Document:

LEVI STRAUSS & CO.

                                 THIRD AMENDMENT
              TO 1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                  This THIRD  AMENDMENT  TO 1997  SECOND  AMENDED  AND  RESTATED
CREDIT AGREEMENT (this  "AMENDMENT") is dated as of October 13, 2000 and entered
into by and among Levi Strauss & Co., a Delaware  corporation  ("Company");  the
financial  institutions party hereto ("BANKS");  Bank of America,  N.A. as Agent
for Banks  ("Agent");  and Bank of America,  N.A. as Collateral  Agent for Banks
("COLLATERAL  AGENT"),  and is made with  reference  to that certain 1997 Second
Amended and Restated  Credit  Agreement dated as of January 31, 2000, as amended
by First  Amendment to 1997 Second  Amended and Restated  Credit  Agreement  and
Limited  Waiver  dated as of July 31, 2000 and Second  Amendment  to 1997 Second
Amended and Restated  Credit  Agreement and Limited Waiver dated as of September
29, 2000 (the "CREDIT  AGREEMENT"),  by and among  Company;  Banks;  the several
financial  institutions  party thereto as Senior  Managing  Agents;  the several
financial  institutions  party thereto as Managing Agents; the several financial
institutions   party  thereto  as  Co-Agents;   Agent;  and  Collateral   Agent.
Capitalized  terms used herein without  definition  shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS,   Company  and  Banks  desire  to  amend  the  Credit
Agreement as set forth below.

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

                  SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT

                  1.1 AMENDMENT TO ARTICLE II: THE CREDITS

                  A. Section 2.8(a) of the Credit Agreement is hereby amended by
adding the following as the final sentence thereof:

                  "Company  may, if so  specified  in the  applicable  notice of
prepayment, request that any prepayment of Loans pursuant to this Section 2.8 be
applied to reduce the principal  amounts  payable and  corresponding  Commitment
reductions under Section 2.10 in forward  chronological order; PROVIDED that (A)
the  amount  of  such  voluntary  prepayment  is  equal  to the  Three  Facility
Commitment  Reduction  Fraction TIMES the aggregate  amount of  prepayments  and
commitment  reductions  made  pursuant to  subclauses  (A),  (B) and (C) of this
paragraph,  (B) Company  simultaneously  makes a voluntary  prepayment  of loans
outstanding  under the Amended and Restated 1997 364 Day Credit  Agreement in an
amount equal to the Three  Facility  Commitment  Reduction  Fraction (as defined
therein)  TIMES the aggregate  amount of prepayments  and commitment  reductions
made pursuant to subclauses (A), (B) and (C) of this paragraph,  and

                                       1

<PAGE>

(C) Company  simultaneously  makes a voluntary  commitment  reduction  under the
Amended and  Restated  1999 180 Day Credit  Agreement  in an amount equal to the
Three  Facility  Commitment  Reduction  Fraction (as defined  therein) TIMES the
aggregate  amount of  prepayments  and  commitment  reductions  made pursuant to
subclauses  (A),  (B) and (C) of  this  paragraph;  PROVIDED  FURTHER  that  the
prepayments and commitment  reductions set forth in subclauses (B) and (C) above
are applied to reduce  scheduled  principal  payments and commitment  reductions
under the applicable credit agreements in forward chronological order."

                  SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A. CORPORATE  POWER AND  AUTHORITY.  Company has all requisite
corporate  power and authority to enter into this Amendment and to carry out the
transactions  contemplated  by, and perform its  obligations  under,  the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B. AUTHORIZATION OF AGREEMENTS.  The execution and delivery of
this  Amendment  and the  performance  of the Amended  Agreement  have been duly
authorized by all necessary corporate action on the part of Company.

                  C. NO CONFLICT.  The execution and delivery by Company of this
Amendment  and the  performance  by Company of the Amended  Agreement do not and
will not (i) violate any of its Organization Documents or any order, judgment or
decree of any court or other  Governmental  Authority  binding on Company,  (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination  of,  any  Contractual  Obligation  of  Company,  except  where such
conflicts, breaches, defaults and terminations, in the aggregate, would not have
a Material Adverse Effect, (iii) result in or require the creation or imposition
of any Lien of any nature  whatsoever  upon any of the  properties  or assets of
Company  (other than pursuant to the  Collateral  Documents) or (iv) require any
approval of  stockholders  or any  approval  or consent of any Person  under any
Contractual  Obligation  of Company  except  where the  failure  to obtain  such
approvals  and consents  would not, in the  aggregate,  have a Material  Adverse
Effect.

                  D.  GOVERNMENTAL  CONSENTS.  The  execution  and  delivery  by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.  BINDING   OBLIGATION.   This  Amendment  and  the  Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       2

<PAGE>

                  SECTION 3. MISCELLANEOUS

                  A.  REFERENCE  TO AND EFFECT ON THE CREDIT  AGREEMENT  AND THE
OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Agent,  Collateral  Agent or any Bank  under,  the  Credit
         Agreement or any of the other Loan Documents.

                  B.  GOVERNING  LAW. THIS  AMENDMENT  SHALL BE GOVERNED BY, AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE  OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed and  delivered  shall be deemed an
original,  but all such  counterparts  together shall constitute but one and the
same  instrument;  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.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and Agent of written or telephonic  notification of
such execution and authorization of delivery thereof.

                  [Remainder of page intentionally left blank]

                                       3

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.

                                    LEVI STRAUSS & CO.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    ABN AMRO BANK N.V.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    AIMCO CDO SERIES 2000-A

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    ARCHIMEDES FUNDING III LTD.

                                    By:___________________________
                                    Name:
                                    Title:

                                    ARCHIMEDES FUNDING LLC

                                    By:___________________________
                                    Name:
                                    Title:

                                    BANCA COMMERCIALE ITALIANA LOS ANGELES
                                    FOREIGN BRANCH

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BANCA MONTE DEI PASCHI DI SIENA SPA

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BANK OF AMERICA, N.A.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    THE BANK OF NOVA SCOTIA

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BANK ONE, N.A.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BANKERS TRUST COMPANY

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BNP PARIBAS

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    CAPTIVA III FINANCE LTD.

                                    By:____________________________
                                    Name:
                                    Title:

                                    CAPTIVA IV FINANCE LTD.

                                    By:_____________________________
                                    Name:
                                    Title:

                                    CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
                                    LOMBARDE SPA

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    CIBC INC.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    CITICORP U.S.A. INCORPORATED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    COMMERZBANK AG
                                    NEW YORK AND GRAND CAYMAN BRANCHES

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    CYPRESS MANAGEMENT PARTNERSHIP

                                    By:_____________________________
                                    Name:
                                    Title:

                                    DEUTSCHE BANK AKTIENGESELLSCHAFT,
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                    BRANCH

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    FERNWOOD ASSOCIATES L.P.

                                    By:____________________________
                                    Name:
                                    Title:

                                    FIRST HAWAIIAN BANK

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    FLEET NATIONAL BANK (f/k/a BANKBOSTON, N.A.)

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    FRANKLIN FLOATING RATE TRUST

                                    By:____________________________
                                    Name:
                                    Title:

                                    GALAXY CLO 1999-1, LTD.

                                    By:____________________________
                                    Name:
                                    Title:

                                    GOLDMAN SACHS & COMPANY

                                    By:___________________________
                                    Name:
                                    Title:

                                    THE INDUSTRIAL BANK OF JAPAN, LIMITED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    INDOSUEZ CAPITAL FUNDING III LIMITED,
                                        BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR

                                    By:_____________________________
                                    Name:
                                    Title:

                                    INDOSUEZ CAPITAL FUNDING IV L.P.,
                                        BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR

                                    By:_____________________________
                                    Name:
                                    Title:

                                    INDOSUEZ CAPITAL FUNDING VI LIMITED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    KZH SOLEIL LLC

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    MELLON BANK, N.A.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    NEMEAN CLO, LTD.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    COOPERATIEVE CENTRALE RAIFFEISEN-
                                    BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
                                    NEW YORK BRANCH

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    SALOMON BROTHERS HOLDING COMPANY INC.

                                    By:______________________________
                                    Name:
                                    Title:

                                    THE SANWA BANK, LIMITED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    SOCIETE GENERALE NEW YORK BRANCH

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    THE SUMITOMO BANK, LIMITED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    THE TOKAI BANK LIMITED

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    UBS AG, STAMFORD BRANCH

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    UNICREDITO ITALIANO S.P.A.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    WACHOVIA BANK N.A.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                    BANK OF AMERICA, N.A., as Agent

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

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

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

ACKNOWLEDGED:

BATTERY STREET ENTERPRISES, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS FUNDING, LLC

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS GLOBAL OPERATIONS, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS INTERNATIONAL

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI STRAUSS LATIN AMERICA, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

LEVI'S ONLY STORES, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------

NF INDUSTRIES, INC.

By:
   ---------------------------------------------------
Title:
      ------------------------------------------------CREDIT AGREEMENT

         CREDIT AGREEMENT dated as of February 1, 2001 among LEVI STRAUSS & CO.,
a Delaware corporation (the "BORROWER"),  the banks,  financial institutions and
other  institutional  lenders  listed on the  signature  pages  hereof under the
caption  "INITIAL  LENDERS"  (the  "INITIAL  LENDERS"),  the banks listed on the
signature pages hereof under the caption  "INITIAL  ISSUING BANKS" (the "INITIAL
ISSUING BANKS"), BANK OF AMERICA,  N.A. ("BANK OF AMERICA"),  as the provider of
Swing Line Advances (as hereinafter  defined) hereunder (the "SWING LINE BANK"),
BANC OF AMERICA SECURITIES LLC ("BAS") and SALOMON SMITH BARNEY INC. ("SSB"), as
co-lead  arrangers and joint book managers  (the  "CO-LEAD  ARRANGERS")  for the
Facilities  (as  hereinafter  defined)  hereunder,  CITICORP  USA,  INC., as the
syndication  agent (the  "SYNDICATION  AGENT"),  THE BANK OF NOVA SCOTIA, as the
documentation agent (the "DOCUMENTATION  AGENT"), and BANK OF AMERICA,  N.A., as
the  administrative  and collateral  agent (together with any successor  thereto
appointed  pursuant to Article VII, the  "ADMINISTRATIVE  AGENT") for the Lender
Parties (as hereinafter defined).

                             PRELIMINARY STATEMENTS

         (i) The Borrower is a party to (a) that certain Bridge Credit Agreement
dated as of January 31, 2000,  as amended by First  Amendment  to Bridge  Credit
Agreement and Limited  Waiver dated as of July 31, 2000 and Second  Amendment to
Bridge Credit  Agreement and Limited  Waiver dated as of September 29, 2000; (b)
that certain  Amended and  Restated  1999 180 Day Credit  Agreement  dated as of
January 31, 2000, as amended by First Amendment to Amended and Restated 1999 180
Day Credit  Agreement  and  Limited  Waiver  dated as of July 31,  2000,  Second
Amendment  to Amended and  Restated  1999 180 Day Credit  Agreement  and Limited
Waiver  dated as of  September  29,  2000 and Third  Amendment  to  Amended  and
Restated 1999 180 Day Credit  Agreement  dated as of October 13, 2000;  (c) that
certain  Amended and Restated 1997 364 Day Credit  Agreement dated as of January
31, 2000,  as amended by First  Amendment  to Amended and Restated  1997 364 Day
Credit Agreement and Limited Waiver dated as of July 31, 2000,  Second Amendment
to Amended and Restated 1997 364 Day Credit  Agreement and Limited  Waiver dated
as of September  29, 2000 and Third  Amendment to Amended and Restated  1997 364
Day Credit  Agreement  dated as of October 13,  2000;  and (d) that certain 1997
Second Amended and Restated  Credit  Agreement  dated as of January 31, 2000, as
amended by First Amendment to 1997 Second Amended and Restated Credit  Agreement
and Limited  Waiver dated as of July 31, 2000,  Second  Amendment to 1997 Second
Amended and Restated  Credit  Agreement and Limited Waiver dated as of September
29,  2000 and  Third  Amendment  to 1997  Second  Amended  and  Restated  Credit
Agreement  dated as of October  13, 2000  (collectively,  the  "EXISTING  CREDIT
AGREEMENTS").

         (ii)  The  Borrower  and the  Initial  Lenders  wish to  refinance  all
obligations of the Borrower under the Existing Credit Agreements.

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

<PAGE>

                                   ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

         Section 1.01 Certain  Defined  Terms.  As used in this  Agreement,  the
                      -----------------------
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

         "ADMINISTRATIVE  AGENT" has the  meaning  specified  in the  recital of
parties to this Agreement.

         "ADMINISTRATIVE   AGENT'S   ACCOUNT"   means   the   account   of   the
Administrative Agent maintained by the Administrative Agent with Bank of America
at its office at 1850  Gateway  Boulevard,  5th Floor,  CA4-706-05-09,  Concord,
California 94520, ABA No. 111-000-012,  Account No. 3750836479,  Reference: Levi
Strauss,  Attention:  Agency Services West, or such other account  maintained by
the Administrative Agent and designated by the Administrative Agent as such in a
written notice to the Borrower and each of the Lender Parties.

         "ADVANCE" means a Tranche A Term Advance,  a Tranche B Term Advance,  a
Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance, as
the context may require.

         "AFFILIATE"  means, with respect to any Person,  any other Person that,
directly or  indirectly,  controls,  is controlled by or is under common control
with such Person or is a director  or officer of such  Person.  For  purposes of
this  definition,   the  term  "control"  (including  the  terms  "controlling,"
"controlled  by"  and  "under  common  control  with")  of a  Person  means  the
possession,  direct or indirect,  of the power to vote 10% or more of the Voting
Interests of such Person or to direct or cause the  direction of the  management
and policies of such Person,  whether through the ownership of Voting Interests,
by contract or otherwise.

         "AGENTS" means,  collectively,  the  Administrative  Agent, the Co-Lead
Arrangers,  the Syndication Agent, the Documentation  Agent and each co-agent or
sub-agent  appointed by the  Administrative  Agent from time to time pursuant to
Section 7.01(b).

         "AGGREGATE UNUSED REVOLVING CREDIT COMMITMENTS" means, at any time, (a)
the  aggregate  Revolving  Credit  Commitments  at such time  MINUS (b) the sum,
without  duplication,  of (i) the  aggregate  principal  amount of all Revolving
Credit Advances and Letter of Credit Advances (in respect of Domestic Letters of
Credit)  outstanding at such time,  (ii) the aggregate  Available  Amount of all
Domestic  Letters  of Credit  outstanding  at such  time,  (iii)  the  aggregate
principal  amount of all Swing Line Advances  outstanding at such time, and (iv)
the Foreign  Letter of Credit  Sublimit.  For purposes of this  definition,  any
amount  described in the preceding  sentence  which is denominated in a currency
other than Dollars  shall be valued based on the  applicable  Exchange  Rate for
such currency as of the applicable date of determination.

         "AGREEMENT  VALUE" means,  with respect to each Hedge  Agreement on any
date of  determination,  after  taking  into  account  the effect of any legally
enforceable netting agreement relating to such Hedge Agreement,  an amount equal
to the termination value,  expressed in Dollars,  as determined by the Borrower;
PROVIDED,  HOWEVER,  that in the  event  that  two  Lenders  determine  that the
mark-to-market  value,  expressed  in  Dollars,  for  any  Hedge  Agreement,  as

                                       2

<PAGE>

determined  based  upon  one or  more  mid-market  or  other  readily  available
quotations provided by any recognized dealer in such Hedge Agreement, is greater
than the termination value for such Hedge Agreement  determined by the Borrower,
the Agreement Value of such Hedge  Agreement  shall be the amount  determined by
such  Lenders;  PROVIDED  FURTHER  that any  such  determination  shall  have no
evidentiary  value for purposes of determining the amount owed to the applicable
Hedge Bank.

         "APPLICABLE LENDING OFFICE" means (a) with respect to each Issuing Bank
and the Swing Line Bank,  such Issuing Bank's or the Swing Line Bank's Base Rate
Lending  Office for all purposes of this  Agreement and (b) with respect to each
other Lender Party,  such Lender Party's Base Rate Lending Office in the case of
a Base Rate Advance and such Lender  Party's  Eurodollar  Lending  Office in the
case of a Eurodollar Rate Advance.

         "APPLICABLE  MARGIN"  means (a) at any time  during the period from the
date of this  Agreement  through  July 31, 2001, a rate equal to 2.25% per annum
for Base Rate Advances and 3.50% per annum for Eurodollar  Rate Advances and (b)
at any time and from  time to time  thereafter,  a rate per  annum  equal to the
percentage  set forth below  opposite the  applicable  Performance  Level listed
below at such time:

<TABLE>
<CAPTION>

======================= ========================================== ======================== ========================
     PERFORMANCE                        LEVERAGE                                                EURODOLLAR RATE
        LEVEL                             RATIO                      BASE RATE ADVANCES            ADVANCES
----------------------- ------------------------------------------ ------------------------ ------------------------
<S>                     <C>                                                 <C>                      <C>
      I                 less than 2.75:1.00                                 1.25%                    2.50%
----------------------- ------------------------------------------ ------------------------ ------------------------
      II                greater  than or equal to  2.75:1.00  but           1.50%                    2.75%
                        less than 3.00:1.00
----------------------- ------------------------------------------ ------------------------ ------------------------
      III               greater  than or equal to  3.00:1.00  but           1.75%                    3.00%
                        less than 3.25:1.00
----------------------- ------------------------------------------ ------------------------ ------------------------
      IV                greater  than or equal to  3.25:1.00  but           2.00%                    3.25%
                        less than 3.50:1.00
----------------------- ------------------------------------------ ------------------------ ------------------------
      V                 greater than or equal to 3.50:1.00                  2.25%                    3.50%
======================= ========================================== ======================== ========================

</TABLE>

For purposes of clause (b) of the immediately preceding sentence, at any date of
determination,  the  Applicable  Margin  for each  Base  Rate  Advance  and each
Eurodollar  Rate Advance shall be determined by reference to the Leverage  Ratio
for the most recently completed Measurement Period. The first Measurement Period
shall be the four consecutive  Fiscal Quarters ending May 27, 2001. For purposes
of determining the applicable Performance Level at any date of determination, no
change in the  Performance  Level shall be effective  until three  Business Days
after the date on which the Administrative Agent receives the Required Financial
Information reflecting such change; PROVIDED,  HOWEVER, that if the Borrower has
not  submitted  to  the  Administrative  Agent  all of  the  Required  Financial
Information  within three Business Days after the date on which such information
is otherwise required under Section 5.03(b) or 5.03(c),  as the case may be, the
Performance  Level shall be deemed to be at  Performance  Level V for so long as
such information has not been submitted.

         "APPROPRIATE  LENDER"  means,  at any  time,  (a) with  respect  to the
Tranche A Term  Facility,  the Tranche B Term Facility or the  Revolving  Credit
Facility,  a Lender that has a

                                       3

<PAGE>

Commitment  with respect to such Facility at such time,  (b) with respect to any
Letter of Credit,  (i) any Issuing Bank and (ii) if the Revolving Credit Lenders
have  made  Letter of Credit  Advances  pursuant  to  Section  2.03(c)  that are
outstanding  at such  time,  each such  Revolving  Credit  Lender,  and (c) with
respect to Swing Line Advances, the Swing Line Bank.

         "APPROVED  FUND" means,  with respect to any Lender that is a fund that
invests  in bank  loans or other  commercial  loans,  any  other  fund that also
invests in such loans and is advised or managed by the same  investment  advisor
as such Lender or by an Affiliate of such investment advisor.

         "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance  entered
into  by  a  Lender  Party  and  an  Eligible  Assignee,  and  accepted  by  the
Administrative  Agent and, if  applicable,  the  Borrower,  in  accordance  with
Section 8.07 and in substantially the form of Exhibit C hereto.

         "AVAILABLE  AMOUNT" of any  Letter of Credit  means,  at any time,  the
maximum  amount  available  to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).

         "BANK OF AMERICA"  has the meaning  specified in the recital of parties
to this Agreement.

         "BAS" has the  meaning  specified  in the  recital  of  parties to this
Agreement.

         "BASE RATE" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate PLUS 1/2 of 1% and (b) the rate of interest
in  effect  for  such day as  publicly  announced  from  time to time by Bank of
America as its "prime  rate."  Such rate is a rate set by Bank of America  based
upon  various  factors  including  Bank of America's  costs and desired  return,
general economic conditions and other factors,  and is used as a reference point
for pricing some loans,  which may be priced at, above,  or below such announced
rate.  Any  change in the Base Rate  resulting  from a change in the prime  rate
established  by Bank of America  shall  become  effective on the Business Day on
which such change in the prime rate is announced by Bank of America.

         "BASE RATE ADVANCE" means an Advance that bears interest as provided in
Sections 2.07(a)(i)(A) and 2.07(a)(ii)(A).

         "BASE RATE LENDING  OFFICE"  means,  with respect to each of the Lender
Parties,  the office of such Lender  Party  specified  as its "Base Rate Lending
Office" opposite its name on the signature pages hereof or in the Assignment and
Acceptance  pursuant to which it became a Lender  Party,  as the case may be, or
such other  office of such Lender  Party as such  Lender  Party may from time to
time specify to the Borrower and the Administrative Agent for such purpose.

         "BORROWER" has the meaning  specified in the recital of parties to this
Agreement.

         "BORROWER'S  ACCOUNT"  means the account of the Borrower  maintained by
the Borrower with Bank of America at its office at 1850 Gateway  Boulevard,  5th
Floor, CA4-706-05-09,  Concord,  California 94520, ABA No. 111-000-012,  Account
No.  12335-02255,  Reference:  Levi  Strauss  &  Co.  Secured  Credit  Facility,
Attention:  Treasurer or such other  account of such

                                       4

<PAGE>

Borrower as is agreed from time to time in writing  between the Borrower and the
Administrative Agent.

         "BORROWING"  means  a  Tranche  A  Term  Borrowing,  a  Tranche  B Term
Borrowing,  a  Revolving  Credit  Borrowing,  a Swing Line  Borrowing  or an L/C
Borrowing, as the context may require.

         "BUSINESS  DAY" means a day of the year on which banks are not required
or authorized by law to close in New York, New York or San Francisco, California
and, if the applicable Business Day relates to any Eurodollar Rate Advances,  on
which dealings are carried on in Dollar deposits in the London interbank market.

         "CAPITAL  ASSETS"  means,  with respect to any Person,  all  equipment,
fixed assets and real property or improvements  of such Person,  or replacements
or substitutions  therefor or additions thereto,  that, in accordance with GAAP,
have been or should be reflected as additions to property, plant or equipment on
the  balance  sheet of such  Person or that have a useful  life of more than one
year.

         "CAPITAL  EXPENDITURES"  means,  with  respect  to any  Person  for any
period,  (a) all expenditures  made directly or indirectly by such Person during
such period for Capital Assets (whether paid in cash or other  consideration  or
accrued as a liability and including,  without limitation,  all expenditures for
maintenance  and repairs  which are  required,  in  accordance  with GAAP, to be
capitalized  on the  books of such  Person)  and (b)  solely to the  extent  not
otherwise  included in clause (a) of this  definition,  the aggregate  principal
amount of all Debt  (including,  without  limitation,  Obligations in respect of
Capitalized  Leases)  assumed or incurred  during such period in connection with
any such expenditures for Capital Assets.  For purposes of this definition,  the
purchase price of equipment that is purchased  simultaneously  with the trade-in
of existing  equipment or with  insurance  proceeds shall be included in Capital
Expenditures only to the extent of the gross amount by which such purchase price
exceeds the credit  granted by the seller of such  equipment  for the  equipment
being traded in at such time or the amount of such  insurance  proceeds,  as the
case may be.

         "CAPITAL MARKETS  TRANSACTION" means an issuance or sale of Debt by the
Borrower  through a public  or  private  placement  (other  than Debt  expressly
permitted  to be incurred  or issued  pursuant  to Section  5.02(b)  (other than
Section 5.02(b)(i)(C)).

         "CAPITALIZED LEASE" means any lease with respect to which the lessee is
required to recognize  concurrently  the acquisition of property or an asset and
the incurrence of a liability in accordance with GAAP.

         "CASH  COLLATERAL  ACCOUNT" has the meaning  specified in Section 11 of
the Pledge and Security Agreement.

         "CASH DISTRIBUTIONS"  means, with respect to any Person for any period,
all dividends and other distributions on any of the outstanding Equity Interests
in such Person, all purchases,  redemptions,  retirements,  defeasances or other
acquisitions of any of the outstanding  Equity  Interests in such Person and all
returns of capital to the  stockholders,  partners or members (or the

                                       5

<PAGE>

equivalent  Persons) of such Person,  in each case to the extent paid in cash by
or on behalf of such Person during such period.

         "CASH  EQUIVALENTS"  means,  as  at  any  date  of  determination,  (i)
marketable  securities (a) issued or directly and unconditionally  guaranteed as
to interest and principal by the United  States  government or (b) issued by any
agency of the  United  States  the  obligations  of which are backed by the full
faith and credit of the United  States,  in each case  maturing  within one year
after such date; (ii) marketable direct  obligations  issued by any state of the
United  States or any  political  subdivision  of any such  state or any  public
instrumentality  thereof,  in each case maturing within one year after such date
and having, at the time of the acquisition thereof, a rating of at least A- from
S&P or the equivalent thereof from another nationally  recognized rating agency;
(iii)  commercial paper maturing no more than 270 days from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's;  (iv) time deposits,  certificates of
deposit or  bankers'  acceptances  maturing  within one year after such date and
issued or accepted by any Lender or by any commercial  bank organized  under the
laws of the United States,  any state thereof or an OECD country having, at such
date,  a rating of at least A- from S&P or the  equivalent  thereof from another
nationally  recognized  rating  agency  (except  as  otherwise  approved  by the
Treasurer  of  the  Borrower)  or  by a  primary  government  securities  dealer
reporting  to the Market  Reports  Division of the Federal  Reserve  Bank of New
York; (v) repurchase agreements with financial  institutions organized under the
laws of the United States,  any state thereof or an OECD country having, at such
date,  a rating of at least A- from S&P or the  equivalent  thereof from another
nationally  recognized  rating  agency  (except  as  otherwise  approved  by the
Treasurer  of the  Borrower)  or with a  primary  government  securities  dealer
reporting  to the Market  Reports  Division of the Federal  Reserve  Bank of New
York; (vi) Dollar denominated  floating rate notes, foreign currency denominated
floating rate notes and foreign  indexed notes, in each case maturing within one
year after  such date and  having,  at the time of the  acquisition  thereof,  a
rating  of at least A or A-1 from S&P or the  equivalent  thereof  from  another
nationally  recognized  rating agency;  (vii) auction rate notes maturing within
one year after such date and having, at the time of the acquisition  thereof,  a
rating  of at least A or A-1 from S&P or the  equivalent  thereof  from  another
nationally  recognized  rating  agency;  (viii)  money  market  preferred  funds
maturing  within  one  year  after  such  date  and  having,  at the time of the
acquisition  thereof, a rating of at least AA from S&P or the equivalent thereof
from another  nationally  recognized rating agency;  and (ix) money market funds
maturing  within  one  year  after  such  date  and  having,  at the time of the
acquisition  thereof, a rating of at least A- from S&P or the equivalent thereof
from another nationally recognized rating agency;  provided such investments are
limited to $25,000,000 for each such fund and  $100,000,000 in the aggregate for
all such funds,  such funds are  open-end  funds with total  assets of more than
$1,000,000,000  and an expressed  goal of maintaining a net asset value of $1.00
per share and such funds limit their investments to the prime credit instruments
allowed in this definition with average weighted maturity of less than 90 days.

         "CLOSING  DATE"  means  the first  date on which all of the  conditions
precedent  to the  Initial  Extension  of Credit  set forth in  Article  III are
satisfied, which date shall occur on or prior to February 1, 2001.

         "CO-LEAD ARRANGERS" has the meaning specified in the recital of parties
to this Agreement.

                                       6

<PAGE>

         "COLLATERAL"  means  all  of  the  "COLLATERAL"   referred  to  in  the
Collateral  Documents  and all of the other  property and assets that are or are
intended under the terms of the  Collateral  Documents to be subject to Liens in
favor of the Administrative Agent for the benefit of the Secured Parties.

         "COLLATERAL  DOCUMENTS"  means,  collectively,  the Pledge and Security
Agreement, the Foreign Pledge Agreements,  the Mortgages, each of the mortgages,
collateral assignments,  security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent and the Lender Parties pursuant
to Sections 5.01(i) and 5.01(l),  and each of the other agreements,  instruments
or  documents  that  creates  or  purports  to  create  a Lien in  favor  of the
Administrative Agent for the benefit of the Secured Parties.

         "COMMITMENT"  means a  Tranche  A Term  Commitment,  a  Tranche  B Term
Commitment or a Revolving Credit Commitment, as the context may require.

         "COMMITMENT FEE" has the meaning specified in Section 2.08(a).

         "CONFIDENTIAL  INFORMATION"  means information that is furnished to the
Administrative  Agent or any Lender  Party by or on behalf of the  Borrower in a
writing that either is conspicuously marked as confidential or that a reasonable
Person would believe is  confidential  or  proprietary  in nature,  but does not
include any such information that (a) is or becomes  generally  available to the
public or (b) is or becomes  available to the  Administrative  Agent or any such
Lender  Party  from a  source  other  than  the  Borrower  that is  not,  to the
Administrative Agent's or such Lender Party's knowledge,  acting in violation of
a confidentiality agreement with the Borrower;  PROVIDED,  HOWEVER, that neither
the  Administrative  Agent nor any Lender  Party  shall have any  obligation  to
inquire or determine whether such a confidentiality agreement exists.

         "CONSOLIDATED"  refers to the  consolidation  of accounts in accordance
with GAAP.

         "CONSOLIDATED  EBITDA"  means,  for any period,  (a)  Consolidated  Net
Income for such period PLUS (b) the sum of each of the  following  expenses that
have been deducted in the  determination of the Consolidated Net Income for such
period: (i) Consolidated  Interest Expense for such period,  (ii) all income tax
expense (whether federal,  state,  local,  foreign or otherwise) of the Borrower
and its  Subsidiaries  for such period,  (iii) all  depreciation  expense of the
Borrower and its Subsidiaries for such period, (iv) all amortization  expense of
the Borrower and its  Subsidiaries  for such  period,  and (v) all  nonoperating
expense  of the  Borrower  and  its  Subsidiaries  for  such  period  MINUS  all
nonoperating income of the Borrower and its Subsidiaries for such period.

         "CONSOLIDATED  EXCESS CASH FLOW" means,  for any period,  an amount (if
positive)  equal to Consolidated  EBITDA for such period MINUS the sum,  without
duplication,  of the  amounts  for such period of (a)  voluntary  and  scheduled
repayments of Debt (excluding  repayments of Revolving Credit Advances except to
the extent  Revolving Credit  Commitments are permanently  reduced in connection
with  such  prepayments)  by the  Borrower  and its  Subsidiaries,  (b)  Capital
Expenditures (net of any proceeds of any related financings with respect to such
expenditures)  made by the  Borrower  and  its  Subsidiaries,  (c)  Consolidated
Interest Expense and (d) all income

                                       7

<PAGE>

tax  expense  (whether  federal,  state,  local,  foreign or  otherwise)  of the
Borrower and its Subsidiaries.

         "CONSOLIDATED INTEREST EXPENSE" means, for any period, for the Borrower
and its Subsidiaries on a Consolidated  basis, all interest (net of all interest
income),  premium  payments,  fees,  charges and related expenses payable by the
Borrower and its  Subsidiaries  in  connection  with borrowed  money  (including
capitalized  interest)  or in  connection  with the deferred  purchase  price of
assets, in each case to the extent treated as interest in accordance with GAAP.

         "CONSOLIDATED  NET INCOME" means, for any period,  for the Borrower and
its  Subsidiaries  on a  Consolidated  basis,  the net  income  (or loss) of the
Borrower  and its  Subsidiaries  determined  in  accordance  with  GAAP for that
period.

         "CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets
(less applicable  reserves and other properly  deductible items) after deducting
therefrom (a) all current  liabilities  (excluding  any  indebtedness  for money
borrowed  having a  maturity  of less than 12  months  from the date of the most
recent  consolidated  balance  sheet of the  Borrower  but which by its terms is
renewable  or  extendable  beyond 12 months  from such date at the option of the
borrower), and (b) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles,  all as set forth on the most recent
consolidated  balance  sheet of the  Borrower and  computed in  accordance  with
generally accepted accounting principles.

         "CONSTITUTIVE  DOCUMENTS"  means,  with  respect  to  any  Person,  the
certificate  of  incorporation  or  registration   (including,   if  applicable,
certificate  of change of  name),  articles  of  incorporation  or  association,
memorandum of association,  charter, bylaws, certificate of limited partnership,
partnership agreement, trust agreement, joint venture agreement,  certificate of
formation,  articles of organization,  limited  liability  company  operating or
members  agreement,  joint venture agreement or one or more similar  agreements,
instruments  or documents  constituting  the  organization  or formation of such
Person.

         "CONTINGENT   OBLIGATION"  means,  with  respect  to  any  Person,  any
Obligation or  arrangement  of such Person to guarantee or intended to guarantee
any Debt, leases,  dividends or other obligations ("PRIMARY OBLIGATIONS") of any
other  Person  (the  "PRIMARY  OBLIGOR")  in any  manner,  whether  directly  or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement  (other than for  collection  or deposit in the  ordinary  course of
business),  co-making,  discounting  with recourse or sale with recourse by such
Person  of the  Obligation  of a primary  obligor,  (b) the  Obligation  to make
take-or-pay or similar  payments,  if required,  regardless of nonperformance by
any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not  contingent,  (i) to purchase any such primary  obligation or any
property  constituting direct or indirect security therefor,  (ii) to advance or
supply funds (A) for the purchase or payment of any such primary  obligation  or
(B) to maintain  revolving  credit or equity  capital of the primary  obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property,  assets,  securities or services primarily for the purpose of
assuring the owner of any such primary  obligation of the ability of the primary
obligor to make payment of such primary  obligation or (iv)  otherwise to assure
or hold harmless the holder of such primary  obligation  against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable  amount of the

                                       8

<PAGE>

primary  obligation in respect of which such Contingent  Obligation is made (or,
if less, the maximum amount of such primary obligation for which such Person may
be liable  pursuant to the terms of the instrument  evidencing  such  Contingent
Obligation)  or,  if  not  stated  or  determinable,   the  maximum   reasonably
anticipated  liability in respect  thereof  (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.

         "CONTINUATION",  "CONTINUE", "CONTINUED" and "CONTINUING" each refer to
a  continuation  of a  Eurodollar  Rate  Advance as a  Eurodollar  Rate  Advance
pursuant to Section 2.09.

         "CONVERSION",  "CONVERT",  "CONVERTED" and "CONVERTING" each refer to a
conversion  of Advances of one Type into  Advances of the other Type pursuant to
Section 2.09 or 2.10.

         "DEBT"  means,  with  respect to any Person  (without  duplication  for
purposes of calculating  financial  ratios and compliance with Section  5.02(b))
(a) all  indebtedness of such Person for borrowed money,  (b) all Obligations of
such Person for the deferred  purchase price of property or services (other than
trade payables incurred in the ordinary course of such Person's  business),  (c)
all Obligations of such Person  evidenced by notes,  bonds,  debentures or other
similar  instruments,  or upon which interest payments are customarily made, (d)
all Obligations of such Person created or arising under any conditional  sale or
other title retention agreement with respect to property acquired by such Person
(even  though  the  rights  and  remedies  of the  seller or lender  under  such
agreement  in the event of default are limited to  repossession  or sale of such
property),  (e) all  Obligations  of such  Person  as lessee  under  Capitalized
Leases,  (f) all  Obligations,  contingent  or  otherwise,  of such Person under
acceptance,  letter of credit or similar facilities, (g) all Obligations of such
Person to purchase,  redeem,  retire,  defease or otherwise  make any payment in
respect  of any  Equity  Interests  in such  Person or any  other  Person or any
warrants,  rights or options to acquire such Equity  Interests,  valued,  in the
case of  Redeemable  Preferred  Interests,  at the greater of its  voluntary  or
involuntary  liquidation  preference PLUS accrued and unpaid dividends,  (h) all
Obligations  of such  Person  in  respect  of Hedge  Agreements,  valued  at the
Agreement Value thereof,  (i) all Obligations of such Person under any synthetic
lease,  tax  retention  operating  lease,  off-balance  sheet  loan  or  similar
off-balance sheet financing  classified as an operating lease in accordance with
GAAP,  if such  Obligations  would give rise to a claim against such Person in a
proceeding referred to in Section 6.01(f), (j) all Contingent  Obligations,  and
(k) all  indebtedness and other payment  Obligations  referred to in clauses (a)
through (j) above of another  Person secured by (or for which the holder of such
indebtedness or other payment  Obligations has an existing right,  contingent or
otherwise,  to  be  secured  by)  any  Lien  on  property  (including,   without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such  indebtedness or
other payment Obligations.

         "DEFAULT" means any Event of Default or any event that would constitute
an Event of Default but for the requirement  that notice be given or time elapse
or both.

         "DEFAULTED  ADVANCE"  means,  with  respect to any Lender  Party at any
time, the portion of any Advance required to be made by such Lender Party to the
Borrower  pursuant to Section 2.01 or 2.02 at or prior to such time that has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.02(e) as of such

                                       9

<PAGE>

time.  In the event that a portion of a Defaulted  Advance  shall be deemed made
pursuant to Section  2.16(a),  the remaining  portion of such Defaulted  Advance
shall be considered a Defaulted Advance originally  required to be made pursuant
to Section  2.01 on the same date as the  Defaulted  Advance  so deemed  made in
part.

         "DEFAULTED AMOUNT" means, with respect to any Lender Party at any time,
any amount required to be paid by such Lender Party to the Administrative  Agent
or any other Lender Party hereunder or under any other Loan Document at or prior
to such  time  that has not  been so paid as of such  time,  including,  without
limitation, any amount required to be paid by such Lender Party to (a) the Swing
Line Bank  pursuant  to Section  2.02(b)  to  purchase a portion of a Swing Line
Advance made by the Swing Line Bank,  (b) any Issuing  Bank  pursuant to Section
2.03(c) to purchase a portion of an L/C Borrowing,  (c) the Administrative Agent
pursuant to Section 2.02(e) to reimburse the Administrative Agent for the amount
of any Advance made by the  Administrative  Agent for the account of such Lender
Party,  (d) any other  Lender  Party  pursuant to Section  2.14 to purchase  any
participation  in  Advances  owing  to  such  other  Lender  Party  and  (e) the
Administrative  Agent or any Issuing Bank  pursuant to Section 7.05 to reimburse
the  Administrative  Agent or such Issuing Bank for such Lender Party's  ratable
share  of  any  amount  required  to be  paid  by  the  Lender  Parties  to  the
Administrative Agent or such Issuing Bank as provided therein. In the event that
a portion  of a  Defaulted  Amount  shall be deemed  paid  pursuant  to  Section
2.16(b),  the remaining  portion of such Defaulted  Amount shall be considered a
Defaulted  Amount  originally  required to be paid  hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.

         "DEFAULTING  LENDER" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted  Advance or a Defaulted  Amount or (b) shall take any
action or be the  subject of any action or  proceeding  of a type  described  in
Section 6.01(f).

         "DISCLOSED LITIGATION" has the meaning specified in Section 3.01(d).

         "DISQUALIFIED  STOCK" has the  meaning set forth in that  certain  U.S.
Dollar Indenture dated as of January 18, 2001 between the Borrower and Citibank,
N.A., as trustee,  and that certain Euro Indenture  dated as of January 18, 2001
between the Borrower and Citibank, N.A., as trustee.

         "DOCUMENTATION  AGENT"  has the  meaning  specified  in the  recital of
parties to this Agreement.

         "DOLLARS" and "$" each mean lawful money of the United States.

         "DOMESTIC  LETTERS  OF CREDIT"  has the  meaning  specified  in Section
2.01(e).

         "DOMESTIC  RECEIVABLES"  means all obligations of any obligor  (whether
now  existing  or  hereafter  arising)  under a  contract  for  sale of goods or
services by Domestic Subsidiaries, which includes any obligation of such obligor
(whether now existing or hereafter arising) to pay interest,  finance charges or
amounts  with  respect  thereto,  and,  with  respect  to any  of the  foregoing
receivables  or  obligations,  (a) all of the  interest  of the  Borrower or its
Domestic  Subsidiaries in the goods (including returned goods) the sale of which
gave rise to such receivable or obligation after the passage of title thereto to
any obligor,  (b) all other Liens and

                                       10

<PAGE>

property  subject thereto from time to time purporting to secure payment of such
receivables or obligations, (c) all guaranties, insurance, letters of credit and
other  agreements  or  arrangements  of  whatever  character  from  time to time
supporting or securing payment of any such  receivables or obligations,  (d) all
books  and  records  relating  to the  foregoing,  lockbox  accounts  containing
primarily   proceeds  of  the  foregoing,   and  other  similar  related  assets
customarily transferred (or in which security interests are customarily granted)
to purchasers in  receivables  purchase  transactions  that are treated as sales
under GAAP,  (e) all rights of the  Borrower  or its  Domestic  Subsidiaries  to
refunds on account  of value  added tax in respect of goods sold to an  obligor,
any receivable from whom is or becomes a defaulted receivable,  and (f) proceeds
of or judgments relating to any of the foregoing,  any debts represented thereby
and all rights of action against any Person in connection therewith.

         "DOMESTIC  SUBSIDIARY"  means any  Subsidiary  of the Borrower  that is
incorporated  or  organized  in the  United  States,  any state  thereof  or the
District of Columbia.

         "ELIGIBLE  ASSIGNEE"  means (a) with  respect to the  Revolving  Credit
Facility,  (i) a Revolving Credit Lender;  (ii) a Lender (other than a Revolving
Credit  Lender) or an Affiliate or an Approved Fund of a Lender  approved by the
Issuing Banks and the Swing Line Bank; or (iii) any other Person approved by (A)
the Administrative  Agent, (B) the Issuing Banks and the Swing Line Bank and (C)
so long as no Event of Default has  occurred and is  continuing  at the time the
related  assignment is effected  pursuant to Section 8.07,  the Borrower (in any
case, such approval not to be unreasonably  withheld or delayed and, in the case
of the  Borrower,  such approval to be deemed to have been given if no objection
thereto is received by the Administrative  Agent and the assigning Lender within
five Business Days after the date on which notice of the proposed  assignment is
provided to the Borrower);  (b) with respect to the Tranche A Term Facility, (i)
a Lender;  (ii) an Affiliate or an Approved Fund of a Lender; or (iii) any other
Person approved by (A) the  Administrative  Agent and (B) so long as no Event of
Default has occurred and is  continuing  at the time the related  assignment  is
effected  pursuant to Section 8.07, the Borrower (in either case,  such approval
not to be  unreasonably  withheld or delayed  and, in the case of the  Borrower,
such  approval  to be deemed  to have  been  given if no  objection  thereto  is
received  by the  Administrative  Agent and the  assigning  Lender  within  five
Business  Days  after the date on which  notice of the  proposed  assignment  is
provided to the  Borrower);  and (c) with respect to the Tranche B Term Facility
(i) a Lender;  (ii) an Affiliate or an Approved  Fund of a Lender;  or (iii) any
other Person  approved by the  Administrative  Agent;  PROVIDED,  HOWEVER,  that
neither any Loan Party nor any  Affiliate  of a Loan Party  shall  qualify as an
Eligible Assignee under this definition.

         "ENVIRONMENTAL  ACTION" means any action, suit, demand,  demand letter,
claim,  notice of noncompliance  or violation,  notice of liability or potential
liability,  investigation,  proceeding, consent order or consent agreement under
any Environmental Law, any Environmental Permit or Hazardous Material or arising
from alleged injury or threat to health,  safety or the environment,  including,
without limitation, (a) by any Governmental Authority for enforcement,  cleanup,
removal,  response,  remedial  or  other  actions  or  damages  and  (b)  by any
Governmental   Authority  or  any  other   Person  for  damages,   contribution,
indemnification, cost recovery, compensation or injunctive relief.

                                       11

<PAGE>

         "ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
law,  ordinance,  rule,  regulation,  code, order, writ,  judgment,  injunction,
decree or judicial  or agency  interpretation,  policy or  guidance  relating to
pollution or protection of the environment, health, safety or natural resources,
including,   without   limitation,   those   relating  to  the  use,   handling,
transportation,  treatment, storage, disposal, release or discharge of Hazardous
Materials.

         "ENVIRONMENTAL  PERMIT"  means  any  permit,  approval,  identification
number, license or other authorization required under any Environmental Law.

         "EQUIPMENT  FINANCING  TRANSACTION" means any financing with any Person
of equipment which will be treated as Debt.

         "EQUITY INTERESTS" means, with respect to any Person, all of the shares
of capital stock of (or other ownership or profit interests in) such Person, all
of the warrants,  options or other rights for the purchase or  acquisition  from
such  Person  of  shares  of  capital  stock of (or  other  ownership  or profit
interests  in)  such  Person,   all  of  the  securities   convertible  into  or
exchangeable  for  shares  of  capital  stock of (or other  ownership  or profit
interests  in) such Person or  warrants,  rights or options for the  purchase or
acquisition from such Person of such shares (or such other  interests),  and all
of the other ownership or profit  interests in such Person  (including,  without
limitation,  partnership,  member or trust interests therein), whether voting or
nonvoting,  and whether or not such shares,  warrants,  options, rights or other
interests are outstanding on any date of determination.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended  from time to time,  and the  regulations  promulgated  and the  rulings
issued thereunder.

