Document:

CREDIT AGREEMENT

     CREDIT AGREEMENT,  dated as of the 23rd day of December,  2005 by and among
COMPX  INTERNATIONAL  INC., a corporation  organized  under the laws of Delaware
(the  "Borrower"),  the lenders who are or may become a party to this Agreement,
as Lenders (the "Lenders"),  and WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking   association,   as   Administrative   Agent   for  the   Lenders   (the
"Administrative Agent").

                              STATEMENT OF PURPOSE

     The  Lenders  have  extended  certain  credit  facilities  to the  Borrower
pursuant to the Credit  Agreement dated as of January 22, 2003, by and among the
Borrower,  the Lenders and the Administrative Agent (as amended by (i) the First
Amendment  to Credit  Agreement  dated as of October 20,  2003,  (ii) the Second
Amendment  to Credit  Agreement,  Waiver  and  Release  of  European  Investment
Collateral  dated  January  7,  2005,  and (iii) the Third  Amendment  to Credit
Agreement dated October 31, 2005, collectively the "Existing Credit Agreement").

     The Borrower has requested,  and the Lenders have agreed,  to terminate and
replace the  existing  credit  facilities  provided  under the  Existing  Credit
Agreement,  with the credit facilities extended to the Borrower on the terms and
conditions of this Agreement.

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.1  Definitions.  The following  terms when used in this Agreement
shall have the meanings assigned to them below:

     "Administrative  Agent" means  Wachovia in its  capacity as  Administrative
Agent hereunder, and any successor thereto appointed pursuant to Section 12.9.

     "Administrative   Agent's  Correspondent"  means  Wachovia  Bank,  National
Association, London Branch, or any other financial institution designated by the
Administrative  Agent to act as its correspondent  hereunder with respect to the
distribution and payment of Alternative Currency Loans.

     "Administrative  Agent's  Office"  means the  office of the  Administrative
Agent  specified in or determined in accordance  with the  provisions of Section
13.1(c).

     "Affiliate" means, with respect to any Person, any other Person (other than
a Subsidiary of the Borrower)  which directly or indirectly  through one or more
intermediaries,  controls, or is controlled by, or is under common control with,
such first Person or any of its  Subsidiaries.  The term "control" means (a) the
power  to vote  ten  percent  (10%) or more of the  securities  or other  equity
interests of a Person  having  ordinary  voting  power,  or (b) the  possession,
directly or  indirectly,  of any other power to direct or cause the direction of
the management  and policies of a Person,  whether  through  ownership of voting
securities, by contract or otherwise.

     "Aggregate   Commitment"   means  the  aggregate  amount  of  the  Lenders'
Commitments  hereunder,  as such amount may be  increased,  reduced or otherwise
modified at any time or from time to time pursuant to the terms  hereof.  On the
Closing  Date,  the  Aggregate   Commitment   shall  be  Fifty  Million  Dollars
($50,000,000).

     "Agreement" means this Credit Agreement, as amended, restated, supplemented
or otherwise modified from time to time.

     "Alternative  Currency"  means (i) the euro,  (ii) the Canadian  Dollar and
(iii)  with the  prior  written  consent  of the  Administrative  Agent  and the
Lenders,  any  other  lawful  currency  (other  than  Dollars)  which is  freely
transferable  and convertible  into Dollars in the United States currency market
and freely  available  to all of the  Lenders in the  London  interbank  deposit
market.

     "Alternative  Currency  Amount"  means  with  respect  to each Loan made or
continued (or to be made or continued) in an Alternative Currency, the amount of
such Alternative Currency which is equivalent to the principal amount in Dollars
of such  Loan  at the  most  favorable  spot  exchange  rate  (to the  Borrower)
determined by the  Administrative  Agent to be available to it at  approximately
11:00 a.m.  (Charlotte  time) two (2) Business  Days before such Loan is made or
continued (or to be made or continued).  When used with respect to any other sum
expressed in Dollars,  "Alternative  Currency  Amount"  shall mean the amount of
such  Alternative  Currency  which is  equivalent  to the amount so expressed in
Dollars at the most favorable spot exchange rate (to the Borrower) determined by
the Administrative Agent to be available to it at the relevant time.

     "Alternative  Currency  Commitment"  means the  lesser  of (i) Ten  Million
Dollars ($10,000,000) and (ii) the Aggregate  Commitment,  as such amount may be
reduced  or  modified  at any time or from  time to time  pursuant  to the terms
hereof.

     "Alternative  Currency  Facility" means the alternative  currency  facility
established pursuant to Section 2.2.

     "Alternative   Currency   Lender"  means  Wachovia,   in  its  capacity  as
alternative currency lender hereunder.

     "Alternative  Currency Loan" means any revolving credit loan denominated in
an Alternative  Currency made by the Alternative Currency Lender to the Borrower
pursuant to Section 2.2, and all such Alternative Currency Loans collectively as
the context requires.

     "Alternative Currency Note" means the Alternative Currency Note made by the
Borrower payable to the order of the Alternative Currency Lender,  substantially
in the form of Exhibit A-3 hereto,  evidencing the  Alternative  Currency Loans,
and any  amendments,  supplements  and  modifications  thereto,  any substitutes
therefor and any replacements,  restatements, renewals or extensions thereof, in
whole or in part.

     "Applicable Law" means all applicable  provisions of  constitutions,  laws,
statutes,   ordinances,   rules,  treaties,   regulations,   permits,  licenses,
approvals,  interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.

     "Applicable  Margin"  shall have the  meaning  assigned  thereto in Section
4.1(c);  provided,  that  with  respect  to  each  LIBOR  Rate  Loan  made in an
Alternative  Currency,  the  Applicable  Margin shall include the Mandatory Cost
Rate, as determined pursuant to the formula set forth on Schedule 1.1(b) hereto.

     "Application"  means an  application,  in the form specified by the Issuing
Lender from time to time,  requesting  the  Issuing  Lender to issue a Letter of
Credit.

     "Approved Fund" means any Person (other than a natural Person),  including,
without limitation,  any special purpose entity, that is (or will be) engaged in
making,  purchasing,  holding or  otherwise  investing in  commercial  loans and
similar  extensions of credit in the ordinary course of its business;  provided,
that with respect to any assignment of any  Commitment,  such Approved Fund must
be administered  by (a) a Lender,  (b) an Affiliate of a Lender or (c) an entity
or an Affiliate of an entity that administers or manages a Lender.

     "Arbitration  Rules"  shall have the  meaning  assigned  thereto in Section
13.6(a).

     "Assignment  and  Acceptance"  shall have the meaning  assigned  thereto in
Section 13.10(b).

     "Available Commitment" means, as to any Lender at any time, an amount equal
to (a) such Lender's Commitment less (b) such Lender's Extensions of Credit.

     "Base Rate"  means,  at any time,  the higher of (a) the Prime Rate and (b)
the  Federal  Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.

     "Base Rate Loan" means any Loan  bearing  interest at a rate based upon the
Base Rate as provided in Section 4.1(a).

     "Benefited Lender" shall have the meaning assigned thereto in Section 4.6.

     "Borrower" means CompX  International  Inc., a corporation  organized under
the laws of Delaware, in its capacity as borrower hereunder.

     "Business Day" means (a) for all purposes other than as set forth in clause
(b)  below,  any day  (other  than a  Saturday  or  Sunday)  on  which  banks in
Charlotte,  North  Carolina and New York,  New York, are open for the conduct of
their domestic or international commercial banking business, as applicable,  and
(b) with  respect to all notices and  determinations  in  connection  with,  and
payments of principal and interest on, any LIBOR Rate Loan,  any day (i) that is
a Business Day described in clause (a) and that is also a day for trading by and
between banks in deposits for the  applicable  Permitted  Currency in the London
interbank  market  and (ii) on which  banks  are open for the  conduct  of their
domestic   and   international   banking   business   in  the  place  where  the
Administrative  Agent or the  Administrative  Agent's  Correspondent  shall make
available Loans in such Permitted Currency.  Notwithstanding the foregoing, with
respect  to  any  amount  denominated  or to be  denominated  in the  euro,  any
reference to a "Business  Day" shall be construed as a reference to a day (other
than a Saturday or Sunday) on which banks are generally open for business in New
York,  New York and  prime  banks in London  generally  provide  quotations  for
deposits denominated in the euro.

     "Calculation  Date"  shall  have the  meaning  assigned  thereto in Section
4.1(c).

     "Canadian  Dollar" means, at any time of  determination,  the then official
currency of Canada.

     "Capital  Expenditures"  means,  with  respect  to  the  Borrower  and  its
Subsidiaries  for any period,  the aggregate  amount of all  expenditures of the
Borrower and its Subsidiaries  during such period that, in conformity with GAAP,
are included in "additions to property, plant and equipment" or comparable items
reflected  in the  consolidated  financial  statements  of the  Borrower and its
Subsidiaries.

     "Capital  Lease"  means any lease of any property by the Borrower or any of
its Subsidiaries, as lessee, that should, in accordance with GAAP, be classified
and  accounted  for as a capital  lease on a  Consolidated  balance sheet of the
Borrower and its Subsidiaries.

     "Change in  Control"  shall have the  meaning  assigned  thereto in Section
11.1(h).

     "Closing  Date" means the date of this Agreement or such later Business Day
upon which each condition  described in Section 5.2 shall be satisfied or waived
in all respects in a manner acceptable to the Administrative  Agent, in its sole
discretion.

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

     "Collateral" means the collateral  security for the Obligations  pledged or
granted pursuant to the Security Documents.

     "Collateral Agreement" means the collateral agreement of even date executed
by the Borrower and each of the  Subsidiary  Guarantors  and  Borrower's  Wholly
Owned Material Foreign  Subsidiaries in favor of the  Administrative  Agent, for
the benefit of itself and the Lenders,  substantially  in the form of Exhibit I,
as amended, restated, supplemented or otherwise modified from time to time.

     "Commitment" means, as to any Lender, the obligation of such Lender to make
Loans  (including,  without  limitation,  to participate in Swingline  Loans and
Alternative Currency Loans) to the Borrower, and issue or participate in Letters
of Credit issued for the account of the Borrower,  in an aggregate  principal or
face amount at any time  outstanding not to exceed the amount set forth opposite
such  Lender's  name on Schedule  1.1(a)  hereto,  as the same may be reduced or
modified at any time or from time to time pursuant to the terms hereof.

     "Commitment  Fee Rate" shall have the meaning  assigned  thereto in Section
4.3(a).

     "Commitment  Percentage"  means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) the Aggregate  Commitment
of all of the Lenders.

     "Consolidated"  means, when used with reference to financial  statements or
financial statement items of the Borrower and its Subsidiaries,  such statements
or items on a consolidated  basis in accordance  with  applicable  principles of
consolidation under GAAP.

     "Consolidated  Net  Worth"  means,  with  respect to the  Borrower  and its
Subsidiaries,  on any date of  determination,  the  total  stockholders'  equity
(including capital stock, additional paid-in capital and retained earnings after
deducting the treasury stock) of the Borrower and its Subsidiaries  appearing on
a Consolidated  balance sheet of the Borrower and its  Subsidiaries  prepared in
accordance  with GAAP  (excluding  on a  cumulative  basis any  adjustments  for
foreign currency translation).

     "Costs of Acquisition" means, with respect to any Permitted Acquisition, as
at the date of entering  into any agreement  therefor,  the sum of the following
(without  duplication):  (i) the value of the capital stock, warrants or options
to acquire capital stock of the Borrower or any Subsidiary of the Borrower to be
transferred in connection therewith, (ii) the amount of any cash and fair market
value of other  property  (excluding  property  described  in clause (i) and the
unpaid principal amount of any Debt instrument)  given as  consideration,  (iii)
the  amount  (determined  by using the face  amount  or the  amount  payable  at
maturity, whichever is greater) of any Debt incurred, assumed or acquired by the
Borrower or any  Subsidiary  of the Borrower in connection  with such  Permitted
Acquisition,  (iv) all additional purchase price amounts in the form of earnouts
and other  contingent  obligations  that  should be  recorded  on the  financial
statements of the Borrower and its Subsidiaries in accordance with GAAP, (v) all
amounts paid in respect of covenants not to compete,  consulting agreements that
should  be  recorded  on the  financial  statements  of  the  Borrower  and  its
Subsidiaries  in  accordance  with  GAAP,  and  other  affiliated  contracts  in
connection with such Permitted Acquisition, (vi) the aggregate fair market value
of all  other  consideration  given by the  Borrower  or any  Subsidiary  of the
Borrower in connection with such Permitted Acquisition recorded on the financial
statements of the Borrower and its  Subsidiaries  in accordance  with GAAP,  and
(vii)  out-of-pocket   transaction  costs  for  the  services  and  expenses  of
attorneys,   accountants  and  other  consultants  incurred  in  effecting  such
transaction,  and other similar  transaction costs so incurred.  For purposes of
determining the Cost of Acquisition for any  transaction,  (A) the capital stock
of the  Borrower  shall be valued (I) in the case of capital  stock that is then
designated as a national market system  security by the National  Association of
Securities  Dealers,  Inc.  ("NASDAQ")  or is  listed on a  national  securities
exchange,  the average of the last  reported bid and ask  quotations or the last
prices reported on, or immediately  prior to, the acquisition date and (II) with
respect to any other shares of capital  stock,  as reasonably  determined by the
Board of  Directors of the  Borrower,  (B) the capital  stock of any  Subsidiary
shall be valued as  reasonably  determined  by the  Board of  Directors  of such
Subsidiary  and (C)  with  respect  to any  Permitted  Acquisition  accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Cost of  Acquisition  shall include both the cost of acquiring  such option,
warrant or convertible security as well as the cost of exercise or conversion.

     "Credit Facility" means,  collectively,  the Revolving Credit Facility, the
Swingline Facility, the Alternative Currency Facility and the L/C Facility.

     "Debt" means, with respect to the Borrower and its Subsidiaries at any date
and without duplication,  the sum of the following calculated in accordance with
GAAP: (a) all  liabilities,  obligations and indebtedness of any such Person for
borrowed  money  including  but not limited to  obligations  evidenced by bonds,
debentures,  notes or other similar instruments, (b) all obligations of any such
Person to pay a deferred purchase price for property or services  (provided that
"Debt" shall not include trade payables and other accrued liabilities arising in
the ordinary  course of business  which are either (i) not more than ninety (90)
days past due or (ii) if more than ninety (90) days past due, being contested in
good  faith  by  appropriate  proceedings  diligently  conducted  and for  which
adequate  reserves  have  been  provided  in  accordance  with  GAAP),  (c)  all
obligations of any such Person as lessee under Capital  Leases,  (d) all Debt of
any other  Person  secured  by a Lien on any asset of any such  Person,  (e) all
Guaranty  Obligations  of any such Person,  (f) all  obligations,  contingent or
otherwise,  of any such Person relative to the face amount of letters of credit,
whether or not drawn, including without limitation any Reimbursement Obligation,
and  banker's  acceptances  issued for the account of any such  Person,  (g) all
obligations  of any such  Person to  redeem,  repurchase,  exchange,  defease or
otherwise  make  payments  in respect of capital  stock or other  securities  or
partnership  interests of such Person, (h) all net payment obligations  incurred
by any such  Person  pursuant to Hedging  Agreements  (solely to the extent that
such net payment  obligations are in excess of $2,000,000),  (i) all outstanding
payment  obligations with respect to Synthetic Leases and (j) all obligations of
any such Person under any asset securitization  program. For the purpose of item
(h) above, (1) the amount of any net payment obligation  pursuant to any Hedging
Agreement on any date shall be deemed to be the Termination  Value thereof as of
such date and (2)  "Termination  Value"  means,  in  respect  of any one or more
Hedging  Agreements,  after  taking  into  account  the  effect  of any  legally
enforceable netting agreement relating to such Hedging  Agreements,  (A) for any
date on or after the date such  Hedging  Agreements  have  been  closed  out and
termination  value(s)  determined  in  accordance  therewith,  such  termination
value(s),  and (B) for any date prior to the date  referenced in clause (A), the
amount(s) determined as the mark-to-market value(s) for such Hedging Agreements,
as  determined  based upon one or more  mid-market  or other  readily  available
quotations  provided by any recognized dealer in such Hedging  Agreements (which
may include any Person that is a Lender or an Affiliate thereof at the time such
Hedging Agreement is executed).

     "Default" means any of the events specified in Section 11.1, which with the
passage of time, the giving of notice or any other  condition,  would constitute
an Event of Default.

     "Disputes" shall have the meaning set forth in Section 13.6.

     "Dollars"  or "$"  means,  unless  otherwise  qualified,  dollars in lawful
currency of the United States.

     "Dollar  Amount"  means (a) with respect to each Loan made or continued (or
to be made or  continued),  or  Letter of Credit  issued or  extended  (or to be
issued or  extended),  in Dollars,  the  principal  amount  thereof and (b) with
respect  to each  Loan  made or  continued  (or to be made or  continued)  in an
Alternative Currency, the amount of Dollars which is equivalent to the principal
amount of such Loan, at the most  favorable spot exchange rate (to the Borrower)
determined by the Administrative  Agent at approximately 11:00 a.m. (the time of
the Administrative Agent's  Correspondent's office) two (2) Business Days before
such  Loan is made or  continued  (or to be made or  continued).  When used with
respect to any other sum expressed in an Alternative  Currency,  "Dollar Amount"
shall mean the amount of Dollars  which is equivalent to the amount so expressed
in such  Alternative  Currency at the most  favorable spot exchange rate (to the
Borrower)  determined by the  Administrative  Agent to be available to it at the
relevant time.

     "Domestic  Subsidiary" means any Subsidiary of the Borrower organized under
the laws of any state of the United States or the District of Columbia.

     "EBIT"  means,  for any period,  the sum of the  following  determined on a
Consolidated basis, without  duplication,  for the Borrower and its Subsidiaries
in accordance  with GAAP: (a) Net Income for such period plus (b) the sum of the
following to the extent  deducted in determining  Net Income:  (i) income taxes,
franchise  taxes and similar  taxes  imposed in lieu of net income  taxes,  (ii)
Interest  Expense  and  (iii)  all non cash  charges  associated  with any asset
impairment  less  (c)  interest  income;  provided  that  for  the  purposes  of
determining  EBIT for any  period  during  which any  Permitted  Acquisition  is
consummated,  EBIT shall be adjusted to give effect to the  consummation of such
Permitted  Acquisition on a pro forma basis in accordance  with GAAP, as if such
Permitted Acquisition occurred on the first day of such period, such adjustments
to be  calculated  in a manner  reasonably  satisfactory  to the  Administrative
Agent.

     "EBITDA" means,  for any period,  the sum of the following  determined on a
Consolidated basis, without  duplication,  for the Borrower and its Subsidiaries
in accordance  with GAAP: (a) Net Income for such period plus (b) the sum of the
following to the extent  deducted in determining  Net Income:  (i) income taxes,
franchise  taxes and similar  taxes  imposed in lieu of net income  taxes,  (ii)
Interest Expense,  (iii)  amortization,  depreciation and other non-cash charges
and (iv) all non cash  charges  associated  with any asset  impairment  less (c)
interest  income;  provided that for the purposes of determining  EBITDA for any
period during which any Permitted  Acquisition is  consummated,  EBITDA shall be
adjusted to give effect to the  consummation of such Permitted  Acquisition on a
pro forma  basis in  accordance  with  GAAP,  as if such  Permitted  Acquisition
occurred on the first day of such period, such adjustments to be calculated in a
manner reasonably satisfactory to the Administrative Agent.

     "Eligible  Assignee"  means,  with respect to any assignment of the rights,
interest and obligations of a Lender hereunder,  a Person that is at the time of
such  assignment (a) a commercial  bank  organized  under the laws of the United
States or any state thereof,  having  combined  capital and surplus in excess of
$500,000,000,  (b) a  commercial  bank  organized  under  the laws of any  other
country  that is a  member  of the  Organization  of  Economic  Cooperation  and
Development,  or a political  subdivision of any such country,  having  combined
capital and surplus in excess of $500,000,000,  (c) a finance company, insurance
company or other financial  institution which in the ordinary course of business
extends credit of the type extended  hereunder and has total assets in excess of
$1,000,000,000,  (d) already a Lender hereunder (whether as an original party to
this Agreement or as the assignee of another Lender), (e) the successor (whether
by transfer of assets,  merger or otherwise) to all or substantially  all of the
commercial  lending business of the assigning  Lender,  (f) any Affiliate of the
assigning  Lender,  (g) any Approved  Fund or (h) any other Person that has been
approved  in  writing  as an  Eligible  Assignee  by (i)  other  than  upon  the
occurrence and during the  continuance  of any Default or Event of Default,  the
Borrower, and (ii) the Administrative Agent.

     "EMU" means the economic and monetary union as  contemplated  in the Treaty
on European Union.

     "EMU  Legislation"  means  legislative  measures of the Council of European
Union for the introduction of, change over to or operation of the euro.

     "Employee  Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is  maintained  for employees of the Borrower
or any ERISA Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.

     "Environmental  Claims"  means any and all  administrative,  regulatory  or
judicial actions,  suits,  demands,  demand letters,  claims,  liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the  ordinary  course of  business  and not in  response to any
third party action or request of any kind) or proceedings relating in any way to
any actual or alleged  violation of or liability under any  Environmental Law or
relating  to  any  permit  issued,  or  any  approval  given,   under  any  such
Environmental  Law,  including,  without  limitation,  any  and  all  claims  by
Governmental Authorities for enforcement,  cleanup, removal, response,  remedial
or other  actions  or  damages,  contribution,  indemnification  cost  recovery,
compensation or injunctive relief resulting from Hazardous  Materials or arising
from alleged injury or threat of injury to human health or the environment.

     "Environmental Laws" means any and all federal,  foreign, state, provincial
and local laws, statutes,  ordinances,  rules, regulations,  permits,  licenses,
approvals,  interpretations  and orders of courts or  Governmental  Authorities,
relating to the protection of human health or the environment.

     "ERISA" means the Employee  Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended or modified from time to time.

     "ERISA  Affiliate"  means any  Person who  together  with the  Borrower  is
treated as a single employer  within the meaning of Section 414(b),  (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.

     "euro" means the single currency to which the  Participating  Member States
of the European Union have converted.

     "Eurodollar  Reserve  Percentage"  means,  for any day with  respect to any
LIBOR Rate Loan denominated in Dollars,  the percentage  (expressed as a decimal
and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in
effect  for  such  day as  prescribed  by the  Federal  Reserve  Board  (or  any
successor) for determining the maximum reserve  requirement  (including  without
limitation  any  basic,  supplemental  or  emergency  reserves)  in  respect  of
eurocurrency  liabilities or any similar  category of  liabilities  for a member
bank of the Federal Reserve System in New York City.

     "Event of  Default"  means any of the events  specified  in  Section  11.1,
provided  that any  requirement  for passage of time,  giving of notice,  or any
other condition has been satisfied.

     "Existing Credit  Agreement" shall have the meaning assigned thereto in the
Statement of Purpose.

     "Existing Facility" means the credit facility  established  pursuant to the
Existing Credit Agreement.

     "Existing Bond Documentation"  means the agreements and other documentation
described on Schedule 1.1(c).

     "Extensions of Credit"  means,  as to any Lender at any time, (a) an amount
equal to the sum of (i) the aggregate  principal  amount of all Revolving Credit
Loans  made by such  Lender  then  outstanding,  (ii) such  Lender's  Commitment
Percentage  of  the  L/C  Obligations  then  outstanding,  (iii)  such  Lender's
Commitment  Percentage of the  Swingline  Loans then  outstanding  and (iv) such
Lender's   Commitment   Percentage  of  the  Alternative   Currency  Loans  then
outstanding  or (b) the  making of any Loan or  participation  in any  Letter of
Credit by such Lender, as the context requires.

     "FDIC" means the Federal Deposit  Insurance  Corporation,  or any successor
thereto.

     "Federal  Funds  Rate"  means,  the rate per  annum  (rounded  upwards,  if
necessary,  to the next higher 1/100th of 1%)  representing  the daily effective
federal  funds  rate as quoted by the  Administrative  Agent  and  confirmed  in
Federal  Reserve  Board  Statistical  Release  H.15  (519) or any  successor  or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not  available,  then "Federal  Funds Rate" shall mean a daily rate
which is determined,  in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national  federal funds
market at 9:00 a.m.  (Charlotte  time).  Rates for weekends or holidays shall be
the same as the rate for the most immediately preceding Business Day.

     "Fiscal  Year" means the fiscal year of the Borrower  and its  Subsidiaries
ending on the  nearest  Sunday  to  December  31 (for  United  States  reporting
purposes).

     "Foreign  Subsidiary"  means any  Subsidiary  of the Borrower not organized
under the laws of any State of the United States or the District of Columbia.

     "GAAP" means accounting  principles generally accepted in the United States
of America, as recognized by the U.S. Securities and Exchange  Commissioin,  the
American Institute of Certified Public Accountants and the Financial  Accounting
Standards Board,  consistently  applied and maintained on a consistent basis for
the Borrower and its  Subsidiaries  throughout the period indicated and (subject
to Section 13.9)  consistent with the prior  financial  practice of the Borrower
and its  Subsidiaries.  Any  differences in the recognition of GAAP between such
parties  shall be  resolved  in favor of (i) the U.S.  Securities  and  Exchange
Commission over the American  Institute of Certified Public  Accountants and the
Financial Accounting Standards Board and (ii) the Financial Accounting Standards
Board over the American Institute of Certified Public Accountants.

     "Governmental  Approvals" means all  authorizations,  consents,  approvals,
licenses and exemptions of,  registrations and filings with, and reports to, all
Governmental Authorities.

     "Governmental  Authority"  means any nation,  province,  state or political
subdivision  thereof,  and any  government or any Person  exercising  executive,
legislative,   regulatory  or  administrative  functions  of  or  pertaining  to
government,  and any  corporation or other entity owned or  controlled,  through
stock or capital ownership or otherwise, by any of the foregoing.

     "Guaranty   Obligation"  means,  with  respect  to  the  Borrower  and  its
Subsidiaries,  without duplication, any obligation,  contingent or otherwise, of
any such  Person  pursuant  to which such  Person  has  directly  or  indirectly
guaranteed  any Debt or other  obligations  of any  other  Person  and,  without
limiting the generality of the foregoing,  any  obligation,  direct or indirect,
contingent or  otherwise,  of any such Person (a) to purchase or pay (or advance
or supply  funds for the  purchase or payment of) such Debt or other  obligation
(whether  arising by virtue of  partnership  arrangements,  by agreement to keep
well, to purchase assets, goods,  securities or services, to take-or-pay,  or to
maintain  financial  statement  conditions or otherwise) or (b) entered into for
the purpose of  assuring  in any other  manner the obligee of such Debt or other
obligation  of the payment  thereof or to protect such  obligee  against loss in
respect  thereof  (in  whole or in  part);  provided,  that  the  term  Guaranty
Obligation  shall not  include  endorsements  for  collection  or deposit in the
ordinary course of business.

     "Hazardous  Materials"  means any  substances or materials  that are toxic,
explosive,  corrosive,   flammable,   infectious,   radioactive,   carcinogenic,
mutagenic or otherwise  harmful to human  health or the  environment  and are or
become  regulated  by any  Governmental  Authority,  or  that  contain,  without
limitation,   asbestos,   polychlorinated   biphenyls,  urea  formaldehyde  foam
insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude
oil, nuclear fuel, natural gas or synthetic gas.

     "Hedging  Agreement"  means any agreement with respect to any Interest Rate
Contract,  forward rate  agreement,  commodity swap,  forward  foreign  exchange
agreement, currency swap agreement, cross-currency rate swap agreement, currency
option  agreement or other agreement or arrangement  designed to alter the risks
of any Person arising from  fluctuations in interest  rates,  currency values or
commodity prices, all as amended,  restated,  supplemented or otherwise modified
from time to time.

     "Hedging  Obligations"  shall  have the  meaning  assigned  thereto  in the
definition of "Obligations."

     "Interest Expense" means, with respect to the Borrower and its Subsidiaries
for any period, the gross interest expense of the Borrower and its Subsidiaries,
all determined for such period on a Consolidated basis, without duplication,  in
accordance with GAAP.

     "Interest  Period"  shall  have the  meaning  assigned  thereto  in Section
4.1(b).

     "Interest Rate Contract" means any interest rate swap  agreement,  interest
rate  cap  agreement,  interest  rate  floor  agreement,  interest  rate  collar
agreement,  interest rate option or any other agreement regarding the hedging of
interest  rate risk exposure  executed in  connection  with hedging the interest
rate exposure of any Person and any confirming  letter executed pursuant to such
agreement,  all as amended,  restated,  supplemented or otherwise  modified from
time to time.

     "ISP  98"  means  the  International   Standby  Practices  (1998  Revision,
effective January 1, 1999),  International  Chamber of Commerce  Publication No.
590.

     "Issuing Lender" means Wachovia, in its capacity as issuer of any Letter of
Credit, or any successor thereto.

     "Joinder Agreement" means, collectively, each joinder agreement executed in
favor of the  Administrative  Agent for the  ratable  benefit  of itself and the
Lenders, substantially in the form of Exhibit J.

     "L/C Commitment" means the lesser of (a) Ten Million Dollars  ($10,000,000)
and (b) the aggregate Available Commitment.

     "L/C Facility" means the letter of credit facility  established pursuant to
Article III.

     "L/C Obligations"  means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate  amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.

     "L/C Participants" means the collective  reference to all the Lenders other
than the Issuing Lender.

     "Lender" means each Person executing this Agreement as a Lender (including,
without limitation, the Issuing Lender, the Swingline Lender and the Alternative
Currency  Lender  unless  the  context  otherwise  requires)  set  forth  on the
signature  pages hereto and each Person that  hereafter  becomes a party to this
Agreement as a Lender pursuant to Section 13.10.

     "Lending  Office"  means,  with  respect to any Lender,  the office of such
Lender  maintaining  such Lender's  Commitment  Percentage of the  Extensions of
Credit.

     "Letters of Credit" shall have the meaning assigned thereto in Section 3.1.

     "Leverage Ratio" means the ratio calculated pursuant to Section 9.1.

     "LIBOR" means the rate of interest per annum determined on the basis of the
rate for deposits in Dollars in minimum  amounts of at least  $3,000,000 (or the
Alternative Currency Amount thereof with respect to a borrowing to be made in an
Alternative Currency) for a period equal to the applicable Interest Period which
appears on the Dow Jones Market Screen 3750, or the  applicable  Reuters  Screen
Page, as  determined  by the  Administrative  Agent in its sole  discretion,  at
approximately  11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable  Interest Period  (rounded  upward,  if necessary,  to the
nearest  1/100th of 1%).  If, for any  reason,  such rate does not appear on Dow
Jones Market Screen 3750, or the applicable  Reuters  Screen Page,  then "LIBOR"
shall be determined by the Administrative  Agent to be the arithmetic average of
the rate per annum at which  deposits  in the  Permitted  Currency  in which the
applicable  Loan is  denominated  would be offered by first  class  banks in the
London  interbank  market to the  Administrative  Agent  (or the  Administrative
Agent's  Correspondent)  at  approximately  11:00  a.m.  (London  time)  two (2)
Business  Days prior to the first day of the  applicable  Interest  Period for a
period equal to such Interest  Period.  Each  calculation by the  Administrative
Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest
error.

     "LIBOR Rate" means

     (i) with respect to any LIBOR Rate Loan denominated in Dollars,  a rate per
annum  (rounded  upwards,  if  necessary,  to the  next  higher  1/100th  of 1%)
determined by the Administrative Agent pursuant to the following formula:

         LIBOR Rate =      LIBOR
                      -------------------------------
                           1.00-Eurodollar Reserve Percentage

                  and

     (ii) with  respect to any LIBOR Rate Loan  denominated  in any  Alternative
Currency,  a rate per annum (rounded upwards,  if necessary,  to the next higher
1/100th of 1%) equal to LIBOR.

Each  calculation  by the  Administrative  Agent  of the  LIBOR  Rate  shall  be
conclusive and binding for all purposes, absent manifest error.

     "LIBOR Rate Loan" means any Loan bearing  interest at a rate based upon the
LIBOR Rate as provided in Section 4.1(a).

     "Lien" means, with respect to any asset, any mortgage,  leasehold mortgage,
lien, pledge,  charge,  security  interest,  hypothecation or encumbrance of any
kind in respect of such  asset.  For the  purposes of this  Agreement,  a Person
shall be deemed to own  subject  to a Lien any asset  which it has  acquired  or
holds subject to the interest of a vendor or lessor under any  conditional  sale
agreement,  Capital Lease or other title  retention  agreement  relating to such
asset.

     "Liquidity"  means, with respect to the Borrower and its Subsidiaries as of
any date of determination, (i) consolidated cash and cash equivalents as of such
date plus (ii) the aggregate Available Commitments as of such date.

     "Loan  Documents"  means,  collectively,  this  Agreement,  the Notes,  the
Applications,  the Subsidiary Guaranty Agreement,  the Security Documents,  each
Joinder Agreement and each other document, instrument, certificate and agreement
executed and delivered by the Borrower or any  Subsidiary  thereof in connection
with this Agreement  (excluding any Hedging  Agreement),  all as may be amended,
restated, supplemented or otherwise modified from time to time.

     "Loans" means the collective  reference to the Revolving  Credit Loans, the
Alternative  Currency Loans and the Swingline Loans and "Loan" means any of such
Loans.

     "Mandatory  Cost  Rate"  means  an  addition  to the  interest  rate on any
Revolving  Credit  Loan or  Alternative  Currency  Loan  made by any  Lender  to
compensate  such Lender for the cost  imputed to the Lender  resulting  from the
imposition  from time to time under or  pursuant to the Bank of England Act 1998
and/or by the Bank of England and/or the Financial  Services Authority (or other
Governmental  Authorities  of the  United  Kingdom)  of a  requirement  to place
non-interest  bearing cash ratio deposits or special deposits  (whether interest
bearing or not) with the Bank of England  and/or fees to the Financial  Services
Authority  calculated  by reference to  liabilities  used to fund the  Revolving
Credit Loans and the Alternative  Currency Loans,  expressed as a rate per annum
and determined pursuant to the formula set forth on Schedule 1.1(b) hereto.

     "Material  Acquisition"  means  any  Permitted  Acquisition,  the  Costs of
Acquisition  of which  exceed five  percent  (5%) of the total net assets of the
Borrower and its Subsidiaries as reflected on the financial statements delivered
in accordance with Section 7.1.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
properties,   business,   prospects,   operations  or  condition  (financial  or
otherwise)  of the  Borrower  and its  Subsidiaries  taken as a whole,  (ii) the
ability of the  Borrower  or any of its  Subsidiaries  to perform  its  material
obligations  under  the Loan  Documents  to which  it is a party,  or (iii)  the
validity and enforceability of the Loan Documents.

     "Material  Domestic  Subsidiary"  means,  at any  time,  (a)  any  Domestic
Subsidiary of the Borrower with net assets in excess of five percent (5%) of the
total net  assets of the  Borrower  and its  Subsidiaries  as  reflected  on the
financial statements delivered in accordance with Section 7.1, (b) any parent of
any  Domestic  Subsidiary  referred to in clause (a) of this  definition,  which
parent is also a Domestic  Subsidiary and which parent is not deemed a "Material
Domestic Subsidiary" pursuant to clause (a) of this definition, (c) any Domestic
Subsidiary   of  the  Borrower   voluntarily   designated   in  writing  to  the
Administrative  Agent  by  the  Borrower  as a  "Material  Domestic  Subsidiary"
regardless  of whether such Domestic  Subsidiary is deemed a "Material  Domestic
Subsidiary"  pursuant  to  clause  (a) or (b) of  this  definition  and  (d) any
Domestic  Subsidiary  of the Borrower  that  executes  all the relevant  joinder
documents in  compliance  with Section 8.10  regardless of whether such Domestic
Subsidiary is deemed a "Material  Domestic  Subsidiary"  pursuant to clause (a),
(b) or (c) of this definition.

     "Material  Foreign   Subsidiary"  means,  at  any  time,  (a)  any  Foreign
Subsidiary  of the  Borrower  directly  owned  by  the  Borrower  or a  Domestic
Subsidiary of the Borrower with net assets in excess of five percent (5%) of the
total net  assets of the  Borrower  and its  Subsidiaries  as  reflected  on the
financial  statements  delivered  in  accordance  with  Section  7.1 and (b) any
Foreign  Subsidiary  of the Borrower  voluntarily  designated  in writing to the
Administrative  Agent  by  the  Borrower  as  a  "Material  Foreign  Subsidiary"
regardless  of whether such  Foreign  Subsidiary  is deemed a "Material  Foreign
Subsidiary" pursuant to clause (a) of this definition.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA  Affiliate is making,  or
is  accruing  an  obligation  to make,  or has  accrued an  obligation  to make,
contributions within the preceding six (6) years.

     "Net  Cash  Position"  means  on any day,  with  respect  to the  Operating
Account,  a sum equal to the opening available balance in the Operating Account,
plus any maturing  investment  principal and interest  credited to the Operating
Account,  minus the daily  presentment  of checks and Operating  Account  holds,
minus any floor balance which has been established to cover bank charges,  minus
any maturing  interest debited to the Operating  Account,  in each case for such
day.

     "Net Income" means, with respect to the Borrower and its Subsidiaries,  for
any period of  determination,  the net income (or loss) of the  Borrower and its
Subsidiaries for such period,  determined on a Consolidated  basis in accordance
with GAAP;  provided  that there shall be  excluded  from Net Income (a) the net
income (or loss) of any Person in which the Borrower or any of its  Subsidiaries
has a joint interest with a third party, except to the extent such net income is
actually  paid to the Borrower or any of its  Subsidiaries  by dividend or other
distribution  during  such  period,  (b) the net  income (or loss) of any Person
accrued  prior to the date it becomes a  Subsidiary  of such Person or is merged
into  or  consolidated  with  such  Person  or any of its  Subsidiaries  or that
Person's assets are acquired by such Person or any of its Subsidiaries,  (c) the
cumulative effect of a change in accounting  principles required or permitted by
a change in GAAP subsequent to the Closing Date, and (d) any net gain classified
as an extraordinary item in accordance with GAAP.

     "Notes" means the collective  reference to the Revolving  Credit Notes, the
Alternative  Currency Note and the  Swingline  Note and "Note" means any of such
Notes.

     "Notice of Account  Designation" shall have the meaning assigned thereto in
Section 2.4(b).

     "Notice of Borrowing"  shall have the meaning  assigned  thereto in Section
2.4(a).

     "Notice of Conversion/Continuation" shall have the meaning assigned thereto
in Section 4.2.

     "Obligations"  means,  in each case,  whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the  filing of any  bankruptcy  or  similar  petition)  the  Loans,  (b) the L/C
Obligations,  (c) all existing or future payment and other  obligations owing by
the  Borrower  under any Hedging  Agreement  (which such  Hedging  Agreement  is
permitted  hereunder) with any Person that is a Lender hereunder or an Affiliate
of a Lender  hereunder at the time such Hedging  Agreement is executed (all such
obligations with respect to any such Hedging Agreement,  "Hedging  Obligations")
and (d) all other fees and commissions  (including  attorneys'  fees),  charges,
indebtedness,   loans,  liabilities,   financial  accommodations,   obligations,
covenants  and duties  owing by the Borrower or any of its  Subsidiaries  to the
Lenders or the  Administrative  Agent,  in each case under or in respect of this
Agreement,  any Note, any Letter of Credit or any of the other Loan Documents of
every kind, nature and description,  direct or indirect, absolute or contingent,
due or to become due, contractual or tortious,  liquidated or unliquidated,  and
whether or not evidenced by any note.

     "Officer's Compliance  Certificate" shall have the meaning assigned thereto
in Section 7.2.

     "Operating  Account" means the principal  operating account of the Borrower
maintained with Wachovia.

     "Operating  Lease" shall mean, as to any Person as determined in accordance
with GAAP,  any lease of  property  (whether  real,  personal  or mixed) by such
Person as lessee which is not a Capital Lease.

     "Other Taxes" shall have the meaning assigned thereto in Section 4.13(b).

     "Participating  Member  State"  means  each state so  described  in any EMU
Legislation.

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

     "Pension Plan" means any Employee  Benefit Plan, other than a Multiemployer
Plan,  which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is  maintained  for the  employees of the Borrower or any
ERISA  Affiliate or (b) has at any time within the  preceding six (6) years been
maintained  for the  employees  of the  Borrower or any of its current or former
ERISA Affiliates.

     "Permitted Acquisition" has the meaning set forth in Section 10.3(c).

     "Permitted  Acquisition  Documents"  means with respect to any  acquisition
proposed by the Borrower or any Subsidiary thereof, the purchase agreement, sale
agreement,  merger  agreement or other agreement  evidencing  such  acquisition,
including,  without  limitation,  all legal  opinions  and each  other  document
executed, delivered, contemplated by or prepared in connection therewith and any
amendment, modification or supplement to any of the foregoing.

     "Permitted  Currency"  means Dollars or any Alternative  Currency,  or each
such currency, as the context requires.

     "Permitted  Holders" means (i) Harold C. Simmons,  (ii) the trustees of the
Harold C.  Simmons  Family  Trust No. 1 dated  January  1,  1964,  the Harold C.
Simmons  Family  Trust  No. 2 dated  January  1,  1964 and any  trust or  trusts
established  after the Closing Date for the benefit of Harold C. Simmons  and/or
his spouse or his or her  descendants,  whether  natural or adopted (such trusts
collectively,   the   "Trusts"   and   such   individuals,    collectively   the
"Beneficiaries"),  (iii) each of the Trusts, (iv) each of the Beneficiaries, (v)
any Person  controlled,  directly or  indirectly,  by one or more of the Persons
described in clauses (i) through (iv) above,  (vi) any employee  benefit plan or
pension fund of the Borrower or any  Subsidiary and any Person holding any class
of voting  stock of the Borrower or  Subsidiary  for or pursuant to the terms of
any such  plan or fund,  and (vii) any group  made up of  Persons  described  in
clauses (i) through (vi) above.

     "Person"  means an  individual,  corporation,  limited  liability  company,
partnership,  association,  trust,  business trust,  joint venture,  joint stock
company,  pool,  syndicate,  sole proprietorship,  unincorporated  organization,
Governmental Authority or any other form of entity or group thereof.

