  is not transferred to the Agent by any Lender on the
                  Settlement Date applicable thereto, the Agent shall be
                  entitled to recover such amount on demand from such Lender
                  together with interest thereon at the Federal Funds Rate for
                  the first three (3) days from and after the Settlement Date
                  and thereafter at the Interest Rate then applicable to the
                  Revolving Loans (A) on behalf of the Bank, with respect to
                  each outstanding Ex-Im Bank Revolving Loan or Non-Ratable
                  Loan, and (B) for itself, with respect to each Agent Advance.

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

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

                           (v) Between Settlement Dates, the Agent, to the
                  extent no Agent Advances are outstanding, may pay over to the
                  Bank any payments received by the Agent, which in accordance
                  with the terms of this Agreement would be applied to the
                  reduction of the Revolving Loans, for application to the
                  Bank's Revolving Loans including Ex-Im Bank Revolving Loans
                  and Non-Ratable Loans. If, as of any Settlement Date,
                  collections received since the then immediately preceding
                  Settlement Date have been applied to the Bank's

<PAGE>

                  Revolving Loans (other than to Ex-Im Bank Revolving Loans,
                  Non-Ratable Loans or Agent Advances in which such Lender has
                  not yet funded its purchase of a participation pursuant to
                  clause (iii) above), as provided for in the previous sentence,
                  the Bank shall pay to the Agent for the accounts of the
                  Lenders, to be applied to the outstanding Revolving Loans of
                  such Lenders, an amount such that each Lender shall, upon
                  receipt of such amount, have, as of such Settlement Date, its
                  Pro Rata Share of the Revolving Loans. During the period
                  between Settlement Dates, the Bank with respect to Ex-Im Bank
                  Revolving Loans and Non-Ratable Loans, the Agent with respect
                  to Agent Advances, and each Lender with respect to the
                  Revolving Loans other than Ex-Im Bank Revolving Loans,
                  Non-Ratable Loans and Agent Advances, shall be entitled to
                  interest at the applicable rate or rates payable under this
                  Agreement on the actual average daily amount of funds employed
                  by the Bank, the Agent and the other Lenders.

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

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

                  (c) Defaulting Lenders. Unless the Agent receives notice from
         a Lender on or prior to the Closing Date or, with respect to any
         Borrowing after the Closing Date, at least one Business Day prior to
         the date of such Borrowing, that such Lender will not make available as
         and when required hereunder to the Agent that Lender's Pro Rata Share
         of a Borrowing, the Agent may assume that each Lender has made such
         amount available to the Agent in immediately available funds on the
         Funding Date. Furthermore, the Agent may, in reliance upon such
         assumption, make available to the Borrowers on such date a
         corresponding amount. If any Lender has not transferred its full Pro
         Rata Share to the Agent in immediately available funds and the Agent
         has transferred the corresponding amount to the Borrowers on the
         Business Day following such Funding Date that Lender shall make such
         amount available to the Agent, together with interest at the Federal
         Funds Rate for that day. A notice by the Agent submitted to any Lender
         with respect to amounts owing shall be conclusive, absent manifest
         error. If each Lender's full Pro Rata Share is transferred to the Agent
         as required, the amount transferred to the Agent shall constitute that
         Lender's Revolving Loan for all purposes of this Agreement.

<PAGE>

         If that amount is not transferred to the Agent on the Business Day
         following the Funding Date and the Agent has provided such funds to the
         Borrowers, the Agent will notify the Borrowers of such failure to fund
         and, upon demand by the Agent, the Borrowers shall pay such amount to
         the Agent for the Agent's account, together with interest thereon for
         each day elapsed since the date of such Borrowing, at a rate per annum
         equal to the Interest Rate applicable at the time to the Revolving
         Loans comprising that particular Borrowing. The failure of any Lender
         to make any Revolving Loan on any Funding Date (any such Lender, prior
         to the cure of such failure, being hereinafter referred to as a
         "Defaulting Lender") shall not relieve any other Lender of its
         obligation hereunder to make a Revolving Loan on that Funding Date. No
         Lender shall be responsible for any other Lender's failure to advance
         such other Lenders' Pro Rata Share of any Borrowing.

                  (d) Retention of Defaulting Lender's Payments. The Agent shall
         not be obligated to transfer to a Defaulting Lender any payments made
         by Borrowers to the Agent for the Defaulting Lender's benefit; nor
         shall a Defaulting Lender be entitled to the sharing of any payments
         hereunder. Amounts payable to a Defaulting Lender shall instead be paid
         to or retained by the Agent. In its discretion, the Agent may loan
         Borrowers the amount of all such payments received or retained by it
         for the account of such Defaulting Lender. Any amounts so loaned to the
         Borrowers shall bear interest at the rate applicable to Base Rate
         Revolving Loans and for all other purposes of this Agreement shall be
         treated as if they were Revolving Loans, provided, however, that for
         purposes of voting or consenting to matters with respect to the Loan
         Documents and determining Pro Rata Shares, such Defaulting Lender shall
         be deemed not to be a "Lender". Until a Defaulting Lender cures its
         failure to fund its Pro Rata Share of any Borrowing (A) such Defaulting
         Lender shall not be entitled to any portion of the Unused Line Fee and
         (B) the Unused Line Fee shall accrue in favor of the Lenders which have
         funded their respective Pro Rata Shares of such requested Borrowing and
         shall be allocated among such performing Lenders ratably based upon
         their relative Commitments. This Section shall remain effective with
         respect to such Lender until such time as the Defaulting Lender shall
         no longer be in default of any of its obligations under this Agreement.
         The terms of this Section shall not be construed to increase or
         otherwise affect the Commitment of any Lender, or relieve or excuse the
         performance by the Borrowers of their duties and obligations hereunder.

                  (e) Removal of Defaulting Lender. At the Borrowers' request,
         the Agent or an Eligible Assignee reasonably acceptable to the Agent
         and the Borrowers shall have the right (but not the obligation) to
         purchase from any Defaulting Lender, and each Defaulting Lender shall,
         upon such request, sell and assign to the Agent or such Eligible
         Assignee, all of the Defaulting Lender's outstanding Commitments
         hereunder. Such sale shall be consummated promptly after Agent has
         arranged for a purchase by Agent or an Eligible Assignee pursuant to an
         Assignment and Acceptance, and at a price equal to the outstanding
         principal balance of the Defaulting Lender's Loans, plus accrued
         interest and fees, without premium or discount.

<PAGE>

         12.16 Letters of Credit; Intra-Lender Issues.

                  (a) Notice of Letter of Credit Balance. On each Settlement
         Date the Agent shall notify each Lender of the issuance of all Letters
         of Credit since the prior Settlement Date.

                  (b) Participations in Letters of Credit.

                           (i) Purchase of Participations. Immediately upon
                  issuance of any Letter of Credit in accordance with Section
                  1.4(d), each Lender shall be deemed to have irrevocably and
                  unconditionally purchased and received without recourse or
                  warranty, an undivided interest and participation equal to
                  such Lender's Pro Rata Share of the face amount of such Letter
                  of Credit or the Credit Support provided through the Agent to
                  the Letter of Credit Issuer, if not the Bank, in connection
                  with the issuance of such Letter of Credit (including all
                  obligations of the Borrowers with respect thereto, and any
                  security therefor or guaranty pertaining thereto).

                           (ii) Sharing of Reimbursement Obligation Payments.
                  Whenever the Agent receives a payment from any Borrower on
                  account of reimbursement obligations in respect of a Letter of
                  Credit or Credit Support as to which the Agent has previously
                  received for the account of the Letter of Credit Issuer
                  thereof payment from a Lender, the Agent shall promptly pay to
                  such Lender such Lender's Pro Rata Share of such payment from
                  such Borrower. Each such payment shall be made by the Agent on
                  the next Settlement Date.

                           (iii) Documentation. Upon the request of any Lender,
                  the Agent shall furnish to such Lender copies of any Letter of
                  Credit, Credit Support for any Letter of Credit, reimbursement
                  agreements executed in connection therewith, applications for
                  any Letter of Credit, and such other documentation as may
                  reasonably be requested by such Lender.

                           (iv) Obligations Irrevocable. The obligations of each
                  Lender to make payments to the Agent with respect to any
                  Letter of Credit or with respect to their participation
                  therein or with respect to any Credit Support for any Letter
                  of Credit or with respect to the Revolving Loans made as a
                  result of a drawing under a Letter of Credit and the
                  obligations of the Borrower for whose account the Letter of
                  Credit or Credit Support was issued to make payments to the
                  Agent, for the account of the Lenders, shall be irrevocable
                  and shall not be subject to any qualification or exception
                  whatsoever, including any of the following circumstances:

                                    (A) any lack of validity or enforceability
                           of this Agreement or any of the other Loan Documents;

                                    (B) the existence of any claim, setoff,
                           defense or other right which the Borrowers may have
                           at any time against a beneficiary named in a Letter
                           of Credit or any transferee of any Letter of Credit
                           (or any Person

<PAGE>

                           for whom any such transferee may be acting), any
                           Lender, the Agent, the issuer of such Letter of
                           Credit, or any other Person, whether in connection
                           with this Agreement, any Letter of Credit, the
                           transactions contemplated herein or any unrelated
                           transactions (including any underlying transactions
                           between the Borrowers or any other Person and the
                           beneficiary named in any Letter of Credit);

                                    (C) any draft, certificate or any other
                           document presented under the Letter of Credit proving
                           to be forged, fraudulent, invalid or insufficient in
                           any respect or any statement therein being untrue or
                           inaccurate in any respect;

                                    (D) the surrender or impairment of any
                           security for the performance or observance of any of
                           the terms of any of the Loan Documents;

                                    (E) the occurrence of any Default or Event
                           of Default; or

                                    (F) the failure of the Borrowers to satisfy
                           the applicable conditions precedent set forth in
                           Article 8.

                  (c) Recovery or Avoidance of Payments; Refund of Payments In
         Error. In the event any payment by or on behalf of the Borrowers
         received by the Agent with respect to any Letter of Credit or Credit
         Support provided for any Letter of Credit and distributed by the Agent
         to the Lenders on account of their respective participations therein is
         thereafter set aside, avoided or recovered from the Agent in connection
         with any receivership, liquidation or bankruptcy proceeding, the
         Lenders shall, upon demand by the Agent, pay to the Agent their
         respective Pro Rata Shares of such amount set aside, avoided or
         recovered, together with interest at the rate required to be paid by
         the Agent upon the amount required to be repaid by it. Unless the Agent
         receives notice from the Borrowers prior to the date on which any
         payment is due to the Lenders that the Borrowers will not make such
         payment in full as and when required, the Agent may assume that the
         Borrowers have made such payment in full to the Agent on such date in
         immediately available funds and the Agent may (but shall not be so
         required), in reliance upon such assumption, distribute to each Lender
         on such due date an amount equal to the amount then due such Lender. If
         and to the extent the Borrowers have not made such payment in full to
         the Agent, each Lender shall repay to the Agent on demand such amount
         distributed to such Lender, together with interest thereon at the
         Federal Funds Rate for each day from the date such amount is
         distributed to such Lender until the date repaid.

