Document:

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                                                                    Exhibit 10.1

                           COLOR SPOT NURSERIES, INC.

                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

                            Dated: November 20, 2001

                                   $55,000,000

                           FLEET CAPITAL CORPORATION,
                                    AS AGENT

                             AND ADDITIONAL LENDERS
                         FROM TIME TO TIME PARTY THERETO

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                                TABLE OF CONTENTS

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SECTION 1.  CREDIT FACILITY.....................................................  1
    1.1.    REVOLVING CREDIT LOANS..............................................  1
SECTION 2.  INTEREST, FEES AND CHARGES..........................................  4
    2.1.    INTEREST............................................................  4
    2.2.    COMPUTATION OF INTEREST AND FEES....................................  5
    2.3.    LIBOR OPTION........................................................  5
    2.4.    CLOSING FEE; ANNUAL AGENCY FEE......................................  6
    2.5.    LETTER OF CREDIT AND LC GUARANTY FEES...............................  6
    2.6.    UNUSED LINE FEE.....................................................  7
    2.7.    CAPITAL ADEQUACY....................................................  7
    2.8.    AUDIT AND APPRAISAL FEES............................................  7
    2.9.    REIMBURSEMENT OF EXPENSES...........................................  7
    2.10.   BANK CHARGES........................................................  8
    2.11.   NO DEDUCTIONS.......................................................  8
SECTION 3.  LOAN ADMINISTRATION.................................................  9
    3.1.    MANNER OF BORROWING REVOLVING CREDIT LOANS..........................  9
    3.2.    PAYMENTS............................................................ 11
    3.3.    MANDATORY PREPAYMENTS............................................... 12
    3.4.    APPLICATION OF PAYMENTS AND COLLECTIONS............................. 13
    3.5.    ALL LOANS TO CONSTITUTE ONE OBLIGATION.............................. 13
    3.6.    LOAN ACCOUNT........................................................ 13
    3.7.    STATEMENTS OF ACCOUNT............................................... 13
    3.8.    SHARING OF PAYMENTS, ETC............................................ 14
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SECTION 4.  TERM AND TERMINATION................................................ 14
    4.1.    TERM OF AGREEMENT................................................... 14
    4.2.    TERMINATION......................................................... 14
SECTION 5.  SECURITY INTERESTS.................................................. 16
    5.1.    SECURITY INTEREST IN COLLATERAL..................................... 16
    5.2.    OTHER COLLATERAL.................................................... 17
    5.3.    LIEN PERFECTION; FURTHER ASSURANCES................................. 18
    5.4.    LIEN ON REALTY...................................................... 18
SECTION 6.  COLLATERAL ADMINISTRATION........................................... 19
    6.1.    GENERAL............................................................. 19
    6.2.    ADMINISTRATION OF ACCOUNTS.......................................... 20
    6.3.    ADMINISTRATION OF INVENTORY......................................... 22
    6.4.    ADMINISTRATION OF EQUIPMENT......................................... 22
    6.5.    PAYMENT OF CHARGES.................................................. 23
    6.6.    APPRAISALS.......................................................... 23
SECTION 7.  REPRESENTATIONS  AND  WARRANTIES.................................... 23
    7.1.    GENERAL REPRESENTATIONS AND WARRANTIES.............................. 23
    7.2.    CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES................. 30
    7.3.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................... 30
SECTION 8.  COVENANTS AND CONTINUING AGREEMENTS................................. 30
    8.1.    AFFIRMATIVE COVENANTS............................................... 30
    8.2.    NEGATIVE COVENANTS.................................................. 32
    8.3.    SPECIFIC FINANCIAL COVENANTS........................................ 36
SECTION 9.  CONDITIONS PRECEDENT................................................ 37
    9.1.    DOCUMENTATION....................................................... 37
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    9.2.    NO DEFAULT.......................................................... 37
    9.3.    OTHER CONDITIONS.................................................... 37
    9.4.    AVAILABILITY........................................................ 37
    9.5.    NO LITIGATION....................................................... 37
    9.6.    AVAILABILITY........................................................ 37
    9.7.    MATERIAL ADVERSE EFFECT............................................. 38
    9.8.    RESTRUCTURING OF PUBLIC BONDS....................................... 38
    9.9.    RESTRUCTURING OF HELLER NOTE........................................ 38
    9.10.   RESTRUCTURING OF SERIES A PREFERRED STOCK........................... 38
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT................... 38
    10.1.   EVENTS OF DEFAULT................................................... 38
    10.2.   ACCELERATION OF THE OBLIGATIONS..................................... 42
    10.3.   OTHER REMEDIES...................................................... 42
    10.4.   SET OFF AND SHARING OF PAYMENTS..................................... 44
    10.5.   REMEDIES CUMULATIVE; NO WAIVER...................................... 44
SECTION 11. THE AGENT........................................................... 45
    11.1.   AUTHORIZATION AND ACTION............................................ 45
    11.2.   AGENT'S RELIANCE, ETC............................................... 45
    11.3.   FLEET AND AFFILIATES................................................ 46
    11.4.   LENDER CREDIT DECISION.............................................. 46
    11.5.   INDEMNIFICATION..................................................... 46
    11.6.   AGENCY PROVISIONS RELATING TO COLLATERAL............................ 47
    11.7.   AGENT'S RIGHT TO PURCHASE COMMITMENTS............................... 48
    11.8.   RIGHT OF SALE, ASSIGNMENT, PARTICIPATIONS........................... 48
    11.9.   AMENDMENT........................................................... 50
    11.10.  RESIGNATION OF AGENT; APPOINTMENT OF SUCCESSOR...................... 51
    11.11.  RIGHTS AND REMEDIES TO BE EXERCISED BY AGENT ONLY................... 51
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SECTION 12. MISCELLANEOUS....................................................... 51
    12.1.   POWER OF ATTORNEY................................................... 51
    12.2.   INDEMNITY........................................................... 52
    12.3.   NO SALE OF INTEREST BY BORROWER..................................... 53
    12.4.   SEVERABILITY........................................................ 53
    12.5.   SUCCESSORS AND ASSIGNS.............................................. 53
    12.6.   CUMULATIVE EFFECT; CONFLICT OF TERMS................................ 53
    12.7.   EXECUTION IN COUNTERPARTS........................................... 53
    12.8.   NOTICE.............................................................. 53
    12.9.   AGENT'S AND LENDERS' CONSENT........................................ 54
    12.10.  CREDIT INQUIRIES.................................................... 55
    12.11.  TIME OF ESSENCE..................................................... 55
    12.12.  ENTIRE AGREEMENT.................................................... 55
    12.13.  INTERPRETATION...................................................... 55
    12.14.  CONFIDENTIALITY..................................................... 55
    12.15.  GOVERNING LAW; CONSENT TO FORUM..................................... 55
    12.16.  WAIVERS BY BORROWER................................................. 56
    12.17.  ILLINOIS COLLATERAL PROTECTION ACT.................................. 57
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                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made this 20th day
of November, 2001, by and among FLEET CAPITAL CORPORATION ("Fleet"), a Rhode
Island corporation with an office at One South Wacker Drive, Suite 1400,
Chicago, Illinois 60606, individually as a Lender and as Agent ("Agent") for
itself and any other financial institution that is or becomes a party hereto
(each such financial institution, including Fleet, is referred to herein as a
"Lender" and collectively as the "Lenders"), each Lender and COLOR SPOT
NURSERIES, INC., a Delaware corporation with its chief executive office and
principal place of business at 3478 Buskirk Avenue, Suite 260, Pleasant Hill,
California 94523 ("Borrower"). Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions. Accounting terms
not otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied. All references to Borrower's months shall be deemed
to mean Borrower's fiscal months. This Agreement amends, supersedes, restates
and replaces in its entirety that certain Loan and Security Agreement dated
October 15, 1998, as amended or otherwise modified through the date hereof, by
and among Agent, Fleet, the other financial institutions party thereto as
Lenders and Borrower (the "Original Loan Agreement") and, with respect to the
Loan Documents, following the execution and delivery of this Agreement all
references to the "Loan Agreement" in the Loan Documents shall be deemed to
refer to this Agreement (as it may be amended, restated, supplemented or
otherwise modified from time to time); PROVIDED, that the "Obligations" governed
by the Original Loan Agreement shall remain outstanding and in full force and
effect; and, PROVIDED FURTHER, that the execution and delivery of this Agreement
shall not constitute a novation of any such Obligations.

                           SECTION 1. CREDIT FACILITY

     Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to $55,000,000
available upon Borrower's request therefor, as follows:

     1.1. REVOLVING CREDIT LOANS.

          1.1.1. LOANS.

          (a)  Each Lender agrees, severally and not jointly, for so long as no
          Default or Event of Default exists, to make Revolving Credit Loans to
          Borrower from time to time from the date hereof through September 15,
          2003, as requested by Borrower in the manner set forth in subsection
          3.1.1, up to a maximum principal amount at any time outstanding equal
          to the lesser of (i) such Lender's Revolving Loan Commitment and (ii)
          the product of such Lender's Revolving Loan Percentage multiplied by
          the Borrowing Base at such time

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          MINUS reserves, if any, and MINUS the LC Amount. Without duplicating
          such matters as are taken into account in determining eligibility,
          Agent shall have the right to establish reserves in such amounts, and
          with respect to such matters, as Agent shall reasonably deem necessary
          or appropriate, against the amount of Revolving Credit Loans which
          Borrower may otherwise request under this subsection 1.1.1, including,
          without limitation, with respect to (i) price adjustments, damages,
          unearned discounts, returned products or other matters for which
          credit memoranda are issued in the ordinary course of Borrower's or
          any of its Subsidiary's businesses; (ii) other sums then due which are
          chargeable against Borrower's Loan Account as Revolving Credit Loans
          under any section or subsection of this Agreement; and (iii) such
          other matters, events, conditions or contingencies as to which Agent,
          in its reasonable credit judgment, determines reserves should be
          established from time to time hereunder. Borrower, Lenders and Agent
          agree that any and all "Revolving Credit Loans", as such term is
          separately defined in the Original Loan Agreement, outstanding on the
          Closing Date shall be deemed to be Revolving Credit Loans advanced by
          the Lenders under this Agreement.

          (b)  Insofar as Borrower may request and Lenders may be willing in
          their sole and absolute discretion to make Revolving Credit Loans to
          Borrower at a time when the unpaid balance of Revolving Credit Loans
          plus the LC Amount exceeds, or would exceed with the making of any
          such Revolving Credit Loan, the Borrowing Base (any such Loan or Loans
          being herein referred to individually as an "Overadvance" and
          collectively as "Overadvances"), Agent shall enter such Overadvances
          as debits in the Loan Account. All Overadvances shall be repaid on
          demand, shall be secured by the Collateral and shall bear interest as
          provided in this Agreement for Revolving Credit Loans generally. Any
          Overadvance to be made by Lenders pursuant to the terms hereof shall
          be made by Lenders ratably in accordance with their Revolving Loan
          Percentages. Overadvances in the aggregate amount of $1,000,000 or
          less may, be made in the sole and absolute discretion of Agent.
          Overadvances in the aggregate amount of more than $1,000,000 but less
          than $2,000,0000 may, be made in the sole and absolute discretion of
          Majority Lenders. Overadvances in an aggregate amount of $2,000,000 or
          more shall require the consent of all Lenders. The foregoing
          notwithstanding, in no event, unless otherwise consented to by all
          Lenders, (x) shall any Overadvances be outstanding for more than 60
          consecutive days, (y) after all outstanding Overadvances have been
          repaid, shall Agent or Lenders make any additional Overadvances unless
          60 days or more have expired since the last date on which any
          Overadvances were outstanding or (z) shall Overadvances be outstanding
          for more than 90 days within any 180 day period. Borrower, Lenders and
          Agent hereby agree that any "Overadvances", as such term is separately
          defined in the Original Loan Agreement, outstanding on the Closing

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          Date shall be repaid in full by the issuance on the Closing Date of a
          Base Rate Revolving Credit Loan, which Borrower hereby acknowledges is
          requested and Lenders hereby agree to fund. Notwithstanding anything
          to the contrary in this subsection 1.1.1(b), in no event shall any
          Overadvances be made to the extent that the same would cause the
          unpaid balance of Revolving Credit Loans plus the LC Amount to exceed
          the aggregate Revolving Loan Commitments.

          1.1.2. SWINGLINE LOANS. In order to reduce the frequency of transfers
     of funds from Lenders to Agent for making Revolving Credit Loans and for so
     long as no Default or Event of Default exists, Agent agrees to make
     Revolving Credit Loans to Borrower when Borrower requests any Revolving
     Credit Loan (such Revolving Credit Loans to be designated as "Swingline
     Loans") provided that the aggregate amount of Swingline Loans outstanding
     at any time will not (i) exceed $3,000,000; (ii) when added to the
     principal amount of Agent's other Revolving Credit Loans then outstanding,
     exceed Agent's Revolving Credit Commitment; or (iii) when added to the
     principal amount of all other Revolving Credit Loans then outstanding,
     exceed the Borrowing Base. Within the foregoing limits, Borrower may
     borrow, repay and reborrow Swingline Loans during the Term. All Swingline
     Loans shall be treated as Revolving Credit Loans for purposes of this
     Agreement, except that all Swingline Loans shall be Base Rate Revolving
     Credit Portions. Borrower, Agent and the Lenders hereby agree that any and
     all "Swingline Loans", as such term is separately defined in the Original
     Loan Agreement, outstanding on the Closing Date shall be deemed to be
     Swingline Loans advanced by the Lenders under this Agreement.

          1.1.3. LETTERS OF CREDIT; LC GUARANTIES. Agent agrees, for so long as
     no Default or Event of Default exists and if requested by Borrower, to (i)
     issue or cause to be issued by Bank or another Affiliate of Agent, on the
     date requested by Borrower, Letters of Credit for the account of Borrower
     or (ii) execute LC Guaranties by which Agent, Bank or another Affiliate of
     Agent, on the date requested by Borrower, shall guaranty the payment or
     performance by Borrower of its reimbursement obligations with respect to
     letters of credit, PROVIDED that the LC Amount shall not exceed $5,000,000
     at any time. No trade Letter of Credit or LC Guaranty may have an
     expiration date that is more than 180 days after the date of issuance
     thereof; no standby Letter of Credit or LC Guaranty may have an expiration
     date that is more than one year after the date of issuance thereof
     (provided, however, that any such Letter of Credit or LC Guaranty may be
     renewable for one or more additional one-year periods); and no Letter of
     Credit or LC Guaranty may have an expiration date (including any renewals)
     that is later than the 60th day prior to the last day of the Term.
     Notwithstanding anything to the contrary contained herein, Borrower,
     Lenders and Agent hereby agree that all LC Obligations shall be satisfied
     by the prompt issuance of one or more Base Rate Revolving Credit Loans,
     which Borrower hereby acknowledges are requested and Lenders hereby agree
     to fund. In

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     the event that Revolving Credit Loans are not, for any reason, promptly
     made to satisfy all then existing LC Obligations, each Lender hereby agrees
     to pay to Agent, on demand, an amount equal to such LC Obligations
     MULTIPLIED BY such Lender's Revolving Loan Percentage, and until so paid,
     such amount shall be secured by the Collateral and shall bear interest and
     be payable at the same rate and in the same manner as Base Rate Revolving
     Credit Portions. Immediately upon the issuance of a Letter of Credit or an
     LC Guaranty under this Agreement, each Lender shall be deemed to have
     irrevocably and unconditionally purchased and received from Agent, without
     recourse or warranty, an undivided interest and participation therein to
     the extent of such Lender's Revolving Loan Commitment.

          1.1.4. USE OF PROCEEDS. The Revolving Credit Loans shall be used
     solely for Borrower's general operating capital needs in a manner
     consistent with the provisions of this Agreement and all applicable laws.

                      SECTION 2. INTEREST, FEES AND CHARGES

     2.1. INTEREST.

          2.1.1. RATES OF INTEREST. Except as provided in the last sentence of
     this subsection 2.1, interest shall accrue on the principal amount of the
     Base Rate Revolving Credit Portion and the Base Rate Seasonal Portion
     outstanding at the end of each day at a fluctuating rate per annum equal to
     the Applicable Margin PLUS the Base Rate. The foregoing rate of interest
     shall increase or decrease by an amount equal to any increase or decrease
     in the Base Rate, effective as of the opening of business on the day that
     any such change in the Base Rate occurs. If Borrower properly exercises the
     LIBOR Option as provided in subsection 2.3, then, except as provided in the
     last sentence of this subsection 2.1, interest shall accrue on the
     principal amount of each LIBOR Revolving Credit Portion and each LIBOR
     Seasonal Portion outstanding at the end of each day at a rate per annum
     equal to the Applicable Margin PLUS the LIBOR Rate applicable to each LIBOR
     Portion for the corresponding LIBOR Period.

          2.1.2. DEFAULT RATE OF INTEREST. Upon and after the occurrence of an
     Event of Default set forth in subsection 10.1.1 or 10.1.3 and during the
     continuation thereof, the Agent at its option may, and upon direction of
     the Majority Lenders shall, cause the principal amount of all Loans to bear
     interest at a rate per annum equal to 2.0% PLUS the interest rate otherwise
     applicable thereto (the "Default Rate").

          2.1.3. MAXIMUM INTEREST. In no event whatsoever shall the aggregate of
     all amounts deemed interest hereunder and charged or collected pursuant to
     the terms of this Agreement exceed the highest rate permissible under any
     law which a court of competent jurisdiction shall, in a final
     determination, deem applicable hereto. If any

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     provisions of this Agreement, are in contravention of any such law, such
     provisions shall be deemed amended to conform thereto.

     2.2. COMPUTATION OF INTEREST AND FEES.

     Interest, Letter of Credit and LC Guaranty fees and unused line fees
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Agent shall be deemed applied by
Agent on account of the Obligations (subject to final payment of such items) 1
Business Day after receipt by Agent of such items in Agent's account located in
Chicago, Illinois.

     2.3. LIBOR OPTION.

               (i)  Upon the conditions that: (1) Agent shall have received a
          LIBOR Request from Borrower at least 3 Business Days prior to the
          first day of the LIBOR Period requested, (2) there shall have occurred
          no change in applicable law which would make it unlawful for any
          Lender to obtain deposits of U.S. dollars in the London interbank
          foreign currency deposits market, (3) as of the date of the LIBOR
          Request and the first day of the LIBOR Period, there shall exist no
          Default or Event of Default, (4) Agent is able to determine the LIBOR
          Rate in respect of the requested LIBOR Period (5) each Lender is able
          to obtain deposits of U.S. dollars in the London interbank foreign
          currency deposits market in the applicable amounts and for the
          requested LIBOR Period, and (6) as of the first date of the LIBOR
          Period, there are no more than 4 outstanding LIBOR Portions including
          the LIBOR Portion being requested; then interest on the LIBOR Portion
          requested during the LIBOR Period requested will be based on the
          applicable LIBOR Rate.

               (ii) Each LIBOR Request shall be irrevocable and binding on
          Borrower. Borrower shall indemnify each Lender for any loss, penalty
          or expense incurred by such Lender due to failure on the part of
          Borrower to fulfill, on or before the date specified in any LIBOR
          Request, the applicable conditions set forth in this Agreement or due
          to the prepayment of the applicable LIBOR Portion prior to the last
          day of the applicable LIBOR Period, including, without limitation, any
          loss or expense incurred by reason of the liquidation or redeployment
          of deposits or other funds acquired by any Lender to fund or maintain
          the requested LIBOR Portion.

               (iii) If any Legal Requirement shall (1) make it unlawful for any
          Lender to fund through the purchase of U.S. dollar deposits any LIBOR
          Portion or otherwise give effect to its obligations as contemplated
          under this subsection 2.3, or (2) shall impose on any Lender any costs
          based on or measured by the excess above a specified level of the
          amount of a category of

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          deposits or other liabilities of such Lender which includes deposits
          by reference to which the LIBOR Rate is determined as provided herein
          or a category of extensions of credit or other assets of such Lender
          which includes any LIBOR Portion or (3) shall impose on any Lender any
          restrictions on the amount of such a category of liabilities or assets
          which such Lender may hold, then, in each such case, such Lender may,
          by notice thereof to Borrower, terminate the LIBOR Option. Any LIBOR
          Portion subject thereto shall immediately bear interest thereafter at
          the rate and in the manner provided for Base Rate Portions pursuant to
          subsection 2.1.1. Borrower shall indemnify each Lender against any
          loss, penalty or expense incurred by such Lender due to liquidation or
          redeployment of deposits or other funds acquired by such Lender to
          fund or maintain any LIBOR Portion that is terminated hereunder.