     "Pounds  Sterling" means, at any time of  determination,  the then official
currency of the United Kingdom of Great Britain and Northern Ireland.

     "Prime Rate" means,  at any time,  the rate of interest per annum  publicly
announced  from time to time by Wachovia  as its prime rate.  Each change in the
Prime Rate shall be  effective  as of the  opening of  business  on the day such
change in such prime rate occurs.  The parties hereto  acknowledge that the rate
announced  publicly  by  Wachovia as its prime rate is an index or base rate and
shall not  necessarily  be its lowest or best rate  charged to its  customers or
other banks.

     "Register" shall have the meaning assigned thereto in Section 13.10(d).

     "Reimbursement   Obligation"  means  the  obligation  of  the  Borrower  to
reimburse  the Issuing  Lender  pursuant to Section 3.5 for amounts  drawn under
Letters of Credit.

     "Replaced  Lender"  shall  have the  meaning  assigned  thereto  in Section
4.15(c). "Replacement Lender" shall have the meaning assigned thereto in Section
4.15(c).

     "Required  Lenders"  means,  at any date, any  combination of Lenders whose
Commitment  Percentages  aggregate at least  sixty-six  and  two-thirds  percent
(66-2/3%)  of the  Aggregate  Commitment  or, if the  Credit  Facility  has been
terminated pursuant to Section 11.2, any combination of Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate Extensions of Credit
(with the  aggregate  amount of each  Lender's  risk  participation  and  funded
participation in Alternative Currency Loans, Swingline Loans and L/C Obligations
being deemed "held" by such Lender for the purposes of this definition).

     "Responsible  Officer"  means any of the  following:  the  chief  executive
officer, president, chief financial officer or controller of the Borrower or any
other officer of the Borrower reasonably acceptable to the Administrative Agent.

     "Revolving  Credit  Facility"  means  the  revolving  credit,   alternative
currency and swingline facilities established pursuant to Article II.

     "Revolving  Credit Loans" means any revolving  credit loan  denominated  in
Dollars  made by the Lenders to the  Borrower  pursuant to Section  2.1, and all
such revolving credit loans collectively as the context requires.

     "Revolving  Credit Notes" means the  collective  reference to the Revolving
Credit  Notes  made  by the  Borrower  payable  to the  order  of  each  Lender,
substantially in the form of Exhibit A-1 hereto, evidencing the Revolving Credit
Facility,  and  any  amendments,  supplements  and  modifications  thereto,  any
substitutes therefor, and any replacements, restatements, renewals or extensions
thereof,  in  whole  or in  part;  "Revolving  Credit  Note"  means  any of such
Revolving Credit Notes.

     "Revolving  Credit  Termination  Date"  means  the  earliest  of the  dates
referred to in Section 2.8.

     "Security  Documents"  means the  collective  reference  to the  Subsidiary
Guaranty Agreement, the Collateral Agreement and each other agreement or writing
pursuant to which the Borrower or any  Subsidiary  thereof  purports to guaranty
the payment  and/or  performance of the  Obligations,  in each case, as amended,
restated, supplemented or otherwise modified from time to time.

     "Solvent"  means,  as to the Borrower and its  Subsidiaries on a particular
date,  that any such Person (a) has capital  sufficient to carry on its business
and  transactions  and all  business  and  transactions  in which it is about to
engage and is able to pay its debts as they mature,  (b) owns property  having a
value, at fair  valuation,  greater than the amount required to pay its probable
liabilities  (including  contingencies),  and (c) does not believe  that it will
incur debts or  liabilities  beyond its ability to pay such debts or liabilities
as they mature.

     "Subordinated  Debt"  means  the  collective  reference  to any Debt of the
Borrower  or any  Subsidiary  subordinated  in right and time of  payment to the
Obligations and containing such other terms and conditions,  in each case as are
satisfactory to the Required Lenders.

     "Subsidiary" means as to any Person, any corporation,  partnership, limited
liability  company or other entity of which more than fifty percent (50%) of the
outstanding  capital stock or other ownership  interests  having ordinary voting
power to elect a majority of the board of  directors  or other  managers of such
corporation,  partnership,  limited  liability company or other entity is at the
time  owned  by or  the  management  is  otherwise  controlled  by  such  Person
(irrespective  of  whether,  at the  time,  capital  stock  or  other  ownership
interests  of any  other  class or  classes  of such  corporation,  partnership,
limited  liability company or other entity shall have or might have voting power
by reason of the  happening  of any  contingency).  Unless  otherwise  qualified
references to "Subsidiary" or "Subsidiaries"  herein shall refer to those of the
Borrower.

     "Subsidiary  Guarantors"  means the Material  Domestic  Subsidiaries of the
Borrower.

     "Subsidiary Guaranty Agreement" means the unconditional  guaranty agreement
of  even  date   executed  by  the   Subsidiary   Guarantors  in  favor  of  the
Administrative  Agent,  for the  ratable  benefit  of  itself  and the  Lenders,
substantially  in the form of Exhibit H, as amended,  restated,  supplemented or
otherwise modified from time to time.

     "Sweep  Plus  Service  Program"  means the Sweep  Plus  Service  Program of
Wachovia  and any other  cash  management  arrangement  which the  Borrower  and
Wachovia  agree should be included in the  borrowing  and repayment of Swingline
Loans pursuant to Section 2.3.

     "Swingline  Commitment"  means  the  lesser  of (a)  Five  Million  Dollars
($5,000,000) and (b) the Aggregate Commitment.

     "Swingline  Facility" means the swingline facility  established pursuant to
Section 2.3.

     "Swingline  Lender"  means  Wachovia in its  capacity as  swingline  lender
hereunder.

     "Swingline  Loan" means any swingline  loan  denominated in Dollars made by
the  Swingline  Lender to the  Borrower  pursuant to Section  2.3,  and all such
swingline loans collectively as the context requires.

     "Swingline  Note" means the Swingline Note made by the Borrower  payable to
the order of the  Swingline  Lender,  substantially  in the form of Exhibit  A-2
hereto,  evidencing the Swingline  Loans,  and any  amendments,  supplements and
modifications   thereto,  any  substitutes   therefor,   and  any  replacements,
restatements, renewals or extensions thereof, in whole or in part.

     "Swingline   Termination  Date"  means  the  first  to  occur  of  (a)  the
resignation of Wachovia as Administrative  Agent in accordance with Section 12.9
and (b) the Revolving Credit Termination Date.

     "Synthetic Lease" means any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered  borrowed money  indebtedness  for tax purposes but is
classified as an Operating Lease in accordance with GAAP.

     "Taxes" shall have the meaning assigned thereto in Section 4.13(a).

     "Termination Event" means except for any such event or condition that could
not reasonably be expected to have a Material Adverse Effect:  (a) a "Reportable
Event"  described in Section 4043 of ERISA for which the notice  requirement has
not been waived by the PBGC, or (b) the  withdrawal of the Borrower or any ERISA
Affiliate  from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a
Pension  Plan,  the filing of a notice of intent to  terminate a Pension Plan or
the treatment of a Pension Plan amendment as a  termination,  under Section 4041
of ERISA, if the plan assets are not sufficient to pay all plan liabilities,  or
(d) the institution of proceedings to terminate, or the appointment of a trustee
with  respect  to,  any  Pension  Plan by the PBGC,  or (e) any  other  event or
condition which would constitute  grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or (f) the  imposition  of a Lien pursuant to Section 412 of the Code or Section
302 of ERISA,  or (g) the partial or complete  withdrawal of the Borrower or any
ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by
such plan, or (h) any event or condition which results in the  reorganization or
insolvency of a Multiemployer  Plan under Sections 4241 or 4245 of ERISA, or (i)
any event or condition which results in the termination of a Multiemployer  Plan
under Section 4041A of ERISA or the  institution  by the PBGC of  proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.

     "Total Funded Debt" means, as of any date of determination  with respect to
the Borrower and its Subsidiaries on a Consolidated  basis without  duplication,
the sum of all Debt of the Borrower and its Subsidiaries.

     "Treaty on European  Union" means the Treaty of Rome of March 25, 1957,  as
amended by the Single  European Act of 1986 and the  Maastricht  Treaty  (signed
February 7, 1992), as amended from time to time.

     "Uniform  Customs" means the Uniform  Customs and Practice for  Documentary
Credits  (1993  Revision),  effective  January  1994  International  Chamber  of
Commerce Publication No. 500.

     "United States" means the United States of America.

     "Wachovia" means Wachovia Bank,  National  Association,  a national banking
association, and its successors.

     "Wholly-Owned"  means,  with respect to a Subsidiary,  any  Subsidiary  for
which all of the  shares of  capital  stock or other  ownership  interests  are,
directly or indirectly,  owned or controlled by the Borrower  and/or one or more
of its Wholly-Owned  Subsidiaries  (except for directors'  qualifying  shares or
other shares  required by Applicable  Law to be owned by a Person other than the
Borrower).

     SECTION 1.2  General.  Unless  otherwise  specified,  a  reference  in this
Agreement to a particular article, section, subsection, Schedule or Exhibit is a
reference  to that  article,  section,  subsection,  Schedule or Exhibit of this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the  singular or plural  shall  include  the  singular  and  plural,  and
pronouns  stated in the  masculine,  feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference herein to "Charlotte time"
shall refer to the applicable time of day in Charlotte, North Carolina.

     SECTION 1.3 Effectiveness of Euro Provisions. With respect to any state (or
the currency of such state) that is not a Participating Member State on the date
of this Agreement,  the provisions of Sections 4.1(g),  4.8(b),  4.8(c) and 4.14
shall  become  effective  in  relation  to such state (and the  currency of such
state) at and from the date on which such state becomes a  Participating  Member
State.

     SECTION 1.4. Other Definitions and Provisions.

     (a)  Use of  Capitalized  Terms.  Unless  otherwise  defined  therein,  all
capitalized terms defined in this Agreement shall have the defined meanings when
used  in  this  Agreement,  the  Notes  and  the  other  Loan  Documents  or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement.

     (b) Miscellaneous.  The words "hereof",  "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

                                   ARTICLE II

                            REVOLVING CREDIT FACILITY

     SECTION 2.1 Revolving Credit Loans.  Subject to the terms and conditions of
this  Agreement,  and in reliance upon the  representations  and  warranties set
forth herein,  each Lender  severally  agrees to make Revolving  Credit Loans in
Dollars to the Borrower from time to time from the Closing Date through, but not
including,  the Revolving Credit  Termination Date as requested by the Borrower,
in  accordance  with the terms of Section 2.4;  provided,  that,  based upon the
Dollar Amount of all outstanding  Loans and L/C  Obligations,  (a) the aggregate
principal amount of all outstanding  Revolving Credit Loans (after giving effect
to any amount requested) shall not exceed the Aggregate  Commitment less the sum
of  all  outstanding  Swingline  Loans,   Alternative  Currency  Loans  and  L/C
Obligations and (b) the aggregate principal amount of all outstanding  Revolving
Credit Loans from any Lender to the  Borrower  shall not at any time exceed such
Lender's Commitment less such Lender's  Commitment  Percentage of the sum of all
outstanding  Swingline  Loans,  Alternative  Currency Loans and L/C Obligations.
Each Revolving  Credit Loan by a Lender shall be in a principal  amount equal to
such  Lender's  Commitment  Percentage  of the  aggregate  principal  amount  of
Revolving  Credit  Loans  requested on such  occasion.  Subject to the terms and
conditions hereof, the Borrower may borrow,  repay and reborrow Revolving Credit
Loans hereunder until the Revolving Credit Termination Date.

     SECTION 2.2 Alternative Currency Loans.

     (a)  Availability.  Subject to the terms and conditions of this  Agreement,
and in reliance upon the  representations  and warranties set forth herein,  the
Alternative  Currency  Lender agrees to make  Alternative  Currency Loans to the
Borrower from time to time from the Closing Date through, but not including, the
Revolving  Credit  Termination  Date as requested by the Borrower in  accordance
with the terms of Section 2.4;  provided,  that, based upon the Dollar Amount of
all outstanding Loans and L/C Obligations, the aggregate principal amount of all
outstanding  Alternative  Currency  Loans  (after  giving  effect to any  amount
requested) shall not exceed the lesser of (i) the Aggregate  Commitment less the
sum of the aggregate principal amount of all outstanding  Revolving Credit Loans
less the sum of all outstanding  Swingline Loans and L/C  Obligations,  and (ii)
the  Alternative  Currency  Commitment;  provided  further that the  Alternative
Currency  Lender will not make an  Alternative  Currency Loan from and after the
date  which  is one (1) day  after  it has  received  written  notice  from  the
Administrative Agent (upon the request of the Required Lenders) that one or more
of the applicable conditions to Extensions of Credit specified in Section 5.3 is
not then satisfied  until such  conditions are satisfied or waived in accordance
with the provisions of this Agreement (and the Alternative Currency Lender shall
be entitled to conclusively rely on any such notice and shall have no obligation
to  independently  investigate  the  accuracy  of such  notice and shall have no
liability  to the  Borrower  in  respect  thereof  if such  notice  proves to be
inaccurate).  Alternative  Currency  Loans shall be funded in an amount equal to
the Alternative  Currency Amount of such Alternative  Currency Loan.  Subject to
the terms and  conditions  hereof,  the Borrower may borrow,  repay and reborrow
Alternative  Currency Loans  hereunder  until the Revolving  Credit  Termination
Date.

     (b) Refunding of Alternative Currency Loans.

          (i) Upon the  occurrence  and  during the  continuance  of an Event of
Default,   each  Alternative  Currency  Loan  may,  at  the  discretion  of  the
Alternative Currency Lender, be converted immediately to a Base Rate Loan funded
in  Dollars  by the  Lenders  in an amount  equal to the  Dollar  Amount of such
Alternative Currency Loan for the remainder of the Interest Period applicable to
such  Alternative  Currency  Loan.  Such  Base  Rate Loan  shall  thereafter  be
reflected as a Revolving  Credit Loan of the Lenders on the books and records of
the  Administrative  Agent.  Each Lender  shall fund its  respective  Commitment
Percentage  of such  Revolving  Credit  Loan as  required  to repay  Alternative
Currency Loans  outstanding to the Alternative  Currency Lender upon such demand
by the Alternative  Currency Lender in no event later than 2:00 p.m.  (Charlotte
time) on the next succeeding Business Day after such demand is made. No Lender's
obligation to fund its respective  Commitment Percentage of any Revolving Credit
Loan required to repay such  Alternative  Currency Loan shall be affected by any
other  Lender's  failure to fund its  Commitment  Percentage  of such  Revolving
Credit Loan,  nor shall any  Lender's  Commitment  Percentage  be increased as a
result of any such failure of any other Lender to fund its Commitment Percentage
of such Revolving Credit Loan.

          (ii) The Borrower shall pay to the Alternative  Currency  Lender,  for
the account of the  Alternative  Currency  Lender,  on demand the amount of such
Alternative  Currency Loans to the extent amounts  received from the Lenders are
not  sufficient to refund in full the  outstanding  Alternative  Currency  Loans
requested  or  required  to be  refunded  upon the  occurrence  and  during  the
continuance of an Event of Default. In addition,  the Borrower hereby authorizes
the  Administrative  Agent, upon the occurrence and during the continuance of an
Event of Default,  to charge any account  maintained  by the  Borrower  with the
Alternative  Currency  Lender (up to the amount  available  therein) in order to
immediately pay the Alternative  Currency Lender the amount of such  Alternative
Currency  Loans  to the  extent  amounts  received  from  the  Lenders  are  not
sufficient to repay in full the outstanding Alternative Currency Loans requested
or  required  to be  refunded.  If any  portion of any such  amount  paid to the
Alternative  Currency  Lender shall be recovered by or on behalf of the Borrower
from the Alternative Currency Lender in bankruptcy or otherwise, the loss of the
amount so recovered  shall be ratably shared among all the Lenders in accordance
with their respective Commitment  Percentages (unless the amount so recovered by
or on behalf of the Borrower  pertains to an Alternative  Currency Loan extended
after the occurrence and during the  continuance of an Event of Default of which
the  Alternative  Currency  Lender has  received  notice in the manner  required
pursuant to Section  12.5 and which such Event of Default has not been waived by
the Required Lenders or the Lenders, as applicable).

          (iii) Each  Lender  acknowledges  and agrees  that its  obligation  to
refund  Alternative  Currency Loans in accordance with the terms of this Section
2.2 is absolute and  unconditional and shall not be affected by any circumstance
whatsoever,  including,  without limitation,  non-satisfaction of the conditions
set forth in Article V.  Further,  each Lender agrees and  acknowledges  that if
prior to the refunding of any outstanding Alternative Currency Loans pursuant to
this Section 2.2,  one of the events  described in Section  11.1(i) or (j) shall
have  occurred,  each Lender will, on the date the applicable  Revolving  Credit
Loans would have been made, purchase an undivided participating interest in such
Alternative  Currency  Loans to be refunded in an amount equal to its Commitment
Percentage of the aggregate  amount of such  Alternative  Currency  Loans.  Each
Lender will immediately transfer to the Administrative Agent, for the account of
the Alternative Currency Lender, in immediately  available funds in Dollars, the
amount  of its  participation.  Whenever,  at any  time  after  the  Alternative
Currency  Lender  has  received  from any  Lender  such  Lender's  participating
interest in the refunded  Alternative  Currency Loans, the Alternative  Currency
Lender receives any payment on account thereof,  the Alternative Currency Lender
will  distribute  to such  Lender  its  participating  interest  in such  amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's  participating  interest was  outstanding and
funded).

          (iv) In the  event  that  any  Lender  fails  to make  payment  to the
Alternative  Currency  Lender of any  amount  due under this  Section  2.2,  the
Administrative  Agent, on behalf of the Alternative  Currency  Lender,  shall be
entitled to receive,  retain and apply against such obligation the principal and
interest  otherwise  payable  to such  Lender  hereunder  until the  Alternative
Currency  Lender  receives  such payment from such Lender or such  obligation is
otherwise fully satisfied.  In addition to the foregoing,  if for any reason any
Lender fails to make payment to the  Alternative  Currency  Lender of any amount
due under this  Section 2.2,  such Lender shall be deemed,  at the option of the
Administrative Agent, to have unconditionally and irrevocably purchased from the
Alternative Currency Lender, without recourse or warranty, an undivided interest
and participation in the applicable Alternative Currency Loan, and such interest
and  participation  may be recovered  from such Lender  together  with  interest
thereon  at the  Federal  Funds  Effective  Rate for each day  during the period
commencing on the date of demand and ending on the date such amount is received.

     SECTION 2.3 Swingline Loans.

     (a)  Availability.  Subject to the terms and conditions of this  Agreement,
the Swingline Lender agrees to make Swingline Loans to the Borrower from time to
time from the Closing Date through, but not including, the Swingline Termination
Date; provided, that (i) all Swingline Loans shall be denominated in Dollars and
(ii) based upon the Dollar Amount of all outstanding  Loans and L/C Obligations,
the aggregate principal amount of all outstanding  Swingline Loans (after giving
effect  to any  amount  requested),  shall  not  exceed  the  lesser  of (A) the
Aggregate  Commitment  less the sum of all outstanding  Revolving  Credit Loans,
Alternative Currency Loans and L/C Obligations and (B) the Swingline Commitment;
provided  further that the Swingline  Lender will not make a Swingline Loan from
and after the date  which is one (1) day after it has  received  written  notice
from the  Administrative  Agent (upon the request of the Required  Lenders) that
one or more of the  applicable  conditions to Extensions of Credit  specified in
Section 5.3 is not then satisfied  until such conditions are satisfied or waived
in accordance  with the provisions of this  Agreement (and the Swingline  Lender
shall be  entitled  to  conclusively  rely on any such  notice and shall have no
obligation to  independently  investigate  the accuracy of such notice and shall
have no liability to the Borrower in respect thereof if such notice proves to be
inaccurate).

     (b) Sweep Plus Service  Program.  On each Business Day, the  Administrative
Agent shall  calculate the Net Cash  Position.  If the Net Cash Position is less
than zero, then the Borrower shall be deemed to have irrevocably  requested that
the Swingline Lender make a Swingline Loan to the Borrower in an amount equal to
the lesser of (i) an amount, which when rounded up to the nearest $1,000, equals
or exceeds the amount of the deficit Net Cash Position and (ii) an amount, which
when added to the aggregate principal amount of all outstanding  Swingline Loans
(after giving effect to any amount  requested),  shall not exceed the lesser of,
based upon the Dollar Amount of all outstanding  Loans and L/C Obligations,  (A)
the Aggregate Commitment less the sum of all outstanding Revolving Credit Loans,
all outstanding  Alternative  Currency Loans and the L/C Obligations and (B) the
Swingline  Commitment;  provided,  however, that the obligation of the Swingline
Lender to make any such  Swingline  Loan to the Borrower shall be subject to all
the terms and conditions  hereof  (including,  without  limitation,  Section 5.3
hereof).

     (c) Payment of Principal and Interest.  Principal and interest on Swingline
Loans deemed requested  pursuant to Section 2.3(b) hereof shall be paid pursuant
to the terms and  conditions  of the Sweep  Plus  Service  Program  without  any
deduction,  setoff  or  counterclaim  whatsoever.   Principal  and  interest  on
Swingline Loans requested  pursuant to Section 2.3 hereof shall be paid pursuant
to the terms of this  Agreement.  Unless sooner paid pursuant to the  provisions
hereof or the provisions of the Sweep Plus Service Program, the principal of the
Swingline Loans shall be paid in full,  together with accrued interest  thereon,
on the Swingline Termination Date.

     (d) Refunding.

          (i) Swingline  Loans shall be refunded by the Lenders on demand by the
Swingline  Lender.  Such  refundings  shall be made by the Lenders in accordance
with their respective  Commitment  Percentages and shall thereafter be reflected
as  Revolving  Credit  Loans of the  Lenders  on the  books and  records  of the
Administrative   Agent.  Each  Lender  shall  fund  its  respective   Commitment
Percentage  of  Revolving  Credit  Loans as  required to repay  Swingline  Loans
outstanding to the Swingline  Lender upon demand by the Swingline  Lender but in
no event later than 2:00 p.m.  (Charlotte time) on the next succeeding  Business
Day after such demand is made.  No Lender's  obligation  to fund its  respective
Commitment  Percentage  of a  Swingline  Loan  shall be  affected  by any  other
Lender's  failure to fund its  Commitment  Percentage of a Swingline  Loan,  nor
shall any Lender's  Commitment  Percentage  be increased as a result of any such
failure of any other  Lender to fund its  Commitment  Percentage  of a Swingline
Loan.

          (ii) The  Borrower  shall pay to the  Swingline  Lender on demand  the
amount of such Swingline  Loans to the extent amounts  received from the Lenders
are not sufficient to refund in full the  outstanding  Swingline Loans requested
or required to be refunded.  In addition,  the Borrower  hereby  authorizes  the
Administrative  Agent to charge any account  maintained by the Borrower with the
Swingline  Lender (up to the amount  available  therein) in order to immediately
pay the  Swingline  Lender  the  amount of such  Swingline  Loans to the  extent
amounts  received  from  the  Lenders  are not  sufficient  to repay in full the
outstanding Swingline Loans requested or required to be refunded. If any portion
of any such amount paid to the  Swingline  Lender  shall be  recovered  by or on
behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise, the
loss of the amount so recovered shall be ratably shared among all the Lenders in
accordance with their respective  Commitment  Percentages (unless the amounts so
recovered by or on behalf of the Borrower  pertain to a Swingline  Loan extended
after the occurrence and during the  continuance of an Event of Default of which
the Administrative  Agent has received notice in the manner required pursuant to
Section 12.5 and which such Event of Default has not been waived by the Required
Lenders or the Lenders, as applicable).

          (iii) Each  Lender  acknowledges  and agrees  that its  obligation  to
refund  Swingline  Loans in  accordance  with the terms of this  Section  2.3 is
absolute  and  unconditional  and  shall  not be  affected  by any  circumstance
whatsoever,  including,  without limitation,  non-satisfaction of the conditions
set forth in Article V.  Further,  each Lender agrees and  acknowledges  that if
prior to the  refunding  of any  outstanding  Swingline  Loans  pursuant to this
Section  2.3, one of the events  described in Section  11.1(i) or (j) shall have
occurred,  each Lender will, on the date the applicable  Revolving  Credit Loans
would have been made,  purchase  an  undivided  participating  interest  in such
Swingline  Loans to be refunded in an amount equal to its Commitment  Percentage
of the aggregate  amount of such Swingline  Loans.  Each Lender will immediately
transfer to the Swingline Lender, in immediately  available funds, the amount of
its  participation and upon receipt thereof the Swingline Lender will deliver to
such  Lender a  certificate  evidencing  such  participation  dated  the date of
receipt  of such  funds and for such  amount.  Whenever,  at any time  after the
Swingline  Lender has  received  from any  Lender  such  Lender's  participating
interest in a Swingline  Loan,  the  Swingline  Lender  receives  any payment on
account  thereof,  the  Swingline  Lender  will  distribute  to such  Lender its
participating  interest in such amount  (appropriately  adjusted, in the case of
interest  payments,  to reflect  the period of time during  which such  Lender's
participating interest was outstanding and funded).

          (iv) In the  event  that  any  Lender  fails  to make  payment  to the
Swingline  Lender of any amount due under this Section  2.3, the  Administrative
Agent, on behalf of the Swingline Lender,  shall be entitled to receive,  retain
and apply against such obligation the principal and interest  otherwise  payable
to such Lender  hereunder until the Swingline  Lender receives such payment from
such Lender or such obligation is otherwise fully satisfied.  In addition to the
foregoing,  if for any reason any Lender fails to make payment to the  Swingline
Lender of any amount due under this Section 2.3, such Lender shall be deemed, at
the option of the Administrative  Agent, to have unconditionally and irrevocably
purchased from the Swingline Lender,  without recourse or warranty, an undivided
interest and  participation in the applicable  Swingline Loan, and such interest
and  participation  may be recovered  from such Lender  together  with  interest
thereon  at the  Federal  Funds  Effective  Rate for each day  during the period
commencing on the date of demand and ending on the date such amount is received.

     SECTION 2.4 Procedure for Advances of Revolving  Credit Loans,  Alternative
Currency Loans and Swingline Loans.

     (a) Requests for Borrowing.

          (i)  Revolving  Credit  Loans  and  Alternative  Currency  Loans.  The
Borrower shall give the  Administrative  Agent  irrevocable prior written notice
substantially in the form attached hereto as Exhibit B (a "Notice of Borrowing")
not later than 12:00 p.m.  (Charlotte time) (A) on the same Business Day as each
Base Rate Loan  requested  under this  Section  2.4(a),  (B) at least  three (3)
Business  Days  before  each LIBOR Rate Loan  denominated  in Dollars and (C) at
least four (4)  Business  Days  before  each LIBOR Rate Loan  denominated  in an
Alternative Currency, of its intention to borrow, specifying:

               (1) the date of such borrowing, which shall be a Business Day;

               (2)  if  such  Loan  is  to  be a  Revolving  Credit  Loan  or an
          Alternative Currency Loan;

               (3) if such Loan is to be a Revolving  Credit Loan,  whether such
          Revolving Credit Loan shall be a LIBOR Rate Loan or a Base Rate Loan;

               (4) the  amount of such  borrowing,  which  shall be in an amount
          equal to the amount of the  Aggregate  Commitment  or the  Alternative
          Currency Commitment, as applicable, then available to the Borrower, or
          if less,  (A) with  respect to Base Rate Loans  (other than  Swingline
          Loans),  in an aggregate  principal  amount of  $3,000,000  or a whole
          multiple of  $1,000,000 in excess  thereof,  (B) with respect to LIBOR
          Rate Loans denominated in Dollars, in an aggregate principal amount of
          $3,000,000 or a whole multiple of $1,000,000 in excess thereof and (C)
          with  respect  to  LIBOR  Rate  Loans  denominated  in an  Alternative
          Currency,  in an aggregate  principal  Alternative  Currency Amount of
          $2,000,000 or a whole multiple of $1,000,000 in excess thereof; and

               (5) if such Loan is to be a LIBOR Rate Loan,  the duration of the
          Interest Period applicable thereto.

A Notice of Borrowing received after 12:00 p.m. (Charlotte time) shall be deemed
received on the next  Business  Day.  The  Administrative  Agent shall  promptly
notify the Lenders of each Notice of Borrowing.

          (ii) Swingline Loans. Swingline Loans shall be requested in the manner
set forth in Section 2.3.

     (b) Disbursements.

          (i) Revolving Credit Loans. Not later than 2:00 p.m.  (Charlotte time)
on the proposed  borrowing date for any Revolving  Credit Loan, each Lender will
make available to the Administrative  Agent, for the account of the Borrower, at
the Administrative  Agent's Office in Dollars in funds immediately  available to
the Administrative  Agent, such Lender's Commitment  Percentage of the Revolving
Credit Loan to be made on such borrowing date. The Borrower  hereby  irrevocably
authorizes the  Administrative  Agent to disburse the proceeds of each borrowing
requested  pursuant  to this  Section  2.4 in  immediately  available  funds  by
crediting  or wiring  such  proceeds  to the  deposit  account  of the  Borrower
identified  in the most  recent  notice  substantially  in the form of Exhibit C
hereto (a "Notice of Account  Designation")  delivered  by the  Borrower  to the
Administrative  Agent or as may be otherwise requested by the Borrower from time
to time (subject to the reasonable consent of the Administrative Agent). Subject
to Section 4.7  hereof,  the  Administrative  Agent  shall not be  obligated  to
disburse  the portion of the  proceeds of any  Revolving  Credit Loan  requested
pursuant  to this  Section  2.4 to the  extent  that  any  Lender  has not  made
available  to  the  Administrative  Agent  its  Commitment  Percentage  of  such
Revolving  Credit  Loan.  Revolving  Credit  Loans to be made for the purpose of
refunding  Swingline  Loans  shall be made by the Lenders as provided in Section
2.3(d).  Revolving  Credit  Loans  to be  made  for  the  purpose  of  refunding
Alternative  Currency  Loans shall be made by the Lenders as provided in Section
2.2(b).

          (ii)  Alternative  Currency Loans. Not later than 11:00 a.m. (the time
of the Administrative Agent's  Correspondent's office) on or before the proposed
borrowing  date for any  Alternative  Currency Loan,  the  Alternative  Currency
Lender will make available to the  Administrative  Agent, for the account of the
Borrower,  at the  office of the  Administrative  Agent's  Correspondent  in the
requested   Alternative   Currency  in  funds   immediately   available  to  the
Administrative Agent, the Alternative Currency Loan to be made on such borrowing
date. The Borrower hereby  irrevocably  authorizes the  Administrative  Agent to
disburse the proceeds of each borrowing  requested  pursuant to this Section 2.4
in  immediately  available  funds by  crediting  or wiring such  proceeds to the
deposit account of the Borrower  identified in the most recent Notice of Account
Designation  delivered by the Borrower to the Administrative  Agent or as may be
otherwise requested by the Borrower from time to time (subject to the reasonable
consent of the Administrative Agent). Subject to Section 4.7, the Administrative
Agent shall not be obligated to disburse the portion of the proceeds of any Loan
requested  pursuant  to this  Section  2.4 to the  extent  that the  Alternative
Currency  Lender  has  not  made  available  to the  Administrative  Agent  such
Alternative Currency Loan.

          (iii)  Swingline  Loans.  Swingline  Loans shall be  disbursed  in the
manner set forth in Section 2.3.

     SECTION 2.5 Repayment of Loans.

     (a) Repayment on the Revolving Credit Termination Date. The Borrower hereby
agrees to repay the  outstanding  principal  amount of (i) all Revolving  Credit
Loans in full in Dollars on the  Revolving  Credit  Termination  Date,  (ii) all
Alternative  Currency  Loans in full in the  Alternative  Currency in which each
Alternative   Currency  Loan  was  initially  funded  on  the  Revolving  Credit
Termination  Date  and  (iii)  all  Swingline  Loans in full in  Dollars  on the
Swingline  Termination Date (or, if earlier, in accordance with Section 2.3(d)),
together, in each case, with all accrued but unpaid interest thereon.

     (b) Mandatory Repayment of Revolving Credit Loans.

          (i)  Aggregate  Commitment.  If at  any  time  (as  determined  by the
Administrative  Agent under Section 2.5(b)(v)),  based upon the Dollar Amount of
all  outstanding  Loans and L/C  Obligations,  (A) solely  because  of  currency
fluctuation,  the  outstanding  principal  amount of all Revolving  Credit Loans
exceeds one hundred and five percent (105%) of the Aggregate Commitment less the
sum of all  outstanding  Swingline  Loans,  Alternative  Currency  Loans and L/C
Obligations or (B) for any other reason, the outstanding principal amount of all
Revolving  Credit Loans  exceeds the  Aggregate  Commitment  less the sum of all
outstanding  Swingline  Loans,  Alternative  Currency Loans and L/C Obligations,
then, in each such case,  the Borrower  shall (I) first,  if (and to the extent)
necessary to eliminate  such excess,  immediately  repay  outstanding  Swingline
Loans  (and/or  reduce  any  pending  request  for such Loans on such day by the
Dollar Amount of such excess),  (II) second, if (and to the extent) necessary to
eliminate such excess,  immediately  repay  outstanding  Revolving  Credit Loans
which are Base Rate Loans by the Dollar Amount of such excess (and/or reduce any
pending request for such Loans on such day by the Dollar Amount of such excess),
(III)  third,  if  (and to the  extent)  necessary  to  eliminate  such  excess,
immediately  repay  Revolving  Credit  Loans  which  are  LIBOR  Rate  Loans and
Alternative  Currency Loans (and/or reduce any pending  requests for a borrowing
or  continuation  or conversion of such Loans submitted in respect of such Loans
on such day by the Dollar  Amount of such excess) and (IV) fourth,  with respect
to any Letters of Credit  then  outstanding,  make a payment of cash  collateral
into a cash  collateral  account  opened  by the  Administrative  Agent  for the
benefit of the  Lenders in an amount  equal to the  aggregate  then  undrawn and
unexpired  amount of such Letters of Credit (such cash  collateral to be applied
in accordance with Section 11.2(b)).

          (ii) Alternative Currency Commitment. If at any time (as determined by
the Administrative Agent under Section 2.5(b)(v)),  based upon the Dollar Amount
of all  outstanding  Loans and L/C  Obligations,  (A) solely because of currency
fluctuation,  the outstanding principal amount of all Alternative Currency Loans
exceeds the lesser of (1) one hundred and five percent  (105%) of the  Aggregate
Commitment less the sum of all outstanding  Swingline  Loans,  Revolving  Credit
Loans and L/C  Obligations  and (2) one hundred and five  percent  (105%) of the
Alternative  Currency  Commitment or (B) for any other reason,  the  outstanding
principal amount of all Alternative Currency Loans exceeds the lesser of (1) the
Aggregate Commitment less the sum of all outstanding Swingline Loans,  Revolving
Credit Loans and L/C Obligations and (2) the  Alternative  Currency  Commitment,
then,  in each such  case,  such  excess  shall be  immediately  repaid,  in the
currency in which such Alternative  Currency Loan or Alternative  Currency Loans
were  initially  funded,  by the  Borrower to the  Administrative  Agent for the
account of the Alternative Currency Lender.

          (iii)  Swingline  Commitment.  If at any  time (as  determined  by the
Administrative  Agent under Section 2.5(b)(v)),  based upon the Dollar Amount of
all outstanding  Loans and L/C  Obligations,  and for any reason the outstanding
principal  amount of all Swingline Loans exceeds the lesser of (1) the Aggregate
Commitment less the sum of all outstanding  Revolving Credit Loans,  Alternative
Currency Loans and L/C  Obligations and (2) the Swingline  Commitment,  then, in
each such case,  such excess shall be immediately  repaid by the Borrower to the
Administrative Agent for the account of the Swingline Lender.

          (iv)  Excess L/C  Obligations.  If at any time (as  determined  by the
Administrative Agent under Section 2.5(b)(v)) and for any reason, based upon the
Dollar Amount of all  outstanding  Loans and L/C  Obligations,  the  outstanding
amount of all L/C Obligations exceeds the lesser of (A) the Aggregate Commitment
less the sum of the amount of all outstanding Swingline Loans,  Revolving Credit
Loans and Alternative  Currency Loans and (B) the L/C Commitment,  then, in each
such case,  the  Borrower  shall make a payment of cash  collateral  into a cash
collateral  account  opened by the  Administrative  Agent for the benefit of the
Lenders in an amount equal to the aggregate then undrawn and unexpired amount of
such Letters of Credit (such cash  collateral to be applied in  accordance  with
Section 11.2(b)).

          (v)  Compliance  and Payments.  The  Borrower's  compliance  with this
Section 2.5(b) shall be tested from time to time by the Administrative  Agent at
its sole  discretion,  but in any event shall be tested on (A) the date on which
the  Borrower  requests  the  Lenders  to make a  Revolving  Credit  Loan or the
Alternative  Currency Lender to make an Alternative Currency Loan or the Issuing
Lender to issue a Letter of Credit and (B) the date an  interest  payment is due
under Section 4.1(e).  Each such repayment pursuant to this Section 2.5(b) shall
be  accompanied  by any amount  required  to be paid  pursuant  to Section  4.11
hereof.

     (c) Optional Repayments. The Borrower may at any time and from time to time
repay the  Loans,  in whole or in part,  upon at least four (4)  Business  Days'
irrevocable  notice to the  Administrative  Agent with  respect  to  Alternative
Currency Loans, upon at least three (3) Business Days' irrevocable notice to the
Administrative Agent with respect to LIBOR Rate Loans denominated in Dollars and
upon receipt of  Borrower's  irrevocable  notice with respect to Base Rate Loans
and  Swingline  Loans  (if  received  prior  to  11:00  a.m.  (Charlotte  time),
otherwise,  upon at least  one (1)  Business  Days'  irrevocable  notice  to the
Administrative Agent),  substantially in the form attached hereto as Exhibit D ,
specifying  (i) the date of  repayment,  (ii) the  amount  of  repayment,  (iii)
whether the repayment is of Revolving Credit Loans,  Alternative Currency Loans,
Swingline Loans, or a combination thereof, and, if of a combination thereof, the
amount  allocable to each and (iv) whether the  repayment is of LIBOR Rate Loans
denominated in an Alternative Currency, LIBOR Rate Loans denominated in Dollars,
Base Rate Loans, or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of such notice, the Administrative  Agent
shall  promptly  notify each  Lender.  If any such  notice is given,  the amount
specified  in such notice shall be due and payable on the date set forth in such
notice.  Partial repayments shall be in an aggregate amount (i) of $2,000,000 or
a whole  multiple of $500,000 in excess  thereof with respect to Base Rate Loans
(other  than  Swingline  Loans),  (ii)  of  $3,000,000  or a whole  multiple  of
$1,000,000  in excess  thereof with respect to LIBOR Rate Loans  denominated  in
Dollars, (iii) of $2,000,000 or a whole multiple of $1,000,000 in excess thereof
(based upon the Alternative Currency Amount thereof) with respect to Alternative
Currency  Loans and (iv)  permitted  pursuant to the terms and conditions of the
Sweep Plus Service  Program (or as otherwise  agreed to by the Swingline  Lender
and the  Borrower).  Each such  repayment  shall be  accompanied  by any  amount
required to be paid pursuant to Section 4.11 hereof.

     (d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may not repay
any LIBOR Rate Loan on any day other than on the last day of the Interest Period
applicable  thereto unless such repayment is accompanied by any amount  required
to be paid pursuant to Section 4.11 hereof.

     (e) Hedging Agreements. No repayment or prepayment pursuant to this Section
2.5 shall affect any of the Borrower's obligations under any Hedging Agreement.

     (f) Payment of Interest and Other  Expenses.  Each  repayment or prepayment
pursuant to this  Section 2.5 shall be  accompanied  by accrued  interest on the
amount repaid.

     SECTION 2.6 Notes.

     (a)  Revolving  Credit  Notes.  Except as  otherwise  provided  in  Section
13.10(a) - (e), each Lender's  Revolving  Credit Loans and the obligation of the
Borrower to repay such  Revolving  Credit Loans shall be evidenced by a separate
Revolving  Credit  Note  executed by the  Borrower  payable to the order of such
Lender.

     (b)  Alternative  Currency  Note.  The  Alternative  Currency Loans and the
obligation  of the Borrower to repay such  Alternative  Currency  Loans shall be
evidenced  by a separate  Alternative  Currency  Note  executed by the  Borrower
payable to the order of the Alternative Currency Lender.

     (c) Swingline  Note. The Swingline Loans and the obligation of the Borrower
to repay such  Swingline  Loans shall be evidenced by a separate  Swingline Note
executed by the Borrower payable to the order of the Swingline Lender.

     SECTION  2.7  Permanent  Reduction  of the  Aggregate  Commitment  and  the
Alternative Currency Commitment.

     (a) Voluntary Reduction.  The Borrower shall have the right at any time and
from time to time,  upon at least five (5) Business Days prior written notice to
the Administrative Agent, to permanently reduce, without premium or penalty, (i)
the entire  Aggregate  Commitment  at any time or (ii) portions of the Aggregate
Commitment,  from time to time, in an aggregate  principal  amount not less than
$2,000,000 or any whole multiple of $500,000 in excess thereof; provided that in
no event shall the  Aggregate  Commitment  be reduced to an amount less than the
face amount of all Letters of Credit then outstanding.

     (b) Corresponding  Reductions.  Each partial permanent  reduction permitted
pursuant  to  this  Section  2.7  shall  (i)  permanently  reduce  the  Lenders'
Commitments pro rata in accordance with their respective Commitment  Percentages
and (ii)  permanently  reduce the  Alternative  Currency  Commitment pro rata in
accordance with the relative amount of the Alternative  Currency  Commitment and
the Aggregate Commitment.