         "ERISA   AFFILIATE"  means  any  trade  or  business  (whether  or  not
incorporated)  under  common  control  with the  Borrower  within the meaning of
Section 414(b) or (c) of the Internal  Revenue Code (and Sections 414(m) and (o)
of the Internal Revenue Code for purposes of provisions  relating to Section 412
of the Internal Revenue Code).

         "ERISA EVENT" means (a)(i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice  requirement  with  respect to such event has been  waived by the PBGC or
(ii) the  requirements  of paragraph  (1) of Section  4043(b) of ERISA  (without
regard to paragraph (2) of such Section) are met with respect to a  contributing
sponsor,  as defined in Section  4001(a)(13)  of ERISA,  of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
occurs  with  respect  to such  Plan  within  the  following  30  days;  (b) the
application  for a  minimum  funding  waiver  with  respect  to a Plan;  (c) the
provision  by the  administrator  of any Plan of a notice of intent to terminate
such Plan  pursuant to Section  4041(a)(2) of ERISA  (including  any such notice
with respect to a plan amendment  referred to in Section 4041(e) of ERISA);  (d)
the cessation of operations at a facility of the Borrower or any ERISA Affiliate
in the  circumstances  described in Section 4062(e) of ERISA; (e) the partial or
complete  withdrawal  by the  Borrower  or any ERISA  Affiliate  from a Multiple
Employer  Plan during a plan year for which it was a  substantial  employer,  as
defined in Section  4001(a)(2)  of ERISA which would  reasonably  be expected to
result in  liability  to the  Borrower or any of its  Subsidiaries  of more than
$10,000,000;  (f) the  imposition of a Lien under  Section  302(f) of ERISA with
respect to any Plan;  (g) the adoption of

                                       12

<PAGE>

an amendment to a Plan requiring the provision of security to such Plan pursuant
to Section 307 of ERISA;  or (h) the  institution  by the PBGC of proceedings to
terminate a Plan  pursuant to Section 4042 of ERISA,  or the  occurrence  of any
event or condition described in Section 4042 of ERISA, which would reasonably be
expected to constitute  grounds for the  termination of, or the appointment of a
trustee to administer, such Plan.

         "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System,  as in effect from time to
time.

         "EURODOLLAR LENDING OFFICE" means, with respect to each of the Lenders,
the office of such Lender specified as its "Eurodollar  Lending Office" opposite
its name on the  signature  pages  hereof or in the  Assignment  and  Acceptance
pursuant to which it became a Lender,  as the case may be (or, if no such office
is specified, its Base Rate Lending Office), or such other office of such Lender
as  such  Lender  may  from  time  to  time  specify  to the  Borrower  and  the
Administrative Agent for such purpose.

         "EURODOLLAR  RATE" means,  for any Interest  Period for all  Eurodollar
Rate Advances comprising part of the same Borrowing,

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

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

                  (c) if the rates  referenced in the preceding  subsections (a)
         and (b)  are not  available,  the  rate  per  annum  determined  by the
         Administrative  Agent as the rate of  interest  (rounded  upward to the
         next  1/100th of 1%) at which  deposits in Dollars for  delivery on the
         first day of such Interest  Period in same day funds in the approximate
         amount of the Eurodollar  Rate Loan being made,  continued or converted
         by Bank of America and with a term  equivalent to such Interest  Period
         would be offered by Bank of America's  London  Branch to major banks in
         the offshore Dollar market at their request at approximately 11:00 A.M.
         (London time) two Business Days prior to the first day of such Interest
         Period.

                                       13

<PAGE>

         "EURODOLLAR  RATE  ADVANCE"  means an Advance  that bears  interest  as
provided in Sections 2.07(a)(i)(B) and 2.07(a)(ii)(B).

         "EURODOLLAR  RATE RESERVE  PERCENTAGE"  for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage  applicable  two Business  Days before the first day of such Interest
Period under  regulations  issued from time to time by the Board of Governors of
the  Federal  Reserve  System (or any  successor)  for  determining  the maximum
reserve requirement (including, without limitation, any emergency,  supplemental
or other marginal reserve  requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities  or assets  consisting of or
including  Eurocurrency  Liabilities  (or with respect to any other  category of
liabilities  that  includes  deposits by reference to which the interest rate on
Eurodollar  Rate  Advances is  determined)  having a term equal to such Interest
Period.

         "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

         "EVERGREEN  LETTER OF  CREDIT"  has the  meaning  specified  in Section
2.01(e)(ii).

         "EXCHANGE  ACT" means the  Securities  Exchange Act of 1934, as amended
from  time to time,  and the  regulations  promulgated  and the  rulings  issued
thereunder.

         "EXCHANGE  RATE"  means,  on any date  when an  amount  expressed  in a
currency  other than Dollars is to be  determined  with respect to any Letter of
Credit,  the nominal rate of exchange of the applicable  Issuing Bank in the New
York  foreign  exchange  market for the  purchase by such Issuing Bank (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
two  Business  Days prior to such date,  expressed  as a number of units of such
currency per one Dollar.

         "EXISTING  CREDIT   AGREEMENTS"  has  the  meaning   specified  in  the
Preliminary Statements to this Agreement.

         "EXISTING  LETTERS OF CREDIT"  means those  letters of credit listed on
Schedule 1.01(b) hereto.

         "FACILITY"  means  the  Tranche  A Term  Facility,  the  Tranche B Term
Facility or the Revolving Credit Facility, as the context may require.

         "FEDERAL  FUNDS RATE" means,  for any day, the rate per annum  (rounded
upward 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 on the Business Day next succeeding such day;  provided that (a) if
such day is not a Business  Day,  the  Federal  Funds Rate for such day shall be
such  rate  on  such  transactions  on the  next  preceding  Business  Day as so
published  on the next  succeeding  Business  Day, and (b) if no such rate is so
published on such next succeeding  Business Day, the Federal Funds Rate for such
day shall be the  average  rate  charged  to Bank of America on such day on such
transactions as determined by the Administrative Agent.

                                       14

<PAGE>

         "FINSERV" means Levi Strauss & Co. Financial Services,  S.A., a Belgium
corporation, and any successors.

         "FISCAL  QUARTER"  means,  with  respect to the  Borrower or any of its
Subsidiaries,  the period  commencing  on the Monday  immediately  following the
fourth  Sunday in November in any Fiscal Year and ending on the fourth Sunday of
the next succeeding  February,  the period commencing on the Monday  immediately
following  the fourth  Sunday in  February  in any Fiscal Year and ending on the
fourth Sunday of the next  succeeding  May, the period  commencing on the Monday
immediately  following the fourth Sunday in May in any Fiscal Year and ending on
the fourth Sunday of the next succeeding  August or the period commencing on the
Monday immediately  following the fourth Sunday in August in any Fiscal Year and
ending on the fourth Sunday of the next succeeding November,  as the context may
require, or, if any such Subsidiary was not in existence on the first day of any
such  period,  the period  commencing  on the date on which such  Subsidiary  is
incorporated,  organized, formed or otherwise created and ending on the last day
of such period.

         "FISCAL  YEAR"  means,  with  respect  to  the  Borrower  or any of its
Subsidiaries,  the period  commencing  on the Monday  immediately  following the
fourth  Sunday in November in any calendar  year and ending on the fourth Sunday
of the next succeeding  November or, if any such Subsidiary was not in existence
on such day in November in any calendar year, the period  commencing on the date
on which such Subsidiary is incorporated, organized, formed or otherwise created
and ending on the fourth Sunday of the next succeeding November.

         "FIXED CHARGE COVERAGE RATIO" means,  for any period,  the ratio of (a)
(i) Consolidated  EBITDA for such period, LESS (ii) the sum of (A) the aggregate
amount of all Capital  Expenditures  made by the Borrower  and its  Subsidiaries
during  such period PLUS (B) all income tax  expense  (whether  federal,  state,
local,  foreign or  otherwise)  of the  Borrower and its  Subsidiaries  for such
period to (b) the sum of (i) Consolidated Interest Expense for such period, (ii)
the  aggregate  principal  amount (or the  equivalent  thereto) of all  Required
Principal  Payments of the  Borrower  and its  Subsidiaries  for such period and
(iii) the aggregate amount of all Cash Distributions made by or on behalf of the
Borrower during such period.

         "FOREIGN  AFFILIATE  ISSUING BANK" means (a) an Affiliate of an Issuing
Bank organized under the laws of a country other than the United States or (b) a
branch of an Issuing  Bank  doing  business  in a country  other than the United
States.

          "FOREIGN  GOVERNMENT  SCHEME OR ARRANGEMENT" has the meaning specified
in Section 4.01(o).

         "FOREIGN  LETTERS  OF  CREDIT"  has the  meaning  specified  in Section
2.01(e).

         "FOREIGN  LETTER  OF CREDIT  SUBLIMIT"  means,  at any time,  an amount
designated by the Borrower on the most recent Foreign Letter of Credit  Sublimit
Notice.  As of the  Closing  Date,  the  Foreign  Letter of Credit  Sublimit  is
$43,000,000.

         "FOREIGN LETTER OF CREDIT SUBLIMIT NOTICE" has the meaning specified in
Section 2.01(e)(i).

                                       15

<PAGE>

         "FOREIGN PLAN" has the meaning specified in Section 4.01(o).

         "FOREIGN  PLEDGE  AGREEMENT"  means each  pledge  agreement  or similar
instrument  governed  by the laws of a country  other  than the  United  States,
executed and delivered by the Borrower or any Material Domestic  Subsidiary that
owns Equity Interests of one or more Pledged Foreign  Subsidiaries  organized in
such country, in form and substance satisfactory to Administrative Agent.

         "FOREIGN RECEIVABLES" means all obligations of any obligor (whether now
existing or hereafter arising) under a contract for sale of goods or services by
Foreign Subsidiaries, which includes any obligation of such obligor (whether now
existing or hereafter arising) to pay interest,  finance charges or amounts with
respect  thereto,  and,  with  respect to any of the  foregoing  receivables  or
obligations,  (a) all of the  interest  of  Foreign  Subsidiaries  in the  goods
(including  returned  goods) the sale of which gave rise to such  receivable  or
obligation  after the  passage of title  thereto to any  obligor,  (b) all other
Liens  and  property  subject  thereto  from time to time  purporting  to secure
payment of such  receivables  or  obligations,  (c) all  guaranties,  insurance,
letters of credit and other  agreements or  arrangements  of whatever  character
from time to time  supporting  or securing  payment of any such  receivables  or
obligations,  (d) all books  and  records  relating  to the  foregoing,  lockbox
accounts  containing  primarily  proceeds of the  foregoing,  and other  similar
related  assets  customarily  transferred  (or in which  security  interests are
customarily granted) to purchasers in receivables purchase transactions that are
treated as sales under GAAP, (e) all rights of Foreign  Subsidiaries  to refunds
on account  of value  added tax in  respect  of goods  sold to an  obligor,  any
receivable from whom is or becomes a defaulted  receivable,  and (f) proceeds of
or judgments relating to any of the foregoing, any debts represented thereby and
all rights of action against any Person in connection therewith.

         "FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower, other than a
Domestic Subsidiary.

         "FUNDED CURRENT  LIABILITY  PERCENTAGE" means "funded current liability
percentage"  within the meaning of Section  412(1)(8)(B) of the Internal Revenue
Code.

         "FUNDED DEBT" of any Person means,  at any date of  determination,  all
Debt of such Person that would (or would be required  to) appear as  liabilities
on a Consolidated balance sheet of such Person.

         "GAAP" has the meaning specified in Section 1.03.

         "GOVERNMENTAL  AUTHORITY"  means any nation or  government,  any state,
province, city, municipal entity or other political subdivision thereof, and any
governmental,  executive,  legislative,  judicial,  administrative or regulatory
agency, department,  authority,  instrumentality,  commission,  board or similar
body, whether federal, state, provincial, territorial, local or foreign.

         "GOVERNMENTAL   AUTHORIZATION"   means  any  authorization,   approval,
consent,  franchise,  license,  covenant, order, ruling, permit,  certification,
exemption, notice, declaration or similar right, undertaking or other action of,
to or by, or any filing,  qualification  or registration  with, any Governmental
Authority.

                                       16

<PAGE>

         "GRANTING LENDER" has the meaning specified in Section 8.07(j).

         "GUARANTEED  OBLIGATIONS" has the meaning specified in Section 1 of the
Subsidiary Guaranty, as the context may require.

         "HAZARDOUS  MATERIALS"  means  (a)  petroleum  or  petroleum  products,
by-products or breakdown products,  radioactive  materials,  asbestos-containing
materials,  polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials  or  substances  designated,  classified  or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

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

         "HEDGE BANK" means Bank of America,  Citibank,  N.A.,  The Bank of Nova
Scotia,  Morgan  Guaranty  Trust Company of New York,  Bank One, NA, Fleet Bank,
N.A.  or any of their  respective  Affiliates,  in its  capacity as a party to a
Hedge Agreement.

         "HEDGE BANK HEDGE  AGREEMENT" means any Ordinary Course Hedge Agreement
that is entered  into by and between the  Borrower or FinServ and any Hedge Bank
that is subject to a legally  enforceable netting agreement between the Borrower
or FinServ, as the case may be, and such Hedge Bank.

         "HONOR DATE" has the meaning specified in Section 2.03(c).

         "INDEMNIFIED COSTS" has the meaning specified in Section 7.05(a).

         "INDEMNIFIED PARTY" has the meaning specified in Section 8.04(b).

         "INDENTURES"  means that certain Indenture dated as of November 6, 1996
between the Borrower and  Citibank,  N.A., as trustee,  and that certain  Fiscal
Agency  Agreement  dated as of November 22, 1996 between  Company and  Citibank,
N.A., as fiscal agent.

         "INELIGIBLE  SECURITIES" means securities which may not be underwritten
or dealt in by member banks of the Federal  Reserve  System under  Section 16 of
the Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as amended.

                                       17

<PAGE>

         "INFORMATION   MEMORANDUM"  means  the  information   memorandum  dated
December 2000 used by the Co-Lead  Arrangers in connection  with the syndication
of the Commitments.

         "INITIAL  EXTENSION  OF  CREDIT"  means,   collectively,   the  initial
Borrowings under one or more of the Facilities,  and/or the initial issuances of
one or more Letters of Credit, made on the Closing Date.

         "INITIAL  ISSUING  BANKS" has the meaning  specified  in the recital of
parties to this Agreement.

         "INITIAL  LENDERS" has the meaning  specified in the recital of parties
to this Agreement.

         "INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

         "INSURANCE  RECEIPT"  means any cash  received by or paid to or for the
account of any Person as proceeds of insurance  (other than proceeds of business
interruption  insurance to the extent such proceeds constitute  compensation for
lost earnings) and condemnation awards (and payments in lieu thereof); PROVIDED,
HOWEVER,  that so  long as no  Event  of  Default  shall  have  occurred  and be
continuing,  an Insurance  Receipt shall not include cash receipts received from
proceeds of insurance or  condemnation  awards (or payments in lieu  thereof) to
the  extent  that such  proceeds  or awards  (a) in respect of loss or damage to
equipment,  fixed  assets or real  property  are applied (or in respect of which
expenditures were previously incurred) to replace or repair the equipment, fixed
assets or real  property  in respect of which such  proceeds  were  received  in
accordance  with the terms of the Loan  Documents,  or (b) are  received  by any
Person in respect of any third  party claim  against  such Person and applied to
pay (or to  reimburse  such Person for its prior  payment of) such claim and the
costs and expenses of such Person with respect thereto.

         "INTELLECTUAL  PROPERTY"  means all  patents,  trademarks,  tradenames,
copyrights,  technology,  software,  know-how and processes used in or necessary
for  the  conduct  of the  business  of the  Borrower  and its  Subsidiaries  as
currently conducted that are material to the condition (financial or otherwise),
business or operations of the Borrower and its Subsidiaries, taken as a whole.

         "INTEREST  COVERAGE  RATIO"  means,  for any  period,  the ratio of (a)
Consolidated  EBITDA for such period to (b)  Consolidated  Interest  Expense for
such period.

         "INTEREST  PERIOD" means,  for each Eurodollar Rate Advance  comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate  Advance or the date of the  Conversion  of any Base Rate Advance into such
Eurodollar  Rate Advance,  and ending on the last day of the period  selected by
the Borrower pursuant to the provisions below and,  thereafter,  each subsequent
period commencing on the last day of the immediately  preceding  Interest Period
and ending on the last day of the period  selected by the  Borrower  pursuant to
the provisions  below.  The duration of each such Interest  Period shall be one,
two,  three or six months,  as the  Borrower  may,  upon notice  received by the
Administrative  Agent not later than 9:00 A.M. (San Francisco,  California time)
on the  third  Business  Day prior to the  first  day of such  Interest  Period,
select; PROVIDED, HOWEVER, that:

                                       18

<PAGE>

                  (a) the  Borrower  may not select  any  Interest  Period  with
         respect to any Eurodollar Rate Advance under a Facility that ends after
         any principal  repayment  installment  date for such  Facility  unless,
         after giving effect to such selection,  the aggregate  principal amount
         of Base Rate Advances and of Eurodollar  Rate Advances  having Interest
         Periods that end on or prior to such  principal  repayment  installment
         date  for such  Facility  shall  be at  least  equal  to the  aggregate
         principal  amount of Advances under such Facility due and payable on or
         prior to such date;

                  (b)  whenever  the  last  day of  any  Interest  Period  would
         otherwise  occur on a day other  than a Business  Day,  the last day of
         such Interest  Period shall be extended to occur on the next succeeding
         Business Day;  PROVIDED,  HOWEVER,  that, if such extension would cause
         the last day of such  Interest  Period  to occur in the next  following
         calendar month, the last day of such Interest Period shall occur on the
         immediately preceding Business Day;

                  (c) whenever the first day of any Interest  Period occurs on a
         day of an  initial  calendar  month for which  there is no  numerically
         corresponding  day in the  calendar  month that  succeeds  such initial
         calendar month by the number of months equal to the number of months in
         such  Interest  Period,  such  Interest  Period  shall  end on the last
         Business Day of such succeeding calendar month; and

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

         "INTERNAL  REVENUE  CODE" means the Internal  Revenue Code of 1986,  as
amended  from time to time,  and the  regulations  promulgated  and the  rulings
issued thereunder.

         "INVESTMENT"  means, with respect to any Person, any loan or advance to
such Person,  any purchase or other  acquisition of Equity  Interests in or Debt
of, or the property and assets  comprising a division or business unit or all or
a substantial part of the business of, such Person, any capital  contribution to
such  Person  or  any  other  investment  in  such  Person,  including,  without
limitation,  any  acquisition  by way of a merger or  consolidation  (or similar
transaction)  and any arrangement  pursuant to which the investor incurs Debt of
the types referred to in clause (j) or (k) of the definition of "DEBT" set forth
in this  Section 1.01 in respect of such  Person.  The amount of any  Investment
shall be the original  cost of such  Investment  PLUS the cost of all  additions
thereto,  without any  adjustments  for  increases  or  decreases  in value,  or
write-ups, write downs or write-offs with respect to such Investment (other than
adjustments  for the repayment of, or the refund of capital with respect to, the
original principal amount of any such Investment).

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

         "ISSUING BANK FOREIGN LETTER OF CREDIT  SUBLIMIT" means, at any date of
determination  and for each Issuing Bank, the amount  designated by the Borrower
on the most recent  Foreign  Letter of Credit  Sublimit  Notice for such Issuing
Bank.  As of the  Closing  Date,  the  Issuing  Bank  Foreign  Letter  of Credit
Sublimits are as follows:

                           -------------------------------- ------------------
                           Bank of America                  $20,000,000
                           -------------------------------- ------------------

                                       19

<PAGE>

                           -------------------------------- ------------------
                           Citibank                         $19,000,000
                           -------------------------------- ------------------
                           -------------------------------- ------------------
                           ABN AMRO                         $4,000,000
                           -------------------------------- ------------------

         "ISSUING BANKS" means,  collectively,  the Initial  Issuing Banks,  the
Foreign  Affiliate  Issuing Banks and any other  commercial bank organized under
the  laws  of  the  United  States  and   designated  by  the  Borrower  to  the
Administrative Agent from time to time.

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

         "L/C CASH COLLATERAL  ACCOUNT" has the meaning  specified in Section 11
of the Pledge and Security Agreement.

         "L/C  RELATED   DOCUMENTS"   has  the  meaning   specified  in  Section
2.03(c)(v).

         "LENDER PARTY" means any Lender, any Issuing Bank or the Swing Line
          Bank.

         "LENDERS" means, collectively, the Initial Lenders and each Person that
becomes a Lender  pursuant to Section 8.07 for so long as such Initial Lender or
Person, as the case may be, shall be a party to this Agreement.

         "LETTERS OF CREDIT" has the meaning specified in Section 2.01(e).

         "LETTER OF CREDIT ADVANCE" means, with respect to each Revolving Credit
Lender,  such Revolving  Credit Lender's  participation  in any L/C Borrowing in
accordance with its Pro Rata Share.

         "LETTER  OF CREDIT  AGREEMENT"  has the  meaning  specified  in Section
2.03(a).

         "LETTER OF CREDIT  SUBLIMIT"  means,  at any time,  an amount  equal to
$250,000,000, as such amount may be reduced at or prior to such time pursuant to
Section 2.05.

         "LEVERAGE RATIO" means, at any date of determination,  the ratio of (a)
all  Funded  Debt of the  Borrower  and  its  Subsidiaries  on such  date to (b)
Consolidated EBITDA for the most recently completed  Measurement Period prior to
such date for which the Required Financial  Information has been delivered under
Section 5.03(b) or (c), as the case may be.

         "LIEN"  means,  with  respect to any  Person,  (a) any  mortgage,  lien
(statutory or other), pledge, hypothecation,  security interest, charge or other
preferential  arrangement  or  encumbrance  of  any  kind  (including,   without
limitation,  any  agreement  to give  any of the  foregoing),  (b)  any  sale of
accounts receivable or chattel paper, or any assignment,  deposit arrangement or
lease intended as, or having the effect of, security, (c) any easement, right of
way or other  encumbrance on title to real property or (d) any other interest or
title of any vendor,  lessor, lender or other secured party to or of such Person
under any conditional sale or other title

                                       20

<PAGE>

retention  agreement  or any  Capitalized  Lease or upon or with  respect to any
property or asset of such  Person  (including,  in the case of Equity  Interests
(other than Equity Interests in the Borrower), voting trust agreements and other
similar arrangements).

         "LOAN  DOCUMENTS"  means,  collectively,   (a)  for  purposes  of  this
Agreement  and the Notes and any  amendment,  supplement  or other  modification
hereof or thereof  and for all other  purposes  other than for  purposes  of the
Subsidiary Guaranty and the Collateral Documents,  (i) this Agreement,  (ii) the
Notes, (iii) the Subsidiary Guaranty, (iv) the Collateral Documents and (v) each
Letter of Credit  Agreement and (b) for purposes of the Subsidiary  Guaranty and
the  Collateral  Documents,  (i) this  Agreement,  (ii)  the  Notes,  (iii)  the
Subsidiary Guaranty,  (iv) the Collateral  Documents,  (v) each Letter of Credit
Agreement  and (vi) each Hedge Bank Hedge  Agreement,  in each case as  amended,
supplemented  or otherwise  modified  hereafter  from time to time in accordance
with the terms thereof and Section 8.01.

         "LOAN  PARTIES"  means,  collectively,  the  Borrower  and  each of the
Material Domestic  Subsidiaries of the Borrower party to the Subsidiary Guaranty
or any of the Collateral Documents.

         "LOS/DOS BUSINESS" means the ownership and operation by the Borrower or
a Subsidiary of the Borrower,  whether  directly or through joint  ventures with
third parties in  partnership,  corporate or other form,  of businesses  engaged
solely in selling  apparel  and  accessories  and  related  products  including,
without  limitation,  selling  through retail stores,  outlet stores,  telephone
sales,  catalog or other mail orders,  and electronic  sales.  LOS/DOS  Business
shall not include any business  engaging in  manufacturing  or in selling and in
manufacturing.

         "LSFCC" means Levi Strauss Financial Center  Corporation,  a California
corporation,  formerly Levi Strauss Credit Corp., a California corporation,  and
any successors.

         "LSFLLC" means Levi Strauss Funding,  LLC, a Delaware limited liability
company, and any successors.

         "MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal  Reserve  System as in effect from time to
time.

         "MATERIAL  ADVERSE  CHANGE"  means any material  adverse  change in the
business, assets, liabilities (actual or contingent),  operations,  performance,
properties,  condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries, taken as a whole.

         "MATERIAL  ADVERSE  EFFECT" means a material  adverse effect on (a) the
business, assets, liabilities (actual or contingent),  operations,  performance,
properties,  condition (financial or otherwise) or prospects of the Borrower and
its  Subsidiaries,  taken  as a  whole,  (b)  the  rights  and  remedies  of the
Administrative  Agent or any Lender  Party  under any Loan  Document  or (c) the
ability of any Loan Party to perform its Obligations  under any Loan Document to
which it is or is to be a party.

         "MATERIAL DOMESTIC  SUBSIDIARY" means any Domestic Subsidiary that is a
Material Subsidiary.

                                       21

<PAGE>

         "MATERIAL FOREIGN  SUBSIDIARY"  means any Foreign  Subsidiary that is a
Material Subsidiary.

         "MATERIAL SUBSIDIARY" means (a) any Subsidiary of the Borrower, (i) the
net book value of which is  $5,000,000  or more or (ii) the annual gross revenue
of which is  $15,000,000  or more and (b) any other  Subsidiary  of the Borrower
designated  by the Borrower to be a "MATERIAL  SUBSIDIARY"  for purposes of this
Agreement.

         "MEASUREMENT  PERIOD"  means,  at any date of  determination,  the most
recently  completed  four  consecutive  Fiscal  Quarters  of the  Borrower on or
immediately prior to such date.

         "MOODY'S" means Moody's Investors Service, Inc.

         "MORTGAGES" has the meaning specified in Section 3.01(a)(iii).

         "MORTGAGE POLICIES" has the meaning specified in Section 3.01(a)(iii).

         "MULTIEMPLOYER  PLAN" means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

          "MULTIPLE  EMPLOYER PLAN" means a single  employer plan (as defined in
Section  4001(a)(15)  of ERISA) that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA  Affiliates or (b) was so  maintained  and in respect of which any
Loan Party or any ERISA Affiliate could reasonably be expected to have liability
under  Section  4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.

         "NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or
other disposition of any property or asset, or the incurrence or issuance of any
Debt,  or the sale or issuance of any Equity  Interests  (including  any capital
contribution) in any Person,  or any Insurance Receipt received by or paid to or
for the account of any Person,  as the case may be, the aggregate amount of cash
received from time to time (whether as initial  consideration or through payment
or disposition of deferred consideration) by or on behalf of such Person for its
own account in connection with any such transaction,  after deducting  therefrom
only (without duplication):

                  (a)   reasonable   and   customary   brokerage    commissions,
         underwriting  fees and discounts,  legal fees,  finder's fees and other
         similar fees and commissions;

                  (b) the  amount of taxes  payable in  connection  with or as a
         result of such transaction; and

                  (c)  in the  case  of  any  sale,  lease,  transfer  or  other
         disposition of any property or asset, the outstanding  principal amount
         of, the  premium or  penalty,  if any,  on, and any  accrued and unpaid
         interest on, any Debt (other than the Debt  outstanding  under the Loan
         Documents) that is secured by a Lien on the property and assets subject
         to such sale,

                                       22

<PAGE>

         lease, transfer or other disposition and is required to be repaid under
         the terms  thereof as a result of such sale,  lease,  transfer or other
         disposition.

in each case to the extent, but only to the extent, that the amounts so deducted
are properly  attributable to such  transaction or to the property or asset that
is the  subject  thereof  and  (i) in the  case of  clauses  (a) and (c) of this
definition,  are  actually  paid at the time of receipt of such cash to a Person
that is not an Affiliate of such Person or any Loan Party or of any Affiliate of
any Loan  Party  and  (ii) in the case of  clause  (b) of this  definition,  are
actually  paid at the time of  receipt  of such cash to a Person  that is not an
Affiliate of such Person or any Loan Party or of any Affiliate of any Loan Party
or, so long as such Person is not otherwise indemnified  therefor,  are reserved
for in accordance  with GAAP at the time of receipt of such cash based upon such
Person's reasonable estimate of such taxes;  PROVIDED,  HOWEVER, that if, at the
time such taxes are  actually  paid or  otherwise  satisfied,  the amount of the
reserve  therefor  exceeds  the amount  paid or  otherwise  satisfied,  then the
Borrower shall reduce the  Commitments  in accordance  with the terms of Section
2.06(b),  and shall prepay the outstanding Advances in accordance with the terms
of Section 2.06(b), in an amount equal to the amount of such excess reserve.

         "NON-BANK  NON-US  LENDER  PARTY" has the meaning  specified in Section
2.13(e).

         "NON-US LENDER PARTY" has the meaning specified in Section 2.13(e).

         "NONRENEWAL NOTICE DATE" has the meaning specified in Section 2.01(e).

         "NOTE"  means  a  Tranche  A Term  Note,  a  Tranche  B Term  Note or a
Revolving Credit Note, as the context may require.

         "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

         "NOTICE OF DEFAULT" has the meaning specified in Section 7.03.

         "NOTICE  OF  CONVERSION/CONTINUATION"  has  the  meaning  specified  in
Section 2.09(a).

         "NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a).

         "OBLIGATION"   means,   with  respect  to  any  Person,   any  payment,
performance or other obligation of such Person of any kind,  including,  without
limitation,  any liability of such Person on any claim, whether or not the right
of any  creditor  to payment  in  respect of such claim is reduced to  judgment,
liquidated,  unliquidated,  fixed, contingent,  matured,  disputed,  undisputed,
legal,  equitable,  secured  or  unsecured,  and  whether  or not such  claim is
discharged,  stayed or  otherwise  affected  by any  proceeding  referred  to in
Section  6.01(f).   Without  limiting  the  generality  of  the  foregoing,  the
Obligations  of the Loan  Parties  under  the  Loan  Documents  include  (a) the
obligation to pay principal,  interest,  Letter of Credit commissions,  charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the  obligation of any
Loan Party to reimburse any amount in respect of any of the  foregoing  that any
Lender Party, in its sole  discretion,  may elect to pay or advance on behalf of
such Loan Party.

         "OECD" means the Organization for Economic Cooperation and Development.

                                       23

<PAGE>

         "OFFICER"   means,   with  respect  to  the  Borrower  or  any  of  its
Subsidiaries,  a Responsible Officer or any other officer, partner or member (or
Person  performing  similar  functions)  of the Borrower or any such  Subsidiary
responsible for overseeing the administration of, or reviewing  compliance with,
all or any portion of this Agreement or any of the other Loan Documents.

         "OPERATING  LEASE"  means  any  lease  (including  leases  that  may be
terminated  by the lessee at any time) of any property that is not a Capitalized
Lease.

         "ORDINARY  COURSE HEDGE  AGREEMENTS"  means any and all  interest  rate
swaps, basis swaps, credit derivative  transactions,  forward rate transactions,
commodity swaps, commodity options,  forward commodity contracts,  interest rate
options,  forward  foreign  exchange  transactions,   cap  transactions,   floor
transactions,  collar transactions,  currency swaps,  cross-currency rate swaps,
currency  options,  spot  contracts  or any other  similar  transactions  or any
combination of any of the foregoing  (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, in each case that are (or were) entered into by any Person
in the ordinary course of business for the purpose of directly  mitigating risks
associated with liabilities,  commitments, investments, assets, or property held
or reasonably  anticipated by such Person, or changes in the value of securities
issued by such Person and not for  purposes of  speculation  or taking a "market
view" and that do not contain any provision ("walk-away"  provision) exonerating
the  non-defaulting  party from its  obligation to make payments on  outstanding
transactions to the defaulting party.

         "ORIGINAL CURRENCY" has the meaning specified in Section 8.15.

         "OTHER CURRENCY" has the meaning specified in Section 8.15.

         "OTHER TAXES" has the meaning specified in Section 2.13(b).

         "PBGC" means the Pension Benefit Guaranty  Corporation or any successor
thereto.

         "PERMITTED DOMESTIC  RECEIVABLES  TRANSACTION" means any arrangement of
the  Borrower or its Domestic  Subsidiaries  providing  for sales,  transfers or
conveyances of, or granting of security interests in, Domestic  Receivables that
do not provide, directly or indirectly,  for recourse against the seller of such
Domestic  Receivables  (or against any of such seller's  Affiliates) by way of a
guaranty or any other  support  arrangement,  with respect to the amount of such
Domestic  Receivables (based on the financial  condition or circumstances of the
obligor  thereunder),  other than such limited  recourse as is reasonable  given
market standards for receivables purchase transactions that are treated as sales
under  GAAP,  taking  into  account  such  factors as  historical  bad debt loss
experience and obligor concentration levels.

         "PERMITTED  FOREIGN  RECEIVABLES  TRANSACTION" means any arrangement of
Foreign  Subsidiaries  providing  for sales,  transfers  or  conveyances  of, or
granting of security  interests  in,  Foreign  Receivables  that do not provide,
directly  or  indirectly,  for  recourse  against  the  seller  of such  Foreign
Receivables (or against any of such seller's Affiliates) by way of a guaranty or
any other  support  arrangement,  with  respect  to the  amount of such  Foreign
Receivables  (based on the financial  condition or  circumstances of the obligor
thereunder),  other than such  limited  recourse as is  reasonable  given market
standards for receivables purchase  transactions that are treated as

                                       24

<PAGE>

sales under GAAP,  taking into account such factors as historical  bad debt loss
experience and obligor concentration levels.

         "PERMITTED  LIENS"  means each of the  following:  (a) Liens for taxes,
assessments and governmental  charges or levies to the extent not required to be
paid under Section  5.01(b);  (b) Liens  imposed by law, such as  materialmen's,
mechanics',  carriers',  workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations (other than Debt
for borrowed  money) (i) that are not overdue or (ii) the amount,  applicability
or  validity  of which  are being  contested  in good  faith and by  appropriate
proceedings  diligently  conducted and with respect to which the Borrower or any
of its Subsidiaries,  as the case may be, has established reserves in accordance
with  GAAP;  (c)  pledges  or  deposits  to secure  obligations  under  workers'
compensation laws,  unemployment insurance or similar legislation (other than in
respect of  employee  benefit  plans  subject  to ERISA) or to secure  public or
statutory  obligations;  (d) Liens  securing the  performance  of, or payment in
respect of, bids, tenders, government contracts (other than for the repayment of
borrowed  money),  surety and appeal  bonds and other  obligations  of a similar
nature incurred in the ordinary course of business; (e) any interest or title of
a lessor or sublessor and any  restriction  or encumbrance to which the interest
or title of such  lessor or  sublessor  may be subject  that is  incurred in the
ordinary course of business and, either individually or when aggregated with all
other  Permitted  Liens in  effect  on any date of  determination,  could not be
reasonably  expected to have a Material  Adverse  Effect;  (f) Liens in favor of
customs and revenue authorities arising as a matter of law or pursuant to a bond
to secure payment of customs duties in connection with the importation of goods;
(g) Liens arising out of judgments or awards that do not  constitute an Event of
Default under Section 6.01(g) or 6.01(h) and in respect of which the Borrower or
any of its  Subsidiaries  subject  thereto  shall be  prosecuting  an  appeal or
proceedings  for review in good faith and,  pending such appeal or  proceedings,
shall have secured  within 30 days after the entry thereof a subsisting  stay of
execution  and shall be  maintaining  reserves,  in accordance  with GAAP,  with
respect to any such judgment or award; (h) leases or subleases granted to others
in the ordinary course of business not interfering  with the ordinary conduct of
the  business of the  grantor  thereof;  (i)  easements,  rights of way,  zoning
restrictions  and other  encumbrances  on title to real  property  that were not
incurred  in  connection  with  and do  not  secure  Debt  and  do  not,  either
individually  or in the aggregate,  interfere  with the ordinary  conduct of the
business  of the  Borrower  and its  Subsidiaries,  taken as a whole;  (j) Liens
arising  solely by virtue of any statutory or common law  provision  relating to
banker's  Liens,  rights of set-off or similar rights and remedies as to deposit
accounts  or other  funds  maintained  with a creditor  depository  institution;
provided  that (i) such  deposit  account  is not a  dedicated  cash  collateral
account and is not subject to restrictions against access by the Borrower or any
of  its  Subsidiaries  owning  the  affected  deposit  account  or  other  funds
maintained with a creditor  depository  institution in excess of those set forth
by  regulations  promulgated  by  the  Federal  Reserve  Board  or  any  foreign
regulatory  agency  performing  an  equivalent  function,  and (ii) such deposit
account is not  intended by the Borrower or any of its  Subsidiaries  to provide
collateral to the depository institution; and (k) Liens, assignments and pledges
of rights to receive premiums, interest or loss payments or otherwise arising in
connection  with  worker's   compensation  loss  portfolio   transfer  insurance
transactions  or any insurance or  reinsurance  agreements  pertaining to losses
covered by insurance, and Liens (including, without limitation and to the extent
constituting  Liens,  negative  pledges) in favor of insurers or  reinsurers  on
pledges  or  deposits  by  the  Borrower  or  any

                                       25

<PAGE>

Subsidiary under workmen's  compensation  laws,  unemployment  insurance laws or
similar legislation.

         "PERMITTED  TRANSFEREES" has the meaning  specified in the Stockholders
Agreement  dated as of April 15, 1996 between the Borrower and the  stockholders
of the Borrower  party thereto as in effect as of the Closing Date,  except that
transferees  pursuant  to Section  2.2(a)(x)  thereof  shall not be deemed to be
Permitted Transferees for purposes of this Agreement.

         "PERSON" means an  individual,  partnership,  corporation  (including a
business trust),  limited liability company,  unlimited liability company, joint
stock company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.

         "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

         "PLEDGE AND SECURITY  AGREEMENT"  has the meaning  specified in Section
3.01(a)(i).

         "PLEDGED DEBT" has the meaning  specified in Section 1(e) of the Pledge
and Security Agreement.

         "PLEDGED FOREIGN  SUBSIDIARY"  means a Foreign  Subsidiary no more than
65% of the Equity Interests of which is pledged to Administrative Agent.

         "PLEDGED  INTERESTS"  has the meaning  specified in Section 1(e) of the
Pledge and Security Agreement.

         "PREFERRED  INTERESTS"  means,  with  respect  to  any  Person,  Equity
Interests  issued by such Person that are entitled to a  preference  or priority
over any other Equity  Interests  issued by such Person upon any distribution of
such Person's property and assets, whether by dividend or upon liquidation.

         "PRIMARY  OBLIGATION"  has the meaning  specified in the  definition of
"CONTINGENT OBLIGATION" set forth in this Section 1.01.

         "PRIMARY  OBLIGOR"  has the  meaning  specified  in the  definition  of
"CONTINGENT OBLIGATION" set forth in this Section 1.01.

         "PRINCIPAL  PROPERTY" means any contiguous or proximate  parcel of real
property  owned  by,  or  leased  to,  the  Borrower  or any  of its  Restricted
Subsidiaries,  and any  equipment  located at or  comprising  a part of any such
property,  having a gross  book value  (without  deduction  of any  depreciation
reserves), as of the date of determination,  in excess of 1% of Consolidated Net
Tangible Assets;  PROVIDED,  HOWEVER, that in the event that the Indentures,  or
the   limitations   regarding  Liens  granted  by  the  Borrower  or  Restricted
Subsidiaries contained in the Indentures, are no longer binding on the Borrower,
no property shall be a Principal Property.

         "PRO RATA  SHARE"  of any  amount  means,  with  respect  to any of the
Lenders at any time, the product of (a) a fraction the numerator of which is the
amount  of  such  Lender's   Commitment(s)  under  the  applicable  Facility  or
Facilities  at such time (or,  if the  Commitments

                                       26

<PAGE>

shall have been terminated  pursuant to Section 2.05 or 6.01 at or prior to such
time, such Lender's Commitment(s) under the applicable Facility or Facilities as
in effect immediately prior to such termination) and the denominator of which is
the  aggregate  amount of such  Facility or  Facilities at such time (or, if the
Commitments  shall have been  terminated  pursuant to Section 2.05 or 6.01 at or
prior  to  such  time,  the  applicable  Facility  or  Facilities  as in  effect
immediately prior to such termination) MULTIPLIED BY (b) such amount.

         "REAL ESTATE  FINANCING  TRANSACTIONS"  means any arrangement  with any
Person  pursuant to which the  Borrower or any of its  Subsidiaries  incurs Debt
secured by a Lien on real  property of the  Borrower or any of its  Subsidiaries
and related personal property.

         "RECEIVABLES   TRANSFER  AGREEMENTS"  means  that  certain  Receivables
Purchase  and Sale  Agreement  dated as of January 28, 2000 among the  Borrower,
LSFCC,  Levi Strauss Funding Corp. and LSFLLC and that certain Third Amended and
Fully Restated  Receivables  Purchase and Sale  Agreement  between LSFCC and the
Borrower effective January 28, 2000.

         "REDEEMABLE" means, with respect to any Equity Interest,  Debt or other
right or Obligation, any such Equity Interest, Debt or other right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable  date or
dates,  whether  by  operation  of a  sinking  fund or  otherwise,  or upon  the
occurrence  of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.

         "REDUCTION AMOUNT" has the meaning specified in Section 2.06(b)(vi).

         "REGISTER" has the meaning specified in Section 8.07(d).

         "REGULATION  U" means  Regulation  U of the Board of  Governors  of the
Federal Reserve System, as in effect from time to time.

         "REQUIRED  FINANCIAL  INFORMATION" means, at any date of determination,
the Consolidated  financial statements of the Borrower and its Subsidiaries most
recently  delivered  to the  Administrative  Agent and the Lender  Parties on or
prior to such date  pursuant  to, and  satisfying  all of the  requirements  of,
Section  5.03(b)  or  5.03(c)  and  accompanied  by the  certificates  and other
information required to be delivered therewith.

         "REQUIRED  LENDERS" means,  (a) at any time when the Commitments are in
effect,  Lenders holding at least a majority in interest of the aggregate of the
Tranche A Term  Commitments,  the Tranche B Term  Commitments  and the Revolving
Credit Commitments at such time and (b) at any time after the termination of the
Commitments,  Lenders owed at least a majority in interest of the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and (ii) the
aggregate  Available  Amount of all Letters of Credit  outstanding at such time;
PROVIDED, HOWEVER, that if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the  determination of Required Lenders at such time
(A) the  Commitments  of  such  Lender  at  such  time or (B) the sum of (1) the
aggregate principal amount of the Advances owing to such Lender (in its capacity
as a Lender) and  outstanding  at such time and (2) such Lender's Pro Rata Share
of the aggregate  Available Amount of all Letters of Credit  outstanding at such
time,  as the  case may be.  For  purposes  of this  definition,  the  aggregate
principal  amount of Swing  Line  Advances  owing to the Swing Line Bank and the
Available  Amount of each Letter of Credit

                                       27

<PAGE>

shall be  considered  to be owed to the  Revolving  Credit  Lenders  ratably  in
accordance with their respective Revolving Credit Commitments.

         "REQUIRED PRINCIPAL PAYMENTS" means, with respect to any Person for any
period, the sum of all regularly  scheduled principal payments or redemptions of
outstanding Funded Debt made during such period.

         "REQUIREMENTS  OF LAW" means,  with  respect to any  Person,  all laws,
constitutions,  statutes,  treaties,  ordinances,  rules  and  regulations,  all
orders, writs, decrees, injunctions,  judgments,  determinations or awards of an
arbitrator,  a court or any other Governmental  Authority,  and all Governmental
Authorizations,  binding  upon or  applicable  to such  Person  or to any of its
properties, assets or businesses.

         "RESPONSIBLE OFFICER" means, with respect to the Borrower or any of its
Subsidiaries,  the chief executive officer,  the president,  the chief financial
officer,  the  principal  accounting  officer,  the  treasurer or any  assistant
treasurer (or the equivalent of any of the foregoing).

         "RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower which owns
or leases a Principal Property;  PROVIDED,  HOWEVER,  that in the event that the
Indentures,  or the  limitations  regarding  Liens  granted  by or on the Equity
Interests or Debt of Restricted Subsidiaries contained in the Indentures, are no
longer  binding  on the  Borrower,  no  Subsidiary  of the  Borrower  shall be a
Restricted Subsidiary.

         "REVOLVING  CREDIT  ADVANCE"  has  the  meaning  specified  in  Section
2.01(c).

         "REVOLVING   CREDIT   BORROWING"   means  a  borrowing   consisting  of
simultaneous  Revolving  Credit  Advances of the same Type made by the Revolving
Credit Lenders.