                  (d) Indemnification by Lenders. To the extent not reimbursed
         by the Borrowers and without limiting the obligations of the Borrowers
         hereunder, the Lenders agree to indemnify the Letter of Credit Issuer
         ratably in accordance with their respective Pro Rata Shares, for any
         and all liabilities, obligations, losses, damages, penalties, actions,
         judgments, suits, costs, expenses (including attorneys' fees) or
         disbursements of

<PAGE>

         any kind and nature whatsoever that may be imposed on, incurred by or
         asserted against the Letter of Credit Issuer in any way relating to or
         arising out of any Letter of Credit or the transactions contemplated
         thereby or any action taken or omitted by the Letter of Credit Issuer
         under any Letter of Credit or any Loan Document in connection
         therewith; provided that no Lender shall be liable for any of the
         foregoing to the extent it arises from the gross negligence or willful
         misconduct of the Person to be indemnified. Without limitation of the
         foregoing, each Lender agrees to reimburse the Letter of Credit Issuer
         promptly upon demand for its Pro Rata Share of any costs or expenses
         payable by the Borrowers to the Letter of Credit Issuer, to the extent
         that the Letter of Credit Issuer is not promptly reimbursed for such
         costs and expenses by the Borrowers. The agreement contained in this
         Section shall survive payment in full of all other Obligations.

         12.17 Concerning the Collateral and the Related Loan Documents.

         Each Lender authorizes and directs the Agent to enter into the other
Loan Documents, for the ratable benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent, Majority Lenders
or Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents, and the exercise by the Agent, the
Majority Lenders, or the Required Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders. The
Lenders acknowledge that the Revolving Loans, Agent Advances, Non-Ratable Loans,
Ex-Im Bank Revolving Loans, Bank Products and all interest, fees and expenses
hereunder constitute one Debt, secured pari passu by all of the Collateral.

         12.18 Field Audit and Examination Reports; Disclaimer by Lenders.

         By signing this Agreement, each Lender:

                  (a) is deemed to have requested that the Agent furnish such
         Lender, promptly after it becomes available, a copy of each field audit
         or examination report (each a "Report" and collectively, "Reports")
         prepared by or on behalf of the Agent;

                  (b) expressly agrees and acknowledges that neither the Bank
         nor the Agent (i) makes any representation or warranty as to the
         accuracy of any Report, or (ii) shall be liable for any information
         contained in any Report;

                  (c) expressly agrees and acknowledges that the Reports are not
         comprehensive audits or examinations, that the Agent or the Bank or
         other party performing any audit or examination will inspect only
         specific information regarding the Borrowers and will rely
         significantly upon the Borrowers' books and records, as well as on
         representations of the Borrowers' personnel;

                  (d) agrees to keep all Reports confidential and strictly for
         its internal use, and not to distribute except to its participants, or
         use any Report in any other manner; and

<PAGE>

                  (e) without limiting the generality of any other
         indemnification provision contained in this Agreement, agrees: (i) to
         hold the Agent and any such other Lender preparing a Report harmless
         from any action the indemnifying Lender may take or conclusion the
         indemnifying Lender may reach or draw from any Report in connection
         with any loans or other credit accommodations that the indemnifying
         Lender has made or may make to the Borrowers, or the indemnifying
         Lender's participation in, or the indemnifying Lender's purchase of, a
         loan or loans of the Borrowers; and (ii) to pay and protect, and
         indemnify, defend and hold the Agent and any such other Lender
         preparing a Report harmless from and against, the claims, actions,
         proceedings, damages, costs, expenses and other amounts (including
         Attorney Costs) incurred by the Agent and any such other Lender
         preparing a Report as the direct or indirect result of any third
         parties who might obtain all or part of any Report through the
         indemnifying Lender.

         12.19 Relation Among Lenders.

         The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein in
case of the Agent) authorized to act for, any other Lender.

                                   ARTICLE 13
                             LIABILITY OF BORROWERS

         13.1 Concerning Joint and Several Liability of the Borrowers.

                  (a) Each of the Borrowers is accepting joint and several
         liability hereunder in consideration of the financial accommodation to
         be provided by the Lenders under this Agreement, for the mutual
         benefit, directly and indirectly, of each of the Borrowers and in
         consideration of the undertakings of each of the Borrowers to accept
         joint and several liability for the obligations of each of them.

                  (b) Each of the Borrowers jointly and severally hereby
         irrevocably and unconditionally accepts, not merely as a surety but
         also as a co-debtor, joint and several liability with the other
         Borrowers with respect to the payment and performance of all of the
         Obligations, it being the intention of the parties hereto that all the
         Obligations shall be the joint and several obligations of each of the
         Borrowers without preferences or distinction among them.

                  (c) If and to the extent that any of the Borrowers shall fail
         to make any payment with respect to any of the Obligations as and when
         due or to perform any of the Obligations in accordance with the terms
         thereof, then in each such event, the other Borrowers will make such
         payment with respect to, or perform, such Obligations.

                  (d) The obligations of each Borrower under the provisions of
         this Section 13.1 constitute full recourse obligations of such
         Borrower, enforceable against it to the full extent of its properties
         and assets, irrespective of the validity, regularity or enforceability
         of this Agreement or any other circumstances whatsoever.

<PAGE>

                  (e) Except as otherwise expressly provided herein, each
         Borrower hereby waives notice of acceptance of its joint and several
         liability, notice of any Loan made under this Agreement, notice of
         occurrence of any Event of Default, or of any demand for any payment
         under this Agreement, notice of any action at any time taken or omitted
         by any Lender under or in respect of any of the Obligations, any
         requirement of diligence and, generally, all demands, notices and other
         formalities of every kind in connection with this Agreement. Each
         Borrower hereby assents to, and waives notice of, any extension or
         postponement of the time for the payment of any of the Obligations, the
         acceptance of any partial payment thereon, any waiver, consent or other
         action or acquiescence by any Lender at any time or times in respect of
         any default by any Borrower in the performance or satisfaction of any
         term, covenant, condition or provision of this Agreement, any and all
         other indulgences whatsoever by any Lender in respect of any of the
         Obligations, and the taking, addition, substitution or release, in
         whole or in part, at any time or times, of any security for any of the
         Obligations or in part, at any time or times, of any security for any
         of the Obligations or the addition, substitution or release, in whole
         or in part, of any Borrower. Without limiting the generality of the
         foregoing, each Borrower assents to any other action or delay in acting
         or failure to act on the part of any Lender, including, without
         limitation, any failure strictly or diligently to assert any right or
         to pursue any remedy or to comply fully with the applicable laws or
         regulations thereunder which might, but for the provisions of this
         Section 13.1, afford grounds for terminating, discharging or relieving
         such Borrower, in whole or in part, from any of its obligations under
         this Section 13.1, it being the intention of each Borrower that, so
         long as any of the Obligations remain unsatisfied, the obligations of
         such Borrower under this Section 13.1 shall not be discharged except by
         performance and then only to the extent of such performance. The
         Obligations of each Borrower under this Section 13.1 shall not be
         diminished or rendered unenforceable by any winding up, reorganization,
         arrangement, liquidation, reconstruction or similar proceeding with
         respect to any Borrower or any Lender. The joint and several liability
         of the Borrowers hereunder shall continue in full force and effect
         notwithstanding any absorption, merger, amalgamation or any other
         change whatsoever in the name, membership, constitution or place of
         formation of any Borrower or any Lender.

                  (f) The provisions of this Section 13.1 are made for the
         benefit of the Lenders and their respective successors and assigns, and
         may be enforced by any such Person from time to time against any of the
         Borrowers as often as occasion therefor may arise and without
         requirement on the part of any Lender first to marshal any of its
         claims or to exercise any of its rights against any of the other
         Borrowers or to exhaust any remedies available to it against any of the
         other Borrowers or to resort to any other source or means of obtaining
         payment of any of the Obligations or to elect any other remedy. The
         provisions of this Section 13.1 shall remain in effect until all the
         Obligations shall have been paid in full or otherwise fully satisfied.
         If at any time, any payment, or any part thereof, made in respect of
         any of the Obligations, is rescinded or must otherwise be restored or
         returned by any Lender upon the insolvency, bankruptcy or
         reorganization of any of the Borrowers, or otherwise, the provisions of
         this Section 13.1 will forthwith be reinstated in effect, as though
         such payment had not been made.

<PAGE>

                  (g) Notwithstanding any provision to the contrary contained
         herein or in any other of the Loan Documents, the obligations of each
         Borrower hereunder shall be limited to an aggregate amount equal to the
         largest amount that would not render its obligations hereunder subject
         to avoidance under section 548 of the Bankruptcy Code or any comparable
         provisions of any applicable state law.

                  (h) The Borrowers hereby agree, as among themselves, that if
         any Borrower shall become an Excess Funding Borrower (as defined
         below), each other Borrower shall, on demand of such Excess Funding
         Borrower (but subject to the next sentence hereof and to subsection (B)
         below), pay to such Excess Funding Borrower an amount equal to such
         Borrower's Pro Rata Share (as defined below and determined, for this
         purpose, without reference to the properties, assets, liabilities and
         debts of such Excess Funding Borrower) of such Excess Payment (as
         defined below). The payment obligation of any Borrower to any Excess
         Funding Borrower under this Section 13.1(h) shall be subordinate and
         subject in right of payment to the prior payment in full of the
         Obligations of such Borrower under the other provisions of this
         Agreement, and such Excess Funding Borrower shall not exercise any
         right or remedy with respect to such excess until payment and
         satisfaction in full of all of such Obligations. For purposes hereof,
         (i) "Excess Funding Borrower" shall mean, in respect of any Obligations
         arising under the other provisions of this Agreement (hereafter, the
         "Joint Obligations"), a Borrower that has paid an amount in excess of
         its Pro Rata Share of the Joint Obligations; (ii) "Excess Payment"
         shall mean, in respect of any Joint Obligations, the amount paid by an
         Excess Funding Borrower in excess of its Pro Rata Share of such Joint
         Obligations; and (iii) "Pro Rata Share", for the purposes of this
         Section 13.1(h), shall mean, for any Borrower, the ratio (expressed as
         a percentage) of (A) the amount by which the aggregate present fair
         salable value of all of its assets and properties exceeds the amount of
         all debts and liabilities of such Borrower (including contingent,
         subordinated, unmatured, and unliquidated liabilities, but excluding
         the obligations of such Borrower hereunder) to (B) the amount by which
         the aggregate present fair salable value of all assets and other
         properties of such Borrower and all of the other Borrowers exceeds the
         amount of all of the debts and liabilities (including contingent,
         subordinated, unmatured, and unliquidated liabilities, but excluding
         the obligations of such Borrower and the other Borrowers hereunder) of
         such Borrower and all of the other Borrowers, all as of the Closing
         Date (if any Borrower becomes a party hereto subsequent to the Closing
         Date, then for the purposes of this Section 13.1(h) such subsequent
         Borrower shall be deemed to have been a Borrower as of the Closing Date
         and the information pertaining to, and only pertaining to, such
         Borrower as of the date such Borrower became a Borrower shall be deemed
         true as of the Closing Date).