     (c) Corresponding  Payments. Each permanent reduction permitted pursuant to
this Section 2.7 shall be  accompanied  by a payment of principal  sufficient to
reduce (i) the  aggregate  Dollar  Amount of all  outstanding  Revolving  Credit
Loans,  Alternative  Currency  Loans,  Swingline Loans and L/C  Obligations,  as
applicable,  after such reduction to the Aggregate  Commitment as so reduced and
(ii) to the extent that the  Alternative  Currency  Commitment  is reduced,  the
aggregate  Dollar Amount of all  outstanding  Alternative  Currency Loans to the
Alternate Currency Commitment as so reduced.  If the Aggregate  Commitment as so
reduced is less than the aggregate amount of all outstanding  Letters of Credit,
the Borrower shall be required to deposit cash  collateral in a cash  collateral
account opened by the  Administrative  Agent in an amount equal to the aggregate
then  undrawn  and  unexpired  amount  of such  Letters  of  Credit.  Such  cash
collateral shall be applied in accordance with Section 11.2(b). Any reduction of
the  Aggregate  Commitment  to zero  shall  be  accompanied  by  payment  of all
outstanding  Revolving  Credit Loans,  Alternative  Currency Loans and Swingline
Loans (and  furnishing of cash  collateral  satisfactory  to the  Administrative
Agent for all L/C  Obligations)  and  shall  result  in the  termination  of the
Commitments  and  Credit  Facility.  Such cash  collateral  shall be  applied in
accordance with Section 11.2(b). If the reduction of the Aggregate Commitment or
the Alternative Currency Commitment, as applicable requires the repayment of any
LIBOR Rate Loan,  such repayment  shall be accompanied by any amount required to
be paid pursuant to Section 4.11 hereof.

     SECTION 2.8  Termination  of Credit  Facility.  The Credit  Facility  shall
terminate on the earliest of (a) January 15, 2009,  (b) the date of  termination
by the Borrower  pursuant to Section 2.7 or (c) the date of  termination  by the
Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a).

                                   ARTICLE III

                            LETTER OF CREDIT FACILITY

     SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof, the
Issuing Lender,  in reliance on the agreements of the other Lenders set forth in
Section 3.4(a),  agrees to issue standby letters of credit ("Letters of Credit")
for the  account of the  Borrower  on any  Business  Day from the  Closing  Date
through but not including the Revolving Credit  Termination Date in such form as
may be approved  from time to time by the  Issuing  Lender;  provided,  that the
Issuing  Lender shall have no obligation to issue any Letter of Credit if, after
giving effect to such issuance,  based upon the Dollar Amount of all outstanding
Loans and L/C  Obligations,  (a) the L/C Obligations  would exceed the lesser of
(i) the L/C  Commitment  or (ii) the  Aggregate  Commitment  less the  aggregate
principal amount of all outstanding Swingline Loans,  Revolving Credit Loans and
Alternative  Currency Loans or (b) the Available  Commitment of any Lender would
be less than zero.  Each Letter of Credit shall (i) be denominated in Dollars in
a minimum  amount of  $100,000,  (ii) be a  standby  letter of credit  issued to
support  obligations of the Borrower or any of its  Subsidiaries,  contingent or
otherwise,  incurred in the ordinary course of business,  (iii) expire on a date
satisfactory  to the  Issuing  Lender,  which date shall be no later than ninety
(90) days prior to the Revolving Credit  Termination Date and (iv) be subject to
the  Uniform  Customs  and/or  ISP 98,  as set  forth in the  Application  or as
determined by the Issuing Lender, and, to the extent not inconsistent therewith,
the laws of the State of North  Carolina.  The Issuing  Lender  shall not at any
time be obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C  Participant to exceed any
limits  imposed  by,  any  Applicable  Law.  References  herein to  "issue"  and
derivations  thereof  with  respect  to Letters  of Credit  shall  also  include
extensions  or  modifications  of any  existing  Letters of  Credit,  unless the
context otherwise requires.

     SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrower,  may
from time to time  request  that the Issuing  Lender issue a Letter of Credit by
delivering  to the  Issuing  Lender  at the  Administrative  Agent's  Office  an
Application  therefor,  completed to the satisfaction of the Issuing Lender, and
such other  certificates,  documents  and other  papers and  information  as the
Issuing  Lender may reasonably  request.  Upon receipt of any  Application,  the
Issuing Lender shall process such  Application and the  certificates,  documents
and other  papers and  information  delivered to it in  connection  therewith in
accordance with its customary  procedures and shall,  subject to Section 3.1 and
Article V hereof,  promptly issue the Letter of Credit requested thereby (but in
no event  shall the  Issuing  Lender be  required  to issue any Letter of Credit
earlier  than four (4)  Business  Days  after  its  receipt  of the  Application
therefor  and all such  other  certificates,  documents  and  other  papers  and
information  relating  thereto) by issuing the original of such Letter of Credit
to the  beneficiary  thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower;  provided that the Issuing  Lender shall not issue a Letter of
Credit  from and  after  the date  which  is one (1) day  after it has  received
written notice from the  Administrative  Agent (upon the request of the Required
Lenders) that one or more of the  applicable  conditions to Extensions of Credit
specified  in  Section  5.3 is not then  satisfied  until  such  conditions  are
satisfied or waived in accordance with the provisions of this Agreement (and the
Issuing  Lender  shall be entitled to  conclusively  rely on any such notice and
shall have no  obligation  to  independently  investigate  the  accuracy of such
notice and shall have no liability  to the  Borrower in respect  thereof if such
notice proves to be  inaccurate).  The Issuing Lender shall promptly  furnish to
the Borrower a copy of such Letter of Credit and promptly  notify each Lender of
the issuance  and upon  request by any Lender,  furnish to such Lender a copy of
such Letter of Credit and the amount of such Lender's participation therein.

     SECTION 3.3 Commissions and Other Charges.

     (a) The Borrower shall pay to the Administrative  Agent, for the account of
the Issuing Lender and the L/C Participants,  a letter of credit commission with
respect to each  Letter of Credit in an amount  equal to the face amount of such
Letter of Credit  multiplied by the Applicable Margin with respect to LIBOR Rate
Loans  (determined  on a per annum  basis).  Such  commission  shall be  payable
quarterly in arrears on the last  Business Day of each  calendar  quarter and on
the Revolving Credit Termination Date. The Administrative Agent shall,  promptly
following  its receipt  thereof,  distribute  to the Issuing  Lender and the L/C
Participants  all  commissions  received  pursuant  to this  Section  3.3(a)  in
accordance with their respective Commitment Percentages.

     (b) In addition to the  foregoing  commission,  the Borrower  shall pay the
Issuing  Lender an  issuance  fee with  respect  to each  Letter of Credit in an
amount  equal  to the  face  amount  of such  Letter  of  Credit  multiplied  by
one-eighth of one percent (0.125%) per annum. Such issuance fee shall be payable
quarterly in arrears on the last  Business Day of each  calendar  quarter and on
the Revolving Credit Termination Date.

     (c) In addition to the foregoing fees and  commissions,  the Borrower shall
pay or  reimburse  the Issuing  Lender for such normal and  customary  costs and
expenses as are incurred or charged by the Issuing Lender in issuing,  effecting
payment under, amending or otherwise administering any Letter of Credit.

     SECTION 3.4 L/C Participations.

     (a) The Issuing  Lender  irrevocably  agrees to grant and hereby  grants to
each L/C  Participant,  and,  to induce the Issuing  Lender to issue  Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby  accepts  and  purchases  from the Issuing  Lender,  on the terms and
conditions  hereinafter  stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's  Commitment  Percentage in
the Issuing Lender's  obligations and rights under and in respect of each Letter
of Credit  issued  hereunder  and the amount of each  draft paid by the  Issuing
Lender thereunder.  Each L/C Participant  unconditionally and irrevocably agrees
with the Issuing  Lender that, if a draft is paid under any Letter of Credit for
which the Issuing  Lender is not  reimbursed  in full by the Borrower  through a
Revolving  Credit  Loan or  otherwise  in  accordance  with  the  terms  of this
Agreement,  such L/C Participant  shall pay to the Issuing Lender upon demand at
the Issuing  Lender's  address for notices  specified  herein an amount equal to
such L/C Participant's Commitment Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.

     (b)  Upon  becoming  aware  of any  amount  required  to be paid by any L/C
Participant to the Issuing  Lender  pursuant to Section 3.4(a) in respect of any
unreimbursed  portion of any payment made by the Issuing Lender under any Letter
of Credit,  the Issuing  Lender shall notify each L/C  Participant of the amount
and due date of such required payment and such L/C Participant  shall pay to the
Issuing  Lender the amount  specified on the  applicable  due date.  If any such
amount is paid to the Issuing  Lender after the date such  payment is due,  such
L/C Participant  shall pay to the Issuing Lender on demand,  in addition to such
amount,  the product of (i) such amount,  times (ii) the daily  average  Federal
Funds Rate as determined by the Administrative  Agent during the period from and
including  the date such  payment  is due to the date on which  such  payment is
immediately  available  to the  Issuing  Lender,  times  (iii)  a  fraction  the
numerator of which is the number of days that elapse  during such period and the
denominator of which is 360. A certificate of the Issuing Lender with respect to
any amounts  owing under this Section  3.4(b) shall be conclusive in the absence
of  manifest  error.  With  respect  to  payment  to the  Issuing  Lender of the
unreimbursed  amounts  described in this Section 3.4(b), if the L/C Participants
receive  notice that any such  payment is due (A) prior to 1:00 p.m.  (Charlotte
time) on any Business  Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m.  (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.

     (c) Whenever,  at any time after the Issuing  Lender has made payment under
any Letter of Credit and has received from any L/C  Participant  its  Commitment
Percentage  of such  payment in  accordance  with this  Section 3.4, the Issuing
Lender receives any payment  related to such Letter of Credit (whether  directly
from the Borrower or otherwise),  or any payment of interest on account thereof,
the Issuing Lender will  distribute to such L/C  Participant  its pro rata share
thereof;  provided,  that in the event  that any such  payment  received  by the
Issuing Lender shall be required to be returned by the Issuing Lender,  such L/C
Participant  shall return to the Issuing Lender the portion  thereof  previously
distributed by the Issuing Lender to it.

     SECTION 3.5 Reimbursement  Obligation of the Borrower.  In the event of any
drawing  under any Letter of Credit,  the Borrower  agrees to reimburse  (either
with the proceeds of a Revolving Credit Loan as provided for in this Section 3.5
or with funds from other sources),  in the same day funds, the Issuing Lender on
each date on which the  Issuing  Lender  notifies  the  Borrower of the date and
amount of a draft  paid  under any  Letter of Credit  for the amount of (a) such
draft so paid and (b) any amounts  referred to in Section 3.3(c) incurred by the
Issuing  Lender in  connection  with such  payment.  Unless the  Borrower  shall
immediately notify the Issuing Lender that the Borrower intends to reimburse the
Issuing Lender for such drawing from other sources or funds,  the Borrower shall
be deemed to have timely given a Notice of Borrowing to the Administrative Agent
requesting that the Lenders make a Revolving Credit Loan bearing interest at the
Base  Rate on such  date in the  amount  of (a)  such  draft so paid and (b) any
amounts  referred  to in  Section  3.3(c)  incurred  by the  Issuing  Lender  in
connection with such payment, and the Lenders shall make a Revolving Credit Loan
bearing interest at the Base Rate in such amount, the proceeds of which shall be
applied to reimburse  the Issuing  Lender for the amount of the related  drawing
and costs and expenses.  Each Lender acknowledges and agrees that its obligation
to fund a Revolving Credit Loan in accordance with this Section 3.5 to reimburse
the Issuing  Lender for any draft paid under a Letter of Credit is absolute  and
unconditional  and  shall  not  be  affected  by  any  circumstance  whatsoever,
including,  without limitation,  non-satisfaction of the conditions set forth in
Section  2.4(a) or Article V. If the  Borrower  has elected to pay the amount of
such  drawing  with funds from other  sources  and shall fail to  reimburse  the
Issuing Lender as provided above, the unreimbursed  amount of such drawing shall
bear  interest at the rate which would be payable on any  outstanding  Base Rate
Loans which were then overdue from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full.

     SECTION 3.6 Obligations  Absolute.  The Borrower's  obligations  under this
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and  unconditional  under any and all circumstances and irrespective of
any set-off,  counterclaim  or defense to payment which the Borrower may have or
have had against the Issuing Lender or any  beneficiary of a Letter of Credit or
any other Person.  The Borrower also agrees that the Issuing  Lender and the L/C
Participants  shall not be  responsible  for, and the  Borrower's  Reimbursement
Obligation  under Section 3.5 shall not be affected by, among other things,  the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid,  fraudulent or forged,  or any
dispute  between  or among the  Borrower  and any  beneficiary  of any Letter of
Credit or any other party to which such Letter of Credit may be  transferred  or
any claims  whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such  transferee.  The Issuing  Lender shall not be liable for any
error, omission, interruption or delay in transmission,  dispatch or delivery of
any message or advice,  however  transmitted,  in connection  with any Letter of
Credit,  except for errors or  omissions  caused by the Issuing  Lender's  gross
negligence or willful  misconduct.  The Borrower agrees that any action taken or
omitted by the Issuing  Lender under or in connection  with any Letter of Credit
or the related drafts or documents,  if done in the absence of gross  negligence
or willful misconduct,  shall be binding on the Borrower and shall not result in
any liability of the Issuing Lender or any L/C Participant to the Borrower.  The
responsibility  of the Issuing  Lender to the  Borrower in  connection  with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment  obligation  expressly provided for in such Letter of Credit, be limited
to determining  that the documents  (including each draft)  delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.

     SECTION 3.7 Effect of Application.  To the extent that any provision of any
Application  related to any Letter of Credit is inconsistent with the provisions
of this Article III, the provisions of this Article III shall apply.

                                   ARTICLE IV

                             GENERAL LOAN PROVISIONS

     SECTION 4.1 Interest.

     (a) Interest Rate Options.  Subject to the  provisions of this Section 4.1,
at the election of the Borrower,  (i) Revolving Credit Loans shall bear interest
at (A) the Base Rate plus the  Applicable  Margin as set forth in Section 4.1(c)
or (B) the LIBOR Rate plus the Applicable Margin as set forth in Section 4.1(c),
(ii)  Alternative  Currency Loans shall bear interest at the LIBOR Rate plus the
Applicable Margin as set forth in Section 4.1(c) and (iii) Swingline Loans shall
bear  interest  at the Base  Rate  plus the  Applicable  Margin  as set forth in
Section 4.1(c);  provided that the LIBOR Rate shall not be available until three
(3) Business Days after the Closing Date.  The Borrower shall select the rate of
interest  and  Interest  Period,  if any,  applicable  to any Loan at the time a
Notice of  Borrowing  is given  pursuant  to Section 2.4 or 3.5 or at the time a
Notice of Conversion/Continuation is given pursuant to Section 4.2. Each Loan or
portion  thereof  bearing  interest based on the Base Rate  (including,  without
limitation,  each  Swingline  Loan) shall be a "Base Rate Loan" and each Loan or
portion thereof bearing  interest based on the LIBOR Rate shall be a "LIBOR Rate
Loan." Any Revolving Credit Loan or any portion thereof as to which the Borrower
has not duly  specified  an interest  rate as provided  herein shall be deemed a
Base Rate Loan  denominated  in Dollars.  Any  Alternative  Currency Loan or any
portion thereof as to which the Borrower has not duly specified an interest rate
as provided  herein shall be deemed a LIBOR Rate Loan with an Interest Period of
one (1) month and shall be made four (4)  Business  Days  after  receipt of such
notice

     (b)  Interest  Periods.  In  connection  with each  LIBOR  Rate  Loan,  the
Borrower, by giving notice at the times described in Section 4.1(a), shall elect
an interest period (each,  an "Interest  Period") to be applicable to such Loan,
which  Interest  Period shall be a period of one (1), two (2), three (3), or six
(6) months (or, if available  to all of the  Lenders,  nine (9) months or twelve
(12) months) with respect to each LIBOR Rate Loan; provided that:

          (i) the Interest  Period  shall  commence on the date of advance of or
conversion  to any LIBOR Rate Loan and,  in the case of  immediately  successive
Interest Periods,  each successive Interest Period shall commence on the date on
which the immediately preceding Interest Period expires;

          (ii) if any Interest  Period would  otherwise  expire on a day that is
not a Business  Day, such  Interest  Period shall expire on the next  succeeding
Business Day; provided, that if any Interest Period with respect to a LIBOR Rate
Loan would otherwise  expire on a day that is not a Business Day but is a day of
the month  after  which no  further  Business  Day  occurs in such  month,  such
Interest Period shall expire on the immediately preceding Business Day;

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

          (iv) no Interest  Period  shall  extend  beyond the  Revolving  Credit
Termination Date; and

          (v) there shall be no more than six (6) Interest  Periods in effect at
any time.

     (c) Applicable Margin. The Applicable Margin provided for in Section 4.1(a)
with respect to any Loan (the "Applicable Margin") shall be based upon the table
set forth below and shall be determined and adjusted quarterly on the date (each
a  "Calculation  Date")  ten (10)  Business  Days  after  the date by which  the
Borrower  provides an Officer's  Compliance  Certificate  for the most  recently
ended fiscal quarter of the Borrower;  provided,  however,  that (a) the initial
Applicable  Margin shall be based on Pricing Level IV (as shown below) and shall
remain at Pricing Level IV until the first  Calculation Date occurring after the
Closing Date and,  thereafter the Pricing Level shall be determined by reference
to the  Leverage  Ratio (as  calculated  pursuant  to the  formula  set forth in
Section 9.1) as of the last day of the most recently ended fiscal quarter of the
Borrower  preceding the  applicable  Calculation  Date,  and (b) if the Borrower
fails to provide the Officer's Compliance Certificate as required by Section 7.2
for the most  recently  ended  fiscal  quarter  of the  Borrower  preceding  the
applicable  Calculation  Date, the Applicable  Margin from such Calculation Date
shall be  based on  Pricing  Level I (as  shown  below)  until  such  time as an
appropriate  Officer's  Compliance  Certificate  is provided,  at which time the
Pricing Level shall be  determined by reference to the Leverage  Ratio as of the
last day of the most  recently  ended fiscal  quarter of the Borrower  preceding
such  Calculation  Date.  The  Applicable  Margin  shall be  effective  from one
Calculation  Date  until  the  next  Calculation  Date.  Any  adjustment  in the
Applicable  Margin shall be applicable to all Extensions of Credit then existing
or subsequently made or issued.

<TABLE>
<CAPTION>
----------------------------- ----------------------------- ---------------------------- ---------------------------
       Pricing Level                 Leverage Ratio                 LIBOR Rate                   Base Rate
                                                                 Applicable Margin           Applicable Margin
----------------------------- ----------------------------- ---------------------------- ---------------------------
<S>                                                                    <C>                         <C>
             I                 Greater than 2.00 to 1.00               1.85%                       1.00%
----------------------------- ----------------------------- ---------------------------- ---------------------------
             II                Greater than 1.50 to 1.00
                               but less than or equal to
                                      2.00 to 1.00                     1.60%                       0.75%
----------------------------- ----------------------------- ---------------------------- ---------------------------
            III                Greater than 1.00 to 1.00
                               but less than or equal to
                                      1.50 to 1.00                     1.35%                       0.50%
----------------------------- ----------------------------- ---------------------------- ---------------------------
             IV                Less than or equal to 1.00
                                        to 1.00                        1.10%                       0.25%
----------------------------- ----------------------------- ---------------------------- ---------------------------
</TABLE>

     (d)  Default  Rate.  Subject  to Section  11.3,  at the  discretion  of the
Administrative Agent or as directed by the Required Lenders, upon the occurrence
and during the  continuance  of any Event of Default,  (i) the Borrower shall no
longer  have  the  option  to  request  LIBOR  Rate  Loans  (including,  without
limitation, Alternative Currency Loans) or Swingline Loans, (ii) all outstanding
LIBOR Rate Loans shall bear  interest  at a rate per annum two  percent  (2%) in
excess of the rate then  applicable  to LIBOR  Rate  Loans  until the end of the
applicable Interest Period and thereafter at a rate equal to two percent (2%) in
excess of the rate then applicable to Base Rate Loans, and (iii) all outstanding
Base Rate Loans and other Obligations  arising hereunder or under any other Loan
Document  shall bear  interest at a rate per annum equal to two percent  (2%) in
excess of the rate then applicable to Base Rate Loans or such other  Obligations
arising  hereunder or under any other Loan Document;  provided that clauses (i),
(ii) and (iii)  shall  apply  immediately  upon the  occurrence  and  during the
continuance of any Event of Default under Sections 11.1(a), 11.1(b), 11.1(i) and
11.1(j).  Interest  shall continue to accrue on the Notes after the filing by or
against the Borrower of any petition  seeking any relief in  bankruptcy or under
any act or law pertaining to insolvency or debtor relief, whether state, federal
or foreign.

     (e) Interest Payment and Computation. Interest on each Base Rate Loan shall
be  payable  in  arrears  on the  last  Business  Day of each  calendar  quarter
commencing  December  31,  2005;  and  interest on each LIBOR Rate Loan shall be
payable on the last day of each Interest Period applicable thereto,  and if such
Interest  Period  extends  over three (3)  months,  at the end of each three (3)
month interval during such Interest Period. Interest on LIBOR Rate Loans and all
fees  payable  hereunder  shall be computed  on the basis of a 360-day  year and
assessed  for the actual  number of days  elapsed  (except,  to the extent  that
Pounds  Sterling  is agreed  upon as an  Alternative  Currency  pursuant  to the
definition  thereof,  for  Alternative  Currency  Loans  denominated  in  Pounds
Sterling which shall be computed on the basis of a 365/66-day year) and interest
on Base Rate  Loans  shall be  computed  on the basis of a  365/66-day  year and
assessed for the actual number of days elapsed.

     (f) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts  deemed  interest  hereunder or under any of the Notes charged or
collected  pursuant  to the terms of this  Agreement  or  pursuant to any of the
Notes exceed the highest rate permissible under any Applicable Law which a court
of competent  jurisdiction  shall,  in a final  determination,  deem  applicable
hereto.  In the event that such a court determines that the Lenders have charged
or received  interest  hereunder in excess of the highest  applicable  rate, the
rate in effect  hereunder  shall  automatically  be reduced to the maximum  rate
permitted by Applicable Law and the Lenders shall at the Administrative  Agent's
option (i) promptly refund to the Borrower any interest  received by the Lenders
in excess of the maximum  lawful rate or (ii) apply such excess to the principal
balance of the Obligations on a pro rata basis. It is the intent hereof that the
Borrower not pay or contract to pay, and that neither the  Administrative  Agent
nor any Lender  receive or contract to receive,  directly or  indirectly  in any
manner whatsoever,  interest in excess of that which may be paid by the Borrower
under Applicable Law.

     (g) Basis of  Accrual.  Subject  to  Section  1.3  hereof,  if the basis of
accrual of interest or fees  expressed  in this  Agreement  with  respect to the
currency of any state that becomes a Participating Member State, in the judgment
of the Administrative Agent, shall not be available because interest rate quotes
for the applicable  national  currency unit are no longer provided,  or shall be
inconsistent  with any convention or practice in the London Interbank Market for
the basis of accrual of interest or fees in respect of the euro, such convention
or practice shall replace such expressed basis effective as of and from the date
on which such state becomes a Participating  Member State;  provided that if any
Loan in the  currency  of such state is  outstanding  immediately  prior to such
date, such replacement shall take effect,  with respect to such Loan, at the end
of the then current Interest Period.

     SECTION  4.2 Notice  and Manner of  Conversion  or  Continuation  of Loans.
Provided  that  no  Default  or  Event  of  Default  has  occurred  and is  then
continuing,  the  Borrower  shall  have the  option to (a)  convert  at any time
following  the third  Business  Day after the Closing Date all or any portion of
any  outstanding  Base Rate Loans  (other than  Swingline  Loans) in a principal
amount equal to $3,000,000 or any whole multiple of $1,000,000 in excess thereof
into  one or more  LIBOR  Rate  Loans  denominated  in  Dollars,  (b)  upon  the
expiration of any Interest  Period,  convert all or any part of its  outstanding
LIBOR  Rate  Loans  denominated  in  Dollars  in a  principal  amount  equal  to
$3,000,000 or a whole  multiple of  $1,000,000 in excess  thereof into Base Rate
Loans (other than  Swingline  Loans),  (c) upon the  expiration  of any Interest
Period,  continue  any LIBOR Rate Loan  denominated  in  Dollars in a  principal
amount of $3,000,000 or any whole  multiple of $1,000,000 in excess thereof as a
LIBOR  Rate  Loan  denominated  in  Dollars  or (d) upon the  expiration  of any
Interest  Period,  continue any LIBOR Rate Loan  denominated in any  Alternative
Currency in a principal amount of $2,000,000 or any whole multiple of $1,000,000
in excess thereof (based on the Alternative  Currency Amount thereof) as a LIBOR
Rate Loan in the same  Alternative  Currency.  Whenever the Borrower  desires to
convert  or  continue  Loans as  provided  above,  the  Borrower  shall give the
Administrative  Agent  irrevocable  prior written notice in the form attached as
Exhibit E (a  "Notice  of  Conversion/Continuation")  not later  than 12:00 p.m.
(Charlotte  time)  four (4)  Business  Days  (with  respect  to any  Alternative
Currency Loan) and three (3) Business Days (with respect to any Loan denominated
in Dollars)  before the day on which a proposed  conversion or  continuation  of
such  Loan is to be  effective  specifying  (A) the  Loans  to be  converted  or
continued, and, in the case of any LIBOR Rate Loan to be converted or continued,
the last day of the Interest  Period  therefor,  (B) the  Permitted  Currency in
which such Loan is  denominated,  (C) the effective  date of such  conversion or
continuation  (which shall be a Business Day), (D) the principal  amount of such
Loans to be converted or continued, and (E) the Interest Period to be applicable
to such converted or continued LIBOR Rate Loan. The  Administrative  Agent shall
promptly notify the Lenders of such Notice of Conversion/Continuation.

     SECTION 4.3 Fees.

     (a) Commitment Fee.  Commencing on the Closing Date, the Borrower shall pay
to the  Administrative  Agent, for the account of the Lenders,  a non-refundable
commitment fee at a rate per annum equal to the  applicable  rate based upon the
table set forth below (the  "Commitment  Fee Rate") on the average  daily unused
portion of the Aggregate  Commitment;  provided  that the amount of  outstanding
Swingline Loans and Alternative  Currency Loans shall not be considered usage of
the Revolving  Credit  Commitment for the purpose of calculating such commitment
fee with regard to any Lender other than the Swingline Lender (as to outstanding
Swingling  Loans)  and  the  Alternative  Currency  Lender  (as  to  outstanding
Alternative  Currency Loans).  The commitment fee shall be payable in arrears on
the last Business Day of each calendar quarter during the term of this Agreement
commencing December 31, 2005, and on the Revolving Credit Termination Date. Such
commitment fee shall be distributed by the  Administrative  Agent to the Lenders
pro rata in accordance with the Lenders' respective Commitment Percentages.  The
Commitment  Fee  Rate  shall  be  determined  and  adjusted  quarterly  on  each
Calculation Date;  provided,  however,  that (a) the initial Commitment Fee Rate
shall be based on Pricing  Level IV (as shown below) and shall remain at Pricing
Level IV until the first  Calculation  Date occurring after the Closing Date and
thereafter  the Pricing  Level shall be  determined by reference to the Leverage
Ratio (as calculated pursuant to the formula set forth in Section 9.1) as of the
last day of the most recently ended fiscal quarter of the Borrower preceding the
applicable  Calculation  Date,  and (b) if the  Borrower  fails to  provide  the
Officer's  Compliance  Certificate  as  required  by  Section  7.2 for the  most
recently  ended  fiscal  quarter  of  the  Borrower   preceding  the  applicable
Calculation  Date, the Commitment Fee Rate from such  Calculation  Date shall be
based on Pricing  Level I (as shown  below)  until  such time as an  appropriate
Officer's  Compliance  Certificate is provided,  at which time the Pricing Level
shall be determined by reference to the Leverage Ratio as of the last day of the
most recently  ended fiscal quarter of the Borrower  preceding such  Calculation
Date. The Commitment Fee Rate shall be effective from one Calculation Date until
the next Calculation Date.

<TABLE>
<CAPTION>
--------------------- ---------------------------------------------------------------- -----------------------------
   Pricing Level                              Leverage Ratio                               Commitment Fee Rate
--------------------- ---------------------------------------------------------------- -----------------------------

<S>                     <C>                                                                       <C>
         I                               Greater than 2.00 to 1.00                                0.35%
--------------------- ---------------------------------------------------------------- -----------------------------

         II             Greater than 1.50 to 1.00 but less than or equal to 2.00 to               0.30%
                                                   1.00
--------------------- ---------------------------------------------------------------- -----------------------------

        III             Greater than 1.00 to 1.00 but less than or equal to 1.50 to               0.25%
                                                   1.00
--------------------- ---------------------------------------------------------------- -----------------------------

         IV                         Less than or equal to 1.00 to 1.00                            0.20%
--------------------- ---------------------------------------------------------------- -----------------------------
</TABLE>

     (b)  Administrative  Agent's and Other  Fees.  In order to  compensate  the
Administrative  Agent for  structuring  and syndicating the Extensions of Credit
and  for  its  obligations  hereunder,   the  Borrower  agrees  to  pay  to  the
Administrative  Agent,  for its account,  the fees set forth in the separate fee
letter  agreement  executed by the Borrower and the  Administrative  Agent dated
November 4, 2005.

     SECTION 4.4 Manner of Payment.

     (a) Loans and Letters of Credit Denominated in Dollars. Each payment by the
Borrower  on account of the  principal  of or  interest on any Loan or Letter of
Credit  denominated  in  Dollars  or of any fee,  commission  or  other  amounts
(including  the  Reimbursement  Obligation  with respect to any Letter of Credit
denominated in Dollars)  payable to the Lenders under this Agreement or any Note
(except as set forth in Section  4.4(b)) shall be made in Dollars not later than
1:00  p.m.  (Charlotte  time) on the  date  specified  for  payment  under  this
Agreement to the Administrative  Agent at the Administrative  Agent's Office for
the  account  of the  Lenders  (other  than  as set  forth  below)  pro  rata in
accordance with their  respective  Commitment  Percentages  (except as specified
below) in  immediately  available  funds and shall be made  without any set-off,
counterclaim or deduction  whatsoever.  Any payment received after such time but
before 2:00 p.m.  (Charlotte time) on such day shall be deemed a payment on such
date for the  purposes  of Section  11.1,  but for all other  purposes  shall be
deemed  to have been  made on the next  succeeding  Business  Day.  Any  payment
received after 2:00 p.m.  (Charlotte  time) shall be deemed to have been made on
the next succeeding  Business Day for all purposes.  With respect to each Letter
of Credit denominated in Dollars,  each payment to the  Administrative  Agent of
the Issuing Lender's fees or L/C Participants' commissions shall be made in like
manner,  but for the account of the Issuing Lender or the L/C  Participants,  as
the case may be.

     (b) Alternative  Currency Loans. Each payment by the Borrower on account of
the principal of or interest on the Alternative  Currency Loans shall be made in
such  Alternative   Currency  not  later  than  11:00  a.m.  (the  time  of  the
Administrative  Agent's  Correspondent)  on the date specified for payment under
this Agreement to the  Administrative  Agent's  account with the  Administrative
Agent's  Correspondent for the account of the Alternative Currency Lender (other
than as set  forth  below) in  immediately  available  funds,  and shall be made
without any set-off,  counterclaim or deduction whatsoever. Any payment received
after such time but before  12:00 noon (the time of the  Administrative  Agent's
Correspondent)  on such day  shall  be  deemed a  payment  on such  date for the
purposes of Section  11.1,  but for all other  purposes  shall be deemed to have
been made on the next succeeding  Business Day. Any payment received after 12:00
noon (the time of the Administrative  Agent's  Correspondent) shall be deemed to
have been made on the next succeeding Business Day for all purposes.

     (c) Pro Rata Treatment.  Upon receipt by the  Administrative  Agent of each
such payment,  the Administrative  Agent shall distribute to each Lender, at its
address  for  notices set forth  herein,  its pro rata share of such  payment in
accordance with such Lender's Commitment  Percentage (except as specified below)
and shall wire advice of the amount of such credit to each Lender.  Each payment
to the  Administrative  Agent of the Issuing Lender's fees or L/C  Participants'
commissions  shall be made in like  manner,  but for the  account of the Issuing
Lender  or the L/C  Participants,  as the  case  may  be.  Each  payment  to the
Administrative  Agent of  Administrative  Agent's fees or expenses shall be made
for the account of the Administrative  Agent. Each payment to the Administrative
Agent with respect to the Swingline Note  (including,  without  limitation,  the
Swingline  Lender's  fees or  expenses)  shall  be made for the  account  of the
Swingline Lender.  Each payment to the Administrative  Agent with respect to the
Alternative  Currency  Note  shall be made for the  account  of the  Alternative
Currency  Lender.  Any amount payable to any Lender under  Sections 4.10,  4.11,
4.12, 4.13 or 13.2 shall be paid to the Administrative  Agent for the account of
the applicable Lender. Subject to Section 4.1(b)(ii),  if any payment under this
Agreement  or any Note shall be  specified  to be made upon a day which is not a
Business  Day, it shall be made on the next  succeeding  day which is a Business
Day and such  extension of time shall in such case be included in computing  any
interest if payable along with such payment.

     SECTION 4.5  Crediting  of  Payments  and  Proceeds.  In the event that the
Borrower shall fail to pay any of the  Obligations  when due and the Obligations
have been  accelerated  pursuant to Section 11.2,  all payments  received by the
Lenders upon the Notes and the other  Obligations  and all net proceeds from the
enforcement of the Obligations shall be applied:  (a) first to all expenses then
due and payable by the Borrower  hereunder  and under the other Loan  Documents,
(b) then to all  indemnity  obligations  then due and  payable  by the  Borrower
hereunder  and under the other Loan  Documents,  (c) then to all  Administrative
Agent's  and  Issuing  Lender's  fees  then  due and  payable,  (d)  then to all
commitment  and other fees and  commissions  then due and  payable,  (e) then to
accrued and unpaid  interest on the Swingline  Note to the Swingline  Lender and
the Alternative  Currency Note to the  Alternative  Currency Lender (pro rata in
accordance  with  all  such  amounts  due),  (f)  then to the  principal  amount
outstanding under the Swingline Note to the Swingline Lender and the Alternative
Currency Note to the  Alternative  Currency  Lender (pro rata in accordance with
all such amounts due), (g) then to accrued and unpaid  interest on the Revolving
Credit Notes,  accrued and unpaid interest on the  Reimbursement  Obligation and
any Hedging Obligations  (including any termination payments and any accrued and
unpaid interest thereon) (pro rata in accordance with all such amounts due), (h)
then to the  principal  amount of the Revolving  Credit Notes and  Reimbursement
Obligation  (pro rata in  accordance  with all such amounts due) and (i) then to
the cash collateral account described in Section 11.2(b) hereof to the extent of
any L/C Obligations then outstanding, in that order.

     SECTION 4.6 Adjustments.  If any Lender (a "Benefited Lender") shall at any
time  receive  any  payment  of all or part of the  Obligations  owing to it, or
interest  thereon,  or if any Lender shall at any time receive any collateral in
respect to the Obligations owing to it (whether voluntarily or involuntarily, by
set-off or otherwise)  (other than pursuant to Sections  4.8, 4.9,  4.10,  4.11,
4.12, 4.13 or 13.2 hereof) in a greater  proportion than any such payment to and
collateral  received  by any other  Lender,  if any,  in respect of the  similar
Obligations  owing to such other Lender,  or interest  thereon,  such  Benefited
Lender shall  purchase for cash from the other Lenders such portion of each such
other  Lender's  Extensions of Credit,  or shall provide such other Lenders with
the  benefits  of any such  collateral,  or the  proceeds  thereof,  as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders;  provided, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender,  such purchase shall be rescinded,  and the purchase
price  and  benefits  returned  to the  extent  of such  recovery,  but  without
interest.  The  Borrower  agrees  that each  Lender so  purchasing  a portion of
another  Lender's  Extensions  of Credit  may  exercise  all  rights of  payment
(including,  without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.

     SECTION  4.7 Nature of  Obligations  of  Lenders  Regarding  Extensions  of
Credit;  Assumption by the Administrative  Agent. The obligations of the Lenders
under this  Agreement to make the Loans and issue or  participate  in Letters of
Credit  are  several  and are  not  joint  or  joint  and  several.  Unless  the
Administrative  Agent  shall  have  received  notice  from a  Lender  prior to a
proposed  borrowing  date  that  such  Lender  will  not make  available  to the
Administrative  Agent such Lender's ratable portion of the amount to be borrowed
on such date  (which  notice  shall not release  such Lender of its  obligations
hereunder),  the Administrative  Agent may assume that such Lender has made such
portion available to the Administrative  Agent on the proposed borrowing date in
accordance  with Section  2.4(b) and the  Administrative  Agent may, in reliance
upon  such   assumption,   make  available  to  the  Borrower  on  such  date  a
corresponding  amount.  If such amount is made  available to the  Administrative
Agent  on a date  after  such  borrowing  date,  such  Lender  shall  pay to the
Administrative  Agent on demand an amount, until paid, equal to (a) with respect
to any Loan  denominated  in  Dollars,  the  product  of (i) the amount not made
available by such Lender in  accordance  with the terms  hereof,  times (ii) the
daily  average  Federal  Funds Rate  during  such  period as  determined  by the
Administrative  Agent,  times  (iii) a fraction  the  numerator  of which is the
number of days that elapse from and including such borrowing date to the date on
which such amount not made available by such Lender in accordance with the terms
hereof shall have become immediately  available to the Administrative  Agent and
the denominator of which is 360 and (b) with respect to any Loan  denominated in
an  Alternative  Currency,  the  amount  not made  available  by such  Lender in
accordance with the terms hereof and interest  thereon at a rate per annum equal
to the  Administrative  Agent's  aggregate  marginal cost (including the cost of
maintaining  any  required  reserves  or  deposit  insurance  and of  any  fees,
penalties,  overdraft  charges  or  other  costs  or  expenses  incurred  by the
Administrative  Agent as a result of the failure to deliver funds  hereunder) of
carrying such amount. A certificate of the Administrative  Agent with respect to
any amounts owing under this Section 4.7 shall be  conclusive,  absent  manifest
error.  If such Lender's  Commitment  Percentage  of such  borrowing is not made
available to the  Administrative  Agent by such Lender within three (3) Business
Days after such borrowing  date, the  Administrative  Agent shall be entitled to
recover such amount made  available by the  Administrative  Agent with  interest
thereon  at the rate per annum  applicable  to Base  Rate  Loans  hereunder,  on
demand,  from the  Borrower.  The  failure of any Lender to make  available  its
Commitment Percentage of any Loan requested by the Borrower shall not relieve it
or any other Lender of its obligation,  if any, hereunder to make its Commitment
Percentage of such Loan available on the borrowing  date, but no Lender shall be
responsible  for  the  failure  of any  other  Lender  to  make  its  Commitment
Percentage  of  such  Loan  available  on the  borrowing  date.  Notwithstanding
anything  set forth  herein  to the  contrary,  any  Lender  that  fails to make
available its Commitment Percentage of any Loan shall not (a) have any voting or
consent  rights under or with respect to any Loan  Document or (b)  constitute a
"Lender" (or be included in the calculation of Required  Lenders  hereunder) for
any voting or consent rights under or with respect to any Loan Document.

     SECTION 4.8. Redenomination of Alternative Currency Loans.

     (a)  Conversion  to the Base  Rate.  If any  Alternative  Currency  Loan is
required to bear  interest at the Base Rate rather than the LIBOR Rate  pursuant
to Section 4.1(d),  Section 4.10 or any other applicable  provision hereof, such
Loan shall be funded in Dollars in an amount equal to the Dollar  Amount of such
Alternative  Currency Loan, all subject to the provisions of Section 2.5(b). The
Borrower shall  reimburse the  Alternative  Currency  Lender or the Lenders,  as
applicable,  upon any such conversion for any amounts  required to be paid under
Section 4.11.

     (b) Redenomination of Loans and Obligations. Subject to Section 1.3 hereof,
(i) any Loan to be denominated  in the currency of the applicable  Participating
Member  State  shall be made in the euro and (ii) any  obligation  of any  party
under this  Agreement or any other Loan Document  which has been  denominated in
the currency of a  Participating  Member State shall be  redenominated  into the
euro.

     (c) Further Assurances.  The terms and provisions of this Agreement will be
subject  to  such  reasonable  changes  of  construction  as  determined  by the
Administrative   Agent  to  reflect  the   implementation  of  the  EMU  in  any
Participating  Member  State or any market  conventions  relating  to the fixing
and/or  calculation  of interest being changed or replaced and to reflect market
practice at that time, and subject thereto, to put the Administrative Agent, the
Lenders and the Borrower in the same  position,  so far as  possible,  that they
would  have  been  if  such  implementation  had  not  occurred.  In  connection
therewith,  the Borrower agrees, at the request of the Administrative  Agent, at
the  time  of or at any  time  following  the  implementation  of the EMU in any
Participating  Member  State or any market  conventions  relating  to the fixing
and/or  calculation  of interest  being  changed or  replaced,  to enter into an
agreement  amending this  Agreement in such manner as the  Administrative  Agent
shall reasonably request.

     SECTION 4.9. Regulatory Limitation.  In the event, as a result of increases
in the  value of  Alternative  Currencies  against  the  Dollar or for any other
reason,  the obligation of any of the Lenders to make Loans (taking into account
the Dollar Amount of the Obligations and all other  indebtedness  required to be
aggregated  under 12 U.S.C.A.  ss.84, as amended,  the  regulations  promulgated
thereunder and any other  Applicable Law) is determined by such Lender to exceed
its then applicable legal lending limit under 12 U.S.C.A. ss.84, as amended, and
the regulations promulgated thereunder,  or any other Applicable Law, the amount
of  additional  Extensions  of Credit such Lender  shall be obligated to make or
issue or  participate in hereunder  shall  immediately be reduced to the maximum
amount which such Lender may legally advance (as determined by such Lender), the
obligation of each of the remaining Lenders  hereunder shall be  proportionately
reduced,  based on their  applicable  Commitment  Percentages and, to the extent
necessary under such laws and regulations (as determined by each of the Lenders,
with respect to the  applicability of such laws and regulations to itself),  and
the  Borrower  shall  reduce,  or cause to be reduced,  complying  to the extent
practicable with the remaining  provisions hereof,  the Obligations  outstanding
hereunder by an amount sufficient to comply with such maximum amounts.

     SECTION 4.10 Changed Circumstances.