               (iv) Subject to subsection 11.8.4, each Lender shall receive
          payments of amounts of principal of and interest with respect to the
          LIBOR Portions free and clear of, and without deduction for, any
          Taxes. If (1) any Lender shall be subject to any Tax in respect of any
          LIBOR Portion or any part thereof or, (2) Borrower shall be required
          to withhold or deduct any Tax from any such amount, the LIBOR Rate
          applicable to such LIBOR Portion shall be adjusted by Agent on behalf
          of the affected Lender to reflect all additional costs incurred by
          such Lender in connection with the payment by such Lender or the
          withholding by Borrower of such Tax and Borrower shall provide Agent
          and such Lender with a statement detailing the amount of any such Tax
          actually paid by Borrower. Determination by Agent on behalf of a
          Lender of the amount of such costs shall, in the absence of manifest
          error, be conclusive. If after any such adjustment any part of any Tax
          paid by any Lender is subsequently recovered by such Lender, such
          Lender shall reimburse Borrower to the extent of the amount so
          recovered. A certificate of an officer of such Lender setting forth
          the amount of such recovery and the basis therefor shall, in the
          absence of manifest error, be conclusive.

     2.4. CLOSING FEE; ANNUAL AGENCY FEE.

     Borrower shall pay the fees set forth in the fee letter of even date
herewith between Borrower and Agent in accordance with the terms of such fee
letter.

     2.5. LETTER OF CREDIT AND LC GUARANTY FEES.

     Borrower shall pay to Agent, for the ratable benefit of Lenders, a per
annum fee equal to the Applicable Margin then in effect for LIBOR Revolving
Credit Portions MULTIPLIED BY the aggregate face amount of all Letters of Credit
and LC Guaranties outstanding from time to time during the term of this
Agreement, which fees shall be payable monthly in arrears on the first day of
each month, PLUS all normal and customary charges associated with the issuance
of such Letters of Credit and LC Guaranties, which fees and charges shall be
deemed fully earned and

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shall be due and payable upon issuance of each such Letter of Credit or LC
Guaranty and shall not be subject to rebate or proration upon the termination of
this Agreement for any reason.

     2.6. UNUSED LINE FEE.

     Borrower shall pay to Agent, for the ratable benefit of Lenders, a fee
equal to .375% per annum of the average daily amount by which $55,000,000
exceeds the sum of (i) the outstanding principal balance of the Revolving Credit
Loans PLUS (ii) the LC Amount, MINUS all Swingline Loans. The unused line fee
shall be payable monthly in arrears on the first day of each calendar month
hereafter.

     2.7. CAPITAL ADEQUACY.

     If any Lender shall have determined that the adoption after the date of
this Agreement of any law, rule or regulation regarding capital adequacy, or any
change after the date of this Agreement therein or in the interpretation or
application thereof or compliance by any Lender with any request or directive
after the date of this Agreement regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority, does
or shall have the effect of reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender, in its sole discretion, to be material, then
from time to time, after submission by such Lender to Agent and Borrower of a
written demand therefor, Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction. A
certificate of such Lender claiming entitlement to payment as set forth above
shall be conclusive in the absence of manifest error. Such certificate shall set
forth the nature of the occurrence giving rise to such payment, the additional
amount or amounts to be paid to such Lender, and the method by which such
amounts were determined. In determining such amount, such Lender may use any
reasonable averaging and attribution method.

     2.8. AUDIT AND APPRAISAL FEES.

     Borrower shall pay to Agent out-of-pocket fees in connection with audits
and appraisals conducted by Agent's loan analysts of Borrower's books and
records and such other matters as Agent shall deem appropriate; PROVIDED, that
so long as no Default or Event of Default has occurred, Borrower shall only be
required to pay for four such audits and appraisals in any fiscal year of
Borrower. Audit fees shall be payable on the first day of the month following
the date of issuance by Agent of a request for payment thereof to Borrower.

     2.9. REIMBURSEMENT OF EXPENSES.

     All reasonable fees and expenses of Agent and each Lender incurred in
connection with the review and negotiation of this Agreement shall be charged to
Borrower. In addition to, and in no way in limitation of, the foregoing, if, (a)
at any time or times regardless of whether or

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not an Event of Default then exists, Agent, or (b) at any time or times that an
Event of Default exists, any Lender, incurs legal or accounting expenses or any
other costs or out-of-pocket expenses in connection with (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents, or any
sale or attempted sale of any interest herein to a Participating Lender or an
assignee; (ii) the administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby; (iii) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrower's
affairs; (iv) any attempt to enforce any rights of Agent, any Lender or any
Participating Lender against Borrower or any other Person which may be obligated
to any Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (v) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses shall be charged to
Borrower. Borrower shall also reimburse Agent and any Lender for expenses
incurred by Agent or such Lender in its administration of the Collateral to the
extent and in the manner provided in Section 6. All amounts chargeable to
Borrower under this subsection 2.9 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Agent for distribution to the
applicable Lender, and shall bear interest from the date such demand is made
until paid in full at the rate applicable to Base Rate Revolving Credit Portions
from time to time. In addition, if Borrower fails to pay any amount owing under
this subsection 2.9 when due, Agent may satisfy such amount by the prompt
issuance of one or more Base Rate Revolving Credit Loans, which Borrower hereby
acknowledges are requested in such event and Lenders hereby agree to fund in
such event.

     2.10. BANK CHARGES.

     Borrower shall pay to Agent, on demand, for distribution to the applicable
Lenders any and all fees, costs or expenses which any Lender pays to a bank or
other similar institution (including, without limitation, any fees paid by any
Lender to any other Lender) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by any Lender
of proceeds of loans made by any Lender to Borrower pursuant to this Agreement
and (ii) the depositing for collection, by any Lender, of any check or item of
payment received or delivered to such Lender on account of the Obligations.

     2.11. NO DEDUCTIONS.

     Any and all payments or reimbursements made hereunder shall be made free
and clear of and without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto;
excluding, however, the following: taxes imposed on the income of a Lender by
the jurisdiction of such Lender's applicable lending office or any political
subdivision thereof and franchise taxes imposed by the jurisdiction under the
laws of which Lender is organized or doing business or any political subdivision
thereof (all such taxes, levies, imposts, deductions, charges or withholdings
and all liabilities with respect thereto, herein "Tax Liabilities"). If Borrower

                                       8
<Page>

shall be required by law to deduct any such Tax Liabilities from or in respect
of any sum payable hereunder to any Lender, then the sum payable hereunder shall
be increased as may be necessary so that, after all required deductions are
made, such Lender receives an amount equal to the sum it would have received had
no such deductions been made.

                         SECTION 3. LOAN ADMINISTRATION.

     3.1. MANNER OF BORROWING REVOLVING CREDIT LOANS.

     Borrowings under the credit facility established pursuant to Section 1
hereof shall be as follows:

          3.1.1. LOAN REQUESTS. A request for a Revolving Credit Loan shall be
     made, or shall be deemed to be made, in the following manner: (i) Borrower
     shall give Agent notice of its intention to borrow, in which notice
     Borrower shall specify the amount of the proposed borrowing (which shall
     not be less than $100,000 in the case of Base Rate Portions which are not
     Swingline Loans (with respect to which there shall be no minimum borrowing
     amount)) and the proposed borrowing date, no later than 12:00 noon,
     Chicago, Illinois, time on the proposed borrowing date (or in accordance
     with subsection 2.3 hereof in the case of a request for a LIBOR Portion),
     PROVIDED, however, that no such request may be made at a time when there
     exists a Default or an Event of Default; and (ii) the becoming due of any
     amount required to be paid under this Agreement, whether as interest or for
     any other Obligation, shall be deemed irrevocably to be a request for a
     Revolving Credit Loan on the due date in the amount required to pay such
     interest or other Obligation.

          3.1.2. DISBURSEMENT. Borrower hereby irrevocably authorizes Agent to
     disburse the proceeds of each Revolving Credit Loan requested, or deemed to
     be requested, pursuant to this subsection 3.1.2 as follows: (i) the
     proceeds of each Revolving Credit Loan requested under subsection 3.1.1(i)
     shall be disbursed by Agent in lawful money of the United States of America
     in immediately available funds by wire transfer to such bank account as may
     be agreed upon by Borrower and Agent from time to time or elsewhere if
     pursuant to a written direction from Borrower; and (ii) the proceeds of
     each Revolving Credit Loan requested under subsection 3.1.1(ii) shall be
     disbursed by Agent by way of direct payment of the relevant interest or
     other Obligation.

          3.1.3. PAYMENT BY LENDERS. Agent shall give to each Lender prompt
     written notice by facsimile, telex or cable of the receipt by Agent from
     Borrower of any request for a Revolving Credit Loan. Each such notice shall
     specify the requested date and amount of such Revolving Credit Loan,
     whether such Revolving Credit Loan shall be subject to the LIBOR Option,
     and the amount of each Lender's advance thereunder (in accordance with its
     applicable Revolving Loan Percentage). Each Lender shall, not later than
     1:00 p.m. (Chicago time) on such requested date, wire to a bank designated
     by

                                       9
<Page>

     Agent the amount of that Lender's Revolving Loan Percentage of the
     requested Revolving Credit Loan. The failure of any Lender to make the
     Revolving Credit Loans to be made by it shall not release any other Lender
     of its obligations hereunder to make its Revolving Credit Loan. Neither
     Agent nor any other Lender shall be responsible for the failure of any
     other Lender to make the Revolving Credit Loan to be made by such other
     Lender. The foregoing notwithstanding, Agent in its sole discretion, may
     from its own funds, make a Revolving Credit Loan on behalf of any Lender
     hereto (unless such Lender is not required to make such Revolving Credit
     Loan pursuant to the terms of Section 9 and, on the basis of the same, such
     Lender has notified Agent prior to the time specified above that such
     Lender does not intend to make its Revolving Loan Percentage of the
     requested Revolving Credit Loan). In such event, the Lender on behalf of
     whom Agent made the Revolving Credit Loan shall reimburse Agent for the
     amount of such Revolving Credit Loan made on its behalf, on a weekly (or
     more frequent, as determined by Agent in its sole discretion) basis. The
     entire amount of interest attributable to such Revolving Credit Loan for
     the period from the date on which such Revolving Credit Loan was made by
     Agent on such Lender's behalf until Agent is reimbursed by such Lender,
     shall be paid to Agent for its own account.

          3.1.4. AUTHORIZATION. Borrower hereby irrevocably authorizes Agent to
     advance to Borrower, and to charge to Borrower's Loan Account hereunder as
     a Revolving Credit Loan, a sum sufficient to pay all interest accrued on
     the Obligations during the immediately preceding month and to pay all
     costs, fees and expenses at any time owed by Borrower to Agent or any
     Lender hereunder.

          3.1.5. LETTER OF CREDIT AND LC GUARANTY REQUESTS. A request for a
     Letter of Credit or LC Guaranty shall be made in the following manner:
     Borrower may give Agent and Bank a written notice of its request for the
     issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m.
     Chicago, Illinois time, one Business Day before the proposed issuance date
     thereof, in which notice Borrower shall specify the proposed issuer and
     issuance date; PROVIDED, that no such request may be made at a time when
     there exists a Default or Event of Default. Such request shall be
     accompanied by an executed application and reimbursement agreement in form
     and substance satisfactory to Agent and the Person being asked to issue the
     Letter of Credit or LC Guaranty, as well as any required corporate
     resolutions.

          3.1.6. METHOD OF MAKING REQUESTS. As an accommodation to Borrower,
     unless a Default or an Event of Default is then in existence, (i) Agent
     shall permit telephonic requests for Revolving Credit Loans to Agent, and
     (ii) Agent and Bank may, in their discretion, permit electronic transmittal
     of requests for Letters of Credit and LC Guaranties to them; and (iii)
     Agent may, in Agent's discretion, permit electronic transmittal of
     instructions, authorizations, agreements or reports to Agent. Unless
     Borrower specifically directs Agent in writing not to accept or act upon
     telephonic or electronic communications from Borrower, Agent shall have no
     liability to Borrower for any loss or damage suffered by Borrower as a
     result of Agent's honoring of any

                                       10
<Page>

     requests, execution of any instructions, authorizations or agreements or
     reliance on any reports communicated to it telephonically or electronically
     and purporting to have been sent to Agent by Borrower and Agent shall have
     no duty to verify the origin of any such communication or the authority of
     the person sending it. Each telephonic request for a Revolving Credit Loan
     accepted by Agent hereunder shall be promptly followed by a written
     confirmation of such request from Borrower to Agent.

     3.2. PAYMENTS.

     Except where evidenced by notes or other instruments issued or made by
Borrower to any Lender and accepted by such Lender specifically containing
payment provisions which are in conflict with this subsection 3.2 (in which
event the conflicting provisions of said notes or other instruments shall govern
and control), the Obligations shall be payable as follows:

          3.2.1. PRINCIPAL. Principal payable on account of Revolving Credit
     Loans shall be payable by Borrower to Agent, for the ratable benefit of
     Lenders, immediately upon the earliest of (i) the receipt by Agent or
     Borrower of any proceeds of any of the Collateral, to the extent of said
     proceeds, except as provided in subsection 6.4.2 and except that, so long
     as no Default or Event of Default exists, if all Loans outstanding at the
     time of receipt by Borrower of any such proceeds are LIBOR Portions, then
     Borrower may direct that such proceeds be held by Agent in either a
     non-interest bearing cash collateral account maintained by Agent or in an
     investment that is not a Restricted Investment that is in the possession of
     Agent to be applied to the payment of principal on the last day of the
     LIBOR Period applicable to each LIBOR Portion in the order of maturity;
     (ii) the occurrence of an Event of Default in consequence of which Agent
     elects to accelerate the maturity and payment of the Obligations or (iii)
     the expiration of the term or termination of this Agreement pursuant to
     Section 4; PROVIDED, HOWEVER, that if an Overadvance shall exist at any
     time, Borrower shall, on demand, repay the Overadvance.

          3.2.2. INTEREST.

               (i)  BASE RATE PORTION. Interest accrued on Base Rate Portions
          shall be due on the earliest of (1) the first calendar day of each
          month (for the immediately preceding month), computed through the last
          calendar day of the preceding month, (2) the occurrence of an Event of
          Default in consequence of which Agent elects to accelerate the
          maturity and payment of the Obligations or (3) the expiration of the
          term or termination of this Agreement pursuant to Section 4.

               (ii) LIBOR PORTION. Interest accrued on each LIBOR Portion shall
          be due and payable on each LIBOR Interest Payment Date and on the
          earlier of (1) the occurrence of an Event of Default in consequence of
          which Agent

                                       11
<Page>

          elects to accelerate the maturity and payment of the Obligations or
          (2) the expiration of the term or termination of this Agreement
          pursuant to Section 4.

          3.2.3. COSTS, FEES AND CHARGES. Costs, fees and charges payable
     pursuant to this Agreement shall be payable by Borrower as and when
     provided in Section 2, to Agent or to any other Person designated by Agent
     in writing.

          3.2.4. OTHER OBLIGATIONS. The balance of the Obligations requiring the
     payment of money, if any, shall be payable by Borrower to Agent as and when
     provided in this Agreement, the Other Agreements or the Security Documents,
     or on demand, whichever is later.

     3.3. MANDATORY PREPAYMENTS.

          3.3.1. MANDATORY PREPAYMENT FROM PROCEEDS OF SALE, LOSS, DESTRUCTION
     OR CONDEMNATION OF COLLATERAL. Except as otherwise provided in subsection
     6.4.2, if Borrower or any of its Subsidiaries sells any of the Collateral
     (other than Inventory sold in the ordinary course of business), or if any
     of the Collateral is lost or destroyed or taken by condemnation, Borrower
     shall pay to Agent, for the ratable benefit of Lenders, as and when
     received by Borrower or such Subsidiary a sum equal to the proceeds
     (including insurance payments) received by Borrower or such Subsidiary from
     such sale, loss, destruction or condemnation. To the extent that the
     Collateral sold, lost, destroyed or condemned consists of Equipment or real
     Property, (a) the aggregate Revolving Loan Commitments and the amount set
     forth in clause (3) of the definition of Borrowing Base set forth herein
     shall be reduced by an amount equal to the sum of the proceeds of such
     Equipment or Real Property and (b) the applicable prepayment shall be
     applied first, to reduce the outstanding principal balance of any Seasonal
     Advance and second, to reduce the outstanding principal balance of the
     other Revolving Credit Loans. To the extent that the Collateral sold, lost,
     destroyed or condemned consists of Accounts, Inventory or other Property
     other than Equipment or real Property, the applicable prepayment shall be
     applied first, to reduce the outstanding principal balance of any Seasonal
     Advance and second, to reduce the outstanding principal balance of the
     other Revolving Credit Loans. Borrower shall be responsible for any LIBOR
     breakage fees incurred by any Lender as a result of any prepayments made
     pursuant to this subsection 3.3; provided, however, that, so long as no
     Default or Event of Default exists, if all Loans outstanding at the time of
     receipt by Borrower of any such proceeds are LIBOR Portions, then Borrower
     may direct that such proceeds be held by Agent in either a non-interest
     bearing cash collateral account maintained by Agent or in an investment
     that is not a Restricted Investment that is in the possession of Agent to
     be applied to the payment of principal on the last day of the LIBOR Period
     applicable to each LIBOR Portion in the order of maturity.

          3.3.2. PROCEEDS FROM ISSUANCE OF ADDITIONAL DEBT OR EQUITY.
     Immediately upon the receipt by Borrower of the proceeds of the issuance of
     any debt or equity

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<Page>

     securities subsequent to the date hereof (other than the receipt by
     Borrower of payment of the exercise price for options, warrants or other
     convertible securities), Borrower shall pay to Agent for the ratable
     benefit of Lenders, when and as received by Borrower and as a mandatory
     prepayment of the Loans, a sum equal to twenty-five percent (25%) of the
     net cash proceeds of the issuance of such debt or equity securities (net of
     underwriting discounts and commissions and other reasonable costs
     associated therewith). Any such prepayment shall be applied to the Loans in
     the manner set forth in third sentence of subsection 3.3.1.

     3.4. APPLICATION OF PAYMENTS AND COLLECTIONS.

     All items of payment received by Agent by 1:00 p.m., Chicago, Illinois,
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 1:00 p.m., Chicago, Illinois, time, on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Agent from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that, subject to
subsection 3.2.1(i), Agent shall have the continuing exclusive right to apply
and reapply any and all such payments and collections received at any time or
times hereafter by Agent or its agent against the Obligations, in such manner as
Agent may deem advisable, notwithstanding any entry by Agent or any Lender upon
any of its books and records. If as the result of collections of Accounts as
authorized by subsection 6.2.6 a credit balance exists in the Loan Account, such
credit balance shall not accrue interest in favor of Borrower, but shall be
available to Borrower at any time or times for so long as no Default or Event of
Default exists.

     3.5. ALL LOANS TO CONSTITUTE ONE OBLIGATION.

     The Loans shall constitute one general Obligation of Borrower, and shall be
secured by Agent's Lien, for the ratable benefit of Lenders, upon all of the
Collateral.

     3.6. LOAN ACCOUNT.

     Agent shall enter all Loans as debits to a loan account (the "Loan
Account") and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Agent for the ratable benefit of Lenders, and may record therein, in
accordance with customary accounting practice, other debits and credits,
including interest and all charges and expenses properly chargeable to Borrower.

     3.7. STATEMENTS OF ACCOUNT.

     Agent will account to Borrower monthly with a statement of Loans, charges
and payments made pursuant to this Agreement, and such account rendered by Agent
shall, absent manifest error, be deemed final, binding and conclusive upon
Borrower unless Agent is notified by Borrower in writing to the contrary within
30 days of the date each accounting is mailed to

                                       13
<Page>

Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.

     3.8. SHARING OF PAYMENTS, ETC.

     If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of any
Loan made by it in excess of its ratable share of payments on account of Loans
made by all Lenders, such Lender shall forthwith purchase from each other Lender
such participation in such Loan as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each other Lender; PROVIDED,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each Lender shall be
rescinded and such Lender shall repay to the purchasing Lender the purchase
price to the extent of such recovery, together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of such
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this subsection 3.8 may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation. Notwithstanding anything to the contrary
contained herein, all purchases and repayments to be made under this subsection
3.8 shall be made through Agent.

                         SECTION 4. TERM AND TERMINATION

     4.1. TERM OF AGREEMENT.

     Subject to the right of Lenders to cease making Loans to Borrower upon or
after the occurrence of any Default or Event of Default, this Agreement shall be
in effect for the period from the date of this Agreement through and including
September 15, 2003 (the "Term"), unless earlier terminated as provided in
subsection 4.2 hereof.