         "REVOLVING  CREDIT  COMMITMENT"  means,  with respect to any  Revolving
Credit Lender at any time, the amount set forth  opposite such Revolving  Credit
Lender's name on Schedule  1.01(a)  hereto under the caption  "REVOLVING  CREDIT
COMMITMENT"  or, if such  Revolving  Credit  Lender has entered into one or more
Assignments  and  Acceptances,  the amount set forth for such  Revolving  Credit
Lender in the  Register  maintained  by the  Administrative  Agent  pursuant  to
Section 8.07(d) as such Revolving Credit Lender's "REVOLVING CREDIT COMMITMENT",
as such amount may be reduced at or prior to such time  pursuant to Section 2.05
or 2.06.

         "REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of
the Revolving Credit Lenders' Revolving Credit Commitments at such time.

         "REVOLVING  CREDIT  LENDER"  means,  at any time, any Lender that has a
Revolving Credit Commitment at such time.

         "REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable
to the  order of any  Revolving  Credit  Lender,  in  substantially  the form of
Exhibit A-3 hereto,  evidencing  the aggregate  indebtedness  of the Borrower to
such Revolving  Credit Lender  resulting from the Revolving Credit Advances made
by such Revolving Credit Lender.

                                       28

<PAGE>

        "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc.

         "SECURED  OBLIGATIONS"  has the meaning  specified  in Section 2 of the
Pledge and Security Agreement.

         "SECURED PARTIES" means, collectively,  the Agents, the Lender Parties,
and the Hedge Banks.

         "SENIOR SECURED  LEVERAGE  RATIO" means, at any date of  determination,
the  ratio  of (a)  all  Senior  Secured  Funded  Debt of the  Borrower  and its
Subsidiaries  on such  date to (b)  Consolidated  EBITDA  for the most  recently
completed Measurement Period prior to such date for which the Required Financial
Information has been delivered under Section 5.03(b) or (c), as the case may be.

         "SENIOR  SECURED  FUNDED  DEBT"  of any  Person  means,  at any date of
determination,  all secured Debt of such Person that would (or would be required
to) appear as liabilities on a consolidated balance sheet of such Person that is
not  subordinated  in  right  of  payment  to the  Obligations  under  the  Loan
Documents.

         "SINGLE  EMPLOYER  PLAN"  means a single  employer  plan (as defined in
Section  4001(a)(15)  of ERISA) that (a) is maintained for employees of any Loan
Party or any ERISA  Affiliate  and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA  Affiliate  could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

         "SPC" has the meaning specified in Section 8.07(j).

         "SOLVENT" and "SOLVENCY"  mean,  with respect to any Person on any date
of  determination,  that on such date (a) the fair value of the property of such
Person is  greater  than the total  amount of  liabilities,  including,  without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the  assets of such  Person is not less  than the  amount  that will be
required  to pay the  probable  liability  of such  Person  on its debts as they
become  absolute and  matured,  (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in  business  or a  transaction,  and is not about to engage  in  business  or a
transaction,  for which such Person's  property would constitute an unreasonably
small  capital.  The  amount  of  contingent  liabilities  at any time  shall be
computed  as the amount  that,  in the 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.

         "SSB" has the  meaning  specified  in the  recital  of  parties to this
Agreement.

         "STANDBY LETTER OF CREDIT" means any Letter of Credit issued hereunder,
other than a Trade Letter of Credit.

         "SUBSIDIARY GUARANTY" has the meaning specified in Section 3.01(a)(ii).

                                       29

<PAGE>

         "SUBSIDIARY" of any Person means any  corporation,  partnership,  joint
venture, limited liability company, unlimited liability company, trust or estate
of which (or in which) more than 50% of (a) the issued and outstanding shares of
capital stock having  ordinary  voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time capital stock
of any other  class or classes of such  corporation  shall or might have  voting
power upon the occurrence of any  contingency),  (b) the interest in the capital
or profits of such  partnership,  joint venture,  limited  liability  company or
unlimited  liability  company or (c) the  beneficial  interest  in such trust or
estate,  is at the time  directly  or  indirectly  owned or  controlled  by such
Person,  by such Person and one or more of its other  Subsidiaries  or by one or
more of such Person's other Subsidiaries.

         "SWING  LINE  ADVANCE"  means an  advance  made by the Swing  Line Bank
pursuant to Section 2.01(d).

         "SWING LINE BANK" means Bank of America.

         "SWING LINE  BORROWING"  means a borrowing  consisting  of a Swing Line
Advance made by the Swing Line Bank.

         "SWING LINE NOTE" means a promissory  note of the  Borrower  payable to
the order of the Swing  Line Bank,  in  substantially  the form of  Exhibit  A-4
hereto,  evidencing the aggregate indebtedness of the Borrower to the Swing Line
Bank resulting from the Swing Line Advances made by the Swing Line Bank.

         "SWING  LINE  SUBLIMIT"   means,  at  any  time,  an  amount  equal  to
$50,000,000,  as such amount may be reduced at or prior to such time pursuant to
Section 2.05.

         "SYNDICATION AGENT" has the meaning specified in the recital of parties
to this Agreement.

         "TAXES" has the meaning specified in Section 2.13(a).

         "TERMINATION DATE" means the earlier of (a) August 29, 2003 and (b) the
date of  termination in whole of the Tranche A Term  Commitments,  the Tranche B
Term Commitments and the Revolving Credit  Commitments  pursuant to Section 2.05
or 6.01.

         "TRADE  LETTER OF  CREDIT"  means any  Letter of Credit  that is issued
hereunder  for the benefit of a supplier of  inventory to the Borrower or any of
its Subsidiaries to effect payment for such inventory, the conditions to drawing
under which include the presentation to the Issuing Bank that issued such Letter
of Credit of shipping documents, invoices and related documents.

         "TRANCHE A TERM ADVANCE" has the meaning specified in Section 2.01(a).

         "TRANCHE A TERM BORROWING" means a borrowing consisting of simultaneous
Tranche A Term Advances of the same Type made by the Tranche A Term Lenders.

         "TRANCHE A TERM COMMITMENT"  means,  with respect to any Tranche A Term
Lender at any time, the amount set forth opposite such Lender's name on Schedule
1.01(a) hereto under the caption  "TRANCHE A TERM COMMITMENT" or, if such Lender
has entered into one or more

                                       30

<PAGE>

Assignments  and  Acceptances,  the  amount  set  forth  for such  Lender in the
Register  maintained by the Administrative  Agent pursuant to Section 8.07(d) as
such Tranche A Term Lender's "TRANCHE A TERM COMMITMENT",  as such amount may be
reduced at or prior to such time pursuant to Section 2.05 or 6.01.

         "TRANCHE A TERM FACILITY"  means, at any time, the aggregate  Tranche A
Term Commitments of all Tranche A Term Lenders at such time.

         "TRANCHE A TERM  LENDER"  means,  at any time,  any  Lender  that has a
Tranche A Term Commitment at such time.

         "TRANCHE A TERM NOTE" means a promissory  note of the Borrower  payable
to the order of any Tranche A Term Lender,  in substantially the form of Exhibit
A-1 hereto,  evidencing the  indebtedness of the Borrower to such Tranche A Term
Lender  resulting  from the Tranche A Term  Advance  made by such Tranche A Term
Lender.

         "TRANCHE B TERM ADVANCE" has the meaning specified in Section 2.01(b).

         "TRANCHE B TERM BORROWING" means a borrowing consisting of simultaneous
Tranche B Term Advances of the same Type made by the Tranche B Term Lenders.

         "TRANCHE B TERM COMMITMENT"  means,  with respect to any Tranche B Term
Lender at any time, the amount set forth opposite such Lender's name on Schedule
1.01(a) hereto under the caption  "TRANCHE B TERM COMMITMENT" or, if such Lender
has entered into one or more Assignments and  Acceptances,  the amount set forth
for such Lender in the Register maintained by the Administrative  Agent pursuant
to Section 8.07(d) as such Tranche B Term Lender's  "TRANCHE B TERM COMMITMENT",
as such amount may be reduced at or prior to such time  pursuant to Section 2.05
or 6.01.

         "TRANCHE B TERM FACILITY"  means, at any time, the aggregate  Tranche B
Term Commitments of all Tranche B Term Lenders at such time.

         "TRANCHE B TERM  LENDER"  means,  at any time,  any  Lender  that has a
Tranche B Term Commitment at such time.

         "TRANCHE B TERM NOTE" means a promissory  note of the Borrower  payable
to the order of any Tranche B Term Lender,  in substantially the form of Exhibit
A-2 hereto,  evidencing the  indebtedness of the Borrower to such Tranche B Term
Lender  resulting  from the Tranche B Term  Advance  made by such Tranche B Term
Lender.

         "TYPE" refers to the distinction  between  Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.

         "UNPLEDGED FOREIGN SUBSIDIARIES" means Foreign Subsidiaries none of the
Equity Interests of which is pledged to Administrative Agent.

         "UNREIMBURSED AMOUNT" has the meaning specified in Section 2.03(c).

                                       31

<PAGE>

         "UNUSED  REVOLVING  CREDIT  COMMITMENTS"  means,  with  respect  to any
Revolving  Credit  Lender  at any  time,  (a)  such  Revolving  Credit  Lender's
Revolving Credit Commitment at such time MINUS (b) the sum, without duplication,
of (i) the  aggregate  principal  amount of all  Revolving  Credit  Advances and
Letter of Credit  Advances  (in respect of Domestic  Letters of Credit)  made by
such  Revolving  Credit Lender (in its capacity as a Lender) and  outstanding at
such time,  (ii) such Revolving  Credit Lender's Pro Rata Share of the aggregate
Available Amount of all Domestic Letters of Credit outstanding at such time,
(iii) in the case of the Swing Line Bank, the aggregate principal amount of all
Swing Line Advances  outstanding at such time, and (iv) such Revolving  Credit
Lender's Pro Rata Share of the Foreign  Letter of Credit Sublimit. For  purposes
of this definition,  any amount described in the preceding sentence which is
denominated in a  currency  other  than  Dollars  shall be  valued  based on the
applicable Exchange Rate for such currency as of the applicable date of
determination.

         "VOTING   INTERESTS"   means  shares  of  capital  stock  issued  by  a
corporation,  or equivalent Equity Interests in any other 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 if the  right so to vote  has been  suspended  by the  happening  of such a
contingency.

         "VOTING TRUST AGREEMENT" means the Voting Trust Agreement  entered into
as of April 15, 1996 by and among Robert D. Haas;  Peter E. Haas,  Sr.; Peter E.
Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the  stockholders of
the Borrower (as successor to LSAI Holding Corp.) who are parties thereto.

         "WELFARE  PLAN"  means a welfare  plan (as  defined in Section  3(1) of
ERISA) that is maintained for employees of any Loan Party or in respect of which
any Loan Party could reasonably be expected to have liability.

         "WITHDRAWAL  LIABILITY" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.

         Section  1.02   Computation   of  Time  Periods;   OTHER   DEFINITIONAL
                         -------------------------------
PROVISIONS.  In this  Agreement  in the  computation  of  periods of time from a
specified  date to a later  specified  date,  the word  "from"  means  "from and
including"  and the  words  "to"  and  "until"  each  mean  "to but  excluding".
References in the Loan Documents to any agreement or contract "as amended" shall
mean and be a reference to such  agreement  or contract as amended,  amended and
restated,  supplemented  or otherwise  modified  from time to time in accordance
with its terms.  Section  headings  herein and in the other Loan  Documents  are
included  for   convenience   of  reference   only  and  shall  not  affect  the
interpretation of this Agreement or any Loan Document.

         Section 1.03 Accounting  Terms.  All accounting  terms not specifically
                      -----------------
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
Consolidated  financial statements of the Borrower and its Subsidiaries referred
to in Section 4.01(g) ("GAAP").

         Section  1.04 Change in  Accounting  Principles.  If any change in GAAP
                       ---------------------------------
occurs or takes  effect after the Closing Date which would result in a change in
any quantity  reported to

                                       32

<PAGE>

the Lenders  hereunder  which  provides the basis for any covenant,  performance
obligation or standard of measurement used in this Agreement, the parties hereto
agree to enter into  negotiations  in order to amend such covenant,  performance
obligation  or standard  of  performance  so as to reflect  such change with the
result  that  the  criteria  for  evaluating   compliance  with  such  covenant,
performance  obligation or standard of  performance  shall be the same after the
change as if the change had not been made.  Until the  parties  hereto  agree to
such  amendment,  all  covenants,   performance  obligations  and  standards  of
performance shall be calculated without giving effect to the change in GAAP.

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

         Section 2.01 The Advances and the Letters of Credit.
                      --------------------------------------

         (a) The Tranche a Term Advances.  Each Tranche A Term Lender  severally
             ---------------------------
agrees,  on the terms and  conditions  hereinafter  set forth,  to make a single
advance (a "TRANCHE A TERM  ADVANCE")  in Dollars to the Borrower on the Closing
Date in an amount not to exceed the Tranche A Term  Commitment of such Tranche A
Term Lender at such time. The Tranche A Term Borrowing  shall consist of Tranche
A Term Advances made  simultaneously by the Tranche A Term Lenders in accordance
with their  respective Pro Rata Shares of the Tranche A Term  Facility.  Amounts
borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.

         (b) The Tranche B Term Advances.  Each Tranche B Term Lender  severally
             ---------------------------
agrees,  on the terms and  conditions  hereinafter  set forth,  to make a single
advance (a "TRANCHE B TERM  ADVANCE")  in Dollars to the Borrower on the Closing
Date in an amount not to exceed the Tranche B Term  Commitment of such Tranche B
Term Lender at such time. The Tranche B Term Borrowing  shall consist of Tranche
B Term Advances made  simultaneously by the Tranche B Term Lenders in accordance
with their  respective Pro Rata Shares of the Tranche B Term  Facility.  Amounts
borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed.

         (c)  The  Revolving  Credit  Advances.  Each  Revolving  Credit  Lender
              --------------------------------
severally  agrees,  on the terms and conditions  hereinafter  set forth, to make
advances  (each a "REVOLVING  CREDIT  ADVANCE") in Dollars to the Borrower  from
time to time on any  Business  Day during the period from the date hereof  until
the  Termination  Date,  in each case in an  amount  not to  exceed  the  Unused
Revolving  Credit  Commitment of such Revolving Credit Lender at such time. Each
Revolving  Credit Borrowing shall be in an aggregate amount of $10,000,000 or an
integral  multiple of $1,000,000 in excess  thereof  (other than a Borrowing the
proceeds of which  shall be used  solely to repay or prepay in full  outstanding
Swing Line Advances or outstanding  L/C  Borrowings)  or, if less, the amount of
the Aggregate Unused  Revolving Credit  Commitments at such time. Each Revolving
Credit Borrowing shall consist of Revolving Credit Advances made  simultaneously
by the Revolving  Credit  Lenders in accordance  with their  respective Pro Rata
Shares of the Revolving  Credit  Facility.  Within the limits of each  Revolving
Credit Lender's Unused Revolving Credit  Commitment in effect from time to time,
the Borrower may borrow

                                       33

<PAGE>

under this  Section  2.01(c),  prepay  pursuant to Section  2.06(a) and reborrow
under this Section 2.01(c).

         (d) The Swing Line  Advances.  The  Borrower may request the Swing Line
             ------------------------
Bank to make,  and the Swing Line Bank may, if in its sole  discretion it elects
to do so, make, on the terms and conditions  hereinafter  set forth,  Swing Line
Advances to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination  Date (i) in an aggregate  amount not
to exceed the Swing Line Sublimit at any time  outstanding and (ii) in an amount
for each such Swing Line Borrowing not to exceed the Aggregate  Unused Revolving
Credit  Commitments of the Revolving  Credit Lenders at such time. No Swing Line
Advance shall be used for the purpose of funding the payment of principal of any
other Swing Line  Advance.  Each Swing Line  Borrowing  shall be in an amount of
$1,000,000  or an integral  multiple of $500,000 in excess  thereof.  Within the
limits of the first sentence of this Section 2.01(d),  so long as the Swing Line
Bank, in its sole discretion,  elects to make Swing Line Advances,  the Borrower
may borrow  under this Section  2.01(d),  repay  pursuant to Section  2.04(d) or
prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d).

         (e) Letters of Credit.
             -----------------

                  (i) Each Issuing Bank severally  agrees,  in reliance upon the
agreements  of the  Lenders  set  forth in  Section  2.03 and on the  terms  and
conditions  hereinafter  set forth,  to (A) issue  letters of credit  ("DOMESTIC
LETTERS OF  CREDIT")  for the account of the  Borrower  from time to time on any
Business  Day during the period  from the date  hereof  until 60 days before the
scheduled  Termination  Date in an aggregate  Available  Amount for all Domestic
Letters of Credit not to exceed the lesser of (1) the Letter of Credit  Sublimit
at such time MINUS the  Foreign  Letter of Credit  Sublimit at such time and (2)
the Aggregate Unused Revolving Credit Commitments at such time and (B) issue, or
cause their  respective  Foreign  Affiliate  Issuing Banks to issue,  letters of
credit that constitute Trade Letters of Credit ("FOREIGN LETTERS OF CREDIT" and,
together with Domestic  Letters of Credit,  "LETTERS OF CREDIT") for the account
of the  Borrower  from time to time during the period from the date hereof until
60 days before the scheduled  Termination Date in an aggregate  Available Amount
for all Foreign  Letters of Credit issued by such Issuing Bank and Affiliates of
such  Issuing  Bank not to exceed  the  Issuing  Bank  Foreign  Letter of Credit
Sublimit for such Issuing Bank.  The Borrower shall have the right to change the
Foreign Letter of Credit  Sublimit and the Issuing Bank Foreign Letter of Credit
Sublimits  by  delivering  to the  Administrative  Agent a notice (the  "FOREIGN
LETTER OF CREDIT  SUBLIMIT  NOTICE")  on the first  Business  Day of any  Fiscal
Quarter.  No Trade Letter of Credit shall have an expiration date later than 180
days  after the  issuance  thereof.  No Standby  Letter of Credit  shall have an
expiration date (including all rights of the Borrower or the beneficiary of such
Standby Letter of Credit to require  renewal) later than one year after the date
of issuance  thereof,  but any such Standby Letter of Credit may by its terms be
renewable  annually  on the  terms  set  forth in  clause  (ii) of this  Section
2.03(e). If any Letter of Credit remains outstanding after the Termination Date,
the Borrower shall, not later than the Termination Date, deposit an amount equal
to the aggregate  Available Amount of all Letters of Credit  outstanding at such
time in the L/C Cash  Collateral  Account.  Within  the  limits of the Letter of
Credit  Sublimit,  and subject to the limits referred to above, the Borrower may
request  the  issuance of Letters of Credit  under this  Section  2.01(e)(i)  to
replace  Letters of Credit that have expired or been drawn upon and  reimbursed.
All  Existing

                                       34

<PAGE>

Letters of Credit shall be deemed to have been issued pursuant hereto,  and from
and after the  Closing  Date shall be subject to and  governed  by the terms and
conditions hereof.

                  (ii) If the Borrower so requests in any  applicable  Letter of
Credit  Agreement,  the Issuing Bank may, in its sole and  absolute  discretion,
agree to issue a Letter of Credit that has automatic  renewal  provisions (each,
an "EVERGREEN  LETTER OF CREDIT");  provided that any such  Evergreen  Letter of
Credit must permit the Issuing Bank to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the  beneficiary  thereof not later than a day
(the  "NONRENEWAL  NOTICE DATE") in each such  twelve-month  period to be agreed
upon at the time such Letter of Credit is issued.  Unless otherwise  directed by
the Issuing Bank, the Borrower shall not be required to make a specific  request
to the Issuing Bank for any such renewal. Once an Evergreen Letter of Credit has
been  issued,  the  Lenders  shall be  deemed  to have  authorized  (but may not
require)  the Issuing Bank to permit the renewal of such Letter of Credit at any
time  to a date  not  later  than  the day  that  is  seven  days  prior  to the
Termination  Date  (or if such day is not a  Business  Day,  the next  preceding
Business  Day);  PROVIDED,  HOWEVER,  that the Issuing Bank shall not permit any
such  renewal if (A) the Issuing Bank would have no  obligation  at such time to
issue such Letter of Credit in its renewed form under the terms  hereof,  or (B)
it has  received  notice in writing on or before the  Business  Day  immediately
preceding the Nonrenewal Notice Date (1) from the Administrative  Agent that the
Required  Lenders  have  elected  not to  permit  such  renewal  or (2) from the
Administrative  Agent,  any  Lender  or the  Borrower  that  one or  more of the
applicable   conditions  specified  in  Section  3.02  is  not  then  satisfied.
Notwithstanding  anything to the  contrary  contained  herein,  the Issuing Bank
shall have no obligation to permit the renewal of any Evergreen Letter of Credit
at any time.

                  (iii) No Issuing Bank shall be required to issue any Letter of
Credit if:

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

                        (B) the issuance of such Letter of Credit would  violate
         one or more generally applicable policies of the Issuing Bank; or

                        (C) in the  judgment  of the Issuing  Bank,  the foreign
         currency in which such Letter of Credit is requested to be  denominated
         is not readily and freely available.

                  (iv)   Applicability   of  ISP98  and  UCP.  Unless  otherwise
expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is
issued  (including  any such

                                       35

<PAGE>

agreement  applicable  to an Existing  Letter of  Credit),  (i) the rules of the
"International   Standby   Practices   1998"   published  by  the  Institute  of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance)  shall apply to each  Standby  Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary  Credits,
as most recently published by the International  Chamber of Commerce (the "ICC")
at the time of issuance  (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each Trade Letter of Credit.

         Section 2.02 Making the Advances.
                      -------------------

         (a)  Except as  otherwise  provided  in Section  2.02(b) or 2.03,  each
Borrowing  (other than an L/C Borrowing or a Swing Line Borrowing) shall be made
on notice,  given not later than 9:00 A.M. (San Francisco,  California  time) on
the third  Business Day prior to the date of the proposed  Borrowing in the case
of a Borrowing  comprised of Eurodollar Rate Advances,  or on the first Business
Day  prior  to the date of the  proposed  Borrowing  in the case of a  Borrowing
comprised of Base Rate Advances,  by the Borrower to the  Administrative  Agent,
which shall give prompt notice  thereof to each  Appropriate  Lender by telex or
telecopier.  Each notice of a Borrowing  (a "NOTICE OF  BORROWING")  shall be by
telephone,  confirmed  immediately  in writing,  or by telex or  telecopier,  in
substantially  the form of  Exhibit  B-1  hereto,  shall be duly  executed  by a
Responsible  Officer  of the  Borrower,  and  shall  specify  therein:  (i)  the
requested  date of such  Borrowing  (which  shall be a Business  Day);  (ii) the
Facility under which such  Borrowing is requested to be made;  (iii) the Type of
Advances  requested to comprise such  Borrowing;  (iv) the  requested  aggregate
amount  of such  Borrowing;  and (v) in the  case of a  Borrowing  comprised  of
Eurodollar Rate Advances,  the requested duration of the initial Interest Period
for each such Advance.  Each  Appropriate  Lender shall,  before 11:00 A.M. (San
Francisco,  California  time) on the date of such Borrowing,  make available for
the account of its Applicable Lending Office to the Administrative  Agent at the
Administrative  Agent's Account, in same day funds, such Lender's Pro Rata Share
of such Borrowing.  After the  Administrative  Agent's receipt of such funds and
upon  fulfillment  of the  applicable  conditions  set forth in Article III, the
Administrative Agent will make such funds available to the Borrower by crediting
the Borrower's Account;  provided,  HOWEVER,  that, in the case of any Revolving
Credit Borrowing,  the  Administrative  Agent shall first make a portion of such
funds equal to the aggregate principal amount of any Swing Line Advances made by
the Swing  Line Bank and any  Letter of Credit  Advances  made by any  Revolving
Credit Lender and  outstanding on the date of such Revolving  Credit  Borrowing,
PLUS accrued and unpaid  interest  thereon to and as of such date,  available to
the Swing Line Bank and such  Revolving  Credit  Lenders for  repayment  of such
Swing Line Advances and Letter of Credit Advances.

         (b) (i) Each Swing Line  Borrowing  shall be made on notice,  given not
later  than  11:00  A.M.  (San  Francisco,  California  time) on the date of the
proposed  Swing Line  Borrowing,  by the Borrower to the Swing Line Bank and the
Administrative Agent. Each Notice of Borrowing shall be by telephone,  confirmed
immediately in writing,  or by telex or telecopier,  shall be duly executed by a
Responsible  Officer  of the  Borrower,  and  shall  specify  therein:  (A)  the
requested  date of such  Borrowing  (which  shall be a  Business  Day);  (B) the
requested  amount of such  Borrowing;  and (C) the  requested  maturity  of such
Borrowing  (which  maturity  shall be no later  than  the  14th  day  after  the
requested date of such Borrowing).  If, in its sole discretion it

                                       36

<PAGE>

elects to make the requested Swing Line Borrowing, the Swing Line Bank will make
the amount thereof available for the account of its Applicable Lending Office to
the  Administrative  Agent at the  Administrative  Agent's Account,  in same day
funds.  After  the  Administrative  Agent's  receipt  of  such  funds  and  upon
fulfillment  of  the  applicable  conditions  set  forth  in  Article  III,  the
Administrative Agent will make such funds available to the Borrower by crediting
the  Borrower's  Account.  Immediately  upon  the  making  of  each  Swing  Line
Borrowing,  each  Revolving  Credit  Lender  shall  be  deemed  to,  and  hereby
irrevocably and  unconditionally  agrees to, purchase from the Swing Line Bank a
participation  in such Swing Line Borrowing in an amount equal to the product of
such  Revolving  Credit  Lender's  Pro Rata Share TIMES the amount of such Swing
Line Borrowing.

             (ii) Upon demand by the Swing Line Bank, with a copy of such demand
to the  Administrative  Agent  (which shall give prompt  notice  thereof to each
Revolving  Credit Lender),  each Revolving Credit Lender shall purchase from the
Swing  Line  Bank,  and the Swing  Line Bank  shall sell and assign to each such
Revolving  Credit Lender,  such Revolving Credit Lender's Pro Rata Share of such
outstanding  Swing  Line  Borrowing  as of the date of such  demand,  by  making
available for the account of its Applicable Lending Office to the Administrative
Agent at the  Administrative  Agent's  Account for the account of the Swing Line
Bank,  in same day  funds,  an amount in Dollars  equal to such Pro Rata  Share.
Promptly after receipt of such funds,  the  Administrative  Agent shall transfer
such  funds to the  Swing  Line  Bank at its  Applicable  Lending  Office.  Each
Revolving  Credit  Lender  hereby  agrees to  purchase  its Pro Rata Share of an
outstanding  Swing  Line  Borrowing  on (A) the  Business  Day on  which  demand
therefor  is made by the Swing  Line  Bank so long as  notice of such  demand is
given  not  later  than  12:00  Noon (San  Francisco,  California  time) on such
Business Day or (B) the first Business Day next succeeding such demand if notice
of such demand is given after such time. If and to the extent that any Revolving
Credit Lender shall not have so made its Pro Rata Share of any applicable  Swing
Line  Borrowing  available to the  Administrative  Agent in accordance  with the
foregoing provisions of this Section  2.02(b)(ii),  such Revolving Credit Lender
hereby agrees to pay to the Administrative  Agent forthwith on demand the amount
of its Pro Rata Share,  together  with interest  thereon,  for each day from the
date of demand by the Swing  Line Bank  therefor  until the date such  amount is
paid to the  Administrative  Agent, at the Federal Funds Rate. If such Revolving
Credit Lender shall pay to the  Administrative  Agent the amount of its Pro Rata
Share for the account of the Swing Line Bank on any Business Day, such amount so
paid in respect of principal shall constitute a Revolving Credit Advance made by
such  Revolving  Credit  Lender on such  Business  Day for all  purposes of this
Agreement,  and the outstanding  principal amount of the Swing Line Advance made
by the Swing Line Bank shall be reduced by such amount on such Business Day.

             (iii) The  Obligation of each  Revolving  Credit Lender to purchase
its Pro Rata Share of each  outstanding  Swing Line Borrowing upon demand by the
Swing Line Bank therefor  pursuant to clause (ii) of this Section  2.02(b) shall
be  absolute,  unconditional  and  irrevocable,  and shall be made  strictly  in
accordance  with the  terms of clause  (ii) of this  Section  2.02(b)  under all
circumstances, including, without limitation, the following circumstances:

                  (A)  any  lack  of  validity  or  enforceability  of any  Loan
         Document or any other agreement or instrument relating thereto;

                                       37

<PAGE>

                  (B) the  existence  of any  claim,  set-off,  defense or other
         right that such  Revolving  Credit  Lender may have at any time against
         the Swing Line  Bank,  the  Borrower  or any other  Person,  whether in
         connection with the transactions  contemplated by the Loan Documents or
         any unrelated transaction;

                  (C) the occurrence and  continuance of any Default or Event of
         Default; or

                  (D) any other circumstances or happening  whatsoever,  whether
         or not similar to any of the foregoing.

         (c)  Anything in  subsection  (a) of this  Section 2.02 to the contrary
notwithstanding,  the Borrower may not select  Eurodollar  Rate Advances for the
initial  Borrowing of Tranche B Term  Advances  hereunder  and no Tranche B Term
Advance may be made as a Eurodollar Rate Advance and no Tranche B Term Loan Base
Rate Advance may be converted into a Eurodollar Rate Advance until the tenth day
after the Closing Date. In addition,  Advances may not be outstanding as part of
more than 24 separate Borrowings.

         (d) Each Notice of Borrowing  shall be  irrevocable  and binding on the
Borrower.  In the case of any  Borrowing  that the related  Notice of  Borrowing
specifies is to be comprised of Eurodollar  Rate  Advances,  the Borrower  shall
indemnify each Appropriate  Lender against any loss, cost or expense incurred by
such Lender if for any reason a Borrowing  of any  Eurodollar  Rate Advance does
not  occur on the date  specified  therefor  in such  Notice of  Borrowing  or a
Conversion to or Continuation of any Eurodollar Rate Advance does not occur on a
date  specified  therefor  in  a  Notice  of  Conversion/Continuation  therefor,
including,  without limitation,  any loss, cost or expense incurred by reason of
the  liquidation  or  reemployment  of deposits or other funds  acquired by such
Lender to fund the Advance to be made by such  Lender as part of such  Borrowing
when such Advance, as a result of such failure, is not made on such date.

         (e) Unless the Administrative  Agent shall have received notice from an
Appropriate  Lender prior to the date of any  Borrowing  under a Facility  under
which such Lender has a Commitment  that such Lender will not make  available to
the  Administrative  Agent such Lender's Pro Rata Share of such  Borrowing,  the
Administrative Agent may assume that such Lender has made the amount of such Pro
Rata Share available to the  Administrative  Agent on the date of such Borrowing
in accordance  with  subsection  (a) or (b) of this Section 2.02, as applicable,
and the  Administrative  Agent  may,  in  reliance  upon such  assumption,  make
available to the  Borrower on such date a  corresponding  amount.  If and to the
extent that such Lender shall not have so made the amount of such Pro Rata Share
available to the  Administrative  Agent, such Lender and the Borrower  severally
agree to repay or to pay to the  Administrative  Agent  forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such  amount is made  available  to the  Borrower  until the date such amount is
repaid or paid to the Administrative  Agent, at (i) in the case of the Borrower,
the  interest  rate  applicable  at such time  under  Section  2.07 to  Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the  Administrative  Agent such  corresponding
amount,  such amount so paid shall  constitute such Lender's  Advance as part of
such Borrowing for all purposes under this Agreement.

                                       38

<PAGE>

         (f) The  failure of any  Lender to make the  Advance to be made by it
as part of any Borrowing  shall not relieve any other Lender of its  obligation,
if any,  hereunder  to make its  Advance on the date of such  Borrowing,  but no
Lender  shall be  responsible  for the  failure of any other  Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.

         Section 2.03 Issuance of and Drawings and  Reimbursement  Under Letters
                      ----------------------------------------------------------
of Credit.
---------

         (a) Request for Issuance.
             --------------------

             (i) Each  Domestic  Letter of Credit  shall be issued upon  notice,
given not later than 1:00 P.M. (San Francisco,  California time) on the Business
Day prior to the date of the proposed issuance of such Domestic Letter of Credit
(or such later day as the applicable  Issuing Bank in its sole discretion  shall
agree),  by  the  Borrower  to  any  Issuing  Bank,  which  shall  give  to  the
Administrative  Agent and each Revolving  Credit Lender prompt notice thereof by
telex or telecopier. Each notice of issuance of a Letter of Credit (a "NOTICE OF
ISSUANCE") shall be by telephone,  confirmed immediately in writing, or by telex
or telecopier,  shall be duly executed by a Responsible Officer of the Borrower,
and shall specify therein:  (A) the requested date of such issuance (which shall
be a Business Day); (B) the requested  Available  Amount of such Domestic Letter
of Credit;  (C) the  requested  expiration  date of such Letter of Credit (which
shall comply with the requirements of Section 2.01(e)); (D) the name and address
of the proposed  beneficiary of such Letter of Credit; (E) the currency in which
such  Domestic  Letter of Credit is  requested  to be  denominated;  and (F) the
proposed form of such Domestic  Letter of Credit,  and shall be  accompanied  by
such  application  and  agreement for letters of credit as such Issuing Bank may
specify to the  Borrower  for use in  connection  with such  requested  Domestic
Letter of Credit (a "LETTER OF CREDIT AGREEMENT"). If the requested form of such
Domestic  Letter  of  Credit  is  acceptable  to such  Issuing  Bank in its sole
discretion,   such  Issuing  Bank  will,  upon  fulfillment  of  the  applicable
conditions set forth in Article III, make such Letter of Credit available to the
Borrower at its office  referred to in Section 8.02 or as otherwise  agreed with
the Borrower in connection with the issuance of such Letter of Credit. If and to
the extent that the provisions of any Letter of Credit  Agreement shall conflict
with this Agreement, the provisions of this Agreement shall govern.

             (ii) Each Foreign  Letter of Credit  shall be issued in  accordance
with the usual
and  customary  business  practices  of the  Issuing  Bank or Foreign  Affiliate
Issuing Bank issuing such Foreign Letter of Credit.

             (iii) Immediately upon the issuance of each Letter of Credit,  each
Revolving  Credit  Lender  shall  be  deemed  to,  and  hereby  irrevocably  and
unconditionally  agrees to,  purchase from the Issuing Bank a  participation  in
such  Letter of Credit in an amount  equal to the product of such  Lender's  Pro
Rata Share TIMES the amount of such Letter of Credit.

         (b) Procedure for Issuance.
             ----------------------

             (i) Promptly after receipt of any Notice of Issuance for a Domestic
Letter of Credit,  the Issuing Bank will confirm with the  Administrative  Agent
(by telephone or in writing)

                                       39

<PAGE>

that the  Administrative  Agent has  received a copy of such  Notice of Issuance
from the Borrower and, if not, the Issuing Bank will provide the  Administrative
Agent with a copy thereof. Upon receipt by the Issuing Bank of confirmation from
the  Administrative  Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof,  then,  subject to the terms and conditions
hereof,  the Issuing Bank shall, on the requested date,  issue a Domestic Letter
of  Credit  for the  account  of the  Borrower  or  enter  into  the  applicable
amendment,  as the case may be,  in each  case in  accordance  with the  Issuing
Bank's usual and customary business practices.

             (ii) Promptly  after its delivery of any Domestic  Letter of Credit
or any amendment to a Domestic Letter of Credit to an advising bank with respect
thereto or to the beneficiary thereof, the Issuing Bank will also deliver to the
Borrower and the Administrative  Agent a true and complete copy of such Domestic
Letter of Credit or amendment.

         (c) Drawing and Reimbursement.
             -------------------------

             (i) Upon any drawing  under any Letter of Credit,  the Issuing Bank
shall notify the Borrower and the Administrative  Agent thereof.  Not later than
11:00 A.M. (San  Francisco,  California  time) on the date of any payment by the
Issuing Bank under a Letter of Credit  (each such date,  an "HONOR  DATE"),  the
Borrower shall reimburse the Issuing Bank through the Administrative Agent in an
amount equal to the amount of such drawing in Dollars (which amount, in the case
of a payment under a Letter of Credit which is  denominated  in a currency other
than Dollars, shall be calculated by reference to the applicable Exchange Rate).
If the  Borrower  fails to so  reimburse  the  Issuing  Bank by such  time,  the
Administrative  Agent shall promptly notify each Revolving  Credit Lender of the
Honor Date, the amount of the unreimbursed drawing (the "UNREIMBURSED  AMOUNT"),
and such Lender's Pro Rata Share thereof.  In such event,  the Borrower shall be
deemed to have  requested  a  Revolving  Credit  Advance  of Base Rate  Loans in
Dollars (which  amount,  in the case of a payment under a Letter of Credit which
is  denominated  in a  currency  other  than  Dollars,  shall be  calculated  by
reference to the applicable  Exchange Rate) to be disbursed on the Honor Date in
an amount equal to the  Unreimbursed  Amount,  without regard to the minimum and
multiples  specified in Section  2.01(c) for the  principal  amount of Base Rate
Loans,  but  subject  to the amount of the  Aggregate  Unused  Revolving  Credit
Commitments  and the  conditions  set  forth in  Section  3.02  (other  than the
delivery of a Notice of Borrowing).  Any notice given by the Issuing Bank or the
Administrative  Agent  pursuant  to this  Section  2.03(c)(i)  may be  given  by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate  confirmation shall not affect the conclusiveness or binding effect of
such notice.

             (ii) Each Revolving  Credit Lender  (including the Revolving Credit
Lender  acting as  Issuing  Bank)  shall  upon any  notice  pursuant  to Section
2.03(c)(i) make funds available to the  Administrative  Agent in Dollars for the
account of the Issuing Bank at the  Administrative  Agent's Account in an amount
equal to its Pro Rata Share of the Unreimbursed  Amount not later than 1:00 P.M.
(San Francisco, California time) on the Business Day specified in such notice by
the  Administrative  Agent,  whereupon,  subject  to the  provisions  of Section
2.03(c)(iii),  each Revolving  Credit Lender that so makes funds available shall
be  deemed to have made a  Revolving  Credit  Advance  to the  Borrower  in such
amount.  The  Administrative  Agent  shall  remit the funds so  received  to the
Issuing Bank.

                                       40

<PAGE>

             (iii) With  respect to any  Unreimbursed  Amount  that is not fully
refinanced by a Revolving  Credit  Advance  because the  conditions set forth in
Section 3.02 cannot be satisfied or for any other reason,  the Borrower shall be
deemed to have  incurred from the Issuing Bank an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced,  which L/C Borrowing shall be
due and payable on demand  (together with interest) and shall bear interest at a
rate per  annum  equal at all  times to 2% per  annum  above  the rate per annum
required  to be paid on  Eurodollar  Rate  Advances  pursuant  to clause  (i) of
Section  2.07(a).  In such event,  each Lender's  payment to the  Administrative
Agent for the account of the Issuing Bank pursuant to Section  2.03(c)(ii) shall
be deemed  payment in respect of its  participation  in such L/C  Borrowing  and
shall constitute a Letter of Credit Advance from such Revolving Credit Lender in
satisfaction of its participation obligation under this Section 2.03.

             (iv) Until each Revolving  Credit Lender funds its Revolving Credit
Advance  or  Letter  of Credit  Advance  pursuant  to this  Section  2.03(c)  to
reimburse  the  Issuing  Bank for any amount  drawn  under any Letter of Credit,
interest  in respect of such  Lender's  Pro Rata Share of such  amount  shall be
solely for the account of the Issuing Bank.

             (v)  The  Obligation  of  each  Revolving  Credit  Lender  to  make
Revolving  Loans or Letter of Credit  Advances  upon demand by any Issuing  Bank
therefor  pursuant  to clause (i) of this  Section  2.03(c)  shall be  absolute,
unconditional and irrevocable, and shall be made strictly in accordance with the
terms of clause (i) of this Section 2.03(c) under all circumstances,  including,
without limitation, the following circumstances:

                  (A)  any  lack  of  validity  or  enforceability  of any  Loan
         Document,  any Letter of Credit Agreement,  any Letter of Credit or any
         other agreement or instrument relating thereto (collectively,  the "L/C
         RELATED Documents");

                  (B) the  existence  of any  claim,  set-off,  defense or other
         right that such  Revolving  Credit  Lender may have at any time against
         any  beneficiary or any transferee of a Letter of Credit (or any Person
         for whom any such  beneficiary  or any such  transferee may be acting),
         any  Issuing  Bank,  the  Borrower  or any  other  Person,  whether  in
         connection  with  the  transactions  contemplated  by the  L/C  Related
         Documents or any unrelated transaction;

                  (C) the occurrence and  continuance of any Default or Event of
         Default; or

                  (D) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing.

         (d)  Failure  to Make  Letter of Credit  Advances.  The  failure of any
              --------------------------------------------
Revolving Credit Lender to make the Letter of Credit Advance to be made by it on
the date  specified  in Section  2.03(c)  shall not relieve any other  Revolving
Credit Lender of its  obligation  hereunder to make its Letter of Credit Advance
on such date,  but no  Revolving  Credit  Lender  shall be  responsible  for the
failure  of any  other  Revolving  Credit  Lender  to make the  Letter of Credit
Advance to be made by such other Revolving Credit Lender on such date.

                                       41

<PAGE>

         Section 2.04 Repayment of Advances
                      ---------------------

         (a)  Tranche  a  Term  Advances.   The  Borrower  shall  repay  to  the
              --------------------------
Administrative  Agent for the ratable  account of the Tranche A Term Lenders the
aggregate  principal  amount of all Tranche A Term Advances  outstanding  on the
following  dates in the respective  amounts set forth opposite such dates (which
amounts  shall be  reduced  as a result of the  application  of  prepayments  in
accordance with the order of priority set forth in Sections 2.05 and 2.06):

<TABLE>
<CAPTION>

           DATE                       AMOUNT
           ----                       ------

<S>                                  <C>
August 23, 2001                      $10,000,000
November 21, 2001                     10,000,000
February 21, 2002                     10,000,000
May 23, 2002                          10,000,000
August 22, 2002                       10,000,000
November 20, 2002                     12,500,000
February 20, 2003                     12,500,000
May 22, 2003                          12,500,000
August 29, 2003                       12,500,000

</TABLE>

; PROVIDED,  HOWEVER,  that the final  principal  repayment  installment  of the
Tranche A Term Advances shall be repaid on the Termination Date and in any event
shall be in an amount equal to the aggregate  principal  amount of all Tranche A
Term Advances outstanding on such date.

         (b)  Tranche  B  Term  Advances.   The  Borrower  shall  repay  to  the
              --------------------------
Administrative  Agent for the ratable  account of the Tranche B Term Lenders the
aggregate  principal  amount of all Tranche B Term Advances  outstanding  on the
following  dates in the respective  amounts set forth opposite such dates (which
amounts  shall be  reduced  as a result of the  application  of  prepayments  in
accordance with the order of priority set forth in Sections 2.05 and 2.06):

<TABLE>
<CAPTION>

           DATE                       AMOUNT
           ----                       ------

<S>                                  <C>
August 23, 2001                      $10,000,000
November 21, 2001                     10,000,000
February 21, 2002                     10,000,000
May 23, 2002                          10,000,000
August 22, 2002                       10,000,000
November 20, 2002                     10,000,000
February 20, 2003                     10,000,000
May 22, 2003                          90,000,000
August 29, 2003                       90,000,000

</TABLE>

; PROVIDED,  HOWEVER,  that the final  principal  repayment  installment  of the
Tranche B Term Advances shall be repaid on the Termination Date and in any event
shall be in an amount equal to the aggregate  principal  amount of all Tranche B
Term Advances outstanding on such date.

                                       42

<PAGE>

         (c)  Revolving  Credit  Advances.  The  Borrower  shall  repay  to  the
              ---------------------------
Administrative  Agent for the ratable account of the Revolving Credit Lenders on
the  Termination  Date the aggregate  principal  amount of all Revolving  Credit
Advances outstanding on such date.

         (d) Swing Line Advances. The Borrower shall repay to the Administrative
             -------------------
Agent for the account of the Swing Line Bank on the earlier of (i) the  maturity
date for each Swing Line Advance (as specified in the applicable Notice of Swing
Line Borrowing) and (ii) the Termination Date the principal amount of each Swing
Line Advance made by the Swing Line Bank outstanding on such date.

         (e) Letter of Credit  Advances.  The  Obligations  of the  Borrower  to
             --------------------------
reimburse  the Issuing Bank for each drawing  under each Letter of Credit and to
repay each Letter of Credit  Advance and each  drawing  under a Letter of Credit
that is refinanced by Revolving Credit Advances shall be absolute, unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement,  such Letter of Credit  Agreement or other  agreement  or  instrument
under  all  circumstances,   including,   without   limitation,   the  following
circumstances:

             (i) any  lack of  validity  or  enforceability  of any L/C  Related
Document;

             (ii) any change in the time,  manner or place of payment  of, or in
any other term of, all or any of the  Obligations  of the Borrower in respect of
any L/C Related  Document or any other  amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;

             (iii) the existence of any claim,  set-off,  defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Person for whom any such  beneficiary  or any such
transferee  may be acting),  any Issuing  Bank or any other  Person,  whether in
connection with the  transactions  contemplated by the L/C Related  Documents or
any unrelated transaction;

             (iv) any statement or any other document  presented  under a 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;

             (v)  payment by any  Issuing  Bank in good faith  under a Letter of
Credit against presentation of a draft,  certificate or other document that does
not strictly comply with the terms of such Letter of Credit;

             (vi) any exchange,  release or  nonperfection  of any Collateral or
other  collateral,  or any  release  or  amendment  or waiver of or  consent  to
departure from the Subsidiary Guaranty or any other guarantee, for all or any of
the Obligations of the Borrower in respect of the L/C Related Documents; or

             (vii) any other  circumstance or happening  whatsoever,  whether or
not similar to any of the foregoing,  including,  without limitation,  any other
circumstance  that  might  otherwise  constitute  a defense  available  to, or a
discharge of, the Borrower or a guarantor.