     (a)   Circumstances   Affecting   LIBOR  Rate  and   Alternative   Currency
Availability.  If with respect to any  Interest  Period for any LIBOR Rate Loan,
the Administrative  Agent, the Alternative  Currency Lender or any Lender (after
consultation with the  Administrative  Agent) shall determine that (i) by reason
of circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars or an Alternative Currency in the applicable amounts are
not being  quoted via Dow Jones  Market  Screen 3750 or the  applicable  Reuters
Screen  Page or  offered  to the  Administrative  Agent or such  Lender for such
Interest Period,  (ii) a fundamental change has occurred in the foreign exchange
or  interbank  markets  with  respect to any  Alternative  Currency  (including,
without limitation, changes in national or international financial, political or
economic conditions or currency exchange rates or exchange controls) or (iii) it
has become otherwise materially  impractical for the Alternative Currency Lender
to make such Alternative  Currency Loans,  then the  Administrative  Agent shall
forthwith   give  notice  thereof  to  the  Borrower.   Thereafter,   until  the
Administrative  Agent  notifies the Borrower that such  circumstances  no longer
exist,  the obligation of the Lenders or the  Alternative  Currency  Lender,  as
applicable,  to  make  LIBOR  Rate  Loans  or  Alternative  Currency  Loans,  as
applicable, and the right of the Borrower to convert any Loan to or continue any
Loan as a LIBOR Rate Loan or an Alternative Currency Loan, as applicable,  shall
be  suspended,  and the  Borrower  shall repay in full (or cause to be repaid in
full) the then  outstanding  principal  amount of each such  LIBOR  Rate Loan or
Alternative  Currency  Loan,  as  applicable,  together  with  accrued  interest
thereon,  on the last day of the then current Interest Period applicable to such
LIBOR Rate Loan or Alternative Currency Loan, as applicable, or convert the then
outstanding  principal  amount  of each  such  LIBOR  Rate  Loan or  Alternative
Currency Loan, as applicable,  to a Base Rate Loan in Dollars as of the last day
of such  Interest  Period;  provided  that if the  Borrower  elects to make such
conversion,  the Borrower shall pay to the Administrative Agent, the Alternative
Currency  Lender  and the  Lenders  any and all costs,  fees and other  expenses
incurred by the  Administrative  Agent, the Alternative  Currency Lender and the
Lenders in effecting such conversion.

     (b) Laws Affecting LIBOR Rate and Alternative  Currency  Availability.  If,
after the date hereof, the introduction of, or any change in, any Applicable 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 of the Lenders
(or any of their  respective  Lending  Offices)  with any  request or  directive
(whether  or not  having the force of law) of any such  Governmental  Authority,
central bank or comparable agency,  shall make it unlawful or impossible for any
of the  Lenders  (or any of their  respective  Lending  Offices)  to  honor  its
obligations hereunder to make or maintain any LIBOR Rate Loan or any Alternative
Currency   Loan,   such  Lender  shall  promptly  give  notice  thereof  to  the
Administrative  Agent and the Administrative Agent shall promptly give notice to
the Borrower, and the other Lenders.  Thereafter, until the Administrative Agent
notifies  the  Borrower  that  such  circumstances  no  longer  exist,  (i)  the
obligations of the Lenders or the Alternative Currency Lender, as applicable, to
make LIBOR Rate Loans or Alternative  Currency  Loans,  as  applicable,  and the
right of the  Borrower to convert any Loan or continue  any Loan as a LIBOR Rate
Loan or an  Alternative  Currency  Loan, as  applicable,  shall be suspended and
thereafter the Borrower may select only Base Rate Loans  hereunder,  and (ii) if
any of the Lenders or the Alternative  Currency Lender,  as applicable,  may not
lawfully continue to maintain a LIBOR Rate Loan or an Alternative Currency Loan,
as applicable, to the end of the then current Interest Period applicable thereto
as a LIBOR Rate Loan or Alternative Currency Loan, as applicable, the applicable
LIBOR  Rate  Loan  or  an  Alternative  Currency  Loan,  as  applicable,   shall
immediately  be  converted  to a Base Rate Loan in Dollars for the  remainder of
such  Interest  Period;  provided  that if the  Borrower  elects  to  make  such
conversion,  the Borrower shall pay to the Administrative Agent, the Alternative
Currency  Lender  and the  Lenders  any and all costs,  fees and other  expenses
incurred by the  Administrative  Agent, the Alternative  Currency Lender and the
Lenders in effecting such conversion,  including any amounts required to be paid
under Section 4.11.

     (c) Increased Costs. If, after the date hereof, the introduction of, or any
change  in, any  Applicable  Law,  or 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 of the
Lenders  (or any of  their  respective  Lending  Offices)  with any  request  or
directive  (whether  or not  having  the  force  of law)  of  such  Governmental
Authority, central bank or comparable agency:

          (i) shall (except as provided in Section  4.13(e))  subject any of the
Lenders (or any of their  respective  Lending Offices) to any tax, duty or other
charge with respect to any Note, Letter of Credit or Application or shall change
the  basis  of  taxation  of  payments  to any of the  Lenders  (or any of their
respective  Lending Offices) of the principal of or interest on any Note, Letter
of Credit or  Application  or any other  amounts  due under  this  Agreement  in
respect  thereof  (except for changes in the rate of franchise tax or tax on the
overall  net  income of any of the  Lenders or any of their  respective  Lending
Offices  imposed by the  jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is located);  provided
that the Borrower  shall not be  obligated  to pay any amounts  pursuant to this
Section  4.10(c)(i)  to the extent  that such  amounts  are  duplicative  of any
amounts paid by the Borrower pursuant to Section 4.13; or

          (ii) shall impose,  modify or deem applicable any reserve  (including,
without limitation, any reserve imposed by the Board of Governors of the Federal
Reserve System),  special deposit,  insurance or capital or similar  requirement
against  assets of,  deposits with or for the account of, or credit  extended by
any of the Lenders (or any of their respective  Lending Offices) or shall impose
on any of the  Lenders  (or any of  their  respective  Lending  Offices)  or the
foreign exchange and interbank markets any other condition affecting any Note;

and the result of any of the  foregoing  events  described in clause (i) or (ii)
above is to increase  the costs to any of the Lenders of  maintaining  any LIBOR
Rate  Loan or an  Alternative  Currency  Loan,  as  applicable,  or  issuing  or
participating  in  Letters of Credit or to reduce the yield or amount of any sum
received or receivable  by any of the Lenders under this  Agreement or under the
Notes in  respect  of a LIBOR  Rate Loan or an  Alternative  Currency  Loan,  as
applicable, or Letter of Credit or Application,  then such Lender shall promptly
notify the  Administrative  Agent, and the  Administrative  Agent shall promptly
notify the Borrower of such fact and demand  compensation  therefor and,  within
fifteen (15) days after such notice by the  Administrative  Agent,  the Borrower
shall pay to such Lender such  additional  amount or amounts as will  compensate
such Lender or Lenders for such increased cost or reduction.  The Administrative
Agent will  promptly  notify the Borrower of any event of which it has knowledge
which will entitle such Lender to compensation pursuant to this Section 4.10(c);
provided,  that the Administrative  Agent shall incur no liability whatsoever to
the  Lenders or the  Borrower in the event it fails to do so. The amount of such
compensation  shall  be  determined,   in  the  applicable  Lender's  reasonable
discretion,  based upon the  assumption  that such Lender funded its  Commitment
Percentage of the LIBOR Rate Loans or Alternative Currency Loans, as applicable,
in the London interbank market and using any reasonable attribution or averaging
methods which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts  necessary
to  compensate  such  Lender  shall be  forwarded  to the  Borrower  through the
Administrative  Agent and shall be conclusively  presumed to be correct save for
manifest error.

     (d) Exchange  Indemnification and Increased Costs. The Borrower shall, upon
demand from the  Administrative  Agent, pay to the  Administrative  Agent or any
applicable Lender, the amount of (i) any loss or cost or increased cost incurred
by the Administrative  Agent or any applicable Lender, (ii) any reduction in any
amount   payable  to  or  in  the  effective   return  on  the  capital  to  the
Administrative  Agent or any applicable Lender,  (iii) any interest or any other
return,  including  principal,  foregone  by  the  Administrative  Agent  or any
applicable  Lender  as a  result  of the  introduction  of,  change  over  to or
operation of the euro, or (iv) any currency  exchange loss, that  Administrative
Agent or any  Lender  sustains  as a result  of any  payment  being  made by the
Borrower in a currency other than that  originally  extended to the Borrower.  A
certificate of the Administrative  Agent setting forth the basis for determining
such  additional  amount or amounts  necessary to compensate the  Administrative
Agent or the applicable Lender shall be conclusively presumed to be correct save
for manifest error.

     SECTION 4.11 Indemnity. The Borrower hereby indemnifies each of the Lenders
against any loss or expense (including, without limitation, any foreign exchange
costs)  which  may  arise  or  be  attributable  to  each  Lender's   obtaining,
liquidating  or employing  deposits or other funds  acquired to effect,  fund or
maintain  any Loan (a) as a  consequence  of any failure by the Borrower to make
any payment when due of any amount due hereunder in connection with a LIBOR Rate
Loan or an Alternative  Currency Loan, (b) due to any failure of the Borrower to
borrow,  continue  or  convert  on a date  specified  therefor  in a  Notice  of
Borrowing  or  Notice  of  Conversion/Continuation  or (c)  due to any  payment,
prepayment or conversion of any LIBOR Rate Loan or any Alternative Currency Loan
on a date other than the last day of the Interest Period therefor. The amount of
such loss or expense shall be determined,  in the applicable Lender's reasonable
discretion,  based upon the  assumption  that such Lender funded its  Commitment
Percentage of the LIBOR Rate Loans in the London  interbank market and using any
reasonable  attribution or averaging methods which such Lender deems appropriate
and  practical.  A  certificate  of such  Lender  setting  forth  the  basis for
determining such amount or amounts  necessary to compensate such Lender shall be
forwarded  to the  Borrower  through  the  Administrative  Agent  and  shall  be
conclusively presumed to be correct save for manifest error.

     SECTION 4.12 Capital  Requirements.  If either (a) the  introduction of, or
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any  guideline  or request from any central  bank or  comparable  agency or
other  Governmental  Authority  (whether or not having the force of law), has or
would have the effect of  reducing  the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation  controlling  such Lender as a consequence of, or with
reference to the Commitments and other  commitments of this type, below the rate
which such Lender or such other  corporation  could have  achieved  but for such
introduction,  change or  compliance,  then within five (5) Business  Days after
written  demand by any such Lender,  the Borrower  shall pay to such Lender from
time to time as  specified  by such  Lender  additional  amounts  sufficient  to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrower and the  Administrative  Agent by such
Lender,  shall,  in the absence of manifest error, be presumed to be correct and
binding for all purposes.

     SECTION 4.13 Taxes.

     (a)  Payments  Free and  Clear.  Except as  otherwise  provided  in Section
4.13(e),  any and all payments by the  Borrower  hereunder or under the Notes or
the Letters of Credit shall be made free and clear of and without  deduction for
any and all present or future taxes,  levies,  imposts,  deductions,  charges or
withholding, and all liabilities with respect thereto excluding, (i) in the case
of each Lender and the Administrative  Agent, income and franchise taxes imposed
by the  jurisdiction  under the laws of which such Lender or the  Administrative
Agent  (as the case may be) is  organized  or is or should  be  qualified  to do
business  or any  political  subdivision  thereof  and  (ii) in the case of each
Lender,  income and franchise taxes imposed by the jurisdiction of such Lender's
Lending  Office or any  political  subdivision  thereof  (all such  non-excluded
taxes, levies, imposts, deductions,  charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable  hereunder or
under any Note or in  respect  of any  Letter  of  Credit  to any  Lender or the
Administrative  Agent, (A) except as otherwise provided in Section 4.13(e),  the
sum payable  shall be  increased  as may be  necessary  so that after making all
required  deductions  or  withholdings  (including  deductions  or  withholdings
applicable  to  additional  sums payable under this Section 4.13) such Lender or
the  Administrative  Agent (as the case may be)  receives an amount equal to the
amount such party would have  received had no such  deductions  or  withholdings
been made, (B) the Borrower shall make such deductions or withholdings,  (C) the
Borrower shall pay the full amount deducted to the relevant taxing  authority or
other  authority in accordance  with  Applicable Law, and (D) the Borrower shall
deliver to the Administrative  Agent and such Lender evidence of such payment to
the  relevant  taxing  authority or other  Governmental  Authority in the manner
provided in Section 4.13(d).

     (b) Stamp and Other Taxes. In addition,  the Borrower shall pay any present
or future stamp,  registration,  recordation or  documentary  taxes or any other
similar fees or charges or excise or property taxes, levies of the United States
or  any  state  or  political  subdivision  thereof  or any  applicable  foreign
jurisdiction  which arise from any payment made hereunder or from the execution,
delivery or registration  of, or otherwise with respect to, this Agreement,  the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or  security  interest  in respect  thereof  (hereinafter  referred to as
"Other Taxes").

     (c)  Indemnity.  Except as  otherwise  provided  in  Section  4.13(e),  the
Borrower shall indemnify each Lender and the  Administrative  Agent for the full
amount of Taxes and Other Taxes (including,  without  limitation,  any Taxes and
Other Taxes imposed by any  jurisdiction  on amounts  payable under this Section
4.13) paid by such Lender or the  Administrative  Agent (as the case may be) and
any liability (including penalties,  interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally  asserted.  Such  indemnification  shall be made within thirty (30) days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand  therefor.  Within sixty (60) days of the written  request of the
Borrower,  the  Administrative  Agent and each Lender shall  execute and deliver
such  certificates,  forms or other documents which can be reasonably  furnished
thereby  consistent with the facts and which are reasonably  necessary to assist
the Borrower in applying for refunds of such Taxes or Other Taxes.

     (d)  Evidence  of  Payment.  Within  thirty (30) days after the date of any
payment  of  Taxes  or  Other  Taxes,   the  Borrower   shall   furnish  to  the
Administrative  Agent, at its address  referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.

     (e)  Delivery of Tax Forms.  To the extent  required by  Applicable  Law to
reduce or  eliminate  withholding  or  payment  of taxes,  each  Lender  and the
Administrative  Agent  shall  deliver  to  the  Borrower,  with  a  copy  to the
Administrative  Agent, on the Closing Date or concurrently  with the delivery of
the relevant  Assignment and  Acceptance,  as applicable,  (i) two United States
Internal Revenue Service Forms W-9, Forms W-8ECI or Forms W-8BEN,  as applicable
(or successor  forms)  properly  completed and certifying in each case that such
Lender is entitled to a complete  exemption from withholding or deduction for or
on account of any United  States  federal  income  taxes,  and (ii) an  Internal
Revenue Service Form W-8BEN or W-8ECI or successor  applicable form, as the case
may be, to establish an exemption from United States backup  withholding  taxes.
Each such Lender  further  agrees to deliver to the Borrower  with a copy to the
Administrative  Agent,  as applicable,  two Form W-9, Form W-8BEN or W-8ECI,  or
successor applicable forms or manner of certification, as the case may be, on or
before  the date that any such form  expires or  becomes  obsolete  or after the
occurrence  of any event  requiring a change in the most recent form  previously
delivered  by it to the  Borrower  certifying  in the case of a Form  W-9,  Form
W-8BEN or W-8ECI (or  successor  forms)  that such Lender is entitled to receive
payments  under this  Agreement  without  deduction or withholding of any United
States federal income taxes (unless in any such case an event (including without
limitation any change in treaty,  law or  regulation)  has occurred prior to the
date on which any such delivery  would  otherwise be required which renders such
forms  inapplicable or the exemption to which such forms relate  unavailable and
such Lender  notifies the Borrower and the  Administrative  Agent that it is not
entitled to receive payments  without  deduction or withholding of United States
federal  income  taxes) and,  in the case of a Form W-9,  Form W-8BEN or W-8ECI,
establishing   an  exemption   from  United  States  backup   withholding   tax.
Notwithstanding  anything in any Loan  Document to the  contrary,  the  Borrower
shall  not  be  required  to  pay  additional  amounts  to  any  Lender  or  the
Administrative  Agent under Section 4.13 or Section 4.10(c),  (i) if such Lender
or the  Administrative  Agent  fails to  comply  with the  requirements  of this
Section  4.13(e),  other than to the extent that such failure is due to a change
in law occurring after the date on which such Lender or the Administrative Agent
became a party to this Agreement or (ii) that are the result of such Lender's or
the  Administrative   Agent's  gross  negligence  or  willful   misconduct,   as
applicable.

     (f) Survival.  Without  prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 4.13 shall  survive the payment in full of the  Obligations  and
the termination of the Commitments.

     SECTION 4.14. Other Consequential  Changes.  Subject to Section 1.3 hereof,
without  prejudice  and in  addition  to any method of  conversion  or  rounding
prescribed  by any EMU  Legislation  and  without  prejudice  to the  respective
obligations of the Borrower to the Administrative  Agent and the Lenders and the
Administrative  Agent and the Lenders to the Borrower  under or pursuant to this
Agreement,  except as expressly  provided in this  Agreement,  each provision of
this Agreement,  including,  without limitation, the right to combine currencies
to  effect  a  set-off,   shall  be  subject  to  such  reasonable   changes  of
interpretation as the  Administrative  Agent may from time to time specify to be
necessary or  appropriate to reflect the  introduction  of or change over to the
euro in Participating Member States.

     SECTION 4.15. Replacement of Lenders.

     (a) If any Lender requests compensation pursuant to Section 4.10 or Section
4.12, or if the Borrower is required to pay any additional  amount to any Lender
or any Governmental  Authority for the account of any Lender pursuant to Section
4.13,  then such Lender  shall use  reasonable  efforts to designate a different
lending office for funding or booking its  Extensions of Credit  hereunder or to
assign its rights and obligations hereunder to another of its offices,  branches
or  affiliates,  if,  in the  judgment  of  such  Lender,  such  designation  or
assignment  (A) would  eliminate or reduce amounts  payable  pursuant to Section
4.10,  Section 4.12 or Section  4.13,  as the case may be, in the future and (B)
would not subject such Lender to any unreimbursed  cost or expense and would not
otherwise be disadvantageous to such Lender.

     (b) If any Lender requests compensation pursuant to Section 4.10 or Section
4.12, or if the Borrower is required to pay any additional  amount to any Lender
or any Governmental  Authority for the account of any Lender pursuant to Section
4.13,  then the Borrower may, upon notice to such Lender and the  Administrative
Agent,  require  such  Lender to  assign  and  delegate,  without  recourse  (in
accordance with and subject to the restrictions contained in Section 13.10), all
of its  interests,  rights and  obligations  under this Agreement to an Eligible
Assignee  that shall  assume such  obligations  (which  assignee  may be another
Lender,  if a Lender  accepts such  assignment);  provided that (A) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld,  (B) such Lender shall have received
payment of an amount equal to the  outstanding  principal of its  Extensions  of
Credit,  accrued interest  thereon,  accrued fees,  breakage costs and all other
amounts  payable  to it  hereunder,  from the  assignee  (to the  extent of such
outstanding  principal  and accrued  interest  and fees) or the Borrower (in the
case of all other amounts) and (C) in the case of any such assignment  resulting
from a claim for  compensation  pursuant to Section 4.10 or Section  4.12,  such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required  to make any such  assignment  and  delegation  if,  prior
thereto, as a result of a waiver by such Lender or otherwise,  the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.

     (c) To the extent  that any Lender (a  "Replaced  Lender")  is  required to
assign all of its interests,  rights and obligations  under this Agreement to an
Eligible  Assignee (a "Replacement  Lender") pursuant to this Section 4.15, upon
the execution of all applicable assignment documents and the satisfaction of all
other conditions set forth herein,  the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to be a Lender  hereunder,  except
with  respect to the  indemnification  provisions  under this  Agreement,  which
provisions shall survive as to such Replaced Lender.

     SECTION 4.16. Security. The Obligations shall be secured as provided in the
Security Documents.

                                    ARTICLE V

                  CLOSING; CONDITIONS OF CLOSING AND BORROWING

     SECTION 5.1 Closing.  The closing shall take place at the offices of Womble
Carlyle  Sandridge & Rice, PLLC at 10:00 a.m. on December ____, 2005, or on such
other date and time as the parties hereto shall mutually agree.

     SECTION 5.2  Conditions to Closing and Initial  Extensions  of Credit.  The
obligation  of the Lenders to close this  Agreement and to make the initial Loan
or issue or participate  in the initial Letter of Credit,  if any, is subject to
the satisfaction of each of the following conditions:

     (a) Executed  Loan  Documents.  The  following  Loan  Documents in form and
substance satisfactory to the Administrative Agent and each Lender:

          (i)  this Agreement,

          (ii) the Revolving Credit Notes,

          (iii) the Alternative Currency Note,

          (iv) the Swingline Note,

          (v)  the Subsidiary Guaranty Agreement;

          (vi) the Collateral Agreement; and

          (vii) each other applicable Loan Document;

shall have been duly  authorized,  executed and delivered to the  Administrative
Agent by the parties  thereto,  shall be in full force and effect and no Default
or  Event of  Default  shall  exist  thereunder,  and the  Borrower  shall  have
delivered original counterparts thereof to the Administrative Agent.

     (b) Closing Certificates; etc.

          (i) Officer's  Certificate of the Borrower.  The Administrative  Agent
shall have received a certificate from a Responsible Officer of the Borrower, in
form and substance  satisfactory to the Administrative Agent, to the effect that
all  representations  and  warranties  of  the  Borrower  and  its  Subsidiaries
contained in this Agreement and the other Loan  Documents are true,  correct and
complete;  that the Borrower and its Subsidiaries are not in violation of any of
the covenants  contained in this Agreement and the other Loan  Documents;  that,
after giving  effect to the  transactions  contemplated  by this  Agreement,  no
Default  or  Event of  Default  has  occurred  and is  continuing;  and that the
Borrower and its Subsidiaries have satisfied each of the closing conditions.

          (ii)  Certificate  of Secretary  of the  Borrower and each  Subsidiary
Guarantor.  The  Administrative  Agent shall have received a certificate  of the
secretary or assistant  secretary of the Borrower and each Subsidiary  Guarantor
certifying as to the incumbency and genuineness of the signature of each officer
of the Borrower or such Subsidiary  Guarantor  executing Loan Documents to which
it is a party and  certifying  that  attached  thereto  is a true,  correct  and
complete  copy of (A) the  articles  of  incorporation  of the  Borrower or such
Subsidiary  Guarantor and all amendments  thereto,  certified by the appropriate
Governmental  Authority in its jurisdiction of incorporation,  (B) the bylaws of
the  Borrower  or such  Subsidiary  Guarantor  as in  effect on the date of such
certifications,  (C)  resolutions  duly adopted by the Board of Directors of the
Borrower and such Subsidiary Guarantor  authorizing the borrowings  contemplated
hereunder and the execution,  delivery and performance of this Agreement and the
other Loan Documents to which it is a party, and (D) each  certificate  required
to be delivered pursuant to Section 5.2(b)(iii).

          (iii) Certificates of Good Standing.  The  Administrative  Agent shall
have received (A)  certificates  as of a recent date of the good standing of the
Borrower and each  Subsidiary  Guarantor  under the laws of its  jurisdiction of
organization  and, to the extent  requested by the  Administrative  Agent,  each
other jurisdiction where the Borrower and each Subsidiary Guarantor is qualified
to do business and (B) a  certificate  of the relevant  taxing  authority of the
jurisdiction  of  organization  of the  Borrower and each  Subsidiary  Guarantor
certifying  that  such  Person  has  filed  required  tax  returns  and  owes no
delinquent taxes.

          (iv) Opinions of Counsel. The Administrative Agent shall have received
favorable  opinions of counsel to the  Borrower  and each  Subsidiary  Guarantor
addressed  to the  Administrative  Agent and the  Lenders  with  respect  to the
Borrower, the Subsidiary  Guarantors,  the Loan Documents and such other matters
as the Lenders shall request.

          (v) Tax Forms. The Administrative  Agent shall have received copies of
the United States  Internal  Revenue  Service forms required by Section  4.13(e)
hereof.

     (c) Security Interests.

          (i) Pledged  Collateral.  To the extent that the  Applicable  Laws and
practices of any relevant foreign jurisdiction provide for the issuance of stock
certificates or other certificates, the Administrative Agent shall have received
original stock certificates or other certificates (or the equivalent taking into
account the Applicable Laws and practices of any relevant foreign  jurisdiction)
of each  Material  Foreign  Subsidiary  evidencing  the  capital  stock or other
ownership interests pledged pursuant to the Collateral Agreement,  together with
an undated stock power for each such  certificate  duly executed in blank by the
registered  owner  thereof;  provided that the Borrower may evidence  compliance
herewith by  providing a perfected  first  priority  security  interest  (or the
equivalent thereof pursuant to the Applicable Laws and practices of any relevant
foreign  jurisdiction)  in the relevant  indicia of  ownership of such  Material
Foreign  Subsidiary;  provided,  further,  that the  Borrower or the  applicable
Domestic  Subsidiary of the Borrower owning the capital stock or other ownership
interests of such Material  Foreign  Subsidiary  shall not be required to pledge
more than that  percentage of all issued and  outstanding  shares of all capital
stock or other ownership  interests of such Foreign Subsidiary the granting of a
security interest in which shall not result in material adverse tax consequences
to the Borrower or such applicable Domestic Subsidiary (it being acknowledged by
the Borrower,  the Lenders and the Administrative  Agent that, as of the Closing
Date, such percentage required to be pledged is sixty-five percent (65%)).

          (ii) Foreign Security Interests and Filings.  Notwithstanding anything
in the Loan Documents to the contrary, (A) the Borrower shall not be required to
deliver a foreign pledge agreement unless  reasonably  requested to do so by the
Administrative  Agent and (B) the  Borrower  shall not be required to deliver an
opinion of counsel as to the  perfection,  validity  and  binding  nature of the
security  interests  created  pursuant to such foreign pledge  agreement  unless
reasonably requested to do so by the Administrative Agent.

     (d) Consents; Defaults.

          (ii)  Governmental and Third Party Approvals.  The Borrower shall have
obtained all necessary  material  approvals,  authorizations and consents of any
Person and of all Governmental  Authorities and courts having  jurisdiction with
respect to the  transactions  contemplated  by this Agreement and the other Loan
Documents.

          (i) No Injunction,  Etc. No action, suit,  proceeding,  investigation,
regulation or  legislation  shall have been  instituted,  threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of, this
Agreement or the other Loan Documents or the consummation by the Borrower or any
of its Subsidiaries of the transactions contemplated hereby or thereby, or which
would be reasonably likely to have a Material Adverse Effect.

          (ii) No Event of  Default.  No Default or Event of Default  shall have
occurred and be continuing.

     (e) Financial Matters.

          (i) Financial Statements. The Administrative Agent shall have received
the  audited   Consolidated   financial  statements  of  the  Borrower  and  its
Subsidiaries  for each of the Borrower's  Fiscal Years ending in 2004,  2003 and
2002, each as filed with the Securities and Exchange  Commission and prepared in
accordance with GAAP.

          (ii)  Financial  Condition   Certificate.   The  Borrower  shall  have
delivered  to the  Administrative  Agent a  certificate,  in form and  substance
satisfactory  to the  Administrative  Agent,  and  certified  as  accurate  by a
Responsible Officer, that (A) the Borrower and each of its Subsidiaries are each
Solvent as of the Closing Date, (B) attached thereto are calculations evidencing
compliance  with the  covenants  contained  in  Article IX hereof as of the most
recent quarterly financial statements of the Borrower and its Subsidiaries,  and
(C) the financial  projections  previously delivered to the Administrative Agent
represent the good faith  estimates  (utilizing  reasonable  assumptions) of the
financial  condition and operations of the Borrower and its  Subsidiaries  as of
the date thereof.

          (iii) Payment at Closing; Fee Letters. The Borrower shall have paid to
the  Administrative  Agent and the Lenders the fees set forth or  referenced  in
Section 4.3 and any other accrued and unpaid fees or  commissions  due hereunder
(including,  without limitation,  reasonable legal fees and expenses) and to any
other  Person  such  amount  as  may be  due  thereto  in  connection  with  the
transactions contemplated hereby, including all taxes, fees and other charges in
connection with the execution,  delivery,  recording, filing and registration of
any of the Loan Documents.

     (f) Miscellaneous.

          (i) Notice of Borrowing.  The Administrative Agent shall have received
(A) a Notice of Borrowing,  as applicable,  from the Borrower in accordance with
Section  2.4(a) and (B) a Notice of Account  Designation  from the  Borrower  in
accordance  with Section 2.4(b)  specifying the account or accounts to which the
proceeds of any Loans made after the Closing Date are to be disbursed.

          (ii) Existing Facility.  The Existing Facility shall be repaid in full
and terminated.

          (iii)  Miscellaneous  Matters.  The  Administrative  Agent  shall have
received such  information  as it may have  requested  from the Borrower and its
Subsidiaries relating to litigation, tax, accounting,  labor, insurance, pension
liabilities  (actual  or  contingent),   leases  of  real  property,  agreements
evidencing Debt, ownership of assets by the Borrower or any of its Subsidiaries,
environmental matters, contingent liabilities and management of the Borrower and
its Subsidiaries (including, as applicable, copies of all documents, instruments
and agreements relating to such subjects), and such information shall be in form
and substance satisfactory to Administrative Agent.

          (iv) Other Documents. All opinions, certificates and other instruments
and all  proceedings in connection  with the  transactions  contemplated by this
Agreement  shall be  satisfactory  in form and  substance to the  Administrative
Agent.  The  Administrative  Agent  shall  have  received  copies  of all  other
documents,  certificates  and  instruments  reasonably  requested  thereby  with
respect to the transactions contemplated by this Agreement.

     SECTION 5.3 Conditions to All Extensions of Credit.  The obligations of the
Lenders to make any  Extensions of Credit  (including  the initial  Extension of
Credit),  convert or continue  any Loan  and/or the  Issuing  Lender to issue or
extend any Letter of Credit are  subject to the  satisfaction  of the  following
conditions  precedent  on  the  relevant  borrowing,  conversion,  continuation,
issuance or extension date:

     (a) Continuation of Representations and Warranties. The representations and
warranties contained in Section 6.1(a), (c), (d), (e), (j), (m) and (n) shall be
true and correct on and as of such borrowing, conversion, continuation, issuance
or extension date with the same effect as if made on and as of such date, except
for  any  representation  and  warranty  made  as  of  an  earlier  date,  which
representation  and  warranty  shall  remain true and correct as of such earlier
date.

     (b) No Existing Default. No Default or Event of Default shall have occurred
and be continuing (i) on the  borrowing,  conversion or  continuation  date with
respect to such Loan or after giving  effect to the Loans to be made,  converted
or  continued on such date or (ii) on the issue date with respect to such Letter
of Credit or after giving  effect to the issuance or extension of such Letter of
Credit on such date.

     (c)  Notices.  The  Administrative  Agent  shall have  received a Notice of
Borrowing or Notice of Conversion/Continuation, as applicable, from the Borrower
in accordance with Section 2.4(a) or 4.2.

     (d) Compliance with Borrowing Limits.  The Borrower shall have demonstrated
compliance with Section 2.5(b) (i) on the borrowing,  conversion or continuation
date with respect to such Loan or after  giving  effect to the Loans to be made,
converted or  continued  on such date or (ii) on the issuance or extension  date
with respect to such Letter of Credit or after giving  effect to the issuance or
extension of such Letter of Credit on such date.

     (e) Additional Documents. The Administrative Agent shall have received each
additional  document,   instrument,  legal  opinion  or  other  item  reasonably
requested by it.

                                   ARTICLE VI

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

     SECTION 6.1  Representations  and Warranties.  To induce the Administrative
Agent and the Lenders to enter into this  Agreement and to induce the Lenders to
make Extensions of Credit,  the Borrower  hereby  represents and warrants to the
Administrative  Agent and  Lenders  both before and after  giving  effect to the
transactions contemplated hereunder that:

     (a)  Organization;  Power;  Qualification.  Each  of the  Borrower  and its
Subsidiaries (i) is duly organized,  validly existing and in good standing under
the laws of the  jurisdiction of its  incorporation  or formation,  (ii) has the
power and authority to own its properties and to carry on its business and (iii)
is duly  qualified and authorized to do business in each  jurisdiction  in which
its business  requires such  qualification and  authorization,  except where the
failure to be so qualified  could not  reasonably be expected to have a Material
Adverse Effect. The jurisdictions in which the Borrower and its Subsidiaries are
organized  and  qualified to do business as of the Closing Date are described on
Schedule 6.1(a).

     (b)  Ownership.  Each  Subsidiary of the Borrower as of the Closing Date is
listed, and the Material Domestic Subsidiaries and Material Foreign Subsidiaries
are  identified  as such,  on  Schedule  6.1(b).  As of the  Closing  Date,  the
capitalization  of the Borrower and its  Subsidiaries  consists of the number of
shares, authorized,  issued and outstanding, of such classes and series, with or
without par value,  described  on Schedule  6.1(b).  All  outstanding  shares or
equity interests have been duly authorized and validly issued and are fully paid
and  nonassessable,  with  no  personal  liability  attaching  to the  ownership
thereof,  and not subject to any preemptive or similar rights.  The shareholders
of the Subsidiaries of the Borrower and the number of shares owned by each as of
the Closing Date are described on Schedule 6.1(b). As of the Closing Date, there
are no outstanding stock purchase warrants, subscriptions,  options, securities,
instruments  or  other  rights  of any  type or  nature  whatsoever,  which  are
convertible  into,  exchangeable  for or  otherwise  provide  for or permit  the
issuance of capital stock of the Borrower or its  Subsidiaries,  except pursuant
to plans and agreements  described in the Borrower's  periodic  filings with the
SEC.

     (c) Authorization of Agreement,  Loan Documents and Borrowing.  Each of the
Borrower and its Subsidiaries  has the right,  power and authority and has taken
all  necessary  corporate  and  other  organizational  action to  authorize  the
execution, delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms. This
Agreement  and each of the other  Loan  Documents  have been duly  executed  and
delivered  by the  duly  authorized  officers  of the  Borrower  and each of its
Subsidiaries party thereto,  and each such document constitutes the legal, valid
and  binding  obligation  of the  Borrower  or  its  Subsidiary  party  thereto,
enforceable in accordance with its terms,  except as such  enforceability may be
limited by bankruptcy, insolvency,  reorganization,  moratorium or similar state
or  federal  debtor  relief  laws from time to time in effect  which  affect the
enforcement of creditors'  rights in general and the  availability  of equitable
remedies.

     (d) Compliance of Agreement,  Loan Documents and Borrowing with Laws,  Etc.
The execution,  delivery and performance by the Borrower and its Subsidiaries of
the Loan  Documents  to which each such Person is a party,  in  accordance  with
their respective  terms, the Extensions of Credit hereunder and the transactions
contemplated  hereby do not and will not, by the passage of time,  the giving of
notice or otherwise,  (i) require any material  Governmental Approval or violate
any material Applicable Law relating to the Borrower or any of its Subsidiaries,
(ii)  conflict  with,  result in a breach of or  constitute a default  under the
articles  of  incorporation,  bylaws or other  organizational  documents  of the
Borrower or any of its  Subsidiaries  or any  material  indenture,  agreement or
other  instrument  to  which  such  Person  is a party  or by  which  any of its
properties may be bound or any  Governmental  Approval  relating to such Person,
(iii) result in or require the creation or  imposition of any material Lien upon
or with respect to any  property now owned or hereafter  acquired by such Person
other than Liens arising  under the Loan  Documents or (iv) require any material
consent or material  authorization  of,  material filing with, or other material
act in respect  of, an  arbitrator  or  Governmental  Authority  and no material
consent  of any other  Person is  required  in  connection  with the  execution,
delivery, performance, validity or enforceability of this Agreement.

     (e) Compliance with Law; Governmental  Approvals.  Each of the Borrower and
its Subsidiaries (i) has all Governmental  Approvals  required by any Applicable
Law for it to conduct its  business,  each of which is in full force and effect,
is final and not  subject  to review on  appeal  and is not the  subject  of any
pending or, to Borrower's  knowledge,  threatened attack by direct or collateral
proceeding,   (ii)  is  in  compliance  in  all  material   respects  with  each
Governmental Approval applicable to it, (iii) is in compliance,  and has been in
compliance,  with all  Applicable  Laws relating to it or any of its  respective
properties and (iv) has timely filed all material  reports,  documents and other
materials  required  to be  filed  by it  under  all  Applicable  Laws  with any
Governmental  Authority  and has  retained all  material  records and  documents
required to be retained by it under  Applicable Law, except where the failure to
comply  with or satisfy  could not  reasonably  be  expected  to have a Material
Adverse Effect.

     (f) Taxes. No  Governmental  Authority has asserted any Lien or other claim
against the  Borrower or any  Subsidiary  thereof  with  respect to unpaid taxes
which has not been  discharged or resolved,  except unpaid taxes which are being
contested in good faith and for which  adequate  reserves  have been provided in
accordance with GAAP.

     (g)  Intellectual   Property   Matters.   Each  of  the  Borrower  and  its
Subsidiaries  owns  or  possesses  rights  to  use  all  franchises,   licenses,
copyrights,  copyright applications,  patents, patent rights or licenses, patent
applications,  trademarks, trademark rights, service marks, service mark rights,
trade  names,  trade name  rights,  copyrights  and rights  with  respect to the
foregoing  which are  required to conduct its  business,  except for those,  the
failure of which to own or possess,  could not  reasonably be expected to have a
Material  Adverse  Effect.  To its  knowledge,  (i) no event has occurred  which
permits,  or after notice or lapse of time or both would permit,  the revocation
or  termination  of any  such  rights  and (ii)  neither  the  Borrower  nor any
Subsidiary thereof is liable to any Person for infringement under Applicable Law
with respect to any such rights as a result of its business operations,  in each
case which could reasonably be expected to have a Material Adverse Effect.

     (h) Environmental Matters.

          (i) To the Borrower's  knowledge,  there is no contamination at, under
or  about  the  Borrower's  or any  of  its  Subsidiaries'  properties  or  such
operations which could interfere with the continued operation of such properties
or  impair  the fair  saleable  value  thereof,  except to the  extent  any such
non-compliance  or  contamination  could not  reasonably  be  expected to have a
Material Adverse Effect;

          (ii) Neither the Borrower nor any Subsidiary  thereof has received any
notice of violation, alleged violation,  non-compliance,  liability or potential
liability  regarding  Environmental  Laws,  except  as could not  reasonably  be
expected to have a Material Adverse Effect; and

          (iii) To the Borrower's  knowledge,  Hazardous Materials have not been
transported or disposed of by the Borrower or any of its  Subsidiaries or by any
other Person to or from the properties owned, leased or operated by the Borrower
and its  Subsidiaries  in a manner or to a  location  which  could  give rise to
liability under  Environmental  Laws that could reasonably be expected to have a
Material Adverse Effect.

          (i) ERISA.

          (i) As of the  Closing  Date,  neither  the  Borrower  nor  any  ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on Schedule 6.1(i);

          (ii) Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been  determined by the Internal  Revenue Service
to be so qualified,  and each trust related to such plan has been  determined to
be exempt under  Section  501(a) of the Code except for such plans that have not
yet received  determination  letters but for which the remedial amendment period
for submitting a determination letter has not yet expired;

          (iii) As of the Closing Date, no Pension Plan has been terminated, nor
has any accumulated  funding  deficiency (as defined in Section 412 of the Code)
been  incurred  (without  regard to any waiver  granted under Section 412 of the
Code),  nor has any  funding  waiver  from the  Internal  Revenue  Service  been
received or requested  with respect to any Pension Plan,  nor has there been any
event requiring any disclosure  under Section  4041(c)(3)(C) or 4063(a) of ERISA
with respect to any Pension Plan; and

          (iv) No  Termination  Event has occurred or is reasonably  expected to
occur.

     (j) Margin  Stock.  Neither  the  Borrower  nor any  Subsidiary  thereof is
engaged  principally  or as one of its  activities  in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used,  directly or  indirectly,  in  Regulation U of the
Board of Governors of the Federal  Reserve  System).  No part of the proceeds of
any of the Loans or Letters of Credit  will be used for  purchasing  or carrying
margin stock or for any purpose which  violates,  or which would be inconsistent
with, the provisions of Regulation T, U or X of such Board of Governors.

     (k) Government Regulation.  Neither the Borrower nor any Subsidiary thereof
is an "investment  company" or a company "controlled" by an "investment company"
(as each such term is defined or used in the Investment  Company Act of 1940, as
amended) and neither the Borrower nor any Subsidiary thereof is, or after giving
effect to any  Extension  of Credit  will be,  subject to  regulation  under the
Public Utility Holding Company Act of 1935 or the Interstate  Commerce Act, each
as amended,  or any other  Applicable  Law which  limits its ability to incur or
consummate the transactions contemplated hereby.

     (l) Employee  Relations.  Each of the Borrower and its Subsidiaries is not,
as of the Closing Date, party to any collective bargaining agreement nor has any
labor union been recognized as the representative of its employees except as set
forth on  Schedule  6.1(l).  The  Borrower  knows of no pending,  threatened  or
contemplated strikes, work stoppage or other collective labor disputes involving
its employees or those of its Subsidiaries  that could reasonably be expected to
have a Material Adverse Effect.

     (m) Financial Statements. The (i) audited Consolidated balance sheet of the
Borrower and its  Subsidiaries  as of December 31, 2004 and the related  audited
statements  of income and  retained  earnings and cash flows for the Fiscal Year
then ended and (ii) unaudited Consolidated balance sheet of the Borrower and its
Subsidiaries as of September 30, 2005 and related unaudited  interim  statements
of income and retained earnings,  in each case including the accompanying notes,
copies of which have been furnished to the Administrative Agent and each Lender,
are  complete  and  correct  and  fairly  present  on a  Consolidated  basis the
financial position, results of operations and cash flows of the Borrower and its
Subsidiaries  as of such  dates  and for the  periods  then  ended  (other  than
customary,  year end adjustments for unaudited financial  statements).  All such
financial  statements,  including the related schedules and notes thereto,  have
been prepared in accordance with GAAP. The Borrower and its Subsidiaries have no
Debt,  obligation or other unusual forward or long-term  commitment which is not
fairly reflected in the foregoing financial statements or in the notes thereto.