     4.2. TERMINATION.

          4.2.1. TERMINATION BY AGENT. Agent may, and at the request of Majority
     Lenders shall, terminate this Agreement without notice upon or after the
     occurrence and during the continuance of an Event of Default.

          4.2.2. TERMINATION BY BORROWER. Upon at least 90 days' prior written
     notice to Agent, Borrower may, at its option, terminate this Agreement
     (PROVIDED, that prior written notice of 3 days shall be required if
     Borrower terminates this Agreement in connection with the sale of
     substantially all of its and its Subsidiaries' assets or all of its capital
     stock); PROVIDED, HOWEVER, no such termination shall be effective until
     Borrower has paid all of the Obligations (except for contingent
     indemnification

                                       14
<Page>

     obligations under subsection 12.2 or under the indemnification provisions
     of the Security Documents) in immediately available funds and all Letters
     of Credit and LC Guaranties have been cash collateralized to Agent's
     satisfaction or Agent has received an irrevocable letter of credit in form
     and substance, and issued by a bank, satisfactory to Agent in its sole
     discretion pursuant to which Agent is entitled to recover the maximum
     amount at any time payable under each outstanding Letter of Credit or LC
     Guaranty, plus all costs and fees then or thereafter payable with respect
     to such Letter of Credit or LC Guaranty under the terms of this Agreement.
     Any notice of termination given by Borrower shall be irrevocable unless
     Agent otherwise agrees in writing, and no Lender shall have any obligation
     to make any Loans, nor shall Agent be required to issue or procure any
     Letters of Credit or LC Guaranties, on or after the termination date stated
     in such notice. Borrower may elect to terminate this Agreement in its
     entirety only. No section or subsection of this Agreement or type of Loan
     available hereunder may be terminated singly.

          4.2.3. TERMINATION CHARGES. At the effective date of termination of
     this Agreement for any reason prior to the last day of the Term (except for
     termination pursuant to subsection 4.2.1), Borrower shall pay to Agent, for
     the ratable benefit of Lenders (in addition to the then outstanding
     principal, accrued interest and other charges owing under the terms of this
     Agreement and any of the other Loan Documents), as liquidated damages for
     the loss of the bargain and not as a penalty, an amount equal to 1.0% of
     the Total Credit Facility.

          4.2.4. EFFECT OF TERMINATION. All of the Obligations (except for
     contingent indemnification obligations under subsection 12.2 or under the
     indemnification provisions of the Security Documents) shall be immediately
     due and payable upon the termination date stated in any notice of
     termination of this Agreement. All undertakings, agreements, covenants,
     warranties and representations of Borrower contained in the Loan Documents
     shall survive any such termination and Agent shall retain its Liens in the
     Collateral and Agent and each Lender shall retain all of their respective
     rights and remedies under the Loan Documents notwithstanding such
     termination until all Obligations (including without limitation all
     Obligations under subsection 2.3(ii) resulting from such termination, but
     not including contingent indemnification obligations under subsection 12.2
     or under the indemnification provisions of the Security Documents) have
     been discharged or paid, in full, in immediately available funds, together
     with the applicable termination charge, if any. Notwithstanding the payment
     in full of the Obligations, Agent shall not be required to terminate its
     security interests in the Collateral unless, with respect to any loss or
     damage Agent may incur as a result of dishonored checks or other items of
     payment received by Agent from Borrower or any Account Debtor and applied
     to the Obligations, Agent shall, at its option, (i) have received a written
     agreement, executed by Borrower and by any Person whose loans or other
     advances to Borrower are used in whole or in part to satisfy the
     Obligations, indemnifying Agent and each such Lender from any such loss or
     damage; or (ii) have retained such cash collateral for

                                       15
<Page>

     such period of time as Agent, in its reasonable discretion, may deem
     necessary to protect Agent and each Lender from any such loss or damage.

                          SECTION 5. SECURITY INTERESTS

     5.1. SECURITY INTEREST IN COLLATERAL.

     To secure the prompt payment and performance to Agent and each Lender of
the Obligations, Borrower hereby grants to Agent for the benefit of itself and
each Lender (and hereby reaffirms its prior grant, pursuant to the terms of the
Original Loan Agreement, to Agent and each Lender) a continuing Lien upon all of
Borrower's assets, including all of the following Property and interests in
Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:

          (i)     Accounts;

          (ii)    Certificated Securities;

          (iii)   Chattel Paper;

          (iv)    Computer Hardware and Software and all rights with respect
     thereto, including, any and all licenses, options, warranties, service
     contracts, program services, test rights, maintenance rights, support
     rights, improvement rights, renewal rights and indemnifications, and any
     substitutions, replacements, additions or model conversions of any of the
     foregoing;

          (v)     Contract Rights;

          (vi)    Deposit Accounts;

          (vii)   Documents;

          (viii)  Equipment;

          (ix)    Financial Assets;

          (x)     Fixtures;

          (xi)    General Intangibles, including Payment Intangibles and
     Software;

          (xii)   Goods (including all of its Equipment, Fixtures and
     Inventory), and all accessions, additions, attachments, improvements,
     substitutions and replacements thereto and therefor;

          (xiii)  Instruments;

                                       16
<Page>

          (xiv)   Intellectual Property;

          (xv)    Inventory;

          (xvi)   Investment Property;

          (xvii)  money (of every jurisdiction whatsoever);

          (xviii) Letter-of-Credit Rights;

          (xix)   Payment Intangibles;

          (xx)    Security Entitlements;

          (xxi)   Software;

          (xxii)  Supporting Obligations;

          (xxiii) Uncertificated Securities; and

          (xxiv)  to the extent not included in the foregoing, all other
     personal property of any kind or description;

together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any license,
permit, lease or contract expressly prohibit (which prohibition is enforceable
under applicable law) any assignment thereof, and the grant of a security
interest therein, Agent will not enforce its security interest in Borrower's
rights under such license, permit, lease or contract (other than in respect of
the Proceeds thereof) for so long as such prohibition continues, it being
understood that upon request of Agent, Borrower will in good faith use
reasonable efforts to obtain consent for the creation of a security interest in
favor of Agent (and to Agent's enforcement of such security interest) in Agent's
rights under such license, permit, lease or contract.

     It is the intention of the parties to this Agreement that the security
interests granted hereby are a continuation and reaffirmation of the security
interests granted under the Original Loan Agreement.

     5.2. OTHER COLLATERAL.

          5.2.1. COMMERCIAL TORT CLAIMS. Borrower shall promptly notify Agent in
     writing upon incurring or otherwise obtaining a Commercial Tort Claim after
     the Closing Date against any third party and, upon request of Agent,
     promptly enter into an amendment to this Agreement and do such other acts
     or things deemed appropriate

                                       17
<Page>

     by Agent to give Agent a security interest in any such Commercial Tort
     Claim. Borrower represents and warrants that as of the date of this
     Agreement, to its knowledge, it does not possess any Commercial Tort
     Claims.

          5.2.2. OTHER COLLATERAL. Borrower shall promptly notify Agent in
     writing upon acquiring or otherwise obtaining any Collateral after the date
     hereof consisting of Deposit Accounts, Investment Property,
     Letter-of-Credit Rights or Electronic Chattel Paper and, upon the request
     of Agent, promptly execute such other documents, and do such other acts or
     things deemed appropriate by Agent to deliver to Agent control with respect
     to such Collateral; promptly notify Agent in writing upon acquiring or
     otherwise obtaining any Collateral after the date hereof consisting of
     Documents or Instruments and, upon the request of Agent, will promptly
     execute such other documents, and do such other acts or things deemed
     appropriate by Agent to deliver to Agent possession of such Documents which
     are negotiable and Instruments, and, with respect to nonnegotiable
     Documents, to have such nonnegotiable Documents issued in the name of
     Agent; and with respect to Collateral in the possession of a third party,
     other than Certificated Securities and Goods covered by a Document, obtain
     an acknowledgement from the third party that it is holding the Collateral
     for the benefit of Agent.

     5.3. LIEN PERFECTION; FURTHER ASSURANCES.

     Borrower shall execute such UCC-1 financing statements as are required by
the UCC and such other instruments, assignments or documents as are necessary to
perfect Agent's Lien upon any of the Collateral and shall take such other action
as may be required to perfect or to continue the perfection of Agent's Lien upon
the Collateral. Unless prohibited by applicable law, Borrower hereby authorizes
Agent to execute and file any such financing statement, including, without
limitation, financing statements that indicate the Collateral (i) as all assets
of Borrower or words of similar effect, or (ii) as being of an equal or lesser
scope, or with greater or lesser detail, than as set forth in subsection 5.1, on
Borrower's behalf. Borrower also hereby ratifies its authorization for Agent to
have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
At Agent's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Agent any and all documents, instruments and agreements
deemed necessary by Agent or Majority Lenders, to give effect to or carry out
the terms or intent of the Loan Documents.

     5.4. LIEN ON REALTY.

     The due and punctual payment and performance of the Obligations shall also
be secured by the Lien created by Mortgages upon all real Property of Borrower
now or hereafter owned. Unless already executed, each Mortgage shall be executed
by Borrower in favor of Agent. Unless already recorded, each Mortgage shall be
duly recorded, at Borrower's expense, in each

                                       18
<Page>

office where such recording is required to constitute a fully perfected first
Lien on the real Property covered thereby. Unless already delivered, Borrower
shall deliver to Agent, at Borrower's expense, mortgagee title insurance
policies issued by a title insurance company satisfactory to Agent, which
policies shall be in form and substance satisfactory to Agent and shall insure a
valid first Lien in favor of Agent, for the benefit of itself and the Lenders,
on the Property covered by each Mortgage, subject only to those exceptions
acceptable to Agent and its counsel. Borrower shall deliver to Agent such other
documents, including, without limitation, as-built survey prints of the real
Property, as Agent and its counsel (or Majority Lenders) may request relating to
the real Property subject to the Mortgages.

                      SECTION 6. COLLATERAL ADMINISTRATION

     6.1. GENERAL.

          6.1.1. LOCATION OF COLLATERAL. All Collateral, other than Inventory in
     transit and motor vehicles, will at all times be kept by Borrower and its
     Subsidiaries at one or more of the business locations set forth in EXHIBIT
     6.1.1 and such additional business locations as to which Borrower has given
     Agent 30 days advance written notice and with respect to which Borrower has
     obtained mortgages, leasehold mortgages or landlords' waivers satisfactory
     to Agent and Majority Lenders and shall not, without the prior written
     approval of Agent, be moved therefrom (other than to another location on
     EXHIBIT 6.1.1) except, prior to an Event of Default and Agent's
     acceleration of the maturity of the Obligations in consequence thereof, for
     (i) sales of Inventory in the ordinary course of business; and (ii)
     removals in connection with dispositions of Equipment that are authorized
     by subsection 6.4.2.

          6.1.2. INSURANCE OF COLLATERAL. Borrower shall maintain and pay for
     insurance upon all Collateral wherever located and with respect to
     Borrower's and each Subsidiary's business, covering casualty, hazard,
     public liability and such other risks in such amounts and with such
     insurance companies as are reasonably satisfactory to Agent. Unless already
     delivered by Borrower to Agent, Borrower shall deliver the originals of
     such policies to Agent with satisfactory lender's loss payable
     endorsements, naming Agent as sole loss payee, assignee or additional
     insured, as appropriate. Each policy of insurance or endorsement shall
     contain a clause requiring the insurer to give not less than 30 days' prior
     written notice to Agent in the event of cancellation of the policy for any
     reason whatsoever and a clause specifying that the interest of Agent, for
     the benefit of itself and each Lender, shall not be impaired or invalidated
     by any act or neglect of Borrower or the owner of the Property or by the
     occupation of the premises for purposes more hazardous than are permitted
     by said policy. Borrower agrees to deliver to Agent, promptly as rendered,
     true copies of all reports made in any reporting forms to insurance
     companies.

          6.1.3. PROTECTION OF COLLATERAL. All expenses of protecting, storing,
     warehousing, insuring, handling, maintaining and shipping the Collateral,
     any and all

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     excise, property, sales, and use taxes imposed by any state, federal, or
     local authority on any of the Collateral or in respect of the sale thereof
     shall be borne and paid by Borrower or a Subsidiary of Borrower. If
     Borrower or a Subsidiary of Borrower fails to promptly pay any portion
     thereof when due, Agent may, at its option, but shall not be required to,
     pay the same and charge Borrower therefor. Neither Agent nor any Lender
     shall be liable or responsible in any way for the safekeeping of any of the
     Collateral or for any loss or damage thereto (except for reasonable care in
     the custody thereof while any Collateral is in Agent's actual possession)
     or for any diminution in the value thereof, or for any act or default of
     any warehouseman, carrier, forwarding agency, or other person whomsoever,
     but the same shall be at Borrower's sole risk.

     6.2. ADMINISTRATION OF ACCOUNTS.

          6.2.1. RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Borrower shall,
     and shall cause each of its Subsidiaries to, keep accurate and complete
     records of its Accounts and all payments and collections thereon and shall
     submit to Agent and each Lender on such periodic basis as Agent shall
     require (in its sole discretion), upon not less than one Business Day's
     notice, a borrowing base certificate for the applicable period, in form
     satisfactory to Agent. On or before the 20th day of each month from and
     after the date hereof, Borrower shall deliver to Agent and each Lender, in
     form acceptable to Agent, a summary aged trial balance of all Accounts
     existing as of the last day of the preceding month, specifying the names,
     addresses and face value for each Account Debtor obligated on an Account so
     listed ("Schedule of Accounts"), and, upon Agent's request therefor, any
     other information as Agent or any Lender shall reasonably request. If
     requested by Agent, Borrower shall execute and deliver, and shall cause its
     Subsidiaries to execute and deliver, to Agent formal written assignments of
     all of its Accounts weekly or daily, which shall include all Accounts that
     have been created since the date of the last assignment, together with any
     other information Agent shall reasonably request.

          6.2.2. DISCOUNTS, ALLOWANCES, DISPUTES. If Borrower or any of its
     Subsidiaries grants any discounts, allowances or credits that are not shown
     on the face of the invoice for the Account involved, Borrower shall, and
     shall cause any such Subsidiary to, report such discounts, allowances or
     credits, as the case may be, to Agent as part of the next required Schedule
     of Accounts. Upon the occurrence and during the continuance of an Event of
     Default, Agent shall have the right to settle or adjust all disputes and
     claims directly with the Account Debtor and to compromise the amount or
     extend the time for payment of the Accounts upon such terms and conditions
     as Agent may deem advisable, and to charge the deficiencies, costs and
     expenses thereof, including attorney's fees, to Borrower.

          6.2.3. TAXES. If an Account includes a charge for any tax payable to
     any governmental taxing authority, Agent is authorized, in its sole
     discretion, to pay the amount thereof to the proper taxing authority for
     the account of Borrower and to

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     charge Borrower therefor, provided, however that Agent shall not be liable
     for any taxes to any governmental taxing authority that may be due by
     Borrower or any of its Subsidiaries.

          6.2.4. ACCOUNT VERIFICATION. Whether or not a Default or an Event of
     Default has occurred, any of Agent's officers, employees or agents shall
     have the right, at any time or times, in the name of Agent or any Lender,
     any designee of any Lender or Borrower, to verify the validity, amount or
     any other matter relating to any Accounts by mail, telephone, telegraph or
     otherwise; PROVIDED, that prior to the occurrence of a Default or Event of
     Default, Agent shall obtain Borrower's approval of any procedure utilized
     in connection with such verification. Borrower shall, and shall cause it
     Subsidiaries to, cooperate fully with Agent in an effort to facilitate and
     promptly conclude any such verification process.

          6.2.5. MAINTENANCE OF DOMINION ACCOUNT. Borrower shall, and shall
     cause each Company to, maintain a Dominion Account or Accounts pursuant to
     lockbox arrangements reasonably acceptable to Agent and Majority Lenders
     with such banks as may be selected by Borrower or such Company and be
     reasonably acceptable to Agent. Borrower shall, and shall cause each
     Company to, issue to any such banks an irrevocable letter of instruction
     directing such banks to deposit all payments or other remittances received
     in the lockbox to the Dominion Account for application on account of the
     Obligations. All funds deposited in any Dominion Account shall immediately
     become the property of Agent, for the ratable benefit of Lenders, for
     payment of Obligations, and Borrower shall, and shall cause each Company
     to, obtain the agreement by such banks in favor of Agent to waive any
     offset rights against the funds so deposited. Agent assumes no
     responsibility for such lockbox arrangement, including, without limitation,
     any claim of accord and satisfaction or release with respect to deposits
     accepted by any bank thereunder.

          6.2.6. COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL. To expedite
     collection, Borrower shall, and shall cause each Company to, endeavor in
     the first instance to make collection of its Accounts for Lenders. All
     remittances received by Borrower or any Company on account of Accounts,
     together with the proceeds of any other Collateral, shall be held as
     Agent's property by Borrower or such Company as trustee of an express trust
     for Agent's benefit and Borrower or such Company shall immediately deposit
     the same in kind in the Dominion Account. Agent retains the right at all
     times after the occurrence of a Default or an Event of Default to notify
     Account Debtors that Accounts have been assigned to Agent and to collect
     Accounts directly in its own name and to charge the collection costs and
     expenses, including attorneys' fees, to Borrower.

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     6.3. ADMINISTRATION OF INVENTORY.

          6.3.1. RECORDS AND REPORTS OF INVENTORY. Borrower and each of its
     Subsidiaries shall keep accurate and complete records of its Inventory.
     Borrower shall furnish to Agent and each Lender Inventory reports in form
     and detail satisfactory to Agent at such times as Agent shall require (in
     its sole discretion). Borrower shall conduct a physical inventory no less
     frequently than monthly (or quarterly, to the extent that such inventories
     have been historically performed on a quarterly basis with respect to the
     applicable facility) and shall provide to Agent and each Lender a report
     based on each such physical inventory promptly thereafter, together with
     such supporting information as Agent shall request. In addition, on a
     semi-annual basis, the value of the Eligible Inventory owned by the
     Companies (calculated on the basis of the lower of cost or market with the
     cost calculated on an average cost basis) shall be established by
     appraisals of such Eligible Inventory that are (a) conducted, at Borrower's
     expense, each December and June (commencing with June, 2002) by appraisers
     acceptable to Agent and (b) delivered to Agent prior to January 1 and July
     1 of each year (commencing with July 1, 2002).

     6.4. ADMINISTRATION OF EQUIPMENT.

          6.4.1. RECORDS AND SCHEDULES OF EQUIPMENT. Borrower and each of its
     Subsidiaries shall keep accurate records itemizing and describing the kind,
     type, quality, quantity and book value of its Equipment and all
     dispositions made in accordance with subsection 6.4.2, and shall furnish
     Agent and Lenders with a current schedule containing the foregoing
     information on at least an annual basis and more often if requested by
     Agent. Promptly on request therefor by Agent, Borrower shall deliver to
     Agent any and all evidence of ownership, if any, of any of the Equipment.

          6.4.2. DISPOSITIONS OF EQUIPMENT. Borrower shall not, and shall cause
     its Subsidiaries not to, sell, lease or otherwise dispose of or transfer
     any of the Equipment or any part thereof without the prior written consent
     of Agent; PROVIDED, HOWEVER, that so long as no Default or Event of Default
     exists, Borrower and its Subsidiaries may sell or dispose of Equipment,
     provided that if the proceeds of any such disposition (i) are less than
     $500,000, Agent shall apply such proceeds to the outstanding Revolving
     Credit Loan balance outstanding and shall permit Borrower to reborrow such
     proceeds in accordance with the terms of this Agreement solely for use in
     replacing the Equipment disposed of with new Equipment usable in the
     business of Borrower or a Subsidiary of Borrower and subject to no Liens
     other than Permitted Liens or (ii) are equal to or greater than $500,000,
     Agent shall provisionally apply such proceeds to reduce the outstanding
     Revolving Credit Loan balance outstanding for a period of 30 days. Within
     30 days following receipt by Borrower of proceeds of disposition in an
     amount equal to or greater than $500,000, Borrower may submit to Agent a
     written statement detailing Borrower's plans to pay costs incurred as a
     result of such disposition and to reinvest the balance of such proceeds in
     productive assets

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<Page>

     to be used in its business. If Agent receives such a statement within such
     period, Agent shall permit Borrower to reborrow such proceeds in accordance
     with the terms of this Agreement to execute such reinvestment plan for a
     period of 180 days following receipt by Borrower of such proceeds. If no
     such plan is submitted within said 30 days, all of such proceeds or, if
     such a plan is so submitted, all of such proceeds remaining after said 180
     days, shall be applied to permanently reduce the amount set forth in clause
     (3) of the definition of Borrowing Base set forth herein.