         13.2 Agency of Parent for each other Borrower.

         Each of the other Borrowers appoints Parent as its agent for all
purposes relevant to this Agreement, including (without limitation) the giving
and receipt of notices, the request for Revolving Loans and the execution and
delivery of all documents, instruments and certificates contemplated herein and
all modifications hereto. Any acknowledgment, consent, direction, certification
or other action which might otherwise be valid or effective only if given or
taken by

<PAGE>

all of the Borrowers acting singly or jointly, or both, shall be valid and
effective if given or taken only by Parent, whether or not any of the other
Borrowers joins therein.

                                   ARTICLE 14
                                  MISCELLANEOUS

         14.1 No Waivers; Cumulative Remedies.

         No failure by the Agent or any Lender to exercise any right, remedy, or
option under this Agreement or any present or future supplement thereto, or in
any other agreement between or among the Borrowers and the Agent and/or any
Lender, or delay by the Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by the Agent or any Lender will be effective
unless it is in writing, and then only to the extent specifically stated. No
waiver by the Agent or the Lenders on any occasion shall affect or diminish the
Agent's and each Lender's rights thereafter to require strict performance by the
Borrowers of any provision of this Agreement. The Agent and the Lenders may
proceed directly to collect the Obligations without any prior recourse to the
Collateral. The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or any
Lender may have.

         14.2 Severability.

         The illegality or unenforceability of any provision of this Agreement
or any Loan Document or any instrument or agreement required hereunder shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

         14.3 Governing Law; Choice of Forum; Service of Process.

                  (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
         LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
         INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED
         THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
         EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
         ARTICLE 9 OF THE UCC) OF THE STATE OF NORTH CAROLINA; PROVIDED THAT THE
         AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
         LAW.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
         AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
         THE STATE OF NORTH CAROLINA OR OF THE UNITED STATES OF AMERICA LOCATED
         IN MECKLENBURG COUNTY, NORTH CAROLINA, AND BY EXECUTION AND DELIVERY OF
         THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT AND THE LENDERS
         CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
         NON-EXCLUSIVE JURISDICTION OF

<PAGE>

         THOSE COURTS. EACH OF THE BORROWERS, THE AGENT AND THE LENDERS
         IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
         OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
         NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
         SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
         HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS
         SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
         BORROWERS OR THEIR PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE
         AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE
         ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
         THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS
         DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY
         A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

                  (c) THE BORROWERS HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL
         PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE
         MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE
         BORROWERS AT ITS ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE
         SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME
         SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING
         CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO
         SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

         14.4 WAIVER OF JURY TRIAL.

         THE BORROWERS, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWERS, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY

<PAGE>

SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.

         14.5 Survival of Representations and Warranties.

         All of the Borrowers' representations and warranties contained in this
Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or their
respective agents.

         14.6 Other Security and Guaranties.

         The Agent, may, without notice or demand and without affecting the
Borrowers' obligations hereunder, from time to time: (a) accept from any Person
and hold collateral (other than the Collateral) for the payment of all or any
part of the Obligations and exchange, enforce or release such collateral or any
part thereof; and (b) accept and hold any endorsement or guaranty of payment of
all or any part of the Obligations and release or substitute any such endorser
or guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.

         14.7 Fees and Expenses.

         The Borrowers agree to pay to the Agent, for its benefit, on demand,
all costs and expenses that Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs; (b) costs and expenses (including
outside attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien searches; (d) taxes, fees and other charges for filing financing statements
and continuations, and other actions to perfect, protect, and continue the
Agent's Liens (including costs and expenses paid or incurred by the Agent in
connection with the consummation of Agreement); (e) sums paid or incurred to pay
any amount or take any action required of the Borrowers under the Loan Documents
that the Borrowers fail to pay or take; (f) costs of appraisals, inspections,
and verifications of the Collateral, including travel, lodging, and meals for
inspections of the Collateral and the Borrowers' operations by the Agent plus
the Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each Person retained or employed by the Agent with respect
to each field examination or audit); (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral and (h)(i) so long as no Default or
Event of Default exists, costs and expenses of no more than two inventory
appraisals per calendar year, such appraisals to be conducted by an appraisal
firm satisfactory to the Agent and at any reasonable time selected by the Agent
and (ii) during the existence of a Default or an Event of Default, costs and
expenses of all inventory appraisals requested by the Agent, such appraisals to
be conducted by an appraisal firm satisfactory to the Agent and at any
reasonable time selected

<PAGE>

by the Agent. In addition, the Borrowers agree to pay costs and expenses
incurred by the Agent (including Attorneys' Costs) to the Agent, for its
benefit, on demand, and to the other Lenders for their benefit, on demand, and
all reasonable fees, expenses and disbursements incurred by such other Lenders
for one law firm retained by such other Lenders, in each case, paid or incurred
to obtain payment of the Obligations, enforce the Agent's Liens, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
the Loan Documents, or to defend any claims made or threatened against the Agent
or any Lender arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Loan Documents
regarding costs and expenses to be paid by the Borrowers. All of the foregoing
costs and expenses shall be charged to the Borrowers' Loan Account as Revolving
Loans as described in Section 3.7.

         14.8 Notices.

         Except as otherwise provided herein, all notices, demands and requests
that any party is required or elects to give to any other shall be in writing,
or by a telecommunications device capable of creating a written record, and any
such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) five (5) Business Days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:

         If to the Agent or to the Bank:

                  Bank of America, N.A.
                  600 Peachtree Street N.E., 5th Floor
                  Atlanta, Georgia 30308
                  Attention: Business Credit-Account Executive
                  Telecopy No.: (404) 607-6437

                  with copies to:

                  Bank of America, N.A.
                  FL7-950-15-13
                  100 S.E. 2nd Street, 15th Floor
                  Miami, Florida 33131-2100
                  Telecopy No.: (800) 380-8118

<PAGE>

         If to the Borrowers:

                  Unifi, Inc.
                  7201 West Friendly Avenue
                  Greensboro, North Carolina 27410
                  Attn: Willis C. Moore III
                  Telephone: (336) 316-5664
                  Telecopy: (336) 294-4751

                  with a copy to:

                  Unifi, Inc.
                  7201 West Friendly Avenue
                  Greensboro, North Carolina 27410
                  Attn: Charles McCoy

or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.

         14.9 Waiver of Notices.

         Unless otherwise expressly provided herein, the Borrowers waive
presentment, and notice of demand or dishonor and protest as to any instrument,
notice of intent to accelerate the Obligations and notice of acceleration of the
Obligations, as well as any and all other notices to which it might otherwise be
entitled. No notice to or demand on the Borrowers which the Agent or any Lender
may elect to give shall entitle the Borrowers to any or further notice or demand
in the same, similar or other circumstances.

         14.10 Binding Effect.

         The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective representatives, successors, and assigns of the
parties hereto; provided, however, that no interest herein may be assigned by
any Borrower without prior written consent of the Agent and each Lender. The
rights and benefits of the Agent and the Lenders hereunder shall, if such
Persons so agree, inure to any party acquiring any interest in the Obligations
or any part thereof.

         14.11 Indemnity of the Agent and the Lenders by the Borrowers.

                  (a) The Borrowers agree to defend, indemnify and hold the
         Agent-Related Persons, and each Lender and each of its respective
         officers, directors, employees, counsel, representatives, agents and
         attorneys-in-fact (each, an "Indemnified Person") harmless from and
         against any and all liabilities, obligations, losses, damages,
         penalties,

<PAGE>

         actions, judgments, suits, costs, charges, expenses and disbursements
         (including Attorney Costs) of any kind or nature whatsoever which may
         at any time (including at any time following repayment of the Loans and
         the termination, resignation or replacement of the Agent or replacement
         of any Lender) be imposed on, incurred by or asserted against any such
         Person in any way relating to or arising out of this Agreement or any
         document contemplated by or referred to herein, or the transactions
         contemplated hereby, or any action taken or omitted by any such Person
         under or in connection with any of the foregoing, including with
         respect to any investigation, litigation or proceeding (including any
         Insolvency Proceeding or appellate proceeding) related to or arising
         out of this Agreement, any other Loan Document, or the Loans or the use
         of the proceeds thereof, whether or not any Indemnified Person is a
         party thereto (all the foregoing, collectively, the "Indemnified
         Liabilities"); provided, that the Borrowers shall have no obligation
         hereunder to any Indemnified Person with respect to Indemnified
         Liabilities resulting solely from the willful misconduct of such
         Indemnified Person. The agreements in this Section shall survive
         payment of all other Obligations.

                  (b) The Borrowers agree to indemnify, defend and hold harmless
         the Agent and the Lenders from any loss or liability directly or
         indirectly arising out of the use, generation, manufacture, production,
         storage, release, threatened release, discharge, disposal or presence
         of a hazardous substance relating to the Borrowers' operations,
         business or property. This indemnity will apply whether the hazardous
         substance is on, under or about the property or operations of any
         Borrower or property leased to any Borrower. The indemnity includes but
         is not limited to Attorneys Costs. The indemnity extends to the Agent
         and the Lenders, their parents, affiliates, subsidiaries and all of
         their directors, officers, employees, agents, successors, attorneys and
         assigns. "Hazardous substances" means any substance, material or waste
         that is or becomes designated or regulated as "toxic," "hazardous,"
         "pollutant," or "contaminant" or a similar designation or regulation
         under any federal, state or local law (whether under common law,
         statute, regulation or otherwise) or judicial or administrative
         interpretation of such, including petroleum or natural gas. This
         indemnity will survive repayment of all other Obligations.

         14.12 Limitation of Liability.

         NO CLAIM MAY BE MADE BY ANY BORROWER, ANY LENDER OR OTHER PERSON
AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY OF THEM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH BORROWER AND EACH LENDER HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON
ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.

<PAGE>

         14.13 Final Agreement.

         This Agreement and the other Loan Documents are intended by the
Borrowers, the Agent and the Lenders to be the final, complete, and exclusive
expression of the agreement between them. This Agreement supersedes any and all
prior oral or written agreements relating to the subject matter hereof except
for the Fee Letter and the Commitment Letter, among the Borrowers and the Agent.
No modification, rescission, waiver, release, or amendment of any provision of
this Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Borrowers and a duly authorized officer of each of the
Agent and the requisite Lenders.

         14.14 Counterparts.

         This Agreement may be executed in any number of counterparts, and by
the Agent, each Lender and the Borrowers in separate counterparts, each of which
shall be an original, but all of which shall together constitute one and the
same agreement; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.