                                       43

<PAGE>

         Section   2.05   Termination   or   Reduction   of   the   Commitments.
                          -----------------------------------------------------

         (a)  Optional.  The Borrower may,  upon at least three  Business  Days'
              --------
notice to the  Administrative  Agent,  terminate  in whole or reduce in part the
Aggregate Unused  Revolving Credit  Commitments;  PROVIDED,  HOWEVER,  that each
partial  reduction  of  such  Facility  shall  be  in  an  aggregate  amount  of
$25,000,000 or an integral multiple of $5,000,000 in excess thereof or, if less,
the aggregate amount of such Facility.

         (b) Mandatory.
             ---------

             (i) The Tranche A Term  Facility  and the  Tranche B Term  Facility
shall be  automatically  and  permanently  reduced  from  time to time upon each
repayment or prepayment of the outstanding  Tranche A Term Advances or Tranche B
Term Advances, as the case may be, by an amount equal to the amount by which (A)
the  Tranche A Term  Facility  or Tranche B Term  Facility,  as the case may be,
immediately prior to such reduction  exceeds (B) the aggregate  principal amount
of all Tranche A Term Advances or Tranche B Term  Advances,  as the case may be,
outstanding at such time.

             (ii) The  Revolving  Credit  Facility  shall be  automatically  and
permanently  reduced on each date on which the  prepayment  of Revolving  Credit
Advances  outstanding  thereunder  is  required  to be made  pursuant to Section
2.06(b)(i) by an amount equal to the applicable Reduction Amount.

             (iii) The  Letter of Credit  Sublimit  shall be  automatically  and
permanently  reduced  on the  date of each  reduction  in the  Revolving  Credit
Facility by an amount  equal to the  amount,  if any, by which (A) the Letter of
Credit  Sublimit on such date exceeds (B) the Revolving  Credit Facility on such
date, after giving effect to such reduction of the Revolving Credit Facility.

         (c)  Application  of Commitment  Reductions.  Upon each  reduction of a
              --------------------------------------
Facility  pursuant to this Section  2.05,  the  Commitment  of each  Appropriate
Lender under such  Facility  shall be reduced by such Lender's Pro Rata Share of
the amount by which such Facility is reduced.

         Section 2.06 Prepayments.
                      -----------

         (a) Optional. The Borrower may, upon at least one Business Day's notice
             --------
in the case of Base Rate Advances and three Business Days' notice in the case of
Eurodollar Rate Advances,  in each case to the Administrative  Agent stating the
proposed  date and aggregate  principal  amount of the  prepayment,  and if such
notice is given the Borrower shall, prepay the aggregate principal amount of the
Advances  comprising part of the same Borrowing and outstanding on such date, in
whole or ratably in part;  PROVIDED,  HOWEVER,  that (i) each partial prepayment
shall be in an aggregate principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof and (ii) if any such  prepayment of a Eurodollar
Rate  Advance is made on a date other  than the last day of an  Interest  Period
therefor,  the  Borrower  shall  also pay any  amounts  owing in respect of such
Eurodollar  Rate Advance  pursuant to Section  2.11(d).  The Borrower may on any
Business Day prepay  Swing Line  Advances in an  aggregate  principal  amount of
$1,000,000  or  an  integral  multiple  of  $500,000  in  excess  thereof.  Each
prepayment  pursuant  to

                                       44

<PAGE>

this  subsection  (a), other than any prepayment of Revolving  Credit  Advances,
shall be  applied  to prepay  the  Tranche A Term  Advances  and  Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in order of maturity.

         (b) Mandatory.
             ---------

             (i) The  Borrower  shall (A) on the date of receipt of the Net Cash
Proceeds  by the  Borrower  or any of its  Subsidiaries  from the  sale,  lease,
transfer or other  disposition  of any property or assets of the Borrower or any
of its Subsidiaries (other than any property or assets expressly permitted to be
sold, leased, transferred or otherwise disposed of pursuant to clause (i), (ii),
(iii),  (iv), (ix), (x), (xii),  (xiii) or (xiv) of Section 5.02(e) and property
or assets to the extent that the  aggregate  value of such  property  and assets
disposed of in any single transaction or related series of transactions does not
exceed  $500,000),  (B) no later than five days following the receipt of the Net
Cash  Proceeds by the  Borrower or any of its  Subsidiaries  from any  Equipment
Financing Transaction, Permitted Foreign Receivables Transaction, or Real Estate
Financing  Transaction,  (C) on the date of receipt of the Net Cash  Proceeds by
the Borrower or any of its Subsidiaries from any Permitted Domestic  Receivables
Transaction,  and (D) on the date of  receipt  of the Net Cash  Proceeds  by the
Borrower or any of its  Subsidiaries  from any Insurance  Receipt received by or
paid to or for the  account of the  Borrower or any of its  Subsidiaries  (other
than the Net Cash  Proceeds of any  Insurance  Receipt  with respect to property
subject  to  an  Equipment  Financing  Transaction,   a  Real  Estate  Financing
Transaction or a Lien permitted under Section 5.02(a)(iv)),  prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
100% of the  amount  of such Net Cash  Proceeds.  Each  prepayment  of  Advances
pursuant  to this  clause  (i) shall be  applied  to prepay  the  Tranche A Term
Advances  and the  Tranche B Term  Advances  and  reduce  the  Revolving  Credit
Facility  on a pro rata  basis;  PROVIDED,  HOWEVER,  that  notwithstanding  the
foregoing  provisions  of this clause (i) and Section  2.06(b)(vi),  in no event
shall the Revolving  Credit Facility be reduced  pursuant to this clause (i), to
less than  $500,000,000,  and any amounts that otherwise would have been applied
to  reduce  the  Revolving  Credit  Facility  shall be  applied  to the  further
prepayment  of the  Tranche A Term  Loans and the  Tranche B Term Loans on a pro
rata  basis.  Each  prepayment  of Tranche A Term  Advances  and  Tranche B Term
Advances  pursuant to this  clause (i) shall be applied to reduce the  principal
repayment installments thereof in inverse order of maturity.

             (ii)  The  Borrower  shall,  no  later  than  three  Business  Days
following  the receipt of the Net Cash  Proceeds  by the  Borrower or any of its
Subsidiaries  from (A) the  incurrence or issuance by the Borrower or any of its
Subsidiaries of any Debt (other than Debt expressly  permitted to be incurred or
issued  pursuant to Section 5.02(b) (other than Section  5.02(b)(i)(C))  and (B)
the  issuance or sale by the Borrower or any of its  Subsidiaries  of any Equity
Interests  therein,  prepay an aggregate  principal amount of the Tranche A Term
Advances  and Tranche B Term  Advances  comprising  part of the same  Borrowings
equal to 100% of the  amount  of such  Net Cash  Proceeds.  Each  prepayment  of
Tranche A Term Advances and Tranche B Term Advances pursuant to this clause (ii)
shall be  applied  to prepay  the  Tranche A Term  Advances  and  Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in inverse order of maturity. In the event that there are no outstanding

                                       45

<PAGE>

Tranche A Term Advances or Tranche B Term Advances on the date of receipt of any
such Net Cash Proceeds, no prepayment shall be required.

             (iii) The Borrower  shall,  on the tenth day  following the date on
which the Borrower delivers to the  Administrative  Agent the Required Financial
Information for any Fiscal Year pursuant to Section 5.03(b), commencing with the
Fiscal Year ending November 25, 2001,  prepay an aggregate  principal  amount of
Tranche A Term Advances and Tranche B Term  Advances  equal to 50% of the amount
of Consolidated Excess Cash Flow for such Fiscal Year; PROVIDED,  HOWEVER,  that
the sum of (A) the mandatory  prepayments required to be made under this Section
2.06(b)(iii)  for Fiscal Years 2001 and 2002, (B) the repayments  required to be
made under  Sections  2.04(a)  and (b) during  such  Fiscal  Years,  and (C) any
payments made under  Sections  2.06(a) and  2.06(b)(v)  during such Fiscal Years
shall not exceed  $200,000,000  during any such Fiscal Year.  Each prepayment of
Tranche A Term  Advances  and  Tranche B Term  Advances  pursuant to this clause
(iii) shall be applied to prepay the Tranche A Term  Advances and Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in inverse order of maturity. In the event that there are no outstanding
Tranche A Term Advances or Tranche B Term Advances on the date of receipt of any
such Net Cash Proceeds, no prepayment shall be required.

             (iv)  Notwithstanding  the foregoing,  in the case of any mandatory
prepayment  of the Tranche B Term  Advances  pursuant to clause  (i)(B),  clause
(i)(C) or clause (ii) of this Section 2.06(b), the Tranche B Term Lenders shall,
so long as there are  outstanding  Tranche A Term  Advances,  have the option to
waive the  right to  receive  the  amount of such  mandatory  prepayment  of the
Tranche B Term Advances.  In the event that there are no  outstanding  Tranche A
Term  Advances  on the date of any  mandatory  prepayment,  the  Tranche  B Term
Lenders shall have no option to waive the right to receive such prepayment. Upon
the receipt of any such mandatory  prepayment,  the  Administrative  Agent shall
notify each  Tranche B Term Lender of such  receipt.  In the event any Tranche B
Term Lender  desires to waive such Tranche B Term Lender's right to receive such
mandatory   prepayment,   such  Tranche  B  Term  Lender  shall  so  advise  the
Administrative Agent in writing no later than the close of business on the third
Business Day following receipt of such notice from the Administrative Agent and,
within  five  Business  Days of the  receipt  by  Administrative  Agent  of such
mandatory  prepayment,  the  Administrative  Agent  shall  apply the amount that
otherwise  would have been  applied  to  mandatorily  prepay the  Tranche B Term
Advances  of all Tranche B Term  Lenders  waiving  their  right to receive  such
mandatory prepayment to the further prepayment of the Tranche A Term Advances to
the extent any are then outstanding.

             (v) The Borrower  shall,  on each Business Day, prepay an aggregate
principal  amount of the Revolving  Credit Advances  comprising part of the same
Borrowings,  the Letter of Credit Advances and the Swing Line Advances,  and, if
applicable,  deposit an amount into the L/C Cash Collateral Account equal to the
amount  by  which  (A) the  sum of (1) the  aggregate  principal  amount  of all
Revolving  Credit  Advances,  Letter of Credit  Advances and Swing Line Advances
outstanding on such Business Day and (2) the aggregate  Available  Amount of all
Letters of Credit  outstanding  on such  Business Day exceeds (B) the  Revolving
Credit  Facility on such  Business  Day (after  giving  effect to any  permanent
reduction  thereof  pursuant  to  Section  2.05  on such  Business  Day) on such
Business Day.

                                       46

<PAGE>

             (vi)  Prepayments of the Revolving Credit Facility made pursuant to
clause (i) or (v) of this  Section  2.06(b),  first,  shall be applied to prepay
Letter of Credit  Advances  outstanding  at such time  until all such  Letter of
Credit Advances are paid in full, second,  shall be applied to prepay Swing Line
Advances outstanding at such time until all such Swing Line Advances are paid in
full,  third,  shall be applied to prepay Revolving  Credit Advances  comprising
part of the  same  Borrowings  and  outstanding  at such  time  until  all  such
Revolving  Credit  Advances are paid in full and, fourth shall be deposited into
the L/C Cash  Collateral  Account to cash  collateralize  100% of the  Available
Amount of all Letters of Credit  outstanding  at such time;  and, in the case of
prepayments of the Revolving Credit Facility  required pursuant to clause (i) of
this Section 2.06(b), the amount remaining, if any, after the prepayment in full
of all Advances outstanding at such time and the 100% cash  collateralization of
the aggregate Available Amount of all Letters of Credit outstanding at such time
(the  sum  of  such  prepayment  amounts,  cash  collateralization  amounts  and
remaining amount being, collectively, the "REDUCTION AMOUNT") may be retained by
the Borrower for use in the ordinary  course of its business,  and the Revolving
Credit Facility shall be automatically  and permanently  reduced as set forth in
Section  2.05(b)(iii).  Upon the drawing of any Letter of Credit for which funds
are on deposit in the L/C Cash Collateral  Account,  such funds shall be applied
(without  any further  action by or notice to or from the  Borrower or any other
Loan Party) to reimburse the  applicable  Issuing Bank or the  Revolving  Credit
Lenders, as applicable.

         (c) Prepayments to Include Accrued Interest, Etc. All prepayments under
             --------------------------------------------
this Section 2.06 shall be made together with (i) accrued and unpaid interest to
the date of such  prepayment on the principal  amount so prepaid and (ii) in the
case of any such  prepayment  of a Eurodollar  Rate Advance on a date other than
the last day of an Interest  Period  therefor,  any amounts  owing in respect of
such Eurodollar Rate Advance pursuant to Section 2.11(d).

         Section 2.07 Interest.
                      --------

         (a) Scheduled  Interest.  The Borrower shall pay interest on the unpaid
             -------------------
principal  amount of each  Advance  owing to each Lender  Party from the date of
such Advance until such principal amount shall be paid in full, at the following
rates per annum:

             (i) Revolving Credit Advances and Tranche A Term Advances.

                  (A) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance,  a rate per annum equal at all times to the sum of
         (A) the Base  Rate in effect  from time to time and (B) the  Applicable
         Margin for such Advance in effect from time to time, payable in arrears
         quarterly  on the  fifth  Business  Day  after  the end of each  Fiscal
         Quarter  during  such  periods  and on the date such Base Rate  Advance
         shall be Converted or paid in full.

                  (B)  Eurodollar  Rate  Advances.  During such  periods as such
         Advance is a  Eurodollar  Rate  Advance,  a rate per annum equal at all
         times  during each  Interest  Period for such Advance to the sum of (A)
         the Eurodollar  Rate for such Advance for such Interest  Period and (B)
         the  Applicable  Margin for such  Advance in effect  from time to time,
         payable in arrears on the last day of such Interest Period and, if such
         Interest  Period has a duration of more than three months,  on each day
         that occurs  during such  Interest

                                       47

<PAGE>

Period every three months from the first day of such Interest  Period and on the
date such Eurodollar Rate Advance shall be Converted or paid in full.

             (ii) Tranche B Term Advances.

                  (A) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance,  a rate per annum equal at all times to the sum of
         the Base Rate in effect from time to time and 2.00%, payable in arrears
         quarterly  on the  fifth  Business  Day  after  the end of each  Fiscal
         Quarter  during  such  periods  and on the date such Base Rate  Advance
         shall be Converted or paid in full.

                  (B)  Eurodollar  Rate  Advances.  During such  periods as such
         Advance is a  Eurodollar  Rate  Advance,  a rate per annum equal at all
         times  during each  Interest  Period for such Advance to the sum of the
         Eurodollar  Rate and 3.25%,  payable in arrears on the last day of such
         Interest  Period  and, if such  Interest  Period has a duration of more
         than three months,  on each day that occurs during such Interest Period
         every three  months from the first day of such  Interest  Period and on
         the date such  Eurodollar  Rate  Advance  shall be Converted or paid in
         full.

             (iii) Swing Line Advances. During such periods as such Advance is a
Swing Line  Advance,  a rate per annum at all times  equal to the rate quoted by
Swing Line Bank,  payable in arrears on the date such Swing Line Advance is paid
in full.

         (b) Default Interest. Upon the occurrence and during the continuance of
             ----------------
an Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each  Advance  owing to each Lender  Party,  payable in arrears on the
dates  referred  to in  clause  (i),  (ii)  or  (iii)  of  Section  2.07(a),  as
applicable,  and on  demand,  at a rate per  annum  equal at all times to 2% per
annum above the rate per annum  required to be paid on such Advance  pursuant to
clause (i), (ii) or (iii) of Section  2.07(a),  as  applicable,  and (ii) to the
fullest extent  permitted by applicable law, the amount of any interest,  fee or
other amount  payable  under this  Agreement  or any other Loan  Document to any
Agent or any Lender  Party that is not paid when due,  from the date such amount
shall be due until such amount shall be paid in full,  payable in arrears on the
date such amount shall be paid in full and on demand,  at a rate per annum equal
at all times to 2% per annum above the rate per annum  required  to be paid,  in
the case of interest,  on the Type of Advance on which such interest has accrued
pursuant to clause (i), (ii) or (iii) of Section 2.07(a), as applicable, and, in
all other  cases,  on Base Rate  Advances  pursuant  to  clause  (i) of  Section
2.07(a).

         (c) Notice of  Interest  Rate.  Promptly  after  receipt of a Notice of
             -------------------------
Borrowing  pursuant  to Section  2.02(a),  the  Administrative  Agent shall give
notice to the Borrower and each  Appropriate  Lender of the applicable  interest
rate determined by the  Administrative  Agent for purposes of clause (i) or (ii)
of Section 2.07(a), as applicable.

         Section 2.08 Fees.
                      ----

         (a) Commitment Fee. The Borrower shall pay to the Administrative  Agent
             --------------
for  the  account  of  the  Revolving  Credit  Lenders  a  commitment  fee  (the
"COMMITMENT  FEE"),  from the date hereof in the case of each Initial Lender and
from the effective date  specified in the

                                       48

<PAGE>

Assignment  and  Acceptance  pursuant to which it became a Lender in the case of
each other Lender until, in each case, the Termination Date,  payable in arrears
quarterly  on the  fifth  Business  Day after  the end of each  Fiscal  Quarter,
commencing  February 25, 2001, and on the Termination Date, at the rate of 0.50%
per annum on the sum of the average daily Unused Revolving Credit  Commitment of
each Revolving Credit Lender; PROVIDED, HOWEVER, that any Commitment Fee accrued
with respect to any of the Commitments of a Defaulting  Lender during the period
prior to the time such Lender became a Defaulting Lender and unpaid at such time
shall  not be  payable  by the  Borrower  so  long  as such  Lender  shall  be a
Defaulting  Lender except to the extent that such Commitment Fee shall otherwise
have been due and  payable  by the  Borrower  prior to such time;  and  PROVIDED
FURTHER  that no  Commitment  Fee shall  accrue on any of the  Commitments  of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.

         (b) Domestic Letter of Credit Fees, Etc.
             ------------------------------------

             (i) The  Borrower  shall  pay to the  Administrative  Agent for the
account  of each  Revolving  Credit  Lender a  commission,  payable  in  arrears
quarterly on the fifth Business Day after the end of each Fiscal Quarter, and on
the  earliest  to  occur  of  the  full  drawing,  expiration,   termination  or
cancellation of any such Domestic Letter of Credit and on the Termination  Date,
on such Revolving  Credit Lender's Pro Rata Share of the average daily aggregate
Available Amount of all Domestic Letters of Credit outstanding from time to time
during such Fiscal Quarter at the Applicable Margin for Eurodollar Rate Advances
under  the  Revolving  Credit  Facility.  Upon the  occurrence  and  during  the
continuance  of an Event of  Default,  the amount of  commission  payable by the
Borrower under this clause (b)(i) shall be increased by 2% per annum.

             (ii) The  Borrower  shall  pay to each  Issuing  Bank,  for its own
account,  (A) an issuance fee for each Domestic  Letter of Credit issued by such
Issuing  Bank  (other  than  Existing  Letters of Credit) in an amount  equal to
0.125% of the Available  Amount of such Domestic Letter of Credit on the date of
issuance of such Domestic  Letter of Credit,  payable on such date, and (B) such
other customary documentary and processing charges and other fees and charges in
connection with the issuance or administration of each Domestic Letter of Credit
as the Borrower and such Issuing Bank shall agree.

             (iii) For purposes of  calculating  any fees payable  under clauses
(i) and (ii) of this Section 2.08(b), any amount described in such clauses which
is  denominated  in a currency  other than Dollars  shall be valued based on the
applicable  Exchange  Rate  for  such  currency  as of the  applicable  date  of
determination.

         (c)  Foreign  Letter  of Credit  Fees.  The  Borrower  shall pay to the
              --------------------------------
Administrative  Agent for the  account of each  Revolving  Credit  Lender a fee,
payable in arrears  quarterly  on the fifth  Business  Day after the end of each
Fiscal  Quarter,  equal to the Foreign Letter of Credit Sublimit for such Fiscal
Quarter  MULTIPLIED by 50% of the Applicable Margin for Eurodollar Rate Advances
under  the  Revolving  Credit  Facility.  Upon the  occurrence  and  during  the
continuance  of an  Event of  Default,  the  amount  of the fee  payable  by the
Borrower under this clause (c) shall be increased by 2% per annum.

                                       49

<PAGE>

         (d) Agent's Fees.  The Borrower shall pay to the  Administrative  Agent
             ------------
for the account of the  Administrative  Agent such fees as may from time to time
be agreed between the Borrower and the Administrative Agent.

         Section 2.09 Conversion and Continuation of Advances.
                      ---------------------------------------

         (a)  Optional.  The Borrower may on any Business Day, upon notice given
              --------
to the Administrative Agent not later than 9:00 A.M. (San Francisco,  California
time)  time  on the  third  Business  Day  prior  to the  date  of the  proposed
Conversion or  Continuation,  and subject to the provisions of Sections 2.07 and
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing  equal to at least  $10,000,000  into  Advances  of the other  Type or
Continue all or any portion of the Eurodollar Rate Advances  comprising the same
Borrowing equal to at least  $10,000,000 as Eurodollar Rate Advances;  PROVIDED,
HOWEVER, that:

             (i) any  Conversion  of  Eurodollar  Rate  Advances  into Base Rate
Advances  shall  be made  only on the last day of an  Interest  Period  for such
Eurodollar Rate Advances;

             (ii) any  Conversion  of Base Rate Advances  into  Eurodollar  Rate
Advances  shall be made only if no Event of Default  shall have  occurred and be
continuing;

             (iii) no Conversion  of any Advances  shall result in more separate
Borrowings than permitted under Section 2.02(c); and

             (iv)  each  Conversion  of  Advances  comprising  part of the  same
Borrowing  under any  Facility  shall be made among the  Appropriate  Lenders in
accordance with their respective Pro Rata Shares of such Borrowing.

Each notice of a Conversion/Continuation (a "NOTICE OF CONVERSION/CONTINUATION")
shall be delivered by telephone,  confirmed  immediately in writing, or by telex
or telecopier,  in substantially  the form of Exhibit B-2 hereto,  shall be duly
executed  by a  Responsible  Officer  of the  Borrower,  and  shall,  within the
restrictions set forth in the immediately preceding sentence, specify therein:

                  (A) the  requested  date of such  Conversion  or  Continuation
         (which shall be a Business Day);

                  (B) the Advances requested to be Converted or Continued; and

                  (C) if such  Conversion  is into  Eurodollar  Rate Advances or
         Eurodollar Rate Advances are to be Continued, the requested duration of
         the  Interest  Period  for such  Eurodollar  Rate  Advances;  PROVIDED,
         HOWEVER, that in the event the Borrower fails to select the duration of
         the Interest Period for any Conversion into Eurodollar Rate Advances or
         the Continuation of any Eurodollar Rate Advances, the Borrower shall be
         deemed to have requested an Interest Period of one month.

The  Administrative  Agent  shall give each of the  Appropriate  Lenders  prompt
notice of each  Notice of  Conversion/Continuation  received  by it, by telex or
telecopier.  Each Notice of  Conversion/Continuation  shall be  irrevocable  and
binding on the Borrower.  In the event the

                                       50

<PAGE>

Borrower fails to deliver a Notice of Conversion/Continuation on or prior to the
third Business Day prior to the last day of an Interest  Period for a Eurodollar
Rate  Advance,  the  Borrower  shall  be  deemed  to have  requested  that  such
Eurodollar  Rate  Advance be  Continued  as a  Eurodollar  Rate  Advance with an
Interest Period of one month.

         (b) Mandatory.
             ---------

             (i) In the event that the amount of any outstanding Eurodollar Rate
Advance  shall be less than  $10,000,000,  such  Eurodollar  Rate  Advance  will
automatically,  on the last day of the then existing  Interest Period  therefor,
Convert into a Base Rate Advance.

             (ii) Upon the occurrence and during the continuance of any Event of
Default, (A) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(B) the  obligation of the Lenders to make,  Continue or Convert  Advances into,
Eurodollar Rate Advances shall be suspended. .

         Section 2.10 Increased Costs, Etc.
                      --------------------

         (a)  If,  after  the  date  hereof,  the  adoption  of  any  applicable
Requirement of Law, or any change in any  applicable  Requirement of Law, or any
change in the  interpretation  or  administration  thereof  by any  Governmental
Authority,  central bank or comparable agency charged with the interpretation or
administration  thereof,  or compliance by any Lender (or its Applicable Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency:

             (i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Rate Advances, any
of its Notes, or its obligation to make any Eurodollar Rate Advances,  or change
the basis of taxation of any amounts  payable to such Lender (or its  Applicable
Lending  Office)  under  this  Agreement  or any of its Notes in  respect of any
Eurodollar  Rate Advances  (other than,  for purposes of this Section 2.10,  any
such  increased  costs  resulting  from (A)  Taxes or Other  Taxes  (as to which
Section 2.13 shall govern),  and (B) changes in the basis of taxation of overall
net income or overall  gross  income by the  United  States or the  jurisdiction
under  the laws of which  such  Lender  Party has its  principal  office or such
Applicable Lending Office);

             (ii) shall impose, modify, or deem applicable any reserve,  special
deposit, assessment, or similar requirement (other than any change by way of the
imposition  of or increase in reserve  requirements  included in the  Eurodollar
Rate Reserve  Percentage)  relating to any  extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such Lender (or
its  Applicable  Lending  Office),  including  the  Commitments  of such  Lender
hereunder; or

             (iii)  shall  impose  on such  Lender  (or its  Applicable  Lending
Office) or on the United States market for certificates of deposit or the London
interbank market any other condition affecting this Agreement or its Note or any
of such extensions of credit or liabilities or commitments;

                                       51

<PAGE>

and the result of any of the  foregoing  is to increase  the cost to such Lender
(or its Applicable Lending Office) of making, Converting into or maintaining any
Eurodollar  Rate  Advances or to reduce any sum received or  receivable  by such
Lender (or its Applicable  Lending Office) under this Agreement or its Note with
respect to any  Eurodollar  Rate  Advances,  then the Borrower shall pay to such
Lender on demand such amount or amounts as will  compensate such Lender for such
increased cost or reduction.  Each Lender shall promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Lender to compensation pursuant to this
Section 2.10(a) and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not, in the judgment of such Lender,  be otherwise  disadvantageous  to
it. Any Lender claiming compensation under this Section 2.10(a) shall furnish to
the  Borrower  and  the  Administrative  Agent a  statement  setting  forth  the
additional  amount  or  amounts  to be  paid to it  hereunder,  which  shall  be
conclusive and binding,  absent manifest error. In determining such amount, such
Lender may use any reasonable  averaging and attribution  methods. If any Lender
requests  compensation by the Borrower under this Section 2.10(a),  the Borrower
may, by notice to such Lender (with a copy to the Administrative Agent), suspend
the obligation of such Lender to make or Convert Eurodollar Rate Advances, or to
Convert Base Rate Advances into  Eurodollar  Rate  Advances,  until the event or
condition  giving rise to such request ceases to be in effect (in which case the
provisions  of  Section  2.10(e)  shall  be  applicable);   PROVIDED  that  such
suspension shall not affect the right of such Lender to receive the compensation
so requested.

         (b) If,  after the date  hereof,  any  Lender  shall  have  determined
that  the  adoption  of any  applicable  Requirement  of Law  regarding  capital
adequacy  or any  change  therein  or in the  interpretation  or  administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration  thereof,  or any request or directive
regarding  capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect  of  reducing  the rate of return on the  capital  of such  Lender or any
corporation   controlling   such  Lender  as  a  consequence  of  such  Lender's
obligations  hereunder  to  a  level  below  that  which  such  Lender  or  such
corporation  could  have  achieved  but for such  adoption,  change,  request or
directive  (taking  into  consideration  its  policies  with  respect to capital
adequacy),  then from time to time upon  demand the  Borrower  shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each Lender shall promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Lender to compensation  pursuant to this Section 2.10(b)
and will designate a different  Applicable  Lending  Office if such  designation
will avoid the need for,  or reduce the amount of,  such  compensation  and will
not, in the judgment of such Lender,  be  otherwise  disadvantageous  to it. Any
Lender  claiming  compensation  under this Section  2.10(b) shall furnish to the
Borrower and the  Administrative  Agent a statement setting forth the additional
amount or amounts to be paid to it  hereunder,  which  shall be  conclusive  and
binding,  absent manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.

(c) If, on or prior to the first day of any Interest  Period for any  Eurodollar
Rate  Advance  under  either the  Tranche A Term  Facility,  the  Tranche B Term
Facility or the Revolving Credit Facility, Lenders owed or holding not less than
a  majority  in  interest  of the

                                       52

<PAGE>

aggregate  principal amount of all Advances  outstanding  under such Facility at
any time  notify  the  Administrative  Agent  that the  Eurodollar  Rate for any
Interest  Period for such Advances will not  adequately  and fairly  reflect the
cost to the  Appropriate  Lenders of funding their  Eurodollar Rate Advances for
such Interest  Period,  the  Administrative  Agent shall  promptly so notify the
Borrower and the  Appropriate  Lenders,  whereupon (i) each such Eurodollar Rate
Advance  under such  Facility  will  automatically,  on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation  of the  Appropriate  Lenders to make, or to Convert  Advances  into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower  (promptly  following  notice from the Appropriate  Lenders)
that such Lenders have determined that the circumstances causing such suspension
no longer exist.

         (d) Notwithstanding any other provision of this Agreement, in the event
that it becomes  unlawful  for any Lender or its  Applicable  Lending  Office to
make,  maintain,  or fund Eurodollar Rate Advances  hereunder,  then such Lender
shall promptly notify the Borrower thereof and such Lender's  obligation to make
Eurodollar  Rate Advances and to Convert Base Rate Advances into Eurodollar Rate
Advances  shall be  suspended  until such time as such  Lender  may again  make,
maintain and fund  Eurodollar  Rate  Advances (in which case the  provisions  of
Section 2.10(e) shall be applicable).

         (e) If the  obligation of any Lender to make a Eurodollar  Rate Advance
or to  Convert  Base  Rate  Advances  into  Eurodollar  Rate  Advances  shall be
suspended  pursuant to any other  provision of this Section 2.10,  such Lender's
suspended  Eurodollar Rate Advances shall be  automatically  Converted into Base
Rate Advances on the last day(s) of the then current Interest Period(s) therefor
(or, in the case of a Conversion  required by Section  2.10(d),  on such earlier
date  as  such  Lender  may  specify  to  the  Borrower   with  a  copy  to  the
Administrative Agent) and, unless and until such Lender gives notice as provided
below that the  circumstances  specified in such other provision of this Section
2.10 that gave rise to such Conversion no longer exist:

             (i) to the extent  that such  Lender's  suspended  Eurodollar  Rate
Advances have been so Converted,  all payments and prepayments of principal that
would otherwise be applied to such Lender's  suspended  Eurodollar Rate Advances
shall be applied instead to its Base Rate Advances; and

             (ii) all Eurodollar  Rate Advances that would  otherwise be made or
Converted by such Lender shall be made instead as (or shall remain as) Base Rate
Advances.

If such Lender gives notice to the Borrower  (with a copy to the  Administrative
Agent) that the circumstances otherwise specified in this Section 2.10 that gave
rise to the suspension of the making of Eurodollar  Rate Advances by such Lender
no longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when  Eurodollar Rate Advances by other Lenders with
Commitments  under the same  Facility are  outstanding,  such Lender's Base Rate
Advances  shall be  automatically  Converted,  on the  first  day(s) of the next
succeeding Interest Period(s) therefor,  to the extent necessary into Eurodollar
Rate Advances.

                                       53

<PAGE>

         Section 2.11 Payments and Computations
                      -------------------------

         (a) The Borrower shall make each payment hereunder and under the Notes,
irrespective  of any right of  counterclaim,  deduction  or  set-off  (except as
otherwise  provided in Section 2.16),  not later than 11:00 A.M. (San Francisco,
California time) on the day when due in Dollars to the  Administrative  Agent at
the Administrative Agent's Account in immediately available funds, with payments
received by the  Administrative  Agent after such time being deemed to have been
received on the next  succeeding  Business  Day. The  Administrative  Agent will
promptly  thereafter  cause like funds to be distributed  (i) if such payment by
the Borrower is in respect of principal,  interest, commitment fees or any other
Obligation  then payable  hereunder  and under the Notes to more than one Lender
Party,  to such Lender Parties for the accounts of their  respective  Applicable
Lending  Offices in  accordance  with their  respective  Pro Rata  Shares of the
amounts of such  respective  Obligations  payable to such Lender Parties at such
time and (ii) if such  payment by the  Borrower is in respect of any  Obligation
then payable  hereunder solely to one Lender Party, to such Lender Party for the
account  of its  Applicable  Lending  Office,  in  each  case to be  applied  in
accordance  with  the  terms  of  this  Agreement.  Upon  its  acceptance  of an
Assignment and Acceptance and recording of the information  contained therein in
the Register  pursuant to Section 8.07(d),  from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender  Party  assignee  thereunder,  and the  parties  to such  Assignment  and
Acceptance  shall make all appropriate  adjustments in such payments for periods
prior to such effective date directly between themselves.

         (b) The Borrower hereby authorizes  Administrative  Agent to charge its
accounts with the  Administrative  Agent in order to cause timely  payment to be
made to the Administrative Agent of all principal,  interest,  fees and expenses
due hereunder  (subject to sufficient  funds being available in its accounts for
that purpose) unless the  Administrative  Agent receives written notice from the
Borrower withdrawing such authorization at least five Business Days prior to the
date of any scheduled payment.

         (c) All  computations  of interest  (other than in respect of Base Rate
Advances  calculated on the basis of Bank of America's  "prime rate"),  fees and
Letter of Credit  commissions shall be made by the  Administrative  Agent on the
basis of a year of 360 days and all  computations of interest in respect of Base
Rate Advances  calculated on the basis of Bank of America's  prime rate shall be
made by the Administrative Agent on the basis of a year of 365/366 days, in each
case for the actual  number of days  (including  the first day but excluding the
last day) occurring in the period for which such  interest,  fees or commissions
are payable. Each determination by the Administrative Agent of an interest rate,
fee or commission  hereunder  shall be conclusive  and binding for all purposes,
absent manifest error.

         (d) If any payment of principal  of, or Conversion  of, any  Eurodollar
Rate  Advance is made by the  Borrower to or for the  account of a Lender  Party
other than on the last day of the Interest Period for such Advance,  as a result
of a payment or  Conversion  pursuant to Section  2.06,  2.09(b)(i)  or 2.10(d),
acceleration  of the  maturity of the Notes  pursuant to Section 6.01 or for any
other reason,  or if the Borrower  fails to make any payment or prepayment of an
Advance  for which a notice of  prepayment  has been given or that is  otherwise
required  to be  made,  whether  pursuant  to  Section  2.04,  2.06  or  6.01 or
otherwise,  the Borrower shall, upon

                                       54

<PAGE>

demand by such Lender  Party  (with a copy of such demand to the  Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party any
amounts  required to  compensate  such Lender Party for any  additional  losses,
costs or expenses  that it may  reasonably  incur as a result of such payment or
Conversion  or such  failure  to pay or prepay,  as the case may be,  including,
without  limitation,  any  loss,  cost or  expense  incurred  by  reason  of the
liquidation  or  reemployment  of deposits or other funds acquired by any Lender
Party to fund or maintain such Advance. Any Lender Party claiming  reimbursement
or  compensation  pursuant to this Section 2.11(d) shall deliver to the Borrower
(with a copy  to the  Administrative  Agent)  a  certificate  setting  forth  in
reasonable  detail the amount  payable to the Lender  Party  hereunder  and such
certificate  shall be  conclusive  and binding on the Borrower in the absence of
manifest  error.  Each  certificate  submitted  under this Section may not claim
reimbursement  or  compensation  for a period  earlier than 60 days prior to the
date of such certificate  unless  interpretation of the law or regulation or the
guideline  or request in  question  is  retroactive  in effect in which case the
certificate can cover such retroactive period.

         (e) Whenever  any payment  hereunder or under the Notes shall be stated
to be due on a day other than a Business  Day, such payment shall be made on the
next  succeeding  Business Day, and such extension of time shall in such case be
included in the  computation of payment of interest or Commitment Fees or Letter
of Credit commissions or fees, as the case may be; PROVIDED,  HOWEVER,  that, if
such  extension  would cause  payment of interest on or principal of  Eurodollar
Rate Advances to be made in the next  succeeding  calendar  month,  such payment
shall be made on the immediately preceding Business Day.

         (f) Unless the Administrative Agent shall have received notice from the
Borrower  prior to the date on which  any  payment  is due to any  Lender  Party
hereunder   that  the  Borrower  will  not  make  such  payment  in  full,   the
Administrative  Agent may assume that the Borrower has made such payment in full
to the Administrative  Agent on such date and the  Administrative  Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount  equal to the  amount due such  Lender  Party on such
date.  If and to the extent the Borrower  shall not have so made such payment in
full to the  Administrative  Agent,  each such  Lender  Party shall repay to the
Administrative  Agent forthwith on demand such amount distributed to such Lender
Party, together with interest thereon, for each day from the date such amount is
distributed  to such Lender  Party until the date such Lender  Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

         (g) Whenever  any payment  received by the  Administrative  Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all  amounts due and  payable to the Agents and the Lender  Parties  under or in
respect of this Agreement and the other Loan Documents on any date, such payment
shall be distributed by the  Administrative  Agent and applied by the Agents and
the Lender Parties in the following order of priority:

             (i)  first,  to the  payment  of all of the  fees,  indemnification
payments,  costs and expenses that are due and payable to the Agents  (solely in
their respective capacities as Agents) under or in respect of this Agreement and
the other  Loan  Documents  on such  date,  ratably  based  upon the  respective
aggregate amounts of all such fees, indemnification payments, costs and expenses
owing to the Agents on such date;

                                       55

<PAGE>

             (ii)  second,  to the  payment of all of the fees,  indemnification
payments,  costs and expenses  that are due and payable to the Issuing Banks and
the Swing Line Bank (solely in their respective  capacities as such) under or in
respect of this  Agreement  and the other Loan  Documents on such date,  ratably
based upon the respective  aggregate  amounts of all such fees,  indemnification
payments,  costs and expenses owing to the Issuing Banks and the Swing Line Bank
on such date;

             (iii) third, to the payment of all of the indemnification payments,
costs and expenses  that are due and payable to the Lenders  under  Section 8.04
hereof,  Section 7 of the  Subsidiary  Guaranty,  Section  18 of the  Pledge and
Security Agreement and any similar section of any of the other Loan Documents on
such date,  ratably  based  upon the  respective  aggregate  amounts of all such
indemnification payments, costs and expenses owing to the Lenders on such date;

             (iv) fourth,  to the payment of all of the amounts that are due and
payable to the  Administrative  Agent and the Lender Parties under Sections 2.10
and 2.13  hereof on such  date,  ratably  based  upon the  respective  aggregate
amounts thereof owing to the Administrative Agent and the Lender Parties on such
date;

             (v)  fifth,  to the  payment  of all of the  fees  that are due and
payable to the Lenders  under Section  2.08(a) on such date,  ratably based upon
the respective aggregate Commitments of the Lenders under the Facilities on such
date;

             (vi)  sixth,  to the  payment  of all of  the  accrued  and  unpaid
interest  on the  Obligations  of the  Borrower  under or in respect of the Loan
Documents  that is due and  payable to the  Administrative  Agent and the Lender
Parties under Section  2.07(b) on such date,  ratably based upon the  respective
aggregate amounts of all such interest owing to the Administrative Agent and the
Lender Parties on such date;

             (vii)  seventh,  to the  payment of all of the  accrued  and unpaid
interest on the Advances that is due and payable to the Administrative Agent and
the Lender  Parties under Section  2.07(a) on such date,  ratably based upon the
respective  aggregate  amounts of all such interest owing to the  Administrative
Agent and the Lender Parties on such date;

             (viii) eighth, to the payment of the principal amount of all of the
outstanding Advances that is due and payable to the Administrative Agent and the
Lender Parties on such date, ratably based upon the respective aggregate amounts
of all such principal owing to the  Administrative  Agent and the Lender Parties
on such date; and

             (ix)  ninth,  to the payment of all other  Obligations  of the Loan
Parties owing under or in respect of the Loan Documents that are due and payable
to the Administrative  Agent and the other Secured Parties on such date, ratably
based upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date.

If the Administrative Agent receives funds for application to the Obligations of
the Loan Parties under or in respect of the Loan Documents  under  circumstances
for which the Loan  Documents  do not  specify the  Advances or the  Facility to
which, or the manner in which, such funds are to

                                       56

<PAGE>

be applied,  the Administrative  Agent may, but shall not be obligated to, elect
to distribute  such funds to each of the Lender Parties in accordance  with such
Lender Party's Pro Rata Share of the sum of (A) the aggregate  principal  amount
of all Advances  outstanding at such time and (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time, in repayment or prepayment of
such of the outstanding  Advances or other Obligations then owing to such Lender
Party,  and,  in the case of the  Tranche  A Term  Facility  and  Tranche B Term
Facility,  for application to such principal repayment  installments thereof, as
the Administrative Agent shall direct.

         Section 2.12 Evidence of Debt.
                      ----------------

         (a) The  Obligations  shall be  evidenced  by one or more  accounts  or
records  maintained  by  each  Lender  and by the  Administrative  Agent  in the
ordinary  course  of  business.  The  accounts  or  records  maintained  by  the
Administrative  Agent and each Lender shall be conclusive  absent manifest error
of the amount of the Advances and other credit extensions made by the Lenders to
the Borrower and the interest and payments thereon.  Any failure so to record or
any  error in doing  so shall  not,  however,  limit  or  otherwise  affect  the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any  conflict  between  the  accounts  and records
maintained  by any Lender and the  accounts  and  records of the  Administrative
Agent in respect of such matters,  the accounts and records of such Lender shall
control.  Upon the request of any Lender made through the Administrative  Agent,
such Lender's  Advances may be evidenced by a Revolving Credit Note, a Tranche A
Term  Note,  Tranche B Term Note  and/or a Swing Line Note,  as  applicable,  in
addition to such  accounts or records.  Each Lender may attach  schedules to its
Note(s) and endorse thereon the date, Type (if applicable),  amount and maturity
of the applicable Advances and payments with respect thereto.

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

         Section 2.13 Taxes.
                      ------

         (a) Any and all  payments by the  Borrower to or for the account of any
Lender Party or any Agent  hereunder or under any other Loan  Document  shall be
made, in accordance with Section 2.11 or the applicable provisions of such other
Loan Document,  if any, free and clear of and without  deduction for 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
Party and each  Agent,  taxes that are  imposed on its overall net income by the
United  States  and taxes  that are  imposed  on its  overall  net  income  (and
franchise  taxes imposed in lieu  thereof) by the state or foreign  jurisdiction
under the laws of which such Lender Party or such Agent,  as the case may be, is
organized or any political  subdivision thereof, and, in the case of each Lender
Party,  taxes that are imposed on its overall  net income (and  franchise  taxes
imposed in lieu thereof) by the state or foreign  jurisdiction  of either of its
Applicable  Lending  Offices  or any  political  subdivision  thereof  (all such
nonexcluded  taxes,  levies,  imposts,  deductions,  charges,

                                       57

<PAGE>

withholdings and liabilities in respect of payments hereunder or under the Notes
being,  collectively,   "TAXES").  If  the  Borrower  shall  be  required  under
applicable Requirements of Law to deduct any Taxes from or in respect of any sum
payable  hereunder  or under any other Loan  Document to any Lender Party or any
Agent,  (i) the sum payable by the  Borrower  shall be increased as necessary so
that after the  Borrower  and the  Administrative  Agent have made all  required
deductions  (including  deductions  applicable to additional  sums payable under
this Section 2.13) such Lender Party or such Agent, as the case may be, receives
an amount equal to the sum it would have  received had no such  deductions  been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the  full  amount  deducted  to  the  relevant   taxation   authority  or  other
Governmental  Authority in accordance  with  applicable  Requirements of Law and
(iv) within 30 days after the date of any payment of Taxes,  the Borrower  shall
furnish to the Administrative Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing payment thereof, to the
extent  such a receipt is issued  therefor,  or other  written  proof of payment
thereof that is reasonably satisfactory to the Administrative Agent.

         (b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise, property or similar taxes, charges or
levies  that  arise  from any  payment  made  hereunder  or under any other Loan
Document or from the execution,  delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (collectively, "OTHER TAXES").