     (n) No  Material  Adverse  Change.  Except  as  publicly  disclosed  by the
Borrower prior to the Closing Date,  since September 30, 2005, there has been no
material  adverse  change in the  properties,  assets,  liabilities  (actual  or
contingent),   business,  operations,  prospects,  or  condition  (financial  or
otherwise) of the Borrower and its Subsidiaries,  taken as a whole, and no event
has occurred or  condition  arisen that could  reasonably  be expected to have a
Material Adverse Effect.

     (o)  Solvency.  As of the  Closing  Date and  after  giving  effect to each
Extension of Credit made  hereunder,  the Borrower and each of its  Subsidiaries
will be Solvent.

     (p)  Liens.  None of the  properties  and  assets  of the  Borrower  or any
Subsidiary  thereof is subject to any Lien,  except Liens permitted  pursuant to
Section 10.2. No financing  statement  under the Uniform  Commercial Code of any
state  which  names  the  Borrower  or any  Subsidiary  thereof  or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other  jurisdiction  and neither the Borrower nor
any Subsidiary  thereof has signed any such financing  statement or any security
agreement  authorizing  any secured party  thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 10.2 hereof.

     (q) Debt and  Guaranty  Obligations.  Schedule  6.1(q)  is a  complete  and
correct  listing of all Debt and  Guaranty  Obligations  of the Borrower and its
Subsidiaries as of the Closing Date in excess of $3,000,000.

     (r)  Litigation.  Except for matters  existing on the Closing  Date and set
forth on Schedule  6.1(r),  there are no actions,  suits or proceedings  pending
nor, to the  knowledge of the Borrower,  threatened  against the Borrower or any
Subsidiary thereof or any of their respective  properties in any court or before
any arbitrator of any kind or before or by any  Governmental  Authority that, if
adversely  determined,  could  reasonably be expected to have a Material Adverse
Effect.

     (s)  Absence of  Defaults.  No event has  occurred or is  continuing  which
constitutes  a Default or an Event of Default,  or which  constitutes,  or which
with the passage of time or giving of notice or both would constitute, a default
or  event of  default  by the  Borrower  or any  Subsidiary  thereof  under  any
judgment,  decree or order to which the Borrower or its  Subsidiaries is a party
or by  which  the  Borrower  or its  Subsidiaries  or any  of  their  respective
properties may be bound or which would require the Borrower or its  Subsidiaries
to make any payment  thereunder  prior to the scheduled  maturity date therefor,
except where such default or defaults,  if any, could not reasonably be expected
to have a Material Adverse Effect.

     (t) Accuracy  and  Completeness  of  Information.  All written  information
produced by or on behalf of the Borrower or any Subsidiary thereof and furnished
to the Lenders was, at the time the same was so furnished,  complete and correct
in all material  respects to the extent  necessary to give the  recipient a true
and accurate  knowledge of the subject  matter,  as it pertains to the financing
contemplated by this Agreement.  No document furnished or written statement made
to the  Administrative  Agent or the Lenders by the  Borrower or any  Subsidiary
thereof in connection  with the  negotiation,  preparation  or execution of this
Agreement or any of the Loan Documents  contains any untrue  statement of a fact
material to the creditworthiness of the Borrower or its Subsidiaries or omits to
state a  material  fact  necessary  in order to make  the  statements  contained
therein not misleading in any material respect. The Borrower is not aware of any
facts which it has not disclosed in writing to the Administrative Agent having a
Material Adverse Effect.

     SECTION  6.2  Survival  of   Representations   and  Warranties,   Etc.  All
representations   and   warranties   set  forth  in  this  Article  VI  and  all
representations and warranties contained in any certificate,  or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this  Agreement.  All  representations  and warranties
made  under this  Agreement  shall be made or deemed to be made at and as of the
Closing Date (except those that are expressly made as of a specific date), shall
survive the Closing Date and shall not be waived by the  execution  and delivery
of this Agreement,  any investigation made by or on behalf of the Lenders or any
borrowing hereunder.

                                   ARTICLE VII

                        FINANCIAL INFORMATION AND NOTICES

     Until all the  Obligations  have been  paid and  satisfied  in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section  13.11,  the  Borrower  will  furnish or cause to be furnished to the
Administrative Agent at the Administrative  Agent's Office and to the Lenders at
their respective addresses as set forth on Schedule 1.1(a), or such other office
as may be designated by the Administrative Agent and Lenders from time to time:

     SECTION 7.1 Financial Statements and Projections.

     (a) Quarterly Financial Statements. As soon as practicable and in any event
within fifty (50) days after each fiscal quarter of each Fiscal Year,  unaudited
Consolidated  financial  statements of the Borrower and its Subsidiaries for the
fiscal  quarter  then  ended and that  portion of the  Fiscal  Year then  ended,
including  the notes  thereto,  all in  reasonable  detail and  prepared  by the
Borrower in accordance with GAAP and in compliance with the applicable reporting
requirements  of the Securities and Exchange  Commission for issuers of publicly
traded  securities,  and  certified  by  the  chief  financial  officer  or  the
controller  of the  Borrower  to present  fairly in all  material  respects  the
financial condition of the Borrower and its Subsidiaries on a Consolidated basis
as of their  respective  dates and the results of operations of the Borrower and
its Subsidiaries for the respective  periods then ended,  subject to normal year
end adjustments (it being agreed that the requirements of this subsection may be
satisfied  by  filing  of the  applicable  quarterly  report on Form 10-Q of the
Borrower with the Securities and Exchange  Commission to the extent that: (i) it
contains the foregoing  information,  (ii) it is available to the Administrative
Agent  and  the  Lenders  on  EDGAR  and  (iii)  the   Borrower   notifies   the
Administrative Agent and the Lenders within the time period noted herein that it
is available to them on EDGAR).

     (b) Annual  Financial  Statements.  As soon as practicable and in any event
within  one  hundred  and five (105)  days  after the end of each  Fiscal  Year,
audited  Consolidated  financial statements of the Borrower and its Subsidiaries
for the Fiscal Year then ended,  including the notes thereto,  all in reasonable
detail and certified by an independent public accounting firm in accordance with
GAAP, and accompanied by a report thereon by such independent  public accounting
firm that is not  qualified  with  respect to scope  limitations  imposed by the
Borrower or any of its  Subsidiaries  or with respect to  accounting  principles
followed by the Borrower or any of its  Subsidiaries not in accordance with GAAP
(it being agreed that the  requirements  of this  subsection may be satisfied by
filing of the  applicable  annual  report on Form 10-K of the Borrower  with the
Securities  and  Exchange  Commission  to the extent  that:  (i) it contains the
foregoing information,  (ii) it is available to the Administrative Agent and the
Lenders on EDGAR and (iii) the Borrower  notifies the  Administrative  Agent and
the Lenders  within the time period noted herein that it is available to them on
EDGAR).

     SECTION  7.2  Officer's  Compliance  Certificate.  At each  time  financial
statements  are delivered  pursuant to Sections  7.1(a) or (b) and at such other
times as the Administrative Agent shall reasonably request, a certificate of the
chief financial officer,  the controller or the treasurer of the Borrower in the
form of Exhibit F attached hereto (an "Officer's Compliance Certificate").

     SECTION 7.3 Other Reports. Such other information regarding the operations,
business  affairs  and  financial  condition  of  the  Borrower  or  any  of its
Subsidiaries as the Administrative Agent or any Lender may reasonably request.

     SECTION 7.4 Notices. Prompt (but in no event later than ten (10) days after
an officer of the Borrower  obtains  knowledge  thereof)  telephonic and written
notice of:

     (a) any attachment, judgment, lien, levy or order exceeding $3,000,000 that
may be assessed against the Borrower or any Subsidiary thereof;

     (b) (i) any Default or Event of Default or (ii) the occurrence or existence
of any event or  circumstance  that could  reasonably  be  expected  to become a
Default or Event of Default; and

     (c) any event which makes any of the  representations  set forth in Section
6.1 inaccurate in any respect (provided that, with respect to any representation
set forth in  Section  6.1 that is not  subject to a  materiality  or a Material
Adverse  Effect  qualification,   any  event  which  makes  such  representation
inaccurate in any material respect).

     SECTION 7.5 Accuracy of Information.  All written information  furnished by
or on behalf of the Borrower to the  Administrative  Agent or any Lender whether
pursuant to this Article VII or any other provision of this Agreement, or any of
the Loan Documents, shall, at the time the same is so furnished, comply with the
representations and warranties set forth in Section 6.1(w).

                                  ARTICLE VIII

                              AFFIRMATIVE COVENANTS

     Until all of the  Obligations  have been paid and satisfied in full and the
Commitments terminated,  unless consent has been obtained in the manner provided
for in Section 13.11, the Borrower will, and will cause each of its Subsidiaries
to:

     SECTION 8.1 Preservation of Corporate Existence and Related Matters. Except
as permitted  by Section  10.4,  preserve  and  maintain its separate  corporate
existence and all rights,  franchises,  licenses and privileges necessary to the
material conduct of its business,  and qualify and remain qualified as a foreign
corporation  and  authorized  to do business in each  jurisdiction  in which the
failure to so qualify could  reasonably  be expected to have a Material  Adverse
Effect.

     SECTION 8.2  Maintenance  of Property.  Protect and preserve all properties
useful in and material to its business,  including  copyrights,  patents,  trade
names,  service  marks  and  trademarks;  maintain  in good  working  order  and
condition  all  buildings,  equipment  and  other  tangible  real  and  personal
property;  and  from  time  to time  make or  cause  to be  made  all  renewals,
replacements  and  additions to such  property  necessary for the conduct of its
business,  so that  the  business  carried  on in  connection  therewith  may be
conducted in a commercially reasonable manner.

     SECTION  8.3  Insurance.  Maintain  insurance  with  financially  sound and
reputable  insurance  companies  against  such risks and in such  amounts as are
customarily  maintained by similar businesses  (including,  without  limitation,
hazard and business interruption  coverage) and as may be required by Applicable
Law, and from time to time after the Closing Date deliver to the  Administrative
Agent upon its request a detailed list of the insurance then in effect,  stating
the names of the  insurance  companies,  retention  amounts,  the amounts of the
insurance,  the dates of the  expiration  thereof and the  properties  and risks
covered thereby.

     SECTION 8.4 Accounting Methods and Financial Records.  Maintain a system of
accounting,  and keep such books,  records and accounts (which shall be true and
complete in all material  respects) as may be required or as may be necessary to
permit the  preparation of financial  statements in accordance  with GAAP and in
compliance  with  the   regulations  of  any   Governmental   Authority   having
jurisdiction over it or any of its properties.

     SECTION 8.5 Payment and  Performance  of  Obligations.  Pay and perform all
Obligations  under  this  Agreement  and the other  Loan  Documents,  and pay or
perform (a) all taxes,  assessments and other  governmental  charges that may be
levied  or  assessed  upon  it or  any  of  its  property,  and  (b)  all  other
indebtedness,  obligations  and  liabilities in accordance  with customary trade
practices;  provided,  that the Borrower or such Subsidiary may contest any item
described  in clauses  (a) or (b) of this  Section  8.5 in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.

     SECTION  8.6  Compliance  With Laws and  Approvals.  Observe  and remain in
compliance  in all material  respects with all  Applicable  Laws and maintain in
full force and effect all Governmental Approvals, in each case applicable to its
properties and the conduct of its business.

     SECTION 8.7 ERISA. The Borrower shall furnish to the  Administrative  Agent
upon the  Administrative  Agent's request such additional  information about any
Employee  Benefit  Plan as may be  reasonably  requested  by the  Administrative
Agent.

     SECTION 8.8  Compliance  With Material  Agreements.  Comply in all material
respects with each term,  condition and provision of all material agreements and
other instruments  entered into in the conduct of its business;  provided,  that
the Borrower or any such  Subsidiary may contest any such material  agreement or
other  instrument  in  good  faith  through  applicable  proceedings  so long as
adequate reserves are maintained in accordance with GAAP.

     SECTION  8.9  Visits  and  Inspections.   Permit   representatives  of  the
Administrative Agent or any Lender, from time to time upon reasonable notice, to
visit and inspect its  properties;  inspect,  audit and make  extracts  from its
books,  records and files,  including,  but not limited to,  management  letters
prepared by independent  accountants;  and discuss with its principal  officers,
and its independent accountants,  its business, assets,  liabilities,  financial
condition, results of operations and business prospects.

     SECTION 8.10 Additional Subsidiaries and Additional Collateral.  Notify the
Administrative Agent of (1) the creation or acquisition of any Material Domestic
Subsidiary  or Material  Foreign  Subsidiary  or (2) any Domestic  Subsidiary or
Foreign  Subsidiary of the Borrower becoming a Material  Domestic  Subsidiary or
Material  Foreign  Subsidiary as evidenced by the  information  set forth in the
Officer's Compliance Certificate delivered pursuant to Section 7.2, and promptly
thereafter (and in any event within thirty (30) days),  cause to be executed and
delivered to the  Administrative  Agent (i) a duly  executed  Joinder  Agreement
(pursuant to which such Material Domestic Subsidiary shall become a party to the
Guaranty Agreement,  the Collateral  Agreement and any other applicable Security
Documents  and such Material  Foreign  Subsidiary  shall execute the  Collateral
Agreement as an issuer),  (ii) such other  instruments  and  documents and other
items of the type required to be delivered  pursuant to Section  5.2(c),  all in
form and substance reasonably  satisfactory to the Administrative  Agent, as may
be reasonably  required by the  Administrative  Agent to obtain a first priority
perfected  security  interest  in the  capital  stock  of any  Material  Foreign
Subsidiary  to be pledged  pursuant to the Loan  Documents,  (iii) such  closing
documents and closing certificates of the type required to be delivered pursuant
to Section  5.2(b),  including,  without  limitation,  favorable  legal opinions
addressed  to the  Administrative  Agent and the  Lenders in form and  substance
reasonably  satisfactory  thereto  with  respect to such duly  executed  Joinder
Agreement  (and (i) the Guaranty  Agreement,  the  Collateral  Agreement and any
other applicable  Security Documents to which such Material Domestic  Subsidiary
shall become  party  thereto in  connection  therewith  and (ii) the  Collateral
Agreement  that the Material  Foreign  Subsidiary  shall execute as an issuer in
connection  therewith),  in each  case as may  reasonably  be  requested  by the
Administrative  Agent,  and (iv) such other documents and certificates as may be
reasonably requested by the Administrative Agent. Notwithstanding the foregoing,
neither the Borrower nor any Material  Domestic  Subsidiary  shall pledge to the
Administrative  Agent more than that  percentage  of all issued and  outstanding
shares of all capital stock or other ownership  interests of a Material  Foreign
Subsidiary the granting of a security interest in which shall result in material
adverse tax  consequences  to the Borrower or the applicable  Material  Domestic
Subsidiary  (it  being  acknowledged  by  the  Borrower,  the  Lenders  and  the
Administrative  Agent that, as of the Closing Date, such percentage  required to
be pledged is sixty-five percent (65%).

     SECTION 8.11 Use of Proceeds.  Use the proceeds of the Extensions of Credit
(a) to refinance the Existing  Facility and (b) for working  capital and general
corporate  requirements  of the Borrower  and its  Subsidiaries,  including  the
payment  of  certain  fees  and  expenses   incurred  in  connection   with  the
transactions contemplated by this Agreement.

     SECTION  8.  12  Burdensome  Provisions.   Neither  the  Borrower  nor  any
Subsidiary thereof shall be a party to any indenture,  agreement, lease or other
instrument, or subject to any corporate or partnership restriction, Governmental
Approval or Applicable Law which could be reasonably expected to have a Material
Adverse  Effect.  Except as set forth in the  Existing  Bond  Documentation,  no
Subsidiary shall be a party to any agreement or instrument or otherwise  subject
to any  restriction or encumbrance  that restricts or limits its ability to make
dividend payments or other  distributions in respect of its capital stock to the
Borrower or any Subsidiary or to transfer any of its assets or properties to the
Borrower or any other  Subsidiary in each case other than  existing  under or by
reason of the Loan Documents or Applicable Law.

     SECTION  8.  13  Titles  to  Properties.  Each  of  the  Borrower  and  its
Subsidiaries shall have such title to the real property owned or leased by it as
is  necessary  or  desirable  to the conduct of its business and valid and legal
title to all of its personal  property and assets,  except those which have been
disposed  of by the  Borrower  or its  Subsidiaries  in the  ordinary  course of
business or as otherwise expressly permitted hereunder.

     SECTION 8. 14 Senior Debt Status.  The Obligations of the Borrower and each
of its  Subsidiaries  under this  Agreement and each of the other Loan Documents
shall rank at least  senior in priority of payment to all  Subordinated  Debt of
each such Person and shall be designated  at all times as "Senior  Indebtedness"
under all  instruments  and  documents,  now or in the  future,  relating to all
Subordinated Debt.

     SECTION  8.15  Further  Assurances.  Make,  execute  and  deliver  all such
additional and further acts, things, deeds and instruments as the Administrative
Agent and the Required Lenders (through the Administrative Agent) may reasonably
require to document and consummate the transactions  contemplated  hereby and to
vest  completely  in and insure the  Administrative  Agent and the Lenders their
respective rights under this Agreement, the Notes, the Letters of Credit and the
other Loan Documents.

                                   ARTICLE IX

                               FINANCIAL COVENANTS

     Until all of the  Obligations  have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.11, the Borrower and its Subsidiaries on a Consolidated basis will
not:

     SECTION 9.1 Leverage  Ratio. As of any fiscal quarter end, permit the ratio
of (a) Total Funded Debt on such date,  to (b) EBITDA for the period of four (4)
consecutive  fiscal quarters ending on or immediately  prior to such date, to be
greater than 2.50 to 1.00.

     SECTION 9.2 Consolidated Net Worth.  Permit, at any time,  Consolidated Net
Worth to be less than $120,000,000.

     SECTION 9.3 Interest Coverage Ratio As of any fiscal quarter end during the
periods  set forth  below,  permit the ratio of: (a) EBIT for the period of four
(4) consecutive  fiscal quarters ending on or immediately prior to such date, to
(b)  Interest  Expense for the period of four (4)  consecutive  fiscal  quarters
ending on or immediately prior to such date, to be less than 2.50 to 1.00.

     SECTION 9.4 Capital  Expenditures.  During any Fiscal Year,  permit Capital
Expenditures  to be greater than the sum of (i) one hundred fifty percent (150%)
of depreciation  and amortization  expense  (calculated in accordance with GAAP)
for the prior Fiscal Year and (ii) $5,000,000.

                                    ARTICLE X

                               NEGATIVE COVENANTS

     Until all of the  Obligations  have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in  Section  13.11,  the  Borrower  has  not  and  will  not  permit  any of its
Subsidiaries to:

     SECTION 10.1 Limitations on Debt. Create,  incur, assume or suffer to exist
any Debt except:

     (a) the Obligations (excluding any Hedging Obligations);

     (b)  Debt  incurred  in  connection   with  a  Hedging   Agreement  with  a
counterparty and upon terms and conditions  (including interest rate) reasonably
satisfactory to the Administrative Agent;  provided,  that any counterparty that
is a  Lender  or the  Bank of  Montreal  shall  be  deemed  satisfactory  to the
Administrative Agent;

     (c) Debt  existing on the Closing Date and not  otherwise  permitted  under
this  Section  10.1,  as  set  forth  on  Schedule  6.1(q),   and  the  renewal,
refinancing,  extension and  replacement  (but not the increase in the aggregate
principal amount) thereof;

     (d)  Guaranty  Obligations  in favor of the  Administrative  Agent  for the
benefit of the Administrative Agent and the Lenders;

     (e)  unsecured  Debt of the Borrower and the  Domestic  Subsidiaries  in an
aggregate amount not to exceed $5,000,000 on any date of determination (provided
that such  Debt may be  secured  to the  extent  that any such Debt is  created,
incurred,  assumed or suffered to exist in  connection  with Capital  Leases and
purchase money financing);

     (f) Debt of the Foreign  Subsidiaries in an aggregate  amount not to exceed
$10,000,000 on any date of determination;

     (g)  intercompany  Debt  between the  Borrower  and any  Subsidiary  of the
Borrower or between any  Subsidiary of the Borrower and any other  Subsidiary of
the Borrower; or

     (h)  Debt of any  Person  acquired  in  accordance  with  Section  10.3(c),
including  any renewal,  extension or  refinancing,  but not any increase in the
aggregate principal amount, thereof (provided that such Debt was not incurred in
connection with such acquisition);

provided,  that no agreement or instrument  with respect to Debt permitted to be
incurred  by this  Section  shall  restrict,  limit or  otherwise  encumber  (by
covenant or otherwise) the ability of any Subsidiary of the Borrower to make any
payment to the Borrower or any of its  Subsidiaries  (in the form of  dividends,
intercompany  advances or otherwise) for the purpose of enabling the Borrower to
pay the Obligations.

     SECTION  10.2  Limitations  on Liens.  Create,  incur,  assume or suffer to
exist,  any  Lien  on or  with  respect  to  any  of its  assets  or  properties
(including,  without  limitation,  shares of  capital  stock or other  ownership
interests), real or personal, whether now owned or hereafter acquired, except:

     (a) Liens for taxes,  assessments and other governmental  charges or levies
(excluding  any Lien imposed  pursuant to any of the  provisions of ERISA or the
Environmental  Laws)  not yet due or as to which the  period  of grace,  if any,
related  thereto has not expired or which are being  contested in good faith and
by  appropriate  proceedings  if adequate  reserves are maintained to the extent
required by GAAP;

     (b)  the  claims  of  materialmen,   mechanics,   carriers,   warehousemen,
processors, landlords or other similar parties for labor, materials, supplies or
rentals  incurred in the ordinary course of business,  (i) which are not overdue
for a period of more than thirty (30) days or (ii) which are being  contested in
good faith and by appropriate proceedings;

     (c) Liens  consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation;

     (d) Liens constituting  encumbrances in the nature of zoning  restrictions,
easements  and  rights or  restrictions  of record on the use of real  property,
which in the  aggregate are not  substantial  in amount and which do not, in any
case,  prevent  the  use  thereof  in the  ordinary  conduct  of the  Borrower's
business;

     (e) Liens of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders;

     (f) Liens not otherwise  permitted by this Section 10.2 and in existence on
the Closing Date and described on Schedule 10.2;

     (g) Liens  securing  Debt incurred in  connection  with Capital  Leases and
purchase  money  Debt (in each case to the  extent  that such Debt is  permitted
under  Section  10.1(e));   provided  that  (A)  such  Liens  shall  be  created
substantially simultaneously with the acquisition or lease of the related asset,
(B) such Liens do not at any time encumber any property  other than the property
financed  by such  Debt,  (C) the  amount of such Debt  secured  thereby  is not
increased  and (D) the  principal  amount of such Debt  secured by any such Lien
shall at no time  exceed one hundred  percent  (100%) of the  original  purchase
price or lease payment amount of such property at the time it was acquired;

     (h) Liens on the assets of any  Foreign  Subsidiary  securing  Debt of such
Foreign  Subsidiary  (to the extent that such Debt is  permitted  under  Section
10.1(f));

     (i) Liens securing judgments not giving rise to an Event of Default so long
as (A) such Lien is adequately  bonded and (B) any appropriate  legal proceeding
which may have been duly  initiated  for the review of such  judgment  shall not
have been finally  terminated or the period within which such  proceeding may be
initiated shall not have expired;

     (j) Liens  encumbering  deposits  made to secure  obligations  arising from
statutory,  regulatory,  contractual or warranty requirements of the Borrower or
any of its Subsidiaries, including rights of offset and set-off, incurred in the
ordinary course of business;

     (k) Liens in favor of custom and revenue authorities arising as a matter of
law to secure  payment of custom duties in connection  with the  importation  of
goods in the ordinary course of business;

     (l) Liens arising from the precautionary  filing of Uniform Commercial Code
financing statements (or similar foreign counterparts) regarding leases; and

     (m) rights of setoff or  bankers'  liens upon  deposits of cash in favor of
banks or other financial institutions in the ordinary course of business.

     SECTION 10.3 Limitations on Loans, Advances,  Investments and Acquisitions.
Purchase,  own,  invest in or otherwise  acquire,  directly or  indirectly,  any
capital stock, interests in any partnership or joint venture (including, without
limitation, the creation or capitalization of any Subsidiary),  evidence of Debt
or other obligation or security,  substantially all or a portion of the business
or assets of any other Person or any other investment or interest  whatsoever in
any other Person, or make or permit to exist, directly or indirectly, any loans,
advances or extensions of credit to, or any investment in cash or by delivery of
property in, any Person except:

     (a) investments (i) existing on the Closing Date in  Subsidiaries,  (ii) in
Subsidiaries  formed or acquired  after the Closing Date so long as the Borrower
and its  Subsidiaries  comply  with the  provisions  of  Section  8.10 and (iii)
existing  on the Closing  Date in the form of loans,  advances  and  investments
described on Schedule 10.3;

     (b)   investments  in  (i)   marketable   direct   obligations   issued  or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within three hundred sixty-five (365) days from the date of acquisition
thereof,  (ii)  commercial  paper maturing no more than one hundred twenty (120)
days from the date of creation  thereof and currently  having the highest rating
obtainable  from either  Standard & Poor's Ratings  Services,  a division of The
McGraw-Hill   Companies,   Inc.  or  Moody's  Investors  Service,   Inc.,  (iii)
certificates of deposit maturing no more than one hundred twenty (120) days from
the date of creation thereof issued by commercial banks  incorporated  under the
laws of the United States of America, each having combined capital,  surplus and
undivided  profits of not less than  $500,000,000  and having a rating of "A" or
better by a nationally  recognized rating agency;  provided,  that the aggregate
amount  invested in such  certificates  of deposit  shall not at any time exceed
$5,000,000 for any one such  certificate of deposit and  $10,000,000 for any one
such bank,  (iv) time  deposits  maturing no more than thirty (30) days from the
date of creation  thereof with commercial  banks or savings banks or savings and
loan  associations  each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding  the maximum  amounts
of insurance  thereunder,  (v) tax-exempt  municipal  bonds maturing  within one
hundred twenty (120) days from the date of acquisition  thereof,  (vi) any money
market or bank fund investing only in the  investments  set forth above or (vii)
investments held in trust or escrow accounts  subject to government  regulation,
legal settlements, collateral requirements or other similar arrangements; and

     (c)  investments by the Borrower or any of its  Subsidiaries in the form of
acquisitions of all,  substantially  all or a majority of the stock or assets of
the business or a line of business (whether by the acquisition of capital stock,
assets or any  combination  thereof) of any other  Person  (each,  a  "Permitted
Acquisition"); provided that:

          (i) the Person to be acquired shall be a going  concern,  engaged in a
business,  or the assets to be  acquired  shall be used in a  business  which is
similar,  related or  complimentary  to the line of business of the Borrower and
its Subsidiaries as required pursuant to Section 10.12;

          (ii) the Borrower or such Subsidiary (unless the Person to be acquired
complies with Section 8.10), as applicable, shall be the surviving Person and no
Change in Control shall have been effected thereby;

          (iii) with respect to any  Material  Acquisition,  the Borrower  shall
have delivered written notice of such proposed acquisition to the Administrative
Agent (for delivery by the Administrative Agent to the Lenders) and the Lenders,
which  notice  shall  include  the  proposed   closing  date  of  such  proposed
acquisition,  not less than twenty  (20)  calendar  days prior to such  proposed
closing date;

          (iv) with respect to any Material Acquisition, the Borrower shall have
delivered  to the  Administrative  Agent  copies  of the  Permitted  Acquisition
Documents;

          (v) with respect to any Material Acquisition,  the Borrower shall have
certified on or before the closing date of such proposed acquisition, in writing
and in a form reasonably acceptable to the Administrative Agent and the Lenders,
that such  proposed  acquisition  has been approved by the board of directors or
equivalent governing body of the Person to be acquired;

          (vi) no  Default  or Event  of  Default  shall  have  occurred  and be
continuing both before and after giving effect to such proposed acquisition;

          (vii) the Borrower shall have complied with Section 8.10;

          (viii) with respect to any Material  Acquisition,  the Borrower  shall
have  delivered  to the  Administrative  Agent  and  the  Lenders  an  Officer's
Compliance Certificate dated as of the closing date of such proposed acquisition
demonstrating,  in form and substance reasonably satisfactory thereto, pro forma
compliance  with each  covenant  contained  in Article IX (both before and after
giving  effect to such proposed  acquisition)  (it being agreed by the Borrower,
the  Administrative  Agent and the Lenders that such  calculations  shall assume
that all Debt assumed or incurred in conjunction with such proposed  acquisition
was incurred at the beginning of the applicable  calculation period and that all
income and expenses  associated with such proposed  acquisition shall be treated
as earned and included in the pro-forma calculations (both on a consolidated and
consolidating basis));

          (ix) the Borrower  shall have at least  $10,000,000  in Liquidity both
before and after giving effect to such proposed acquisition; and

          (x) the  Person to be  acquired  is not  subject to  material  pending
litigation which could reasonably be expected to have a Material Adverse Effect;

     (d)  investments by the Borrower or any of its  Subsidiaries in the form of
acquisitions  of less than a majority  of the capital  stock or other  ownership
interests of any other Person; provided that:

          (i) the Person to be invested in shall be a going concern,  engaged in
a business which is similar, related or complimentary to the line of business of
the Borrower and its Subsidiaries;

          (ii)  the  amount  of  the  investment  (regardless  of  the  form  of
consideration),  together  with the aggregate  amounts of all other  investments
pursuant to this Section 10.3(d),  shall not exceed  $10,000,000 during the term
of this Agreement;

          (iii)  neither the Borrower nor any Material  Domestic  Subsidiary  or
Material  Foreign  Subsidiary  shall make any  investment  in which such party's
potential  liability  is not  limited  to the  amount of its  investment  (i.e.,
investments as a general partner, in joint ventures, etc.);

          (iv) no  Default  or Event  of  Default  shall  have  occurred  and be
continuing both before and after giving effect to such proposed investment;

          (v) the Borrower shall have complied with Section 8.10;

          (vi) the Borrower  shall have at least  $10,000,000  in Liquidity both
before and after giving effect to such proposed investment; and

          (vii) the Person to be invested in is not subject to material  pending
litigation which could reasonably be expected to have a Material Adverse Effect.

     (e) intercompany  loans and advances in connection with  intercompany  Debt
permitted under Section 10.1(g);

     (f) Hedging Agreements permitted pursuant to Section 10.1; and

     (g) purchases of assets in the ordinary course of business.

     SECTION 10.4 Limitations on Mergers and Liquidation.  Merge, consolidate or
enter into any similar  combination with any other Person or liquidate,  wind-up
or dissolve itself (or suffer any liquidation or dissolution) except:

     (a) (i) any Wholly-Owned Domestic Subsidiary of the Borrower may merge with
the  Borrower or any other  Wholly-Owned  Domestic  Subsidiary  of the  Borrower
(provided that (1) in any merger  involving the Borrower,  the Borrower shall be
the surviving  entity and (2) in any merger  involving any Subsidiary  Guarantor
(and  not  involving  the  Borrower),  such  Subsidiary  Guarantor  shall be the
surviving entity) and (ii) any Wholly-Owned  Foreign  Subsidiary of the Borrower
may merge with any other Wholly-Owned Foreign Subsidiary of the Borrower;

     (b) (i) any Wholly-Owned Domestic Subsidiary of the Borrower may merge into
the  Person  such  Wholly-Owned  Domestic  Subsidiary  was  formed to acquire in
connection  with an acquisition  permitted by Section  10.3(c)  (provided  that,
after giving  effect to such  acquisition,  such Person shall be a  Wholly-Owned
Domestic  Subsidiary and shall comply with the requirements set forth in Section
8.10) and (ii) any  Wholly-Owned  Foreign  Subsidiary  of the Borrower may merge
into the Person such  Wholly-Owned  Foreign  Subsidiary was formed to acquire in
connection with an acquisition permitted by Section 10.3(c); and

     (c) (i) any  Wholly-Owned  Domestic  Subsidiary of the Borrower may wind-up
into the Borrower or any other Wholly-Owned  Domestic Subsidiary of the Borrower
and (ii) any  Wholly-Owned  Foreign  Subsidiary of the Borrower may wind-up into
any other Wholly-Owned Foreign Subsidiary of the Borrower.

     SECTION 10.5 Limitations on Sale of Assets.  Convey,  sell, lease,  assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without  limitation,  the  sale of any  receivables  and  leasehold
interests and any sale-leaseback or similar  transaction),  whether now owned or
hereafter acquired except:

     (a) the sale of inventory in the ordinary course of business;

     (b) the sale of assets,  for fair market  value in the  ordinary  course of
business,  that are no longer used or usable in the  business of the Borrower or
any of its Subsidiaries;

     (c) the transfer of assets to the Borrower or any  Wholly-Owned  Subsidiary
of the Borrower pursuant to Section 10.4(c);

     (d) the sale or discount without recourse of accounts receivable arising in
the ordinary  course of business in connection with the compromise or collection
thereof;

     (e) the disposition of any Hedging Agreement;

     (f) sales or grants of licenses in the  ordinary  course of business to use
the patents,  trade  secrets,  know-how and other  intellectual  property of the
Borrower  and its  Subsidiaries  to the extent  that any such  license  does not
prohibit the Borrower or its Subsidiaries  from using any material  technologies
licensed  unless  for  due  consideration,   or  require  the  Borrower  or  its
Subsidiaries to pay fees for the use of any material technology;

     (g) any distribution permitted pursuant to Section 10.6; and

     (h) sales of assets by the Borrower or any Subsidiary of the Borrower in an
aggregate  amount not to exceed  $10,000,000  during the term of this Agreement;
provided that such limitations on the sale of assets shall not include,  so long
as no Default or Event of Default has  occurred and is  continuing,  any sale of
assets  consisting  of  property,  plant or  equipment of Borrower or any of its
Subsidiaries  in which  the net cash  proceeds  of such sale are  reinvested  in
assets  consisting  of property,  plant or equipment  (or  otherwise in a manner
acceptable  to the  Administrative  Agent in its  sole  discretion)  within  two
hundred seventy (270) days after receipt of such net cash proceeds.

     SECTION 10.6 Limitations on Dividends and Distributions. Declare or pay any
dividends  upon any of its  capital  stock  or any  other  ownership  interests;
purchase,  redeem,  retire or otherwise  acquire,  directly or  indirectly,  any
shares  of  its  capital  stock  or  other  ownership  interests,  or  make  any
distribution  of cash,  property  or assets  among the  holders of shares of its
capital stock or other  ownership  interests,  or make any change in its capital
structure; provided that:

     (a) the Borrower or any  Subsidiary  may pay dividends in shares of its own
capital stock;

     (b) any Subsidiary may pay cash dividends to the Borrower;

     (c) the Borrower may pay cash  dividends  on its capital  stock,  purchase,
redeem,  retire or  otherwise  acquire,  directly or  indirectly,  shares of its
capital stock (including  purchases of treasury stock), or make distributions of
cash,  property or assets among its  shareholders in an aggregate  amount not to
exceed the lesser of (i) twelve and  one-half  cents  ($0.125)  per share in any
calendar quarter, or (ii) $8,000,000 in any calendar year; and

     (d) in addition to transactions  permitted under  subsection (c) above, the
Borrower may pay cash dividends on its capital stock,  purchase,  redeem, retire
or  otherwise  acquire,  directly or  indirectly,  shares of its  capital  stock
(including purchases of treasury stock), or make distributions of cash, property
or assets among its  shareholders in an aggregate  amount not to exceed,  during
the term of this Agreement, the sum of (i) $20,000,000 plus (ii) an amount equal
to  fifty  percent  (50%)  of  aggregate  Net  Income  of the  Borrower  and its
Subsidiaries since September 30, 2005.

     SECTION 10.7 Limitations on Exchange and Issuance of Capital Stock.  Issue,
sell or otherwise  dispose of any class or series of capital  stock that, by its
terms  or by  the  terms  of  any  security  into  which  it is  convertible  or
exchangeable, is, or upon the happening of an event or passage of time would be,
(a)  convertible  or  exchangeable  into Debt or (b)  required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or upon the happening of an event or passage of time would have, a redemption or
similar payment due.

     SECTION  10.8  Transactions   with  Affiliates.   Except  for  transactions
permitted by 10.3, 10.6 and 10.7 and those transactions  existing on the Closing
Date and identified on Schedule 10.8, directly or indirectly enter into, or be a
party to, any  transaction  with any of its  Affiliates,  except pursuant to the
reasonable  requirements of its business and upon fair and reasonable terms that
are no less  favorable to it than it would  obtain in a comparable  arm's length
transaction with a Person not its Affiliate.

     SECTION 10.9 Certain Accounting Changes; Organizational Documents.

     (a) Make any change in its  accounting  treatment and  reporting  practices
except as required or permitted by GAAP; or

     (b) Amend,  modify or change its articles of  incorporation  (or  corporate
charter or other similar  organizational  documents) or amend,  modify or change
its bylaws (or other similar  documents)  in any manner  adverse in any material
respect to the rights or interests of the Lenders.

     SECTION 10.10  Amendments;  Payments and Prepayments of Subordinated  Debt.
Amend or modify (or permit the modification or amendment of) any of the terms or
provisions of any  Subordinated  Debt, or cancel or forgive,  make any elective,
voluntary or optional  payment or prepayment  on, or redeem or acquire for value
(including,  without  limitation,  by way of  depositing  with any trustee  with
respect  thereto money or  securities  before due for the purpose of paying when
due) any Subordinated Debt.

     SECTION 10.11 Restrictive Agreements.

     (a) Enter into any Debt which contains any negative pledge on assets or any
covenants  more  restrictive  than the  provisions  of Articles  VIII,  IX and X
hereof, or which restricts,  limits or otherwise  encumbers its ability to incur
Liens on or with  respect  to any of its  assets or  properties  other  than the
assets or properties securing such Debt.

     (b) Except as provided in the Existing  Bond  Documentation,  enter into or
permit  to exist any  agreement  which  impairs  or limits  the  ability  of any
Subsidiary of the Borrower to pay dividends to the Borrower.

     SECTION  10.12  Nature  of  Business.  Alter in any  material  respect  the
character  or  conduct  of the  business  conducted  by  the  Borrower  and  its
Subsidiaries  taken as a whole  as of the  Closing  Date  (except  as  otherwise
permitted by the terms of this Agreement).

     SECTION 10.13  Impairment of Security  Interests.  Take or omit to take any
action,  which  might or would  have the  result  of  materially  impairing  the
security  interests  in favor of the  Administrative  Agent with  respect to the
capital stock or other ownership interests of the Material Foreign  Subsidiaries
pledged pursuant to the Collateral  Agreement or grant to any Person (other than
the  Administrative  Agent for the benefit of itself and the Lenders pursuant to
the Security  Documents)  any interest  whatsoever in the capital stock or other
ownership interest of the Material Foreign  Subsidiaries pledged pursuant to the
Collateral Agreement, except for asset sales permitted under Section 10.5.

     SECTION 10.14 Subsidiaries. Allow the Subsidiaries of the Borrower that are
not "Material Domestic Subsidiaries" (including without limitation, Subsidiaries
designated as Material Domestic  Subsidiaries  pursuant to subsection (c) of the
definition of Material Domestic  Subsidiary) or "Material Foreign  Subsidiaries"
(including  without  limitation,  Subsidiaries  designated  as Material  Foreign
Subsidiaries  pursuant to subsection (c) of the  definition of Material  Foreign
Subsidiary)  to have total net assets equal to or greater than ten percent (10%)
of total net assets of the Borrower and its Subsidiaries at any time.

                                   ARTICLE XI

                              DEFAULT AND REMEDIES

     SECTION 11.1 Events of Default.  Each of the following shall  constitute an
Event of  Default,  whatever  the reason for such event and  whether it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment  or  order  of any  court  or any  order,  rule  or  regulation  of any
Governmental Authority or otherwise:

     (a) Default in Payment of Principal of Loans and Reimbursement Obligations.
The Borrower  shall  default in any payment of  principal  of any Loan,  Note or
Reimbursement  Obligation  when and as due  (whether at  maturity,  by reason of
acceleration or otherwise).

     (b) Other Payment  Default.  The Borrower shall default in the payment when
and as due (whether at maturity,  by reason of acceleration or otherwise) of (i)
interest on any Loan, Note or Reimbursement  Obligation,  and such default shall
continue unremedied for five (5) Business Days or (ii) any other Obligation, and
such default shall continue unremedied for ten (10) Business Days.

     (c) Misrepresentation.  Any representation or warranty made or deemed to be
made by the Borrower or any of its Subsidiaries under this Agreement,  any other
Loan  Document or any  amendment  hereto or thereto,  shall at any time prove to
have been  incorrect or misleading  in any material  respect when made or deemed
made.

     (d) Default in Performance of Certain Covenants. The Borrower or any of its
Subsidiaries  shall default in the  performance or observance of any covenant or
agreement  contained  in Sections  7.1,  7.2 or 7.4(b)(i) or Articles IX or X of
this Agreement, and the Borrower's failure to perform or observe any covenant or
agreement in Section 7.1 or 7.2 shall continue  unremedied for ten (10) Business
Days (during  which time the  Applicable  Margin shall be based on Pricing Level
I).

     (e) Default in Performance of Other Covenants and Conditions.  The Borrower
or any Subsidiary  thereof shall default in the performance or observance of any
term,  covenant,  condition or agreement contained in this Agreement (other than
as  specifically  provided for otherwise in this Section 11.1) or any other Loan
Document and such default shall  continue for a period of thirty (30) days after
written  notice  thereof has been given to the  Borrower  by the  Administrative
Agent.

     (f) Hedging  Agreement.  The Borrower  shall default in the  performance or
observance of any terms,  covenant,  condition or agreement (after giving effect
to any applicable grace or cure period) under any Hedging Agreement with respect
to any Debt or other  obligation  in a principal  amount in excess of $3,000,000
and such default causes the termination of such Hedging Agreement or permits any
counterparty to such Hedging Agreement to terminate any such Hedging Agreement.