         14.15 Captions.

         The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.

         14.16 Right of Setoff.

         In addition to any rights and remedies of the Lenders provided by law,
if an Event of Default exists or the Loans have been accelerated, each Lender is
authorized at any time and from time to time, without prior notice to the
Borrowers, any such notice being waived by the Borrowers to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender or any Affiliate of such Lender
to or for the credit or the account of the Borrowers against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify the Borrowers and the Agent
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE
ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR
PROPERTY OF THE BORROWERS HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR
WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

<PAGE>

         14.17 Confidentiality.

                  (a) The Borrowers hereby agrees that the Agent and each
         Lender, upon the prior consent of the Borrowers (such consent not to be
         unreasonably withheld), may issue and disseminate to the public general
         information describing the credit accommodation entered into pursuant
         to this Agreement, including the name and address of the Borrowers and
         a general description of the Borrowers' business and may use any
         Borrower's name in advertising and other promotional material.

                  (b) Each Lender severally agrees to take normal and reasonable
         precautions and exercise due care to maintain the confidentiality of
         all information identified as "confidential" or "secret" by the
         Borrowers and provided to the Agent or such Lender by or on behalf of
         the Borrowers, under this Agreement or any other Loan Document, except
         to the extent that such information (i) was or becomes generally
         available to the public other than as a result of disclosure by the
         Agent or such Lender, or (ii) was or becomes available on a
         nonconfidential basis from a source other than the Borrowers, provided
         that such source is not bound by a confidentiality agreement with the
         Borrowers known to the Agent or such Lender; provided, however, that
         the Agent and any Lender may, upon prior written notice to the
         Borrowers (to the extent not prohibited by applicable law), disclose
         such information (1) at the request or pursuant to any requirement of
         any Governmental Authority to which the Agent or such Lender is subject
         or in connection with an examination of the Agent or such Lender by any
         such Governmental Authority; (2) pursuant to subpoena or other court
         process; (3) when required to do so in accordance with the provisions
         of any applicable Requirement of Law; (4) to the extent reasonably
         required in connection with any litigation or proceeding (including,
         but not limited to, any bankruptcy proceeding) to which the Agent, any
         Lender or their respective Affiliates may be party; (5) to the extent
         reasonably required in connection with the exercise of any remedy
         hereunder or under any other Loan Document; (6) to the Agent's or such
         Lender's independent auditors, accountants, attorneys and other
         professional advisors; (7) to any prospective Participant or Assignee
         under any Assignment and Acceptance, actual or potential, provided that
         such prospective Participant or Assignee agrees to keep such
         information confidential to the same extent required of the Agent and
         the Lenders hereunder; (8) as expressly permitted under the terms of
         any other document or agreement regarding confidentiality to which the
         Borrowers are party or are deemed party with the Agent or such Lender,
         and (9) to its Affiliates.

         14.18 Conflicts with Other Loan Documents.

         Unless otherwise expressly provided in this Agreement (or in another
Loan Document by specific reference to the applicable provision contained in
this Agreement), if any provision contained in this Agreement conflicts with any
provision of any other Loan Document, the provision contained in this Agreement
shall govern and control.

         14.19 Accounting Terms.

         Any accounting term used in the Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations in the Agreement shall be computed, unless
otherwise specifically provided

<PAGE>

therein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.

         14.20    Interpretive Provisions.

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

                  (b) The words "hereof," "herein," "hereunder" and similar
         words refer to the Agreement as a whole and not to any particular
         provision of the Agreement; and Subsection, Section, Schedule and
         Exhibit references are to the Agreement unless otherwise specified.

                  (c)      (i) The term "documents" includes any and all
                  instruments, documents, agreements, certificates, indentures,
                  notices and other writings, however evidenced.

                           (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."

                           (iv) The word "or" is not exclusive.

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

                  (e) The captions and headings of the Agreement and other Loan
         Documents are for convenience of reference only and shall not affect
         the interpretation of the Agreement.

                  (f) The 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.

                  (g) For purposes of Section 9.1, a breach of a financial
         covenant contained in Sections 7.22-7.24 shall be deemed to have
         occurred as of any date of determination of

<PAGE>

         such breach or upon the date that such breach is first known by any
         Borrower or the Agent, regardless of when the Financial Statements
         reflecting such breach are delivered to the Agent.

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

<PAGE>

         IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.

                                     "BORROWERS"

                                      UNIFI, INC., a New York corporation

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

                                      UNIFI SALES & DISTRIBUTION, INC.,
                                      a North Carolina corporation

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

                                      UNIFI MANUFACTURING, INC.,
                                      a North Carolina corporation

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

                                      GLENTOUCH YARN COMPANY, LLC,
                                      a North Carolina limited liability company

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

                                      UNIFI MANUFACTURING VIRGINIA, LLC,
                                      a North Carolina limited liability company

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

<PAGE>

                                      UNIFI EXPORT SALES, LLC,
                                      a North Carolina limited liability company

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

                                      UNIFI TEXTURED POLYESTER, LLC,
                                      a North Carolina limited liability company

                                      By:    WILLIS C. MOORE, III
                                             -----------------------------------
                                      Name:  Willis C. Moore III
                                      Title: Executive Vice President & CFO

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                                      "AGENT"

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

                                      By:    DAVID M. ANDERSON
                                             -----------------------------------
                                      Name:  DAVID M. ANDERSON
                                      Title: SVP

                                      "LENDERS"

                                      BANK OF AMERICA, N.A., as a Lender

                                      By:    DAVID M. ANDERSON
                                             -----------------------------------
                                      Name:  DAVID M. ANDERSON
                                      Title: SVP

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                                     ANNEX A
                                       to
                                Credit Agreement

                                   Definitions

         Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:

         "Accounts" means all of the Borrowers' now owned or hereafter acquired
or arising accounts, as defined in the UCC, including any rights to payment for
the sale or lease of goods or rendition of services, whether or not they have
been earned by performance.

         "Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).

         "Account Designation Letter" means a notice of account designation
dated the Closing Date designating the Designated Account.

         "ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of the Borrowers pursuant to agreement or overdrafts.

         "Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Parent, net income of the Parent and its Domestic
Subsidiaries on a consolidated basis after provision for income taxes for such
fiscal period, as determined in accordance with GAAP and reported on the
Financial Statements for such period, excluding any and all of the following
included in such net income: (a) gain or loss arising from the sale of any
capital assets; (b) gain arising from any write-up in the book value of any
asset; (c) earnings of any Person, substantially all the assets of which have
been acquired by the Parent or any of its Domestic Subsidiaries in any manner,
to the extent realized by such other Person prior to the date of acquisition;
(d) earnings of any Person in which the Parent or any of its Domestic
Subsidiaries has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by the Parent or any of its Domestic
Subsidiary in the form of cash distributions; (e) earnings of any Person who is
not a Borrower to which assets of the Parent or any of its Domestic Subsidiaries
shall have been sold, transferred or disposed of, or into which the Parent or
any of its Domestic Subsidiaries shall have been merged, or which has been a
party with the Parent or any of its Domestic Subsidiaries to any consolidation
or other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of the Parent or any
of its Domestic Subsidiaries or from cancellation or forgiveness of Debt; and
(g) non-cash gain or loss arising from extraordinary items, as determined in
accordance with GAAP.

         "Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns,

<PAGE>

directly or indirectly, ten percent (10%) or more of the outstanding equity
interest of such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.

         "Agent" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.

         "Agent Advances" has the meaning specified in Section 1.2(i).

         "Agent Fees" has the meaning specified in Section 2.4.

         "Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, Bank, and Agent pursuant to this Agreement and
the other Loan Documents.

         "Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.

         "Aggregate Revolver Outstandings" means, at any date of determination:
the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount
of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit.

         "Agreement" means the Credit Agreement to which this Annex A is
attached, as from time to time amended, modified or restated.

         "Anniversary Date" means each anniversary of the Closing Date.

         "Applicable Margin" means

                  (i) with respect to Base Rate Revolving Loans and all other
         Obligations (other than LIBOR Rate Loans), 1.0%;

                  (ii) with respect to LIBOR Revolving Loans, 2.5%; and

         The Applicable Margins shall be adjusted (up or down) prospectively on
a quarterly basis as determined by the Borrowers' consolidated financial
performance, commencing with the first day of the first calendar month that
occurs more than 5 days after delivery of the Borrowers' quarterly Financial
Statements to Lenders for the fiscal quarter ending December 22, 2002.
Adjustments in Applicable Margins shall be determined by reference to the
following grids:

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                                                                  Level of
         If Leverage Ratio is:                               Applicable Margins:
                                                             ------------------

         less than 1.50                                           Level I
         greater than or equal to 1.50, but less than 2.25        Level II
         greater than or equal to 2.25, but less than 3.00        Level III
         greater than or equal to 3.00, but less than 3.75        Level IV
         greater than or equal to 3.75, but less than 4.50        Level V
         greater than or equal to 4.50                            Level VI

Low to High
                                            Applicable Margins
                                            ------------------
                           Level I Level II Level III Level IV Level V Level VI
                           ------- -------- --------- -------- ------- --------
Base Rate Revolving Loans   0.25%    0.50%    0.75%     1.00%   1.25%    1.50%
LIBOR Revolving Loans       1.75%    2.00%    2.25%     2.50%   2.75%    3.00%
Applicable L/C Margin       1.75%    2.00%    2.25%     2.50%   2.75%    3.00%

         All adjustments in the Applicable Margins after December 22, 2002 shall
be implemented quarterly on a prospective basis, for each calendar month
commencing at least 5 days after the date of delivery to the Lenders of
quarterly unaudited or annual audited (as applicable) Financial Statements
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, the Parent shall deliver to the Agent and the Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such Financial Statements shall, in addition
to any other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until
the first day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not required. If a
Default or Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, no reduction may occur
until the first day of the first calendar month following the date on which such
Default or Event of Default is waived or cured.

         "Assigned Contracts" means, collectively, all of the Borrowers' rights
and remedies under, and all moneys and claims for money due or to become due to
the Borrowers under those contracts set forth on Schedule 1.1, and any other
material contracts, and any and all amendments, supplements, extensions, and
renewals thereof including all rights and claims of the Borrowers now or
hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts; (iii) to all
other amounts from time to time paid or payable under or in connection with any
of the foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.

         "Assignee" has the meaning specified in Section 11.2(a).

<PAGE>

         "Assignment and Acceptance" has the meaning specified in Section
11.2(a).

         "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent or, to the
extent provided in the Agreement, by the Lenders.

         "Availability" means, at any time (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, minus (b) the Aggregate Revolver
Outstandings.

         "Bank" means Bank of America, N.A., a national banking association, or
any successor entity thereto.

         "Bank Products" means any one or more of the following types of
services or facilities extended to the Borrowers by any Lender or any affiliate
of a Lender in reliance on such Lender's agreement to indemnify such affiliate:
(i) ACH Transactions; (ii) cash management, including controlled disbursement
services; and (iii) Hedge Agreements.