         (c) The Borrower  agrees to indemnify  each Lender Party and each Agent
for the full amount of Taxes and Other Taxes (including, without limitation, the
full  amount of Taxes and Other  Taxes of any kind  imposed or  asserted  by any
jurisdiction  on amounts  payable under this Section 2.13) imposed on or paid by
such  Lender  Party  or  such  Agent,  as the  case  may be,  and any  liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. Amounts payable by the Borrower under the indemnity set
forth in this subsection (c) shall be paid within 30 days from the date on which
the  applicable  Lender  or  Agent,  as the case may be,  makes  written  demand
therefor.

         (d) In the case of any  payment  hereunder  or  under  any  other  Loan
Document by or on behalf of the  Borrower  through an account or branch  outside
the United States,  or on behalf of the Borrower by a payor that is not a United
States person,  if the Borrower  determines that no Taxes are payable in respect
thereof,  the Borrower shall furnish,  or shall cause such payor to furnish,  to
the Administrative Agent, at its address referred to in Section 8.02, an opinion
of counsel reasonably  acceptable to the Administrative  Agent stating that such
payment  is  exempt  from  Taxes.  For  purposes  of  this  subsection  (d)  and
subsections  (e) and (f) of this Section  2.13,  the terms  "UNITED  STATES" and
"UNITED STATES PERSON" shall have the meanings  specified in Section 7701 of the
Internal Revenue Code.

         (e) Each  Lender  Party  organized  under  the  laws of a  jurisdiction
outside the United States (each "NON-US LENDER PARTY") shall, on or prior to the
date of its execution and delivery of this Agreement in the case of each Initial
Lender or each Initial  Issuing Bank, as the case may be, and on or prior to the
date of the  Assignment  and  Acceptance  pursuant  to which it becomes a Lender
Party in the case of each other Lender Party,  and from time to time  thereafter
as reasonably  requested in writing by the Borrower (but only so long thereafter
as such Non-US Lender Party remains lawfully able to do so), provide each of the
Administrative Agent and the

                                       58

<PAGE>

Borrower with two original  Internal  Revenue  Service forms W-8BEN or W-8ECI as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying  that such  Lender  Party is exempt  from or  entitled to a
reduced  rate of United  States  withholding  tax on  payments  pursuant to this
Agreement or any other Loan Document.  If a Non-US Lender Party has certified in
writing  to the  Administrative  Agent  that it is not a "bank"  (as  defined in
Section  881(c)(3)(A) of the Internal  Revenue Code) (a "NON-BANK  NON-US LENDER
PARTY"),  such Non-Bank  Non-US Lender Party shall instead  provide two original
Internal Revenue Service forms W-8BEN, together with a certificate  representing
that such  Non-Bank  Non-US  Lender  Party is not (i) a "bank" for  purposes  of
Section  881(c) of the Internal  Revenue Code,  (ii) a  ten-percent  shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrower  or (iii) a  controlled  foreign  corporation  related to the  Borrower
(within the meaning of Section  864(d)(4)  of the  Internal  Revenue  Code),  to
certify  that  such  non-Bank  Non-US  Lender  Party is a  foreign  corporation,
partnership, estate or trust.

         (f) Each Non-US Lender  Party,  to the extent it does not act or ceases
to act for its own account  with  respect to any portion of any sums  payable to
such Lender Party  hereunder or under any other Loan Document  (for example,  by
virtue  of  selling  a  participation),  shall,  on or  prior to the date of its
execution and delivery of this  Agreement in the case of each Initial  Lender or
each Initial  Issuing  Bank,  as the case may be, on or prior to the date of the
Assignment  and  Acceptance  pursuant to which it becomes a Lender  Party in the
case of each other  Lender  Party,  or on such date when any such  Lender  Party
ceases to act for its own account  with  respect to any portion of any such sums
payable,  and from time to time thereafter as reasonably requested in writing by
the Borrower (but only so long thereafter as such Lender Party remains  lawfully
able to do so), provide each of the  Administrative  Agent and the Borrower with
(i) two original  copies of the forms or  statements  required to be provided by
such Non-US Lender Party under  subsection (e) of this Section 2.13 to establish
the portion of any such sums  payable  with  respect to which such Lender  Party
acts for its own  account,  and (ii) two  original  copies of  Internal  Revenue
Service  form  W-8IMY  (or any  successor  forms)  properly  completed  and duly
executed by such Lender  Party,  together  with any  information,  if any,  such
Lender Party chooses to transmit with such form,  and any other  certificate  or
statement  of  exemption  required  under  the  Internal  Revenue  Code  or  the
regulations issued thereunder, to establish that such Lender Party is not acting
for its own account  with  respect to a portion of any such sums payable to such
Lender Party.

         (g) If any form or document  referred to in subsections  (e) and (f) of
this Section 2.13 requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal  Revenue  Service form W-8BEN (and, in the case of a Non-Bank Non-US
Lender  Party,  the related  certificate  described  in  subsection  (e) of this
Section 2.13),  W-8ECI, or W-8IMY, that the Lender Party reasonably considers to
be confidential,  the Lender Party shall give notice thereof to the Borrower and
shall not be  obligated  to include in such form or document  such  confidential
information.

         (h)  If the  forms  provided  by a  Non-US  Lender  Party  pursuant  to
subsection  (e) of this Section 2.13 at the time such Lender Party first becomes
a party to this Agreement indicate a United States interest withholding tax rate
in excess of zero,  withholding  tax at such rate shall be  considered  excluded
from Taxes unless and until such Lender Party  provides  the  appropriate

                                       59

<PAGE>

forms certifying that a lesser rate applies,  whereupon  withholding tax at such
lesser rate only shall be considered excluded from Taxes for periods governed by
such forms.

         (i) For any  period  with  respect to which a Non-US  Lender  Party has
failed to provide the Borrower with the appropriate  form,  certificate or other
document  described in subsections (e) and (f) of this Section 2.13 or, pursuant
to  subsection  (g) of this  Section  2.13,  has not  included  any  information
required to be  disclosed on any such  appropriate  form,  certificate  or other
document  information  (other  than if such  failure  is due to a change  in the
applicable Requirements of Law, or in the interpretation or application thereof,
occurring  after  the  date on  which  a form,  certificate  or  other  document
originally  was  required to be provided or if such form,  certificate  or other
document  otherwise is not required under  subsection (e) or (f) of this Section
2.13),   such  Non-US  Lender  Party  shall  not  be  entitled  to  payments  or
indemnification  under  subsection  (a),  (b) or (c) of this  Section  2.13 with
respect  to Taxes  imposed  by the  United  States by  reason  of such  failure;
PROVIDED,  HOWEVER,  that should a Non-US  Lender Party become  subject to Taxes
because of its failure to deliver a form, certificate or other document required
hereunder  or to disclose any  information  required to be disclosed on any such
form,  certificate or other document, the Borrower shall take such steps as such
Non-US Lender Party shall reasonably  request to assist such Non-US Lender Party
in recovering such Taxes.

         (j) The right to payments or indemnification under subsections (a), (b)
or (c) of this  Section  2.13 shall not apply to the extent Taxes or Other Taxes
relate to a portion of any sums payable to a Non-US  Lender  Party  hereunder or
under any other Loan  Document  with  respect to which such Non-US  Lender Party
does not act for its own account.

         (k) Each of the Lender Parties hereby agrees that,  upon the occurrence
of any circumstances  entitling such Lender Party to additional amounts pursuant
to this Section 2.13, such Lender Party shall use reasonable efforts (consistent
with its internal policy and legal and regulatory  restrictions)  to designate a
different  Applicable  Lending Office if the making of such a change would avoid
the need for,  or reduce the amount of,  any such  additional  amounts  that may
thereafter  accrue and would not,  in the  reasonable  judgment  of such  Lender
Party, be otherwise disadvantageous to such Lender Party.

         Section 2.14 Sharing of Payments, Etc. If any Lender Party shall obtain
                      ------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) (a) on account of Obligations due and payable
to such Lender  Party under or in respect of this  Agreement or any of the other
Loan  Documents at such time in excess of its ratable  share  (according  to the
proportion of (i) the amount of such  Obligations due and payable to such Lender
Party at such time (other than pursuant to Section 2.10,  2.13, 8.04 or 8.07) to
(ii) the  aggregate  amount of the  Obligations  due and  payable  to all Lender
Parties at such time) of payments on account of the  Obligations due and payable
to all Lender  Parties under or in respect of this  Agreement and the other Loan
Documents at such time obtained by all the Lender Parties at such time or (b) on
account of  Obligations  owing (but not due and  payable) to such  Lender  Party
under or in respect of this Agreement or any of the other Loan Documents at such
time in excess of its ratable  share  (according  to the  proportion  of (i) the
amount of such  Obligations  owing to such Lender Party at such time (other than
pursuant to Section 2.10,  2.13,  8.04 or 8.07) to (ii) the aggregate  amount of
the  Obligations  owing (but not due and payable) to all Lender Parties under or
in respect of this Agreement and the other Loan Documents at such

                                       60

<PAGE>

time) of payments on account of the Obligations  owing (but not due and payable)
to all Lender  Parties under or in respect of this  Agreement and the other Loan
Documents at such time obtained by all of the Lender Parties at such time,  such
Lender  Party  shall  forthwith  purchase  from the other  Lender  Parties  such
interests or participating interests in the Obligations due and payable or owing
to them,  as the case may be, as shall be  necessary  to cause  such  purchasing
Lender Party to share the excess  payment  ratably with each of them;  PROVIDED,
HOWEVER,  that  if all or any  portion  of such  excess  payment  is  thereafter
recovered  from such  purchasing  Lender  Party,  such  purchase from each other
Lender Party shall be  rescinded  and such other Lender Party shall repay to the
purchasing  Lender Party the purchase price to the extent of such Lender Party's
ratable  share  (according to the  proportion of (A) the purchase  price paid to
such  Lender  Party  to (B) the  aggregate  purchase  price  paid to all  Lender
Parties) of such recovery,  together with an amount equal to such Lender Party's
ratable  share  (according  to the  proportion  of (1) the  amount of such other
Lender Party's required  repayment to (2) the total amount so recovered from the
purchasing  Lender Party) of any interest or other amount paid or payable by the
purchasing  Lender Party in respect of the total amount so  recovered;  PROVIDED
FURTHER that, so long as the Obligations under the Loan Documents shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other  Appropriate  Lenders.  The  Borrower
hereby agrees that any Lender Party so  purchasing an interest or  participating
interest  from another  Lender  Party  pursuant to this Section 2.13 may, to the
fullest  extent  permitted  under  applicable  law,  exercise  all its rights of
payment  (including  the right of setoff)  with  respect to such an  interest or
participating  interest,  as the case may be, as fully as if such  Lender  Party
were the direct  creditor  of the  Borrower in the amount of such an interest or
participating interest.

         Section  2.15     USE OF PROCEEDS.  The  proceeds of the  Advances and
                           ---------------
issuances of Letters of Credit shall be available (and the Borrower  agrees that
it shall use such  proceeds and Letters of Credit)  solely to refinance  certain
Debt of the Borrower and its Subsidiaries outstanding on the date of the Initial
Extension of Credit and for the  Borrower's  working  capital and other  general
corporate purposes.

         Section 2.16      DEFAULTING LENDERS.
                           ------------------

         (a)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a Defaulting Lender,  (ii) such Defaulting Lender shall owe a Defaulted
Advance to the  Borrower  and (iii) the  Borrower  shall be required to make any
payment hereunder or under any other Loan Document to or for the account of such
Defaulting  Lender,  then the Borrower may, so long as no Default shall occur or
be  continuing  at such time and to the fullest  extent  permitted by applicable
law, set off and  otherwise  apply the  Obligation  of the Borrower to make such
payment to or for the account of such  Defaulting  Lender against the obligation
of such Defaulting Lender to make such Defaulted Advance.  In the event that, on
any date,  the Borrower  shall so set off and otherwise  apply its obligation to
make any such payment against the obligation of such  Defaulting  Lender to make
any such  Defaulted  Advance on or prior to such date, the amount so set off and
otherwise  applied by the  Borrower  shall  constitute  for all purposes of this
Agreement and the other Loan Documents an Advance by such Defaulting Lender made
on the date of such setoff under the Facility  pursuant to which such  Defaulted
Advance was originally required to have been made pursuant to Section 2.01. Such
Advance shall be a Base Rate Advance and shall be  considered,  for all purposes
of this Agreement, to comprise part of the Borrowing in

                                       61

<PAGE>

connection  with which such Defaulted  Advance was  originally  required to have
been made pursuant to Section 2.01,  even if the other Advances  comprising such
Borrowing  shall be Eurodollar  Rate Advances on the date such Advance is deemed
to be made  pursuant to this  subsection  (a).  The  Borrower  shall  notify the
Administrative  Agent at any time the  Borrower  exercises  its right of set-off
pursuant to this  subsection (a) and shall set forth in such notice (A) the name
of the Defaulting  Lender and the Defaulted  Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise applied in respect of
such  Defaulted  Advance  pursuant to this  subsection  (a). Any portion of such
payment  otherwise  required to be made by the Borrower to or for the account of
such Defaulting Lender which is paid by the Borrower, after giving effect to the
amount set off and otherwise applied by the Borrower pursuant to this subsection
(a), shall be applied by the Administrative Agent as specified in subsection (b)
or (c) of this Section 2.16.

         (b)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a Defaulting Lender,  (ii) such Defaulting Lender shall owe a Defaulted
Amount to the Administrative  Agent or any of the other Lender Parties and (iii)
the Borrower  shall make any payment  hereunder or under any other Loan Document
to the Administrative  Agent for the account of such Defaulting Lender, then the
Administrative  Agent  may,  on its  behalf or on behalf  of such  other  Lender
Parties and to the fullest  extent  permitted by applicable  law,  apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such  Defaulted  Amount to the extent  required to
pay such Defaulted Amount. In the event that the  Administrative  Agent shall so
apply any such amount to the payment of any such  Defaulted  Amount on any date,
the amount so applied  by the  Administrative  Agent  shall  constitute  for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such  Defaulted  Amount  on such  date.  Any such  amount so  applied  by the
Administrative   Agent  shall  be  retained  by  the  Administrative   Agent  or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance  with the respective  portions of such Defaulted  Amounts  payable at
such time to the Administrative  Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower  shall at such time be  insufficient
to pay all Defaulted Amounts owing at such time to the Administrative  Agent and
the other Lender Parties, in the following order of priority:

                 (i)       first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent;

                 (ii)      second,  to the  Issuing  Banks and the Swing Line
Bank for any Defaulted  Amount then owing to them, in their  capacities as such,
ratably in accordance with such respective  Defaulted Amounts then owing to such
Issuing Banks and the Swing Line Bank; and

                 (iii)     third, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lender Parties.

Any  portion  of such  amount  paid by the  Borrower  for  the  account  of such
Defaulting  Lender  remaining,  after giving effect to the amount applied by the
Administrative  Agent pursuant to this  subsection  (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.16.

                                       62

<PAGE>

         (c)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a  Defaulting  Lender,  (ii)  such  Defaulting  Lender  shall not owe a
Defaulted   Advance  or  a  Defaulted   Amount  and  (iii)  the  Borrower,   the
Administrative  Agent or any other  Lender  Party  shall be  required  to pay or
distribute  any amount  hereunder or under any other Loan Document to or for the
account of such Defaulting Lender,  then the Borrower or such other Lender Party
shall  pay  such  amount  to  the  Administrative   Agent  to  be  held  by  the
Administrative  Agent,  to the fullest  extent  permitted by applicable  law, in
escrow or the  Administrative  Agent shall,  to the fullest extent  permitted by
applicable law, hold in escrow such amount  otherwise held by it. Any funds held
by the  Administrative  Agent in  escrow  under  this  subsection  (c)  shall be
deposited by the Administrative Agent in an account with Bank of America, in the
name and under the  control  of the  Administrative  Agent,  but  subject to the
provisions  of this  subsection  (c).  The  terms  applicable  to such  account,
including  the rate of interest  payable with  respect to the credit  balance of
such  account  from  time to time,  shall be Bank of  America's  standard  terms
applicable to escrow accounts  maintained with it. Any interest credited to such
account  from time to time shall be held by the  Administrative  Agent in escrow
under, and applied by the  Administrative  Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative  Agent shall, to
the fullest  extent  permitted  by  applicable  law,  apply all funds so held in
escrow from time to time to the extent  necessary to make any Advances  required
to be made by such  Defaulting  Lender  and to pay any  amount  payable  by such
Defaulting   Lender  hereunder  and  under  the  other  Loan  Documents  to  the
Administrative  Agent or any other Lender  Party,  as and when such  Advances or
amounts  are  required  to be made or paid and,  if the amount so held in escrow
shall at any time be  insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:

                 (i)       first, to the  Administrative  Agent for any amount
then due and payable by such Defaulting  Lender to the Administrative Agent
hereunder;

                 (ii)      second,  to the Issuing Banks and the Swing Line Bank
for any amounts then due and payable to them hereunder,  in their  capacities as
such, by such  Defaulting  Lender,  ratably in accordance with such amounts then
due and payable to such Issuing Bank and the Swing Line Bank; and

                 (iii)     third,  to any other Lender Parties for any amount
then due and  payable by such  Defaulting  Lender to such other  Lender  Parties
hereunder,  ratably in  accordance  with such  respective  amounts  then due and
payable to such other Lender Parties; and

                 (iv) fourth, to the  Borrower for any Advance then  required to
be made by such  Defaulting  Lender  pursuant to a Commitment of such Defaulting
Lender.

In the event that any Lender Party that is a  Defaulting  Lender  shall,  at any
time,  cease to be a  Defaulting  Lender,  any funds held by the  Administrative
Agent in  escrow  at such  time  with  respect  to such  Lender  Party  shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender  Party to the  Obligations  owing to such Lender Party at such time under
this  Agreement  and the other Loan  Documents  ratably in  accordance  with the
respective amounts of such Obligations outstanding at such time.

                                       63

<PAGE>

         (d)     The rights and remedies against a Defaulting  Lender under this
Section 2.15 are in addition to other rights and remedies  that the Borrower may
have against such  Defaulting  Lender with respect to any Defaulted  Advance and
that the  Administrative  Agent  or any  Lender  Party  may  have  against  such
Defaulting Lender with respect to any Defaulted Amount.

                                  ARTICLE III
                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

         Section  3.01     CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT.
                           ---------------------------------------------------
The obligation of each Lender to make an Advance or of any Issuing Bank to issue
a Letter of Credit on the occasion of the Initial  Extension of Credit hereunder
is subject to the satisfaction of the following  conditions  precedent before or
concurrently with the Initial Extension of Credit:

         (a)     The  Administrative  Agent  shall have  received on or before
the day of the Initial  Extension of Credit the  following,  each dated such day
(unless otherwise specified),  in form and substance reasonably  satisfactory to
the Lender Parties  (unless  otherwise  specified) and (except for the Notes) in
sufficient copies for each Lender Party:

                 (i)       A pledge and  security  agreement,  in  substantially
the form of Exhibit D hereto  (together with each other  security  agreement and
security agreement  supplement  delivered  pursuant to Section 5.01(i),  in each
case as amended,  the "PLEDGE AND SECURITY  AGREEMENT"),  duly  executed by each
Loan Party, together with:

                           (A) certificates representing the Pledged In- terests
                 referred  to  therein   accompanied  by  undated  stock  powers
                 executed in blank and  instruments  evidencing the Pledged Debt
                 indorsed in blank,

                           (B)  duly   executed   copies  of  proper   financing
                 statements   for   filing   in  all   jurisdictions   that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to perfect and protect the first  priority  Liens created under
                 the Pledge and  Security  Agreement,  covering  the  Collateral
                 described in the Pledge and Security Agreement,

                           (C) completed  requests for information,  dated on or
                 before the date of the Initial Extension of Credit, listing all
                 effective  financing  statements  filed  in  the  jurisdictions
                 referred  to in clause  (B) above  that name any Loan  Party as
                 debtor,   together   with   copies  of  such  other   financing
                 statements,

                           (D) duly executed cover sheets or other  documents or
                 instruments  required to be filed with the United States Patent
                 and Trademark Office,

                           (E)   evidence  of  the   completion   of  all  other
                 recordings  and  filings  of or with  respect to the Pledge and
                 Security  Agreement  that  the  Administrative  Agent  may deem
                 necessary  or  desirable  in order to perfect  and  protect the
                 Liens created thereby, and

                           (F)   evidence   that  all  other   action  that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to perfect and protect the first  priority  Liens created under

                                       64

<PAGE>

                 the Pledge and Security  Agreement  has been taken  (including,
                 without limitation, receipt of duly executed payoff letters and
                 UCC-3 termination statements).

                 (ii)      A guaranty,  in  substantially  the form of Exhibit E
hereto  (together  with each other  guaranty and guaranty  supplement  delivered
pursuant  to  Section  5.01(i),  in  each  case  as  amended,   the  "SUBSIDIARY
GUARANTY"), duly executed by each Material Domestic Subsidiary.

                 (iii)     Deeds of trust,  trust deeds and mortgages,  in sub-
stantially  the form of Exhibit F hereto and covering the  properties  listed on
Schedule 3.01(a) hereto (the "MORTGAGES"), duly executed by the appropriate Loan
Party, together with:

                           (A) evidence that  counterparts of the Mortgages have
                 been  duly  recorded  on or  before  the  day  of  the  Initial
                 Extension of Credit in all filing or recording offices that the
                 Administrative  Agent may deem  necessary or desirable in order
                 to create a valid  first and  subsisting  Lien on the  property
                 described therein in favor of the Administrative  Agent for the
                 benefit  of  the  Secured  Parties  and  that  all  filing  and
                 recording taxes and fees have been paid,

                           (B)  fully  paid  American  Land  Title   Association
                 Lender's  Extended  Coverage  title  insurance   policies  (the
                 "MORTGAGE  POLICIES") in form and substance,  with endorsements
                 and in amount acceptable to the Administrative  Agent,  issued,
                 coinsured  and  reinsured by title  insurers  acceptable to the
                 Administrative  Agent, insuring the Mortgages to be valid first
                 and subsisting Liens on the property  described  therein,  free
                 and clear of all material defects  (including,  but not limited
                 to,  mechanics' and  materialmen's  Liens) and encumbrances and
                 providing  for  such  other  affirmative  insurance  (including
                 endorsements  for future  advances under the Loan Documents and
                 for mechanics' and  materialmen's  Liens) and such  coinsurance
                 and direct access reinsurance as the  Administrative  Agent may
                 deem necessary or desirable,

                           (C) such consents and agreements of lessors and other
                 third   parties,   and  such   estoppel   letters   and   other
                 confirmations,  as the Administrative  Agent may deem necessary
                 or desirable, and

                           (D)   evidence   that  all  other   action  that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to create  valid  first and  subsisting  Liens on the  property
                 described in the Mortgages has been taken.

                 (iv)      Certified  copies of the resolutions of the Board of
Directors of each Loan Party  approving  each Loan Document to which it is or is
to be a party,  and of all documents  evidencing  other  necessary  Governmental
Authorizations  and other necessary  corporate  actions or third party approvals
and consents, if any, with respect to each Loan Document to which it is or is to
be a party.

                 (v)       A copy of a certificate  of the Secretary of State of
the jurisdiction of incorporation of each Loan Party,  dated reasonably near the
date of the Initial Extension of Credit, certifying (A) as to a true and correct
copy of the charter (or comparable

                                       65

<PAGE>

Constitutive  Document) of such Loan Party and each amendment thereto on file in
such Secretary's office and (B) that (1) such amendments are the only amendments
to such Loan  Party's  (or  comparable  Constitutive  Document)  on file in such
Secretary's office, (2) such Loan Party has paid all franchise taxes to the date
of such  certificate  and (C) such Loan Party is duly  incorporated  and in good
standing or presently subsisting under the laws of the state of the jurisdiction
of its incorporation.

                 (vi)      A copy of a certificate of the Secretary of State of
each  jurisdiction  in which each Loan Party is qualified to do business,  dated
reasonably near the date of the Initial  Extension of Credit,  stating that such
Loan Party is duly  qualified and in good standing as a foreign  corporation  in
such state and has filed all annual reports  required to be filed to the date of
such certificate.

                 (vii)     A certificate or certificates of each Loan Party,
signed on  behalf  of such Loan  Party by its  President,  a Vice  President  or
Treasurer and its Secretary or any  Assistant  Secretary,  dated the date of the
Initial  Extension  of  Credit  (the  statements  made in which  certificate  or
certificates  shall be true on and as of the date of the  Initial  Extension  of
Credit),  certifying as to (A) the absence of any  amendments to the charter (or
comparable  Constitutive  Document)  of such  Loan  Party  since the date of the
Secretary of State's certificate  referred to in Section 3.01(a)(v),  (B) a true
and correct  copy of the bylaws (or  comparable  Constitutive  Document) of such
Loan  Party as in  effect on the date on which the  resolutions  referred  to in
Section  3.01(a)(iv)  were  adopted and on the date of the Initial  Extension of
Credit,  (C) the due  incorporation and good standing or valid existence of such
Loan Party as a corporation  organized under the laws of the jurisdiction of its
incorporation,  and  the  absence  of any  proceeding  for  the  dissolution  or
liquidation  of such  Loan  Party,  (D) the  truth  of the  representations  and
warranties  contained in the Loan Documents as though made on and as of the date
of the Initial  Extension  of Credit and (E) the absence of any event  occurring
and  continuing,  or  resulting  from the  Initial  Extension  of  Credit,  that
constitutes a Default.

                 (viii)    A  certificate  of the  Secretary or an Assistant
Secretary of each Loan Party  certifying  the names and true  signatures  of the
officers of such Loan Party authorized to sign each Loan Document to which it is
or is to be a party  and the  other  documents  to be  delivered  hereunder  and
thereunder.

                 (ix)      Such financial,  business and other  information
regarding each Loan Party and its  Subsidiaries as the Lender Parties shall have
requested, including, without limitation,  information as to possible contingent
liabilities,  tax  matters,  environmental  matters,  obligations  under  Plans,
Multiemployer  Plans and Welfare  Plans,  collective  bargaining  agreements and
other  arrangements  with employees,  audited annual financial  statements dated
November 29, 1998,  November 28, 1999 and November 26, 2000, pro forma financial
statements  as to the  Borrower  and  forecasts  prepared by  management  of the
Borrower,  in form and substance  satisfactory to the Lender Parties, of balance
sheets  and  income  statements  on a monthly  basis for the first  Fiscal  Year
following the day of the Initial  Extension of Credit and on an annual basis for
each Fiscal Year thereafter until the Termination Date.

                 (x)       Evidence of insurance naming the Administrative Agent
as  additional  insured  and loss  payee  with such  responsible  and  reputable
insurance  companies or  associations,  and in such  amounts and  covering  such
risks, as is satisfactory to the Lender Parties, including,  without limitation,
business interruption insurance.

                                       66

<PAGE>

                 (xi)      A Notice of Borrowing or Notice of Issuance, as
applicable, relating to the Initial Extension of Credit.

                 (xii)     Favorable opinions of Wachtell, Lipton, Rosen & Katz,
special  counsel  for the Loan  Parties,  Albert F.  Moreno,  Esq.,  Senior Vice
President  and General  Counsel of the  Borrower,  and Legal  Strategies  Group,
special  intellectual  property  counsel to the Borrower,  in form and substance
reasonably satisfactory to the Lender Parties.

                 (xiii)    A  favorable  opinion of  O'Melveny & Myers LLP,
special counsel to the Lender Parties, in form and substance satisfactory to the
Lender Parties.

         (b)     The Lender Parties shall be satisfied  that all  obligations of
the Borrower and its Subsidiaries under the Existing Credit Agreements have been
prepaid, redeemed or defeased in full or otherwise satisfied and extinguished.

         (c)     There shall have occurred no Material Adverse Change since
November 28, 1999.

         (d)     There shall exist no action, suit,  investigation,  litigation
or  proceeding  affecting any Loan Party or any of its  Subsidiaries  pending or
threatened  before any  Governmental  Authority or arbitrator  that (i) would be
reasonably  likely to have a Material  Adverse  Effect  other  than the  matters
described  on Schedule  4.01(f)  hereto  (the  "DISCLOSED  LITIGATION")  or (ii)
purports to affect the legality, validity or enforceability of any Loan Document
and there  shall  have been no change in the status or  financial  effect on any
Loan Party or any of its  Subsidiaries of the Disclosed  Litigation which change
would be reasonably likely to have a Material Adverse Effect.

         (e)     All Governmental  Authorizations  and all third party consents
and approvals  necessary in connection  with the Loan Documents  shall have been
obtained  and  shall  remain  in  effect;  and no  Requirements  of Law shall be
applicable in the reasonable  judgment of the Lender Parties,  in each case that
restrains,  prevents  or imposes  materially  adverse  conditions  upon the Loan
Documents or the rights of the Loan Parties or their  Subsidiaries to create any
Lien on, any properties now owned or hereafter acquired by any of them.

         (f)     The Lender Parties shall have completed a due diligence inves-
tigation  of the  Borrower  and its  Subsidiaries  in scope,  and with  results,
satisfactory to the Lender Parties, and nothing shall have come to the attention
of the Lender Parties during the course of such due diligence  investigation  to
lead  them  to  believe  that  the  Information  Memorandum  was or  has  become
misleading,  incorrect or  incomplete  in any  material  respect,  and,  without
limiting the  generality of the  foregoing,  the Lender  Parties shall have been
given such access to the management,  records,  books of account,  contracts and
properties of the Borrower and its Subsidiaries as they shall have requested.

         (g)     The Lender Parties shall have received a trademark valuation
from Ernst & Young LLP.

         (h)     The  Borrower  shall have paid all accrued fees of the Agents
and the Lender  Parties and all accrued  expenses of the Agents  (including  the
accrued  fees and  expenses  of  counsel to the  Administrative  Agent and local
counsel to the Lender Parties).

                                       67

<PAGE>

         Section 3.02      CONDITIONS  PRECEDENT TO EACH  BORROWING AND ISSUANCE
                           -----------------------------------------------------
AND RENEWAL.  The obligation of each  Appropriate  Lender to make an Advance
-----------
(other  than a Letter  of  Credit  Advance  made by a  Revolving  Credit  Lender
pursuant to Section  2.03(c) and a Revolving  Credit Advance made by a Revolving
Credit  Lender  pursuant to Section  2.02(b)) on the occasion of each  Borrowing
(including  the initial  Borrowing),  and the obligation of each Issuing Bank to
issue a Letter of Credit  (including the initial  issuance) or renew a Letter of
Credit and the right of the Borrower to request a Swing Line  Advance,  shall be
subject to the further  conditions  precedent that on the date of such Borrowing
or issuance or renewal:

         (a)     the following  statements shall be true and the  Administrative
Agent shall have  received for the account of such Lender or such Issuing Bank a
certificate signed by a duly  authorized  officer  of the  Borrower,  dated the
date of such Borrowing or issuance or renewal, stating that:

                 (i)       the  representations  and  warranties  contained  in
each Loan  Document are correct on and as of such date,  before and after giving
effect to such  Borrowing or issuance or renewal and to the  application  of the
proceeds  therefrom,  as though made on and as of such date  (except (A) for any
such  representations  or warranties  that, by their terms,  refer to a specific
date other than the date of such Borrowing or issuance or renewal, in which case
as of such specific date and (B) if any Required Financial  Information has been
delivered to the Administrative  Agent and the Lender Parties on or prior to the
date of such Borrowing or issuance or renewal,  that the Consolidated  financial
statements of the Borrower and its  Subsidiaries  referred to in Section 4.01(g)
shall be  deemed at any time and from time to time  after  the  Closing  Date to
refer  to  the  Consolidated  financial  statements  of  the  Borrower  and  its
Subsidiaries comprising part of the Required Financial Information most recently
delivered  to the  Administrative  Agent  and the  Lender  Parties  pursuant  to
Sections  5.03(b)  and  5.03(c),  respectively,  on or prior to the date of such
Borrowing, issuance or renewal); and

                 (ii)      no Default has occurred and is  continuing,  or would
result from such Borrowing or issuance or renewal or from the application of the
proceeds therefrom; and

         (b)     the Administrative Agent shall have received such other appro-
vals, opinions or documents as any Appropriate Lender through the Administrative
Agent may reasonably request.

         Section 3.03      DETERMINATIONS  UNDER  SECTION 3.01.  For purposes of
                           -----------------------------------
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or  satisfactory to the Lender Parties unless an
officer  of  the   Administrative   Agent   responsible  for  the   transactions
contemplated  by the Loan Documents  shall have received notice from such Lender
Party prior to the Initial  Extension of Credit specifying its objection thereto
and, if the Initial  Extension of Credit  consists of a  Borrowing,  such Lender
Party  shall not have made  available  to the  Administrative  Agent such Lender
Party's ratable portion of such Borrowing.

                                       68

<PAGE>

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

         Section 4.01      REPRESENTATIONS  AND  WARRANTIES  OF THE  BORROWER.
                           --------------------------------------------------
The  Borrower  represents  and  warrants  as follows:

         (a)     ORGANIZATION  AND POWERS. Each Loan Party is a corporation duly
                 ------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its  incorporation,  (ii) is duly qualified and in good standing
as a foreign  corporation in each other  jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed  except  where the  failure to so qualify or be  licensed  would not be
reasonably  likely to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority (including,  without limitation,  all Governmental
Authorizations)  to own or lease and operate its  properties and to carry on its
business as now conducted and as proposed to be conducted.

         (b)     SUBSIDIARIES.  Set  forth on  Schedule  4.01(b)  hereto is a
                 ------------
complete and accurate list of all Subsidiaries of each Loan Party as of the date
hereof,   showing  (as  to  each  such   Subsidiary)  the  jurisdiction  of  its
incorporation  and the  percentage  of each such class of its  Equity  Interests
owned (directly or indirectly) by such Loan Party. All of the outstanding Equity
Interests in each Loan Party's  Subsidiaries have been validly issued, are fully
paid and non-assessable and, except as set forth on Schedule 4.01(b) hereto, are
owned by such Loan  Party or one or more of its  Subsidiaries  free and clear of
all Liens, except those created under the Collateral Documents.

         (c)     NO CONFLICTS. The execution,  delivery and performance by each
                 ------------
Loan Party of each Loan  Document  to which it is or is to be a party are within
such Loan Party's corporate  powers,  have been duly authorized by all necessary
corporate  action,  and do not (i)  contravene  such Loan  Party's  Constitutive
Documents,  (ii) violate any  Requirements  of Law, (iii) except as set forth on
Schedule 4.01(c) hereto, conflict with or result in the breach of, or constitute
a default or require any payment to be made under, any contract, loan agreement,
indenture,  mortgage,  deed of trust,  lease or other  instrument  binding on or
affecting any Loan Party,  any of its Subsidiaries or any of their properties or
(iv) except for the Liens created under the Loan Documents, result in or require
the  creation  or  imposition  of any Lien  upon or with  respect  to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of
its Subsidiaries is in violation of any such Requirements of Law or in breach of
any such contract, loan agreement,  indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which would be reasonably likely to
have a Material Adverse Effect.

         (d)     GOVERNMENTAL  AUTHORIZATIONS.  No Governmental  Authorization,
                 ----------------------------
and no other  authorization  or approval or other action by, and no notice to or
filing with, any Governmental Authority or any other third party is required for
(i) the due execution, delivery,  recordation, filing or performance by any Loan
Party of any Loan Document to which it is or is to be a party, (ii) the grant by
any Loan Party of the Liens granted by it pursuant to the Collateral  Documents,
(iii) the  perfection or  maintenance  of the Liens created under the Collateral
Documents  (including the first priority nature thereof) or (iv) the exercise by
any Agent or any Lender  Party of its  rights  under the Loan  Documents  or the
remedies  in respect of the  Collateral  pursuant to the  Collateral  Documents,
except for filings or  recordings  contemplated  by Section  4.01(l) and actions
that may be required  following  the Closing Date as a result of a change in law
and except

                                       69

<PAGE>

as may be required, in connection with the disposition of any Pledged Interests,
by laws generally affecting the offering and sale of securities.

         (e)     BINDING  OBLIGATION.  This  Agreement has been, and each other
                 -------------------
Loan  Document  when  delivered  hereunder  will have been,  duly  executed  and
delivered by each Loan Party party  thereto.  This  Agreement is, and each other
Loan Document when  delivered  hereunder  will be, the legal,  valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan Party
in accordance with its terms.

         (f)     LITIGATION.  There  is  no  action,  suit,  investigation,
                 ----------
litigation  or proceeding  affecting any Loan Party or any of its  Subsidiaries,
including  any   Environmental   Action,   pending  or  threatened   before  any
Governmental Authority or arbitrator that (i) would be reasonably likely to have
a Material Adverse Effect (other than the Disclosed Litigation) or (ii) would be
reasonably likely to affect the legality, validity or enforceability of any Loan
Document,  and there has been no  adverse  change in the  status,  or  financial
effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation
from that described on Schedule 4.01(f) hereto, which change would be reasonably
likely to have a Material Adverse Effect.

         (g)     FINANCIAL  CONDITION.  The Consolidated and consolidating
                 --------------------
balance sheets of the Borrower and its  Subsidiaries as at November 28, 1999 and
November 26, 2000, and the related Consolidated and consolidating  statements of
income  and  Consolidated  statement  of  cash  flows  of the  Borrower  and its
Subsidiaries  for the Fiscal Year then ended,  accompanied,  with respect to the
Consolidated  financial  statements  only, by an  unqualified  opinion of Arthur
Andersen, independent public accountants, copies of which have been furnished to
each Lender Party,  fairly present the Consolidated and consolidating  financial
condition  of the  Borrower  and  its  Subsidiaries  as at  such  dates  and the
Consolidated  and  consolidating  results of  operations of the Borrower and its
Subsidiaries  for the periods ended on such dates,  all in accordance  with GAAP
applied on a consistent  basis,  and since November 28, 1999,  there has been no
Material Adverse Change.

         (h)     PROJECTIONS.  The Consolidated  forecasted  balance sheets and
                 -----------
statements  of income of the  Borrower  and its  Subsidiaries  delivered  to the
Lender  Parties  pursuant to Section  3.01(a)(ix)  or 5.03 or  contained  in the
Information  Memorandum  were  prepared  in  good  faith  on  the  basis  of the
assumptions  stated  therein,  which  assumptions  were  fair  in  light  of the
conditions existing at the time of delivery of such forecasts,  and represented,
at the time of delivery,  the Borrower's  best estimate of its future  financial
performance.

         (i)     USE OF  PROCEEDS.  The  Borrower is not engaged in the business
                 ----------------
of extending  credit for the purpose of purchasing or carrying Margin Stock, and
no proceeds  of any Advance or drawings  under any Letter of Credit will be used
to  purchase  or carry any  Margin  Stock or to extend  credit to others for the
purpose of purchasing or carrying any Margin Stock.

         (j)     GOVERNMENTAL REGULATION.  Neither any Loan Party nor any of its
                 -----------------------
Subsidiaries  is an  "investment  company",  or an  "affiliated  person"  of, or
"promoter" or "principal  underwriter"  for, an  "investment  company",  as such
terms are defined in the Investment Company Act of 1940, as amended. Neither any
Loan Party nor any of its Subsidiaries is a "holding company",  or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or

                                       70

<PAGE>

of a "subsidiary  company" of a "holding company",  as such terms are defined in
the Public Utility Holding  Company Act of 1935, as amended.  Neither the making
of any Advances,  nor the issuance of any Letters of Credit, nor the application
of the proceeds or repayment  thereof by the Borrower,  nor the  consummation of
the other transactions contemplated by the Loan Documents and Related Documents,
will violate any  provision of any such Act or any rule,  regulation or order of
the Securities and Exchange Commission thereunder applicable to a Loan Party or
any of its Subsidiaries.

         (k)     MATERIALLY  ADVERSE  AGREEMENTS.  Neither  any  Loan  Party nor
                 -------------------------------
any of its Subsidiaries is a party to any indenture, loan or credit agreement or
any lease or other  agreement  or  instrument  or  subject  to any  Constitutive
Documents or corporate  restrictions  that would be reasonably  likely to have a
Material Adverse Effect.

         (l)     COLLATERAL.  Except for the filings and other actions  required
                 ----------
by Sections  5.01(j) and  5.01(l),  all filings and other  actions  necessary or
desirable to perfect and protect the security interest in the Collateral created
under  the  Collateral  Documents  have  been duly made or taken and are in full
force  and  effect,  and  the  Collateral  Documents  create  in  favor  of  the
Administrative  Agent  for the  benefit  of the  Secured  Parties  a valid  and,
together with such filings and other actions,  perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations. The
Loan  Parties are the legal and  beneficial  owners of the  Collateral  free and
clear of any Lien,  except  for the Liens  created or  permitted  under the Loan
Documents.

         (m)     SOLVENCY.  Each Loan Party is, individually and together with
                 --------
its Subsidiaries, Solvent.

         (n)     ERISA COMPLIANCE.  Except as specifically disclosed in Schedule
                 ----------------
4.01(n) hereto:

                 (i)       And  except as would not have a  Material  Adverse
Effect,  each Plan is in compliance in all material respects with the applicable
provisions of ERISA,  the Internal  Revenue Code and other federal or state law.
Each Plan which is  intended to qualify  under  Section  401(a) of the  Internal
Revenue Code has received a favorable  determination  letter from the IRS and to
the best knowledge of any Loan Party, nothing has occurred which would cause the
loss of such qualification.  The Borrower and each ERISA Affiliate have made all
required  contributions  to any Plan  subject  to  Section  412 of the  Internal
Revenue Code,  and no  application  for a funding  waiver or an extension of any
amortization  period  pursuant to Section 412 of the  Internal  Revenue Code has
been made with respect to any Plan.

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

                 (iii)  (a) No  ERISA  Event that  requires  notice  to be given
to the PBGC has occurred or is reasonably  expected to occur;  (b) no Plan has a
Funded  Current  Liability

                                       71

<PAGE>

Percentage of less than 90% as of the most recent  valuation  date;  (c) neither
the Borrower nor any ERISA  Affiliate  has incurred,  or  reasonably  expects to
incur,  any  liability  under Title IV of ERISA with  respect to any Plan (other
than  premiums due and not  delinquent  under  Section  4007 of ERISA);  and (d)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur,  any liability  (and no event has occurred  which,  with the giving of
notice  under  Section  4219 of ERISA,  would  result in such  liability)  under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan.

         (o)     FOREIGN  EMPLOYEE  BENEFIT PLANS.  With respect to each retire-
                 --------------------------------
ment plan or arrangement  mandated by a government  other than the United States
(a "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and with respect to each employee
benefit plan maintained or contributed to by any Loan Party or any Subsidiary of
any Loan Party that is not subject to United States law (a "FOREIGN PLAN"), each
Foreign Plan is in compliance with the applicable  Foreign  Government Scheme or
Arrangement and neither the Borrower nor any of its Subsidiaries has incurred or
reasonably expects to incur any liability under any Foreign Government Scheme or
Arrangement, which noncompliance or liability would be reasonably likely to have
a Material Adverse Effect.

         (p)     ENVIRONMENTAL  MATTERS. The operations and properties of each
                 ----------------------
Loan  Party  and  each of its  Subsidiaries  comply  in all  respects  with  all
applicable  Environmental  Laws and  Environmental  Permits  except  where  such
noncompliance  could not have a Material  Adverse Effect,  and no  circumstances
exist that would be reasonably  likely to (A) form the basis of an Environmental
Action  against  any  Loan  Party  or any of its  Subsidiaries  or any of  their
properties  that  could  have a  Material  Adverse  Effect or (B) cause any such
property  to be subject to any  restrictions  on  ownership,  occupancy,  use or
transferability  under any  Environmental Law that could have a Material Adverse
Effect.

         (q)     TAXES.  (i) Neither any Loan Party nor any of its Subsidiaries
                 -----
is party to any tax sharing agreement.

                 (ii)      Each  Loan  Party  and  each  of  its  Subsidiaries
and Affiliates has filed, has caused to be filed or has been included in all tax
returns (federal,  state, local and foreign) required to be filed and, except as
permitted  by  Section  5.01(b),  has paid all taxes  shown  thereon  to be due,
together with applicable interest and penalties.

                 (iii)     No issues have been raised by taxing authorities that
in the aggregate would be reasonably likely to have a Material Adverse Effect.

         (r)     LABOR MATTERS.  Neither the business nor the properties of any
                 -------------
Loan  Party or any of its  Subsidiaries  are  affected  by any fire,  explosion,
accident,  strike,  lockout  or  other  labor  dispute,  drought,  storm,  hail,
earthquake,  embargo,  act of  God or of the  public  enemy  or  other  casualty
(whether or not covered by insurance) that would be reasonably  likely to have a
Material Adverse Effect.

         (s)     COMPLIANCE  WITH  LAW.  Each of the  Borrower  and its  Subsi-
                 ---------------------
diaries  is in  compliance  with all  Requirements  of Law  applicable  to their
properties,  assets and business where the failure to so comply would (as to all
such failures to comply in the aggregate) have a

                                       72

<PAGE>

Material  Adverse  Effect.  There  are no  proceedings  pending  or, to the best
knowledge of any Loan Party,  threatened in writing,  to terminate or modify any
license,  permit or other  approval  issued  by a  Governmental  Authority,  the
termination or  modification  of which (in the aggregate as to all such matters)
would have a Material Adverse Effect.