     (g) Debt  Cross-Default.  The Borrower or any of its Subsidiaries shall (i)
default in the payment of any Debt  (other  than the Notes or any  Reimbursement
Obligation)  the  aggregate  outstanding  amount  of which  Debt is in excess of
$3,000,000  beyond the period of grace if any,  provided  in the  instrument  or
agreement  under which such Debt was created,  or (ii) default in the observance
or performance of any other  agreement or condition  relating to any Debt (other
than the Notes or any Reimbursement Obligation) the aggregate outstanding amount
of which Debt is in excess of  $3,000,000  or  contained  in any  instrument  or
agreement  evidencing,  securing  or  relating  thereto or any other event shall
occur or  condition  exist,  the  effect  of  which  default  or other  event or
condition  is to cause,  or to permit  the  holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause,  with the giving
of notice if required,  any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).

     (h)  Change  in  Control.  (i)  The  sale,  lease  or  transfer  of  all or
substantially  all of the  Borrower's  assets to any  person or group of persons
(within the meaning of Section 13(d) of the Securities  Exchange Act of 1934, as
amended), (ii) the liquidation or dissolution of the Borrower,  (iii) any person
or group of persons  (within  the  meaning of  Section  13(d) of the  Securities
Exchange  Act of 1934,  as amended),  other than the  Permitted  Holders,  shall
obtain  ownership or control in one or more series of  transactions of more than
thirty-five  percent (35%) of the common stock or  thirty-five  percent (35%) of
the voting power of the Borrower  entitled to vote in the election of members of
the board of  directors of the Borrower or (iv) during any period of twelve (12)
consecutive  calendar months,  individuals who, at the beginning of such period,
constituted the Borrower's  board of directors  (together with any new directors
whose  election by the  Borrower's  board of directors or whose  nomination  for
election  by the  Borrower's  stockholders  was  approved  by a vote of at least
two-thirds  (2/3rds)  of the  directors  then still in office  who  either  were
directors at the beginning of such period or whose  election or  nomination  for
election was previously so approved)  cease for any reason,  other than death or
disability,  to constitute a majority of the directors  then in office (any such
event, a "Change in Control").

     (i) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary thereof
shall (i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter  in effect),  (ii) file a petition  seeking to take  advantage  of any
other  laws,   domestic  or  foreign,   relating  to   bankruptcy,   insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest  in a timely and  appropriate  manner any  petition  filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate  manner,
the  appointment  of, or the taking of  possession  by, a  receiver,  custodian,
trustee,  or  liquidator  of itself or of a  substantial  part of its  property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due,  (vi) make a general  assignment  for the benefit of  creditors,  or
(vii) take any  corporate  action  for the  purpose  of  authorizing  any of the
foregoing.

     (j) Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be
commenced  against the Borrower or any Material Domestic  Subsidiary  thereof in
any court of  competent  jurisdiction  seeking  (i)  relief  under  the  federal
bankruptcy  laws (as now or  hereafter  in  effect)  or under  any  other  laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or  adjustment  of debts,  or (ii) the  appointment  of a trustee,  receiver,
custodian,  liquidator  or the like for the  Borrower or any  Material  Domestic
Subsidiary  thereof  or for  all or any  substantial  part of  their  respective
assets,  domestic or foreign, and such case or proceeding shall continue without
dismissal  or stay for a period  of sixty  (60)  consecutive  days,  or an order
granting the relief  requested in such case or  proceeding  (including,  but not
limited to, an order for relief  under such  federal  bankruptcy  laws) shall be
entered.

     (k) Failure of Agreements.  This  Agreement or any other Loan Document,  at
any time after its  execution  and  delivery  and for any  reason  other than as
expressly  permitted  hereunder  or  the  satisfaction  in  full  of  all of the
Obligations,  ceases  to be in full  force  and  effect;  or the  Borrower,  any
Subsidiary  Guarantor or any other Affiliate contests in any manner the validity
or enforceability of this Agreement or any other Loan Document;  or the Borrower
or any  Subsidiary  Guarantor  denies  that it has any or further  liability  or
obligation  under this  Agreement  or any other Loan  Document,  or  purports to
revoke, terminate or rescind this Agreement or any other Loan Document.

     (l) Termination  Event. The occurrence of any of the following events:  (i)
the Borrower or any ERISA  Affiliate  fails to make full payment when due of all
amounts  which,  under the  provisions of any Pension Plan or Section 412 of the
Code,  the Borrower or any ERISA  Affiliate is required to pay as  contributions
thereto,  (ii) an accumulated  funding deficiency in excess of $5,000,000 occurs
or exists,  whether or not waived,  with  respect to any Pension  Plan,  (iii) a
Termination Event or (iv) the Borrower or any ERISA Affiliate as employers under
one or more Multiemployer  Plans makes a complete or partial withdrawal from any
such  Multiemployer  Plan  and the  plan  sponsor  of such  Multiemployer  Plans
notifies such withdrawing  employer that such employer has incurred a withdrawal
liability requiring payments in an amount exceeding $5,000,000.

     (m) Judgment. A judgment or order for the payment of money which causes the
aggregate  amount of all such judgments to exceed  $5,000,000 in any Fiscal Year
shall be entered  against the Borrower or any of its  Subsidiaries  by any court
and such judgment or order shall continue without discharge or stay for a period
of sixty (60) days.

     (n)  Environmental.  Any one or more  Environmental  Claims shall have been
asserted against the Borrower or any of its  Subsidiaries;  the Borrower and its
Subsidiaries  would be reasonable likely to incur liability as a result thereof;
and such liability would be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect.

     SECTION 11.2 Remedies. Upon the occurrence of an Event of Default, with the
consent of the  Required  Lenders,  the  Administrative  Agent may,  or upon the
request of the Required Lenders,  the  Administrative  Agent shall, by notice to
the Borrower:

     (a) Acceleration;  Termination of Facilities.  Declare the principal of and
interest on the Loans, the Notes and the  Reimbursement  Obligations at the time
outstanding, and all other amounts owed to the Lenders and to the Administrative
Agent  under  this  Agreement  or any of the other  Loan  Documents  (including,
without limitation, all L/C Obligations, whether or not the beneficiaries of the
then outstanding  Letters of Credit shall have presented or shall be entitled to
present the documents required thereunder) and all other Obligations (other than
Hedging Obligations),  to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or other
notice  of any  kind,  all of  which  are  expressly  waived,  anything  in this
Agreement  or the other Loan  Documents  to the  contrary  notwithstanding,  and
terminate  the  Credit  Facility  and  any  right  of the  Borrower  to  request
borrowings or Letters of Credit thereunder;  provided,  that upon the occurrence
of an Event of Default  specified in Section 11.1(i) or (j), the Credit Facility
shall be  automatically  terminated  and all  Obligations  (other  than  Hedging
Obligations)  shall  automatically  become due and payable without  presentment,
demand,  protest or other notice of any kind, all of which are expressly waived,
anything  in this  Agreement  or in any  other  Loan  Document  to the  contrary
notwithstanding.

     (b) Letters of Credit.  With  respect to all Letters of Credit with respect
to  which  presentment  for  honor  shall  not have  occurred  at the time of an
acceleration  pursuant to the preceding paragraph,  require the Borrower at such
time to, and the Borrower shall,  deposit in a cash collateral account opened by
the  Administrative  Agent an amount  equal to the  aggregate  then  undrawn and
unexpired amount of such Letters of Credit. Amounts held in such cash collateral
account  shall be applied by the  Administrative  Agent to the payment of drafts
drawn under such Letters of Credit,  and the unused  portion  thereof  after all
such  Letters of Credit  shall have  expired or been fully drawn  upon,  if any,
shall be applied to repay the other  Obligations on a pro rata basis.  After all
such  Letters  of Credit  shall  have  expired or been  fully  drawn  upon,  the
Reimbursement  Obligation  shall have been  satisfied and all other  Obligations
shall  have been paid in full,  the  balance,  if any,  in such cash  collateral
account shall be returned to the Borrower.

     (c) Rights of  Collection.  Exercise  on behalf of the  Lenders  all of its
other rights and remedies  under this  Agreement,  the other Loan  Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.

     SECTION  11.3  Rights  and  Remedies  Cumulative;   Non-Waiver;   etc.  The
enumeration  of the  rights and  remedies  of the  Administrative  Agent and the
Lenders set forth in this  Agreement  is not intended to be  exhaustive  and the
exercise  by the  Administrative  Agent and the  Lenders  of any right or remedy
shall not preclude  the  exercise of any other rights or remedies,  all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan  Documents or that may now or hereafter  exist
at law or in equity or by suit or otherwise.  No delay or failure to take action
on the part of the  Administrative  Agent or any Lender in exercising any right,
power or privilege  shall operate as a waiver  thereof,  nor shall any single or
partial  exercise of any such right,  power or  privilege  preclude any other or
further exercise thereof or the exercise of any other right,  power or privilege
or shall be  construed  to be a waiver  of any  Event of  Default.  No course of
dealing between the Borrower,  the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any  provision  of this  Agreement  or any of the  other  Loan  Documents  or to
constitute a waiver of any Event of Default.

     SECTION 11.4.  Judgment  Currency.  The  obligation of the Borrower to make
payments of the principal of and interest on the Notes and the obligation of any
such Person to make payments of any other amounts payable  hereunder or pursuant
to any other Loan Document in the currency  specified for such payment shall not
be  discharged  or  satisfied  by any tender,  or any  recovery  pursuant to any
judgment, which is expressed in or converted into any other currency,  except to
the extent that such tender or recovery  shall  result in the actual  receipt by
each  of the  Administrative  Agent  and  Lenders  of  the  full  amount  of the
particular Permitted Currency expressed to be payable pursuant to the applicable
Loan Document.  The  Administrative  Agent shall,  using all amounts obtained or
received from the Borrower pursuant to any such tender or recovery in payment of
principal of and interest on the Obligations,  promptly  purchase the applicable
currency at the most favorable  spot exchange rate (to the Borrower)  determined
by the  Administrative  Agent  to be  available  to it.  The  obligation  of the
Borrower to make payments in the applicable  currency shall be enforceable as an
alternative  or additional  cause of action solely for the purpose of recovering
in the  applicable  currency  the amount,  if any, by which such actual  receipt
shall  fall short of the full  amount of the  currency  expressed  to be payable
pursuant to the applicable Loan Document.

                                   ARTICLE XII

                            THE ADMINISTRATIVE AGENT

     SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably designates
and  appoints  Wachovia  as  Administrative  Agent  of such  Lender  under  this
Agreement and the other Loan  Documents for the term hereof and each such Lender
irrevocably authorizes Wachovia as Administrative Agent for such Lender, to take
such action on its behalf under the  provisions of this  Agreement and the other
Loan  Documents  and to  exercise  such  powers and  perform  such duties as are
expressly  delegated to the Administrative  Agent by the terms of this Agreement
and such other Loan Documents, together with such other powers as are reasonably
incidental  thereto.  Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents,  the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein,  or  any  fiduciary  relationship  with  any  Lender,  and  no  implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or the other Loan  Documents  or  otherwise  exist
against the Administrative  Agent. Any reference to the Administrative  Agent in
this Article XII shall be deemed to refer to the Administrative  Agent solely in
its capacity as Administrative Agent and not in its capacity as a Lender.

     SECTION 12.2 Delegation of Duties. The Administrative Agent may execute any
of its respective duties under this Agreement and the other Loan Documents by or
through agents or  attorneys-in-fact  and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not  be  responsible   for  the  negligence  or  misconduct  of  any  agents  or
attorneys-in-fact selected by the Administrative Agent with reasonable care.

     SECTION 12.3 Exculpatory  Provisions.  Neither the Administrative Agent nor
any  of  its  officers,   directors,   employees,   agents,   attorneys-in-fact,
Subsidiaries or Affiliates  shall be (a) liable for any action lawfully taken or
omitted  to be  taken by it or such  Person  under or in  connection  with  this
Agreement or the other Loan Documents  (except for actions  occasioned solely by
its or such  Person's  own  gross  negligence  or  willful  misconduct),  or (b)
responsible  in any manner to any of the Lenders for any  recitals,  statements,
representations or warranties made by the Borrower or any of its Subsidiaries or
any officer  thereof  contained in this Agreement or the other Loan Documents or
in any certificate,  report, statement or other document referred to or provided
for in, or received by the  Administrative  Agent under or in  connection  with,
this  Agreement  or the  other  Loan  Documents  or  for  the  value,  validity,
effectiveness,  genuineness,  enforceability or sufficiency of this Agreement or
the other  Loan  Documents  or for any  failure  of the  Borrower  or any of its
Subsidiaries   to  perform  its   obligations   hereunder  or  thereunder.   The
Administrative  Agent  shall  not be  under  any  obligation  to any  Lender  to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement,  or to inspect the
properties, books or records of the Borrower or any of its Subsidiaries.

     SECTION 12.4 Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely,  and shall be fully  protected  in relying,  upon any
note, writing,  resolution,  notice, consent,  certificate,  affidavit,  letter,
cablegram,  telegram,  telecopy, telex or teletype message,  statement, order or
other document or  conversation  believed by it to be genuine and correct and to
have been signed,  sent or made by the proper  Person or Persons and upon advice
and statements of legal counsel (including,  without limitation,  counsel to the
Borrower),   independent   accountants   and  other  experts   selected  by  the
Administrative  Agent. The Administrative  Agent may deem and treat the payee of
any Note as the owner thereof for all purposes  unless such Note shall have been
transferred in accordance with Section 13.10. The Administrative  Agent shall be
fully  justified in failing or refusing to take any action under this  Agreement
and the other  Loan  Documents  unless it shall  first  receive  such  advice or
concurrence of the Required  Lenders (or, when expressly  required  hereby or by
the relevant other Loan Documents,  all the Lenders) as it deems  appropriate or
it shall first be indemnified to its satisfaction by the Lenders against any and
all  liability  and  expense  which may be incurred by it by reason of taking or
continuing  to take any such  action  except  for its own  gross  negligence  or
willful  misconduct.  The  Administrative  Agent  shall  in all  cases  be fully
protected in acting, or in refraining from acting,  under this Agreement and the
Notes in accordance  with a request of the Required  Lenders (or, when expressly
required  hereby,  all the  Lenders),  and such  request and any action taken or
failure to act  pursuant  thereto  shall be binding upon all the Lenders and all
future holders of the Notes.

     SECTION  12.5  Notice of  Default.  The  Administrative  Agent shall not be
deemed to have  knowledge or notice of the occurrence of any Default or Event of
Default unless it has received notice from a Lender or the Borrower referring to
this  Agreement,  describing  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,  it shall  promptly give notice  thereof to the Lenders.
The Administrative  Agent shall take such action with respect to such Default or
Event of Default as shall be  reasonably  directed by the Required  Lenders (or,
when expressly required hereby, all the 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  action,  or refrain  from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best  interests of the Lenders,  except to the extent that
other  provisions of this  Agreement  expressly  require that any such action be
taken or not be taken only with the consent and  authorization or the request of
the Lenders or Required Lenders, as applicable.

     SECTION 12.6  Non-Reliance on the  Administrative  Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers,  directors,  employees,  agents,  attorneys-in-fact,
Subsidiaries or Affiliates has made any  representations or warranties to it and
that no act by the Administrative Agent hereafter taken, including any review of
the  affairs  of the  Borrower  or any of its  Subsidiaries,  shall be deemed to
constitute any  representation  or warranty by the  Administrative  Agent to any
Lender.  Each  Lender  represents  to the  Administrative  Agent  that  it  has,
independently  and without reliance upon the  Administrative  Agent or any other
Lender,   and  based  on  such  documents  and  information  as  it  has  deemed
appropriate,  made its own  appraisal of and  investigation  into the  business,
operations,  property, financial and other condition and creditworthiness of the
Borrower  and its  Subsidiaries  and made its own decision to make its Loans and
issue or  participate  in  Letters  of  Credit  hereunder  and  enter  into this
Agreement.  Each Lender also represents that it will,  independently and without
reliance upon the  Administrative  Agent or any other Lender,  and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  analysis,  appraisals and decisions in taking or not taking
action  under  this  Agreement  and the other Loan  Documents,  and to make such
investigation  as it  deems  necessary  to  inform  itself  as to the  business,
operations,  property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries.  Except for notices,  reports and other documents
expressly  required to be furnished to the Lenders by the  Administrative  Agent
hereunder or by the other Loan  Documents,  the  Administrative  Agent shall not
have any duty or  responsibility  to provide any Lender with any credit or other
information concerning the business,  operations,  property, financial and other
condition or  creditworthiness  of the Borrower or any of its Subsidiaries which
may  come  into  the  possession  of  the  Administrative  Agent  or  any of its
respective   officers,   directors,   employees,   agents,    attorneys-in-fact,
Subsidiaries or Affiliates.

     SECTION  12.7   Indemnification.   The  Lenders   agree  to  indemnify  the
Administrative  Agent in its capacity as such and (to the extent not  reimbursed
by the Borrower and without  limiting the  obligation of the Borrower to do so),
ratably  according to the respective  amounts of their  Commitment  Percentages,
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind whatsoever which may at any time  (including,  without  limitation,  at any
time  following  the payment of the Notes or any  Reimbursement  Obligation)  be
imposed on, incurred by or asserted against the Administrative  Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents,  reports or other information provided to the Administrative Agent or
any  Lender  or  contemplated  by or  referred  to  herein  or  therein  or  the
transactions  contemplated  hereby or thereby or any action  taken or omitted by
the  Administrative  Agent  under or in  connection  with any of the  foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or  disbursements  resulting  solely  from the  Administrative
Agent's bad faith,  gross  negligence or willful  misconduct.  The agreements in
this  Section  12.7 shall  survive the payment of the Notes,  any  Reimbursement
Obligation and all other amounts  payable  hereunder and the termination of this
Agreement.

     SECTION  12.8 The  Administrative  Agent in Its  Individual  Capacity.  The
Administrative  Agent and its  respective  Subsidiaries  and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the  Borrower  as though the  Administrative  Agent were not the  Administrative
Agent  hereunder.  With  respect to any Loans made or renewed by it and any Note
issued  to it  and  with  respect  to  any  Letter  of  Credit  issued  by it or
participated in by it, the  Administrative  Agent shall have the same rights and
powers under this  Agreement and the other Loan  Documents as any Lender and may
exercise the same as though it were not the Administrative  Agent, and the terms
"Lender" and "Lenders" shall include the Administrative  Agent in its individual
capacity.

     SECTION  12.9   Resignation   of  the   Administrative   Agent;   Successor
Administrative  Agent.  Subject to the appointment and acceptance of a successor
as provided  below,  the  Administrative  Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower.  Upon any such resignation,  the
Required  Lenders  shall  have the right to appoint a  successor  Administrative
Agent,  which  successor  shall have  minimum  capital  and  surplus of at least
$500,000,000.  If no successor Administrative Agent shall have been so appointed
by the Required Lenders and shall have accepted such  appointment  within thirty
(30) days after the Administrative Agent's giving of notice of resignation, then
the  Administrative  Agent may,  on behalf of the  Lenders,  appoint a successor
Administrative  Agent, which successor shall have minimum capital and surplus of
at least $500,000,000.  Upon the acceptance of any appointment as Administrative
Agent   hereunder  by  a  successor   Administrative   Agent,   such   successor
Administrative  Agent  shall  thereupon  succeed to and become  vested  with all
rights, powers,  privileges and duties of the retiring Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations  hereunder.  After any retiring  Administrative  Agent's resignation
hereunder as  Administrative  Agent,  the  provisions of this Section 12.9 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.

     SECTION 12.10 Administrative Agent May File Proofs of Claim. In case of the
pendency   of   any   receivership,    insolvency,   liquidation,    bankruptcy,
reorganization,   arrangement,   adjustment,   composition   or  other  judicial
proceeding relative to the Borrower or any Guarantor,  the Administrative  Agent
(irrespective  of whether the principal of any Loan or L/C Obligation shall then
be due and  payable as herein  expressed  or by  declaration  or  otherwise  and
irrespective of whether the  Administrative  Agent shall have made any demand on
the  Borrower)  shall  be  entitled  and  empowered,  by  intervention  in  such
proceeding or otherwise:

     (a) to file and  prove a claim for the whole  amount of the  principal  and
interest owing and unpaid in respect of the Loans,  the L/C  Obligations and all
other  Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the  Administrative
Agent and the  Lenders  (including  any claim for the  reasonable  compensation,
expenses, disbursements and advances of the Administrative Agent and the Lenders
and  their  respective  agents  and  counsel  and  all  other  amounts  due  the
Administrative  Agent and the Lenders under this Agreement,  including,  without
limitation,  Section 3.3, Section 4.3 and Section 13.2) allowed in such judicial
proceeding; and

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

and any custodian,  receiver,  assignee,  trustee,  liquidator,  sequestrator or
other similar official in any such judicial  proceeding is hereby  authorized by
each Lender to make such payments to the Administrative  Agent and, in the event
that the  Administrative  Agent  shall  consent to the  making of such  payments
directly to the Lenders,  to pay to the Administrative  Agent any amount due for
the  reasonable  compensation,  expenses,  disbursements  and  advances  of  the
Administrative  Agent and its agents and counsel,  and any other amounts due the
Administrative  Agent  under  this  Agreement  (including,  without  limitation,
Section 4.3 and Section 13.2).

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

                                  ARTICLE XIII

                                  MISCELLANEOUS

         SECTION 13.1      Notices.

     (a)  Method  of  Communication.   Except  as  otherwise  provided  in  this
Agreement,  all notices and  communications  hereunder  shall be in writing (for
purposes  hereof,  the term  "writing"  shall include  information in electronic
format  such as  electronic  mail  and  internet  web  pages),  or by  telephone
subsequently confirmed in writing. Any notice shall be effective if delivered by
hand  delivery or sent via  electronic  mail,  posting on an internet  web page,
telecopy, recognized overnight courier service or certified mail, return receipt
requested,  and shall be presumed  to be  received by a party  hereto (i) on the
date of delivery if delivered by hand or sent by electronic mail,  posting on an
internet web page, telecopy, (ii) on the next Business Day if sent by recognized
overnight courier service and (iii) on the third Business Day following the date
sent by certified mail,  return receipt  requested.  A telephonic  notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the  controlling  and  proper  notice in the event of a  discrepancy  with or
failure to receive a confirming written notice.

     (b) Addresses for Notices.  Notices to any party shall be sent to it at the
following addresses,  or any other address as to which all the other parties are
notified in writing.

  If to the Borrower:                CompX International Inc.
                                     Three Lincoln Centre
                                     5430 LBJ Freeway, Suite 1700
                                     Dallas, Texas 75240-2697
                                     Attention: J. Mark Hollingsworth
                                     Telephone No.: (972) 233-1700
                                     Telecopy No.: (972) 448-1445

  If to Wachovia as                  Wachovia Bank, National Association
  Administrative Agent:              Charlotte Plaza, CP-8
                                     201 South College Street
                                     Charlotte, North Carolina 28288-0680
                                     Attention:  Syndication Agency Services
                                     Telephone No.:  (704) 374-2698
                                     Telecopy No.:  (704) 383-0288

  With a copy to:                    Womble Carlyle Sandridge & Rice, PLLC
                                     One West Fourth Street
                                     Winston-Salem, North Carolina 27101
                                     Attention: Christopher E. Leon
                                     Telephone No.: (336) 721-3518
                                     Telecopy No.: (336) 726-6932

  If to any Lender:                  To the address set forth on Schedule 1.1(a)

     (c)  Administrative   Agent's  Office.  The  Administrative   Agent  hereby
designates its office located at the address set forth above,  or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders,  as the Administrative  Agent's Office referred to herein,
to which  payments due are to be made and at which Loans will be  disbursed  and
Letters  of Credit  issued,  except for  Alternative  Currency  Loans,  to which
payments  due  are to be  made  at the  office  of  the  Administrative  Agent's
Correspondent.

     SECTION 13.2 Expenses;  Indemnity. The Borrower will (a) pay all reasonable
out-of-pocket expenses (including,  without limitation,  all costs of electronic
or internet  distribution  of any information  hereunder) of the  Administrative
Agent in  connection  with (i) the  preparation,  execution and delivery of this
Agreement and each other Loan Document,  whenever the same shall be executed and
delivered,  including, without limitation, all out-of-pocket syndication and due
diligence  expenses and  reasonable  fees and  disbursements  of counsel for the
Administrative  Agent and (ii) the  preparation,  execution  and delivery of any
waiver, amendment or consent by the Administrative Agent or the Lenders relating
to this Agreement or any other Loan  Document,  including,  without  limitation,
reasonable fees and disbursements of counsel for the  Administrative  Agent, (b)
pay all reasonable  out-of-pocket  expenses of the Administrative Agent and each
Lender actually incurred in connection with the  administration  and enforcement
of any rights and  remedies of the  Administrative  Agent and Lenders  under the
Credit Facility,  including, without limitation, in connection with any workout,
restructuring,  bankruptcy or other similar proceeding,  creating and perfecting
Liens in favor of  Administrative  Agent on behalf of  Lenders  pursuant  to any
Security Document,  enforcing any Obligations of, or collecting any payments due
from, the Borrower or any Subsidiary  Guarantor by reason of an Event of Default
(including in connection with the sale of, collection from, or other realization
upon  any of  the  Collateral  or the  enforcement  of the  Subsidiary  Guaranty
Agreement),  consulting with appraisers,  accountants,  engineers, attorneys and
other Persons  concerning  the nature,  scope or value of any right or remedy of
the  Administrative  Agent or any  Lender  hereunder  or under  any  other  Loan
Document or any factual  matters in connection  therewith,  which expenses shall
include,  without  limitation,  the reasonable  fees and  disbursements  of such
Persons,  and (c) defend,  indemnify and hold harmless the Administrative  Agent
and  the  Lenders,  and  their  respective  parents,  Subsidiaries,  Affiliates,
employees,  agents,  officers  and  directors,  from  and  against  any  losses,
penalties,  fines,  liabilities,   settlements,  damages,  costs  and  expenses,
suffered by any such Person in  connection  with any claim  (including,  without
limitation,  any  Environmental  Claims),  investigation,  litigation  or  other
proceeding  (whether  or not the  Administrative  Agent or any Lender is a party
thereto) and the prosecution and defense  thereof,  arising out of or in any way
connected  with the  Loans,  this  Agreement,  any other  Loan  Document  or any
documents,  reports or other information provided to the Administrative Agent or
any Lender or contemplated by or referred herein or therein or the  transactions
contemplated  hereby  or  thereby,  including,  without  limitation,  reasonable
attorney's and consultant's fees and settlement costs, except to the extent that
any of the  foregoing  directly  result  from the gross  negligence  or  willful
misconduct of the party seeking indemnification therefor.

     SECTION 13.3 Set-off.

     (a) In addition to any rights now or hereafter granted under Applicable Law
and not by way of limitation of any such rights,  upon and after the  occurrence
of any Event of Default and during the continuance  thereof, the Lenders and any
assignee or participant of a Lender in accordance  with Section 13.10 are hereby
authorized by the Borrower at any time or from time to time,  without  notice to
the Borrower or to any other  Person,  any such notice  being  hereby  expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or  special,  time or  demand,  including,  but  not  limited  to,  indebtedness
evidenced by  certificates  of deposit,  whether  matured or unmatured)  and any
other  indebtedness  at any  time  held or  owing  by the  Lenders,  or any such
assignee  or  participant  to or for the credit or the  account of the  Borrower
against and on account of the Obligations irrespective of whether or not (a) the
Lenders shall have made any demand under this Agreement or any of the other Loan
Documents or (b) the Administrative  Agent shall have declared any or all of the
Obligations to be due and payable as permitted by Section 11.2 and although such
Obligations  shall be  contingent or  unmatured.  Notwithstanding  the preceding
sentence, each Lender agrees to notify the Borrower and the Administrative Agent
after any such set-off and application;  provided, that the failure to give such
notice shall not affect the validity of such set-off and application.

     (b)  Any  amount  to be  set-off  pursuant  to  Section  13.3(a)  shall  be
denominated in Dollars and any amount  denominated  in an  Alternative  Currency
shall be in an amount  equal to the  Dollar  Amount  of such  amount at the most
favorable spot exchange rate (to the Borrower)  determined by the Administrative
Agent  to be  available  to it;  provided  that  if at  the  time  of  any  such
determination  no such spot exchange  rate can  reasonably  be  determined,  the
Administrative  Agent may use any  reasonable  method as it deems  applicable to
determine such rate, any such  determination  to be conclusive  absent  manifest
error.

     (c)  Each  Lender  and  any  assignee  or  participant  of such  Lender  in
accordance  with Section 13.10 are hereby  authorized by the Borrower to combine
currencies,  as deemed necessary by such Person,  in order to effect any set-off
pursuant to Section 13.3(a).

     SECTION 13.4  Governing Law. This  Agreement,  the Notes and the other Loan
Documents,  unless otherwise expressly set forth therein,  shall be governed by,
construed  and  enforced  in  accordance  with  the  laws of the  State of North
Carolina,  without  reference  to the  conflicts  or  choice  of law  principles
thereof.

     SECTION 13.5 Jurisdiction and Venue.

     (a) Jurisdiction.  The Borrower hereby irrevocably consents to the personal
jurisdiction  of the state and federal  courts  located in  Mecklenburg  County,
North Carolina (and any courts from which an appeal from any of such courts must
or may be taken),  in any action,  claim or other proceeding  arising out of any
dispute  in  connection  with this  Agreement,  the  Notes  and the  other  Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations.  The Borrower hereby irrevocably consents to the
service of a summons and  complaint  and other  process in any action,  claim or
proceeding brought by the Administrative  Agent or any Lender in connection with
this Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder,  or the performance of such rights and obligations,  on
behalf of itself or its  property,  in the manner  specified  in  Section  13.1.
Nothing in this Section 13.5 shall affect the right of the Administrative  Agent
or any Lender to serve legal process in any other manner permitted by Applicable
Law or affect the right of the  Administrative  Agent or any Lender to bring any
action or proceeding against the Borrower or its properties in the courts of any
other jurisdictions.

     (b) Venue. The Borrower hereby irrevocably waives any objection it may have
now or in the future to the laying of venue in the aforesaid jurisdiction in any
action,  claim or other  proceeding  arising out of or in  connection  with this
Agreement,  any other Loan Document or the rights and obligations of the parties
hereunder or thereunder.  The Borrower  irrevocably  waives,  in connection with
such action,  claim or proceeding,  any plea or claim that the action,  claim or
other proceeding has been brought in an inconvenient forum.

     SECTION 13.6 Binding Arbitration; Waiver of Jury Trial.

     (a) Binding  Arbitration.  Upon demand of the Borrower,  the Administrative
Agent or the Required  Lenders,  whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or  relating to this  Agreement  or any other Loan  Document  ("Disputes"),
between  or among  parties  hereto  and to the  other  Loan  Documents  shall be
resolved by binding  arbitration as provided  herein.  Institution of a judicial
proceeding  by a party  does  not  waive  the  right  of that  party  to  demand
arbitration hereunder.  Disputes may include,  without limitation,  tort claims,
counterclaims,  claims  brought  as class  actions,  claims  arising  from  Loan
Documents executed in the future,  disputes as to whether a matter is subject to
arbitration,  or claims  concerning  any  aspect of the past,  present or future
relationships  arising out of or connected with the Loan Documents.  Arbitration
shall be  conducted  under and  governed by the  Commercial  Financial  Disputes
Arbitration  Rules  (the  "Arbitration   Rules")  of  the  American  Arbitration
Association  (the  "AAA")  and the  Federal  Arbitration  Act.  All  arbitration
hearings  shall  be  conducted  in  Charlotte,  North  Carolina.  The  expedited
procedures  set  forth in Rule 51, et seq.  of the  Arbitration  Rules  shall be
applicable  to  claims of less  than  $1,000,000.  All  applicable  statutes  of
limitations shall apply to any Dispute. A judgment upon the award may be entered
in any court  having  jurisdiction.  Notwithstanding  anything  foregoing to the
contrary,  any  arbitration  proceeding  demanded  hereunder  shall begin within
ninety  (90) days  after  such  demand  thereof  and shall be  concluded  within
one-hundred twenty (120) days after such demand.  These time limitations may not
be  extended  unless a party  hereto  shows  cause for  extension  and then such
extension  shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed  attorneys selected from
the  Commercial  Financial  Dispute  Arbitration  Panel of the AAA.  The  single
arbitrator  selected for expedited  procedure  shall be a retired judge from the
highest court of general jurisdiction,  state or federal, of the state where the
hearing  will be  conducted.  The  parties  hereto do not  waive any  applicable
Federal or state substantive law except as provided herein.  Notwithstanding the
foregoing, this paragraph shall not apply to any Hedging Agreement.

     (b) Jury Trial.  THE  ADMINISTRATIVE  AGENT,  EACH LENDER AND THE  BORROWER
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR  OTHER  PROCEEDING  ARISING  OUT OF  ANY  DISPUTE  IN  CONNECTION  WITH  THIS
AGREEMENT,  THE NOTES OR THE OTHER LOAN  DOCUMENTS,  ANY  RIGHTS OR  OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

     (c) Preservation of Certain Remedies. Notwithstanding the preceding binding
arbitration  provisions,  the  parties  hereto  and  the  other  Loan  Documents
preserve,  without diminution,  certain remedies that such Persons may employ or
exercise  freely,  either alone, in conjunction  with or during a Dispute.  Each
such Person shall have and hereby  reserves the right to proceed in any court of
proper  jurisdiction  or by self help to exercise  or  prosecute  the  following
remedies,  as  applicable:  (i) all  rights  to  foreclose  against  any real or
personal property or other security by exercising a power of sale granted in the
Loan  Documents or under  Applicable  Law or by judicial  foreclosure  and sale,
including  a  proceeding  to  confirm  the  sale,  (ii) all  rights of self help
including peaceful  occupation of property and collection of rents, set off, and
peaceful  possession  of  property,  (iii)  obtaining  provisional  or ancillary
remedies including injunctive relief,  sequestration,  garnishment,  attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding,  and
(iv) when  applicable,  a judgment by  confession of judgment.  Preservation  of
these  remedies  does not  limit  the power of an  arbitrator  to grant  similar
remedies that may be requested by a party in a Dispute.

     SECTION  13.7  Reversal of  Payments.  To the extent the  Borrower  makes a
payment or payments to the  Administrative  Agent for the ratable benefit of the
Lenders or the  Administrative  Agent  receives  any  payment or proceeds of the
Collateral,  which  payments or proceeds  or any part  thereof are  subsequently
invalidated,  declared  to be  fraudulent  or  preferential,  set  aside  and/or
required  to be repaid to a  trustee,  receiver  or any  other  party  under any
bankruptcy  law, state or federal law, common law or equitable  cause,  then, to
the extent of such payment or proceeds  repaid,  the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such  payment or  proceeds  had not been  received  by the  Administrative
Agent.

     SECTION 13.8 Injunctive Relief; Punitive Damages.

     (a) The  Borrower  recognizes  that,  in the  event the  Borrower  fails to
perform,  observe or discharge any of its obligations or liabilities  under this
Agreement,  any remedy of law may prove to be inadequate  relief to the Lenders.
Therefore,  the Borrower agrees that the Lenders, at the Lenders' option,  shall
be  entitled  to  temporary  and  permanent  injunctive  relief in any such case
without the necessity of proving actual damages.

     (b) The  Administrative  Agent,  the Lenders and the Borrower (on behalf of
itself  and its  Subsidiaries)  hereby  agree that no such  Person  shall have a
remedy of  punitive  or  exemplary  damages  against  any other  party to a Loan
Document  and each such Person  hereby  waives any right or claim to punitive or
exemplary  damages  that  they  may  now  have or may  arise  in the  future  in
connection  with  any  Dispute,   whether  such  Dispute  is  resolved   through
arbitration or judicially.

     SECTION 13.9 Accounting  Matters.  Except as otherwise  expressly  provided
herein,  all terms of an  accounting  or financial  nature shall be construed in
accordance  with GAAP,  as in effect from time to time,  provided  that,  if the
Borrower  notifies  the  Administrative  Agent  that the  Borrower  requests  an
amendment  to any  provision  hereof  to  eliminate  the  effect  of any  change
occurring  after the date  hereof in GAAP or in the  application  thereof on the
operation  of  such  provision  (or if the  Administrative  Agent  notifies  the
Borrower that the Required  Lenders request an amendment to any provision hereof
for such  purpose),  regardless  of whether any such  notice is given  before or
after such change in GAAP or in the  application  thereof,  then such  provision
shall be interpreted  on the basis of GAAP as in effect and applied  immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance therewith.

     SECTION 13.10 Successors and Assigns; Participations.

     (a) Benefit of Agreement. This Agreement shall be binding upon and inure to
the benefit of the  Borrower,  the  Administrative  Agent and the  Lenders,  all
future holders of the Notes, and their respective successors and assigns, except
that the Borrower  shall not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.

     (b) Assignment by Lenders.  Each Lender may, in the ordinary  course of its
business and in accordance  with  Applicable  Law, sell or assign to any Lender,
any  Affiliate  of a Lender and with the consent of the  Borrower (so long as no
Default or Event of Default has occurred and is  continuing)  and the consent of
the Administrative  Agent, which consents shall not be unreasonably  withheld or
delayed,  assign  to one or more  Eligible  Assignees  all or a  portion  of its
interests,  rights  and  obligations  under  this  Agreement  and the other Loan
Documents (including,  without limitation, all or a portion of the Extensions of
Credit at the time owing to it and the Notes held by it); provided that:

          (i) each such  assignment  shall be of a constant,  and not a varying,
percentage  of all the  assigning  Lender's  rights and  obligations  under this
Agreement;

          (ii) if less than all of the  assigning  Lender's  Commitment is to be
assigned, the Commitment so assigned shall not be less than $5,000,000;

          (iii) 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 substantially in the form of Exhibit G attached hereto
(an "Assignment and Acceptance"),  together with (to the extent requested by any
Purchasing Lender) any Note or Notes subject to such assignment;

          (iv) where  consent of the Borrower to an  assignment  to a Purchasing
Lender is required hereunder  (including consent to an assignment to an Approved
Fund),  the Borrower shall be deemed to have given its consent five (5) Business
Days after the date written  notice  thereof has been delivered by the assigning
Lender  (through  the  Administrative  Agent)  unless such  consent is expressly
refused by the Borrower prior to such fifth (5th) Business Day;

          (v) such  assignment  shall not,  without the consent of the  Borrower
require the Borrower to file a  registration  statement  with the Securities and
Exchange Commission or apply to or qualify the Loans or the Notes under the blue
sky laws of any state; and

          (vi) the  assigning  Lender shall pay to the  Administrative  Agent an
assignment fee of $3,500 upon the execution by such Lender of the Assignment and
Acceptance;  provided that no such fee shall be payable upon any assignment by a
Lender to an Affiliate of such Lender.

Upon such  execution,  delivery,  acceptance and  recording,  from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business  Days after the  execution  thereof  (unless
otherwise  agreed to by the  Administrative  Agent),  (A) the Purchasing  Lender
thereunder  shall  be a  party  hereto  and,  to the  extent  provided  in  such
Assignment and  Acceptance,  have the rights and  obligations of a Lender hereby
and (B) the Lender  thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.

     (c) Rights and Duties Upon  Assignment.  By  executing  and  delivering  an
Assignment and Acceptance,  the assigning  Lender  thereunder and the Purchasing
Lender  thereunder  confirm to and agree  with each other and the other  parties
hereto as set forth in such Assignment and Acceptance.

     (d)  Register.  The  Administrative  Agent  shall  maintain  a copy of each
Assignment and Acceptance  delivered to it and a register for the recordation of
the names and  addresses  of the  Lenders  and the amount of the  Extensions  of
Credit  with  respect to each  Lender  from time to time (the  "Register").  The
entries in the Register shall be conclusive,  in the absence of manifest  error,
and the Borrower, the Administrative Agent and the Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this  Agreement.  The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.

     (e) Issuance of New Notes. Upon its receipt of an Assignment and Acceptance
executed by an assigning  Lender and a Purchasing  Lender together with any Note
or Notes (if  applicable)  subject to such  assignment and (if  applicable)  the
written  consent to such  assignment,  the  Administrative  Agent shall, if such
Assignment and Acceptance has been completed and is substantially in the form of
Exhibit G:

          (i) accept such Assignment and Acceptance;

          (ii) record the information contained therein in the Register;

          (iii) give prompt notice thereof to the Lenders and the Borrower; and

          (iv) promptly  deliver a copy of such Assignment and Acceptance to the
Borrower.

Within  five (5)  Business  Days after  receipt of notice,  the  Borrower  shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes,  a new Note or Notes to the order of such  Purchasing  Lender (to
the extent requested  thereby) in amounts equal to the Commitment  assumed by it
pursuant to such  Assignment and Acceptance and a new Note or Notes to the order
of the assigning Lender (to the extent requested  thereby) 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 the assigned
Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be
canceled  and  returned  to  the  Borrower.  Notwithstanding  anything  in  this
Agreement to the contrary,  any Lender which has not been issued a Note or Notes
hereunder  may at any time deliver a written  request for a Note or Notes to the
Administrative  Agent and the  Borrower.  Within  five (5)  Business  Days after
receipt of notice,  the Borrower shall execute and deliver to the Administrative
Agent,  a Note or Notes (as  applicable)  to the order of such Lender in amounts
equal to the Commitment of such Lender. Upon receipt thereby, the Administrative
Agent shall promptly deliver such Note or Notes to such Lender.

     (f)  Participations.  Each Lender may,  without notice to or the consent of
the  Borrower  or the  Administrative  Agent,  in  the  ordinary  course  of its
commercial  banking  business  and  in  accordance  with  Applicable  Law,  sell
participations  to one or more banks or other  entities  (any such bank or other
entity, a "Participant") in all or a portion of its rights and obligations under
this  Agreement  (including,  without  limitation,  all  or  a  portion  of  its
Extensions of Credit and the Notes held by it); provided that:

          (i) each  such  participation  shall  be in an  amount  not less  than
$5,000,000;

          (ii)  such  Lender's  obligations  under  this  Agreement  (including,
without limitation, its Commitment) shall remain unchanged;

          (iii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;

          (iv) such Lender  shall  remain the holder of the Notes held by it for
all purposes of this Agreement;

          (v) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's rights and obligations under this Agreement;

          (vi)  such  Lender  shall not  permit  such  Participant  the right to
approve any waivers,  amendments or other modifications to this Agreement or any
other Loan Document other than waivers,  amendments or modifications which would
reduce  the  principal  of or the  interest  rate on any  Loan or  Reimbursement
Obligation, extend the term or increase the amount of the Commitment, reduce the
amount of any fees to which such  Participant is entitled,  extend any scheduled
payment  date for  principal of any Loan or,  except as  expressly  contemplated
hereby or thereby,  release  substantially all of the Collateral or any Security
Document; and

          (vii) any such  disposition  shall  not,  without  the  consent of the
Borrower  require  the  Borrower  to  file a  registration  statement  with  the
Securities  and Exchange  Commission  to apply to qualify the Loans or the Notes
under the blue sky law of any state.