     6.5. PAYMENT OF CHARGES.

     All amounts chargeable to Borrower under this Section 6 shall be
Obligations secured by all of the Collateral, shall be payable on demand and
shall bear interest from the date such advance was made until paid in full at
the rate applicable to Base Rate Revolving Credit Portions from time to time.

     6.6. APPRAISALS.

     On an annual basis, the orderly liquidation value of the Equipment owned by
the Companies and the fair market value of the real Property owned by the
Companies shall be established by appraisals of such Equipment and real Property
("Appraisals") that are (a) conducted, at Borrower's expense, each September by
appraisers acceptable to Agent and (b) delivered to Agent prior to October 1 of
each year.

                    SECTION 7. REPRESENTATIONS AND WARRANTIES

     7.1. GENERAL REPRESENTATIONS AND WARRANTIES.

     To induce Agent and each Lender to enter into this Agreement and to make
advances hereunder, Borrower warrants, represents and covenants to Agent and
each Lender that:

          7.1.1. ORGANIZATION AND QUALIFICATION. Borrower and each of its
     Subsidiaries, as applicable, is a corporation or limited partnership duly
     organized, validly existing and in good standing under the laws of the
     jurisdiction of its incorporation or formation. Borrower and each of its
     Subsidiaries is duly qualified and is authorized to do business and is in
     good standing as a foreign corporation or limited partnership, as
     applicable, in each state or jurisdiction listed on EXHIBIT 7.1.1 and in
     all other states and jurisdictions where the character of its Properties or
     the nature of its activities make such qualification necessary, except when
     the failure to so qualify would not have a Material Adverse Effect.

          7.1.2. POWER AND AUTHORITY. Borrower and each of its Subsidiaries is
     duly authorized and empowered to enter into, execute, deliver and perform
     this Agreement and each of the other Loan Documents to which it is a party.
     The execution, delivery and performance of this Agreement and each of the
     other Loan Documents have been duly authorized by all necessary corporate
     and limited partnership action, as

                                       23
<Page>

     applicable, and do not and will not (i) require any consent or approval of
     the general or limited partners or the shareholders of Borrower or any of
     Borrower's Subsidiaries; (ii) contravene Lone Star's agreement of limited
     partnership or Borrower's or any of its other Subsidiary's charter,
     articles or certificate of incorporation or by-laws; (iii) violate, or
     cause Borrower or any of its Subsidiaries to be in default under, any
     provision of any law, rule, regulation, order, writ, judgment, injunction,
     decree, determination or award in effect having applicability to Borrower
     or any such Subsidiary; (iv) result in a breach of or constitute a default
     under any indenture or loan or credit agreement or any other agreement,
     lease or instrument to which Borrower or any of its Subsidiaries is a party
     or by which it or its Properties may be bound or affected; or (v) result
     in, or require, the creation or imposition of any Lien (other than
     Permitted Liens) upon or with respect to any of the Properties now owned or
     hereafter acquired by Borrower or any of its Subsidiaries.

          7.1.3. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
     the other Loan Documents when delivered under this Agreement will be, a
     legal, valid and binding obligation of Borrower and each of its
     Subsidiaries party thereto, enforceable against it in accordance with its
     respective terms, except as may be limited by applicable bankruptcy,
     reorganization, insolvency or similar laws affecting the enforcement of
     creditor's rights generally.

          7.1.4. CAPITAL STRUCTURE. EXHIBIT 7.1.4 states, as of the date hereof,
     (i) the correct name of Borrower and each of the Subsidiaries of Borrower,
     its jurisdiction of incorporation or formation, its organizational
     identification number and, with respect to each of the Subsidiaries of
     Borrower, the percentage of its Voting Stock or limited partnership
     interests, as applicable, owned by Borrower, (ii) the names of Borrower's
     corporate or joint venture Affiliates and the nature of the affiliation,
     (iii) the number, nature and holder of all outstanding Securities of
     Borrower and each Subsidiary of Borrower and (iv) the number of partnership
     interests of Lone Star and the number of authorized, issued and treasury
     shares of Borrower and each other Subsidiary of Borrower. Borrower has good
     title to all of the shares and limited partnership interests it purports to
     own of the stock and limited partnership interests of each of its
     Subsidiaries, free and clear in each case of any Lien other than Permitted
     Liens. All such shares and limited partnership interests have been duly
     issued and are fully paid and non-assessable. Except as set forth on
     EXHIBIT 7.1.4, and except for options issued to purchase capital stock of
     Borrower to non-management employees, directors and consultants of Borrower
     or its Subsidiaries, there are no outstanding options to purchase, or any
     rights or warrants to subscribe for, or any commitments or agreements to
     issue or sell, or any Securities or obligations convertible into, or any
     powers of attorney relating to, partnership interests or shares of the
     capital stock of Borrower or any of its Subsidiaries. Except as set forth
     on EXHIBIT 7.1.4, and except for options issued to non-management employees
     of Borrower or its Subsidiaries, there are no outstanding agreements or
     instruments binding upon any of Borrower's

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<Page>

     shareholders relating to the ownership of its shares of capital stock. Lone
     Star GP is the sole general partner of Lone Star.

          7.1.5. CORPORATE NAMES. Neither Borrower nor any of its Subsidiaries
     has been known as or used any corporate, fictitious or trade names except
     those listed on EXHIBIT 7.1.5 and except for those used by Borrower or any
     Subsidiary in the future after giving Agent 30 days advance written notice.
     Except as set forth on EXHIBIT 7.1.5, neither Borrower and nor any of its
     Subsidiaries has been the survivor of a merger or consolidation or has
     acquired all or substantially all of the assets of any Person.

          7.1.6. BUSINESS LOCATIONS; AGENT FOR PROCESS. Borrower's and each of
     its Subsidiaries' chief executive office and other places of business are
     as listed on EXHIBIT 6.1.1. During the one-year period preceding the date
     hereof, neither Borrower nor any of its Subsidiaries has had an office,
     place of business or agent for service of process other than as listed on
     EXHIBIT 6.1.1. Except as shown on EXHIBIT 6.1.1, no Inventory is stored
     with a bailee, warehouseman or similar party, nor is any Inventory
     consigned to any Person.

          7.1.7. TITLE TO PROPERTIES; PRIORITY OF LIENS. Borrower and each of
     its Subsidiaries has good, indefeasible and marketable title to and fee
     simple ownership of, or valid and subsisting leasehold interests in, all of
     its real Property, and good title to all of the Collateral and all of its
     other Property, in each case, free and clear of all Liens except Permitted
     Liens. Borrower or one of its Subsidiaries has paid or discharged all
     lawful claims which, if unpaid, might become a Lien against any of
     Borrower's or such Subsidiary's Properties that is not a Permitted Lien.
     The Liens granted to Agent under Section 5 are first priority Liens,
     subject only to Permitted Liens.

          7.1.8. ACCOUNTS. Agent may rely, in determining which Accounts are
     Eligible Accounts, on all statements and representations made by any
     Company with respect to any Account or Accounts. Unless otherwise indicated
     in writing to Agent, with respect to each Eligible Account:

               (i)  It is genuine and in all respects what it purports to be,
          and it is not evidenced by a judgment;

               (ii) It arises out of a completed, BONA FIDE sale and delivery of
          goods or rendition of services by a Company in the ordinary course of
          its business and in accordance with the terms and conditions of all
          purchase orders, contracts or other documents relating thereto and
          forming a part of the contract between such Company and the Account
          Debtor and the Account Debtor is not an Affiliate of such Company;

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<Page>

               (iii) It is for a liquidated amount maturing as stated in the
          duplicate invoice covering such sale or rendition of services, a copy
          of which has been furnished or is available to Agent;

               (iv) Such Account, and Agent's Lien therein, is not, and will not
          (by voluntary act or omission of any Company) be in the future,
          subject to any offset, Lien, deduction, defense, dispute, counterclaim
          or any other adverse condition except as disclosed in the most recent
          schedule of Accounts delivered by Borrower to Agent and except for
          disputes resulting in returned goods where the amount in controversy
          is deemed by Agent to be immaterial, and each such Account is
          absolutely owing to a Company and is not contingent in any respect or
          for any reason;

               (v)  Except pursuant to the Conditional Sales Program, no company
          has made any agreement with any Account Debtor thereunder for any
          extension, compromise, settlement or modification of any such Account
          or any deduction therefrom, except discounts or allowances which are
          granted by such Company in the ordinary course of its business for
          prompt payment and which are reflected in the calculation of the net
          amount of each respective invoice related thereto and are reflected in
          the Schedules of Accounts submitted to Agent pursuant to subsection
          6.2.1;

               (vi) There are no facts, events or occurrences which in any way
          impair the validity or enforceability of any Accounts or tend to
          reduce the amount payable thereunder from the face amount of the
          invoice and statements delivered to Agent with respect thereto;

               (vii) To the best of Borrower's knowledge, the Account Debtor
          thereunder (1) had the capacity to contract at the time any contract
          or other document giving rise to the Account was executed and (2) such
          Account Debtor is Solvent; and

               (viii) To the best of Borrower's knowledge, there are no
          proceedings or actions which are threatened or pending against any
          Account Debtor thereunder which might result in any material adverse
          change in such Account Debtor's financial condition or the
          collectibility of such Account.

          7.1.9. EQUIPMENT. The Equipment taken as a whole is in good operating
     condition and repair, and all necessary replacements of and repairs thereto
     shall be made so that the value and operating efficiency of the Equipment
     shall be maintained and preserved, reasonable wear and tear excepted.
     Borrower shall not, and shall cause each of its Subsidiaries not to, permit
     any of the Equipment to become affixed to any real Property leased to
     Borrower or such Subsidiary so that an interest arises therein under the
     real estate laws of the applicable jurisdiction unless the landlord of such
     real

                                       26
<Page>

     Property has executed a landlord waiver or leasehold mortgage in favor of
     and in form acceptable to Agent, and Borrower shall not, and shall cause
     each of its Subsidiaries not to, permit any of the Equipment to become an
     accession to any personal Property other than Equipment that is subject to
     first priority (except for Permitted Liens) Liens in favor of Agent.

          7.1.10. FINANCIAL STATEMENTS; FISCAL YEAR. The Consolidated and
     consolidating balance sheets of Borrower and such other Persons described
     therein (including the accounts of all Subsidiaries of Borrower and their
     respective Subsidiaries for the respective periods during which a
     Subsidiary relationship existed) as of December 31, 2000, and the related
     statements of income, changes in stockholder's equity, and changes in
     financial position for the periods ended on such dates, have been prepared
     in accordance with GAAP, and present fairly the financial positions of
     Borrower and such Persons at such dates and the results of Borrower's and
     such Persons' operations for such periods. Since December 31, 2000, there
     has been no material change in the condition, financial or otherwise, of
     Borrower or such other Persons as shown on the Consolidated balance sheet
     as of such date and no change in the aggregate value of Equipment and real
     Property owned by Borrower or such other Persons, except changes in the
     ordinary course of business, none of which individually or in the aggregate
     has been materially adverse. The fiscal year of Borrower and each of its
     Subsidiaries ends on December 31 of each year.

          7.1.11. FULL DISCLOSURE. The financial statements referred to in
     subsection 7.1.10 do not, nor does this Agreement or any other written
     statement of Borrower or any of its Subsidiaries to Agent or any Lender,
     contain any untrue statement of a material fact or omit a material fact
     necessary to make the statements contained therein or herein not
     misleading, except in cases where corrections are made to the financial
     statements with the consent of Agent. There is no fact which Borrower or
     any of its Subsidiaries has failed to disclose to Agent in writing which
     materially affects adversely or, so far as Borrower can now reasonably
     foresee, will materially affect adversely the Properties, business,
     prospects or condition (financial or otherwise) of Borrower or any of its
     Subsidiaries or the ability of Borrower or any of its Subsidiaries to
     perform this Agreement or the other Loan Documents.

          7.1.12. SOLVENT FINANCIAL CONDITION. Borrower and each of its
     Subsidiaries is now and, after giving effect to the Loans to be made
     hereunder, at all times will be, Solvent.

          7.1.13. SURETY OBLIGATIONS. Neither Borrower nor any of its
     Subsidiaries is obligated as surety or indemnitor under any surety or
     similar bond or other contract issued or entered into to assure payment,
     performance or completion of performance of any undertaking or obligation
     of any Person.

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          7.1.14. TAXES. The federal tax identification number of Borrower and
     each of its Subsidiaries is shown on EXHIBIT 7.1.14. Borrower and each of
     its Subsidiaries has filed all federal, state and local tax returns and
     other reports it is required by law to file and has paid, or made provision
     for the payment of, all taxes, assessments, fees, levies and other
     governmental charges upon it, its income and Properties as and when such
     taxes, assessments, fees, levies and charges are due and payable, unless
     and to the extent any thereof are being actively contested in good faith
     and by appropriate proceedings and Borrower or such Subsidiary maintains
     reasonable reserves on its books therefor. The provision for taxes on the
     books of Borrower and each of its Subsidiaries is adequate for all years
     not closed by applicable statutes, and for the current fiscal year.

          7.1.15. BROKERS. There are no claims for brokerage commissions,
     finder's fees or investment banking fees in connection with the
     transactions contemplated by this Agreement.

          7.1.16. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower and
     each of its Subsidiaries owns or possesses all the patents, trademarks,
     service marks, trade names, copyrights and licenses necessary for the
     present and planned future conduct of its business without any known
     conflict with the rights of others. All such patents, trademarks, service
     marks, trade names, copyrights, licenses and other similar rights are
     listed on EXHIBIT 7.1.16.

          7.1.17. GOVERNMENTAL CONSENTS. Borrower and each of its Subsidiaries
     has, and is in good standing with respect to, all governmental consents,
     approvals, licenses, authorizations, permits, certificates, inspections and
     franchises necessary to continue to conduct its business as heretofore or
     proposed to be conducted by it and to own or lease and operate its
     Properties as now owned or leased by it, except in cases where the failure
     to have any such items does not cause a Material Adverse Effect.

          7.1.18. COMPLIANCE WITH LAWS. Borrower and each of its Subsidiaries
     has duly complied with, and its Properties, business operations and
     leaseholds are in compliance in all material respects with, the provisions
     of all federal, state and local laws, rules and regulations applicable to
     Borrower or such Subsidiary, as applicable, its Properties or the conduct
     of its business and there have been no citations, notices or orders of
     noncompliance issued to Borrower or any of its Subsidiaries under any such
     law, rule or regulation which could reasonably be expected to have a
     Material Adverse Effect. Borrower and each of its Subsidiaries has
     established and maintains an adequate monitoring system to insure that it
     remains in compliance with all federal, state and local laws, rules and
     regulations applicable to it. No Inventory has been produced in violation
     of the Fair Labor Standards Act (29 U.S.C. Section 201 ET SEQ.), as
     amended.

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          7.1.19. RESTRICTIONS. Neither Borrower nor any of its Subsidiaries is
     a party or subject to any contract, agreement, or charter or other
     corporate or limited partnership restriction, which materially and
     adversely affects the use or ownership of any of its Properties. Neither
     Borrower nor any of its Subsidiaries is a party or subject to any contract
     or agreement which restricts its right or ability to incur Indebtedness,
     other than as set forth on EXHIBIT 7.1.19, none of which prohibit the
     execution of or compliance with this Agreement or the other Loan Documents
     by Borrower or any of its Subsidiaries, as applicable.

          7.1.20. LITIGATION. Except as set forth on EXHIBIT 7.1.20, there are
     no actions, suits, proceedings or investigations pending, or to the
     knowledge of Borrower, threatened, against or affecting Borrower or any of
     its Subsidiaries, or the business, operations, Properties, prospects,
     profits or condition of Borrower or any of its Subsidiaries which could
     reasonably be expected to cause a Material Adverse Effect. Neither Borrower
     nor any of its Subsidiaries is in default with respect to any order, writ,
     injunction, judgment, decree or rule of any court, governmental authority
     or arbitration board or tribunal.

          7.1.21. NO DEFAULTS. No event has occurred and no condition exists
     which would, upon or after the execution and delivery of this Agreement or
     Borrower's performance hereunder, constitute a Default or an Event of
     Default. Except as set forth on EXHIBIT 7.1.21, after giving effect to the
     closing on the date hereof of the transactions contemplated by this
     Agreement, neither Borrower nor any of its Subsidiaries is in default in
     (and no event has occurred and no condition exists which constitutes, or
     which with the passage of time or the giving of notice or both would
     constitute, a default in) the payment of any Indebtedness to any Person for
     Money Borrowed.

          7.1.22. LEASES. EXHIBIT 7.1.22 is a complete listing of all
     capitalized leases and operating leases of Borrower and its Subsidiaries.
     Borrower and each of its Subsidiaries is in material compliance with all of
     the terms of each of its respective capitalized and operating leases.

          7.1.23. PENSION PLANS. Except as disclosed on EXHIBIT 7.1.23, neither
     Borrower nor any of its Subsidiaries has any Plan. Borrower and each of its
     Subsidiaries is in material compliance with the requirements of ERISA and
     the regulations promulgated thereunder with respect to each Plan. No fact
     or situation that could reasonably be expected to result in a Material
     Adverse Effect exists in connection with any Plan. Neither Borrower nor any
     of its Subsidiaries has any withdrawal liability in connection with a
     Multiemployer Plan.

          7.1.24. TRADE RELATIONS. After giving effect to each of the
     transactions contemplated by this Agreement, there exists no actual or
     threatened termination, cancellation or limitation of, or any modification
     or change in, the business

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<Page>

     relationship between Borrower or any of its Subsidiaries and any customer
     or any group of customers whose purchases individually or in the aggregate
     are material to the business of Borrower or any of its Subsidiaries, or
     with any material supplier, and there exists no present condition or state
     of facts or circumstances which would materially affect adversely Borrower
     or any of its Subsidiaries or prevent Borrower or any of its Subsidiaries
     from conducting such business after the consummation of the transaction
     contemplated by this Agreement in substantially the same manner in which it
     has heretofore been conducted.

          7.1.25. LABOR RELATIONS. Except as described on EXHIBIT 7.1.25,
     neither Borrower nor any of its Subsidiaries is a party to any collective
     bargaining agreement. There are no material grievances, disputes or
     controversies with any union or any other organization of Borrower's or any
     of its Subsidiaries' employees, or threats of strikes, work stoppages or
     any asserted pending demands for collective bargaining by any union or
     organization.

          7.1.26. DESIGNATED SENIOR DEBT. Other than the Obligations and the
     Indebtedness evidenced by the Secured Subordinated Debt Documents, there
     exists no other Designated Senior Debt (as defined in the New Indenture).

     7.2. CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES.

     Each representation and warranty contained in this Agreement and the other
Loan Documents shall be continuous in nature and shall remain accurate, complete
and not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or any of its Subsidiaries' business or
operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Agent has consented to
such changes or such changes are expressly permitted by this Agreement.
Schedules to this Agreement may be updated by Borrower to reflect any such
changes.

     7.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     All representations and warranties of Borrower contained in this Agreement
or any of the other Loan Documents shall survive the execution, delivery and
acceptance thereof by Lenders and the parties thereto and the closing of the
transactions described therein or related thereto.

                 SECTION 8. COVENANTS AND CONTINUING AGREEMENTS

     8.1. AFFIRMATIVE COVENANTS.

     During the term of this Agreement, and thereafter for so long as there are
any Obligations outstanding (other than contingent indemnification obligations
under subsection 12.2 or under the indemnification provisions of the Security
Documents), Borrower covenants that, unless otherwise consented to by Majority
Lenders in writing, it shall:

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<Page>

          8.1.1. VISITS AND INSPECTIONS. Permit representatives of Agent, or any
     Lender accompanying Agent, from time to time, as often as may be reasonably
     requested, but only during normal business hours, to visit and inspect the
     Properties of Borrower and each of its Subsidiaries, inspect, audit and
     make extracts from their respective books and records, and discuss with
     their respective officers, employees and independent accountants,
     Borrower's and each of its Subsidiaries' business, assets, liabilities,
     financial condition, business prospects and results of operations.

          8.1.2. NOTICES. Promptly notify Agent in writing of the occurrence of
     any event or the existence of any fact which renders any representation or
     warranty in this Agreement or any of the other Loan Documents inaccurate,
     incomplete or misleading.