         "Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.

         "Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.ss. 101 et seq.).

         "Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.

         "Base Rate Loans" means the Base Rate Revolving Loans.

         "Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.

         "Blocked Account Agreement" means an agreement among the Borrowers, the
Agent and a Clearing Bank, in form and substance reasonably satisfactory to the
Agent, concerning the collection of payments which represent the proceeds of
Accounts or of any other Collateral.

         "Borrowers' Ex-Im Agreement" means the Export-Import Bank of the United
States Working Capital Guarantee Program Borrower Agreement entered into after
the Closing Date by the Borrowers in favor of the Ex-Im Bank and the Agent
relating to Ex-Im Bank Guaranteed Loans.

<PAGE>

         "Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to any Borrower or by Bank in the case of a
Borrowing funded by Ex-Im Bank Revolving Loans, Non-Ratable Loans or by the
Agent in the case of a Borrowing consisting of an Agent Advance, or the issuance
of Letters of Credit hereunder.

         "Borrowing Base" means, at any time, an amount equal to

         (a)      the sum of:

                           (i) ninety percent (90%) of the Eligible Factoring
                  Credit Balances; plus

                           (ii) eighty-five percent (85%) of the Net Amount of
                  Eligible Accounts; plus

                           (iii) the lesser of (a) $10,000,000 or (b) eighty
                  percent (80%) of the Net Amount of Eligible Foreign Accounts;
                  plus

                           (iv) the lesser of (a) sixty percent (60%) of the
                  value of Eligible Inventory or (b) eighty percent (80%) of the
                  Net Orderly Liquidation Value of Eligible Inventory; plus

                           (v) the lesser of (a) $10,000,000 or (b) ninety
                  percent (90%) of the Eligible Export-Related Accounts
                  Receivable Value with respect only to Ex-Im Bank Revolving
                  Loans, subject to the availability that exists pursuant to the
                  terms of Borrowers' Ex-Im Agreement under the Export-Related
                  Borrowing Base (as that term is defined in the Borrowers'
                  Ex-Im Agreement); minus

         (b)      Reserves from time to time established by the Agent in its
                  reasonable credit judgment;

         provided that the aggregate Revolving Loans advanced against Eligible
         Inventory shall not exceed the Maximum Inventory Loan Amount; provided,
         further, that any and all items of Collateral acquired pursuant to a
         Permitted Acquisition shall not be included in the Borrowing Base until
         such time as the Agent shall have had the opportunity to conduct a
         field exam and/or an appraisal of such Collateral with results
         satisfactory to the Agent.

         "Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Parent, substantially in the form of Exhibit B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to the Agent. All calculations of the Borrowing Base
in connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Parent and certified to the Agent; provided, that the
Agent shall have the right to review and adjust, in the exercise of its
reasonable credit judgment, any such calculation (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein, and
(2) to the extent that such calculation is not in accordance with this
Agreement.

<PAGE>

         "Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in Charlotte, North Carolina are required or permitted to be
closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Rate Loans, any day that is
a Business Day pursuant to clause (a) above and that is also a day on which
trading in Dollars is carried on by and between banks in the London interbank
market.

         "Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

         "Capital Expenditures" means, for any period, all capital expenditures
of the Borrowers on a consolidated basis for such period, as determined in
accordance with GAAP.

         "Capital Lease" means any lease of property by any Borrower which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Borrower.

         "Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

         "Change of Control" means the occurrence of any of the following
events: (i) any Person or two or more Persons acting in concert shall have
acquired "beneficial ownership," directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of,
control over, Voting Stock of the Parent (or other securities convertible into
such Voting Stock) representing 25% or more of the combined voting power of all
Voting Stock of the Parent, or (ii) during any period of up to 24 consecutive
months, commencing after the Closing Date, individuals who at the beginning of
such 24 month period were directors of the Parent (together with any new
director whose election by the Parent's Board of Directors or whose nomination
for election by the Parent's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of the Parent then in office. As used herein, "beneficial ownership"
shall have the meaning provided in Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934.

         "Chattel Paper" means all of the Borrowers' now owned or hereafter
acquired chattel paper, as defined in the UCC, including electronic chattel
paper.

         "Clearing Bank" means the Bank or any other banking institution with
whom a Payment Account has been established pursuant to a Blocked Account
Agreement.

<PAGE>

         "Closing Date" means the date of this Agreement.

         "Code" means the Internal Revenue Code of 1986.

         "Collateral" means all of the Borrowers' real and personal property,
(other than (i) any manufacturing facility owned by any Borrower and any
manufacturing equipment owned by a Borrower and located in such facility, but
excluding office equipment, rolling stock and other equipment not directly used
in the production of such Borrower's products, (ii) any shares of stock owned by
the Parent or any of its Subsidiaries in a Restricted Subsidiary (as defined in
the Indenture) or (iii) indebtedness of a Restricted Subsidiary (as defined in
the Indenture)) and all other assets of any Person from time to time subject to
Agent's Liens securing payment or performance of the Obligations.

         "Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on
Schedule 1.2 attached to the Agreement or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
3.2 and Section 11.2, and "Commitments" means, collectively, the aggregate
amount of the commitments of all of the Lenders.

         "Commitment Letter" means that certain commitment letter dated December
4, 2001 between Bank of America, N.A. and Unifi, Inc.

         "Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.

         "Continuation/Conversion Date" means the date on which a Loan is
converted into or continued as a LIBOR Rate Loan.

         "Corporate Headquarters" means the corporate headquarters of the
Borrowers located at 7201 West Friendly Avenue, Greensboro, North Carolina
27410.

         "Credit Support" has the meaning specified in Section 1.3(a).

         "Debt" means, as to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:

                  (a) every obligation of such Person for money borrowed;

                  (b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses;

<PAGE>

                  (c) every reimbursement obligation of such Person with respect
to letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person;

                  (d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith;

                  (e) every obligation of such Person under any Capital Lease;

                  (f) every obligation of such Person under any Synthetic Lease;

                  (g) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire for value
any shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured by
the value of such shares, warrants, options or other rights;

                  (h) Derivative Obligations of such Person;

                  (i) every obligation in respect of Debt of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Debt provide that such Person is not liable
therefor and such terms are enforceable under applicable law;

                  (j) every obligation, contingent or otherwise, of such Person
guarantying, or having the economic effect of guarantying or otherwise acting as
surety for, any obligation of a type described in any of clauses (a) through (i)
(the "primary obligation") of another Person (the "primary obligor"), in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (ii)
to purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary obligation.

                  The "amount" or "principal amount" of any Debt at any time of
determination represented by (A) any Debt, issued at a price that is less than
the principal amount at maturity thereof, shall be the amount of the liability
in respect thereof determined in accordance with GAAP, (B) any Capital Lease
shall be the principal component of the aggregate of the rentals obligation
under such Capital Lease payable over the term thereof that is not subject to
termination by the lessee, and (C) any equity related purchase obligation shall
be the maximum fixed redemption or purchase price thereof inclusive of any
accrued and unpaid dividends to be comprised in such redemption or purchase
price.

         "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.

<PAGE>

         "Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, the Default Rate shall
result in an increase in the Letter of Credit Fee by two (2) percentage points
per annum.

         "Defaulting Lender" has the meaning specified in Section 12.15(c).

         "Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Borrower.

         "Derivative Obligations" means the net obligations of a Person under
any Hedge Agreement.

         "Designated Account" has the meaning specified in Section 1.2(c).

         "Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (or any options or warrants for, or other rights with respect to, such
stock) of such corporation, other than distributions in capital stock (or any
options or warrants for such stock) of the same class; or (b) the redemption or
other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.

         "Documents" means all documents as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by the Borrowers.

         "DOL" means the United States Department of Labor or any successor
department or agency.

         "Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under the Agreements shall be
made in Dollars.

         "Domestic Subsidiary" means any Subsidiary of the Parent other than a
Foreign Subsidiary.

         "EBITDA" means, with respect to any fiscal period of the Parent and its
Domestic Subsidiaries, on a consolidated basis, Adjusted Net Earnings from
Operations, plus, to the extent deducted in the determination of Adjusted Net
Earnings from Operations for that fiscal period, interest expenses, Federal,
state, local and foreign income taxes, depreciation, amortization and other
non-cash charges (excluding the effect of non-cash income or loss from any
Person in which the Parent or any of its Domestic Subsidiaries has an ownership
interest). Unless otherwise specified herein, the applicable period of
computation shall be for the four (4) consecutive fiscal quarters ending as of
the date of determination.

<PAGE>

         "Eligible Accounts" means the Accounts which the Agent in the exercise
of its reasonable commercial discretion determines to be Eligible Accounts.
Without limiting the discretion of the Agent to establish other criteria of
ineligibility, Eligible Accounts shall not, unless the Agent in its sole
discretion elects, include any Account:

                  (a) with respect to which more than 90 days (or, with the
         prior consent of the Agent, 120 days) have elapsed since the date of
         the original invoice therefor or which is more than 60 days past due;

                  (b) with respect to which any of the representations,
         warranties, covenants, and agreements contained in the Security
         Agreement are incorrect or have been breached;

                  (c) with respect to which Account (or any other Account due
         from such Account Debtor), in whole or in part, a check, promissory
         note, draft, trade acceptance or other instrument for the payment of
         money has been received, presented for payment and returned uncollected
         for any reason;

                  (d) which represents a progress billing (as hereinafter
         defined) or as to which a Borrower has extended the time for payment
         without the consent of the Agent; for the purposes hereof, "progress
         billing" means any invoice for goods sold or leased or services
         rendered under a contract or agreement pursuant to which the Account
         Debtor's obligation to pay such invoice is conditioned upon a
         Borrower's completion of any further performance under the contract or
         agreement;

                  (e) with respect to which any one or more of the following
         events has occurred to the Account Debtor on such Account: death or
         judicial declaration of incompetency of an Account Debtor who is an
         individual; the filing by or against the Account Debtor of a request or
         petition for liquidation, reorganization, arrangement, adjustment of
         debts, adjudication as a bankrupt, winding-up, or other relief under
         the bankruptcy, insolvency, or similar laws of the United States, any
         state or territory thereof, or any foreign jurisdiction, now or
         hereafter in effect; the making of any general assignment by the
         Account Debtor for the benefit of creditors; the appointment of a
         receiver or trustee for the Account Debtor or for any of the assets of
         the Account Debtor, including, without limitation, the appointment of
         or taking possession by a "custodian," as defined in the Federal
         Bankruptcy Code; the institution by or against the Account Debtor of
         any other type of insolvency proceeding (under the bankruptcy laws of
         the United States or otherwise) or of any formal or informal proceeding
         for the dissolution or liquidation of, settlement of claims against, or
         winding up of affairs of, the Account Debtor; the sale, assignment, or
         transfer of all or any material part of the assets of the Account
         Debtor; the nonpayment generally by the Account Debtor of its debts as
         they become due; or the cessation of the business of the Account Debtor
         as a going concern;