     The Borrower agrees that each Participant shall be entitled to the benefits
of Section 4.7, Section 4.8, Section 4.9,  Section 4.10,  Section 4.11,  Section
4.12,  Section  4.13 and Section  13.3 to the same extent as if it were a Lender
and had acquired its interest by  assignment  pursuant to paragraph  (b) of this
Section 13.10;  provided that a Participant shall not be entitled to receive any
greater  payment  under  Section 4.7,  Section 4.8,  Section 4.9,  Section 4.10,
Section 4.11,  Section 4.12, and Section 4.13 than the  applicable  Lender would
have been  entitled to receive  with respect to the  participation  sold to such
Participant,  unless the sale of the  participation  to such Participant is made
with the  Borrower's  prior  written  consent  and such  Participant  shall have
delivered to the Administrative Agent all United States Internal Revenue Service
Forms required pursuant to Section 4.13(e).

     (g) Disclosure of Information;  Confidentiality.  The Administrative  Agent
and the  Lenders  shall  hold all  non-public  information  with  respect to the
Borrower  obtained pursuant to the Loan Documents (or any Hedging Agreement with
a Lender  or the  Administrative  Agent)  in  accordance  with  their  customary
procedures   for  handling   confidential   information;   provided,   that  the
Administrative Agent may disclose information relating to this Agreement to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other  information  customarily  found in such  publications  and
provided further,  that the Administrative  Agent or any Lender may disclose any
such  information  to the  extent  such  disclosure  is (i)  required  by law or
requested  or required  pursuant to any legal  process,  (ii)  requested  by, or
required  to be  disclosed  to,  any rating  agency,  or  regulatory  or similar
authority (including,  without limitation, the National Association of Insurance
Commissioners)  or (iii) used in any suit,  action or proceeding for the purpose
of defending  itself,  reducing its liability or  protecting  any of its claims,
rights, remedies or interests under or in connection with the Loan Documents (or
any Hedging  Agreement with a Lender or the  Administrative  Agent).  Any Lender
may, in connection with any assignment,  proposed  assignment,  participation or
proposed   participation  pursuant  to  this  Section  13.10,  disclose  to  the
Purchasing   Lender,   proposed   Purchasing   Lender,   Participant,   proposed
Participant,  or to any  direct or  indirect  contractual  counterparty  in swap
agreements  or  such  contractual   counterparty's   professional   advisor  any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower;  provided, that prior to any such disclosure, each such Purchasing
Lender,  proposed  Purchasing  Lender,   Participant  or  proposed  Participant,
contractual  counterparty or professional advisor shall agree to be bound by the
provisions of this Section 13.10(g).

     (h) Certain  Pledges or  Assignments.  Any Lender may at any time pledge or
assign a  security  interest  in all or any  portion  of its  rights  under this
Agreement  or any other Loan  Document  to secure  obligations  of such  Lender,
including, without limitation, any pledge or assignment to secure obligations to
a Federal Reserve Bank; provided that no such pledge or assignment of a security
interest  shall  release  a Lender  form  any of its  obligations  hereunder  or
substitute such pledgee or assignee for such Lender as a party hereto.

     SECTION 13.11 Amendments,  Waivers and Consents.  Except as set forth below
or as specifically  provided in the Credit Agreement or any other Loan Document,
any term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived by the Lenders, and any consent given by
the Lenders,  if, but only if, such  amendment,  waiver or consent is in writing
signed by the Required Lenders (or by the Administrative  Agent with the consent
of the Required Lenders) and delivered to the  Administrative  Agent and, in the
case of an amendment, signed by the Borrower; provided that no amendment, waiver
or  consent  shall (a)  increase  (i) the  Commitment  of any  Lender,  (ii) the
Alternative  Currency Commitment or (iii) the Swingline  Commitment,  (b) reduce
the rate of interest or fees  payable on any Loan or  Reimbursement  Obligation,
(c)  reduce  or  forgive  the  principal  amount  of any  Loan or  Reimbursement
Obligation,  (d) extend the originally scheduled time or times of payment of the
principal  of any  Loan or  Reimbursement  Obligation  or the  time or  times of
payment  of  interest  on any  Loan or  Reimbursement  Obligation  or any fee or
commission with respect thereto,  (e) permit any  subordination of the principal
or interest on any Loan or  Reimbursement  Obligation,  (f) release the Borrower
from the Obligations (other than Hedging Obligations) hereunder, (g) release any
Subsidiary   Guarantor  from  its  obligations  under  the  Subsidiary  Guaranty
Agreement,  (h) permit any assignment  (other than as specifically  permitted or
contemplated in this Agreement) of any of the Borrower's  rights and obligations
hereunder,  (i) release any  Collateral  or any Security  Documents  (other than
asset sales  permitted  pursuant to Section 10.5 and as  otherwise  specifically
permitted  or  contemplated  in  this  Agreement  or  the  applicable   Security
Document),  (j) amend the  definition  of  Alternative  Currency,  (k) amend the
provisions of this Section 13.11 or the definition of Required  Lenders,  or (l)
extend the time of the obligation of the Lenders to make or issue or participate
in Letters of Credit,  in each case,  without the prior written  consent of each
Lender.  In addition,  no amendment,  waiver or consent to the provisions (a) of
Article  XII shall be made  without the  written  consent of the  Administrative
Agent,  (b) of Article  III shall be made  without  the  written  consent of the
Issuing Lender,  (c) relating to Swingline Loans or the Swingline Facility shall
be made without the written consent of the Swingline  Lender and (d) relating to
Alternative  Currency Loans or the Alternative  Currency  Facility shall be made
without the written consent of the Alternative Currency Lender.

     SECTION 13.12 Performance of Duties. The Borrower's  obligations under this
Agreement  and  each of the  other  Loan  Documents  shall be  performed  by the
Borrower at its sole cost and expense.

     SECTION 13.13 All Powers Coupled with Interest.  All powers of attorney and
other  authorizations  granted to the Lenders,  the Administrative Agent and any
Persons  designated by the  Administrative  Agent or any Lender  pursuant to any
provisions of this Agreement or any of the other Loan Documents  shall be deemed
coupled  with  an  interest  and  shall  be  irrevocable  so  long as any of the
Obligations  remain  unpaid or  unsatisfied,  any of the  Commitments  remain in
effect or the Credit Facility has not been terminated.

     SECTION 13.14 Survival of Indemnities.  Notwithstanding  any termination of
this  Agreement,  the  indemnities  to which  the  Administrative  Agent and the
Lenders are  entitled  under the  provisions  of this Article XIII and any other
provision of this Agreement and the other Loan Documents  shall continue in full
force and effect and shall  protect  the  Administrative  Agent and the  Lenders
against events arising after such termination as well as before.

     SECTION  13.15  Titles and  Captions.  Titles  and  captions  of  Articles,
Sections and  subsections  in, and the table of contents of, this  Agreement are
for  convenience  only,  and neither  limit nor amplify the  provisions  of this
Agreement.

     SECTION 13.16  Severability of Provisions.  Any provision of this Agreement
or  any  other  Loan  Document  which  is  prohibited  or  unenforceable  in any
jurisdiction  shall, as to such jurisdiction,  be ineffective only to the extent
of such prohibition or  unenforceability  without  invalidating the remainder of
such  provision or the remaining  provisions  hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

     SECTION 13.17 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 shall be binding
upon all parties,  their successors and assigns, and all of which taken together
shall constitute one and the same agreement.

     SECTION 13.18 Term of Agreement. This Agreement shall remain in effect from
the Closing  Date  through  and  including  the date upon which all  Obligations
arising  hereunder or under any other Loan Document shall have been indefeasibly
and  irrevocably  paid and  satisfied  in full  and all  Commitments  have  been
terminated. The Administrative Agent is hereby permitted to release all security
interests  in the capital  stock or other  ownership  interests  of the Material
Foreign  Subsidiaries  pledged pursuant to the Collateral  Agreement in favor of
the  Administrative  Agent,  for the ratable  benefit of itself and the Lenders,
upon repayment of the outstanding  principal of and all accrued  interest on the
Loans,   payment  of  all  outstanding  fees  and  expenses  hereunder  and  the
termination of the Lender's Commitments.  No termination of this Agreement shall
affect the rights and  obligations  of the parties  hereto arising prior to such
termination or in respect of any provision of this Agreement which survives such
termination.

     SECTION  13.19 Advice of Counsel.  Each of the parties  represents  to each
other party hereto that it has discussed this Agreement with its counsel.

     SECTION 13.20 No Strict Construction.  The parties hereto have participated
jointly in the  negotiation  and  drafting  of this  Agreement.  In the event an
ambiguity or question of intent or interpretation  arises,  this Agreement shall
be construed as if drafted  jointly by the parties  hereto and no presumption or
burden of proof shall arise favoring or  disfavoring  any party by virtue of the
authorship of any provisions of this Agreement.

     SECTION 13.21  Inconsistencies with Other Documents;  Independent Effect of
Covenants.

     (a)  In the  event  there  is a  conflict  or  inconsistency  between  this
Agreement  and any  other  Loan  Document,  the  terms of this  Agreement  shall
control;  provided,  that any provision of the Security  Documents which imposes
additional  burdens on the Borrower or its Subsidiaries or further restricts the
rights of the Borrower or its Subsidiaries or gives the Administrative  Agent or
Lenders  additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.

     (b) The  Borrower  expressly  acknowledges  and agrees  that each  covenant
contained in Articles VIII, IX, or X hereof shall be given  independent  effect.
Accordingly,  the  Borrower  shall not  engage in any  transaction  or other act
otherwise  permitted under any covenant contained in Articles VIII, IX, or X if,
before or after giving effect to such  transaction or act, the Borrower shall or
would be in breach of any other covenant contained in Articles VIII, IX, or X.

     SECTION  13.22  Continuity of Contract.  The parties  hereto agree that the
occurrence or  non-occurrence  of EMU, any event or events  associated  with EMU
and/or the introduction of the euro in any additional part of the European Union
(a) will not result in the discharge, cancellation, rescission or termination in
whole or in part of this Agreement or any other Loan Document, (b) will not give
any party the right to cancel, rescind,  terminate or vary this Agreement or any
other Loan  Document or (c) will not give rise to an Event of  Default,  in each
case other than as specifically provided in this Agreement.

     SECTION  13.23  Release of  Collateral.  The parties  hereto  agree that at
Closing,   all  of  the  mortgages  and  security   interests   granted  to  the
Administrative Agent in the assets of the Borrower and its Subsidiaries pursuant
the Existing Credit Agreement, other than in the Collateral,  shall be released.
The  Administrative  Agent shall take such  action and execute and deliver  such
documents,  certificates  and  instruments  as may be  reasonably  requested  by
Borrower to evidence the release contemplated hereby.

                           [Signature pages to follow]

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed  under seal by their duly  authorized  officers,  all as of the day and
year first written above.

                                    BORROWER:

[CORPORATE SEAL]                    COMPX INTERNATIONAL INC., as Borrower

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

                [Signature pages continued on the following page]

<PAGE>

                        ADMINISTRATIVE AGENT AND LENDERS:

                                   WACHOVIA BANK, NATIONAL
                                   ASSOCIATION, as Administrative Agent
                                   and Lender

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

                [Signature pages continued on the following page]

<PAGE>

                              COMPASS BANK, as Lender

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

                [Signature pages continued on the following page]

<PAGE>

                            COMERICA BANK, as Lender

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

<PAGE>

                                 Schedule 1.1(a)
                                       to
                                Credit Agreement

                             Lenders and Commitments

<TABLE>
<CAPTION>
---------------------------------------------------- -------------------------- --------------------------------------
                      LENDER                                COMMITMENT                       COMMITMENT
                                                            PERCENTAGE
---------------------------------------------------- -------------------------- --------------------------------------
Wachovia Bank, National Association
Charlotte Plaza, CP-8
<C>                                                          <C>                           <C>
201 South College Street                                     50.00000%                     $25,000,000.00
Charlotte, North Carolina 28288-0680
Attention:  Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288

---------------------------------------------------- -------------------------- --------------------------------------
Compass Bank
8080 N. Central Expway, Suite 250
Dallas, Texas  75206                                         25.00000%                       $12,500,000
Attention:  Key Coker
Telephone No.: 214-706-8044
Telecopy No.: 214-346-2746

---------------------------------------------------- -------------------------- --------------------------------------
Comerica Bank
U.S. Banking Department- South
4100 Spring Valley Road, Suite 400                           25.00000%                       $12,500,000
Dallas, Texas  75244
Attention:  Janet L. Wheeler
Telephone No.:  972-361-2652
Telecopy No.:   972-361-2550

---------------------------------------------------- -------------------------- --------------------------------------
TOTAL:                                                         100%                        $50,000,000.00
---------------------------------------------------- -------------------------- --------------------------------------
</TABLE>

<PAGE>

                                 Schedule 1.1(b)
                                       To
                                Credit Agreement

                               Mandatory Cost Rate

1.   The  Mandatory  Cost Rate is an addition to the interest rate to compensate
     Lenders for the cost of compliance with (a) the requirements of the Bank of
     England  and/or the United  Kingdom's  Financial  Services  Authority  (the
     "Financial  Services  Authority")  (or, in either case, any other authority
     which replaces all or any of its functions) or (b) the  requirements of the
     European Central Bank.

2.   On  the  first  day  of  each  Interest  Period  (or as  soon  as  possible
     thereafter),  the  Administrative  Agent shall  calculate,  as a percentage
     rate,  a rate (the  "Additional  Cost Rate") for each Lender in  accordance
     with  the  paragraphs  set out  below.  The  Mandatory  Cost  Rate  will be
     calculated  by  the  Administrative  Agent  as a  weighted  average  of the
     Lenders'  Additional  Cost Rates  (weighted in proportion to the percentage
     participation of each Lender in the relevant Loan) and will be expressed as
     a percentage rate per annum.

3.   The Additional  Cost Rate for any Lender lending from a Lending Office in a
     Participating  Member State will be the percentage  notified by that Lender
     to the  Administrative  Agent.  This  percentage  will be certified by that
     Lender  in its  notice  to the  Administrative  Agent to be its  reasonable
     determination  of the cost  (expressed  as a  percentage  of that  Lender's
     participation in all Loans made from that Lending Office) of complying with
     the minimum reserve requirements of the European Central Bank in respect of
     loans made from that Lending Office.

4.   The  Additional  Cost Rate for any Lender  lending from a Lending Office in
     the  United  Kingdom  will be  calculated  by the  Administrative  Agent as
     follows:

     (a)  in relation to a Loan denominated in Pounds Sterling:

                 AB+C(B-D)+E x 0.01
                 ------------------  percent per annum
                      100-(A+C)

     (b) in relation to a Loan in denominated in any Alternative  Currency other
than Pounds Sterling:

                         E x 0.01
                         -------- percent per annum
                           300

     Where:

     A    is the  percentage of Eligible  Liabilities  (assuming  these to be in
          excess of any stated  minimum)  which that Lender is from time to time
          required to maintain as an interest  free cash ratio  deposit with the
          Bank of England to comply with cash ratio requirements.

     B    is LIBOR for the relevant Interest Period on the relevant Loan.

     C    is the percentage (if any) of Eligible  Liabilities  which that Lender
          is required from time to time to maintain as interest  bearing Special
          Deposits with the Bank of England.

     D    is the percentage rate per annum payable by the Bank of England to the
          Administrative Agent on interest bearing Special Deposits.

     E    is designed to compensate  Lenders for amounts  payable under the Fees
          Rules  and is  calculated  by the  Administrative  Agent as being  the
          average of the most recent rates of charge  supplied by any applicable
          reference banks (the "Reference  Banks") to the  Administrative  Agent
          pursuant   to   paragraph  7  below  and   expressed   in  pounds  per
          (pound)1,000,000.

5. For the purposes of this Schedule 1.1(b):

     (a)  "Eligible  Liabilities"  has the meaning given to it from time to time
          under  or  pursuant  to the  Bank of  England  Act  1998 or (as may be
          appropriate) by the Bank of England;

     (b)  "Fees  Rules"  means the rules on periodic  fees  contained in the FSA
          Supervision  Manual or such other law or regulation as may be in force
          from time to time in respect of the payment of fees for the acceptance
          of deposits;

     (c)  "Fee Tariffs" means the fee tariffs  specified in the Fees Rules under
          the activity group A.1 Deposit acceptors  (ignoring any minimum fee or
          zero rated fee  required  pursuant  to the Fees Rules but taking  into
          account any applicable discount rate); and

     (d)  "Special  Deposits"  has the  meanings  given to it from  time to time
          under  or  pursuant  to the  Bank of  England  Act  1998 or (as may be
          appropriate) by the Bank of England;

     (e)  "Tariff  Base" has the meaning  given to it in, and will be calculated
          in accordance with, the Fees Rules.

6.   In application of the above formulae, A, B, C and D will be included in the
     formulae as percentages  (i.e. 5 percent will be included in the formula as
     5 and not as 0.05).  A negative  result  obtained by  subtracting  D from B
     shall be taken as zero.  The  resulting  figures  shall be  rounded to four
     decimal places.

7.   If requested by the  Administrative  Agent,  each Reference Bank shall,  as
     soon as practicable after publication by the Financial Services  Authority,
     supply  to the  Administrative  Agent the rate of  charge  payable  by that
     Reference  Bank to the Financial  Services  Authority  pursuant to the Fees
     Rules in respect of the relevant  financial year of the Financial  Services
     Authority  (calculated for this purpose by that Reference Bank as being the
     average  of the Fee  Tariffs  applicable  to that  Reference  Bank for that
     financial year) and expressed in pounds per  (pound)1,000,000 of the Tariff
     Base of that Reference Bank.

8.   Each Lender shall  supply any  information  required by the  Administrative
     Agent  for  the  purpose  of  calculating  its  Additional  Cost  Rate.  In
     particular, but without limitation,  each Lender shall supply the following
     information on or prior to the date on which it becomes a Lender:

     (a)  the jurisdiction of its Lending Office; and

     (b)  any other  information  that the  Administrative  Agent may reasonably
          require for such purpose.

     Each Lender shall promptly notify the Administrative Agent of any change to
     the information provided by it pursuant to this paragraph.

9.   The  percentages  of each  Lender for the  purpose of A and C above and the
     rates of charge of each  Reference Bank for the purpose of E above shall be
     determined by the Administrative  Agent based upon the information supplied
     to it  pursuant to  paragraphs  7 and 8 above and on the  assumption  that,
     unless a Lender  notifies the  Administrative  Agent to the contrary,  each
     Lender's  obligations  in  relation  to cash  ratio  deposits  and  Special
     Deposits are the same as those of a typical bank from its  jurisdiction  of
     incorporation with a Lending Office in the same jurisdiction as its Lending
     Office.

10.  The  Administrative  Agent  shall have no  liability  to any person if such
     determination  results  in an  Additional  Cost  Rate  which  over or under
     compensates any Lender and shall be entitled to assume that the information
     provided by any Lender or Reference  Bank pursuant to paragraphs 3, 7 and 8
     above is true and correct in all respects.

11.  The  Administrative  Agent shall distribute the additional amounts received
     as a result of the  Mandatory  Cost Rate to the Lenders on the basis of the
     Additional Cost Rate for each Lender based on the  information  provided by
     each  Lender and each  Reference  Bank  pursuant to  paragraphs  3, 7 and 8
     above.

12.  Any  determination  by the  Administrative  Agent pursuant to this Schedule
     1.1(b) in relation to a formula,  the  Mandatory  Cost Rate,  an Additional
     Cost Rate or any  amount  payable  to a Lender  shall,  in the  absence  of
     manifest error, be conclusive and binding on all parties.

13.  The Administrative Agent may from time to time, after consultation with the
     Borrower  and the  Lenders,  determine  and  notify to all  parties  of any
     amendments  which are required to be made to this Schedule  1.1(b) in order
     to comply with any change in law,  regulation or any requirements from time
     to time imposed by the Bank of England, the Financial Services Authority or
     the  European  Central  Bank (or, in any case,  any other  authority  which
     replaces all or any of its functions) and any such determination  shall, in
     the absence of manifest error, be conclusive and binding on all parties.

<PAGE>

                                 Schedule 1.1(c)
                                       To
                                Credit Agreement

                           Existing Bond Documentation

                                [Attached hereto]

<PAGE>

                                CREDIT AGREEMENT

                          dated as of December 23, 2005

                                  by and among

                            COMPX INTERNATIONAL INC.
                                  as Borrower,

                         the Lenders referred to herein,
                                   as Lenders,

                                       and

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                             as Administrative Agent

                           WACHOVIA SECURITIES, INC.,
                   as Sole Lead Arranger and Sole Book Manager

<PAGE>

                                TABLE OF CONTENTS

                                                                         Page

<TABLE>
<CAPTION>
<S>                                                                                                              <C>
ARTICLE I  DEFINITIONS............................................................................................1
SECTION 1.1          Definitions..................................................................................1
SECTION 1.2          General......................................................................................3
SECTION 1.3          Effectiveness of Euro Provisions.............................................................3
SECTION 1.4          Other Definitions and Provisions.............................................................3

ARTICLE II  REVOLVING CREDIT FACILITY.............................................................................3
SECTION 2.1          Revolving Credit Loans.......................................................................3
SECTION 2.2          Alternative Currency Loans...................................................................3
SECTION 2.3          Swingline Loans..............................................................................3
SECTION 2.4          Procedure for Advances of Revolving Credit Loans, Alternative Currency Loans
                      and Swingline Loans                                                                         3
SECTION 2.5          Repayment of Loans...........................................................................3
SECTION 2.6          Notes........................................................................................3
SECTION 2.7          Permanent Reduction of the Aggregate Commitment and the Alternative Currency Commitment......3
SECTION 2.8          Termination of Credit Facility...............................................................3

ARTICLE III  LETTER OF CREDIT FACILITY............................................................................3
SECTION 3.1          L/C Commitment...............................................................................3
SECTION 3.2          Procedure for Issuance of Letters of Credit..................................................3
SECTION 3.3          Commissions and Other Charges................................................................3
SECTION 3.4          L/C Participations...........................................................................3
SECTION 3.5          Reimbursement Obligation of the Borrower.....................................................3
SECTION 3.6          Obligations Absolute.........................................................................3
SECTION 3.7          Effect of Application........................................................................3

ARTICLE IV  GENERAL LOAN PROVISIONS...............................................................................3
SECTION 4.1          Interest.....................................................................................3
SECTION 4.2          Notice and Manner of Conversion or Continuation of Loans.....................................3
SECTION 4.3          Fees.........................................................................................3
SECTION 4.4          Manner of Payment............................................................................3
SECTION 4.5          Crediting of Payments and Proceeds...........................................................3
SECTION 4.6          Adjustments..................................................................................3
SECTION 4.7          Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by
                     the Administrative Agent                                                                     3
SECTION 4.8.         Redenomination of Alternative Currency Loans.................................................3
SECTION 4.9.         Regulatory Limitation........................................................................3
SECTION 4.10         Changed Circumstances........................................................................3
SECTION 4.11         Indemnity....................................................................................3
SECTION 4.12         Capital Requirements.........................................................................3
SECTION 4.13         Taxes........................................................................................3
SECTION 4.14.        Other Consequential Changes..................................................................3
SECTION 4.15.        Replacement of Lenders.......................................................................3
SECTION 4.16.        Security.....................................................................................3

ARTICLE V  CLOSING; CONDITIONS OF CLOSING AND BORROWING...........................................................3
SECTION 5.1          Closing......................................................................................3
SECTION 5.2          Conditions to Closing and Initial Extensions of Credit.......................................3
SECTION 5.3          Conditions to All Extensions of Credit.......................................................3

ARTICLE VI  REPRESENTATIONS AND WARRANTIES OF THE BORROWER........................................................3
SECTION 6.1          Representations and Warranties...............................................................3
SECTION 6.2          Survival of Representations and Warranties, Etc..............................................3

ARTICLE VII  FINANCIAL INFORMATION AND NOTICES....................................................................3
SECTION 7.1          Financial Statements and Projections.........................................................3
SECTION 7.2          Officer's Compliance Certificate.............................................................3
SECTION 7.3          Other Reports................................................................................3
SECTION 7.4          Notices......................................................................................3
SECTION 7.5          Accuracy of Information......................................................................3

ARTICLE VIII  AFFIRMATIVE COVENANTS...............................................................................3
SECTION 8.1          Preservation of Corporate Existence and Related Matters......................................3
SECTION 8.2          Maintenance of Property......................................................................3
SECTION 8.3          Insurance....................................................................................3
SECTION 8.4          Accounting Methods and Financial Records.....................................................3
SECTION 8.5          Payment and Performance of Obligations.......................................................3
SECTION 8.6          Compliance With Laws and Approvals...........................................................3
SECTION 8.7          ERISA........................................................................................3
SECTION 8.8          Compliance With Agreements...................................................................3
SECTION 8.9          Visits and Inspections.......................................................................3
SECTION 8.10         Additional Subsidiaries and Additional Collateral............................................3
SECTION 8.11         Use of Proceeds..............................................................................3
SECTION 8.12         Burdensome Provisions........................................................................3
SECTION 8.13         Titles to Properties.........................................................................3
SECTION 8.14         Senior Debt Status...........................................................................3
SECTION 8.15         Further Assurances...........................................................................3

ARTICLE IX  FINANCIAL COVENANTS...................................................................................3
SECTION 9.1          Leverage Ratio...............................................................................3
SECTION 9.2          Consolidated Net Worth.......................................................................3
SECTION 9.3          Interest Coverage Ratio......................................................................3
SECTION 9.4          Capital Expenditures.........................................................................3

ARTICLE X  NEGATIVE COVENANTS.....................................................................................3
SECTION 10.1         Limitations on Debt..........................................................................3
SECTION 10.2         Limitations on Liens.........................................................................3
SECTION 10.3         Limitations on Loans, Advances, Investments and Acquisitions.................................3
SECTION 10.4         Limitations on Mergers and Liquidation.......................................................3
SECTION 10.5         Limitations on Sale of Assets................................................................3
SECTION 10.6         Limitations on Dividends and Distributions...................................................3
SECTION 10.7         Limitations on Exchange and Issuance of Capital Stock........................................3
SECTION 10.8         Transactions with Affiliates.................................................................3
SECTION 10.9         Certain Accounting Changes; Organizational Documents.........................................3
SECTION 10.10        Amendments; Payments and Prepayments of Subordinated Debt....................................3
SECTION 10.11        Restrictive Agreements.......................................................................3
SECTION 10.12        Nature of Business...........................................................................3
SECTION 10.13        Impairment of Security Interests.............................................................3
SECTION 10.14        Subsidiaries.................................................................................3

ARTICLE XI  DEFAULT AND REMEDIES..................................................................................3
SECTION 11.1         Events of Default............................................................................3
SECTION 11.2         Remedies.....................................................................................3
SECTION 11.3         Rights and Remedies Cumulative; Non-Waiver; etc..............................................3
SECTION 11.4         Judgment Currency............................................................................3

ARTICLE XII  THE ADMINISTRATIVE AGENT.............................................................................3
SECTION 12.1         Appointment..................................................................................3
SECTION 12.2         Delegation of Duties.........................................................................3
SECTION 12.3         Exculpatory Provisions.......................................................................3
SECTION 12.4         Reliance by the Administrative Agent.........................................................3
SECTION 12.5         Notice of Default............................................................................3
SECTION 12.6         Non-Reliance on the Administrative Agent and Other Lenders...................................3
SECTION 12.7         Indemnification..............................................................................3
SECTION 12.8         The Administrative Agent in Its Individual Capacity..........................................3
SECTION 12.9         Resignation of the Administrative Agent; Successor Administrative Agent......................3
SECTION 12.10        Administrative Agent May File Proofs of Claim................................................3

ARTICLE XIII  MISCELLANEOUS.......................................................................................3
SECTION 13.1         Notices......................................................................................3
SECTION 13.2         Expenses; Indemnity..........................................................................3
SECTION 13.3         Set-off......................................................................................3
SECTION 13.4         Governing Law................................................................................3
SECTION 13.5         Jurisdiction and Venue.......................................................................3
SECTION 13.6         Binding Arbitration; Waiver of Jury Trial....................................................3
SECTION 13.7         Reversal of Payments.........................................................................3
SECTION 13.8         Injunctive Relief; Punitive Damages..........................................................3
SECTION 13.9         Accounting Matters...........................................................................3
SECTION 13.10        Successors and Assigns; Participations.......................................................3
SECTION 13.11        Amendments, Waivers and Consents.............................................................3
SECTION 13.12        Performance of Duties........................................................................3
SECTION 13.13        All Powers Coupled with Interest.............................................................3
SECTION 13.14        Survival of Indemnities......................................................................3
SECTION 13.15        Titles and Captions..........................................................................3
SECTION 13.16        Severability of Provisions...................................................................3
SECTION 13.17        Counterparts.................................................................................3
SECTION 13.18        Term of Agreement............................................................................3
SECTION 13.19        Advice of Counsel............................................................................3
SECTION 13.20        No Strict Construction.......................................................................3
SECTION 13.21        Inconsistencies with Other Documents; Independent Effect of Covenants........................3
SECTION 13.22        Continuity of Contract.......................................................................3
SECTION 13.23        Release of Collateral........................................................................3
</TABLE>

<PAGE>

                             EXHIBITS AND SCHEDULES

EXHIBITS

Exhibit A-1          -        Form of Revolving Credit Note
Exhibit A-2          -        Form of Swingline Note
Exhibit A-3          -        Form of Alternative Currency Note
Exhibit B            -        Form of Notice of Borrowing
Exhibit C            -        Form of Notice of Account Designation
Exhibit D            -        Form of Notice of Prepayment
Exhibit E            -        Form of Notice of Conversion/Continuation
Exhibit F            -        Form of Officer's Compliance Certificate
Exhibit G            -        Form of Assignment and Acceptance
Exhibit H            -        Form of Subsidiary Guaranty Agreement
Exhibit I                     Form of Collateral Agreement
Exhibit J            -        Form of Joinder Agreement

SCHEDULES

Schedule 1.1(a)      -        Lenders and Commitments
Schedule 1.1(b)      -        Mandatory Cost Rate
Schedule 1.1(c)      -        Existing Bond Documentation
Schedule 6.1(a)      -        Jurisdictions of Organization and Qualification
Schedule 6.1(b)      -        Subsidiaries and Capitalization
Schedule 6.1(i)      -        ERISA Plans
Schedule 6.1(l)      -        Labor and Collective Bargaining Agreements
Schedule 6.1(q)      -        Debt and Guaranty Obligations
Schedule 6.1(r)      -        Litigation
Schedule 10.2        -        Existing Liens
Schedule 10.3        -        Existing Loans, Advances and Investments
Schedule 10.8        -        Transactions with AffiliatesFiled by Automated Filing Services Inc. (604) 609-0244 - Ikona Gear International, Inc. - Exhibit 4.1

SUBSCRIPTION AGREEMENT

Westminster Securities Corporation
 100 Wall Street,
7th Floor 
New York, NewYork 10005

Ikona Gear International, Inc. 
1850 Hartley Avenue, Unit #1

Coquitlam, BC V3K 7A1

Ladies and Gentlemen:

          1.     
Private Placement

          The
undersigned (the “Investor(s)”) is writing to advise you of the following terms
and conditions under which the undersigned hereby offers to subscribe (the
"Offer") for the securities of this private placement (“Offering”) that is
offered by Ikona Gear International, Inc., a Nevada corporation (the "Company”).
The exclusive placement agent for the Offering is Westminster Securities
Corporation (the "Placement Agent”). The Company is issuing securities
consisting of a unit consisting of a promissory note (“Note”) and a warrant to
acquire shares of common stock of the Company, par value $0.00001 per share (the
“Common Stock”), at an exercise price of $0.59 per share in the form of Exhibit
A attached to this Agreement (the “Warrant”). The Notes are convertible into
shares of Common Stock at a conversion price of $0.50 per share at the option of
the Investor or registered assigns (the “Holder”) pursuant to the terms of such
Note. The number of shares of Common Stock underlying the Warrant is equal to
the number of shares of Common Stock underlying the Note. The Note and the
Warrant shall be collectively referred to herein as the “Securities.” The
Offering is for up to $750,000 of the Securities (the “Maximum Offering”) with a
minimum offering of $300,000 (“Minimum Offering”). The Maximum Offering may be
increased by the mutual agreement of Placement Agent and the Company without
notice to any Investor. The undersigned understands that the Securities are
being issued pursuant to the exemption from the registration requirements of the
Securities Act of 1933, as amended (the “Act”), provided by Section 4(2) of the
Act. As such, the Note, the Warrant, and the shares of Common Stock underlying
the Note and the Warrant (the “Underlying Shares”) are "restricted securities"
within the meaning of Rule 144 under the Act, certificates representing
Securities will bear a restrictive legend, and there will be restrictions on the
resale of Securities.

          The
Securities are being offered on a “best efforts, all or none” basis by the
Company through the Placement Agent with respect to the Minimum Offering, during
an offering period commencing on the date of the Company’s Private Placement
Memorandum dated March XXX, 2006 (the “Memorandum”) (the “Commencement Date”)
and continuing until March 31, 2006 unless extended to April 30, 2006 at the
discretion of the Placement Agent or such other date as agreed by the Company
and Placement Agent (the “Initial Offering Period”). If the Minimum Offering is
completed within the Initial Offering Period, the remaining Securities up to the
amount of the Maximum Offering will be offered (the “Continuing Offering
Period”) on a “best efforts” basis until the first to occur of (i) the
completion of the Maximum Offering, (ii) March 31, 2006 (unless extended by
agreement of the Company and Placement Agent) or (iii) the termination of the
Offering by mutual agreement of the Placement Agent and the Company. The Initial
Offering Period and Continuing Offering Period are referred to collectively
herein as the “Offering Period.”

          All
proceeds received from subscribers for the Securities offered hereby will be
deposited in a special non-interest bearing escrow account (the “Escrow
Account”) with Riverside Bank and will be released to the Company against
delivery by the Company of certificates representing the Common Stock and
Warrants (each such date, a “Closing Date”).

          Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Memorandum.

          2.      Subscription.

          Subject
to the terms and conditions hereinafter set forth in this Subscription
Agreement, the undersigned hereby offers to purchase the Note and Warrant as set
forth in the Investor Signature Page attached hereto.

          If
the Offer is accepted by the Company, the Securities shall be paid for by the
delivery of such amount by wire transfer, check or money order payable to the
order of “Ikona Gear International Escrow Account,” which is being delivered
contemporaneously herewith.

          Once a
minimum of $300,000 has been sold and proceeds of the minimum of $300,000 in
cleared funds are on deposit in the Escrow Account (the “Minimum Escrow Date”)
and such subscriptions are accepted by the Company, an initial closing will be
held as soon as practicable thereafter (the “Initial Closing”).

          Additional
closings will be held, at the discretion of the Company and the Placement Agent,
at reasonable intervals during the Continuing Offering Period, but a final
closing shall occur in no event later than the conclusion of the Offering Period
(the “Final Closing”).

          3.      Conditions
to Offer.

          The
Offering is made subject to the following conditions: (i) that the Company shall
have the right to accept or reject this Offer, in whole or in part, for any
reason whatsoever; and (ii) that the undersigned agrees to comply with the terms
of this Subscription Agreement and to execute and deliver any and all further
documents that may be reasonably requested by the Company.

          Acceptance
of this Offer shall be deemed given by the countersigning of this Subscription
Agreement on behalf of the Company.

          4.      Representations
and Warranties of the Undersigned.

          The
undersigned, in order to induce the Company to accept this Offer, hereby
warrants and represents as follows:

          (A)      The
undersigned has sufficient liquid assets to sustain a loss of the undersigned's
entire investment.

          (B)      The
undersigned represents that he (she or it) is an Accredited Investor as that
term is defined in Regulation D promulgated under the Securities Act of 1933, as
amended (the "Act"). In general, an "Accredited Investor" is deemed to be an
institution with assets in excess of $5,000,000 or individuals with net worth in
excess of $1,000,000 or annual income exceeding $200,000 (or $300,000 jointly
with their spouse).

          (C)      The
undersigned represents that he (she or it):

          (1)     
is purchasing the Securities as principal for his (her or its) own account, not
for the benefit of any other person, for investment only and not with a view to
the resale or distribution of all or any of the Securities;

          (2)     
is an “accredited investor” for the purposes of Canadian National Instrument
45-106 Prospectus and Registration Exemptions (“NI 45-106”) as set forth in
Exhibit A Additional Canadian Securities Law Representations - Certificate of
Accredited Investor attached hereto, and the Investor has concurrently
completed, executed and delivered a completed Exhibit A; and

          (3)     
if described in Category 13 of the definition of “accredited investor” in
Exhibit A, was not created nor is it used solely to purchase or hold securities
as an accredited investor. For the purposes of this section 4(C), the following
are deemed to be purchasing as principal:

2

          (4)      a
trust company or trust corporation described in Category 16 of the definition of
“accredited investor” in Exhibit A, other than a trust company or trust
corporation registered under the laws of Prince Edward Island that is not
registered or authorized under the Trust and Loan Companies Act (Canada) or
under comparable legislation in another jurisdiction of Canada; and

          (5)     
a person described in Category 17 of the definition of “accredited investor” in
Exhibit A;

          (D)      The
Company has not made any other representations or warranties to the undersigned
with respect to the Company except as contained herein. The Company has not
rendered any investment advice to the undersigned with respect to the
Company.

          (E)     
The undersigned has not authorized any person or institution to act as his
Purchaser Representative (as that term is defined in Regulation D of the General
Rules and Regulations under the Act) in connection with this transaction. The
undersigned has such knowledge and experience in financial, investment and
business matters that he is capable of evaluating the merits and risks of the
prospective investment in the Securities. The undersigned has consulted with
such independent legal counsel or other advisers as he has deemed appropriate to
assist the undersigned in evaluating his proposed investment in the
Securities.

          (F)      The
undersigned understands that the Securities involve a high degree of risk and
represents that he (i) has adequate means of providing for his current financial
needs and possible personal contingencies, and has no need for liquidity of
investment in the Securities; (ii) can afford (a) to hold unregistered
securities for an indefinite period of time as required and (b) sustain a
complete loss of the entire amount of the subscription; and (iii) has not made
an overall commitment to investments which are not readily marketable which is
disproportionate so as to cause such overall commitment to become excessive.

          (G)     
The undersigned has carefully reviewed the Memorandum. The undersigned has also
been afforded the opportunity to ask questions of, and receive answers from, the
officers and/or directors of the Company concerning the terms and conditions of
the Offering and to obtain any additional information, to the extent that the
Company possesses such information or can acquire it without unreasonable effort
or expense, necessary to verify the accuracy of the information furnished; and
has availed himself of such opportunity to the extent he considers appropriate
in order to permit him to evaluate the merits and risks of an investment in the
Securities. It is understood that all documents, records and books pertaining to
this investment have been made available for inspection, and that the books and
records of the Company will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business.

          (H)      The
undersigned acknowledges that the Securities, including the Underlying Shares
have not been registered under the Act in reliance on an exemption for
transactions by an issuer not involving a public offering, and further
understands that the undersigned is purchasing the Securities without being
furnished any prospectus setting forth all of the information that would be
required to be furnished under the Act in a registered transaction.

          (I)      The
undersigned further acknowledges that this Offering has not been passed upon or
the merits thereof endorsed or approved by any state or federal authorities.

          (J)      The
  Securities being subscribed for are being acquired solely for the account of
  the undersigned for personal investment and not with a view to, or for resale
  in connection with, any distribution in any jurisdiction where such sale or
  distribution would be precluded. By such representation, the undersigned means
  that no other person has a beneficial interest in the Securities (or Underlying
  Shares) subscribed for hereunder, and that no other person has furnished or
  will furnish directly or indirectly, any part of or guarantee the payment of
  any part of the consideration to be paid to the Company in connection therewith.
  The undersigned does not intend to dispose of all or any part of the Securities
  (or Common Stock issuable upon any exercise of the Warrant or conversion of
  the Note) except in compliance with the provisions of the Act and applicable
  state securities laws and understands that the Securities are being offered
  pursuant to a specific exemption under the provisions of the Act, which exemption(s)
  depends, among other things, upon compliance with the provisions of the Act.

3

 

          (K)      The
undersigned further represents and agrees that the undersigned will not sell,
transfer, pledge or otherwise dispose of or encumber the Securities (including
the Underlying Shares) unless prior to any such sale, transfer, pledge,
disposition or encumbrance, the undersigned will, if requested, furnish the
Company and its transfer agent with an opinion of counsel satisfactory to the
Company in form and substance that registration under the Act or applicable
state securities laws is not required.

          (L)      The
undersigned hereby agrees that the Securities and the Underlying Shares are
“restricted securities” under the Act and that the Company may insert the
following or similar legend on the face of the certificates evidencing the
Securities and the Underlying Shares:

"These securities have not been
registered under the Securities Act of 1933, as amended (the “Act”), nor under
any state securities law and may not be pledged, sold, assigned, hypothecated or
otherwise transferred until (1) a registration statement with respect thereto is
effective under the act and any applicable state securities law or (2) the
Company receives an opinion of counsel reasonably satisfactory to the company
that such note may be pledged, sold, assigned, hypothecated or transferred
without an effective registration statement under the act or applicable state
securities laws.”

          (M)      The
undersigned hereby acknowledges that the Placement Agent, its affiliates and/or
its beneficial owners may subscribe for Securities.

          (N)     
The undersigned hereby acknowledges that neither the Company nor any person
acting on its behalf has offered or sold the undersigned the Securities by means
of any form of general solicitation or general advertising and the Securities
were not offered or sold to the undersigned by means of publicly disseminated
advertisements or sales literature.

          (O)      The
undersigned understands and acknowledges that the Securities and the Underlying
Shares may be resold, pledged or otherwise transferred only pursuant to an
effective registration statement under the Act or pursuant to an exemption from
the registration requirements of the Act and applicable state securities
laws.

          (P)      The
undersigned understands and acknowledges that the Warrant may be exercised only
pursuant to an exemption from the registration requirements of the Act and
applicable state securities laws.