         (t)     INTELLECTUAL PROPERTY. The Borrower and its Subsidiaries own,
                 ---------------------
or possess the right to use, all trademarks,  trade names, copyrights,  patents,
patent rights, franchises, licenses and other intangible assets that are used in
the conduct of their  respective  businesses as now  operated,  and none of such
items,  to the  best  knowledge  of any Loan  Party,  conflicts  with the  valid
trademark,  trade name, copyright,  patent, patent right, franchise,  license or
other intangible asset of any other Person, except to the extent such failure to
own or  possess  or such  conflict  would  not be  reasonably  likely  to have a
Material Adverse Effect.

         (u)     INSURANCE.  The properties of the Borrower and its Subsidiaries
                 ---------
are insured  with  financially  sound and  reputable  insurance  companies,  not
Affiliates of the Borrower,  or with Majestic  Insurance  International  Ltd., a
wholly-owned  Subsidiary of the Borrower, in such amounts, with such deductibles
and  covering  such risks as are  customarily  carried by  companies  engaged in
similar  businesses  and  owning  similar  properties  in  localities  where the
Borrower and its Subsidiaries  operate.  From and after the date that is 30 days
following the Closing Date, property,  general liability,  business interruption
and automobile  insurance policies shall name the  Administrative  Agent for the
benefit  of the  Secured  Parties as an  additional  insured  thereunder  as its
interests  may appear  and, in the case of  property  insurance,  contain a loss
payable  subsection or  endorsement,  satisfactory  in form and substance to the
Administrative  Agent,  that names the  Administrative  Agent for the benefit of
Lenders as the loss payee  thereunder  for any covered  loss with respect to the
Collateral,  as  appropriate.  Insurance  policies  provide for at least 30 days
prior written notice to the Administrative Agent of any material modification or
cancellation of such policy.

         (v)     CONDUCT OF BUSINESS. The Borrower and its Subsidiaries, consi-
                 -------------------
dered  together,  are engaged only in  businesses  related or  incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.

         (w)     EXISTING  DEBT.  Set forth on  Schedule  4.01(w)  hereto is a
                 --------------
complete and accurate list of all Debt of the Borrower and its  Subsidiaries for
borrowed money that, after prepayment of all obligations of the Borrower and its
Subsidiaries under the Existing Credit Agreements, is outstanding as of the date
hereof, showing the obligor and the principal amount outstanding thereunder.

         (x)     LIENS.  Set forth on Schedule 4.01(x) hereto is a complete and
                 -----
accurate list of all Liens and negative  pledges to which,  after  prepayment of
all obligations of the Borrower and its  Subsidiaries  under the Existing Credit
Agreements,  property or assets of any Loan Party or any of its Subsidiaries are
subject  as of the date  hereof,  other  than  Liens  permitted  under  Sections
5.02(a)(ii)-(xii)    and   negative    pledges    permitted    under    Sections
5.02(l)(ii)-(vii),  showing the lienholder thereof,  the principal amount of the
obligations  secured  thereby  and the  property or assets of such Loan Party or
such Subsidiary subject thereto.

                                       73

<PAGE>

         (y)     REAL  PROPERTY.  Set forth on  Schedule  4.01(y)  hereto is a
                 --------------
complete  and  accurate  list of all real  property  owned or leased by any Loan
Party or any of its  Subsidiaries  in the United  States as of the date  hereof,
showing the street address, county or other relevant jurisdiction, state, record
owner  and book and  estimated  fair  value  thereof.  Each  Loan  Party or such
Subsidiary  has good,  marketable  and  insurable fee simple title to such owned
real  property,  free and  clear of all  Liens,  other  than  Liens  created  or
permitted by the Loan Documents. Each such lease is the legal, valid and binding
obligation of the lessor  thereof,  enforceable  in  accordance  with its terms,
except as may be limited by bankruptcy, insolvency,  reorganization,  moratorium
or similar laws  relating to or affecting  creditors'  rights  generally  and by
general principles of equity.

         (z)     RESTRICTED  SUBSIDIARIES.  Set forth on Schedule  4.01(z)
                 ------------------------
hereto is a complete and  accurate  list of all Restricted Subsidiaries on the
date hereof.

         (aa)    ORGANIZATIONAL  STRUCTURE. Set forth on Schedule 4.01(aa) here-
                 -------------------------
to is the  organizational  structure of the Borrower and its Subsidiaries on the
date hereof.

         (bb)    MATERIAL SUBSIDIARIES.  Set forth on Schedule 4.01(bb) hereto
                 ---------------------
is a complete and accurate list of all Material  Subsidiaries.  As of the end of
the Fiscal Year ended  November 28, 2000,  the aggregate  gross  revenues of the
Subsidiaries of the Borrower not  constituting  Material  Subsidiaries  for such
Fiscal  Year  were not  more  than 5% of the  aggregate  gross  revenues  of the
Borrower and its Subsidiaries on a Consolidated basis for such Fiscal Year.

         (cc)    INVESTMENTS.  Set forth on  Schedule  4.01(cc)  hereto is a
                 -----------
complete and accurate list of all  Investments  held by any Loan Party or any of
its Subsidiaries as of the date hereof,  other than Investments  permitted under
Sections 5.02(f)(ii)-(xiv),  showing the amount, obligor or issuer and maturity,
if any, thereof.

         (dd)    INTELLECTUAL PROPERTY. Set forth on Schedule 4.01(dd) hereto is
                 ---------------------
a complete and accurate list of all patents,  trademarks,  trade names,  service
marks and copyrights, and all applications therefor and licenses thereof, of any
Loan  Party  or any of its  Subsidiaries  as of the  date  hereof,  showing  the
jurisdiction  in  which  registered,   the  registration  number,  the  date  of
registration and the expiration date.

         (ee)    DISCLOSURE.  No  representation  or warranty of any Loan Party
                 ----------
contained in this  Agreement or any other document  (other than  representations
and warranties with respect to the  Consolidated  forecasted  balance sheets and
statements  of income of the  Borrower  and its  Subsidiaries  delivered  to the
Lender  Parties  pursuant to Section  3.01(a)(ix)  or 5.03 or  contained  in the
Information   Memorandum),   certificate  or  written  statement   furnished  to
Administrative  Agent or any Lender by any Loan Party for use in connection with
any  transactions  contemplated  by this  Agreement,  including the  Information
Memorandum,  contains or will contain any untrue statement of a material fact or
omits to state or will omit to state a  material  fact  known to such Loan Party
necessary in order to make the statements  contained herein or therein, in light
of the circumstances under which they were made, not misleading.

                                       74

<PAGE>

                                   ARTICLE V
                            COVENANTS OF THE BORROWER

         Section  5.01     AFFIRMATIVE  COVENANTS.  So  long  as any  Advance or
                           ----------------------
any other  Obligation  of any Loan Party under any Loan  Document  shall  remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will:

         (a)     COMPLIANCE WITH LAWS,  ETC.  Comply,  and cause each of its
                 --------------------------
Subsidiaries to comply with all applicable  Requirements of Law, such compliance
to  include,   without   limitation,   compliance  with  ERISA,  all  applicable
Environmental  Laws and Environmental  Permits and the Racketeer  Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970, except
where the failure to comply would not  reasonably be expected to have a Material
Adverse Effect.

         (b)     PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its
                 ---------------------
Subsidiaries to pay and discharge,  before the same shall become delinquent, (i)
all taxes,  assessments  and  governmental  charges or levies imposed upon it or
upon its property (other than taxes,  assessments and other governmental charges
not exceeding  $5,000,000 in the  aggregate) and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property;  PROVIDED,  HOWEVER,  that
neither the  Borrower  nor any of its  Subsidiaries  shall be required to pay or
discharge any such tax,  assessment,  charge or claim that is being contested in
good faith and by proper  proceedings and as to which  appropriate  reserves are
being maintained,  unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.

         (c)     MAINTENANCE OF INSURANCE.  Maintain,  and cause each of its
                 ------------------------
Subsidiaries to maintain,  through  self-insurance or with financially sound and
reputable  insurers,  insurance  with respect to its properties and business and
the properties and business of the Borrower and its Subsidiaries against loss or
damage of the kinds  customarily  insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated,  of
such  types  and in  such  amounts  as are  customarily  carried  under  similar
circumstances by such other  corporations,  if the failure to do so would (as to
all such failures in the aggregate) have a Material  Adverse  Effect.  Property,
general liability, business interruption and automobile insurance policies shall
(i) name the  Administrative  Agent for the benefit of the Secured Parties as an
additional  insured  thereunder  with respect to all Collateral as its interests
may appear and, (ii) in the case of property  insurance,  contain a loss payable
subsection  or   endorsement,   satisfactory   in  form  and  substance  to  the
Administrative Agent, that names the Administrative Agent for the benefit of the
Secured  Parties as the loss payee  thereunder for any covered loss with respect
to all Collateral, as appropriate. Insurance policies shall provide for at least
30 days  prior  written  notice  to the  Administrative  Agent  of any  material
modification or cancellation of such policy.

         (d)     PRESERVATION OF CORPORATE EXISTENCE,  ETC. Preserve and main-
                 -----------------------------------------
tain,  and  cause  each  of its  Subsidiaries  to  preserve  and  maintain,  its
existence,  legal  structure,  legal name,  rights  (charter and  statutory) and
franchises and its  Governmental  Authorizations;  PROVIDED,  HOWEVER,  that the
Borrower  and  its  Subsidiaries  may  consummate  any  merger,   consolidation,
liquidation,

                                       75

<PAGE>

wind up or dissolution permitted under Section 5.02(d) and PROVIDED FURTHER that
neither the Borrower nor any of its  Subsidiaries  shall be required to preserve
any right, permit, license, approval,  privilege or franchise if the Borrower or
such  Subsidiary  shall  determine  that the  preservation  thereof is no longer
desirable in the conduct of the business of the Borrower or such Subsidiary,  as
the case may be, and that the loss  thereof  would not be  reasonably  likely to
have a Material Adverse Effect.

         (e)     VISITATION  RIGHTS.  At any  reasonable  time  and  from  time
                 ------------------
to time on  reasonable  notice,  permit  any of the  Agents or any of the Lender
Parties, or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of,  the  Borrower  and any of its  Subsidiaries,  and to discuss  the  affairs,
finances and accounts of the  Borrower and any of its  Subsidiaries  with any of
their  officers  or  directors  and  with  their  independent  certified  public
accountants. Following the occurrence and during the continuation of an Event of
Default,  the  expenses of any Lender  Party  incurred  pursuant to this Section
5.01(e) shall be for the account of the Borrower.

         (f)     KEEPING OF BOOKS.  Keep, and cause each of its Subsidiaries to
                 ----------------
keep,  proper  books of record and  account,  in which full and correct  entries
shall be made of all financial  transactions  and the assets and business of the
Borrower  and  each  such  Subsidiary  in  accordance  with  generally  accepted
accounting principles in effect from time to time.

         (g)     MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
                 ------------------------------
cause each of its  Subsidiaries to maintain and preserve,  all of its properties
that are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

         (h)     TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
                 ----------------------------
Subsidiaries to conduct,  all  transactions  otherwise  permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such  Subsidiary  than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.

         (i)     COVENANT TO GUARANTEE OBLIGATIONS AND GIVE SECURITY. Upon (x)
                 ---------------------------------------------------
the request of the Administrative  Agent following the occurrence and during the
continuance of a Default,  (y) the formation or acquisition of any new direct or
indirect Material  Domestic  Subsidiary by any Loan Party or (z) the acquisition
of any  property by any Loan Party,  and such  property,  in the judgment of the
Administrative Agent, shall not already be subject to a perfected first priority
security  interest in favor of the  Administrative  Agent for the benefit of the
Secured  Parties,  then  the  Borrower  shall,  in each  case at the  Borrower's
expense:

                 (i)       in  connection  with the  formation or  acquisition
of a  Material  Domestic  Subsidiary,  within 30 days after  such  formation  or
acquisition, cause each such Material Domestic Subsidiary, and cause each direct
and indirect parent of such Material Domestic  Subsidiary (if it has not already
done so), to duly execute and deliver to the Administrative  Agent a guaranty or
guaranty  supplement,  in form and substance  satisfactory to the Administrative
Agent,   guaranteeing  the  other  Loan  Parties'  obligations  under  the  Loan
Documents,

                                       76

<PAGE>

                 (ii)      within 30 days after such request,  formation or
acquisition,  duly execute and deliver,  and cause each such  Material  Domestic
Subsidiary  and each  direct  and  indirect  parent  of such  Material  Domestic
Subsidiary  (if it has not already done so) to duly execute and deliver,  to the
Administrative  Agent mortgages,  pledges,  assignments,  security agreements or
security  agreement  supplements,  as  specified  by and in form  and  substance
reasonably satisfactory to the Administrative Agent, securing payment of all the
Obligations of the applicable Loan Party, such Subsidiary or such parent, as the
case  may be,  under  the  Loan  Documents  and  constituting  Liens on all such
properties,

                 (iii)     within 30 days after such request,  formation or
acquisition, take, and cause such Material Domestic Subsidiary or such parent to
take,  whatever  action  (including,   without  limitation,   the  recording  of
mortgages,  the filing of Uniform  Commercial  Code  financing  statements,  the
giving of notices  and the  endorsement  of notices on title  documents)  may be
necessary or advisable in the opinion of the Administrative Agent to vest in the
Administrative  Agent  (or in any  representative  of the  Administrative  Agent
designated by it) valid and subsisting  Liens on the properties  purported to be
subject to the mortgages, pledges, assignments, security agreements and security
agreement  supplements  delivered pursuant to this Section 5.01(i),  enforceable
against all third parties in accordance with their terms,

                 (iv)      within 60 days after such request, formation or
acquisition,  deliver  to the  Administrative  Agent,  upon the  request  of the
Administrative  Agent  in its sole  discretion,  a  signed  copy of a  favorable
opinion (in form and substance  reasonably  satisfactory  to the  Administrative
Agent),  addressed to the Administrative Agent and the other Secured Parties, of
counsel for the Loan Parties  acceptable to the  Administrative  Agent as to the
matters  contained in clauses (i), (ii) and (iii) above, as to such  guaranties,
guaranty supplements,  mortgages, pledges, assignments,  security agreements and
security  agreement  supplements being legal,  valid and binding  obligations of
each Loan Party thereto  enforceable in accordance  with their terms,  as to the
matters  contained  in  clause  (iii)  above,  as to such  recordings,  filings,
notices,  endorsements  and other  actions  being  sufficient  to  create  valid
perfected  Liens  on  such  properties,  and as to  such  other  matters  as the
Administrative Agent may reasonably request,

                 (v)       as promptly as  practicable  after such request,
formation  or  acquisition,   deliver,   upon  the  reasonable  request  of  the
Administrative Agent, to the Administrative Agent with respect to each parcel of
real  property  owned or held by the entity that is the subject of such request,
formation or acquisition title reports, surveys and engineering, soils and other
reports, and environmental assessment reports, each in scope, form and substance
satisfactory to the Administrative Agent, PROVIDED,  HOWEVER, that to the extent
that any Loan  Party or any of its  Material  Domestic  Subsidiaries  shall have
otherwise  received  any of the  foregoing  items  with  respect  to  such  real
property,  such items shall, promptly after the receipt thereof, be delivered to
the Administrative Agent,

                 (vi)      upon the  occurrence  and during the  continuance  of
an Event of Default,  promptly  cause to be deposited any and all cash dividends
paid or payable to it or any of its  Subsidiaries  from any of its  Subsidiaries
from time to time into the Cash  Collateral  Account,  and with  respect  to all
other  dividends paid or payable to it or any of its  Subsidiaries  from time to
time, promptly execute and deliver, or cause such Subsidiary to promptly execute
and  deliver,  as the case may be, any and all further  instruments  and take or
cause such  Subsidiary to take, as the

                                       77

<PAGE>

case  may be,  all  such  other  action  as the  Administrative  Agent  may deem
necessary or  desirable in order to obtain and maintain  from and after the time
such  dividend  is paid or  payable a  perfected,  first  priority  Lien on such
dividends, and

                 (vii)     at any time and from time to time,  promptly  execute
and deliver  any and all further  instruments  and  documents  and take all such
other  reasonable  action  as the  Administrative  Agent may deem  necessary  or
desirable in obtaining the full benefits of, or in perfecting and preserving the
Liens  of,  such  guaranties,   mortgages,  pledges,  assignments  and  security
agreements,

PROVIDED,  HOWEVER,  neither the Borrower nor any of its  Subsidiaries  shall be
required to grant Liens on any  Principal  Property,  the Equity  Interests of a
Restricted Subsidiary or any Debt of or issued by a Restricted Subsidiary,

         (j)     FOREIGN  PLEDGED  COLLATERAL.  The  Borrower  shall  use  its
                 ----------------------------
commercially  reasonable  efforts to take or cause to be taken all such actions,
execute and deliver or cause to be executed and delivered  all such  agreements,
documents  and  instruments  and make or cause to be made all such  filings  and
recordings that may be necessary or, in the opinion of the Administrative Agent,
desirable  in order to  create  in favor of the  Administrative  Agent,  for the
benefit of Secured Parties,  a valid and perfected  security  interest in 65% of
the  Equity  Interests  owned by the  Borrower  or any other  Loan  Party of all
Material  Foreign  Subsidiaries  (other than the Equity  Interests of Restricted
Subsidiaries);  PROVIDED,  HOWEVER, that no action shall be required to be taken
with respect to the Equity Interests of any Material Foreign Subsidiary pursuant
to this subsection in the event that the Borrower and the  Administrative  Agent
agree in good faith that the pledge of such Equity  Interests  would result in a
significant  tax  liability to the Borrower or is  restricted by the laws of the
jurisdiction under which such Material Foreign Subsidiary is organized.

         (k)     ADDITIONAL  MATERIAL  SUBSIDIARIES.  In the event that, as of
                 ----------------------------------
the end of any Fiscal Quarter,  the aggregate gross revenues of the Subsidiaries
of the Borrower  not  constituting  Material  Subsidiaries  for the  four-Fiscal
Quarter  period then ended were more than 5% of the aggregate  gross revenues of
the Borrower and its Subsidiaries on a Consolidated  basis for such period,  the
Borrower  shall   designate  one  or  more  of  its   Subsidiaries  as  Material
Subsidiaries  for purposes of this Agreement and shall take all action  required
by Sections 5.01(i) and 5.01(j) with respect to such Subsidiary.

         (l)     POST CLOSING ACTIONS. The Borrower shall, within 180 days after
                 --------------------
the Closing Date,

                 (i)       deliver to the  Administrative  Agent  evidence  that
all action that the  Administrative  Agent may deem  necessary  or  desirable in
order to perfect and protect the first priority Lien of the Administrative Agent
for  the  benefit  of the  Secured  Parties  in  all  foreign  registrations  of
Intellectual  Property in Australia,  Canada,  France,  Germany,  Italy,  Japan,
Mexico,  Netherlands  Antilles,  Spain,  and the United  Kingdom has been taken;
provided  that taking such action does not result in the granting of a trademark
registration, patent, copyright registration or application therefor in the name
of the Administrative Agent or the Secured Parties;

                                       78

<PAGE>

                 (ii)      deliver  to  the  Administrative Agent a  certificate
of each Foreign  Subsidiary,  signed on behalf of such Foreign Subsidiary by its
President or a Vice  President  and its  Secretary or any  Assistant  Secretary,
dated the date of the Initial  Extension of Credit (the statements made in which
certificate  shall be true on and as of the  date of the  Initial  Extension  of
Credit),  certifying as to a true and correct copy of the Constitutive  Document
of such Foreign  Subsidiary and a copy of an  intercompany  promissory note duly
executed by each Foreign  Subsidiary (other than any Restricted  Subsidiary) and
duly endorsed to the Administrative Agent;

                 (iii)     deliver to the  Administrative  Agent such landlord
and bailee waiver and consent  agreements as may be reasonably  requested by the
Administrative Agent;

                 (iv)      deliver to the  Administrative Agent executed control
agreements with respect to all deposit,  savings,  investment and other accounts
maintained by the Borrower or any of its Material Domestic Subsidiaries; and

                 (v)       at the request of any Hedge Bank  delivered to the
Borrower  within 30 days  after the  Closing  Date,  enter  into  amendments  to
existing master  agreements for Hedge Bank Hedge Agreements with such Hedge Bank
(A)  providing  that the  obligations  of the  Borrower  and FinServ  under such
agreements are secured by the Collateral  Documents until the payment in full of
all  Obligations  under this Agreement and the other Loan Documents  (other than
the Hedge Bank Hedge Agreements),  the cancellation or expiration of all Letters
of Credit and the  termination  of the  Commitments  and (B)  setting  forth the
arrangements  to be made  between the  parties at such time with  respect to the
providing of other collateral, if any.

         (m)     FURTHER ASSURANCES.
                 ------------------

                 (i)       Promptly  upon  request  by any  Agent, or any Lender
Party  through  the  Administrative  Agent,  correct,  and  cause  each  of  its
Subsidiaries  promptly  to  correct,  any  material  defect or error that may be
discovered in any Loan Document or in the execution,  acknowledgment,  filing or
recordation thereof, and

                 (ii)      Promptly  upon  request by any  Agent,  or any Lender
Party through the  Administrative  Agent,  do,  execute,  acknowledge,  deliver,
record,  re-record,  file,  re-file,  register and  re-register any and all such
further acts, deeds, conveyances, pledge agreements,  mortgages, deeds of trust,
trust  deeds,  assignments,  financing  statements  and  continuations  thereof,
termination  statements,   notices  of  assignment,   transfers,   certificates,
assurances and other  instruments as any Agent,  or any Lender Party through the
Administrative  Agent, may reasonably  require from time to time in order to (A)
carry  out more  effectively  the  purposes  of the Loan  Documents,  (B) to the
fullest extent  permitted by applicable law,  subject any Loan Party's or any of
its Subsidiaries'  properties,  assets,  rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents, (C) perfect
and maintain the validity,  effectiveness  and priority of any of the Collateral
Documents and any of the Liens intended to be created thereunder and (D) assure,
convey, grant, assign, transfer,  preserve, protect and confirm more effectively
unto the Secured  Parties the rights granted or now or hereafter  intended to be
granted  to the  Secured  Parties  under  any Loan  Document  or under any

                                       79

<PAGE>

other instrument executed in connection with any Loan Document to which any Loan
Party or any of its  Subsidiaries is or is to be a party,  and cause each of its
Subsidiaries to do so.

         (n)      TRANSFER OF  RECEIVABLES.  LSFCC shall sell to LSFLLC all
                 ------------------------
accounts  receivable   purchased  by  it  from  the  Borrower  immediately  upon
consummation of such purchase.

         (o)     LIEN SEARCHES.  If requested by the Administrative Agent,
                 -------------
promptly  following  receipt  of the  acknowledgment  copy of any UCC  financing
statements  filed in any applicable  jurisdiction by or on behalf of the Secured
Parties,  deliver to the Administrative Agent completed requests for information
listing such financing  statement and all other effective  financing  statements
filed in such  jurisdiction  that name any Loan Party as debtor,  together  with
copies of such other financing statements.

         (p)     CASH COLLATERAL ACCOUNTS.  Maintain, and cause each of its
                 ------------------------
Material Domestic Subsidiaries to maintain,  the Cash Collateral Account and the
L/C Cash  Collateral  Account  with Bank of America or another  commercial  bank
located in the United States which has accepted the  assignment of such accounts
to the  Administrative  Agent for the benefit of the Secured Parties pursuant to
the  Pledge  and  Security  Agreement.  From and after the date that is 180 days
after the Closing Date, no Loan Party shall maintain any investment  property or
Deposit  Account with any  financial  institution  unless such  institution  has
executed a control  agreement in form and substance  reasonably  satisfactory to
the Administrative Agent.

         Section 5.02      NEGATIVE COVENANTS.  So long as any Advance or any
                           ------------------
other  Obligation of any Loan Party under any Loan Document shall remain unpaid,
any Letter of Credit  shall be  outstanding  or any Lender  Party shall have any
Commitment hereunder, the Borrower will not, at any time:

         (a)     LIENS, ETC. Create,  incur,  assume or suffer to exist, or per-
                 ----------
mit any of its  Subsidiaries to create,  incur,  assume or suffer to exist,  any
Lien on or with respect to any of its  properties of any  character  (including,
without limitation,  accounts) whether now owned or hereafter acquired,  or sign
or file or suffer to exist, or permit any of its Subsidiaries to sign or file or
suffer to exist,  under  the  Uniform  Commercial  Code of any  jurisdiction,  a
financing  statement  that  names the  Borrower  or any of its  Subsidiaries  as
debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or
suffer to exist, any security agreement authorizing any secured party thereunder
to file such financing statement, except:

                 (i)       Liens existing on the date hereof and described on
Schedule 4.01(x) hereto;

                 (ii)      Liens created under the Loan Documents;

                 (iii)     Permitted Liens;

                 (iv)      purchase money Liens upon or in real property or per-
sonal  property  acquired  or held by the  Borrower  or any of its  Subsidiaries
(other  than LSFCC or LSFCCC) in the  ordinary  course of business to secure the
purchase  price of such  property  or to secure  Debt  incurred  solely  for the
purpose of financing the  acquisition  or improvement of any such property to be
subject to such Liens,  or Liens  existing  on any such  property at the time of
acquisition

                                       80

<PAGE>

(other than any such Liens created in  contemplation of such acquisition that do
not secure the purchase price),  or extensions,  renewals or replacements of any
of the foregoing for the same or a lesser  amount;  PROVIDED,  HOWEVER,  that no
such Lien shall  extend to or cover any property  other than the property  being
acquired or improved, and no such extension, renewal or replacement shall extend
to or cover any property  not  theretofore  subject to the Lien being  extended,
renewed or replaced; and provided further that the aggregate principal amount of
the Debt  secured by Liens  permitted  by this  clause (iv) shall not exceed the
amount permitted under Section 5.02(b)(iii)(C) at any time outstanding;

                 (v)       Liens arising in connection with Capitalized  Leases
permitted under Section  5.02(b)(i)(B);  provided that no such Lien shall extend
to or cover any  Collateral  or assets  other  than the  assets  subject to such
Capitalized Leases;

                 (vi)      Liens  attaching  to  ownership  interests  in joint
ventures  (whether  in  partnership,  corporate  or other  form)  engaged in the
LOS/DOS  Business or attaching to  intellectual  property rights relating to the
LOS/DOS Business;

                 (vii)     Liens created in  connection  with (A)  Equipment
Financing Transactions permitted under Section 5.02(b)(iii)(H),  (B) Real Estate
Financing  Transactions permitted under Section  5.02(b)(iii)(G),  (C) Permitted
Foreign   Receivables    Purchase    Transactions    permitted   under   Section
5.02(b)(iii)(F)  and (D) Permitted Domestic  Receivables  Purchase  Transactions
permitted under Section  5.02(b)(iii)(J);  PROVIDED,  HOWEVER, that no such Lien
shall  extend to or cover  property  other  than the  property  subject  to such
Equipment Financing Transaction,  Real Estate Financing  Transaction,  Permitted
Foreign  Receivables  Purchase  Transaction  or Permitted  Domestic  Receivables
Purchase Transaction;

                 (viii)    Liens  created  pursuant to  applications  or  reim-
bursement agreements  pertaining to documentary letters of credit which encumber
documents and other property relating to such documentary  letters of credit and
the products and proceeds thereof;

                 (ix)      Liens on cash,  Cash  Equivalents  or other  assets
deposited  in a margin  account  securing  Ordinary  Course  Hedging  Agreements
permitted under Section 5.02(b)(iii)(D);

                 (x)       Liens on property that is the subject of a repurchase
agreement  entered into in the ordinary  course of business and permitted  under
Section 5.02(f)(iv);

                 (xi)      Liens on property of Foreign  Subsidiaries  securing
Debt outstanding in an aggregate  principal amount not to exceed  $25,000,000 at
any time; and

                 (xii)    other Liens securing Debt outstanding in an aggregate
principal  amount not to exceed  $10,000,000 at any time.

         (b)     DEBT.  Create,  incur,  assume or suffer to exist,  or permit
                 ----
any of its  Subsidiaries  to create, incur, assume or suffer to exist, any Debt,
except:

                 (i)      in the case of the Borrower,

                                       81

<PAGE>

                           (A) Debt owed to a Material  Domestic  Subsidiary  of
                 the Borrower,  which Debt (x) shall constitute Pledged Debt and
                 (y)  shall  be  evidenced  by  promissory  notes  in  form  and
                 substance  satisfactory to the  Administrative  Agent, shall be
                 subordinated  in right of payment to the payment in full of the
                 Obligations  and such  promissory  notes  shall be  pledged  as
                 security for the  Obligations  of the holder  thereof under the
                 Loan Documents to which such holder is a party and delivered to
                 the  Administrative  Agent  pursuant to the terms of the Pledge
                 and Security Agreement;

                           (B) Capitalized Leases not to exceed in the aggregate
                 $25,000,000 at any time outstanding; and

                           (C) Debt of the Borrower  issued in a Capital Markets
                 Transaction  provided such Debt is unsecured and such Debt does
                 not have a stated maturity date or required  principal payments
                 earlier than the  Termination  Date and the Borrower  makes the
                 prepayment required pursuant to Section 2.06(b);

                 (ii)      in the case of any Subsidiary of the Borrower (other
than LSFCC or LSFLLC),

                           (A)  Debt  owed  to  the  Borrower  or to a  Material
                 Domestic  Subsidiary of the Borrower (other than Debt owed by a
                 Restricted Subsidiary), which Debt (x) shall constitute Pledged
                 Debt and (y) shall, except in the case of redeemable  preferred
                 stock,  be evidenced by promissory  notes in form and substance
                 satisfactory to the Administrative Agent, shall be subordinated
                 in  right  of  payment  in full of the  Obligations,  and  such
                 promissory   notes  shall  be  pledged  as  security   for  the
                 Obligations  of the holder  thereof under the Loan Documents to
                 which   such   holder   is  a  party  and   delivered   to  the
                 Administrative  Agent  pursuant  to the terms of the Pledge and
                 Security Agreement;

                           (B) Debt owed to a Pledged  Foreign  Subsidiary  by a
                 Pledged Foreign Subsidiary; and

                           (C) Debt owed to an Unpledged Foreign Subsidiary by a
                 Pledged Foreign Subsidiary or an Unpledged Foreign Subsidiary;

                 (iii)     in the case of the Borrower and its Subsidiaries
(other than LSFCC or LSFLLC),

                           (A)  Debt  of  the  Borrower  and  its   Subsidiaries
                 outstanding on the Closing Date and listed on Schedule  4.01(w)
                 hereto  and any  refinancing  of the  industrial  revenue  bond
                 obligations listed on Schedule 4.01(w) hereto provided there is
                 no  increase  in  the  aggregate   principal   amount  of  such
                 obligations;

                           (B) Debt under the Loan Documents;

                           (C)  Debt  secured  by  Liens  permitted  by  Section
                 5.02(a)(iv)  not to exceed in the aggregate  $50,000,000 at any
                 time outstanding;

                                       82

<PAGE>

                           (D) Debt of the  Borrower  and  FinServ in respect of
                 Ordinary  Course Hedge  Agreements and consistent  with prudent
                 business practice,  provided that the aggregate Agreement Value
                 of all such Ordinary  Course Hedge  Agreements  under which the
                 Borrower  or  FinServ  would be  required  to make a payment on
                 termination thereof do not exceed in the aggregate  $75,000,000
                 (net of the value of cash,  Cash  Equivalents  or other  assets
                 deposited  in a  margin  account  in  connection  with any such
                 Ordinary  Course  Hedge  Agreements  and the face amount of any
                 letter of  credit  issued  with  respect  to any such  Ordinary
                 Course Hedge Agreements) at any time outstanding;

                           (E) Debt of the Borrower and its Subsidiaries  (other
                 than LSFCC or  LSFLLC)  to  FinServ  and Debt of FinServ to the
                 Borrower  and its  other  Subsidiaries  (other  than  LSFCC  or
                 LSFLLC) in the ordinary course of business;

                           (F)  Debt  of  Foreign  Subsidiaries  in the  form of
                 Permitted Foreign Receivables Purchase  Transactions,  provided
                 the Borrower and its Subsidiaries make the prepayment  required
                 pursuant to Section 2.06(b);

                           (G) Debt of the Borrower and its  Subsidiaries in the
                 form  of  Real  Estate  Financing  Transactions,  provided  the
                 principal  amount  of all Debt  permitted  under  this  Section
                 5.02(b)(iii)(G) and Section 5.02(b)(iii)(H) (including all such
                 Debt  existing  on the  Closing  Date and  listed  on  Schedule
                 4.01(w)  hereto) does not exceed in the aggregate  $175,000,000
                 at any time  outstanding and the Borrower and its  Subsidiaries
                 make the prepayment required pursuant to Section 2.06(b);

                           (H) Debt of the Borrower and its  Subsidiaries in the
                 form  of  Equipment   Financing   Transactions,   provided  the
                 principal  amount  of all Debt  permitted  under  this  Section
                 5.02(b)(iii)(H) and Section 5.02(b)(iii)(G) (including all such
                 Debt  existing  on the  Closing  Date and  listed  on  Schedule
                 4.01(w)  hereto) does not exceed in the aggregate  $175,000,000
                 at any time  outstanding and the Borrower and its  Subsidiaries
                 make the prepayment required pursuant to Section 2.06(b);

                           (I) Ordinary  Course Hedging  Agreements  between the
                 Borrower or FinServ and FinServ and the other  Subsidiaries  of
                 the  Borrower  (other  than LSFCC or  LSFLLC)  in the  ordinary
                 course of business;

                           (J) Debt of the Borrower and its  Subsidiaries in the
                 form of Permitted Domestic Receivables Purchase Transactions in
                 form   and   substance    reasonably    satisfactory   to   the
                 Administrative   Agent,   provided   the   Borrower   and   its
                 Subsidiaries  make the prepayment  required pursuant to Section
                 2.06(b);

                           (K) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its other  Subsidiaries  outstanding  on the  Closing  Date and
                 listed on Schedule 4.01(w) hereto;

                           (L)  Debt   between  the  Borrower  and  any  of  its
                 Subsidiaries  or between any of its  Subsidiaries  arising from
                 purchases of inventory or raw materials in the ordinary  course
                 of business;

                                       83

<PAGE>

                           (M) Debt arising from the honoring of a check,  draft
                 or similar instrument against insufficient funds;

                           (N) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its  other  Subsidiaries;  PROVIDED,  HOWEVER,  that  the  sum,
                 without  duplication,  of (i) the aggregate principal amount of
                 all such  Debt  incurred  after the date  hereof  PLUS (ii) the
                 aggregate  Investments  permitted  by Section  5.02(f)(x)  PLUS
                 (iii)  the   aggregate   dispositions   permitted   by  Section
                 5.02(e)(x) shall not exceed $50,000,000 in the aggregate during
                 Fiscal Year 2001,  $100,000,000 in the aggregate  during Fiscal
                 Years 2001 and 2002, taken as a single period,  or $150,000,000
                 in the aggregate during Fiscal Years 2001, 2002 and 2003, taken
                 as a single period;

                           (O) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its  other   Subsidiaries   incurred  in   connection   with  a
                 disposition permitted under Section 5.02(e)(xii);

                           (P) Debt of the  Borrower  or any  Subsidiary  of the
                 Borrower  to the  Borrower  or any  of its  other  Subsidiaries
                 incurred in  connection  with a Permitted  Foreign  Receivables
                 Purchase Transaction permitted under Section 5.02(b)(iii)(F) in
                 an amount not to exceed the proceeds thereof; and

                           (Q) other Debt (without  duplication) of the Borrower
                 and  its  Subsidiaries   not  exceeding   $150,000,000  in  the
                 aggregate at any time.

         (c)     CHANGE IN NATURE OF  BUSINESS.  Engage  in, or suffer or permit
                 -----------------------------
any of its  Subsidiaries to engage in, any business not related or incidental to
the manufacture and sale of clothing and accessories.  The LOS/DOS Business is a
business that is related or incidental to the  manufacture  and sale of clothing
within the meaning of the preceding  sentence.  The Borrower shall not suffer or
permit  LSFLLC to engage in any business  other than the  purchase,  holding and
securitization  of accounts  receivable  and shall not suffer or permit LSFCC to
engage in any business other than the purchase,  sale to LSFLLC and servicing of
accounts  receivable  generated  by the  Borrower,  the  processing  of accounts
payable of the Borrower and its Subsidiaries,  procurement  support services for
the Borrower and its  Subsidiaries  and other  accounting  and general  customer
relationship functions.

         (d)     MERGERS,  ETC.  Merge  into or  consolidate with any  Person or
                 -------------
permit any Person to merge  into it, or permit any of its Subsidiaries to do so,
except that:

                 (i)       any Domestic  Subsidiary of the Borrower may merge
into or  consolidate  with any other  Domestic  Subsidiary of the Borrower or be
liquidated,  wound-up or dissolved or all or any part of its business,  property
or assets may be conveyed, sold, leased, transferred or otherwise disposed of to
any other Domestic Subsidiary of the Borrower, provided that, in the case of any
such merger or consolidation,  the Person formed by such merger or consolidation
shall be a Domestic  Subsidiary of the Borrower,  provided  further that, in the
case of any such merger or consolidation to which a Material Domestic Subsidiary
is a party, the Person formed by such merger or consolidation shall be or become
a Material Domestic Subsidiary;

                                       84

<PAGE>

                 (ii)      any Pledged Foreign Subsidiary may merge into or con-
solidate with any other Pledged Foreign Subsidiary or be liquidated, wound-up or
dissolved  or  all or any  part  of its  business,  property  or  assets  may be
conveyed,  sold,  leased,  transferred or otherwise disposed of to the Borrower,
any Material Domestic Subsidiary or any other Pledged Foreign Subsidiary; and

                 (iii)     any Unpledged  Foreign  Subsidiary may merge into or
consolidate with any other Unpledged  Foreign  Subsidiary or any Pledged Foreign
Subsidiary,  or be  liquidated,  wound-up or dissolved or all or any part of its
business,  property or assets may be  conveyed,  sold,  leased,  transferred  or
otherwise  disposed of to any other Unpledged Foreign  Subsidiary or any Pledged
Foreign  Subsidiary,   provided  that,  in  the  case  of  any  such  merger  or
consolidation  between a Pledged  Foreign  Subsidiary  and an Unpledged  Foreign
Subsidiary, the Person formed by such merger or consolidation shall be a Pledged
Foreign Subsidiary.

         (e)     SALES,  ETC.,  OF  ASSETS.  Sell,  lease,  transfer  or  other-
                 -------------------------
wise dispose of, or permit any of its Subsidiaries to sell,  lease,  transfer or
otherwise  dispose  of,  any  assets,  or grant  any  option  or other  right to
purchase, lease or otherwise acquire any assets, except:

                 (i)       purchases or sales of inventory in the ordinary
course of its business;

                 (ii)      dispositions of obsolete or worn out property,
whether now owned or hereafter  acquired,  in the ordinary course of business;

                 (iii)     dispositions  of  inventory  by the  Borrower  or any
of  Subsidiaries  to the  Borrower or any of its  Subsidiaries  in arm's  length
transactions in the ordinary course of business;

                 (iv)      dispositions of accounts receivable from the Borrower
to LSFCC and from LSFCC to LSFLLC;

                 (v)       dispositions  of  Foreign   Receivables   pursuant to
Permitted  Foreign  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(F)  provided the Borrower and its Subsidiaries make the prepayments
required pursuant to Section 2.06(b);

                 (vi)      dispositions  of equipment  pursuant to Equipment
Financing  Transactions  permitted  under Section  5.02(b)(iii)(H)  provided the
Borrower and its Subsidiaries make the prepayments  required pursuant to Section
2.06(b);

                 (vii)     dispositions  of  real  property   pursuant  to  Real
Estate Financing Transactions permitted under Section  5.02(b)(iii)(G)  provided
the Borrower and its  Subsidiaries  make the  prepayments  required  pursuant to
Section 2.06(b);

                 (viii)    dispositions  of Domestic  Receivables  pursuant to
Permitted Domestic  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(J)  provided the Borrower and its Subsidiaries make the prepayments
required pursuant to Section 2.06(b);

                 (ix)      licenses of Intellectual Property in the ordinary
course of business;

                                       85

<PAGE>

                 (x)       dispositions  by the Borrower to any of its  Subsidi-
aries of property other than accounts  receivable and inventory and dispositions
by any of its  Subsidiaries to the Borrower or any of its other  Subsidiaries of
property other than accounts  receivable  and inventory;  provided that the sum,
without  duplication,  of  (i)  the  fair  market  value  of  the  assets  sold,
transferred,  licensed or otherwise  disposed of after the date hereof PLUS (ii)
the aggregate principal amount of Debt permitted by Section 5.02(b)(iii)(N) PLUS
(iii) the aggregate Investments permitted by Section 5.02(f)(x) shall not exceed
$50,000,000  in the  aggregate  during  Fiscal  Year 2001,  $100,000,000  in the
aggregate  during  Fiscal  Years  2001 and 2002,  taken as a single  period,  or
$150,000,000 in the aggregate  during Fiscal Years 2001, 2002 and 2003, taken as
a single period;

                 (xi)      other  dispositions by the Borrower and its  Subsi-
diaries of property  other than  accounts  receivable;  provided that (i) at the
time of any  disposition,  no Event of Default  shall exist or shall result from
such disposition;  (ii) the consideration received for such disposition shall be
in an  amount  at least  equal  to the fair  market  value of the  assets  sold,
transferred,  licensed  or  otherwise  disposed  of;  (iii) at least  75% of the
consideration  received for such  disposition  shall be cash;  (iv) the non-cash
consideration  received for all such  dispositions  in the  aggregate  shall not
exceed $30,000,000 at any time outstanding;  (v) the aggregate fair market value
of all assets so sold,  transferred,  licensed or  otherwise  disposed of by the
Borrower and its Subsidiaries  shall not exceed  $50,000,000 in any Fiscal Year;
and  (vi) the  Borrower  and its  Subsidiaries  make  the  prepayments  required
pursuant to Section 2.06(b);

                 (xii)     dispositions of the Equity Interests of Material
Domestic  Subsidiaries  to the  Borrower  and  wholly  owned  Material  Domestic
Subsidiaries;   dispositions   of  the  Equity   Interests  of  Pledged  Foreign
Subsidiaries to the Borrower,  Material Domestic  Subsidiaries and other Pledged
Foreign  Subsidiaries;  and  dispositions  of the Equity  Interests of Unpledged
Foreign Subsidiaries to the Borrower or any of its other Subsidiaries;

                 (xiii)    dispositions of accounts  receivable to collection
agencies provided the aggregate face amount of all such accounts receivable does
not exceed $5,000,000; and

                 (xiv)     dispositions of accounts receivable of Foreign Subsi-
diaries, provided the aggregate face amount of all such accounts receivable does
not exceed $25,000,000.

         (f)     INVESTMENTS  IN OTHER  PERSONS.  Make or hold,  or permit  any
                 ------------------------------
of its  Subsidiaries  to make or hold,  any Investment in any Person, except:

                 (i)       Investments existing on the date hereof and described
on Schedule 4.01(cc) hereto;

                 (ii)      equity  Investments by the Borrower and its  Subsi-
diaries in their  Subsidiaries  outstanding  on the date hereof and described on
Schedule 4.01(cc) hereto;

                 (iii)     advances to officers,  directors  and employees of
the Borrower or any of its  Subsidiaries for travel,  entertainment,  relocation
and analogous ordinary business purposes;

                 (iv)      Investments by the Borrower and its Subsidiaries in
cash and Cash Equivalents;

                                       86

<PAGE>

                 (v)       Investments   consisting  of  intercompany  Debt
permitted   under   Section   5.02(b)(i)(A),    5.02(b)(ii),    5.02(b)(iii)(E),
5.02(b)(iii)(I),      5.02(b)(iii)(K),     5.02(b)(iii)(L),     5.02(b)(iii)(N),
5.02(b)(iii)(O) or 5.02(b)(iii)(P);

                 (vi)      extensions  of  credit to  customers  or  suppliers
of the Borrower or any of its  Subsidiaries  in the ordinary  course of business
and any Investments received in satisfaction or partial satisfaction thereof;

                 (vii)     Investments  by the  Borrower in any  Material Domes-
tic  Subsidiary  and  Investments  of any Material  Domestic  Subsidiary  in the
Borrower or any other Material Domestic Subsidiary;

                 (viii)    Investments by Pledged Foreign Subsidiaries in other
Pledged Foreign Subsidiaries;

                 (ix)      Investments by Unpledged Foreign  Subsidiaries in
other Unpledged Foreign  Subsidiaries or Pledged Foreign Subsidiaries;

                 (x)       Investments by the Borrower in any of its Subsidi-
aries and  Investments of any of its  Subsidiaries in the Borrower or any of its
other  Subsidiaries;  provided that the sum,  without  duplication,  of (i) such
Investments made after the date hereof PLUS (ii) the aggregate  principal amount
of  Debt  permitted  by  Section   5.02(b)(iii)(N)   PLUS  (iii)  the  aggregate
dispositions permitted by Section 5.02(e)(x) shall not exceed $50,000,000 in the
aggregate  during Fiscal Year 2001,  $100,000,000 in the aggregate during Fiscal
Years 2001 and 2002, taken as a single period,  or $150,000,000 in the aggregate
during  Fiscal Years 2001,  2002 and 2003,  taken as a single  period;  PROVIDED
FURTHER that  Investments in  Subsidiaries  of the Borrower that are not Solvent
immediately  prior  to the  making  of any  such  Investment  shall  not  exceed
$10,000,000 in the aggregate in any Fiscal Year;

                 (xi)      Investments by the Borrower in any of its  Subsidi-
aries and  Investments of any of its  Subsidiaries in the Borrower or any of its
other Subsidiaries made in connection with a disposition permitted under Section
5.02(e)(xii);

                 (xii)     Investments  by the Borrower in  Subsidiaries  formed
in  connection  with  Permitted  Domestic  Receivables   Purchase   Transactions
permitted under Section 5.02(b)(iii)(J);

                 (xiii)    Investments  by any Subsidiary of the Borrower in the
Borrower or any of its other  Subsidiaries  made in connection  with a Permitted
Foreign Receivables Purchase Transaction permitted under Section 5.02(b)(iii)(F)
in an amount not to exceed the proceeds thereof; and

                 (xiv)     other  Investments  by the Borrower  and its  Subsi-
diaries not  otherwise  permitted  under this  Section  5.02(f) in an  aggregate
amount not to exceed $35,000,000.