          8.1.3. FINANCIAL STATEMENTS. Keep, and cause its Subsidiaries to keep,
     adequate records and books of account with respect to its business
     activities in which proper entries are made in accordance with GAAP
     reflecting all its financial transactions; and cause to be prepared and
     furnished to Agent and each Lender the following (all to be prepared in
     accordance with GAAP applied on a consistent basis, unless Borrower's
     certified public accountants concur in any change therein and such change
     is disclosed to Agent and is consistent with GAAP):

               (i)  not later than 90 days after the close of each fiscal year
          of Borrower, unqualified (except for a qualification for a change in
          accounting principles with which the accountant concurs) audited
          financial statements of Borrower and each of its Subsidiaries as of
          the end of such year, on a Consolidated and consolidating basis,
          certified by a firm of independent certified public accountants of
          recognized standing selected by Borrower acceptable to Agent;

               (ii) not later than 30 days after the end of each month
          hereafter, including the last month of Borrower's fiscal year,
          unaudited interim financial statements (which shall consist of an
          income statement, statement of cash flows and a balance sheet) of
          Borrower and each of its Subsidiaries as of the end of such month and
          of the portion of Borrower's fiscal year then elapsed, on a
          Consolidated and consolidating basis, certified by the principal
          financial officer of Borrower as prepared in accordance with GAAP and
          fairly presenting the Consolidated financial position and results of
          operations of Borrower and each of its Subsidiaries for such month and
          period subject only to changes from audit and year-end adjustments and
          except that such statements need not contain notes;

               (iii) promptly after the sending or filing thereof, as the case
          may be, copies of any proxy statements, financial statements or
          reports which Borrower has made available to its shareholders in their
          capacity as shareholders and copies of any regular, periodic and
          special reports or

                                       31
<Page>

          registration statements which Borrower files with the Securities and
          Exchange Commission or any governmental authority which may be
          substituted therefor, or any national securities exchange;

               (iv) promptly after the filing thereof, copies of any annual
          report to be filed with ERISA in connection with each Plan; and

               (v)  such other data and information (financial and otherwise) as
          Agent, from time to time, may reasonably request, bearing upon or
          related to the Collateral or Borrower's or any of its Subsidiaries'
          financial condition or results of operations.

     Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Borrower shall forward to Agent and each
Lender a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Agent and each Lender a certificate of the
aforesaid certified public accountants certifying to Agent and Lenders that,
based upon their examination of the financial statements of Borrower and its
Subsidiaries performed in connection with their examination of said financial
statements, they are not aware of any Default or Event of Default, or, if they
are aware of such Default or Event of Default, specifying the nature thereof,
and acknowledging, in a manner satisfactory to Agent, that they are aware that
Agent and each Lender is relying on such financial statements in making its
decisions with respect to the Loans. Concurrently with the delivery of the
financial statements described in clauses (i) and (ii) of this subsection 8.1.3,
or more frequently if requested by Agent, Borrower shall cause to be prepared
and furnished to Agent a Compliance Certificate in the form of EXHIBIT 8.1.3
executed by the Chief Financial Officer of Borrower.

          8.1.4. LANDLORD AND STORAGE AGREEMENTS. Provide Agent with copies of
     all agreements between Borrower or any of its Subsidiaries and any landlord
     or warehouseman which owns any premises at which any Inventory may, from
     time to time, be kept.

          8.1.5. GUARANTOR FINANCIAL STATEMENTS. Deliver or cause to be
     delivered to Agent financial statements for each Guarantor (to the extent
     not delivered pursuant to subsection 8.1.3) in form and substance
     satisfactory to Agent at such intervals and covering such time periods as
     Agent may request.

          8.1.6. PROJECTIONS. No later than 30 days prior to the end of each
     fiscal year of Borrower, deliver to Agent Projections of Borrower and its
     Subsidiaries for the forthcoming fiscal year, month by month.

     8.2. NEGATIVE COVENANTS.

     During the term of this Agreement, and thereafter for so long as there are
any Obligations outstanding (other than contingent indemnification obligations
under subsection

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<Page>

12.2 or under the indemnification provisions of the Security Documents),
Borrower covenants that, unless Majority Lenders have first consented thereto in
writing, it will not:

          8.2.1. MERGERS; CONSOLIDATIONS; ACQUISITIONS. Merge or consolidate, or
     permit any Subsidiary of Borrower to merge or consolidate, with any Person;
     or acquire, or permit any of its Subsidiaries to acquire, all or any
     substantial part of the Properties of any Person; PROVIDED, that any
     Subsidiary of Borrower may merge with and into any other Subsidiary of
     Borrower.

          8.2.2. LOANS. Make, or permit any Subsidiary of Borrower to make, any
     loans or other advances of money (other than for salary, travel advances,
     advances against commissions and other similar advances in the ordinary
     course of business and advance payments made for Christmas tree purchases
     in the ordinary course of business) to any Person, other than Subsidiary
     Loans.

          8.2.3. TOTAL INDEBTEDNESS FOR MONEY BORROWED. Create, incur, assume,
     or suffer to exist, or permit any Subsidiary of Borrower to create, incur
     or suffer to exist, any Indebtedness for Money Borrowed, except:

               (i)    Obligations owing to Agent and Lenders under this
          Agreement;

               (ii)   the Indebtedness evidenced by the New Bonds;

               (iii)  the Indebtedness evidenced by the New Heller Note;

               (iv)   the Indebtedness evidenced by the Secured Subordinated
          Debt Documents;

               (v)    other Indebtedness for Money Borrowed existing on the
          Closing Date as set forth on EXHIBIT 8.2.3;

               (vi)   Indebtedness of any Subsidiary of Borrower resulting from
          a Subsidiary Loan;

               (vii)  Permitted Purchase Money Indebtedness;

               (viii) obligations incurred in connection with interest rate
          protection arrangements; and

               (ix)   unsecured Indebtedness for Money Borrowed not included in
          paragraphs (i) through (v) above which does not exceed at any time, in
          the aggregate, the sum of $1,000,000.

          8.2.4. AFFILIATE TRANSACTIONS. Enter into, or be a party to, or permit
     any Subsidiary of Borrower to enter into or be a party to, any transaction
     with any Affiliate of Borrower, except (i) in the ordinary course of and
     pursuant to the

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<Page>

     reasonable requirements of Borrower's or such Subsidiary's business and
     upon fair and reasonable terms which are fully disclosed to Agent and are
     no less favorable to Borrower than would obtain in a comparable arm's
     length transaction with a Person not an Affiliate of Borrower or such
     Subsidiary and (ii) usual and customary employment agreements and
     indemnification arrangements contained in a Borrower's or a Subsidiary's
     formation documents as in effect on the date hereof.

          8.2.5. LIMITATION ON LIENS. Create or suffer to exist, or permit any
     Subsidiary of Borrower to create or suffer to exist, any Lien upon any of
     its Property, income or profits, whether now owned or hereafter acquired,
     except:

               (i)    Liens at any time granted in favor of Agent, for the
          benefit of itself and each Lender;

               (ii)   Liens for taxes (excluding any Lien imposed pursuant to
          any of the provisions of ERISA) not yet due, or being contested in the
          manner described in subsection 7.1.14, but only if in Agent's
          reasonable judgment such Lien does not adversely affect Agent's or
          Lenders' rights or the priority of Agent's Lien in the Collateral;

               (iii)  Liens arising in the ordinary course of Borrower's or any
          Subsidiary's business by operation of law or regulation, but only if
          payment in respect of any such Lien is not at the time required and
          such Liens do not, in the aggregate, materially detract from the value
          of the Property of Borrower or such Subsidiary or materially impair
          the use thereof in the operation of Borrower's or such Subsidiary's
          business;

               (iv)   Purchase Money Liens securing Permitted Purchase Money
          Indebtedness;

               (v)    such other Liens as appear on EXHIBIT 8.2.5;

               (vi)   so long as no Event of Default has occurred and is
          continuing, attachment, judgment and other similar non-tax Liens
          arising in connection with court proceedings, but only if and for so
          long as the execution or other enforcement of such Liens is and
          continues to be effectively stayed and bonded on appeal, the validity
          and amount of the claims secured thereby are being actively contested
          in good faith and by appropriate lawful proceedings and such Liens do
          not, in the aggregate, materially detract from the value of the
          Property of Borrower or its Subsidiaries or materially impair the use
          thereof in the operation of Borrower's or any of its Subsidiary's
          businesses;

               (vii)  reservations, exceptions, easements, rights of way and
          other similar encumbrances affecting real Property, provided, that, in
          Agent's sole judgment, they do not in the aggregate materially detract
          from the value of said

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<Page>

          Properties or materially interfere with their use in the ordinary
          conduct of Borrower's or any of its Subsidiary's businesses, and, if
          said real Property constitutes Collateral, Agent has consented
          thereto;

               (viii) Liens in favor of Catalyst under the Secured Subordinated
          Debt Documents to the extent that the same have been subordinated to
          the Liens securing the Obligations pursuant to documentation
          acceptable to Agent; and

               (ix) such other Liens as Majority Lenders may hereafter approve
          in writing.

          8.2.6. SUBORDINATED DEBT. (i) Make, or permit any Subsidiary of
     Borrower to make, any payment of any part or all of any Subordinated Debt
     or take any other action or omit to take any other action in respect of any
     Subordinated Debt, except in accordance with the subordination agreement
     relative thereto (or, in the case of the New Bonds, the subordination
     provisions set forth in the New Indenture) or (ii) without Majority
     Lenders' prior written consent, agree to (a) any amendment or other
     modification of the subordination provisions of any documentation
     evidencing or relating to any Subordinated Debt or (b) any amendment or
     other modification to any documentation evidencing any Subordinated Debt
     that would increase the interest rate applicable thereto, accelerate the
     maturity date of any payment owing in respect thereof (including any
     redemption, prepayment or defeasance provision or Borrower's obligation to
     pay cash interest) or otherwise modify any of the provisions of such
     Subordinated Debt in any manner that adversely affects Borrower, Agent or
     any Lender.

          8.2.7. AMENDMENTS REGARDING PREFERRED STOCK. Without Majority Lenders'
     prior written consent, agree to any amendment or other modification to the
     documentation relating to the Series A Preferred Stock, the Series B
     Preferred Stock or the Series B-1 Preferred Stock that would increase the
     interest or dividend rate applicable thereto, accelerate the maturity date
     of any payment owing in respect thereof (including any redemption,
     prepayment or defeasance provision or Borrower's obligation to pay cash
     dividends) or otherwise modify any of the provisions of such Preferred
     Stock in any manner that adversely affects Borrower, Agent or any Lender.

          8.2.8. DISTRIBUTIONS. Declare or make, or permit any Subsidiary of
     Borrower to declare or make, any Distributions (other than Distributions
     made when no Default or Event of Default exists to Borrower by a
     Subsidiary) except for redemptions of stock or options issued to employees
     whose employment has been terminated, provided that (i) such redemptions
     shall not exceed $300,000 in the aggregate during the Term and (ii)
     Availability equals or exceeds $3,000,000 after giving effect to any such
     redemptions.

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<Page>

          8.2.9. CAPITAL EXPENDITURES. Make Capital Expenditures (including,
     without limitation, by way of capitalized leases), excluding any
     reinvestments in Equipment as described in subsection 6.4.2 and any
     casualty insurance proceeds received by Borrower or any of its Subsidiaries
     which are spent to replace Collateral which is lost or destroyed, which, in
     the aggregate, as to Borrower and all of its Subsidiaries, exceed (i)
     $5,500,000 for the fiscal year of Borrower ending December 31, 2001 and
     (ii) $6,000,000 for each other fiscal year of Borrower commencing with the
     fiscal year ending December 31, 2002, except that any unused portion of the
     Capital Expenditure allowance for any fiscal year may be carried over to
     the immediately succeeding fiscal year to be used in such succeeding fiscal
     year after all of the Capital Expenditure allowance for that year has been
     used.

          8.2.10. DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of any
     of, or permit any Subsidiary of Borrower to sell, lease or otherwise
     dispose of, any of its Properties, including any disposition of Property as
     part of a sale and leaseback transaction, to or in favor of any Person,
     except (i) sales of Inventory in the ordinary course of business for so
     long as no Event of Default exists hereunder, (ii) transfers of Property to
     Borrower by a Subsidiary of Borrower or (iii) dispositions expressly
     authorized by this Agreement.

          8.2.11. STOCK OF SUBSIDIARIES. Permit any of Borrower's Subsidiaries
     to issue any additional shares of its capital stock or any additional
     partnership interests, except director's qualifying shares.

          8.2.12. BILL-AND-HOLD SALES, ETC. Except pursuant to the Conditional
     Sales Program, make a sale to any customer on a bill-and-hold, guaranteed
     sale, sale and return, sale on approval or consignment basis, or any sale
     on a repurchase or return basis.

          8.2.13. RESTRICTED INVESTMENT. Make or have, or permit any Subsidiary
     of Borrower to make or have, any Restricted Investment.

          8.2.14. TAX CONSOLIDATION. File or consent to the filing of any
     consolidated income tax return with any Person other than any Subsidiary of
     Borrower.

          8.2.15. FISCAL YEAR. Change, or permit any of its Subsidiaries to
     change, its fiscal year except, upon reasonable advance notice to Agent, a
     change to a calendar year end.

     8.3. SPECIFIC FINANCIAL COVENANTS.

     During the term of this Agreement, and thereafter for so long as there are
any Obligations outstanding (other than contingent indemnification obligations
under subsection 12.2 or under the indemnification provisions of the Security
Documents), Borrower covenants

                                       36
<Page>

that, unless otherwise consented to by Majority Lenders in writing, it shall
comply with all of the financial covenants set forth in EXHIBIT 8.3.

                         SECTION 9. CONDITIONS PRECEDENT

     Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Agent or any
Lender under the other sections or subsections of this Agreement, neither Agent
nor any Lender shall be required to make any Loan, nor shall Agent be required
to issue or procure any Letter of Credit or LC Guaranty, under this Agreement
unless and until each of the following conditions has been and continues to be
satisfied or waived pursuant to subsection 11.9:

     9.1. DOCUMENTATION. Agent shall have received, in form and substance
satisfactory to Agent and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Agent and its counsel shall require (including,
without limitation, subordination agreements relating to the Secured
Subordinated Debt and the New Heller Note, legal opinions of counsel to Borrower
and certificates and other documentation relating to insurance policies of
Borrower) in connection therewith from time to time, all in form and substance
satisfactory to Agent and its counsel.

     9.2. NO DEFAULT. No Default or Event of Default shall exist.

     9.3. OTHER CONDITIONS. Each of the conditions precedent set forth in the
Loan Documents shall have been satisfied.

     9.4. AVAILABILITY. Agent shall have determined that immediately after
Lenders have made the initial Loans contemplated hereby, and all closing costs
incurred in connection with the transactions contemplated hereby have been paid
or accrued, Availability shall not be less than $7,000,000.

     9.5. NO LITIGATION. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.

     9.6. RESTRUCTURING OF PUBLIC BONDS. Not less than 95% in principal amount
of the Prior Bonds shall have been exchanged for the New Bonds and Series B
Preferred Stock pursuant to documentation acceptable to Agent and Majority
Lenders. The terms and conditions of the New Bonds and the Series B Preferred
Stock shall be acceptable to Agent and Majority Lenders. To the extent that any
Prior Bonds remain outstanding, the terms and conditions of the Prior Indenture
shall have been amended in a manner acceptable to Agent and Majority Lenders.
After giving effect to the foregoing exchange, the aggregate principal amount of
the Prior Bonds and the New Bonds shall not exceed $53,000,000.

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<Page>

     9.7. RESTRUCTURING OF HELLER NOTE. The Prior Heller Note shall have been
exchanged for the New Heller Note and Series B-1 Preferred Stock pursuant to
documentation acceptable to Agent and Majority Lenders. The terms and conditions
of the New Heller Note (including, without limitation, subordination terms
applicable to the same) shall be acceptable to Agent and Majority Lenders.

     9.8. FUNDING OF SECURED SUBORDINATED DEBT. The entire amount of the Secured
Subordinated Debt shall have been funded in accordance with the terms of the
Secured Subordinated Debt Documents.

     9.9. RESTRUCTURING OF SERIES A PREFERRED STOCK. The Series A Preferred
Stock shall have been restructured pursuant to terms and conditions satisfactory
to Agent and Majority Lenders.

          SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

     10.1. EVENTS OF DEFAULT.

     The occurrence of one or more of the following events shall constitute an
"Event of Default":

          10.1.1. PAYMENT OF OBLIGATIONS. Borrower shall fail to pay any of the
     Obligations on the due date thereof (whether due at stated maturity, on
     demand, upon acceleration or otherwise) and, in the case of interest
     payments only, such failure continues for 5 days after the due date
     thereof.

          10.1.2. MISREPRESENTATIONS. Any representation, warranty or other
     statement made or furnished to Agent or any Lender by or on behalf of
     Borrower, any Subsidiary of Borrower or any Guarantor in this Agreement,
     any of the other Loan Documents or any instrument, certificate or financial
     statement furnished in compliance with or in reference thereto proves to
     have been false or misleading in any material respect when made or
     furnished or when reaffirmed pursuant to subsection 7.2 hereof.

          10.1.3. BREACH OF SPECIFIC COVENANTS. Borrower shall fail or neglect
     to perform, keep or observe any covenant contained in subsections 5.2, 5.3,
     6.1.1, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that Borrower is
     required to perform, keep or observe such covenant.

          10.1.4. BREACH OF OTHER COVENANTS. Borrower shall fail or neglect to
     perform, keep or observe any covenant contained in this Agreement (other
     than a covenant which is dealt with specifically elsewhere in subsection
     10.1) and the breach of such other covenant is not cured to Agent's
     satisfaction within 30 days after the sooner to occur of Borrower's receipt
     of notice of such breach from Agent or the date

                                       38
<Page>

     on which such failure or neglect first becomes known to any executive
     officer of Borrower.

          10.1.5. DEFAULT UNDER SECURITY DOCUMENTS, OTHER AGREEMENTS OR PURCHASE
     DOCUMENT. Any event of default shall occur under, or Borrower or any of its
     Subsidiaries shall default in the performance or observance of any term,
     covenant, condition or agreement contained in, any of the Security
     Documents or the Other Agreements and such default shall continue beyond
     any applicable grace period.

          10.1.6. OTHER DEFAULTS. There shall occur any default or event of
     default on the part of Borrower or any of its Subsidiaries under any
     agreement, document or instrument to which Borrower or such Subsidiary is a
     party or by which Borrower or such Subsidiary or any of its Property is
     bound, creating or relating to any Indebtedness for Money Borrowed in an
     amount exceeding, at any time, $500,000 in the aggregate (other than the
     Obligations), if (a) the payment or maturity of such Indebtedness is
     accelerated in consequence of such event of default, (b) demand for payment
     of such Indebtedness is made or (c) any collection action in respect
     thereof is commenced.

          10.1.7. UNINSURED LOSSES. Any material loss, theft, damage or
     destruction of any of the Collateral such that the aggregate value of such
     Collateral MINUS the amount of such Collateral covered by insurance exceeds
     $500,000.

          10.1.8. INSOLVENCY AND RELATED PROCEEDINGS. Borrower or any Guarantor
     shall cease to be Solvent or shall suffer the appointment of a receiver,
     trustee, custodian or similar fiduciary, or shall make an assignment for
     the benefit of creditors, or any petition for an order for relief shall be
     filed by or against Borrower or any Guarantor under the federal bankruptcy
     laws (if against Borrower or any Guarantor, the continuation of such
     proceeding for more than 60 days), or Borrower or any Guarantor shall make
     any offer of settlement, extension or composition to their respective
     unsecured creditors generally.

          10.1.9. BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
     cessation of a substantial part of the business of Borrower, any Subsidiary
     of Borrower or any Guarantor for a period which significantly and adversely
     affects Borrower's, such Subsidiary's or such Guarantor's capacity to
     continue its business, on a profitable basis; or Borrower, any Subsidiary
     of Borrower or any Guarantor shall suffer the loss or revocation of any
     license or permit now held or hereafter acquired by Borrower, such
     Subsidiary or such Guarantor which is necessary to the continued or lawful
     operation of its business; or Borrower, any Subsidiary of Borrower or any
     Guarantor shall be enjoined, restrained or in any way prevented by court,
     governmental or administrative order from conducting all or any material
     part of its business affairs; or any material lease or agreement pursuant
     to which Borrower, such Subsidiary or any Guarantor leases, uses or
     occupies any Property shall be canceled or terminated prior

                                       39
<Page>

     to the expiration of its stated term; or any material part of the
     Collateral shall be taken through condemnation or the value of such
     Property shall be impaired through condemnation.