          The
undersigned certifies that each of the foregoing representations and warranties
set forth in subsection (A) through (P) inclusive of this Section 4 are true as
of the date hereof and shall survive such date.

          5.     
Representations and Warranties of the Company.

          The
Company hereby makes the following representations and warranties to the
Investors:

          (A)      Subsidiaries.
The Company has no direct or indirect subsidiaries (each a “Subsidiary,” and
collectively, “Subsidiaries”) except as described in the Company’s audited
financial statement for the year ended August 31, 2005, and in the unaudited
financial statements for the quarter ending November 30, 2005, included in the
Memorandum. All the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights, and the Company owns all of the issued and
outstanding shares of capital stock of each Subsidiary, except as described in
such unaudited quarterly financial statements and/or the Memorandum.

          (B)     
  Organization and Qualification. Each of the Company and the Subsidiaries
  is an entity duly incorporated or otherwise organized, validly existing and
  in good standing under the laws of the jurisdiction of its incorporation or
  organization (as applicable), with the requisite power and authority to own
  and use its properties and assets and to carry on its business as currently
  conducted. Neither the Company nor any Subsidiary is in violation of any of
  the provisions of its respective certificate or articles of incorporation, bylaws
  or other organizational or charter documents. 

4

          (C)     
  Authorization; Enforcement. The Company has the requisite corporate power
  and authority to enter into and to consummate the Offering. The execution and
  delivery of this Subscription Agreement by the Company and the consummation
  by it of the transactions contemplated hereby have been duly authorized by all
  necessary action on the part of the Company and no further consent or action
  is required by the Company, other than the Required Approvals. This Subscription
  Agreement and the Securities, when executed and delivered in accordance with
  the terms hereof, will constitute the valid and binding obligation of the Company
  enforceable against the Company in accordance with its terms, subject to applicable
  bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
  similar laws affecting creditors’ rights and remedies generally and general
  principles of equity. Neither the Company nor any Subsidiary is in violation
  of any of the provisions of its respective certificate or articles of incorporation,
  by-laws or other organizational or charter documents.

          (D)      No
Conflicts. The execution, delivery and performance of this Subscription
Agreement by the Company and the consummation by the Company of the Offering and
the issuance of the Securities do not and will not: (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
subject to obtaining the Required Approvals (as defined below), conflict with,
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority as currently in effect
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate (a)
adversely affect the legality, validity or enforceability of the Offering, (b)
have or result in or be reasonably likely to have or result in a material
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (c) adversely impair the Company's ability to perform fully on a
timely basis its obligations under this Subscription Agreement (any of (a), (b)
or (c), a “Material Adverse Effect”).

          (E)     
Filings, Consents and Approvals. Neither the Company nor any Subsidiary
is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of this Subscription
Agreement, other than (i) the filing with the SEC of a Form D pursuant to SEC
Regulation D and (ii) applicable Blue Sky filings (collectively, the
“Required Approvals”).

          (F)      Issuance
of the Securities. The Securities are duly authorized and, when issued and
paid for in accordance with this Subscription Agreement, will be duly and
validly issued, fully paid and nonassessable, free and clear of all liens.
Assuming the accuracy of the Investors representations and warranties set forth
in Section 4, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Investors as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene
the SEC rules and regulations.

          (G)     
  Capitalization. The number of shares and type of all authorized, issued
  and outstanding capital stock of the Company is as set forth in the Company’s
  financial statements or Memorandum of the Company. No Person has any right of
  first refusal, preemptive right, right of participation, or any similar right
  to participate in the Offering. The issuance and sale of the Securities will
  not obligate the Company to issue Underlying Shares or other securities to any
  Person (other than the Investors) and will not result in a right of any holder
  of Company securities to adjust the exercise, conversion, exchange or reset
  price under such securities, however, the holders of the Senior Note have the
  right and have agreed to adjust their conversion price to the stock price of
  the next equity offering.

5

          (H)     
SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) of 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the “SEC Reports”). The SEC Reports, when filed, complied in all
material respects with the requirements of the Securites Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company that have been included in the SEC Reports comply in
all material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

          (I)      Material
Changes. Except for the proposed Offering, since the date of the latest
audited financial statement dated August 31, 2005, 2005 included within the SEC
Reports, (a) there has been no event, occurrence or development that has had a
Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (I) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(II) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
SEC, (c) the Company has not altered its method of accounting or the identity of
its auditors, (d) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders except in the
ordinary course of business consistent with prior practice, or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock except consistent with prior practice or pursuant to existing Company
stock option or similar plans, and (e) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option or similar plans.

          (J)     
Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which: (i) adversely affects or
challenges the legality, validity or enforceability of this Subscription
Agreement or the Securities or (ii) would, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary is
or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws. The Company does not have
pending before the SEC any request for confidential treatment of information.
There has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the SEC involving the Company. The
SEC has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act. 

          (K)     
  Compliance. Neither the Company nor any Subsidiary: (i) is in default
  under or in violation of (and no event has occurred that has not been waived
  that, with notice or lapse of time or both, would result in a default by the
  Company or any Subsidiary under), nor has the Company or any Subsidiary received
  notice of a claim that it is in default under or that it is in violation of,
  any material indenture, loan or credit agreement or any other material agreement
  or instrument to which it is a party or by which it or any of its properties
  is bound (whether or not such default or violation has been waived), which default
  or violation would have or result in a Material Adverse Effect, (ii) is in violation
  of any order of any court, arbitrator or governmental body, or (iii) is or has
  been in violation of any statute, rule or regulation of any governmental authority,
  except in each case as would not, individually or in the aggregate, have or
  result in a Material Adverse Effect.

6

          (L)     
Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material
Permit.

          (M)      Listing
and Maintenance Requirements. The Company is currently quoted on the Over
the Counter Bulletin Board under the symbol “IKGI”. The Company is, and has no
reason to believe that it will not in the foreseeable future to be, in
compliance with all such listing and maintenance requirements.

          (N)      Internal
Accounting Controls. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company
and designed such disclosures controls and procedures to ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities. 

          (O)     
Advisory Agreement. The Company currently has an investment banking
engagement with Westminster Securities Corporation that continue while a
majority of the Notes are outstanding.

          (P)     
Disclosure. The disclosure provided to the Investor regarding the
Company, its business and the transactions contemplated hereby, furnished by or
on behalf of the Company, including all of the SEC Reports, does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company acknowledges and agrees
that the Investor makes or has made no representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in this Subscription Agreement.

          6.     
Covenants of the Company.

          (A)     
Registration Rights. The Company grants registration rights to the
purchasers in the Offering of the Underlying Shares under the following terms
and conditions:

          (1)      Piggyback
Registration. If, at any time the Company proposes to register any of its Common
Stock (“Registered Securities”) under the Act (other than pursuant to Form S-4
or Form S-8), (“Registration Statement”) it will give written notice, by
registered mail sent to the Investor at the address set forth on the signature
page hereto, at least thirty (30) days prior to the filing of each such
Registration Statement, of its intention to do so. If the Investor notifies the
Company within fifteen (15) days after the mailing of any such notice of its
desire to include Underlying Shares in such proposed Registration Statement, the
Company shall afford the Investor the opportunity to have any such Underlying
Shares registered for resale under such Registration Statement (“Registrable
Securities”). Any registration pursuant to this Section 6(A)(1) shall be subject
to customary hold-back provisions at the request of the underwriters in the case
of a firm-commitment underwritten offering by the Company. 

     (2)      Demand
Registration.

7

          (a)      At
any time subsequent to one year after the end of the Offering Period and
expiring five (5) years after the end of the Offering Period, the Investor,
together with all other purchasers of Securities in the Offering, holding
Registrable Securities or the right to acquire Registrable Securities (through
the exercise or conversion of the Securities) that would constitute, in the
aggregate, a majority of the Registrable Securities (assuming all Notes have
been converted and all Warrants have been exercised) (the “Requesting Holders”)
shall have the right (which right is in addition to the registration rights
under Section 6(A)(1) hereof), exercisable by written notice provided to the
Company at its address set forth herein, to have the Company prepare and file
with the SEC, on one occasion, a Registration Statement (on any form available
to the Company upon which the registration may be qualified )and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Investors, in order to comply with
the provisions of the Act, so as to permit a public offering and sale of
Registrable Securities included in the Registration Statement (the “Demand
Request”). No later than 10 days after receiving such Demand Request, the
Company shall provide written notice of the Demand Request to the Investors
other than the Requesting Holders, at the address for each such Investor
maintained in the Company’s records. Such non-Requesting Holders shall have the
right to include their Registrable Securities in the Registration Statement,
provided that such Investors shall notify the Company in writing, at its address
set forth herein, within fifteen (15) days after the Company mails the notice
referred to in the preceding sentence. For purposes of this paragraph 6A(2)(a),
the term “Registrable Securities” means the Registrable Securities held (or
which the Investor has the right to acquire upon the exercise or conversion of
the Securities held by the Investor) by the Investor, together with any
Underlying Shares issued or issuable upon exercise or conversion of Securities
acquired in the Offering by purchasers other than the Investor and to which
registration rights identical to those contemplated herein apply.

          (b)      All
fees, disbursements and out-of-pocket expenses and costs incurred by the Company
in connection with the preparation and filing of the Registration Statement and
in complying with applicable federal securities and Blue Sky laws (including,
without limitation, all attorneys' fees of the Company) shall be borne by the
Company. The Investors shall bear the cost of underwriting and/or brokerage
discounts, fees and commissions, if any, and transfer taxes applicable to the
Registrable Securities being registered and the fees and expenses of their
counsel. The Company shall use its reasonable best efforts to qualify any of the
Registrable Securities for re-sale in such states as any Investor reasonably
requests. However, the Company shall not be required to qualify in any state
which will require an escrow or other restriction relating to the Company and/or
the Investors, or which will require the Company to qualify to do business in
such state or require the Company to file therein any general consent to service
of process. The Company at its expense will supply the Investors with copies of
the applicable Registration Statement and any prospectus included therein and
other related documents in such quantities as may be reasonably requested by the
Investors.

          (c)      In
  the event that (i) the Registration Statement to be filed by the Company pursuant
  to Section (6)(A)(2)(a) is not filed with the SEC within sixty (60) days from
  the date that a Demand Request is received by the Company (“Demand Date”)
  and, (ii) such Registration Statement is not declared effective by the SEC within
  one hundred and twenty (120) days from the Demand Date, or (iii) such Registration
  Statement is does not continue to be effective for the period set forth in Section
  (6)(C) below (each a “Registration Default”) then the Company will
  pay the Investor (pro rated on a daily basis), as partial compensation for such
  failure and not as a penalty, one and one-half percent (1.5%) of the purchase
  price of the Registrable Securities purchased from the Company and held by the
  Investor for each month (or portion thereof) until such Registration Statement
  has been filed (in the case of clause (i)), and in the event of late effectiveness
  (in case of clause (ii) above) or lapsed effectiveness (in the case of clause
  (iii) above), one and one-half percent (1.5%) of the purchase price of the Registrable
  Securities purchased from the Company and held by the Investor for each month
  (or portion thereof) until such Registration Statement has been declared or
  re-declared effective (regardless of whether one or more such Registration Defaults
  are then in existence, but without duplication of such partial compensatory
  payments). Such compensatory payments shall be made to the Investor in cash,
  within five (5) calendar days of demand, provided, however, that the payment
  of such amounts shall not relieve the Company from its obligations to register
  the Securities pursuant to this Section. 

8

          If the
Company does not remit the payment to the Investor as set forth above, the
Company will pay the Investor reasonable costs of collection, including
attorneys’ fees, in addition to the liquidated damages. The registration of the
Registrable Securities pursuant to this provision or payment of such
compensatory amounts shall not affect or limit the Investor’s other rights or
remedies as set forth in this Agreement or at law.

          (B)     
Notwithstanding the foregoing, the Company shall be entitled to suspend the
availability of any Registration Statement, by providing notice thereof to the
Investor, without incurring or accruing any obligation to pay liquidated damages
pursuant to Section 6(A)(2)(c), no more than one (1) time in any three month
period or three (3) times in any twelve month period, and any such period during
which the availability of the Registration Statement is suspended (the “Deferral
Period”) shall, without incurring any obligation to pay liquidated damages
pursuant to Section 6(A)(2)(c), not exceed 30 days; provided that the
aggregate duration of any Deferral Periods shall not exceed 30 days in any three
month period (or 60 days in any three month period in the event of a Material
Event (as defined below) pursuant to which the Company has delivered a second
notice as required below) or 90 days in any twelve (12) month period;
provided that in the case of a Material Event relating to an acquisition
or a probable acquisition or financing, recapitalization, business combination
or other similar transaction, the Company may, without incurring any obligation
to pay liquidated damages pursuant to Section 6(A)(2)(c), deliver to the
Investor a second notice to the effect set forth above, which shall have the
effect of extending the Deferral Period by up to an additional 30 days, or such
shorter period of time as is specified in such second notice. As used herein,
“Material Event” shall mean the occurrence of any event or the existence of any
fact as a result of which any Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which the statements were made.

          
(C)      In the case of each registration effected
by the Company pursuant to any section herein, the Company will keep Requesting
Holders advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:

          (1)      Keep
such registration effective such time as (i) the Registrable Securities are
eligible to have the restrictive legend removed pursuant to SEC Rule 144(k), or
(ii) all Registrable Securities have been sold; 

          (2)     
Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Act with respect to a disposition of all securities covered by such Registration
Statement; 

          (3)      Notify
the Requesting Holders at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in light of the circumstances then
existing, and at the request of the Requesting Holders, prepare and furnish to
them a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
shareholders, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which the statements were made;

           (4)     
  Use its commercially reasonable best efforts to prevent the issuance of any
  stop order or other suspension of effectiveness of a registration statement,
  and, if such an order is issued, to obtain the withdrawal of such order at the
  earliest possible moment and to notify Investor (and, in the event of an underwritten
  offering, the managing underwriter) of the issuance of such order and the resolution
  thereof;

9

           (5)      Cause
all Registrable Securities which are registered in accordance with the
provisions herein, to be listed or included for quotation on each exchange on
which the Company’s shares of Common Stock are then listed or included for
quotation; 

          (6)     
Provide a transfer agent and registrar for all such shares and CUSIP number for
all such shares of Common Stock in each case not later than the effective date
of such registration statement; and 

          (7)      Otherwise
use its commercially reasonable best efforts to comply with all applicable rules
and regulations of the SEC. 

          (D)      To
the extent Investor includes any Registrable Securities in a Registration
Statement pursuant to the terms hereof, the Company will indemnify and hold
harmless Investor, its directors and officers, and each person, if any, who
controls Investor within the meaning of the Securities Act, from and against,
and will reimburse Investor, its directors and officers and each controlling
person with respect to, any and all loss, damage, liability, cost and expense to
which Investor or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by Investor or any such
controlling person in writing specifically for use in the preparation
thereof.

          (E)      To
the extent Investor includes any Registrable Securities in a Registration
Statement pursuant to the terms hereof, Investor will indemnify and hold
harmless the Company, its directors and officers and any controlling person from
and against, and will reimburse the Company, its directors and officers and any
controlling person with respect to, any and all loss, damage, liability, cost or
expense to which the Company, its directors and officers or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in conformity with written information furnished by
or on behalf of the Investor specifically for use in the preparation thereof and
provided further, that the maximum amount that may be recovered from Investor
shall be limited to the amount of proceeds received by Investor from the sale of
such shares of Common Stock.

          (F)      To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable hereunder to the
extent permitted by law, provided that (i) no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification pursuant to the provisions hereof, (ii) no seller of securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
securities who was not guilty of such fraudulent misrepresentation, and (iii)
the amount of the contribution together with any other payments made in respect
of such loss, damage, liability or expense, by any seller of securities shall be
limited to the net amount of proceeds received by such seller from the sale of
such securities.

          (G)     
  The Investor will cooperate with the Company in connection with this Subscription
  Agreement, including timely supplying all information reasonably requested by
  the Company (which shall include all information regarding the Investor and
  proposed manner of sale of securities required to be disclosed in any registration
  statement filed in accordance with this Section 6) and executing and returning
  all documents reasonably requested in connection with the registration and sale
  of any securities being registered hereunder and entering into and performing
  their obligations under any underwriting agreement, if the offering is an underwritten
  offering, in usual and customary form, with the managing underwriter or underwriters
  of such underwritten offering.

10

          (H)     
Transfer Restrictions.

          (1)      The
Securities and Underlying Shares may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Underlying
Shares other than pursuant to an effective registration statement, to the
Company or to an affiliate of an Investor or in connection with a pledge as
contemplated in Section 6(H)(2), the Company may require the transferor thereof
to provide to the Company with an opinion of counsel selected by the transferor
and reasonably acceptable to the Company, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities Underlying
Shares under the Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Subscription Agreement and
shall have the rights of an Investor under this Subscription Agreement.

          (2)      The
Investors agree to the imprinting, so long as is required by this Section
6(H)(2) of a legend on any of the Securities in the following form:

THIS [PROMISSORY NOTE] [WARRANT] AND
THE SHARES ISSUABLE UPON [CONVERSION] [EXERCISE] OF THIS [PROMISSORY NOTE]
[WARRANT] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

The Company acknowledges and agrees
that an Investor may from time to time pledge pursuant to a bona fide margin
agreement with a registered broker-dealer or grant a security interest in some
or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Act and who agrees to be bound by
the provisions of this Subscription Agreement and, if required under the terms
of such arrangement, such Investor may transfer pledged or secured Securities to
the pledgees or secured parties. Such a pledge or transfer would not be subject
to approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Investor’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) under the Act or other
applicable provision of the Act to appropriately amend the list of selling
stockholders thereunder.

          (3)      Upon
  the request of the Investor, certificates evidencing the Underlying Shares shall
  not contain any legend (including the legend set forth in Section 6(H)(2) hereof):
  (i) following any sale of Underlying Shares pursuant to the Registration Statement,
  or(ii) following any sale of such Underlying Shares pursuant to Rule 144, or
  (iii) if such Underlying Shares are eligible for sale under Rule 144(k), or
  (iv) if such legend is not required under applicable requirements of the Act
  (including judicial interpretations and pronouncements issued by the staff of
  the SEC); provided, however, in connection with the issuance of
  the Underlying Shares, each Investor, severally and not jointly with the other
  Investors, hereby agrees to adhere to and abide by all prospectus delivery requirements
  under the Act and rules and regulations of the SEC. The Company shall cause
  its counsel to issue a legal opinion to the Company’s transfer agent promptly
  after the effective date of the Registration Statement if required by the Company’s
  transfer agent to effect the removal of the legend hereunder. If all or any
  portion of a Note or Warrant is converted or exercised (as applicable) at a
  time if permitted by law such Underlying Shares may be sold under Rule 144(k)
  or if such legend is not otherwise required under applicable requirements of
  the Act (including judicial interpretations thereof) then such Underlying Shares
  shall be issued free of all legends. The Company agrees that at such time as
  such legend is no longer required under this Section 6(H)(3), it will, no later
  than three (3) days following the delivery by an Investor to the Company or
  the Company's transfer agent of a certificate representing Underlying Shares,
  as applicable, issued with a restrictive legend (such third (3rd)
  day, the “Legend Removal Date”), deliver or cause to be delivered
  to such Investor a certificate representing such shares that is free from all
  restrictive and other legends. The Company may not make any notation on its
  records or give instructions to any transfer agent of the Company that enlarge
  the restrictions on transfer set forth in this Section, but may make such a
  notation or give such instructions to give effect to such restrictions.

11

          (4)     
In addition to such Investor’s other available remedies, the Company shall pay
to an Investor, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the closing price of the Common Stock
on the date such Securities are submitted to the Company’s transfer agent)
delivered for removal of the restrictive legend and subject to this Section
6(H)(3), $10 per day (increasing to $20 per day five (5) days after such damages
have begun to accrue) for each day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit such
Investor’s right to pursue actual damages for the Company's failure to deliver
certificates representing any Securities as required by this Subscription
Agreement, the Note, the Warrant and any other document relating to this
Offering, and such Investor shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. Notwithstanding the foregoing,
the first sentence of this paragraph shall not apply to any failure by the
Company to remove a restrictive legend caused by acts of God, fire, floods,
strikes, equipment or transmission failure, or other causes reasonably beyond
the Company’s control.

          7.      Specific
State Legends.

          FOR
NEW HAMPSHIRE RESIDENTS ONLY: NEITHER THE FACT THAT A REGISTRATION
STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH
THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION.
IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.

          FOR
FLORIDA RESIDENTS ONLY: EACH FLORIDA RESIDENT WHO SUBSCRIBES FOR
THE PURCHASE OF SECURITIES HEREIN HAS THE RIGHT, PURSUANT TO SECTION
517.061(11)(A)(5) OF THE FLORIDA SECURITIES ACT, TO WITHDRAW HIS SUBSCRIPTION
FOR THE PURCHASE AND RECEIVE A FULL REFUND OF ALL MONIES PAID WITHIN THREE
BUSINESS DAYS AFTER THE EXECUTION OF THIS SUBSCRIPTION AGREEMENT OR PAYMENT FOR
THE PURCHASE HAS BEEN MADE, WHICHEVER IS LATER. WITHDRAWAL WILL BE WITHOUT ANY
FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER
NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN
THIS SUBSCRIPTION AGREEMENT INDICATING HIS INTENTION TO WITHDRAW.

          SUCH
LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY 

12

CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS
RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS MADE
ORALLY, IN PERSON OR BY TELEPHONE TO AN OFFICER OF THE COMPANY, A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.

          FOR
GEORGIA RESIDENTS ONLY THE SECURITIES OFFERED HEREBY ARE BEING ISSUED OR
SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT

          FOR
RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

          THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY,
NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 

          8.     
No Waiver.

          Notwithstanding
any of the representations, warranties, acknowledgments or agreements made
herein by the undersigned, the undersigned does not thereby or in any manner
waive any rights granted to the undersigned under federal or state securities
laws.

          9.      Revocation.

          The
undersigned agrees that he shall not cancel, terminate or revoke this
Subscription Agreement or any agreement of the undersigned made hereunder other
than as set forth herein, and that this Subscription Agreement shall survive the
death or disability of the undersigned. 

          10.     Termination
of Subscription Agreement.

          If
the Company elects to cancel this Subscription Agreement, provided that it
returns to the undersigned, without interest and without deduction, all sums
paid by the undersigned, this offer shall be null and void and of no further
force and effect, and no party shall have any rights against any other party
hereunder.

          11.     Miscellaneous.

                    (A)      All
notices or other communications given or made hereunder shall be in writing and
shall be mailed by registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier service to the undersigned at his
address set forth below, to the Company and the Placement Agent at the addresses
set forth herein.

                    (B)      This
Subscription Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties.

                    (C)      The
provisions of this Subscription Agreement shall survive the execution thereof.

                    (D)      The
Subscription Agreement shall be governed by the laws of the State of New York
without giving effect to principles of conflicts of laws.

13

          12.      Certification.

          The
undersigned certifies that he has read this entire Subscription Agreement and
that every statement on his part made and set forth herein is true and
complete.

14

INVESTOR SIGNATURE PAGE FOR IKONA GEAR INTERNATIONAL
SUBSCRIPTION AGREEMENT 
Please print or type, Use ink only. (All
Parties Must Sign)

The undersigned investor hereby certifies that he (i) has
received and relied solely upon the Confidential Private Placement Memorandum
dated __________ of Ikona Gear International, Inc.,, this Subscription Agreement
and their respective exhibits and schedules, (ii) agrees to all the terms and
conditions of this Subscription Agreement, (iii) meets the suitability standards
set forth herein and (iv) is a resident of the state or foreign jurisdiction
indicated below.

Dollar Amount of Securities Subscribed for:
$_________________________

  	 	 	If other than individual check one and indicate
      
	Name of Investor (Print) 	 	capacity of signatory under the signature: 
	 	 	o Trust 
	 	 	o Estate 
	Name of Joint Investor (if any) (Print) 	 	o Uniform Gifts to Minors Act, State of _________________________
	 	 	o Attorney-in-fact 
	 	 	o Corporation 
	 	 	o Other 
	Signature of Investor 	 	 
	 	 	If Joint Ownership, Check one: 
	 	 	o Joint Tenants with Right of Survivorship 
	 	 	o Tenants in Common 
	Signature of Joint Investor (if any) 	 	o Tenants by the Entirety 
	 	 	o Community by Property 
	 	 	 
	Capacity of Signatory (if applicable) 	 	Backup Withholding Statement: 
	 	 	o Please check this box only if the investor
        is subject to 
	 	 	     backup withholding
      
	Social Security or Taxpayer Identification Number 	 	 
	 	 	Foreign Person: 
	Investor Mail Address: 	 	            o
        Please check this box only if the investor is a 
	 	 	nonresident alien, foreign corporation, foreign
      
	 	 	partnership, foreign trust or foreign estate
      
	Street Address 	 	 
	 	 	 
		 	 
	City                                                                        
        State                
        Zip Code 	 	Share and Warrant Registration Name(s) and Amounts:
      
	 	 	 
	Telephone: (    
         )                                                 
        Fax: (      ) 	 	Name	Amount 
	 	 	1. ________________     	_________
	 	 	 
	Email:_______________________________ 	 	2. ________________     	_________
	 	 	 
	 	 	3. ________________     	_________
	Address for Delivery of Shares (if different from above):
      	 	 
	 	 	4. ________________    
      	_________
	 	 	 
	 	 	 
	 	 	 
	City State Zip Code 	 	 

Customer Account No.________________________

Broker:

           o
  Westminster Reg.Rep._________________ No. ________                      o
  Other Investor Representative_______________________

The investor agrees to the terms of this Agreement and, as
required by the Regulations pursuant to the Internal Revenue Code, certifies
under penalty of perjury that (1) the Social Security Number or Taxpayer
Identification Number and address provided above is correct, (2) the investor is
not subject to backup withholding (unless the Backup Withholding Statement box
is checked) either because he has not been notified that he is subject to backup
withholding as a result of a failure to report all interest or dividends or
because the Internal Revenue Service has notified him that he is no longer
subject to backup withholding and (3) the investor (unless, the Foreign Person
box above is checked) is not a nonresident alien, foreign partnership, foreign
trust or foreign estate.

THE SUBSCRIPTION FOR SECURITIES OF IKONA GEAR INTERNATIONAL,
INC. BY THE ABOVE NAMED INVESTOR(S) IS ACCEPTED THIS ________ DAY OF 
______________________, 2006.

IKONA GEAR INTERNATIONAL, INC.

By:_____________________________________
Name:  Laith
Nosh 
Title:    President and CEO

15

EXHIBIT A

ADDITIONAL CANADIAN SECURITIES LAW REPRESENTATIONS
-
CERTIFICATE OF ACCREDITED INVESTOR

To be completed by all Investors

Certificate

As an integral part of the attached Subscription Agreement, the
  undersigned Investor hereby:

		(a) 	 certifies, represents and warrants
        that he (she or it) is not a resident of Canada nor was the undersigned
        Investor in Canada at the time this Exhibit or the attached Subscription
        Agreement were executed; 

	 	  	 

		(b) 	 represents and agrees that he (she
        or it) will not sell the Securities or the shares of Common Stock issueable
        upon conversion or exercise, as applicable, of the Securities to a resident
        of British Columbia, Canada, into British Columbia, Canada or through
        a market in British Columbia, Canada before the date that is four months
        and one day after the date of distribution of the Securities; 

	 	  	 

	 	(c) 	 understands and agrees that the Notes will
        be imprinted with a legend in the following form: 

  
    
      
        THE HOLDER OF THIS PROMISSORY NOTE MUST NOT
          SELL THIS PROMISSORY NOTE OR THE SHARES ISSUABLE UPON
          CONVERSION OF THIS PROMISSORY NOTE TO A RESIDENT OF BRITISH
          COLUMBIA, CANADA, INTO BRITISH COLUMBIA, CANADA OR THROUGH
          A MARKET IN BRITISH COLUMBIA, CANADA BEFORE THE DATE
          THAT IS 4 MONTHS AND A DAY AFTER THE DISTRIBUTION DATE.
        

      

    

  

	 	(d) 	 understands and agrees that the Warrants
        will be imprinted with a legend in the following form: 

  
    
      
        THE HOLDER OF THIS WARRANT MUST NOT SELL THIS
          WARRANT OR THE SHARES ISSUABLE UPON CONVERSION OF THIS WARRANT
          TO A RESIDENT OF BRITISH COLUMBIA, CANADA, INTO BRITISH COLUMBIA,
          CANADA OR THROUGH A MARKET IN BRITISH COLUMBIA, CANADA BEFORE
          THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE DISTRIBUTION
          DATE. 

      

    

  

		(e) 	 certifies, represents and warrants
        that the undersigned is an “accredited investor” for the purposes
        of Canadian National Instrument NI 45-106 Prospectus and Registration
        Exemptions (“NI 45- 106”) on the basis that the undersigned
        is correctly and in all respects described by the category or categories
        of “accredited investor” for the purposes of NI 45-106 which
        the undersigned has marked below (please check the category or categories
        that apply; please note Definitions and Interpretation Aids
        below). Note that if individual accredited investors wish to purchase
        through wholly-owned holding companies or similar entities, such purchasing
        entities must qualify under Category 13 or Category 20 below (note: all
        monetary references are in Canadian Dollars). 

	 ̈	Category 1 	
      A Canadian financial institution, or a Schedule III bank.
      

	 	  	
      

	 ̈	Category 2 	
      The Business Development Bank of Canada incorporated
      under the Business Development Bank of Canada Act (Canada).
      

	 	  	
      

	 ̈	Category 3 	
      A subsidiary of any person referred to in categories (1)
      or (2), if the person owns all of the voting securities of the subsidiary,
      except the voting securities required by law to be owned by directors of
      that subsidiary. 

	 	  	
      

	 ̈	Category 4 	
      A person registered under the securities legislation of a
      jurisdiction of Canada as an adviser or dealer, other than a person
      registered solely as a limited market dealer under one or both of the
      Securities Act (Ontario) or the Securities Act (Newfoundland and
      Labrador). 

	 	  	
      

	 ̈	Category 5 	 An individual registered or formerly
        registered under the securities legislation of a jurisdiction of Canada
        as a representative of a person referred to in category (4). 

16

	 ̈	Category 6 	 The Government of Canada or a
        jurisdiction of Canada, or any crown corporation, agency or wholly-owned
        entity of the Government of Canada or a jurisdiction of Canada. 

	 	  	 	 

	 ̈	Category 7 	 A municipality, public board
        or commission in Canada and a metropolitan community, school board, the
        Comité de gestion de la taxe scolaire de l’ile de Montréal
        or an intermunicipal management board in Quebec. 

	 	  	 	 

	 ̈	Category 8 	 Any national, federal, state,
        provincial, territorial or municipal government of or 

	 			  

	 ̈	Category 9 	 A pension fund that is regulated
        by either the Office of the Superintendent of Financial Institutions (Canada)
        or a pension commission or similar regulatory authority of a jurisdiction
        of Canada. 

	 	  	 	 

	 ̈	Category 10 	 An individual who, either alone
        or with a spouse, beneficially owns, directly or indirectly, financial
        assets having an aggregate realizable value that before taxes, but net
        of any related liabilities, exceeds $1,000,000. 

	 	  	 	 

	 ̈	Category 11 	 An individual whose net income
        before taxes exceeded $200,000 in each of the 2 most recent calendar years
        or whose net income before taxes combined with that of a spouse exceeded
        $300,000 in each of the 2 most recent calendar years and who, in either
        case, reasonably expects to exceed that net income level in the current
        calendar year. 

	 	  	 	 

	 ̈	Category 12 	 An individual who, either alone
        or with a spouse, has net assets of at least $5,000,000. 

	 	  	 	 

	 ̈	Category 13 	 A person, other than an individual
        or investment fund, that has net assets of at least $5,000,000 as shown
        on its most recently prepared financial statements. 

	 	  	 	 

	 ̈	Category 14 	 An investment fund that distributes
        or has distributed its securities only to: 

	 	  	 	 

	 	  	(i)
	 a person that is or was an accredited investor
        at the time of the distribution, 

	 	  	 	 

			(ii)
	 a person that acquires or acquired securities
        in the circumstances referred to in section 2.10 (Minimum amount investment),
        and 2.19 (Additional investment in investment funds) of NI 45-106, or
      

	 	  	 	 

			(iii)
	 a person described in category 14(i) or (ii)
        that acquires or acquired securities under section 2.18 (Investment fund
        reinvestment) of NI 45-106. 

	 	  	 	 

	 ̈	Category 15 	 An investment fund that distributes
        or has distributed securities under a prospectus in a jurisdiction of
        Canada for which the regulator or, in Quebec, the securities regulatory
        authority, has issued a receipt. 

	 	  	 	 

	 ̈	Category 16 	 A trust company or trust corporation
        registered or authorized to carry on business under the Trust and Loan
        Companies Act (Canada) or under comparable legislation in a jurisdiction
        of Canada or a foreign jurisdiction, acting on behalf of a fully managed
        account managed by the trust company or trust corporation, as the case
        may be. 

	 	  	 	 

	 ̈	Category 17 	 A person acting on behalf of
        a fully managed account managed by that person, if that person 

	 	  	 	 

			(i)
	 is registered or authorized to carry on business
        as an adviser or the equivalent under the securities legislation of a
        jurisdiction of Canada or a foreign jurisdiction, and 

	 	  	 	 

			(ii)
	 in Ontario, is purchasing a security that
        is not a security of an investment fund. 

	 	  	 	 

	 ̈	Category 18 	 A registered charity under the
        Income Tax Act (Canada) that, in regard to the trade, has obtained
        advice from an eligibility adviser or an adviser registered under the
        securities legislation of the jurisdiction of the registered charity to
        give advice on the securities being traded. 

17

	 ̈	Category 19 	 An entity organized in a foreign
        jurisdiction that is analogous to any of the entities referred to in categories
        (1) to (4) or paragraph (9) in form and function. 

	 	  	 	  

	 ̈	Category 20 	 A person in respect of which
        all of the owners of interests, direct, indirect or beneficial, except
        the voting securities required by law to be owned by directors, are persons
        that are accredited investors. 

	 	  	 	  

	 ̈	Category 21 	 An investment fund that is advised
        by a person registered as an adviser or a person that is exempt from registration
        as an adviser. 

	 	  	 	  

	 ̈	Category 22 	 A person that is recognized
        or designated by the securities regulatory authority or, except in Ontario
        and Quebec, the regulator as 

	 	  	 	  

	 	  	(i)	 an accredited investor, or 

	 	  	 	  

			(ii)	 an exempt purchaser in Alberta or British
        Columbia after September 14, 2005. 

The foregoing representations, warranties and covenants are
made by the undersigned with the intent that they be relied upon in determining
the undersigned’s suitability as a purchaser of the securities. The undersigned
undertakes to notify the Company immediately of any change in any
representation, warranty or other information set forth herein which takes place
prior to the closing of the purchase and sale of the securities.

	Date: 		 
	 	  	 
	 	(Print name of Investor) 	 
	 	  	 
	By: 		 
	 	(Signature of Investor or, if
      Investor is not an 	 
	 	individual, duly authorized
      signatory of Investor) 	 
	 	  	 
	 	  	 
	 	(Print name of person signing
      above if different 	 
	 	than the name of the Investor)
	 

Definitions and Interpretation Aids
The following
definitions and interpretation aids relate to certain of the categories of
“accredited investor” for the purposes of NI 45-106 set forth above.

“bank” means a bank named in Schedule I or II
  of the Bank Act (Canada);

 “Canadian financial institution” means:

          (a)      an
association governed by the Cooperative Credit Associations Act (Canada)
or a central cooperative credit society for which an order has been made under
section 473(1) of that Act; or

          (b)      a
bank, loan Newco 1, trust company, trust corporation, insurance company,
treasury branch, credit union, caisse populaire, financial services cooperative,
or a league that, in each case, is authorized by an enactment of Canada or a
jurisdiction of Canada to carry on business in Canada or a jurisdiction of
Canada; 

 

“Canadian securities regulatory
authorities” means the securities commissions and similar regulatory
authorities of each of the provinces and territories of Canada; 

“control person” has the same
meaning as in securities legislation except in Manitoba, Newfoundland and
Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward
Island and Québec where control person means any person that holds or is one of
a combination of persons that holds:

          (a)      a
sufficient number of any of the securities of an issuer so as to affect
materially the control of the issuer, or

18

          (b)      more
  than 20% of the outstanding voting securities of an issuer except where there
  is evidence showing that the holding of those securities does not affect materially
  the control of the issuer; 

“director” means:

          (a)     
a member of the board of directors of a company or an individual who performs
similar functions for a company, and

          (b)      with
respect to a person that is not a company, an individual who performs functions
similar to those of a director of a company; 

“eligibility adviser” means:

          (a)     
a person that is registered as an investment dealer or in an equivalent category
of registration under the securities legislation of the jurisdiction of a
purchaser and authorized to give advice with respect to the type of security
being distributed, and 

          (b)     
in Saskatchewan or Manitoba, also means a lawyer who is a practising member in
good standing with a law society of a jurisdiction of Canada or a public
accountant who is a member in good standing of an institute or association of
chartered accountants, certified general accountants or management accountants
in a jurisdiction of Canada provided that the lawyer or public accountant must
not:

          (i)      have
a professional, business or personal relationship with the issuer, or any of its
directors, executive officers, founders or control persons, and

          (ii)      have
acted for or been retained personally or otherwise as an employee, executive
officer, director, associate or partner of a person or company that has acted
for or been retained by the issuer or any of its directors, executive officers,
founders or control persons within the previous 12 months;

 “EVCC” means an employee venture capital
corporation that does not have a restricted constitution, and is registered
under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C.
1996 c.112, and whose business objective is making multiple investments; 

“executive officer” means, for an issuer, an individual
who is:

          (a)      a
chair, vice-chair or president,

          (b)     
a vice-president in charge of a principal business unit, division or function
including sales, finance or production,

          (c)      an
officer of the issuer or any of its subsidiaries and who performs a
policy-making function in respect of the issuer, or

          (f)     
performing a policy-making function in respect of the issuer;

“financial assets” mean cash; securities; or a contract
of insurance, a deposit or an evidence of a deposit that is not a security for
the purposes of securities legislation; 

“foreign jurisdiction” means a country other than Canada
or a political subdivision of a country other than Canada;

 “founder” means, in respect of an issuer, a person
who:

          (a)      acting
along, in conjunction, or in concert with one or more other persons, directly or
indirectly, takes the initiative in founding, organizing or substantially
reorganizing the business of the issuer; and

          (b)     
at the time of the trade, is actively involved in the business of the
issuer;

“fully managed account” means an account of a client for
which a person makes the investment decisions if that person has full discretion
to trade in securities for the account without requiring the client’s express
consent to a transaction; 

“investment fund” means a mutual fund or a
non-redeemable investment fund, and, for greater certainty in British Columbia,
includes an EVCC and a VCC;

19

“jurisdiction” or “jurisdiction of Canada” means
a province or territory of Canada except when used in the term “foreign
jurisdiction”; 

“local jurisdiction” means the jurisdiction in which the
Canadian securities regulatory authority is situate; 

“non-redeemable investment fund” means an issuer:

	 	(a) 	
      whose primary purpose is to invest money provided by its
      securityholders,

	 	 	 	 
	 	(b) 	
      that does not invest:

	 	 	 	 
	 		(i) 	
      for the purpose of exercising or seeking to exercise
      control of an issuer, other than an issuer that is a mutual fund or a
      non-redeemable investment fund, or

	 	 	 	 
	 		(ii) 	
      for the purpose of being actively involved in the
      management of any issuer in which it invests, other than an issuer that is
      a mutual fund or a non-redeemable investment fund, and

	 	 	 	 
	 	(c) 	
      that is not a mutual fund;

“person” includes an individual; a corporation; a
partnership, trust, fund and an association, syndicate, organization or other
organized group of persons, whether incorporated or not; and an individual or
other person in that person’s capacity as a trustee, executor, administrator or
personal or other legal representative; 

“regulator” means, for the local jurisdiction, the
Executive Director, Director, Administrator, Registrar or Commission, as the
case may be, for the purposes of and as defined under the securities legislation
of the local jurisdiction; 

“related liabilities” means liabilities incurred
  or assumed for the purpose of financing the acquisition or ownership of financial
  assets; or liabilities that are secured by financial assets; 

“Schedule III bank” means an authorized foreign
  bank named in Schedule III of the Bank Act (Canada); 

“securities legislation” means, for the local
jurisdiction, the statute and other instruments issued by the securities
regulatory authority of the local jurisdiction; 

“spouse” means an individual who:

	 	(a) 	
      is married to another individual and is not living
      separate and apart within the meaning of the Divorce Act (Canada),
      from the other individual,

	 	 	 
	 	(b) 	
      is living with another individual in a marriage-like
      relationship, including a marriage-like relationship between individuals
      of the same gender, or

	 	 	 
	 	(c) 	
      in Alberta, is an individual referred to in paragraph (a)
      or (b), or is an adult interdependent person within the meaning of the
      Adult Interdependent Relationships Act
(Alberta);

“subsidiary” means an issuer that is controlled directly
or indirectly by another issuer and includes a subsidiary of that subsidiary;
and 

“VCC” means a venture capital corporation registered
under Part 1 of the Small Business Venture Capital Act (British
Columbia), R.S.B.C. 1996 c.429 whose business objective is making multiple
investments.

In NI 45-106, an issuer is an “affiliate” of another
issuer if:

	 	(a) 	
      one of them is the subsidiary of the other, or

	 	 	 
	 	(b) 	
      each of them is controlled by the same
  person.

For the purposes of the “accredited investor” exemption in NI
45-106, a person (the “first person”) is considered to control another
person (the “second person”) if:

	 	(a) 	
      the first person, directly or indirectly, beneficially
      owns or exercises control or direction over securities of the second
      person carrying votes which, if exercised, would entitle the first person
      to elect a majority of the directors of the second person, unless that
      first person holds the voting securities only to secure an
    obligation,

20

	 	(b) 	
      the second person is a partnership, other than a limited
      partnership, and the first person holds more than 50% of the interests of
      the partnership, or

	 	 	 
	 	(c) 	
      the second person is a limited partnership and the
      general partner of the limited partnership is the first
  person.

21

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