         (g)     RESTRICTED PAYMENTS. Declare or pay any dividends, purchase,
                 -------------------
redeem,  retire,  defease  or  otherwise  acquire  for value  any of its  Equity
Interests now or hereafter outstanding,  return any capital to its stockholders,
partners  or members  (or the  equivalent  Persons  thereof)  as such,  make any
distribution  of assets,  Equity  Interests,  obligations  or  securities to its

                                       87

<PAGE>

stockholders,  partners or members (or the equivalent  Persons thereof) as such,
or permit any of its  Subsidiaries to do any of the foregoing,  or permit any of
its Subsidiaries to purchase,  redeem,  retire, defease or otherwise acquire for
value any Equity  Interests in the Borrower,  except that, so long as no Default
shall have occurred and be continuing at the time of any action  described below
or would result therefrom:

                 (i)       the  Borrower may declare and pay  dividends  and
distributions  payable only in common stock (other than  Disqualified  Stock) of
the Borrower; and

                 (ii)      any  Subsidiary of the Borrower may (A) declare and
pay cash  dividends  and  dividends  and  distributions  payable in common stock
(other than  Disqualified  Stock) of such  Subsidiary  to the  Borrower  and (B)
declare and pay cash dividends and dividends and distributions payable in common
stock (other than  Disqualified  Stock) of such  Subsidiary to any Subsidiary of
the Borrower of which it is a Subsidiary;  provided that any dividends paid by a
Subsidiary of the Borrower  which is not a  wholly-owned  Subsidiary are paid to
all  stockholders  thereof on a pro rata basis or on a basis that results in the
receipt by the Borrower or a Subsidiary that is the parent of that Subsidiary of
dividends or  distributions of greater value than it would receive on a pro rata
basis.

         (h)     LEASE OBLIGATIONS.  Create,  incur, assume or suffer to exist,
                 -----------------
or permit any of its Subsidiaries to create,  incur,  assume or suffer to exist,
any  obligations  as  lessee  (i) for  the  rental  or hire of real or  personal
property in connection  with any sale and leaseback  transaction  other than (A)
Capitalized  Leases  permitted  under  Section  5.02(b)(i)(B),  (B) Real  Estate
Financing Transactions permitted under Section 5.02(b)(iii)(G) and (C) Equipment
Financing Transactions permitted under Section 5.02(b)(iii)(H),  or (ii) for the
rental or hire of other real or personal  property  of any kind under  leases or
agreements  to lease  (excluding  Capitalized  Leases)  other than (A) leases in
existence  on the  Closing  Date and (B) leases  entered  into or assumed by the
Borrower  or any  Subsidiary  after the date  hereof in the  ordinary  course of
business.

         (i)     AMENDMENTS OF  CONSTITUTIVE  DOCUMENTS.  Amend,  or permit any
                 --------------------------------------
of its Subsidiaries to amend, any of its Constitutive Documents if the effect of
such amendment would be materially adverse to the Borrower or to the Lenders.

         (j)     ACCOUNTING  CHANGES.  Make or permit,  or permit any of its
                 -------------------
Subsidiaries to make or permit,  any change in its Fiscal Year.

         (k)     PREPAYMENTS,  ETC., OF DEBT. Prepay, redeem, purchase,  defease
                 ---------------------------
or otherwise  satisfy prior to the scheduled  maturity thereof in any manner, or
make any payment in violation of any  subordination  terms of, any Debt,  except
(i) the  prepayment  of the  Advances  in  accordance  with  the  terms  of this
Agreement and the  prepayment of Debt payable to the Borrower,  (ii) the payment
of Debt as  contemplated  by the  definitions  of Net Cash  Proceeds,  (iii) the
contemporaneous exchange of Debt, in an aggregate principal amount not to exceed
$50,000,000,   outstanding  under  the  Indentures,  that  certain  U.S.  Dollar
Indenture dated as of January 18, 2001 between the Borrower and Citibank,  N.A.,
as trustee,  or that certain Euro Indenture dated as of January 18, 2001 between
the Borrower and Citibank,  N.A., as trustee, for Debt issued in connection with
a Capital Markets Transaction  permitted under Section  5.02(b)(i)(C),  (iv) the
prepayment  of secured Debt provided  there are no  outstanding  Advances

                                       88

<PAGE>

after giving effect to such prepayment, and (v) the close out of Ordinary Course
Hedge Agreements.

         (l)     NEGATIVE  PLEDGE.  Enter  into or suffer to exist,  or permit
                 ----------------
any of its  Subsidiaries  to  enter  into or  suffer  to  exist,  any  agreement
prohibiting or  conditioning  the creation or assumption of any Lien upon any of
its property or assets except:

                 (i)      those  existing  on property  of the  Borrower and its
Subsidiaries  on the  Closing  Date and listed on Schedule 4.01(x) hereto;

                 (ii)      those in favor of the Secured Parties;

                 (iii)     those in connection  with any purchase money Debt
permitted under Section  5.02(b)(iii)(C) solely to the extent that the agreement
or instrument governing such Debt prohibits a Lien on the property acquired with
the proceeds of such Debt;

                 (iv)      those in connection  with any  Capitalized  Lease
permitted under Section 5.02(b)(i)(B) solely to the extent that such Capitalized
Lease prohibits a Lien on the property subject thereto;

                 (v)       negative  pledges on accounts  receivable  of Foreign
Subsidiaries  and the associated  assets of Foreign  Subsidiaries  in connection
with Permitted Foreign Receivable Purchase Transactions  permitted under Section
5.02(b)(iii)(F),   negative   pledges  on   accounts   receivable   of  Domestic
Subsidiaries and associated  assets of Domestic  Subsidiaries in connection with
Permitted Domestic  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(J), negative pledges on the property subject to Equipment Financing
Transactions  permitted under Section  5.02(b)(iii)(H) and Real Estate Financing
Transactions permitted under Section 5.02(b)(iii)(G) and negative pledges on the
property  of Foreign  Subsidiaries  subject  to Liens  permitted  under  Section
5.02(a)(xi);

                 (vi)      negative pledges on Intellectual Property licensed
from third parties; and

                 (vii)     negative  pledges  with  respect  to  property of the
Borrower and its Subsidiaries contained in documentation for any Capital Markets
Transaction  provided such negative  pledges (A) expressly permit Liens in favor
of  Administrative  Agent on all assets of the Borrower and its Subsidiaries and
Liens on equipment subject to Equipment  Financing  Transactions,  real property
subject to Real Estate Financing  Transactions,  accounts  receivable subject to
Permitted  Domestic  Receivables  Purchase  Transactions  and Permitted  Foreign
Receivables  Purchase  Transactions  and  property  subject  to any  other  Lien
permitted  under Section  5.02(a) and (B) do not require the Debt issued in such
Capital Markets Transactions to be secured by such permitted Liens.

         (m)     CAPITAL  EXPENDITURES.  Make, or permit any of its Subsidiaries
                 ---------------------
to make,  any Capital  Expenditures  that would cause the  aggregate of all such
Capital  Expenditures  made by the Borrower and its  Subsidiaries  in any Fiscal
Year to exceed $75,000,000.

                                       89

<PAGE>

         (n)     RESTRICTED  SUBSIDIARIES.  Permit any of its  Subsidiaries
                 ------------------------
existing as of the Closing Date to become a Restricted Subsidiary, other than as
a result of a change in Consolidated Net Tangible Assets.

         (o)     PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.  Directly or
                 -------------------------------------------
indirectly,  enter into or suffer to exist, or permit any of its Subsidiaries to
enter into or suffer to exist, any agreement or arrangement limiting the ability
of any of its Subsidiaries to declare or pay dividends or other distributions in
respect of its Equity  Interests or repay or prepay any Debt owed to, make loans
or advances  to, or otherwise  transfer  assets to or invest in, the Borrower or
any  Subsidiary  of  the  Borrower  (whether  through  a  covenant   restricting
dividends,  loans,  asset  transfers  or  investments,  a financial  covenant or
otherwise),  except (i) the Loan  Documents,  (ii)  restrictions on Subsidiaries
formed in connection with Permitted Foreign  Receivables  Purchase  Transactions
permitted  under  Section  5.02(b)(iii)(F)  and Permitted  Domestic  Receivables
Purchase  Transactions  permitted  under  Section  5.02(b)(iii)(J)  contained in
documentation for such  Transactions,  (iii)  restrictions on the declaration or
payment or other  distributions in respect of such Equity Interests contained in
documentation  for any  Capital  Markets  Transaction  permitted  under  Section
5.02(b)(i)(C)  provided such  restrictions do not prohibit any actions expressly
permitted hereunder, (iv) restrictions on the foregoing (other than restrictions
of the type set forth in clause (iii)),  if any,  contained in documentation for
any Capital Markets Transaction permitted under Section  5.02(b)(i)(C)  provided
that any such restrictions shall be deemed to be included herein as if set forth
in this Agreement,  and (v) restrictions on the transfer of the property subject
to Equipment  Financing  Transactions  permitted under Section  5.02(b)(iii)(H),
Real Estate Financing Transactions  permitted under Section  5.02(b)(iii)(G) and
dispositions of accounts receivable permitted under Section 5.02(e)(xiv).

         (p)     AMENDMENTS OF DOCUMENTS RELATING TO DEBT AND RECEIVABLES. Amend
                 --------------------------------------------------------
or otherwise  change the terms of any Debt, or make any payment  consistent with
an  amendment  thereof or change  thereto,  if the effect of such  amendment  or
change is to increase the interest rate on such Debt,  change (to earlier dates)
any dates upon which  payments of principal or interest are due thereon,  change
any event of default or condition  to an event of default  with respect  thereto
(other  than to  eliminate  or make less  onerous  any such  event or default or
increase any grace period related thereto), change the redemption, prepayment or
defeasance  provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other  amendments  or  changes  made,  is to  increase  materially  the
obligations of the obligor  thereunder or to confer any additional rights on the
holders  of such Debt (or a trustee  or other  representative  on their  behalf)
which  would be  materially  adverse  to the  Borrower  or to the  Lenders.  The
Borrower  shall  not amend or  otherwise  change  the  terms of the  Receivables
Transfer  Agreements  other than (i) amendments to extend the term thereof or to
preserve the arm's length nature of the purchase and sale  effected  thereby and
(ii) amendments in connection  with a Permitted  Domestic  Receivables  Purchase
Transaction  provided  the  effect of such  amendment  would  not be  materially
adverse to the Borrower or to the Lenders.

         (q)     USE OF PROCEEDS.
                 ---------------

                 (i)       Use any portion of the proceeds of the Advances,
directly or indirectly,  (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance Debt of the Borrower or

                                       90

<PAGE>

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 Sections 13 or 14 of the Exchange
Act.

                 (ii)      Use any portion of the proceeds of the  Advances,
directly or indirectly,  (i) knowingly to purchase  Ineligible  Securities  from
either Co-Lead Arranger during any period in which such Co-Lead Arranger makes a
market in such  Ineligible  Securities,  (ii)  knowingly to purchase  during the
underwriting or placement period  Ineligible  Securities  being  underwritten or
privately  placed by  either  Co-Lead  Arranger,  or (iii) to make  payments  of
principal or interest on Ineligible Securities  underwritten or privately placed
by either  Co-Lead  Arranger and issued by or for the benefit of the Borrower or
any  Affiliate  of  the  Borrower.   Each  Co-Lead   Arranger  is  a  registered
broker-dealer  and  permitted  to  underwrite  and  deal in  certain  Ineligible
Securities.

         Section  5.03     REPORTING  REQUIREMENTS.  So long  as any  Advance or
                           -----------------------
any other  Obligation  of any Loan Party under any Loan  Document  shall  remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will furnish to the Agents and the Lender
Parties:

         (a)     DEFAULT  NOTICE.  As soon as possible and in any event within
                 ---------------
two days after an Officer of the Borrower obtains  knowledge of a Default or any
event,  development or occurrence  reasonably  likely to have a Material Adverse
Effect  continuing on the date of such  statement,  a statement of a Responsible
Officer of the  Borrower  setting  forth  details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto.

         (b)     ANNUAL  FINANCIALS.  As soon as  available  and in any event
                 ------------------
within 90 days after the end of each  Fiscal  Year,  a copy of the annual  audit
report for such year for the Borrower and its  Subsidiaries,  including  therein
Consolidated  and   consolidating   balance  sheets  of  the  Borrower  and  its
Subsidiaries  as  of  the  end  of  such  Fiscal  Year  and   Consolidated   and
consolidating statements of income and a Consolidated statement of cash flows of
the Borrower and its Subsidiaries for such Fiscal Year, in each case accompanied
by an opinion with respect to the Consolidated  statements reasonably acceptable
to  the  Required  Lenders  of  Arthur  Andersen  or  other  independent  public
accountants of recognized standing acceptable to the Required Lenders,  together
with (i) a certificate of such  accounting  firm to the Lender  Parties  stating
that in the course of the regular  audit of the business of the Borrower and its
Subsidiaries,  which audit was conducted by such  accounting  firm in accordance
with generally accepted auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is  continuing,  or if, in the opinion
of such accounting  firm, a Default has occurred and is continuing,  a statement
as to the nature thereof, (ii) a schedule in form reasonably satisfactory to the
Administrative   Agent  of  the   computations   used  by  such  accountants  in
determining,  as of the end of such Fiscal Year,  compliance  with the covenants
contained in Section 5.04, provided that in the event of any change in GAAP used
in the  preparation  of such  financial  statements,  the  Borrower  shall  also
provide,  if necessary for the  determination of compliance with Section 5.04, a
statement of  reconciliation  conforming  such financial  statements to GAAP and
(iii) a certificate of a Responsible  Officer of the Borrower,  in substantially
the form of  Exhibit G hereto,  stating  that no  Default  has  occurred  and is
continuing  or, if a Default has occurred and is  continuing,  a statement as to
the nature  thereof and the action that the  Borrower  has taken and proposes to
take with respect thereto.

                                       91

<PAGE>

         (c)     QUARTERLY  FINANCIALS.  As soon as available and in any event
                 ---------------------
within 45 days after the end of each of the first three Fiscal  Quarters of each
Fiscal Year,  Consolidated and consolidating  balance sheets of the Borrower and
its  Subsidiaries  as of the end of such  Fiscal  Quarter and  Consolidated  and
consolidating statements of income and a Consolidated statement of cash flows of
the Borrower and its  Subsidiaries  for the period  commencing at the end of the
previous  Fiscal  Quarter  and ending  with the end of such  Fiscal  Quarter and
Consolidated and consolidating statements of income and a Consolidated statement
of cash flows of the Borrower and its Subsidiaries for the period  commencing at
the end of the  previous  Fiscal  Year and  ending  with the end of such  Fiscal
Quarter,  setting  forth in each  case in  comparative  form  the  corresponding
figures for the  corresponding  date or period of the preceding Fiscal Year, all
in  reasonable  detail and duly  certified  (subject  to normal  year-end  audit
adjustments) by a Responsible Officer of the Borrower as having been prepared in
accordance  with  GAAP,  together  with (i) a  certificate  of said  Responsible
Officer, in substantially the form of Exhibit G hereto,  stating that no Default
has occurred and is continuing  or, if a Default has occurred and is continuing,
a statement as to the nature  thereof and the action that the Borrower has taken
and  proposes  to  take  with  respect  thereto  and  (ii) a  schedule  in  form
satisfactory  to the  Administrative  Agent  of  the  computations  used  by the
Borrower in determining compliance with the covenants contained in Section 5.04,
provided that in the event of any change in GAAP used in the preparation of such
financial  statements,  the Borrower  shall also  provide,  if necessary for the
determination  of compliance  with Section  5.04, a statement of  reconciliation
conforming such financial statements to GAAP.

         (d)     MONTHLY  FINANCIALS.  As soon as  available  and in any event
                 -------------------
within 30 days after the end of each fiscal month, a Consolidated  balance sheet
of  the  Borrower  and  its  Subsidiaries  as of  the  end  of  such  month  and
Consolidated  statements of income and a Consolidated statement of cash flows of
the Borrower and its  Subsidiaries  for the period  commencing at the end of the
previous month and ending with the end of such month and Consolidated statements
of income and a  Consolidated  statement  of cash flows of the  Borrower and its
Subsidiaries  for the period  commencing at the end of the previous  Fiscal Year
and  ending  with  the end of such  month,  all in  reasonable  detail  and duly
certified by a Responsible Officer of the Borrower.

         (e)     ANNUAL  FORECASTS.  As soon as  available  and in any event no
                 -----------------
later than 60 days after the end of each  Fiscal  Year,  forecasts  prepared  by
management of the Borrower, in form satisfactory to the Administrative Agent, of
Consolidated  balance  sheets  and income  statements  of the  Borrower  and its
Subsidiaries  on a monthly basis for the Fiscal Year  following such Fiscal Year
and on an annual  basis for each Fiscal Year  thereafter  until the  Termination
Date.

         (f)     LITIGATION.  Promptly after the commencement thereof, notice of
                 ----------
all  actions,  suits,  investigations,  litigation  and  proceedings  before any
Governmental  Authority or  arbitrator,  affecting  any Loan Party or any of its
Subsidiaries  of the type described in Section  4.01(f),  and promptly after the
occurrence thereof,  notice of any adverse change in the status or the financial
effect on any Loan Party or any of its Subsidiaries of the Disclosed  Litigation
from that described on Schedule 4.01(f) hereto.

         (g)     SECURITIES REPORTS. Promptly after the sending or filing there-
                 ------------------
of, copies of all proxy  statements,  financial  statements and reports that any
Loan Party or any of its Subsidiaries  sends to its stockholders,  and copies of
all regular, periodic and special reports, and all

                                       92

<PAGE>

registration  statements,  that any Loan Party or any of its Subsidiaries  files
with the Securities and Exchange  Commission or any governmental  authority that
may be substituted therefor, or with any national securities exchange.

         (h)     CREDITOR  REPORTS.  Promptly  after the  furnishing  thereof,
                 -----------------
copies of any statement or report  furnished to any holder of Debt securities of
any  Loan  Party  or of any of its  Subsidiaries  pursuant  to the  terms of the
Indentures or any  indenture,  loan or credit or similar  agreement  executed in
connection with a Capital Markets  Transaction and not otherwise  required to be
furnished  to the Lender  Parties  pursuant to any other  clause of this Section
5.03.

         (i)     AGREEMENT  NOTICES.  Promptly upon receipt  thereof,  copies of
                 -------------------
all notices,  requests and other documents  received by any Loan Party or any of
its Subsidiaries under or pursuant to any instrument,  indenture, loan or credit
or similar  agreement  regarding or related to any breach or default by any Loan
Party thereto or any other event that could  materially  impair the value of the
interests or the rights of any Loan Party or otherwise  have a Material  Adverse
Effect and copies of any amendment,  modification  or waiver of any provision of
any instrument, indenture, loan or credit or similar agreement and, from time to
time upon request by the  Administrative  Agent,  such  information  and reports
regarding  such  instruments,   indentures  and  loan  and  credit  and  similar
agreements as the Administrative Agent may reasonably request.

         (j)     ERISA.  promptly  upon any  Officer of the  Borrower  becoming
                 -----
aware of its  occurrence,  notice of any of the following  events  affecting the
Borrower  or any ERISA  Affiliate  (but in no event more than 10 days after such
event),  and such Officer  shall also deliver to  Administrative  Agent and each
Lender a copy of any  notice  with  respect  to such  event that is filed with a
Governmental  Authority and any notice delivered by a Governmental  Authority to
the Borrower or any ERISA Affiliate with respect to such event:

                 (i)       an ERISA Event;

                 (ii)      a decrease in the Funded  Current  Liability  Percen-
tage  for any Plan at the end of any fiscal quarter to less than 90%; or

                 (iii)     any significant change in the status of any item dis-
closed on Schedule 4.01(n) hereto.

         (k)     INSURANCE.  As soon as available  and in any event within 60
                 ---------
days after the end of each Fiscal Year, a report  summarizing any changes in the
insurance coverage  maintained for the Borrower and its Subsidiaries during such
Fiscal Year and containing  such  additional  information  as any Agent,  or any
Lender Party through the Administrative Agent, may reasonably specify.

         (l)     NEW SUBSIDIARIES. No later than 60 days after the end of each
                 ----------------
Fiscal Year, a list of all  Subsidiaries  of each Loan Party showing (as to each
such Subsidiary) the jurisdiction of its incorporation,  the number of shares of
each class of its Equity Interests  authorized and the number  outstanding,  and
the  percentage of each such class of its Equity  Interests  owned  (directly or
indirectly)  by such  Loan  Party  and  the  number  of  shares  covered  by all
outstanding  options,  warrants,  rights of  conversion  or purchase and similar
rights.

                                       93

<PAGE>

         (m)     FOREIGN INTELLECTUAL  PROPERTY.  No later than 60 days after
                 ------------------------------
the end of each Fiscal Year, a list of the ten countries  (other than the United
States) in which the highest  percentage of the aggregate  gross revenues of the
Borrower and its Subsidiaries on a Consolidated  basis for such Fiscal Year were
generated.

         (n)     MATERIAL  SUBSIDIARIES.  No later than 60 days after the end of
                 ----------------------
each Fiscal Year, a list of all Material  Subsidiaries and the percentage of the
aggregate gross revenues of the Borrower and its  Subsidiaries on a Consolidated
basis for such Fiscal Year contributed by each such Material Subsidiary.

         (o)     OTHER INFORMATION. Such other information respecting the busi-
                 -----------------
ness, condition (financial or otherwise), operations, performance, properties or
prospects  of any Loan Party or any of its  Subsidiaries  as any  Agent,  or any
Lender Party through the Administrative  Agent, may from time to time reasonably
request.

         Section 5.04      FINANCIAL COVENANTS. So long as any Advance or any
                           -------------------
other  Obligation of any Loan Party under any Loan Document shall remain unpaid,
any Letter of Credit  shall be  outstanding  or any Lender  Party shall have any
Commitment hereunder, the Borrower will:

         (a)      LEVERAGE  RATIO.  Maintain  at all times a Leverage  Ratio of
                  ---------------
not more than the amount set forth below for each Business Day occurring in the
periods set forth below:

         -----------------------------------------------------
                   PERIOD                       RATIO
         -----------------------------------------------------
         Closing - 11/24/01                   4.25:1.00
         -----------------------------------------------------
         11/25/01 - 05/25/02                  4.00:1.00
         -----------------------------------------------------
         05/26/02 - 11/23/02                  3.75:1.00
         -----------------------------------------------------
         11/24/02 - 05/24/03                  3.25:1.00
         -----------------------------------------------------
         05/25/03 - 08/29/03                  3.00:1.00
         -----------------------------------------------------

         (b)     SENIOR SECURED  LEVERAGE  RATIO. Maintain at all times a Senior
                 -------------------------------
Secured Leverage Ratio of not more than the amount set forth below for each
Business   Day  occurring in the periods set forth below:

         ------------------------------------------------------
                 PERIOD RATIO
         ------------------------------------------------------
            Closing - 11/24/01                    2.50:1.00
         ------------------------------------------------------
            11/25/01 - 05/25/02                   2.25:1.00
         ------------------------------------------------------
            05/26/02 - 11/23/02                   2.00:1.00
         ------------------------------------------------------
            11/24/02 - 05/24/03                   1.75:1.00
         ------------------------------------------------------
            05/25/03 - 08/29/03                   1.50:1.00
         ------------------------------------------------------

         (c)     FIXED CHARGE  COVERAGE  RATIO.  Maintain at the end of each
                 -----------------------------
Fiscal  Quarter of the Borrower a Fixed Charge Coverage Ratio of not less than
1.00 to 1.00 for each Measurement Period.

                                       94

<PAGE>

         (d)     INTEREST  COVERAGE  RATIO.  Maintain  at the  end of each
                 -------------------------
Fiscal  Quarter  of the  Borrower  an  Interest Coverage Ratio of not less than
the amount set forth below for each Measurement Period ending during the periods
set forth below:

         ------------------------------------------------------
                   MEASUREMENT
                 PERIOD ENDING IN                RATIO
         ------------------------------------------------------
         Closing - 11/24/01                    2.00:1.00
         ------------------------------------------------------
         11/25/01 - 05/25/02                   2.00:1.00
         ------------------------------------------------------
         05/26/02 - 11/23/02                   2.25:1.00
         ------------------------------------------------------
         11/24/02 - 05/24/03                   2.50:1.00
         ------------------------------------------------------
         05/25/03 - 08/29/03                   2.75:1.00
         ------------------------------------------------------

                                   ARTICLE VI
                                EVENTS OF DEFAULT

         Section 6.01      EVENTS OF  DEFAULT.  If any of the  following  events
                           ------------------
("EVENTS OF  DEFAULT")  shall occur and be continuing:

         (a) (i) the  Borrower  shall fail to pay any  principal  of any Advance
when the same shall become due and payable,  whether by scheduled maturity or at
a date fixed for prepayment or by acceleration, demand or otherwise, or (ii) the
Borrower shall fail to pay any interest on any Advance or any fee owing under or
in respect  of this  Agreement,  or any Loan Party  shall fail to make any other
payment under or in respect of any Loan Document,  whether by scheduled maturity
or at a date  fixed for  payment or  prepayment  or by  acceleration,  demand or
otherwise,  in each case under this clause (ii) within three Business Days after
the same becomes due and payable; or

         (b) any representation or warranty made by any Loan Party under or in
connection  with any Loan  Document  shall prove to have been  incorrect  in any
material respect when made or deemed made; or

         (c) (i) the  Borrower  shall fail to perform or observe  any term,
covenant or agreement  contained in Section 2.14, 5.01(c),  5.01(d),  5.01(n) or
5.01(p), 5.02, 5.03 or 5.04; or

         (d) any Loan  Party  shall fail to perform  or  observe  any term,
covenant or agreement  contained in any of the Loan  Documents on its part to be
performed or observed that is not otherwise  referred to in this Section 6.01 if
such failure shall remain  unremedied  for at least 30 days after the earlier of
the date on which (i) an Officer of any of the Loan Parties  first becomes aware
of such failure and (ii)  written  notice  thereof  shall have been given to the
Borrower by the Administrative Agent or any of the Lenders Parties; or

         (e)  (i)  any  Loan  Party  or any of its  Subsidiaries  shall  fail
to pay any principal of, premium or interest on, or any other amount payable in
respect of, one or more items of Debt of the Loan Parties and their Subsidiaries
(excluding  Debt  outstanding  hereunder)  that is  outstanding  in an aggregate
principal amount (or, in the case of any Hedge Agreement,  that has an Agreement
Value) of at least $25,000,000 when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such

                                       95

<PAGE>

failure shall continue after the applicable grace period,  if any,  specified in
the agreements or instruments relating to all such Debt; or (ii) any other event
shall  occur or  condition  shall  exist  under the  agreements  or  instruments
relating to one or more items of Debt of the Loan Parties and their Subsidiaries
(excluding Debt  outstanding  hereunder) that is outstanding (or under which one
or more Persons have a commitment  to extend  credit) in an aggregate  principal
amount (or, in the case of any Hedge Agreement,  that has an Agreement Value) of
at least $25,000,000, and such other event or condition shall continue after the
applicable  grace  period,   if  any,   specified  in  all  such  agreements  or
instruments,  if the effect of such event or condition is to  accelerate,  or to
permit the  acceleration of, the maturity of such Debt or otherwise to cause, or
to permit the holder thereof to cause, such Debt to mature; or (iii) one or more
items  of Debt of the  Loan  Parties  and  their  Subsidiaries  (excluding  Debt
outstanding  hereunder)  that is outstanding (or under which one or more Persons
have a commitment to extend credit) in an aggregate principal amount (or, in the
case  of  any  Hedge  Agreement,  that  has  an  Agreement  Value)  of at  least
$25,000,000 shall be declared to be due and payable or required to be prepaid or
redeemed  (other  than  by a  regularly  scheduled  or  required  prepayment  or
redemption or as contemplated by the definition of Net Cash Proceeds), purchased
or defeased, or an offer to prepay, redeem,  purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or

         (f)     the Borrower or any Material Subsidiary shall generally not pay
its debts as such debts  become due, or shall admit in writing its  inability to
pay its debts generally,  or shall make a general  assignment for the benefit of
creditors;  or any proceeding  shall be instituted by or against the Borrower or
any Material  Subsidiary  seeking to adjudicate  it a bankrupt or insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar  official for it or for any substantial part of its property and, in the
case of any such  proceeding  instituted  against it (but not  instituted by it)
that is being diligently  contested by it in good faith,  either such proceeding
shall remain  undismissed or unstayed for a period of at least 60 days or any of
the actions sought in such proceeding (including,  without limitation, the entry
of an order for relief  against,  or the  appointment  of a  receiver,  trustee,
custodian  or other  similar  official  for, it or any  substantial  part of its
property)  shall  occur;  or any  event  or  action  analogous  to or  having  a
substantially  similar effect to any of the events or actions set forth above in
this Section 6.01(f) (other than a solvent reorganization) shall occur under the
Requirements  of Law of  any  jurisdiction  applicable  to the  Borrower  or any
Material  Subsidiary;  or the Borrower or any Material Subsidiary shall take any
corporate,  partnership,  limited  liability  company or other similar action to
authorize any of the actions set forth above in this Section 6.01(f); or

         (g)     one or more  judgments  or  orders  for the  payment  of money
in excess of $10,000,000 in the aggregate shall be rendered against the Borrower
or any of its Material  Subsidiaries and shall remain unsatisfied and either (i)
enforcement  proceedings shall have been commenced by any creditor upon any such
judgment  or order or (ii) there  shall be any period of at least 30 days during
which a stay of  enforcement  of any such  judgment  or  order,  by  reason of a
pending appeal or otherwise, shall not be in effect; PROVIDED, HOWEVER, that any
such  judgment  or order  shall not give rise to an Event of Default  under this
Section  6.01(g) if and for so long as (A) the amount of such  judgment or order
is covered by a valid and binding policy of insurance

                                       96

<PAGE>

between the defendant and the insurer, which shall be rated at least "A" by A.M.
Best  Company,  covering  full  payment  thereof  and (B) such  insurer has been
notified,  and has not denied the claim made for payment,  of the amount of such
judgment or order; or

         (h)     one or more nonmonetary judgments or orders (including, without
limitation, writs or warrants of attachment,  garnishment,  execution, distraint
or  similar  process)  shall be  rendered  against  the  Borrower  or any of its
Material  Subsidiaries  that,  either  individually  or in the aggregate,  could
reasonably be expected to have a Material Adverse Effect, and there shall be any
period  of at  least  30 days  during  which a stay of  enforcement  of any such
judgment or order,  by reason of a pending appeal or otherwise,  shall not be in
effect; or

         (i)     any  provision  of any Loan  Document  after  delivery  thereof
pursuant  to Section  3.01,  5.01(i),  5.01(j)  or 5.01(l)  shall for any reason
(other than pursuant to the terms  thereof)  cease to be valid and binding on or
enforceable  against any Loan Party intended to be a party thereto,  or any such
Loan Party shall so state in writing; or

         (j)     any Collateral  Document after  delivery  thereof  pursuant to
Section  3.01,  5.01(i),  5.01(j) or 5.01(l)  shall for any reason  (other  than
pursuant  to the terms  thereof)  cease to create a valid  and  perfected  first
priority Lien on the Collateral purported to be covered thereby; or

         (k)     any Plan maintained by the Borrower or any of its ERISA Affili-
ates shall be  terminated  within the  meaning of Title IV of ERISA or a trustee
shall be appointed by an appropriate  United States district court to administer
any Plan, or the PBGC (or any successor thereto) shall institute  proceedings to
terminate any Plan or to appoint a trustee to administer any Plan,  and, in each
case,  the  Borrower's  or any such ERISA  Affiliate's  liability  (after giving
effect to the tax  consequences  thereof) as of the date thereof to the PBGC (or
any successor  thereto) for unfunded  guaranteed vested benefits under such Plan
or the Borrower's  obligations to contribute to any Plan in order to voluntarily
terminate  such  Plan  exceed  $20,000,000  (or in  the  case  of a  termination
involving  the  Borrower  or any  of  its  ERISA  Affiliates  as a  "substantial
employer" (as defined in Section 4001(a)(2) of ERISA) the withdrawing employer's
proportionate share of such liability shall exceed such amount); or

         (l)     the  Borrower  or  any  of  its  ERISA   Affiliates as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from
such  Multiemployer  Plan and the plan sponsor of such  Multiemployer Plan shall
have  notified  such  withdrawing  employer  that such  employer  has incurred a
Withdrawal Liability in an amount exceeding $20,000,000; or

         (m)    (i) Any Person or two or more  Persons  (other than  Permitted
Transferees) acting in concert shall acquire beneficial  ownership,  directly or
indirectly,  of Equity  Interests of the  Borrower or Voting Trust  Certificates
issued under the Voting Trust Agreement (or other  securities  convertible  into
such  securities)  representing  30% or more of the combined voting power of all
Equity Interests of the Borrower  entitled to vote (or would be entitled to vote
in the absence of the Voting  Trust  Agreement)  in the  election  of  directors
(except that the  provisions  of this  subsection  (i) shall not apply to Voting
Trustees serving in their capacities as such under the Voting Trust  Agreement);
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 Borrower shall cease for any reason to constitute a majority of
the Board of Directors of

                                       97

<PAGE>

the Borrower unless the persons replacing such individuals were nominated by the
Board of Directors of the Borrower,  by Permitted  Transferees  or by any of the
Voting  Trustees;  or (iii) the occurrence of any "CHANGE IN CONTROL" as defined
in any  indenture  or other  agreement  executed  in  connection  with a Capital
Markets Transaction;

then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Required  Lenders,  by notice to the  Borrower,
declare the  Commitments  of each Lender Party and the obligation of each Lender
Party to make  Advances  (other  than  Letter of Credit  Advances by a Revolving
Credit Lender  pursuant to Section  2.03(c) and the  obligations  of each Lender
Party to purchase its Pro Rata Share of outstanding Swing Line Advances pursuant
to Section  2.02(b)) and of each  Issuing Bank to issue  Letters of Credit to be
terminated,  whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders,  (A) by notice to the
Borrower,  declare the Notes, all interest thereon and all other amounts payable
under  this  Agreement  and the other Loan  Documents  to be  forthwith  due and
payable, whereupon the Obligations, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the
Borrower  and (B) by  notice  to each  party  required  under  the  terms of any
agreement in support of which a Standby Letter of Credit is issued, request that
all  Obligations  under  such  agreement  be  declared  to be due  and  payable;
PROVIDED,  HOWEVER,  that in the event of an actual or deemed  entry of an order
for relief with respect to the Borrower under the Federal  Bankruptcy  Code, (1)
the  Commitments of each Lender Party and the obligation of each Lender Party to
make Advances (other than Letter of Credit Advances by a Revolving Credit Lender
pursuant to Section 2.03(c) and the obligations of each Lender Party to purchase
its Pro Rata  Share of  outstanding  Swing  Line  Advances  pursuant  to Section
2.02(b)) and each Issuing Bank to issue Letters of Credit shall automatically be
terminated  and (2) the Notes,  all such  interest  and all such  amounts  shall
automatically  become  and be due  and  payable,  without  presentment,  demand,
protest or any notice of any kind, all of which are hereby  expressly  waived by
the Borrower.

         Section  6.02     ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
                           ------------------------------------------------
DEFAULT.  If any Event of Default shall have occurred and be continuing, the
-------
Administrative  Agent  may,  or shall at the  request of the  Required  Lenders,
irrespective  of whether it is taking any of the  actions  described  in Section
6.01 or  otherwise,  make demand upon the Borrower to, and  forthwith  upon such
demand  the  Borrower  will,  pay to the  Administrative  Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral  Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding.  If
at any time the  Administrative  Agent determines that any funds held in the L/C
Cash  Collateral  Account are subject to any right or claim of any Person  other
than the  Administrative  Agent and the Secured Parties or that the total amount
of such  funds is less than the  aggregate  Available  Amount of all  Letters of
Credit, the Borrower will,  forthwith upon demand by the  Administrative  Agent,
pay to the Administrative Agent, as additional funds to be deposited and held in
the L/C Cash  Collateral  Account,  an  amount  equal to the  excess of (a) such
aggregate Available Amount over (b) the total amount of funds, if any, then held
in the L/C Cash Collateral Account that the  Administrative  Agent determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds are on deposit in the L/C Cash Collateral  Account,  such
funds  shall be  applied,  to the extent

                                       98

<PAGE>

permitted under  applicable  law, to reimburse the relevant  Issuing Bank or the
Revolving Credit Lenders, as applicable.

                                  ARTICLE VII
                                   THE AGENTS

Section 7.01      APPOINTMENT, POWERS AND IMMUNITY.
                  --------------------------------

         (a)     Each Lender Party (in its  capacities  as a Lender,  the Swing
Line Bank (if  applicable),  an Issuing Bank (if  applicable),  and on behalf of
itself  and its  Affiliates  as  potential  Hedge  Banks)  hereby  appoints  and
authorizes the Administrative Agent to act as its agent under this Agreement and
the other Loan  Documents  with such powers and  discretion as are  specifically
delegated to the  Administrative  Agent by the terms of this  Agreement  and the
other  Loan  Documents,  together  with  such  other  powers  as are  reasonably
incidental  thereto.  The  Administrative  Agent  (which  term  as  used in this
sentence  and in Section  7.05(a) and the first  sentence of Section  7.06 shall
include its  Affiliates  and its own and its  Affiliates'  officers,  directors,
employees, and agents): (i) shall not have any duties or responsibilities except
those  expressly  set forth in this  Agreement  and  shall  not be a trustee  or
fiduciary  for any Lender  Party;  (ii) shall not be  responsible  to the Lender
Parties for any recital, statement, representation, or warranty (whether written
or oral) made in or in connection  with any Loan Document or any  certificate or
other document referred to or provided for in, or received by any of them under,
any Loan  Document,  or for the  value,  validity,  effectiveness,  genuineness,
enforceability,  or  sufficiency  of, or the  perfection or priority of any Lien
created  or  purported  to be  created  under or in  connection  with,  any Loan
Document,  or any other document  referred to or provided for therein or for any
failure by any Loan Party or any other Person to perform any of its  obligations
thereunder;  (iii) shall not be  responsible  for or have any duty to ascertain,
inquire  into,  or verify the  performance  or  observance  of any  covenants or
agreements by any Loan Party or the  satisfaction of any condition or to inspect
the property  (including  the books and records) of any Loan Party or any of its
Subsidiaries  or  Affiliates;  (iv) shall not be required to initiate or conduct
any litigation or collection  proceedings under any Loan Document; and (v) shall
not be  responsible  for any action taken or omitted to be taken by it or any of
its directors,  officers,  agents or employees  under or in connection  with any
Loan  Document,  except  for  its or  their  own  gross  negligence  or  willful
misconduct.

         (b)     The Administrative Agent shall also act as the "COLLATERAL
AGENT"  under  the  Loan  Documents,  and  each of the  Lender  Parties  (in its
capacities as a Lender, the Swing Line Bank (if applicable), an Issuing Bank (if
applicable)  and a potential  Hedge Bank)  hereby  appoints and  authorizes  the
Administrative  Agent to act as the agent of such Lender  Party for  purposes of
acquiring,  holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably  incidental thereto.  The Administrative
Agent may from time to time in its  discretion  appoint any of the other  Lender
Parties or any of the  Affiliates  of a Lender  Party to act as its  co-agent or
sub-agent or its  attorney-in-fact  for any purpose,  including  for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof) granted
under  the  Collateral  Documents  or of  exercising  any  rights  and  remedies
thereunder at the direction of the Administrative  Agent, and the Administrative
Agent shall not be  responsible  for the  negligence  or  misconduct of any such
co-agents, sub-agents or attorneys-in-fact selected by it with

                                       99

<PAGE>

reasonable care. In this connection,  the  Administrative  Agent, as "collateral
agent", and such co-agents,  sub-agents and attorneys-in-fact  shall be entitled
to the  benefits  of all  provisions  of this  Article VII  (including,  without
limitation,   Section   7.05,   as  though  such   co-agents,   sub-agents   and
attorneys-in-fact  were the  "collateral  agent" under the Loan Documents) as if
set forth in full herein with respect thereto.

         (c)     The Co-Lead  Arrangers  shall not have any powers or discretion
under  this  Agreement  or any of the other  Loan  Documents  other  than  those
bestowed  upon  it  as a  co-agent  or  sub-agent  from  time  to  time  by  the
Administrative  Agent  pursuant to subsection (b) of this Section 7.01, and each
of the  Lender  Parties  hereby  acknowledges  that (i) it has not relied on the
Co-Lead  Arrangers in deciding whether to enter into this Agreement or in taking
or not taking any action  under the  Agreement  and (ii) the  Co-Lead  Arrangers
shall not have any  liability  under  this  Agreement  or any of the other  Loan
Documents.

         (d)     Neither the  Documentation  Agent nor the  Syndication  Agent
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Lenders as such.

         Section 7.02      RELIANCE BY AGENT.  The  Administrative  Agent shall
                           -----------------
be entitled to rely upon any  certification,  notice,  instrument,  writing,  or
other communication (including,  without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper  Person or  Persons,  and upon  advice and
statements of legal counsel (including counsel for any Loan Party),  independent
accountants,  and  other  experts  selected  by the  Administrative  Agent.  The
Administrative  Agent may deem and  treat  the  payee of any Note as the  holder
thereof  for all  purposes  hereof  unless  and until the  Administrative  Agent
receives and accepts an Assignment  and Acceptance  executed in accordance  with
Section 8.07. As to any matters not  expressly  provided for by this  Agreement,
the  Administrative  Agent shall not be required to exercise any  discretion  or
take any action,  but shall be  required  to act or to refrain  from acting (and
shall be fully  protected  in so  acting or  refraining  from  acting)  upon the
instructions of the Required Lenders,  and such instructions shall be binding on
all of the Lender Parties;  PROVIDED,  HOWEVER,  that the  Administrative  Agent
shall not be required to take any action that exposes the  Administrative  Agent
to personal  liability  or that is contrary to any Loan  Document or  applicable
Requirements of Law or unless it shall first be indemnified to its  satisfaction
by the Lender  Parties  against any and all  liability  and expense which may be
incurred by it by reason of taking any such action.

         Section  7.03     DEFAULTS.  The  Administrative  Agent shall not be
                           --------
deemed to have  knowledge or notice of the  occurrence  of a Default or Event of
Default  (other  than an Event of  Default  under  Section  6.01(a))  unless the
Administrative  Agent has  received  written  notice from a Lender  Party or the
Borrower  specifying  such  Default or Event of Default  and  stating  that such
notice is a "NOTICE  OF  DEFAULT".  In the event that the  Administrative  Agent
receives such a notice of the  occurrence of a Default or Event of Default,  the
Administrative Agent shall give prompt notice thereof to the Lender Parties. The
Administrative  Agent  shall  (subject  to Section  7.02) take such  action with
respect to such Default or Event of Default as shall  reasonably  be directed by
the Required Lenders;  provided that, unless and until the Administrative  Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such

                                      100

<PAGE>

action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem  advisable in the best  interest of the Lender
Parties.

         Section  7.04     BANK  OF  AMERICA,  BAS  AND  AFFILIATES.  With
                           ----------------------------------------
respect to its Commitments, the Advances made by it and the Note or Notes issued
to it, Bank of America (and any successor acting as the Administrative Agent) in
its capacity as a Lender Party  hereunder  shall have the same rights and powers
under the Loan  Documents as any other Lender Party and may exercise the same as
though it were not acting as the  Administrative  Agent or an Issuing Bank;  and
the term "LENDER PARTY" or "LENDER PARTIES" shall,  unless  otherwise  expressly
indicated,  include Bank of America in its individual capacity.  Bank of America
(and any successor acting as the Administrative Agent), BAS and their respective
affiliates may (without  having to account  therefor to any Lender Party) accept
deposits from,  lend money to, make  investments  in,  provide  services to, and
generally engage in any kind of lending,  trust, or other business with any Loan
Party or any of its  Subsidiaries  or  Affiliates as if it were not acting as an
Agent or an Issuing Bank,  and Bank of America (and any successor  acting as the
Administrative  Agent), BAS and their respective  affiliates may accept fees and
other  consideration  from  any  Loan  Party  or  any  of  its  Subsidiaries  or
Affiliates,  or any Person that may do business  with or own  securities  of any
Loan Party or any such Subsidiary or Affiliate,  for services in connection with
this Agreement or otherwise without having to account for the same to the Lender
Parties.