                  (f) if fifty percent (50%) or more of the aggregate Dollar
         amount of outstanding Accounts owed at such time by the Account Debtor
         thereon is classified as ineligible under clause (a) above;

<PAGE>

                  (g) which constitutes an Eligible Foreign Account or an
         Eligible Export-Related Account Receivable or is otherwise owned owed
         by an Account Debtor which: (i) does not maintain its chief executive
         office in the United States of America or Canada (other than the
         Province of Newfoundland); or (ii) is not organized under the laws of
         the United States of America or Canada or any state or province
         thereof; or (iii) is the government of any foreign country or sovereign
         state, or of any state, province, municipality, or other political
         subdivision thereof, or of any department, agency, public corporation,
         or other instrumentality thereof;

                  (h) owed by an Account Debtor which is an Affiliate or
         employee of any Borrower;

                  (i) except as provided in clause (k) below, with respect to
         which either the perfection, enforceability, or validity of the Agent's
         Liens in such Account, or the Agent's right or ability to obtain direct
         payment to the Agent of the proceeds of such Account, is governed by
         any federal, state, or local statutory requirements other than those of
         the UCC;

                  (j) owed by an Account Debtor to which the Parent or any other
         Borrower, is indebted in any way, or which is subject to any right of
         setoff or recoupment by the Account Debtor, unless the Account Debtor
         has entered into an agreement acceptable to the Agent to waive setoff
         rights; or if the Account Debtor thereon has disputed liability or made
         any claim with respect to any other Account due from such Account
         Debtor; but in each such case only to the extent of such indebtedness,
         setoff, recoupment, dispute, or claim;

                  (k) owed by the government of the United States of America, or
         any department, agency, public corporation, or other instrumentality
         thereof, unless the Federal Assignment of Claims Act of 1940, as
         amended (31 U.S.C. ss. 3727 et seq.), and any other steps necessary to
         perfect the Agent's Liens therein, have been complied with to the
         Agent's satisfaction with respect to such Account;

                  (l) owed by any state, municipality, or other political
         subdivision of the United States of America, or any department, agency,
         public corporation, or other instrumentality thereof and as to which
         the Agent determines that its Lien therein is not or cannot be
         perfected;

                  (m) which represents a sale on a bill-and-hold, guaranteed
         sale, sale and return, sale on approval, consignment, or other
         repurchase or return basis;

                  (n) which is evidenced by a promissory note or other
         instrument or by chattel paper;

                  (o) if the Agent believes, in the exercise of its reasonable
         judgment, that the prospect of collection of such Account is impaired
         or that the Account may not be paid by reason of the Account Debtor's
         financial inability to pay;

<PAGE>

                  (p) with respect to which the Account Debtor is located in any
         state requiring the filing of a Notice of Business Activities Report or
         similar report in order to permit a Borrower to seek judicial
         enforcement in such State of payment of such Account, unless such
         Borrower has qualified to do business in such state or has filed a
         Notice of Business Activities Report or equivalent report for the then
         current year;

                  (q) which arises out of a sale not made in the ordinary course
         of a Borrower's business;

                  (r) with respect to which the goods giving rise to such
         Account have not been shipped and delivered to and accepted by the
         Account Debtor or the services giving rise to such Account have not
         been performed by a Borrower, and, if applicable, accepted by the
         Account Debtor, or the Account Debtor revokes its acceptance of such
         goods or services;

                  (s) owed by an Account Debtor which is obligated to a Borrower
         respecting Accounts the aggregate unpaid balance of which exceeds
         twenty-five percent (25%) of the aggregate unpaid balance of all
         Accounts owed such Borrower at such time by all of such Borrower's
         Account Debtors, but only to the extent of such excess; or

                  (t) which is not subject to a first priority and perfected
         security interest in favor of the Agent for the benefit of the Lenders.

         If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.

         "Eligible Assignee" means (a) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and
is continuing, any Person reasonably acceptable to the Agent.

         "Eligible Export-Related Accounts Receivable" has the meaning set forth
in Borrowers' Ex-Im Agreement, but in no event will include any Eligible Foreign
Accounts or Accounts that are insured or payable by a letter of credit.

         "Eligible Export-Related Accounts Receivable Value" has the meaning set
forth in Borrowers' Ex-Im Agreement.

         "Eligible Foreign Accounts" means Accounts owed by an Account Debtor
which: (a)(i) does not maintain its chief executive office in the United States
of America or Canada (other than the Province of Newfoundland); or (ii) is not
organized under the laws of the United States of America or Canada or any state
or province thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof (a "Foreign Account Debtor"); (b)(i) such Account is
secured or payable by a letter of credit satisfactory to the Agent in its
discretion or (ii) such Account is insured to the satisfaction

<PAGE>

of the Agent; (c) would qualify as an Account eligible for financing under the
Ex-Im Bank Working Capital Guarantee Program; (d) would qualify as an "Eligible
Account" but for the fact that it is owed by a foreign Account Debtor and (e)
complies with applicable laws; but in no event will Eligible Foreign Accounts
include any Eligible Export-Related Accounts Receivable.

         If any Account at any time ceases to be an Eligible Foreign Account,
then such Account shall promptly be excluded from the calculation of Eligible
Foreign Accounts.

         "Eligible Factoring Credit Balances" means as at any date of
determination , all Factoring Credit Balances in respect of Factored Accounts
upon which the Factor shall have assumed the risk of credit loss minus the sum
of any such Factored Accounts that are disputed, any deductions from payment
thereon or any other fees, and any commissions, reserves or other charges due
from a Borrower to a Factor, all as reflected in the Borrowing Base Certificates
delivered to Lender in accordance with Section 5.2(k).

         "Eligible Inventory" means Inventory, valued at the lower of cost (on a
first-in, first-out basis) or market, which the Agent, in its reasonable
discretion, determines to be Eligible Inventory. Without limiting the discretion
of the Agent to establish other criteria of ineligibility, Eligible Inventory
shall not, unless the Agent in its sole discretion elects, include any
Inventory:

                  (a) that is not owned by a Borrower;

                  (b) that is not subject to the Agent's Liens, which are
         perfected as to such Inventory, or that are subject to any other Lien
         whatsoever (other than the Liens described in clause (d) of the
         definition of Permitted Liens provided that such Permitted Liens (i)
         are junior in priority to the Agent's Liens or subject to Reserves and
         (ii) do not impair directly or indirectly the ability of the Agent to
         realize on or obtain the full benefit of the Collateral);

                  (c) that does not consist of finished goods, raw materials,
         work-in-process, chemicals, samples, prototypes, supplies, or packing
         and shipping materials;

                  (d) that is not in good condition, is unmerchantable, or does
         not meet all standards imposed by any Governmental Authority, having
         regulatory authority over such goods, their use or sale;

                  (e) that is not currently either usable or salable, at prices
         approximating at least cost, in the normal course of a Borrower's
         business, or that is slow moving or stale (i.e., aged greater than one
         year);

                  (f) that is obsolete or returned or repossessed or used goods
         taken in trade;

                  (g) that is located outside the United States of America or
         Canada (or that is in-transit from vendors or suppliers);

<PAGE>

                  (h) that is located in a public warehouse or in possession of
         a bailee or in a facility leased by a Borrower, if the warehouseman, or
         the bailee, or the lessor has not delivered to the Agent, if requested
         by the Agent, a subordination agreement in form and substance
         satisfactory to the Agent or if permitted by the Agent in lieu of such
         a subordination agreement, a Reserve for rents or storage charges (not
         to exceed three months) has not been established for Inventory at that
         location;

                  (i) that contains or bears any Proprietary Rights (other than
         Dacron(R) and other trademarked products supplied by Dupont or the
         Parent) licensed to a Borrower by any Person, if the Agent is not
         satisfied that it may sell or otherwise dispose of such Inventory in
         accordance with the terms of the Security Agreement and Section 9.2
         without infringing the rights of the licensor of such Proprietary
         Rights or violating any contract with such licensor (and without
         payment of any royalties other than any royalties due with respect to
         the sale or disposition of such Inventory pursuant to the existing
         license agreement), and, as to which a Borrower has not delivered to
         the Agent a consent or sublicense agreement from such licensor in form
         and substance acceptable to the Agent if requested;

                  (j) that is not reflected in the details of a current
         perpetual inventory report; or

                  (k) that is Inventory placed on consignment.

         If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.

         "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.

         "Environmental Compliance Reserve" means any reserve which the Agent
establishes in its reasonable discretion after prior written notice to the
Borrowers from time to time for amounts that are reasonably likely to be
expended by a Borrower in order for such Borrower and its operations and
property (a) to comply with any notice from a Governmental Authority asserting
material non-compliance with Environmental Laws, or (b) to correct any such
material non-compliance identified in a report delivered to the Agent and the
Lenders pursuant to Section 7.7.

         "Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, licenses, authorizations and permits of,
and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety and land use matters.

         "Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.

<PAGE>

         "Equipment" means all of the Borrowers' now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including embedded software,
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by the Borrowers and all of the Borrowers' rights and
interests with respect thereto under such leases (including, without limitation,
options to purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.

         "ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrowers within the meaning of
Section 414(b) or (c) of the Code.

         "Event of Default" has the meaning specified in Section 9.1.

         "Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.

         "Ex-Im Bank" means the Export-Import Bank of the United States.

         "Ex-Im Bank Guaranteed Loan" means a loan contemplated under and
evidenced by the Borrowers' Ex-Im Agreement that qualifies as an eligible loan
under the Ex-Im Bank Working Capital Guarantee Program and is subject to a
Master Ex-Im Bank Guarantee.

         "Ex-Im Bank Revolving Loan" has the meaning specified in Section
1.2(j).

         "Existing Credit Agreement" means that certain Credit Agreement dated
as of December 20, 2000 among the Borrower, certain of its Subsidiaries, as
guarantors, the lenders party thereto, Bank of America, N.A., as administrative
agent, Wachovia Bank, N.A., as syndication agent and Credit Suisse First Boston,
as documentation agent.

         "Factor" means The CIT Group/Commercial Services, Inc., HSBC Holdings,
First Factors Corporation, Capital Factors, Inc. , and each other factor with
which a Borrower may hereafter enter into a Factoring Agreement and who has
executed a Factor Assignment and Intercreditor Agreement.

         "Factor Assignment and Intercreditor Agreement" means each Collateral
Assignment of Factoring Credit Balances and Intercreditor Agreement among a
Borrower, a Factor and the Agent, pursuant to which, among other things, such
Borrower collaterally assigns to the Agent, as security for the Obligations, and
such Factor acknowledges the collateral assignment to the Agent of all sums at
any time or times due to or become due to such Borrower from such Factor under
its

<PAGE>

Factoring Agreement with such Borrower, and establishes the relative priorities
of the respective Liens of such Factor and the Lender with respect to the
Collateral.