          10.1.10. CHANGE OF OWNERSHIP.

     (a)  The occurrence of one or more of the following events: (i) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Borrower to any
Person or group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group"), together with any Affiliates thereof (whether or not otherwise
in compliance with the provisions of this Agreement); (ii) the approval by the
holders of the capital stock of Borrower of any plan or proposal for the
liquidation or dissolution of Borrower (whether or not otherwise in compliance
with the provisions of this Agreement); (iii) any Person or Group (other than
KCSN Acquisition Company, L.P. and its Affiliates, Kohlberg & Company, LLC and
its Affiliates, Kohlberg Management IV, LLC and its Affiliates, Michael F.
Vukelich and his Affiliates, SunAmerica Asset Management Corp., AIG Global
Investment Corp., Ares Management, L.P., and TCW/Crescent Mezzanine, LLC, or the
holders of the Prior Bonds (immediately prior to the issuance of the New Bonds)
or any combination of such entities and their respective Affiliates) shall
become the owner, directly or indirectly, beneficially or of record, of more
than 35% of the shares of the issued and outstanding capital stock of Borrower
that is generally entitled to vote for the election of directors (other than the
Series A Preferred Stock and the Series B Preferred Stock (but not the Series
B-1 Preferred Stock)); (iv) the replacement of a majority of Borrower's
directors over a two-year period from the directors who constituted the
directors of Borrower at the beginning of such period, and such replacement
shall not have been approved by a vote of any of (A) Agent, (B) the holders of a
majority of the issued and outstanding shares of Series B Preferred Stock (but
not the Series B-1 Preferred Stock), or (C) a majority of the directors of
Borrower then still in office who either were directors at the beginning of such
period or whose election as a director was previously so approved; (v) the
occurrence of any "Change of Control" under and as defined in the New Indenture
or (vi) the occurrence of any "Change of Control" under and as defined in the
Certificates of Designation for the Series A Preferred Stock or the Series B
Preferred Stock (but not the Series B-1 Preferred Stock).

     (b)  Either (i) David Barrett ceases for any reason whatsoever to be the
chief executive officer of Borrower and is not replaced within 60 days by a
chief executive officer reasonably acceptable to Agent or (ii) Charles Ferer
ceases for any reason whatsoever to be the chief financial officer of Borrower
and is not replaced within 60 days by a chief financial officer reasonably
acceptable to Agent.

     (c)  David Barrett ceases for any reason whatsoever to be the chief
executive officer of Borrower and Charles Ferer ceases for any reason whatsoever
to be the chief financial officer of Borrower within any period of six (6)
consecutive months.

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          10.1.11. ERISA. A Reportable Event shall occur which Agent, in its
     sole discretion, shall determine in good faith constitutes grounds for the
     termination by the Pension Benefit Guaranty Corporation of any Plan or for
     the appointment by the appropriate United States district court of a
     trustee for any Plan, or if any Plan shall be terminated or any such
     trustee shall be requested or appointed, or if Borrower, any Subsidiary of
     Borrower or any Guarantor is in "default" (as defined in Section 4219(c)(5)
     of ERISA) with respect to payments to a Multiemployer Plan resulting from
     Borrower's, such Subsidiary's or such Guarantor's complete or partial
     withdrawal from such Plan.

          10.1.12. CHALLENGE TO AGREEMENT. Borrower, any Subsidiary of Borrower
     or any Guarantor, or any Affiliate of any of them, shall challenge or
     contest in any action, suit or proceeding the validity or enforceability of
     this Agreement or any of the other Loan Documents, the legality or
     enforceability of any of the Obligations or the perfection or priority of
     any Lien granted to Agent, for the benefit of itself and Lenders.

          10.1.13. REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
     Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed
     by such Guarantor, or shall repudiate such Guarantor's liability thereunder
     or shall be in default under the terms thereof.

          10.1.14. JUDGMENTS. Any money judgment, writ of attachment or similar
     process (collectively, "Judgments") is issued or rendered against Borrower
     or any of its Subsidiaries, or any of their respective Property (i) in the
     case of money Judgments, in an amount of $250,000 or more for any single
     judgment, attachment or process or $500,000 for all such judgments,
     attachments or processes in the aggregate, in each case in excess of any
     applicable insurance with respect to which the insurer has admitted
     liability and (ii) in the case of non-monetary Judgments, such Judgment or
     Judgments (in the aggregate) are reasonably likely to have a material
     adverse effect on the business of Borrower or any of its Subsidiaries, and,
     in each case, which judgment, attachment or process is not stayed, released
     or discharged within 45 days of if being filed against Borrower, any
     Subsidiary of Borrower or any Guarantor, or any of their respective
     Property.

          10.1.15. CRIMINAL ACTIVITY. Borrower or any Guarantor shall be
     criminally indicted or convicted under any law that could lead to a
     forfeiture of any Property of Borrower or any Guarantor which would be
     reasonably expected to have a Material Adverse Effect or a material and
     adverse impact on the reputation or goodwill of Borrower or any Guarantor.

          10.1.16. ENVIRONMENTAL MATTERS.

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     (a)  Any inquiry, investigation or administrative or judicial proceeding is
commenced against Borrower or any Guarantor with respect to any Environmental
Condition which is reasonably expected, individually or in the aggregate, to
result in a liability equal to or in excess of $250,000.

     (b)  Any order, decree, fine or penalty shall be entered against or imposed
upon Borrower or any Guarantor or any real Property with respect to an
Environmental Condition where the cost of compliance or the amount of such fine
or penalty is reasonably expected, individually or in the aggregate, to exceed
$250,000.

          10.1.17. TAX LIEN. Any tax assessment Lien equal to or in excess of
     $250,000 is imposed.

     10.2. ACCELERATION OF THE OBLIGATIONS.

     Without in any way limiting the right of Lenders to demand payment of any
portion of the Obligations payable on demand in accordance with the terms
hereof, upon or at any time after the occurrence and during the continuance of
an Event of Default, all or any portion of the Obligations shall, at the option
of Agent or Majority Lenders and without presentment, demand protest or further
notice by Agent or any Lender, become at once due and payable and Borrower shall
forthwith pay to Agent, for the ratable benefit of Lenders, the full amount of
such Obligations, PROVIDED, that upon the occurrence of an Event of Default
specified in subsection 10.1.8, all of the Obligations shall become
automatically due and payable without declaration, notice or demand.

     10.3. OTHER REMEDIES.

     Upon or at any time after the occurrence and during the continuance of an
Event of Default, Agent shall have and may exercise from time to time the
following rights and remedies:

          10.3.1. All of the rights and remedies of a secured party under the
     Code or under other applicable law, and all other legal and equitable
     rights to which Agent or any Lender may be entitled, all of which rights
     and remedies shall be cumulative and shall be in addition to any other
     rights or remedies contained in this Agreement or any of the other Loan
     Documents, and none of which shall be exclusive.

          10.3.2. The right to take immediate possession of the Collateral, and
     to (i) require Borrower or any Subsidiary of Borrower to assemble the
     Collateral, at Borrower's expense, and make it available to Agent at a
     place designated by Agent which is reasonably convenient to both parties,
     and (ii) enter any premises where any of the Collateral shall be located
     and to keep and store the Collateral on said premises until sold (and if
     said premises be the Property of Borrower or any Subsidiary of Borrower,
     Borrower agrees not to charge, and shall cause its Subsidiaries not to
     charge, Agent for storage thereof).

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          10.3.3. The right to sell or otherwise dispose of all or any
     Collateral in its then condition, or after any further manufacturing or
     processing thereof, at public or private sale or sales, with such notice as
     may be required by law, in lots or in bulk, for cash or on credit, all as
     Agent, in its sole discretion, may deem advisable. Agent may, at Agent's
     option, disclaim any and all warranties regarding the Collateral in
     connection with any such sale. Borrower agrees that 10 days' written notice
     to Borrower of any public or private sale or other disposition of
     Collateral shall be reasonable notice thereof, and such sale shall be at
     such locations as Agent may designate in said notice. Agent shall have the
     right to conduct such sales on Borrower's or any of its Subsidiary's
     premises, without charge therefor, and such sales may be adjourned from
     time to time in accordance with applicable law. Agent shall have the right
     to sell, lease or otherwise dispose of the Collateral, or any part thereof,
     for cash, credit or any combination thereof, and Agent, on behalf of
     Lenders, may purchase all or any part of the Collateral at public or, if
     permitted by law, private sale and, in lieu of actual payment of such
     purchase price, may set off the amount of such price against the
     Obligations. The proceeds realized from the sale of any Collateral may be
     applied, after allowing 2 Business Days for collection, first to the costs,
     expenses and attorneys' fees incurred by Agent in collecting the
     Obligations, in enforcing the rights of Lenders under the Loan Documents
     and in collecting, retaking, completing, protecting, removing, storing,
     advertising for sale, selling and delivering any Collateral; second to the
     interest due upon any of the Obligations; and third, to the principal of
     the Obligations. If any deficiency shall arise, Borrower and each Guarantor
     shall remain jointly and severally liable to Lenders therefor.

          10.3.4. Agent is hereby granted a license or other right to use,
     without charge, Borrower's labels, patents, copyrights, rights of use of
     any name, trade secrets, trade names, trademarks and advertising matter, or
     any Property of a similar nature, as it pertains to the Collateral, in
     advertising for sale and selling any Collateral and Borrower's rights under
     all licenses and all franchise agreements shall inure to Agent's benefit.

          10.3.5. Agent may, at its option, require Borrower to deposit with
     Agent funds equal to the LC Amount and, if Borrower fails to promptly make
     such deposit, Agent may advance such amount as a Revolving Credit Loan
     (whether or not an Overadvance is created thereby). Each such Revolving
     Credit Loan shall be secured by all of the Collateral and shall bear
     interest and be payable at the same rate and in the same manner as Base
     Rate Revolving Credit Portions. Any such deposit or advance shall be held
     by Agent as a reserve to fund future payments on such LC Guaranties and
     future drawings against such Letters of Credit. At such time as all LC
     Guaranties have been paid or terminated and all Letters of Credit have been
     drawn upon or expired, any amounts remaining in such reserve shall be
     applied against any outstanding Obligations, or, if all Obligations have
     been indefeasibly paid in full, returned to Borrower.

                                       43
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     10.4. SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender at any of its offices for the account of Borrower
or any of its Subsidiaries (regardless of whether such balances are then due to
Borrower or its Subsidiaries), and (B) other property at any time held by or
owed to such Lender to or for the credit or for the account of Borrower or any
of its Subsidiaries, against and on account of any of the Obligations then due
and payable, except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall,
to the extent the amount of any such set off exceeds its pro rata share of the
amount set off, purchase for cash (and the other Lenders shall sell) interests
in each such other Lender's pro rata share of the Obligations as would be
necessary to cause such Lender to share such excess with each other Lender in
accordance with their respective pro rata shares.

     10.5. REMEDIES CUMULATIVE; NO WAIVER.

     All covenants, conditions, provisions, warranties, guaranties, indemnities,
and other undertakings of Borrower and each of its Subsidiaries contained in
this Agreement and the other Loan Documents, or in any document referred to
herein or contained in any agreement supplementary hereto or in any schedule or
in any Guaranty Agreement given to Agent or contained in any other agreement
between Agent and Borrower or any of its Subsidiaries, heretofore, concurrently,
or hereafter entered into, shall be deemed cumulative to and not in derogation
or substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to any Lender shall have been fully satisfied. None
of the undertakings, agreements, warranties, covenants and representations of
Borrower or any of its Subsidiaries contained in this Agreement or any of the
other Loan Documents and no Event of Default by Borrower or any of its
Subsidiaries under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Agent, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Agent and directed to Borrower.

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                              SECTION 11. THE AGENT

     11.1. AUTHORIZATION AND ACTION.

     Each Lender hereby appoints and authorizes Agent to take such action on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Each Lender hereby
acknowledges that Agent shall not have by reason of this Agreement assumed a
fiduciary relationship in respect of any Lender. In performing its functions and
duties under this Agreement, Agent shall act solely as Agent of Lenders and
shall not assume, or be deemed to have assumed, any obligation toward, or
relationship of agency or trust with or for, Borrower. As to any matters not
expressly provided for by this Agreement and the other Loan Documents, Agent
may, but shall not be required to, exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; PROVIDED,
however, that Agent shall not be required to take any action which exposes Agent
to any liability or which is contrary to this Agreement, the other Loan
Documents or applicable law, unless Agent is indemnified therefor to its
satisfaction (which may, at Agent's option, include indemnification by each
Lender other than Fleet for its pro rata share of all such liabilities). If
Agent seeks the consent or approval of the Majority Lenders (or a greater or
lesser number of Lenders as required in this Agreement), with respect to any
action hereunder, Agent shall send notice thereof to each Lender and shall
notify each Lender at any time that the Majority Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.

     11.2. AGENT'S RELIANCE, ETC.

     Neither Agent, any Affiliate of Agent, nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be

taken by it or them under or in connection with this Agreement or the other Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, Agent: (i) may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts, (ii) makes no warranties or representations to any Lender and shall not
be responsible to any Lender for any recitals, statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Documents; (iii) shall not have any duty beyond Agent's customary practices in
respect of loans in which Agent is the only lender, to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of this Agreement or the other Loan Documents on the part of Borrower, to
inspect the property (including the books and records) of Borrower or any of its
Subsidiaries, to monitor the financial condition of Borrower or any of its
Subsidiaries or to ascertain the existence or possible existence or

                                       45
<Page>

continuation of any Default or Event of Default; (iv) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (v)
shall not be liable to any Lender for any action taken, or inaction, by Agent
upon the instructions of Majority Lenders pursuant to subsection 11.1 or
refraining to take any action pending such instructions; (vi) shall not be
liable for any apportionment or distributions of payments made by it in good
faith pursuant to Section 3; and (vii) shall incur no liability under or in
respect of this Agreement or the other Loan Documents by acting upon any notice,
consent, certificate, message or other instrument or writing (which may be by
telephone, facsimile, telegram, cable or telex) believed in good faith by it to
be genuine and signed or sent by the proper party or parties. In the event any
apportionment or distribution described in clause (vi) above is determined to
have been made in error, the sole recourse of any Person to whom payment was due
but not made shall be to recover from the recipients of such payments any
payment in excess of the amount to which they are determined to have been
entitled.

     11.3. FLEET AND AFFILIATES.

     With respect to its commitment hereunder to make Loans, Fleet shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not Agent; and the
terms "Lender," "Lenders" or "Majority Lenders" shall, unless otherwise
expressly indicated, include Fleet in its individual capacity as a Lender. Fleet
and its Affiliates may lend money to, and generally engage in any kind of
business with, Borrower, and any Person who may do business with or own
Securities of Borrower all as if Fleet were not Agent and without any duty to
account therefor to any other Lender.

     11.4. LENDER CREDIT DECISION.

     Each Lender acknowledges that it has, independently and without reliance
upon Agent or any other Lender and based on the financial statements referred to
in subsection 7.1.10 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon 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 decisions in taking or not taking action under this Agreement. Agent
shall not have any duty or responsibility, either initially or on an ongoing
basis, to provide any Lender with any credit or other similar information
regarding Borrower or any of its Subsidiaries.

     11.5. INDEMNIFICATION.

     Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower), in accordance with their respective Revolving Loan Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or

                                       46
<Page>

asserted against Agent in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by Agent under this
Agreement; PROVIDED that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share, as set forth above,
of any out-of-pocket expenses (including attorneys' fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrower. The
obligations of Lenders under this subsection 11.5 shall survive the payment in
full of all Obligations and the termination of this Agreement. In the event that
after payment and distribution of any amount by Agent to Lenders, any Lender or
any other Person, including Borrower, any creditor of Borrower or a trustee in
bankruptcy, recovers from Agent any amount found to have been wrongfully paid to
Agent or disbursed by Agent to Lenders, then Lenders, in accordance with their
respective Revolving Loan Percentages, shall reimburse Agent for all such
amounts.

     11.6. AGENCY PROVISIONS RELATING TO COLLATERAL.

     Each Lender authorizes and ratifies Agent's entry into this Agreement and
the Security Documents for the benefit of Lenders. Each Lender agrees that any
action taken by Agent with respect to the Collateral in accordance with the
provisions of this Agreement or the Security Documents, and the exercise by
Agent of the powers set forth herein or therein, together with such other powers
as are reasonably incidental thereto, shall be authorized and binding upon all
Lenders. Agent is hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any Collateral
or the Loan Documents which may be necessary to perfect and maintain perfected
Agent's Liens upon the Collateral, for its benefit and the ratable benefit of
Lenders. Lenders hereby irrevocably authorize Agent, at its option and in its
discretion, to release any Lien granted to or held by Agent upon any Collateral
(i) upon termination of the Agreement and payment and satisfaction of all
Obligations; or (ii) constituting property being sold or disposed of if Borrower
certifies to Agent that the sale or disposition is made in compliance with
subsection 3.3 and subsection 8.2.9 (and Agent may rely conclusively on any such
certificate, without further inquiry); or (iii) constituting property in which
Borrower does not own any interest at the time the Lien was granted or at any
time thereafter; or (iv) in connection with any foreclosure sale or other
disposition of Collateral after the occurrence and during the continuation of an
Event of Default or (v) if approved, authorized or ratified in writing by Agent
at the direction of all Lenders. Upon request by Agent at any time, Lenders will
confirm in writing Agent's authority to release particular types or items of
Collateral pursuant hereto. Agent shall have no obligation whatsoever to any
Lender or to any other Person to assure that the Collateral exists or is owned
by Borrower or any of its Subsidiaries or is cared for, protected or insured or
has been encumbered or that the Liens granted to Agent herein or pursuant to the
Security Documents

                                       47
<Page>

have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of its rights, authorities and powers granted or
available to Agent in this subsection 11.6 or in any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, but consistent with the provisions of this
Agreement, including, without limitation, the provisions of subsection 6.1.3,
given Agent's own interest in the Collateral as a Lender and that Agent shall
have no duty or liability whatsoever to any Lender.

     11.7. AGENT'S RIGHT TO PURCHASE COMMITMENTS.

     Agent shall have the right, but shall not be obligated, at any time upon
written notice to any Lender and with the consent of such Lender, which may be
granted or withheld in such Lender's sole discretion, to purchase for Agent's
own account all of such Lender's interests in this Agreement, the other Loan
Documents and the Obligations, for the face amount of the outstanding
Obligations owed to such Lender, including, without limitation, all accrued and
unpaid interest and fees (including LIBOR breakage fees to the extent that the
same have been actually incurred by such Lender in connection with such
purchase).

     11.8. RIGHT OF SALE, ASSIGNMENT, PARTICIPATIONS.

     Borrower hereby consents to any Lender's participation, sale, assignment,
transfer or other disposition, at any time or times hereafter, of this Agreement
and any of the other Loan Documents, or of any portion hereof or thereof,
including, without limitation, such Lender's rights, title, interests, remedies,
powers, and duties hereunder or thereunder subject to the terms and conditions
set forth below:

          11.8.1. SALES, ASSIGNMENTS. Each Lender hereby agrees that, with
     respect to any sale or assignment (i) no such sale or assignment shall be
     for an amount of less than the lesser of (a) $5,000,000 and (b) such
     Lender's total Revolving Loan Commitment at such time, (ii) each such sale
     or assignment shall be made on terms and conditions which are customary in
     the industry at the time of the transaction, (iii) Agent and, unless an
     Event of Default is then in existence, Borrower, must consent, no such
     consent to be unreasonably withheld or delayed, to each such assignment to
     a party which is not an original signatory to this Agreement and (iv) the
     assigning Lender shall pay to the Agent a processing and recordation fee of
     $3,500 and any out-of-pocket attorneys' fees and expenses incurred by the
     Agent in connection with any such sale or assignment. After such sale or
     assignment has been consummated (x) the assignee lender thereupon shall
     become a "Lender" for all purposes of this Agreement and (y) the assigning
     Lender shall have no further liability for funding the portion of Revolving
     Loan Commitments assumed by such other Lender.