         Section 7.05      INDEMNIFICATION.
                           ---------------

         (a)     The Lenders  severally agree to indemnify the  Administrative
Agent (to the extent not promptly  reimbursed  under Section  8.04,  but without
limiting  the  obligations  of the  Borrower  under  such  Section)  ratably  in
accordance  with  their  respective  Commitments,  for any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  (including  attorneys'  fees), or disbursements of any kind and nature
whatsoever  that  may  be  imposed  on,  incurred  by or  asserted  against  the
Administrative  Agent in any way relating to or arising out of any Loan Document
or the transactions  contemplated  thereby or any action taken or omitted by the
Administrative  Agent under any Loan Document  (collectively,  the  "INDEMNIFIED
COSTS"); provided that no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful  misconduct of the Person
to be  indemnified.  In the  case of any  claim,  investigation,  litigation  or
proceeding  for  which  indemnity  under  this  Section  7.05(a)  applies,  such
indemnity  shall apply whether or not such claim,  investigation,  litigation or
proceeding is brought by the Administrative  Agent, any of the other Agents, any
of the Lender  Parties or a third party.  Without  limitation of the  foregoing,
each Lender severally agrees to reimburse the Administrative Agent promptly upon
demand for its ratable  share of any costs or expenses  payable by the  Borrower
under Section 8.04, to the extent that the Administrative  Agent is not promptly
reimbursed for such costs and expenses (including,  without limitation, fees and
expenses  of  counsel)  by the  Borrower.  In  the  case  of any  investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such  investigation,  litigation or proceeding is brought by
any  Lender  Party or any other  Person.  The  failure  of any  Lender  Party to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any amount required to be paid by the Lender Party to the  Administrative  Agent
as provided  herein shall not relieve any other  Lender Party of its  obligation
hereunder to reimburse  the  Administrative  Agent for its ratable share of such
amount,  but no Lender Party shall be  responsible  for the failure of any other
Lender Party to

                                      101

<PAGE>

reimburse the  Administrative  Agent for such other Lender Party's ratable share
of such amount.  Without prejudice to the survival of any other agreement of any
Lender Party  hereunder,  the agreement and obligations of each Lender contained
in this Section 7.05(a) shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the other Loan Documents.

         (b)     The Revolving Credit Lenders  severally agree to indemnify each
Issuing Bank (to the extent not promptly  reimbursed  under  Section  8.04,  but
without  limiting the  obligations  of the Borrower under such Section) for such
Revolving   Credit  Lender's  Pro  Rata  Share  of  any  and  all   liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements  of any kind or nature  whatsoever that may be imposed
on, incurred by, or asserted against such Issuing Bank in any way relating to or
arising out of the Loan Documents or the  transactions  contemplated  thereby or
any  action  taken or  omitted by such  Issuing  Bank under the Loan  Documents;
PROVIDED,  HOWEVER,  that no  Revolving  Credit  Lender  shall be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, costs, expenses or disbursements  resulting from such Issuing
Bank's  gross  negligence  or  willful  misconduct.  In the  case of any  claim,
investigation,  litigation or proceeding for which  indemnity under this Section
7.05(b)  applies,  such  indemnity  shall  apply  whether  or  not  such  claim,
investigation,  litigation or proceeding is brought by any Issuing Bank,  any of
the other Lender Parties or a third party.  Without limitation of the foregoing,
each  Revolving  Credit Lender  severally  agrees to reimburse such Issuing Bank
promptly  upon  demand  for  its  Pro  Rata  Share  of any  costs  and  expenses
(including,  without  limitation,  fees and expenses of counsel)  payable by the
Borrower  under  Section  8.04,  to the  extent  that such  Issuing  Bank is not
promptly reimbursed for such costs and expenses by the Borrower.  The failure of
any Revolving  Credit Lender to reimburse such Issuing Bank promptly upon demand
for its Pro Rata Share of any amount required to be paid by the Revolving Credit
Lenders to such  Issuing  Bank as  provided  herein  shall not relieve any other
Revolving  Credit Lender of its  obligation  hereunder to reimburse such Issuing
Bank for its Pro Rata Share of such amount, but no Revolving Credit Lender shall
be responsible for the failure of any other Revolving Credit Lender to reimburse
such Issuing  Bank for such other  Revolving  Credit  Lender's Pro Rata Share of
such amount.  Without  prejudice  to the survival of any other  agreement of any
Revolving  Credit  Lender  hereunder,  the  agreement  and  obligations  of each
Revolving  Credit  Lender  contained in this Section  7.05(b)  shall survive the
payment in full of principal,  interest and all other amounts payable  hereunder
and under the other Loan Documents.

         Section 7.06      NON-RELIANCE ON AGENT AND OTHER LENDER PARTIES.  Each
                           ----------------------------------------------
Lender Party agrees that it has, independently and without reliance on any Agent
or any other Lender Party, and based on such documents and information as it has
deemed  appropriate,  made its own credit analysis of the Loan Parties and their
Subsidiaries  and  decision  to  enter  into  this  Agreement  and that it will,
independently and without reliance upon any Agent or any other Lender Party, and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own analysis  and  decisions in taking or not taking
action  under  the Loan  Documents.  Except  for  notices,  reports,  and  other
documents  and  information  expressly  required to be  furnished  to the Lender
Parties by the Administrative  Agent hereunder,  the Administrative  Agent shall
not have any duty or  responsibility to provide any Lender Party with any credit
or other information concerning the affairs, financial condition, or business of

                                      102

<PAGE>

any Loan Party or any of its  Subsidiaries  or Affiliates that may come into the
possession of the Administrative Agent or any of its affiliates.

         Section 7.07      RESIGNATION OF ADMINISTRATIVE  AGENT. The Adminis-
trative  Agent may resign at any time  (effective  as set forth below) by giving
notice  thereof  to  the  Lender  Parties  and  the  Borrower.   Upon  any  such
resignation,  the Required  Lenders  shall have the right to appoint a successor
Administrative Agent which such successor Administrative Agent shall, so long as
no Event of Default has occurred and is continuing,  be approved by the Borrower
(such  approval not to be  unreasonably  withheld or delayed and to be deemed to
have been given if no  objection  thereto is  received by the  Required  Lenders
within  five  Business  Days  after  the date on which  notice  of the  proposed
appointment is provided to the Borrower).  If no successor Agent shall have been
so appointed by the Required  Lenders and shall have accepted  such  appointment
within 30 days after the  retiring  Administrative  Agent's  giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the Lender
Parties,  appoint a successor  Administrative  Agent which shall be a commercial
bank  organized  under the laws of the United  States or any state  thereof  and
having combined capital and surplus of at least $500,000,000.  If within 45 days
after written notice is given of the retiring Administrative Agent's resignation
under  this  Section  7.07 no  successor  Administrative  Agent  shall have been
appointed and shall have accepted  such  appointment,  then on such 45th day (a)
the retiring Administrative Agent's resignation shall become effective,  (b) the
retiring  Administrative Agent shall thereupon be discharged from its duties and
obligations  under  the  Loan  Documents  and (c)  the  Required  Lenders  shall
thereafter  perform all duties and  obligations  of the retiring  Administrative
Agent under the Loan Documents until such time, if any, as the Required  Lenders
appoint a successor Administrative Agent as provided above in this Section 7.07.
Upon the acceptance of any  appointment as  Administrative  Agent hereunder by a
successor  and upon the  execution  and filing or  recording  of such  financing
statements,  or amendments  thereto,  and such  amendments or supplements to the
Mortgages,  and such  other  instruments  or  notices,  as may be  necessary  or
desirable,  or as the  Required  Lenders may  request,  in order to continue the
perfection  of the Liens  granted or purported  to be granted by the  Collateral
Documents,  such successor  Administrative  Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent,  and the retiring  Administrative  Agent shall be discharged
from its duties and  obligations  under the Loan  Documents.  After any retiring
Agent's  resignation  hereunder as Administrative  Agent, the provisions of this
Article  VII shall  continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.

                                  ARTICLE VIII
                                  MISCELLANEOUS

         Section 8.01      AMENDMENTS,  ETC. No amendment or waiver of any  pro-
                           ----------------
vision of this Agreement,  the Notes or any other Loan Document,  nor consent to
any  departure  by any of the Loan  Parties  therefrom,  shall  in any  event be
effective unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to in writing) by the Required Lenders, and then
such waiver or consent shall be effective only in the specific  instance and for
the specific purpose for which given; PROVIDED,  HOWEVER, that (a) no amendment,
waiver or  consent  shall,  unless in  writing  and  signed by all of the Lender
Parties  (other  than any  Lender  Party  that is, at such  time,  a  Defaulting
Lender),  do any of the following at any time:  (i) waive

                                      103

<PAGE>

any of the  conditions  specified in Section 3.01 or, in the case of the Initial
Extension  of Credit,  Section  3.02;  (ii)  change the number of Lenders or the
percentage of the Commitments or the aggregate  outstanding  principal amount of
Advances or the  aggregate  Available  Amount of  outstanding  Letters of Credit
that, in each case,  shall be required for the Lender  Parties or any of them to
take any action hereunder or thereunder;  (iii) release all or substantially all
of the value of the guarantees of the Material Domestic  Subsidiaries  under the
Subsidiary   Guaranty  (other  than,  in  the  case  of  any  Material  Domestic
Subsidiary,  to the extent  permitted  under the  Subsidiaries  Guaranty);  (iv)
release all or substantially  all of the Collateral in any transaction or series
of related transactions (other than to the extent permitted under the Pledge and
Security  Agreement);  or (v) amend  Section 2.14 or this Section  8.01;  (b) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders  and each  Lender  (other  than any  Lender  that is,  at such  time,  a
Defaulting  Lender) that has a Commitment under, or is owed any amounts under or
in respect of, the Tranche A Term  Facility,  the Tranche B Term Facility or the
Revolving  Credit Facility if such Lender is directly and adversely  affected by
such amendment,  waiver or consent: (i) increase the Commitments of such Lender;
(ii) reduce the  principal  of, or stated rate of interest on, the Notes held by
such Lender or any fees or other amounts payable hereunder to such Lender; (iii)
postpone any date scheduled for any payment of principal of, or interest on, the
Notes pursuant to Section 2.04 or 2.07 or any date fixed for any payment of fees
hereunder or any Guaranteed  Obligations payable under the Subsidiary  Guaranty;
or (iv) change the order of application  of any reduction in the  Commitments or
any prepayment of Advances  between the Tranche A Term Facility or the Tranche B
Term  Facility  from  the  application  thereof  set  forth  in  the  applicable
provisions  of Section  2.05(b) or  2.06(b),  respectively,  in any manner  that
materially and adversely  affects the Lenders under such Tranche A Term Facility
or  Tranche  B Term  Facility,  as the case may be,  or  require  the  permanent
reduction of the Revolving  Credit Facility at any time when all or a portion of
the Tranche A Term  Facility or Tranche B Term Facility  remains in effect;  and
(c) the consent of any Lender Party shall not be required for any amendment that
increases the Revolving  Credit  Commitments by  $250,000,000  in the event such
increase  does not  increase  the  Commitments  of such Lender  Party;  PROVIDED
FURTHER that no amendment, waiver or consent shall, unless in writing and signed
by the Swing Line Bank or each Issuing  Bank, as the case may be, in addition to
the Lenders required above to take such action, affect the rights or obligations
of the Swing Line Bank or of the Issuing  Banks,  as the case may be, under this
Agreement;  and PROVIDED  FURTHER that no  amendment,  waiver or consent  shall,
unless in writing  and signed by the  Administrative  Agent in  addition  to the
Lenders  required above to take such action,  affect the rights or duties of the
Administrative  Agent  under  this  Agreement  and  the  other  Loan  Documents.
Notwithstanding  any of the foregoing  provisions of this Section 8.01,  none of
the defined  terms set forth in Section 1.01 shall be amended,  supplemented  or
otherwise  modified  in any manner  that would  change the  meaning,  purpose or
effect of this  Section  8.01 or any  section  referred  to herein  unless  such
amendment,  supplement or modification is agreed to in writing by the number and
percentage  of  Lenders  (and the Swing  Line Bank,  each  Issuing  Bank and the
Administrative  Agent, if applicable)  otherwise  required to amend such section
under the terms of this Section 8.01.

         Section 8.02      NOTICES,  ETC. All notices and other  communications
                           -------------
provided for hereunder shall be in writing (including  telegraphic,  telecopy or
telex communication) and mailed, telegraphed,  telecopied, telexed or delivered,
if to the Borrower,  at its address at 1155 Battery  Street,  San Francisco,  CA
94111,  Attention:  Treasurer;  if to any Initial Lender, the

                                      104

<PAGE>

Swing Line Bank or each Initial  Issuing Bank,  at its Base Rate Lending  Office
specified  opposite its name on Schedule 1.01(a) hereto;  if to any other Lender
Party,  at  its  Base  Rate  Lending  Office  specified  in the  Assignment  and
Acceptance  pursuant  to  which  it  became  a  Lender  Party;  and  if  to  the
Administrative Agent, at its address at Bank of America, N.A. Attention:  Credit
Services,  1850  Gateway  Boulevard,  CA  4-706-05-09,  Concord,  CA 94520,  for
borrowings, conversions,  continuations and payment notices and Bank of America,
N.A.  Attention:  Agency  Management,  1455 Market Street,  CA 5-701-12-09,  San
Francisco,  CA 94103, for all other notices;  or, as to any party, at such other
address as shall be  designated  by such party in a written  notice to the other
parties.  All  such  notices  and  other  communications   shall,  when  mailed,
telegraphed,  telecopied or telexed,  be effective  when deposited in the mails,
delivered to the telegraph  company,  transmitted  by telecopier or confirmed by
telex answerback,  respectively,  except that notices and  communications to any
Agent  pursuant to Article II, III or VII shall not be effective  until received
by such Agent.  Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this  Agreement or the Notes
or of any  Exhibit  hereto  to be  executed  and  delivered  hereunder  shall be
effective as delivery of an original executed counterpart thereof.

         Section 8.03      NO WAIVER;  REMEDIES. No failure on the part of any
Lender Party or any Agent to  exercise,  and no delay in  exercising,  any right
hereunder or under any Note or any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or  further  exercise  thereof or the  exercise  of any other  right.  The
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law.

         Section 8.04      COSTS AND EXPENSES.
                           ------------------

         (a)     The Borrower  agrees to pay on demand (i) all reasonable  costs
and  expenses of each Agent in  connection  with the  syndication,  preparation,
execution,  delivery,  administration,  modification  and  amendment  of, or any
consent  or waiver  under,  the Loan  Documents  and the other  documents  to be
delivered  thereunder  (including,  without  limitation,  (A) all due diligence,
collateral   review,   syndication,   transportation,   computer,   duplication,
appraisal, audit, insurance,  consultant,  search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for each Agent with
respect  thereto,  with  respect  to  advising  such  Agent as to its rights and
responsibilities,  or the  perfection,  protection or  preservation of rights or
interests,  under the Loan Documents, with respect to negotiations with any Loan
Party  or with  other  creditors  of any Loan  Party or any of its  Subsidiaries
arising out of any Default or any events or circumstances  that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy,  insolvency or other similar proceeding  involving
creditors' rights generally and any proceeding  ancillary  thereto) and (ii) all
costs and  expenses of each Agent and each Lender Party in  connection  with the
enforcement  of the Loan  Documents  and the  other  documents  to be  delivered
thereunder,  whether  in any  action,  suit or  litigation,  or any  bankruptcy,
insolvency or other similar  proceeding  affecting  creditors'  rights generally
(including,  without limitation, the reasonable fees and expenses of counsel for
the Administrative Agent and each Lender Party with respect thereto).

         (b)     The Borrower  agrees to  indemnify,  defend and save and hold
harmless each Agent,  each Lender Party and each of their  affiliates  and their
respective  officers,  directors,

                                      105

<PAGE>

employees,  agents and advisors (each, an "INDEMNIFIED PARTY") from and against,
and shall pay on demand, any and all claims,  damages,  losses,  liabilities and
expenses  (including,  without  limitation,  reasonable  fees  and  expenses  of
counsel) that may be incurred by or asserted or awarded  against any Indemnified
Party,  in each  case  arising  out of or in  connection  with or by  reason  of
(including, without limitation, in connection with any investigation, litigation
or  proceeding or  preparation  of a defense in  connection  therewith)  (i) the
Facilities,  the actual or proposed  use of the  proceeds of the Advances or the
Letters of Credit, the Loan Documents,  or any of the transactions  contemplated
thereby,  or (ii) the actual or alleged  presence of Hazardous  Materials on any
property  of any Loan  Party  or any of its  Subsidiaries  or any  Environmental
Action relating in any way to any Loan Party or any of its Subsidiaries,  except
to the extent  such  claim,  damage,  loss,  liability  or expense is found in a
final,  non-appealable  judgment by a court of  competent  jurisdiction  to have
resulted from such Indemnified  Party's gross negligence or willful  misconduct.
In the case of an  investigation,  litigation  or other  proceeding to which the
indemnity in this Section  8.04(b)  applies,  such indemnity  shall be effective
whether or not such  investigation,  litigation  or proceeding is brought by any
Loan Party, its directors,  shareholders or creditors or an Indemnified Party or
any other  Person,  whether or not any  Indemnified  Party is  otherwise a party
thereto and whether or not the  Transaction  is  consummated.  The Borrower also
agrees not to assert any claim  against  any Agent,  any Lender  Party or any of
their Affiliates,  or any of their respective  officers,  directors,  employees,
agents  and  advisors,  on any  theory  of  liability,  for  special,  indirect,
consequential  or punitive  damages arising out of or otherwise  relating to the
Facilities,  the actual or proposed  use of the  proceeds of the Advances or the
Letters of Credit,  the Loan Documents or any of the  transactions  contemplated
thereby.

         (c)     If any Loan Party fails to pay when due any costs, expenses or
other  amounts  payable  by it  under  any  Loan  Document,  including,  without
limitation,  fees and  expenses of counsel and  indemnities,  such amount may be
paid on behalf  of such Loan  Party by the  Administrative  Agent or any  Lender
Party, in its sole discretion.

         (d)     Without  prejudice to the survival of any other  agreement of
any Loan Party  hereunder or under any other Loan  Document,  the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.13 and this Section
8.04 shall  survive the  payment in full of  principal,  interest  and all other
amounts payable hereunder and under any of the other Loan Documents.

         Section  8.05     RIGHT  OF  SET-OFF.  Upon  (a)  the  occurrence  and
                           ------------------
during the continuance of any Event of Default and (b) the making of the request
or the  granting of the  consent  specified  by Section  6.01 to  authorize  the
Administrative  Agent to declare the Obligations due and payable pursuant to the
provisions of Section  6.01,  each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent  permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness at any time owing by such Agent,  such Lender Party
or such  Affiliate to or for the credit or the account of the  Borrower  against
any and all of the  Obligations of the Borrower now or hereafter  existing under
the Loan  Documents,  irrespective  of whether  such Agent or such Lender  Party
shall  have  made any  demand  under  this  Agreement  or such Note or Notes and
although such  Obligations  may be  unmatured.  Each Agent and each Lender Party
agrees  promptly to notify the Borrower after any such set-off and  application;
PROVIDED, HOWEVER, that

                                      106

<PAGE>

the failure to give such notice  shall not affect the  validity of such  set-off
and  application.  The  rights  of each  Agent and each  Lender  Party and their
respective  Affiliates  under this  Section are in addition to other  rights and
remedies  (including,  without  limitation,  other rights of set-off)  that such
Agent, such Lender Party and their respective Affiliates may have.

         Section 8.06      BINDING EFFECT. This Agreement shall become effective
                           --------------
when it  shall  have  been  executed  by the  Borrower  and each  Agent  and the
Administrative  Agent shall have been notified by each Initial Lender, the Swing
Line Bank and each Initial Issuing Bank that such Initial Lender, the Swing Line
Bank or such  Initial  Issuing  Bank has  executed  it and  thereafter  shall be
binding  upon and inure to the  benefit  of the  Borrower,  each  Agent and each
Lender  Party and their  respective  successors  and  assigns,  except  that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender Parties.

         Section 8.07      ASSIGNMENTS AND PARTICIPATIONS.
                           ------------------------------

         (a)     Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including, without
limitation,  all or a portion of its  Commitment  or  Commitments,  the Advances
owing to it and the Note or Notes held by it); PROVIDED,  HOWEVER, that (i) each
such  assignment  shall be of a uniform,  and not a varying,  percentage  of all
rights  and  obligations  under and in respect  of any or all  Facilities,  (ii)
except in the case of an assignment to a Person that,  immediately prior to such
assignment,  was a Lender, an Affiliate of any Lender or an Approved Fund of any
Lender or an assignment of all of a Lender's rights and  obligations  under this
Agreement,  the  aggregate  amount of the  Commitments  being  assigned  to such
Eligible Assignee pursuant to such assignment  (determined as of the date of the
Assignment and Acceptance with respect to such assignment)  shall in no event be
less  than,  in the case of an  assignment  of all or a  portion  of a  Lender's
Revolving  Credit  Commitment,  $5,000,000  (or such  lesser  amount as shall be
approved by the  Administrative  Agent and, so long as no Event of Default shall
have  occurred  and be  continuing  at the  time  of the  effectiveness  of such
assignment,  the  Borrower) or, in the case of an assignment of all or a portion
of  a  Lender's  Tranche  A  Term  Commitment  or  Tranche  B  Term  Commitment,
$1,000,000,  (iii) each such  assignment to an Approved Fund of any Lender shall
in no event be less than  $1,000,000,  (iv) each such assignment  shall be to an
Eligible Assignee, and (v) the parties to each such assignment shall execute and
deliver to the  Administrative  Agent,  for its  acceptance and recording in the
Register, an Assignment and Acceptance,  together with any Note or Notes subject
to such assignment and a processing and recordation fee of $3,000.

         (b)     Upon such execution,  delivery, acceptance and recording, from
and after the effective date specified in such  Assignment and  Acceptance,  (i)
the assignee  thereunder  shall be a party hereto and, to the extent that rights
and  obligations  hereunder have been assigned to it pursuant to such Assignment
and Acceptance,  have the rights and obligations of a Lender  hereunder and (ii)
the Lender assignor  thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish its rights (other than its rights under Sections 2.10,  2.13 and 8.04
to the extent any claim  thereunder  relates to an event  arising  prior to such
assignment) and be released from its  obligations  under this Agreement (and, in
the case of an Assignment and Acceptance  covering all of the remaining  portion
of an assigning  Lender's  rights and  obligations  under this  Agreement,  such
Lender shall

                                      107

<PAGE>

cease to be a party hereto).  If the assignee is not incorporated under the laws
of the United  States or a state  thereof,  it shall deliver to the Borrower and
the  Administrative  Agent  certification  as to  exemption  from  deduction  or
withholding of Taxes in accordance with Section 2.13.

         (c)     By executing and delivering an Assignment and Acceptance,  each
Lender Party  assignor  thereunder and each assignee  thereunder  confirm to and
agree with each other and the other parties  thereto and hereto as follows:  (i)
other than as provided in such Assignment and Acceptance,  such assigning Lender
Party makes no  representation  or warranty and assumes no  responsibility  with
respect  to  any  statements,  warranties  or  representations  made  in  or  in
connection  with  any  Loan  Document  or  the  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value  of, or the  perfection  or
priority of any Lien created or purported to be created  under or in  connection
with, any Loan Document or any other instrument or document  furnished  pursuant
thereto;  (ii) such assigning Lender Party makes no  representation  or warranty
and assumes no  responsibility  with respect to the  financial  condition of any
Loan  Party or the  performance  or  observance  by any Loan Party of any of its
obligations  under  any  Loan  Document  or any  other  instrument  or  document
furnished pursuant thereto;  (iii) such assignee confirms that it has received a
copy of this  Agreement,  together with copies of such 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 any Agent,  such assigning Lender Party
or any other  Lender Party 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  confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such powers and
discretion  under the Loan Documents as are delegated to such Agent by the terms
hereof and thereof,  together with such powers and  discretion as are reasonably
incidental  thereto;  and (vii) such  assignee  agrees  that it will  perform in
accordance  with their  terms all of the  obligations  that by the terms of this
Agreement are required to be performed by it as a Lender or Issuing Bank, as the
case may be.

         (d)     The  Administrative  Agent,  acting  for  this  purpose  (but
only for this  purpose)  as the agent of the  Borrower,  shall  maintain  at its
address  referred to in Section 8.02 a copy of each  Assignment  and  Acceptance
delivered to and accepted by it and a register for the  recordation of the names
and addresses of the Lender Parties and the  Commitment  under each Facility of,
and principal  amount of the Advances  owing under each Facility to, each Lender
Party from time to time (the  "REGISTER").  The entries in the Register shall be
conclusive  and  binding  for  all  purposes,  absent  manifest  error,  and the
Borrower,  the Agents and the Lender  Parties shall treat each Person whose name
is recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Agent or any  Lender  Party at any  reasonable  time and from  time to time upon
reasonable prior notice.

         (e)     Upon its receipt of an Assignment  and  Acceptance  executed by
an  assigning  Lender  Party and an  assignee,  together  with any Note or Notes
subject to such assignment,  the Administrative  Agent shall, if such Assignment
and Acceptance has been completed and is in substantially  the form of Exhibit C
hereto,  (i) accept such Assignment and Acceptance,  (ii) record the information
contained  therein in the Register and (iii) give prompt  notice  thereof to the
Borrower.  In the case of any assignment by a Lender, if so requested,  promptly
after its

                                      108

<PAGE>

receipt of such notice,  the  Borrower,  at its own expense,  shall  execute and
deliver to the  Administrative  Agent in exchange  for the  surrendered  Note or
Notes a new Note to the order of such  Eligible  Assignee in an amount  equal to
the Commitment assumed by it under each Facility pursuant to such Assignment and
Acceptance  and, if any  assigning  Lender has retained a  Commitment  hereunder
under  such  Facility,  a new Note to the order of such  assigning  Lender in an
amount equal to the Commitment retained by it hereunder.  Such new Note or Notes
shall be in an  aggregate  principal  amount  equal to the  aggregate  principal
amount of such surrendered  Note or Notes,  shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially  the form
of Exhibit A-1, A-2 or A-3 hereto, as the case may be.

         (f)     Each Lender Party may sell participations to one or more Per-
sons  (other  than any Loan  Party or any of its  Affiliates)  in or to all or a
portion  of its  rights,  obligations  or  rights  and  obligations  under  this
Agreement (including,  without limitation,  all or a portion of its Commitments,
the Advances  owing to it and the Note or Notes (if any) held by it);  PROVIDED,
HOWEVER,   that  (i)  such  Lender  Party's  obligations  under  this  Agreement
(including,  without limitation,  its Commitments) shall remain unchanged,  (ii)
such Lender Party shall remain solely  responsible  to the other parties  hereto
for the  performance of such  obligations,  (iii) such Lender Party shall remain
the  holder  of any  such  Note for all  purposes  of this  Agreement,  (iv) the
Borrower,  the Agents and the other Lender Parties shall continue to deal solely
and  directly  with such Lender  Party in  connection  with such Lender  Party's
rights  and  obligations  under this  Agreement,  (v) the  participant  shall be
entitled to the benefit of the yield protection provisions contained in Sections
2.10,  2.13 and 8.04(c) and the right of set-off  contained  in Section 8.05 and
(vi) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent to
any  departure  by any Loan  Party  therefrom,  except to the  extent  that such
amendment,  waiver or consent  would reduce the  principal of, or stated rate of
interest on, the Notes or any fees or other amounts payable  hereunder,  in each
case to the extent  subject to such  participation,  postpone any date scheduled
for any payment of principal  of, or interest on, the Notes  pursuant to Section
2.04  or  2.07 or any  date  fixed  for any  payment  of fees  hereunder  or any
Guaranteed  Obligations payable under the Subsidiary  Guaranty,  in each case to
the extent subject to such participation, or release all or substantially all of
the Collateral.

         (g)     Any Lender Party may, in connection with any assignment or par-
ticipation  or proposed  assignment  or  participation  pursuant to this Section
8.07,   disclose  to  the  assignee  or  participant  or  proposed  assignee  or
participant  any information  relating to the Borrower  furnished to such Lender
Party by or on behalf of the Borrower;  PROVIDED,  HOWEVER,  that,  prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve  the  confidentiality  of any  Confidential  Information
received by it from such Lender Party.

         (h)     Notwithstanding any other provision set forth in this Agreement
any  Lender  Party  may at any time  create a  security  interest  in all or any
portion of its rights under this Agreement (including,  without limitation,  the
Advances  owing to it and the Note or Notes held by it) in favor of any  Federal
Reserve Bank in  accordance  with  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from its obligations
hereunder.

                                      109

<PAGE>

         (i)     Notwithstanding  anything to the contrary contained herein, any
Lender that is a fund that invests in bank loans may create a security  interest
in all or any portion of the Advances  owing to it and the Note or Notes held by
it to the trustee for holders of obligations owed, or securities issued, by such
fund as security for such obligations or securities,  provided,  that unless and
until  such  trustee  actually  becomes  a Lender in  compliance  with the other
provisions of this Section  8.07,  (i) no such pledge shall release the pledging
Lender  from any of its  obligations  under  the Loan  Documents  and (ii)  such
trustee  shall not be entitled to exercise  any of the rights of a Lender  under
the Loan Documents even though such trustee may have acquired  ownership  rights
with respect to the pledged interest through foreclosure or otherwise.

         (j)     Notwithstanding  anything to the contrary contained herein, any
Lender  Party (a  "GRANTING  LENDER")  may  grant to a special  purpose  funding
vehicle  identified as such in writing from time to time by the Granting  Lender
to the  Administrative  Agent and the  Borrower (an "SPC") the option to provide
all or any part of any Advance  that such  Granting  Lender  would  otherwise be
obligated to make pursuant to this  Agreement,  provided that (i) nothing herein
shall constitute a commitment by any SPC to fund any Advance, and (ii) if an SPC
elects not to exercise such option or otherwise fails to make all or any part of
such  Advance,  the  Granting  Lender  shall be  obligated  to make such Advance
pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall
utilize the  Commitment  of the Granting  Lender to the same extent,  and as if,
such Advance were made by such Granting Lender.  Each party hereto hereby agrees
that (i) no SPC shall be liable for any indemnity or similar payment  obligation
under this Agreement for which a Lender Party would be liable, (ii) no SPC shall
be entitled to the  benefits of Sections  2.10 and 2.13 (or any other  increased
costs protection  provision) and (iii) the Granting Bank shall for all purposes,
including,  without  limitation,  the approval of any amendment or waiver of any
provision of any Loan Document,  remain the Lender Party of record hereunder. In
furtherance of the foregoing,  each party hereto hereby agrees (which  agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the  payment  in full of all  outstanding  commercial
paper or other senior Debt of any SPC, it will not  institute  against,  or join
any   other   Person  in   instituting   against,   such  SPC  any   bankruptcy,
reorganization,  arrangement,  insolvency,  or liquidation  proceeding under the
laws of the United States or any state thereof.  Notwithstanding anything to the
contrary  contained  in this  Agreement,  any SPC may (i) with  notice  to,  but
without prior consent of, the Borrower and the Administrative Agent and with the
payment of a processing  fee of $500,  assign all or any portion of its interest
in any Advance to the Granting Lender and (ii) disclose on a confidential  basis
any  non-public  information  relating  to its funding of Advances to any rating
agency, commercial paper dealer or provider of any surety or guarantee or credit
or liquidity  enhancement  to such SPC. This  subsection  (k) may not be amended
without the prior written  consent of each Granting  Lender,  all or any part of
whose Advances are being funded by the SPC at the time of such amendment.

         Section 8.08      EXECUTION IN  COUNTERPARTS.  This Agreement may be
                           --------------------------
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original  and all of which  taken  together  shall  constitute  one and the same
agreement. Delivery by telecopier of an executed counterpart of a signature page
to this  Agreement  shall be  effective  as  delivery  of an  original  executed
counterpart of this Agreement.

                                      110

<PAGE>

         Section 8.09      NO LIABILITY OF THE ISSUING BANKS.  The Borrower
                           ---------------------------------
assumes all risks of the acts or omissions of any  beneficiary  or transferee of
any Letter of Credit with  respect to its use of such Letter of Credit.  Neither
any  Issuing  Bank nor any of its  officers  or  directors  shall be  liable  or
responsible  for:  (a) the use that may be made of any  Letter  of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;  (b)
the validity,  sufficiency or genuineness  of documents,  or of any  endorsement
thereon,  even if  such  documents  should  prove  to be in any or all  respects
invalid,  insufficient,  fraudulent or forged;  (c) payment by such Issuing Bank
against  presentation of documents that do not comply with the terms of a Letter
of Credit,  including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances  whatsoever in
making or failing to make  payment  under any Letter of Credit,  except that the
Borrower  shall have a claim  against such Issuing  Bank,  and such Issuing Bank
shall  be  liable  to  the  Borrower,  to the  extent  of any  direct,  but  not
consequential,  damages  suffered by the Borrower that the Borrower  proves were
caused by (i) such Issuing  Bank's  willful  misconduct  or gross  negligence as
determined  in  a  final,  non-appealable  judgment  by  a  court  of  competent
jurisdiction  in determining  whether  documents  presented  under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's
willful  failure  to make  lawful  payment  under a Letter of  Credit  after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit.  In furtherance and not in limitation of
the foregoing,  such Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation,  regardless of
any notice or information to the contrary.

         Section  8.10     CONFIDENTIALITY.  Neither  any Agent nor any Lender
                           ---------------
Party shall  disclose any  Confidential  Information  to any Person  without the
consent of the Borrower,  other than (a) to such Agent's or such Lender  Party's
Affiliates and their officers,  directors,  employees,  agents and advisors,  to
other  Lender  Parties  and to  actual or  prospective  Eligible  Assignees  and
participants, and then only on a confidential basis, (b) as required by any law,
rule or  regulation  or judicial  process,  (c) as  requested or required by any
state,  federal  or  foreign  authority  or  examiner  (including  the  National
Association  of  Insurance   Commissioners   or  any  similar   organization  or
quasi-regulatory  authority)  regulating  such Lender  Party,  (d) to any rating
agency when required by it, provided that,  prior to any such  disclosure,  such
rating  agency  shall   undertake  to  preserve  the   confidentiality   of  any
Confidential  Information  relating to the Loan Parties received by it from such
Lender Party,  (e) in connection with any litigation or proceeding to which such
Agent or such Lender Party or any of its Affiliates  may be a party,  (f) to the
extent reasonably required,  in connection with the exercise of any remedy under
this Agreement or any other Loan Document, (g) as provided in Section 8.07(h) or
(h) to any  direct  or  indirect  contractual  counterparty  in swap  agreements
relating  to this  Agreement  or such  contractual  counterparty's  professional
advisor (so long as such  contractual  counterparty or  professional  advisor to
such  contractual  counterparty  agrees  to be bound by the  provisions  of this
Section 8.10).

         Section  8.11     RELEASE OF  COLLATERAL.  Upon the sale,  lease,
                           ----------------------
transfer  or other  disposition  of any  item of  Collateral  of any Loan  Party
(including,  without limitation, as a result of the sale, in accordance with the
terms of the Loan  Documents,  of the Loan Party that owns such  Collateral)  in
accordance with the terms of the Loan Documents,  the Administrative Agent will,
at the Borrower's expense, execute and deliver to such Loan Party such documents
as such Loan Party may  reasonably  request to evidence the release of such item
of  Collateral  from the

                                      111

<PAGE>

assignment  and security  interest  granted  under the  Collateral  Documents in
accordance with the terms of the Loan Documents.

         Section 8.12      JURISDICTION, ETC.
                           ------------------

         (a)     Each of the parties hereto hereby irrevocably and uncondi-
tionally submits, for itself and its property, to the nonexclusive  jurisdiction
of any New York State court or federal court of the United States sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this  Agreement or any of the other Loan Documents
to which it is a party, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such New York State court or, to the fullest extent  permitted
by law, in such Federal  court.  Each of the parties  hereto agrees that a final
judgment  in any  such  action  or  proceeding  shall be  conclusive  and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding  relating to this Agreement
or any of the other Loan Documents in the courts of any jurisdiction.

         (b)     Each of the parties hereto  irrevocably and  unconditionally
waives,  to the  fullest  extent  it may  legally  and  effectively  do so,  any
objection  that it may now or hereafter have to the laying of venue of any suit,
action or proceeding  arising out of or relating to this Agreement or any of the
other  Loan  Documents  to which it is a party in any New York  State or federal
court.  Each of the parties  hereto hereby  irrevocably  waives,  to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

         Section 8.13      GOVERNING  LAW. This Agreement and the Notes shall be
                           --------------
governed by, and construed in accordance with, the internal laws of the State of
New York (including  Section 5-1401 of the General  Obligations Law of the State
of New York) without regard to conflicts of laws  principles  that would require
application of another law.

         Section  8.14     WAIVER OF JURY  TRIAL.  Each of the  Borrower,  the
                           ---------------------
Agents and the Lender Parties  irrevocably  waives all right to trial by jury in
any action,  proceeding  or  counterclaim  (whether  based on contract,  tort or
otherwise)  arising  out  of or  relating  to any of  the  Loan  Documents,  the
Advances,  the Letters of Credit or the actions of any Agent or any Lender Party
in the negotiation, administration, performance or enforcement thereof.

         Section 8.15      JUDGMENT CURRENCY.
                           -----------------

         (a)     If, for the purposes of obtaining  judgment in any court, it is
necessary  to  convert  a sum  due  hereunder  in any  currency  (the  "ORIGINAL
CURRENCY")  into another  currency (the "OTHER  CURRENCY"),  the parties  hereto
agree,  to the fullest  extent  permitted by law, that the rate of exchange used
shall  be that at  which  in  accordance  with  normal  banking  procedures  the
Administrative  Agent or a Lender could purchase the Original Currency with such
Other Currency in New York, New York on the Business Day  immediately  preceding
the day on which any such judgment, or any relevant part thereof, is given.

                                      112

<PAGE>

         (b)     The  obligations  of the  Borrower  in respect of any sum due
from it to any Agent or Lender hereunder shall,  notwithstanding any judgment in
such Other  Currency,  be discharged only to the extent that on the Business Day
following  receipt by such Agent or Lender of any sum  adjudged  to be so due in
such Other  Currency such Agent or Lender may in accordance  with normal banking
procedures  purchase  the Original  Currency  with such Other  Currency;  if the
Original Currency so purchased is less than the sum originally due such Agent or
Lender in the Original Currency,  the Borrower agrees, as a separate  obligation
and notwithstanding any such judgment, to indemnify such Agent or Lender against
such loss, and if the Original  Currency so purchased exceeds the sum originally
due to such Agent or Lender in the Original Currency, such Agent or Lender shall
remit such excess to such Borrower.

                                      113

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                  LEVI STRAUSS & CO.

                                  By
                                    --------------------------------------------
                                    Name:
                                    Title:

                                  ADDRESS FOR NOTICES:

                                  Levi Strauss & Co.
                                  Levi's Plaza
                                  1155 Battery Street
                                  San Francisco, CA  94111
                                  Facsimile:   (415) 501-1342
                                  Telephone:  (415) 501-6955

                                      S-1

<PAGE>

                                                                     O'M&M DRAFT
                                                                        01/29/01

                                 $1,050,000,000

                                CREDIT AGREEMENT

                          Dated as of February 1, 2001

                                      Among

                               LEVI STRAUSS & CO.,

                                  AS BORROWER,
                                  -- --------

                                       and

                 THE INITIAL LENDERS, INITIAL ISSUING BANKS AND
                          SWING LINE BANK NAMED HEREIN,

         AS INITIAL LENDERS, INITIAL ISSUING BANKS, AND SWING LINE BANK
         -- ------- -------  ------- ------- -----  --- ----- ---- ----

                                       and

                             BANK OF AMERICA, N.A.,

                  AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,
                  -- -------------- ----- --- ---------- ----

                                       and

                         BANC OF AMERICA SECURITIES LLC,
                                       and
                           SALOMON SMITH BARNEY INC.,

                  AS CO-LEAD ARRANGERS AND JOINT BOOK MANAGERS
                  -- ------- --------- --- ----- ---- --------

                                       and

                               CITICORP USA, INC.,
                              AS SYNDICATION AGENT
                              -- ----------- -----

                                       and

                            THE BANK OF NOVA SCOTIA,
                             AS DOCUMENTATION AGENT
                             -- ------------- -----

<PAGE>

                                TABLE OF CONTENTS

SECTION                                                                     PAGE
-------                                                                     ----

SCHEDULES
---------
Schedule 1.01(a)  -        Commitments and Applicable Lending Offices
Schedule 1.01(b)  -        Existing Letters of Credit
Schedule 3.01(a)  -        Mortgaged Property
Schedule 4.01(b)  -        Subsidiaries
Schedule 4.01(c)  -        Conflicts
Schedule 4.01(f)  -        Disclosed Litigation
Schedule 4.01(n)  -        ERISA
Schedule 4.01(w)  -        Existing Debt
Schedule 4.01(x)  -        Liens
Schedule 4.01(y)  -        Real Property
Schedule 4.01(z)  -        Restricted Subsidiaries
Schedule 4.01(aa) -        Organizational Structure
Schedule 4.01(bb) -        Material Subsidiaries
Schedule 4.01(cc) -        Investments
Schedule 4.01(dd) -        Intellectual Property

EXHIBITS
--------
Exhibit A-1                Form of Tranche A Term Note
Exhibit A-2                Form of Tranche B Term Note
Exhibit A-3                Form of Revolving Credit Note
Exhibit A-4                Form of Swing Line Note
Exhibit B-1                Form of Notice of Borrowing
Exhibit B-2                Form of Notice of Conversion/Continuation
Exhibit C                  Form of Assignment and Acceptance
Exhibit D                  Form of Pledge and Security Agreement
Exhibit E                  Form of Subsidiary Guaranty
Exhibit F                  Form of Mortgage
Exhibit G                  Form of Compliance Certificate

<PAGE>

<TABLE>
<CAPTION>

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

<S>               <C>                                                                                           <C>
Section 1.01      Certain Defined Terms..........................................................................2
Section 1.02      Computation of Time Periods; Other Definitional Provisions....................................31
Section 1.03      Accounting Terms..............................................................................32
Section 1.04      Change in Accounting Principles...............................................................32

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

Section 2.01      The Advances and the Letters of Credit........................................................32
Section 2.02      Making the Advances...........................................................................35
Section 2.03      Issuance of and Drawings and Reimbursement Under Letters of Credit............................38
Section 2.04      Repayment of Advances.........................................................................41
Section 2.05      Termination or Reduction of the Commitments...................................................43
Section 2.06      Prepayments...................................................................................43
Section 2.07      Interest......................................................................................46
Section 2.08      Fees..........................................................................................47
Section 2.09      Conversion and Continuation of Advances.......................................................48
Section 2.10      Increased Costs, Etc..........................................................................50
Section 2.11      Payments and Computations.....................................................................52
Section 2.12      Evidence of Debt..............................................................................56
Section 2.13      Taxes.........................................................................................56
Section 2.14      Sharing of Payments, Etc......................................................................59
Section 2.15      Use of Proceeds...............................................................................60
Section 2.16      Defaulting Lenders............................................................................60
Section 3.01      Conditions Precedent to Initial Extension of Credit...........................................62
Section 3.02      Conditions Precedent to Each Borrowing and Issuance and Renewal...............................66
Section 3.03      Determinations Under Section 3.01.............................................................67
Section 4.01      Representations and Warranties of the Borrower................................................67
Section 5.01      Affirmative Covenants.........................................................................73
Section 5.02      Negative Covenants............................................................................78
Section 5.03      Reporting Requirements........................................................................89
Section 5.04      Financial Covenants...........................................................................92
Section 6.01      Events of Default.............................................................................93
Section 6.02      Actions in Respect of the Letters of Credit upon Default......................................97
Section 7.01      Appointment, Powers and Immunity..............................................................97
Section 7.02      Reliance by Agent.............................................................................98
Section 7.03      Defaults......................................................................................99
Section 7.04      Bank of America, BAS and Affiliates...........................................................99
Section 7.05      Indemnification..............................................................................100
Section 7.06      Non-Reliance on Agent and Other Lender Parties...............................................101
Section 7.07      Resignation of Administrative Agent..........................................................101
Section 8.01      Amendments, Etc..............................................................................102
Section 8.02      Notices, Etc.................................................................................103

<PAGE>

Section 8.03      No Waiver; Remedies..........................................................................103
Section 8.04      Costs and Expenses...........................................................................104
Section 8.05      Right of Set-off.............................................................................105
Section 8.06      Binding Effect...............................................................................105
Section 8.07      Assignments and Participations...............................................................105
Section 8.08      Execution in Counterparts....................................................................109
Section 8.09      No Liability of the Issuing Banks............................................................109
Section 8.10      Confidentiality..............................................................................110
Section 8.11      Release of Collateral........................................................................110
Section 8.12      Jurisdiction, Etc............................................................................110
Section 8.13      Governing Law................................................................................111
Section 8.14      Waiver of Jury Trial.........................................................................111
Section 8.15      Judgment Currency............................................................................111

</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]