         "Factored Account" means an Account of a Borrower that is sold,
assigned or otherwise transferred to a Factor pursuant to a Factoring Agreement.

         "Factoring Agreements" means the Factoring Agreement, undated, between
HSBC Business Credit (USA) Inc. and Unifi Sales and Distribution, Inc. and that
certain Factoring Agreement dated May 2, 1988 between First Factors Corporation,
succeeded by GE Capital Commercial Services, Inc. and Macfield, Inc., succeeded
by Unifi, Inc. and that certain Factoring Agreement dated December 31, 1998
between The CIT Group Commercial Services, Inc. and Unifi Sales & Distribution,
Inc. and that certain Capital Factors, Inc. Average Maturity Date Factoring
Agreement dated on or about December 7, 2001 between Capital Factors, Inc. and
Unifi, Inc.

         "Factoring Credit Balances" means the monies and credit balances due or
to become due to any Borrower from any Factor under its Factoring Agreement with
a Borrower arising from the sale by a Borrower of Factored Accounts to such
Factor as calculated and determined under the Factoring Agreements.

         "FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.

         "Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, 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, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.

         "Federal Reserve Board" or "FRB" means the Board of Governors of the
Federal Reserve System or any successor thereto.

         "Fee Letter" means that certain fee letter dated December 4, 2001
between the Bank of America, N.A. and Unifi, Inc.

         "Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.

         "Fiscal Year" means the Parent's fiscal year for financial accounting
purposes. The current Fiscal Year of the Parent will end on June 30, 2002.

<PAGE>

         "Fixed Assets" means the Equipment and Real Estate of the Borrowers.

         "Fixed Charge Coverage Ratio" means, with respect to any fiscal period
of the Parent and its Domestic Subsidiaries, the ratio of (a) EBITDA for such
period minus Capital Expenditures made by the Parent or any of its Domestic
Subsidiaries during such period plus cash payments (excluding cash distribution
of earnings) made during such period from Persons in which the Parent or any of
its Domestic Subsidiaries has an ownership interest minus cash payments made
during such period by the Parent or any of its Domestic Subsidiaries to Persons
in which the Parent or any of its Domestic Subsidiaries has an ownership
interest plus cash proceeds from asset sales received by the Parent or any of
its Domestic Subsidiaries during such period minus Distributions paid by the
Parent during such period minus share repurchases made by the Parent of its
Capital Stock during such period minus cash invested in joint ventures and
Permitted Acquisitions during such period minus cash taxes paid for such period
plus tax refunds received in cash for such period to (b) Fixed Charges. Unless
otherwise specified herein, the applicable period of computation shall be for
the four (4) consecutive fiscal quarters ending as of the date of determination.

         "Fixed Charges" means, with respect to any fiscal period of the Parent
and its Domestic Subsidiaries on a consolidated basis, without duplication, cash
interest expense and scheduled principal payments of Funded Debt, determined in
accordance with GAAP.

         "Foreign Subsidiary" means any Subsidiary of the Parent that is
incorporated, formed or registered or whose principal place of business or
headquarters is not in the United States.

         "Funded Debt" means, as of any date of determination with respect to
any fiscal period then ended, an amount equal to the aggregate principal amount
then outstanding in respect of all interest-bearing Debt of the Parent and its
Domestic Subsidiaries on a consolidated basis.

         "Funding Date" means the date on which a Borrowing occurs.

         "GAAP" means generally accepted accounting principles in the United
States of America and applied on a consistent basis with the Financial
Statements.

         "General Intangibles" means all of the Borrowers' now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrowers of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, payment intangibles, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to the Borrowers
in connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to the Borrowers from any Plan
or other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of

<PAGE>

insurance covering the lives of key employees on which a Borrower is
beneficiary, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to a Borrower.

         "Goods" means all "goods" as defined in the UCC, now owned or hereafter
acquired by a Borrower, wherever located, including embedded software to the
extent included in "goods" as defined in the UCC, manufactured homes, standing
timber that is cut and removed for sale and unborn young of animals.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

         "Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.

         "Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Borrowers' exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.

         "Immaterial Subsidiary" means any Domestic Subsidiary the Collateral of
which does not exceed $100,000. As of the date hereof, the Immaterial
Subsidiaries are Unifi International Service, Inc., a North Carolina
corporation, Unifi Technical Fabrics, LLC, a North Carolina limited liability
company, Spanco Industries, Inc., a North Carolina corporation and Spanco
International, Inc., a North Carolina corporation.

         "Indenture" means that certain indenture dated February 5, 1998 between
the Parent and First Union National Bank, as trustee, as amended, modified or
supplemented from time to time.

         "Instruments" means all instruments as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower.

<PAGE>

         "Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrower in its Notice of Borrowing, in the form attached hereto as Exhibit D,
or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E,
provided that:

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

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

                  (c) no Interest Period shall extend beyond the Stated
         Termination Date.

         "Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.

         "Inventory" means all of the Borrowers' now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in the Borrowers' business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.

         "Investment Property" means all of the Borrowers' right title and
interest in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.

         "IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.

         "Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 5.2(e), the
projections of the Borrowers' financial condition, results of operations, and
cash flows, for the period commencing on June 25, 2001 and ending on June 30,
2002 and delivered to the Agent prior to the Closing Date; and (b) thereafter,
the projections most recently received by the Agent pursuant to Section 5.2(f).

         "Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Ex-Im Bank Revolving Loan or
Non-Ratable Loan outstanding; provided

<PAGE>

that no such Agent Advance or Ex-Im Bank Revolving Loan or Non-Ratable Loan
shall be taken into account in determining any Lender's Pro Rata Share.

         "Letter of Credit" has the meaning specified in Section 1.4(a).

         "Letter of Credit Fee" has the meaning specified in Section 2.6.

         "Letter of Credit Fee Percentage" means a per annum percent equal to
the Applicable Margin for LIBOR Rate Loans.

         "Letter of Credit Issuer" means the Bank, any affiliate of the Bank or
any other financial institution that issues any Letter of Credit pursuant to
this Agreement.

         "Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the UCC, now owned or hereafter acquired by any Borrower,
including rights to payment or performance under a letter of credit, whether or
not such Borrower, as beneficiary, has demanded or is entitled to demand payment
or performance.

         "Letter of Credit Subfacility" means $10,000,000.

         "Leverage Ratio" means, with respect to any fiscal period of the Parent
and its Domestic Subsidiaries, the ratio of (a) Funded Debt to (b) EBITDA.

         "LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan,
the Termination Date and the last day of each Interest Period applicable to such
Loan or, with respect to each Interest Period of greater than three months in
duration, the last day of the third month of such Interest Period and the last
day of such Interest Period.

         "LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the rate of interest per annum determined pursuant to the following
formula:

                  LIBOR Rate  =               Offshore Base Rate
                                 --------------------------------------------
                                     1.00 - Eurodollar Reserve Percentage
                  Where,

                           "Offshore Base Rate" means the rate per annum
                  appearing on Telerate Page 3750 (or any successor page) as the
                  London interbank offered rate for deposits in Dollars at
                  approximately 11:00 a.m. (London time) two Business Days prior
                  to the first day of such Interest Period for a term comparable
                  to such Interest Period. If for any reason such rate is not
                  available, the Offshore Base Rate shall be, for any Interest
                  Period, the rate per annum appearing on Reuters Screen LIBO
                  Page as the London interbank offered rate for deposits in
                  Dollars at approximately 11:00 a.m. (London time) two Business
                  Days prior to the first day of such Interest Period for a term
                  comparable to such Interest Period; provided, however, if more
                  than one rate is specified on Reuters Screen LIBO Page, the
                  applicable rate shall be the arithmetic mean of all such
                  rates. If for any reason none of the foregoing

<PAGE>

                  rates is available, the Offshore Base Rate shall be, for any
                  Interest Period, the rate per annum determined by Agent as the
                  rate of interest at which dollar deposits in the approximate
                  amount of the LIBOR Rate Loan comprising part of such
                  Borrowing would be offered by the Bank's London Branch to
                  major banks in the offshore dollar market at their request at
                  or about 11:00 a.m. (London time) two Business Days prior to
                  the first day of such Interest Period for a term comparable to
                  such Interest Period.

                           "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 applicable to member banks under
                  regulations issued from time to time by the Federal Reserve
                  Board for determining the maximum reserve requirement
                  (including any emergency, supplemental or other marginal
                  reserve requirement) with respect to Eurocurrency funding
                  (currently referred to as "Eurocurrency liabilities"). The
                  Offshore Rate for each outstanding LIBOR Rate Loan shall be
                  adjusted automatically as of the effective date of any change
                  in the Eurodollar Reserve Percentage.

         "LIBOR Rate Loans" means the LIBOR Revolving Loans.

         "LIBOR Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.

         "Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (b) to the extent not included
under clause (a), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (c) any contingent or other agreement to
provide any of the foregoing.

         "Loan Account" means the loan account of the Borrowers, which account
shall be maintained by the Agent.

         "Loan Documents" means this Agreement, the Factor Assignment and
Intercreditor Agreements, the Security Agreement, the Borrowers' Ex-Im
Agreement, and any other agreements, instruments, and documents heretofore, now
or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.

         "Loans" means, collectively, all loans and advances provided for in
Article 1.

         "Majority Lenders" means at any date of determination Lenders whose Pro
Rata Shares aggregate more than 50%.

<PAGE>

         "Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.

         "Master Ex-Im Bank Guarantee" means an Export-Import Bank of the United
States Working Capital Guarantee Program Master Guarantee Agreement executed by
Ex-Im Bank and the Agent pertaining to the Ex-Im Bank Working Capital Guarantee
Program.

         "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrowers and their Subsidiaries
taken as a whole, (b) a material adverse change in, or a material adverse effect
upon the Collateral; (c) a material impairment of the ability of the Borrowers
to perform under any Loan Document to which it is a party; or (d) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Borrower of any Loan Document to which it is a party.

         "Maximum Inventory Loan Amount" means $75,000,000.

         "Maximum Revolver Amount" means $150,000,000, or such lesser amount as
determined pursuant to the provisions of Section 3.2.

         "Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA.

         "Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed.

         "Net Amount of Eligible Foreign Accounts" means, at any time, the gross
amount of Eligible Foreign Accounts less sales, excise or similar taxes, and
less returns, discounts, claims, credits and allowances accrued rebates,
offsets, deductions, counterclaims, disputes and other defenses of any nature at
any time issued, owing, granted, outstanding, available or claimed.

         "Net Orderly Liquidation Value" means the appraised orderly liquidation
value of Eligible Inventory, net of all costs, fees and expenses of such
liquidation as determined by an appraiser acceptable to Agent in its sole
discretion.

         "Net Proceeds" has the meaning specified in Section 3.4(b).

         "Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified
in Section 1.2(h).

         "Notice of Borrowing" has the meaning specified in Section 1.2(b).

         "Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(b).

<PAGE>

         "Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by any Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to the Borrowers hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.