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          11.8.2. PARTICIPATIONS. Any Lender may grant participations in its
     extensions of credit hereunder to any other Lender or other lending
     institution (a "Participating Lender"), provided that (i) no Participating
     Lender shall thereby acquire any direct rights under this Agreement, (ii)
     no Participating Lender shall be granted any right to consent to any
     amendment, except to the extent any of the same pertain to (A) reducing the
     aggregate principal amount of, or interest rate on, or fees applicable to,
     any Loan or (B) extending the final stated maturity of any Loan or the
     stated maturity of any portion of any payment of principal of, or interest
     or fees applicable to, any of the Loans; provided, however, that the rights
     described in this subclause (B) shall not be deemed to include the right to
     consent to any amendment with respect to or which has the effect of
     requiring any mandatory prepayment of any portion of any Loan or any
     amendment or waiver of any Default or Event of Default, (iii) no sale of a
     participation in extensions of credit shall in any manner relieve the
     originating Lender of its obligations hereunder, (iv) the originating
     Lender shall remain solely responsible for the performance of such
     obligations, (v) Borrower and the Agent shall continue to deal solely and
     directly with the originating Lender in connection with the originating
     Lender's rights and obligations under this Agreement and the other Loan
     Documents, (vi) in no event shall any financial institution purchasing the
     participation grant a participation in its participation interest in the
     Loans without the prior written consent of Borrower (so long as no Event of
     Default shall have occurred and be continuing) and Agent, which consents
     shall not unreasonably be withheld and (vii) all amounts payable by
     Borrower hereunder shall be determined as if the originating Lender had not
     sold any such participation.

          11.8.3. CERTAIN AGREEMENTS OF BORROWER. Borrower agrees that (i) it
     will assist and cooperate with each Lender in any manner reasonably
     requested by such Lender to effect the sale of participation in or
     assignments of any of the Loan Documents or any portion thereof or interest
     therein, including, without limitation, assisting in the preparation of
     appropriate disclosure documents; and (ii) subject to the provisions of
     subsection 12.14, such Lender may disclose credit information regarding
     Borrower to any potential participant or assignee.

          11.8.4. NON U.S. RESIDENT TRANSFEREES. If, pursuant to this subsection
     11.8, any interest in this Agreement or any Loans is transferred to any
     transferee which is organized under the laws of any jurisdiction other than
     the United States or any state thereof, the transferor Lender shall cause
     such transferee (other than any participant), and may cause any
     participant, concurrently with the effectiveness of such transfer, to (i)
     represent to the transferor Lender (for the benefit of the transferor
     Lender, the Agent and Borrower) that under applicable law and treaties no
     Taxes will be required to be withheld by Agent, Borrower or the transferor
     Lender with respect to any payments to be made to such transferee in
     respect of the interest so transferred, (ii) furnish to the transferor
     Lender, Agent and Borrower either United States Internal Revenue Service
     Form W-8BEN or W-8ECI (wherein such transferee claims entitlement to
     complete exemption from United States federal withholding tax on all
     interest payments hereunder), and (iii) agree (for the benefit of the
     transferor Lender, Agent and

                                       49
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     Borrower) to provide the transferor Lender, Agent and Borrower a new Form
     W-8BEN or W-8ECI upon the obsolescence of any previously delivered form and
     comparable statements in accordance with applicable United States laws and
     regulations and amendments duly executed and completed by such transferee,
     and to comply from time to time with all applicable United States laws and
     regulations with regard to such withholding tax exemption.

     11.9. AMENDMENT.

     No amendment or waiver of any provision of this Agreement or any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Majority
Lenders and Borrower, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall be effective, unless (i) in
writing and signed by each Lender, do any of the following: (1) increase the
aggregate Revolving Loan Commitments, or any Lender's Revolving Loan Commitment,
(2) reduce the principal of, or interest on, amounts payable hereunder other
than those payable only to Fleet in its capacity as Agent, which may be reduced
by Fleet unilaterally, (3) decrease any interest rate payable hereunder except
as provided in subsection 2.1.2, (4) postpone any date fixed for any payment of
principal of, or interest on, amounts payable hereunder, other than those
payable only to Fleet in its capacity as Agent, which may be postponed by Fleet
unilaterally, (5) reduce the percentage of Lenders that shall be required for
Lenders or any of them to take any action hereunder, (6) release or discharge
any Person liable for the performance of any obligations of Borrower hereunder
or under any of the Loan Documents, (7) amend any provision of this Agreement
that requires the consent of all Lenders or consent to or waive any breach
thereof, (8) amend this subsection 11.9, Section 9 (with respect to the making
of the initial Loans and the issuance of the initial Letters of Credit),
subsection 1.1.1(b) or subsection 11.6 , (9) amend the definition of the term
"Borrowing Base", "Eligible Account", "Eligible Inventory" or "Majority Lenders"
set forth in the Appendix A to this Agreement or (10) change the frequency of,
the detail required to be included in or the deadlines for appraisals or other
reports on the Collateral required to be delivered hereunder; or (ii) in writing
and signed by Lenders holding the Revolving Loan Percentages specified therein
with respect to any provision of this Agreement that requires the agreement,
consent or approval of Lenders holding such Revolving Loan Percentages in a
different amount than Majority Lenders; or (iii) in writing and signed by Agent
in addition to the Majority Lenders required above to take such action, if the
amendment, waiver or consent in question affects the rights or duties of Agent
under this Agreement or any Loan Document. Notwithstanding anything to the
contrary contained in this Agreement, no amendment to increase the advance rates
set forth in clauses (ii)(1) and (ii)(2) of the definition of Borrowing Base
shall be effective unless the same shall be in writing and signed by each Lender
with a Revolving Loan Commitment in excess of $5,000,000.

                                       50
<Page>

     11.10. RESIGNATION OF AGENT; APPOINTMENT OF SUCCESSOR.

     The Agent may resign as Agent by giving not less than 30 days' prior
written notice to the Lenders and Borrower. If the Agent shall resign under this
Agreement, then, subject to the consent of the Borrower (which consent shall not
be unreasonably withheld and which consent shall not be required during any
period in which an Event of Default exists) either (i) the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders or (ii)
if a successor agent shall not be so appointed and approved within the 30 day
period following the Agent's notice to the Lenders and Borrower of its
resignation, then the Agent shall appoint a successor agent who shall serve as
Agent until such time as the Majority Lenders appoint a successor agent. Upon
its appointment, such successor agent shall succeed to the rights, powers and
duties of the Agent and the term "Agent" shall mean such successor effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 11 shall inure to the
benefit of such former Agent and such former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was an Agent under this Agreement.

     11.11. RIGHTS AND REMEDIES TO BE EXERCISED BY AGENT ONLY.

     In the event any remedy may be exercised with respect to this Agreement,
any other Loan Document or the Collateral, Agent shall pursue remedies
designated by Majority Lenders, PROVIDED, that Agent shall not be required to
act or not to act if to do so would expose Agent to liability or would be
contrary to this Agreement, any other Loan Document or to applicable law. Each
Lender agrees that, except as provided in subsection 10.4, no Lender shall have
any right individually (a) to realize upon the security created by this
Agreement or any other Loan Document, (b) to enforce any provision of this
Agreement or any other Loan document, or (c) to make demand under this Agreement
or any other Loan Document.

                            SECTION 12. MISCELLANEOUS

     12.1. POWER OF ATTORNEY.

     Borrower hereby irrevocably designates, makes, constitutes and appoints
Agent (and all Persons designated by Agent) as Borrower's true and lawful
attorney (and agent-in-fact) and Agent, or Agent's agent, may, without notice to
Borrower and in Borrower's or Agent's name, but at the cost and expense of
Borrower:

          12.1.1. At such time or times upon and during the continuance of the
     occurrence of a Default or an Event of Default as Agent or said agent, in
     its sole discretion, may determine, endorse Borrower's name on any checks,
     notes, acceptances, drafts, money orders or any other evidence of payment
     or proceeds of the Collateral which come into the possession of Agent or
     under Agent's control.

                                       51
<Page>

          12.1.2. At such time or times upon and during the continuance of the
     occurrence of an Event of Default as Agent or its agent in its sole
     discretion may determine: (i) demand payment of the Accounts from the
     Account Debtors, enforce payment of the Accounts by legal proceedings or
     otherwise, and generally exercise all of Borrower's rights and remedies
     with respect to the collection of the Accounts; (ii) settle, adjust,
     compromise, discharge or release any of the Accounts or other Collateral or
     any legal proceedings brought to collect any of the Accounts or other
     Collateral; (iii) sell or assign any of the Accounts and other Collateral
     upon such terms, for such amounts and at such time or times as Agent deems
     advisable; (iv) take control, in any manner, of any item of payment or
     proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
     name to a proof of claim in bankruptcy or similar document against any
     Account Debtor or to any notice of lien, assignment or satisfaction of lien
     or similar document in connection with any of the Collateral; (vi) receive,
     open and dispose of all mail addressed to Borrower and notify postal
     authorities to change the address for delivery thereof to such address as
     Agent may designate; (vii) endorse the name of Borrower upon any of the
     items of payment or proceeds relating to any Collateral and deposit the
     same to the account of Agent on account of the Obligations; (viii) endorse
     the name of Borrower upon any chattel paper, document, instrument, invoice,
     freight bill, bill of lading or similar document or agreement relating to
     the Accounts, Inventory and any other Collateral; (ix) use Borrower's
     stationery and sign the name of Borrower to verifications of the Accounts
     and notices thereof to Account Debtors; (x) use the information recorded on
     or contained in any data processing equipment and computer hardware and
     software relating to the Accounts, Inventory, Equipment and any other
     Collateral; (xi) make and adjust claims under policies of insurance; and
     (xii) do all other acts and things necessary, in Agent's determination, to
     fulfill Borrower's obligations under this Agreement.

          The power of attorney granted hereby shall constitute a power coupled
     with an interest and shall be irrevocable.

     12.2. INDEMNITY.

     Borrower hereby agrees to indemnify and hold Agent and each Lender harmless
from and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Agent or such Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
each Lender against and save it harmless from all claims of any Person with
respect to the Collateral. Without limiting the generality of the foregoing,
these indemnities shall extend to any claims asserted against Agent or any
Lender by any Person under any Environmental Laws or similar laws by reason of
Borrower's or any other Person's failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances. Notwithstanding any
contrary provision in this Agreement, the Obligations of

                                       52
<Page>

Borrower under this subsection 12.2 shall survive the payment in full of the
other Obligations and the termination of this Agreement.

     12.3. NO SALE OF INTEREST BY BORROWER.

     Borrower may not sell, assign or transfer any interest in this Agreement,
any of the other Loan Documents, or any of the Obligations, or any portion
thereof, including, without limitation, Borrower's rights, title, interests,
remedies, powers, and duties hereunder or thereunder.

     12.4. SEVERABILITY.

     Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

     12.5. SUCCESSORS AND ASSIGNS.

     This Agreement, the Other Agreements and the Security Documents shall be
binding upon and inure to the benefit of the successors and assigns of Borrower
and Agent permitted under Section 11.8.

     12.6. CUMULATIVE EFFECT; CONFLICT OF TERMS.

     The provisions of the Other Agreements and the Security Documents are
hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in subsection 3.2 and except as otherwise provided in any of
the other Loan Documents by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in direct
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

     12.7. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.

     12.8. NOTICE.

     Except as otherwise provided herein, all notices, requests and demands to
or upon a party hereto, to be effective, shall be in writing and shall be sent
by personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered

                                       53
<Page>

against receipt, 1 Business Day after sent with an overnight courier for next
Business Day delivery or, in the case of facsimile notice, the Business Day when
sent, addressed as follows:

     If to Agent:     Fleet Capital Corporation
                      One South Wacker Drive
                      Suite 1400
                      Chicago, Illinois 60606
                      Attention: Loan Administration Manager
                      Facsimile No.: (312) 332-6537

     With a copy to:  Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd.
                      55 East Monroe Street
                      Suite 3700
                      Chicago, Illinois  60603
                      Attention: James B. Rosenbloom
                      Facsimile No.: (312) 332-2196

     If to Borrower:  Color Spot Nurseries, Inc.
                      3478 Buskirk Avenue
                      Suite 260
                      Pleasant Hill, California  94523
                      Attention: Charles Ferer
                      Facsimile No.: (925) 935-2331

     With a copy to:  Brownstein, Hyatt & Farber, P.C.
                      410 Seventeenth Street
                      22nd Floor
                      Denver, Colorado  80202-4437
                      Attention: Steven S. Siegel
                      Facsimile No.: (303) 223-1111

or to such other address as each party may designate for itself by notice given
in accordance with this subsection 12.8; PROVIDED, HOWEVER, that any notice,
request or demand to or upon Agent pursuant to subsection 3.1.1 or 4.2.2 shall
not be effective until received by Agent.

     12.9. AGENT'S AND LENDERS' CONSENT.

     Whenever Agent's or any Lender's consent is required to be obtained under
this Agreement, any of the Other Agreements or any of the Security Documents as
a condition to any action, inaction, condition or event, Agent or any Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional collateral
security for the Obligations, the payment of money or any other matter.

                                       54
<Page>

     12.10. CREDIT INQUIRIES.

     Borrower hereby authorizes and permits Agent and each Lender to respond to
usual and customary credit inquiries from third parties concerning Borrower or
any of its Subsidiaries.

     12.11. TIME OF ESSENCE.

     Time is of the essence of this Agreement, the Other Agreements and the
Security Documents.

     12.12. ENTIRE AGREEMENT.

     This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.

     12.13. INTERPRETATION.

     No provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.

     12.14. CONFIDENTIALITY.

     Each Lender shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a prospective participant or assignee in
connection with the contemplated participation or assignment or as required or
requested by any governmental authority or representative thereof or pursuant to
legal process and shall require any such participant or assignee to agree to
comply with this subsection 12.14.

     12.15. GOVERNING LAW; CONSENT TO FORUM.

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES
IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION

                                       55
<Page>

ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT OR ANY LENDER,
BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF COOK COUNTY,
ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
AGENT OR ANY LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE AS
PROVIDED IN SUBSECTION 12.8. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

     12.16. WAIVERS BY BORROWER.

     BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH EACH LENDER HEREBY
ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT
OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO AGENT'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO

                                       56
<Page>

EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO EACH
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT EACH LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     12.17. ILLINOIS COLLATERAL PROTECTION ACT.

     Unless Borrower provides Agent with evidence of the insurance coverage
required by this Agreement, Agent may purchase insurance at Borrower's expense
to protect Agent's and Lenders' interests in the Collateral. This insurance may,
but need not, protect Borrower's or any of its Subsidiary's interests. The
coverage that Agent purchases may not pay any claim that Borrower or any of its
Subsidiaries may make or any claim that is made against Borrower or any of its
Subsidiaries in connection with the Collateral. Borrower may later cancel any
insurance purchased by Agent, but only after providing Agent with evidence that
Borrower has obtained insurance as required by this Agreement. If Agent
purchases insurance for the Collateral, Borrower will be responsible for the
costs of that insurance, including interest and any other charges that may be
imposed in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance. The costs of the
insurance may be added to the Loans. The cost of the insurance may be more than
the cost of insurance Borrower or any of its Subsidiaries may be able to obtain
on its own.

                                       57
<Page>

     IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.

                                        COLOR SPOT NURSERIES, INC., a Delaware
                                        corporation

                                        By
                                          ------------------------------------
                                        Title: Chief Financial Officer

                                        Accepted in Chicago, Illinois:

                                        FLEET CAPITAL CORPORATION, as Agent and
                                        as a Lender

                                        By
                                          ------------------------------------
                                        Title
                                             ---------------------------------

                                        Revolving Loan Commitment:  $33,300,000

                                        COMERICA BANK, as a Lender

                                        By
                                          ------------------------------------
                                        Title
                                             ---------------------------------

                                        Revolving Loan Commitment:  $6,700,000
                                        FOOTHILL CAPITAL CORPORATION

                                        By
                                          ------------------------------------
                                        Title
                                             ---------------------------------

                                        Revolving Loan Commitment:  $15,000,000

                                       58
<Page>

                                   APPENDIX A

                               GENERAL DEFINITIONS

     When used in the Amended and Restated Loan and Security Agreement dated as
of November 20, 2001, by and among Fleet Capital Corporation, as Agent, the
other Lenders party thereto and Color Spot Nurseries, Inc., the following terms
shall have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):

          ACCOUNT DEBTOR - any Person who is or may become obligated under or on
     account of an Account.

          ACCOUNTS - all accounts, contract rights, chattel paper, instruments
     and documents, whether now owned or hereafter created or acquired by
     Borrower or any of its Subsidiaries, or in which Borrower or any of its
     Subsidiaries now has or hereafter acquires any interest.

          AFFILIATE - a Person (other than a Subsidiary): (i) which directly, or
     indirectly through one or more intermediaries, controls, or is controlled
     by, or is under common control with, a Person; (ii) which beneficially owns
     or holds 10% or more of any class of the Voting Stock of a Person; or (iii)
     10% or more of the Voting Stock (or in the case of a Person which is not a
     corporation, 10% or more of the equity interest) of which is beneficially
     owned or held by a Person or a Subsidiary of a Person.

          AGREEMENT - the Loan and Security Agreement referred to in the first
     sentence of this Appendix A, all Exhibits thereto and this Appendix A.

          APPLICABLE MARGIN - the percentages set forth below with respect to
     the Base Rate Revolving Credit Portion, the Base Rate Seasonal Portion, the
     LIBOR Revolving Credit Portion and the LIBOR Seasonal Portion:

<Table>
<Caption>
                                LIBOR        Base Rate        LIBOR
          Base Rate           Revolving      Seasonal       Seasonal
       Revolving Credit         Credit        Advance        Advance
            Margin              Margin        Margin          Margin
<S>                           <C>            <C>            <C>
            1.00%               3.00%          1.50%           3.50%
</Table>

          APPRAISAL - as defined in subsection 6.6 of the Agreement.

          AVAILABILITY - the amount of money which Borrower is entitled to
     borrow from time to time as Revolving Credit Loans, such amount being the
     difference derived when the sum of the principal amount of Revolving Credit
     Loans then outstanding (including any amounts which Agent may have paid for
     the account of Borrower or any of its Subsidiaries pursuant to any of the
     Loan Documents and which have not

                                      A-1
<Page>

     been reimbursed by Borrower or such Subsidiary) PLUS the LC Amount, and the
     amount of any reserves is subtracted from the Borrowing Base. If the amount
     outstanding is equal to or greater than the Borrowing Base, Availability is
     0.

          BANK - Fleet National Bank.

          BASE RATE - the rate of interest announced or quoted by Bank from time
     to time as its prime rate for commercial loans, whether or not such rate is
     the lowest rate charged by Bank to its most preferred borrowers; and, if
     such prime rate for commercial loans is discontinued by Bank as a standard,
     a comparable reference rate designated by Bank as a substitute therefor
     shall be the Base Rate.

          BASE RATE PORTION - a Base Rate Seasonal Portion or a Base Rate
     Revolving Credit Portion.

          BASE RATE REVOLVING CREDIT PORTION - that portion of the Revolving
     Credit Loans (other than Seasonal Advances) that is not subject to a LIBOR
     Option.

          BASE RATE SEASONAL PORTION - that portion of the Revolving Credit
     Loans which constitute Seasonal Advances that is not subject to a LIBOR
     Option.

          BORROWING BASE - as at any date of determination thereof, an amount
     equal to the lesser of:

               (i)  $55,000,000; or

               (ii) an amount equal to:

                    (1)  80% of the net amount of Eligible Accounts outstanding
               at such date;

                                      PLUS

                    (2)  the lesser of i) $35,000,000 or ii) (a) 50% of the
               value of Eligible Ordinary Inventory consisting of raw materials
               and finished goods at such date, in each case calculated on the
               basis of the lower of cost or market with the cost calculated on
               an average cost basis, PLUS (b) the lesser of (1) $1,500,000 or
               (2) 50% of the value of Eligible Christmas Tree Inventory
               calculated on the basis of the lower of cost or market with the
               cost calculated on an average cost basis;

                                      PLUS

                    (3)  during the period commencing on each October 1 and
               ending on the following April 30 during the Term, the lesser of
               i) (a)

                                      A-2
<Page>

               $10,000,000, for the period from October 1, 2001 through and
               including April 30, 2002 or (b) $8,000,000, for the period from
               October 1, 2002 through and including April 30, 2003 or ii) (a)
               85% of the orderly liquidation value of the Equipment at such
               date owned by a Company and subject to the Lien hereunder in
               favor of Agent (for the benefit of Agent and the Lenders), PLUS
               (b) 70% of the fair market value of the real Property at such
               date owned by a Company and subject to a Mortgage; PROVIDED,
               that, for each such period, if an Appraisal has not been
               delivered to Agent during the September immediately preceding
               such period in accordance with subsection 6.6 of the Agreement,
               such amount shall be $0.

     For purposes hereof, the net amount of Eligible Accounts at any time shall
     be the face amount of such Eligible Accounts less any and all returns,
     rebates, discounts (which may, at Agent's option, be calculated on shortest
     terms), credits, allowances or excise taxes of any nature at any time
     issued, owing, claimed by Account Debtors, granted, outstanding or payable
     in connection with such Accounts at such time.