         "Obligor" means any Borrower, and "Obligors" means the Borrowers,
collectively.

         "Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.

         "Participant" means any Person who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.

         "Payment Account" means each bank account established pursuant to the
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or any
Borrower, as the Agent may determine, on terms acceptable to the Agent.

         "PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.

         "Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.

         "Pension Plan" means a "pension plan" as defined in Section 3(2) of
ERISA which is subject to Title IV of ERISA and which is not a Multi-employer
Plan.

         "Permitted Acquisition" means the acquisition in a single transaction
or series of related transactions of the property and assets or Capital Stock or
a business unit of another Person by any Borrower (including any such
acquisition by merger to the extent no Change of Control shall occur) so long as
(1) such acquired assets are in the same or a similar line of business in
compliance with Section 7.17 hereof, (2) such acquisition is in compliance with
the definition of Restricted Investments, (3) in the case of an acquisition of
Capital Stock, all liabilities of the

<PAGE>

target company to be assumed by the Borrowers shall have been approved by the
Required Lenders and (4) the target company or the assets to be acquired shall
have demonstrated positive net profits for the four fiscal quarter period ending
immediately prior to such acquisition.

         "Permitted Liens" means:

                  (a) Liens for taxes not delinquent or statutory Liens for
         taxes in an amount not to exceed $1,000,000 provided that the payment
         of such taxes which are due and payable is being contested in good
         faith and by appropriate proceedings diligently pursued and as to which
         adequate financial reserves have been established on a Borrower's books
         and records and a stay of enforcement of any such Lien is in effect;

                  (b) the Agent's Liens;

                  (c) Liens consisting of deposits made in the ordinary course
         of business in connection with, or to secure payment of, obligations
         under worker's compensation, unemployment insurance, social security
         and other similar laws, or to secure the performance of bids, tenders
         or contracts (other than for the repayment of Debt) or to secure
         indemnity, performance or other similar bonds for the performance of
         bids, tenders or contracts (other than for the repayment of Debt) or to
         secure statutory obligations (other than liens in excess of $1,000,000
         arising under ERISA or Environmental Liens) or surety or appeal bonds,
         or to secure indemnity, performance or other similar bonds;

                  (d) Liens securing the claims or demands of materialmen,
         mechanics, carriers, warehousemen, landlords and other like Persons,
         provided that if any such Lien arises from the nonpayment of such
         claims or demand when due, such claims or demands do not exceed
         $1,000,000 in the aggregate;

                  (e) Liens constituting encumbrances in the nature of
         reservations, exceptions, encroachments, easements, rights of way,
         covenants running with the land, and other similar title exceptions or
         encumbrances affecting any Real Estate; provided that they do not in
         the aggregate materially detract from the value of the Real Estate or
         materially interfere with its use in the ordinary conduct of any
         Borrower's business;

                  (f) Liens arising from judgments and attachments in connection
         with court proceedings provided that the attachment or enforcement of
         such Liens would not result in an Event of Default hereunder and such
         Liens are being contested in good faith by appropriate proceedings,
         adequate reserves have been set aside and no material Property is
         subject to a material risk of loss or forfeiture and the claims in
         respect of such Liens are fully covered by insurance (subject to
         ordinary and customary deductibles) and a stay of execution pending
         appeal or proceeding for review is in effect;

                  (g) Liens permitted by Sections 7.13 or 7.19, provided that
         any such Lien attaches substantially simultaneously with the incurrence
         of the related debt or other obligation;

<PAGE>

                  (h) operating leases or subleases granted to others not
         interfering in any material respect with the business of the Borrowers;

                  (i) any interest of title of a lessor under, and Liens arising
         from UCC financing statements (or equivalent filings, registrations or
         agreements in foreign jurisdictions) relating to, leases permitted by
         this Agreement;

                  (j) normal and customary rights of setoff upon deposits of
         cash in favor of banks or other depository institutions;

                  (k) Liens of a collecting bank arising under Section 4-210 of
         the UCC on items in the course of collection;

                  (l) Liens created or deemed to exist in connection with any
         Factoring Agreements or consignment agreements approved by the Agent
         and Liens arising from UCC financing statements (or equivalent filings,
         registrations, or agreements in foreign jurisdictions) relating to,
         such approved Factoring Agreements and consignment agreements; and

                  (m) a mortgage lien securing mortgage Debt permitted pursuant
         to Section 7.13 (g) to finance the purchase of the Corporate
         Headquarters.

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

         "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA), which any Borrower sponsors or maintains or to which any Borrower makes,
is making, or is obligated to make contributions and includes any Pension Plan.

         "Proprietary Rights" means all of each Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service mark applications, and all licenses and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names and
copyrights set forth on Schedule 6.12 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.

         "Pro Rata Share" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the

<PAGE>

Obligations owed to the Lenders, in each case giving effect to a Lender's
participation in Ex-Im Bank Revolving Loans, Non-Ratable Loans and Agent
Advances.

         "Real Estate" means all of each Borrower's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of each Borrower's now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.

         "Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.

         "Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66-2/3%.

         "Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

         "Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against Availability, Eligible Accounts or
Eligible Inventory, established by Agent from time to time in Agent's reasonable
credit judgment. Without limiting the generality of the foregoing, the following
reserves shall be deemed to be a reasonable exercise of Agent's credit judgment:
(a) Bank Product Reserves, (b) a reserve for accrued, unpaid interest on the
Obligations, (c) reserves for rent, not to exceed three (3) months, at leased
locations subject to statutory or contractual landlord liens, (d) Inventory
shrinkage, (e) customs charges, (f) dilution, (g) warehousemen's or bailees'
charges, (h) reserves of up to ten percent (10%) of the amount of Ex-Im Bank
Revolving Loans and (i) reserves for insurance deductibles.

         "Responsible Officer" means the chief executive officer, the president
or vice president of any Borrower, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer or the treasurer of any Borrower, or any other officer having
substantially the same authority and responsibility, and, for purposes of
execution and delivery of the monthly management reports and the quarterly
financial statements, the Borrowing Base Certificate and other collateral
reports and certificates, and Notices of Borrowing, the Director of Credit, the
Finance Director or the Director of Financial Planning, but only so long as each
such Director is fully covered under the Borrowers' D&O insurance policies to
the same extent as the other senior financial officers of the Borrowers.

         "Restricted Investment" means, as to the Borrowers, any acquisition of
property by any Borrower in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or

<PAGE>

a loan, advance, capital contribution, or subscription, except the following:
(a) acquisitions of Equipment to be used in the business of any Borrower so long
as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
the Borrowers; (c) acquisitions of current assets acquired in the ordinary
course of business of the Borrowers; (d) direct obligations of the United States
of America, or any agency thereof, or obligations guaranteed by the United
States of America, provided that such obligations mature within one year from
the date of acquisition thereof; (e) acquisitions of certificates of deposit
maturing within one year from the date of acquisition, bankers' acceptances,
Eurodollar bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of the
United States of America or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions of commercial paper given a
rating of "A2" or better by Standard & Poor's Corporation or "P2" or better by
Moody's Investors Service, Inc. and maturing not more than 90 days from the date
of creation thereof; (g) Hedge Agreements; (h) non-cash investments (so long as
the non-cash items paid, contributed or exchanged in connection with such
investments do not constitute Collateral) and (i) cash investments in joint
ventures and Permitted Acquisitions, but only so long as (1) the Fixed Charge
Coverage Ratio is not less than 1.0 to 1.0 after giving effect to such
investment on a pro forma basis, (2) Availability is (and would be after giving
effect to such investment) greater than or equal to $25,000,000 and (3) no
Default or Event of Default exists prior to or immediately after the making of
any such investment; provided, however, that if Availability would be less than
$25,000,000 but greater than or equal to $10,000,000 after giving effect to the
making of any such investment, notwithstanding the foregoing, such investment
may be made in accordance with and subject to the other requirements of this
clause (i) if after giving effect to the making thereof, the Fixed Charge
Coverage Ratio would not be less than 1.10 to 1.0 and the Leverage Ratio would
not be greater than 5.0 to 1.0, determined on a pro forma basis. For purposes of
clause (i) of this definition, "pro forma basis" shall mean that compliance with
the financial covenants referred to in this clause (i) shall be determined on
the basis of the financial statements and related numbers for the four
consecutive fiscal quarters ending with the fiscal quarter immediately preceding
the date on which any such investment is to be made and giving effect to the
making of such investment as if it were made on the first day of the four
consecutive fiscal quarters ending with such fiscal quarter.

         "Revolving Loans" has the meaning specified in Section 1.2 and includes
each Ex-Im Bank Revolving Loan, Agent Advance and Non-Ratable Loan.

         "Security Agreement" means the Security Agreement of even date herewith
among the Borrowers and Agent for the benefit of Agent and other Lenders.

         "Settlement" and "Settlement Date" have the meanings specified in
Section 12.15(a)(ii).

         "Software" means all "software" as such term is defined in the UCC, now
owned or hereafter acquired by any Borrower, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

<PAGE>

         "Solvent" means, when used with respect to any Person, that at the time
of determination:

                  (a) the assets of such Person, at a fair valuation, are in
         excess of the total amount of its debts (including contingent
         liabilities); and

                  (b) the present fair saleable value of its assets is greater
         than its probable liability on its existing debts as such debts become
         absolute and matured; and

                  (c) it is then able and expects to be able to pay its debts
         (including contingent debts and other commitments) as they mature; and

                  (d) it has capital sufficient to carry on its business as
         conducted and as proposed to be conducted.

         For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

         "Stated Termination Date" means December 7, 2006.

         "Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Parent.

         "Supporting Obligations" means all supporting obligations as such term
is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.

         "Synthetic Lease" means a lease treated as an operating lease under
GAAP and as a loan or financing for United States income tax purposes and
pursuant to which the lessee retains the economic risk with respect to the value
of the residual interest in the leased property.

         "Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
each Lender's net income in any the jurisdiction (whether federal, state or
local and including any political subdivision thereof) under the laws of which
such Lender or the Agent, as the case may be, is organized or maintains a
lending office.

         "Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrowers pursuant to Section 3.2 or by the

<PAGE>

Required Lenders pursuant to Section 9.2, and (iii) the date this Agreement is
otherwise terminated for any reason whatsoever pursuant to the terms of this
Agreement.

         "Total Facility" has the meaning specified in Section 1.1 adjusted for
permanent reductions pursuant to Section 3.2.

         "UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of North Carolina or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests; provided, that to the extent that the UCC is
used to define any term herein or in any other documents and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.

         "Unused Letter of Credit Subfacility" means an amount equal to
$10,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.

         "Unused Line Fee" has the meaning specified in Section 2.5.

         "Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

         "Wachovia Asset Securitization" means that certain receivables
financing dated December 19, 2000 among Unifi Receivables, LLC, as Seller,
Unifi, Inc., as initial servicer, Blue Ridge Asset Funding Corporation and
Wachovia Bank, N.A., as Agent.

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