          BUSINESS DAY - (i) when used with respect to the LIBOR Option, shall
     mean a day on which dealings may be effected in deposits of U.S. Dollars in
     the London interbank foreign currency deposits market and on which Agent is
     conducting and other banks may conduct business in London, England, in the
     State of Wisconsin or the State of Illinois and (ii) when used with respect
     to any other provision of the Agreement, any day excluding Saturday, Sunday
     and any day which is a legal holiday under the laws of the State of
     Wisconsin, the State of Illinois or the State of California or is a day on
     which banking institutions located in any of such states are closed.

          CAPITAL EXPENDITURES - expenditures made or liabilities incurred for
     the acquisition of any fixed assets or improvements, replacements,
     substitutions or additions thereto which have a useful life of more than
     one year, including the total principal portion of Capitalized Lease
     Obligations.

          CAPITALIZED LEASE OBLIGATION - any indebtedness represented by
     obligations under a lease that is required to be capitalized for financial
     reporting purposes in accordance with GAAP.

          CATALYST - Catalyst Equity Fund, L.P.

          CATALYST SECURITIES PURCHASE AGREEMENT - the Securities Purchase
     Agreement dated November 20, 2001 by and among Catalyst, Borrower, CSCT,
     Lone Star, Lone Star GP, LSGR Holdings, Inc. and Oda Nursery, Inc. as in
     effect as of the date hereof.

          CHRISTMAS TREE DIVISION - the business operations of CSCT.

          CHRISTMAS TREE INVENTORY - all tree Inventory of CSCT.

                                      A-3
<Page>

          CLOSING DATE - the date on which all of the conditions precedent in
     Section 9 of the Agreement are satisfied or waived.

          CODE - the Uniform Commercial Code as adopted and in force in the
     State of Illinois, as from time to time in effect.

          COLLATERAL - all of the Property and interests in Property described
     in Section 5 of the Agreement, and all other Property and interests in
     Property that now or hereafter secure the payment and performance of any of
     the Obligations.

          COMPANIES - collectively, Borrower, CSCT and Lone Star.

          CONDITIONAL SALES PROGRAM - The Companies' rebate program for certain
     of its Account Debtors as heretofore conducted in the ordinary course of
     business.

          CONSOLIDATED - the consolidation in accordance with GAAP of the
     accounts or other items as to which such term applies.

          CSCT - Color Spot Christmas Trees, Inc., a Delaware corporation and a
     wholly-owned Subsidiary of Borrower.

          CURRENT ASSETS - at any date means the amount at which all of the
     current assets of a Person would be properly classified as current assets
     shown on a balance sheet at such date in accordance with GAAP.

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

          DEFAULT RATE - as defined in subsection 2.1.2 of the Agreement.

          DERIVATIVE OBLIGATIONS - every obligation of a Person under any
     forward contract, futures contract, swap, option or other financing
     agreement or arrangement (including, without limitation, caps, floors,
     collars and similar agreement), the value of which is dependent upon
     interest rates, currency exchange rates, commodities or other indices.

          DISTRIBUTION - in respect of any company means and includes: (i) the
     payment of any dividends or other distributions on capital stock or other
     equity interests of the company (except distributions in such stock) and
     (ii) the redemption or acquisition of Securities unless made substantially
     contemporaneously from the net proceeds of the sale of Securities.

          DOMINION ACCOUNT - a special account or accounts of Agent established
     by Borrower pursuant to the Agreement at banks selected by Borrower, but
     acceptable to Agent in its reasonable discretion, and over which Agent
     shall have sole and exclusive access and control for withdrawal purposes.

                                      A-4
<Page>

          ELIGIBLE ACCOUNT - an Account arising in the ordinary course of a
     Company's business from the sale of goods or rendition of services which
     Agent, in its reasonable credit judgment, deems to be an Eligible Account.
     Without limiting the generality of the foregoing, no Account shall be an
     Eligible Account if:

               (i)  it arises out of a sale made by a Company to a Subsidiary or
          an Affiliate of such Company or to a Person controlled by an Affiliate
          of such Company; or

               (ii) it is an open Account and remains unpaid more than 90 days
          after the original invoice date (or, with respect to Accounts with
          dating terms that have been approved in writing by Agent acting in its
          sole discretion, it remains more than 60 days past due or unpaid more
          than 120 days after the original invoice date); or

               (iii) 25% or more of the Accounts from the Account Debtor are not
          deemed Eligible Accounts hereunder; or

               (iv) the total unpaid Accounts of the Account Debtor exceed 20%
          of the net amount of all Eligible Accounts, to the extent of such
          excess (except with respect to Account Debtors with a rating of at
          least 5(A)(2) by Dun & Bradstreet, for which the foregoing percentage
          shall be 25%); or

               (v)  any covenant, representation or warranty contained in the
          Agreement with respect to such Account has been breached; or

               (vi) the Account Debtor is also a Company's creditor or supplier,
          or the Account Debtor has disputed liability with respect to such
          Account, or the Account Debtor has made any claim with respect to any
          other Account due from such Account Debtor to a Company, or the
          Account otherwise is or may become subject to any right of setoff or
          rebate by the Account Debtor in each case to the extent of such
          dispute, setoff or rebate; or

               (vii) the Account Debtor has commenced a voluntary case under the
          federal bankruptcy laws, as now constituted or hereafter amended, or
          made an assignment for the benefit of creditors, or a decree or order
          for relief has been entered by a court having jurisdiction in the
          premises in respect of the Account Debtor in an involuntary case under
          the federal bankruptcy laws, as now constituted or hereafter amended,
          or any other petition or other application for relief under the
          federal bankruptcy laws has been filed against the Account Debtor, or
          if the Account Debtor has failed, suspended business, ceased to be
          Solvent, or consented to or suffered a receiver, trustee, liquidator
          or custodian to be appointed for it or for all or a significant
          portion of its assets or affairs; or

                                      A-5
<Page>

               (viii) it arises from a sale to an Account Debtor outside the
          United States and Canada, unless the sale is on letter of credit,
          guaranty or acceptance terms, in each case acceptable to Agent in its
          sole discretion; or

               (ix) except pursuant to the Conditional Sales Program, it arises
          from a sale to the Account Debtor on a bill-and-hold, guaranteed sale,
          sale-or-return, sale-on-approval, consignment or any other repurchase
          or return basis; or

               (x)  the Account Debtor is the United States of America or any
          department, agency or instrumentality thereof, unless the applicable
          Company assigns its right to payment of such Account to Agent, for the
          benefit of itself and Lenders, in a manner satisfactory to Agent, so
          as to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
          Section 203 ET SEQ., as amended); or

               (xi) it is not at all times subject to Agent's duly perfected,
          first priority security interest and to no other Lien that is not a
          Permitted Lien; or

               (xii) the goods giving rise to such Account have not been
          delivered to and accepted by the Account Debtor or the services giving
          rise to such Account have not been performed by a Company and accepted
          by the Account Debtor or the Account otherwise does not represent a
          final sale; or

               (xiii) the Account is evidenced by chattel paper or an instrument
          of any kind, or has been reduced to judgment; or

               (xiv) the applicable Company has made any agreement with the
          Account Debtor for any deduction therefrom, except for discounts or
          allowances which are made in the ordinary course of business for
          prompt payment and which discounts or allowances are reflected in the
          calculation of the face value of each invoice related to such Account;
          or

               (xv) the applicable Company has made an agreement with the
          Account Debtor to extend the time of payment thereof.

          ELIGIBLE CHRISTMAS TREE INVENTORY - Eligible Inventory consisting of
     Christmas Tree Inventory.

          ELIGIBLE INVENTORY - such Inventory of a Company (other than packaging
     materials, supplies, displays and parts) which Agent, in its reasonable
     credit judgment, deems to be Eligible Inventory. Without limiting the
     generality of the foregoing, no Inventory shall be Eligible Inventory if:

               (i)  it is not raw materials or finished goods; or

                                      A-6
<Page>

               (ii) it is not in good, new and saleable condition; or

               (iii) it is slow-moving, obsolete or unmerchantable; or

               (iv) it does not meet all standards imposed by any applicable
          governmental agency or authority; or

               (v)  it does not conform in all respects to the warranties and
          representations set forth in the Agreement; or

               (vi) it is not at all times subject to Agent's duly perfected,
          first priority security interest and no other Lien except a Permitted
          Lien; or

               (vii) it is not situated at a location in compliance with the
          Agreement or is in transit; or

               (viii) it is situated at a location for which an acceptable
          mortgage, leasehold mortgage or landlord's, warehouseman's or
          processor's agreement has not been delivered to Agent, unless
          otherwise agreed by Agent.

          ELIGIBLE ORDINARY INVENTORY - Eligible Inventory consisting of
     Ordinary Inventory.

          ENVIRONMENTAL CONDITION - as defined in the Catalyst Securities
     Purchase Agreement (including any definitions included within such defined
     term).

          ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
     regulations, ordinances, programs, permits, guidances, orders and consent
     decrees relating to health, safety and environmental matters.

          EQUIPMENT - all machinery, apparatus, equipment, fittings, furniture,
     fixtures, motor vehicles and other tangible personal Property (other than
     Inventory) of every kind and description used in a Company's operations or
     owned by such Company or in which such Company has an interest, whether now
     owned or hereafter acquired by such Company and wherever located, and all
     parts, accessories and special tools and all increases and accessions
     thereto and substitutions and replacements therefor.

          ERISA - the Employee Retirement Income Security Act of 1974, as
     amended, and all rules and regulations from time to time promulgated
     thereunder.

          EVENT OF DEFAULT - as defined in subsection 10.1 of the Agreement.

          EXCHANGE ACT - the Securities Exchange Act of 1934, as amended, or any
     successor statute or statutes thereto.

          FLEET - as defined in the first paragraph of the Agreement.

                                      A-7
<Page>

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

          GENERAL INTANGIBLES - all intangible personal property of Borrower and
     each of its Subsidiaries (including things in action) other than goods,
     Accounts, chattel paper, documents, instruments and money, whether now
     owned or hereafter created or acquired by Borrower or any of its
     Subsidiaries.

          GUARANTORS - CSCT, Lone Star, Lone Star GP, LSGR Holdings, Inc., Oda
     Nursery, Inc. and any other Person who may have heretofore guaranteed or
     may hereafter guarantee payment or performance of the whole or any part of
     the Obligations.

          GUARANTY AGREEMENTS - the Continuing Guaranty Agreements which have
     been or are to be executed by each Guarantor in form and substance
     satisfactory to Agent.

          HELLER - Heller Equity Capital Corporation, a Delaware corporation.

          INDEBTEDNESS - as applied to a Person means, without duplication:

               (i)  all items which in accordance with GAAP would be included in
          determining total liabilities as shown on the liability side of a
          balance sheet of such Person as at the date as of which Indebtedness
          is to be determined, including, without limitation, Capitalized Lease
          Obligations;

               (ii) all obligations of other Persons which such Person has
          guaranteed;

               (iii) all reimbursement obligations in connection with letters of
          credit or letter of credit guaranties issued for the account of such
          Person;

               (iv) Derivative Obligations; and

               (v)  in the case of Borrower (without duplication), the
          Obligations.

          INVENTORY - all of each Company's inventory, whether now owned or
     hereafter acquired including, but not limited to, all goods intended for
     sale or lease by each Company or for display or demonstration; all work in
     process; all crops growing or to be grown; all plants; all raw materials
     and other materials and supplies of every nature and description used or
     which might be used in connection with the manufacture, printing, packing,
     shipping, advertising, selling, leasing or furnishing of such goods or
     otherwise used or consumed in each Company's business; and all documents
     evidencing and General Intangibles relating to any of the foregoing,
     whether now owned or hereafter acquired by any Company.

                                      A-8
<Page>

          INVESTMENT PROPERTY - all of Borrower's and each of its Subsidiary's
     investment property, whether now owned or hereafter acquired, including,
     but not limited to, all securities (certificated or uncertificated),
     securities accounts, securities entitlements, commodity accounts and
     commodity contracts.

          LC AMOUNT - at any time, the aggregate undrawn face amount of all
     Letters of Credit and LC Guaranties then outstanding.

          LC GUARANTY - any guaranty pursuant to which Agent or any Affiliate of
     Agent shall guaranty the payment or performance by Borrower of its
     reimbursement obligation under any letter of credit.

          LC OBLIGATIONS - any Obligations that arise from any draw against any
     Letter of Credit or against any letter of credit supported by an LC
     Guaranty.

          LEGAL REQUIREMENT - any requirement imposed upon Agent or any Lender
     by any law of the United States of America or the United Kingdom or by any
     regulation, order, interpretation, ruling or official directive (whether or
     not having the force of law) of the Federal Reserve Board, the Bank of
     England or any other board, central bank or governmental or administrative
     agency, institution or authority of the United States of America, the
     United Kingdom or any political subdivision of either thereof.

          LENDER - as defined in the first paragraph of this Agreement.

          LETTER OF CREDIT - any letter of credit issued by Agent, Bank or any
     other Affiliate of Agent for the account of Borrower.

          LIBOR INTEREST PAYMENT DATE - with respect to any LIBOR Portion, the
     last day of each calendar month occurring during the applicable LIBOR
     Period and the last day of the applicable LIBOR Period.

          LIBOR OPTION - the option granted pursuant to subsection 2.3 of the
     Agreement to have the interest on all or any portion of the principal
     amount of the Revolving Credit Loans based on a LIBOR Rate.

          LIBOR PERIOD - any period of one month, two months, three months or
     six months, commencing on a Business Day, selected as provided in
     subsection 2.3(i) of the Agreement; PROVIDED, however that no LIBOR Period
     shall extend beyond the last day of the Term unless Borrower and Lenders
     have agreed to an extension of the Term beyond the expiration of the LIBOR
     Period in question. If any LIBOR Period so selected shall end on a date
     that is not a Business Day, such LIBOR Period shall instead end on the next
     preceding or succeeding Business Day as determined by Agent in accordance
     with the then current banking practice in London; PROVIDED, that Borrower
     shall not be required to pay double interest, even though the preceding
     LIBOR Period ends and the new LIBOR Period begins on the same day. Each

                                      A-9
<Page>

     determination by Agent of the LIBOR Period shall, in the absence of
     manifest error, be conclusive.

          LIBOR PORTION - a LIBOR Revolving Credit Portion or a LIBOR Seasonal
     Portion.

          LIBOR RATE - with respect to any LIBOR Portion for the related LIBOR
     Period, an interest rate per annum (rounded upwards, if necessary, to the
     next higher 1/16 of 1% equal to the product of (i) the Base LIBOR Rate (as
     hereinafter defined) MULTIPLIED by (ii) Statutory Reserves. For purposes of
     this definition, the term "Base LIBOR Rate" shall mean the rate (rounded to
     the next higher 1/16 of 1%) at which deposits of U.S. dollars approximately
     equal in principal amount to the LIBOR Portion specified in the applicable
     LIBOR Request are offered to Agent by prime banks in the London interbank
     foreign currency deposits market at approximately 11:00 a.m., London time,
     3 Business Days prior to the commencement of such LIBOR Period, for
     delivery on the first day of such LIBOR Period. Each determination by Agent
     of any LIBOR Rate shall, in the absence of manifest error, be conclusive.

          LIBOR REQUEST - a notice in writing (or by telephone confirmed by
     telex, telecopy or other facsimile transmission on the same day as the
     telephone request) from Borrower to Agent requesting that interest on a
     Revolving Credit Loan be based on the LIBOR Rate, specifying: (i) the 1st
     day of the LIBOR Period; (ii) the length of the LIBOR Period consistent
     with the definition of that term; and (iii) the dollar amount of the LIBOR
     Revolving Credit Portion or the LIBOR Seasonal Portion consistent with the
     definition of such terms.

          LIBOR REVOLVING CREDIT PORTION - that portion of the Revolving Credit
     Loans (other than Seasonal Advances) specified in a LIBOR Request
     (including any portion of Revolving Credit Loans which is being borrowed by
     Borrower concurrently with such LIBOR Request) which is not less than
     $1,000,000 and is an integral multiple of $100,000, which does not exceed
     the outstanding balance of Revolving Credit Loans not already subject to a
     LIBOR Option and, which, as of the date of the LIBOR Request specifying
     such LIBOR Portion, has met the conditions for basing interest on the LIBOR
     Rate in subsection 2.3 of the Agreement and the LIBOR Period of which was
     commenced and not terminated.

          LIBOR SEASONAL PORTION - that portion of the Revolving Credit Loans
     which constitutes a Seasonal Advance specified in a LIBOR Request
     (including any portion of a Seasonal Advance which is being borrowed by
     Borrower concurrently with such LIBOR Request) which is not less than
     $1,000,000 and is an integral multiple of $100,000, which does not exceed
     the outstanding balance of Revolving Credit Loans not already subject to a
     LIBOR Option and, which, as of the date of the LIBOR Request specifying
     such LIBOR Portion, has met the conditions for basing interest on the

                                      A-10
<Page>

     LIBOR Rate in subsection 2.3 of the Agreement and the LIBOR Period of which
     was commenced and not terminated.

          LIEN - any interest in Property securing an obligation owed to, or a
     claim by, a Person other than the owner of the Property, whether such
     interest is based on common law, statute or contract. The term "Lien" shall
     also include rights of seller under conditional sales contracts or title
     retention agreements, reservations, exceptions, encroachments, easements,
     rights-of-way, covenants, conditions, restrictions, leases and other title
     exceptions and encumbrances affecting Property. For the purpose of the
     Agreement, Borrower shall be deemed to be the owner of any Property which
     it has acquired or holds subject to a conditional sale agreement or other
     arrangement pursuant to which title to the Property has been retained by or
     vested in some other Person for security purposes.

          LOAN ACCOUNT - the loan account established on the books of Agent
     pursuant to subsection 3.6 of the Agreement.

          LOAN DOCUMENTS - the Agreement, the Other Agreements and the Security
     Documents.

          LONE STAR - Lone Star Growers, L.P., a Delaware limited partnership
     and a Subsidiary of Borrower.

          LOAN STAR GP - Lone Star, Inc., a Delaware corporation and the general
     partner of Lone Star.

          LOANS - all loans and advances of any kind made by any Lender pursuant
     to the Agreement.

          MAJORITY LENDERS - as of any date, (i) Lenders holding 66-2/3% or more
     of the Revolving Loan Percentages of all Lenders as of such date and (ii)
     if there are three or fewer Lenders, at least two Lenders.

          MATERIAL ADVERSE EFFECT - (i) a material adverse effect on the
     business, condition (financial or otherwise), operation, performance or
     properties of Borrower and its Subsidiaries taken as a whole, (ii) a
     material adverse effect on the rights and remedies of Agent and Lenders
     under the Loan Documents, or (iii) the material impairment of the ability
     of Borrower or any of its Subsidiaries to perform its obligations hereunder
     or under any Loan Document.

          MONEY BORROWED - means (i) Indebtedness arising from the lending of
     money by any Person to Borrower or any Subsidiary of Borrower; (ii)
     Indebtedness, whether or not in any such case arising from the lending by
     any Person of money to Borrower or any Subsidiary of Borrower, (1) which is
     represented by notes payable or drafts accepted that evidence extensions of
     credit, (2) which constitutes obligations

                                      A-11
<Page>

     evidenced by bonds, debentures, notes or similar instruments, or (3) upon
     which interest charges are customarily paid (other than accounts payable)
     or that was issued or assumed as full or partial payment for Property;
     (iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
     reimbursement obligations with respect to letters of credit or guaranties
     of letters of credit and (v) Indebtedness of Borrower or any Subsidiary of
     Borrower under any guaranty of obligations that would constitute
     Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if
     owed directly by Borrower or such Subsidiary.

          MORTGAGES - the mortgages, deeds of trust and leasehold mortgages
     executed by Borrower and certain of its Subsidiaries in favor of Agent, for
     the benefit of itself and Lenders, and by which Borrower or such Subsidiary
     grants and conveys to Agent, for the benefit of itself and Lenders, as
     security for the Obligations, a Lien upon the real Property of the
     Companies listed on EXHIBIT A.

          MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
     of ERISA.

          NEW HELLER NOTE - that certain 8% Subordinated Convertible Note in the
     original principal amount of $4,690,473 made by Borrower as of the date
     hereof in favor of Heller.

          NEW INDENTURE - that certain Indenture, dated as of even date
     herewith, between Borrower and the Bank of New York, as Trustee, relating
     to the New Bonds.

          NEW BONDS - Borrower's 13% Senior Subordinated Notes due 2005 in the
     original principal amount of $52,870,833.33 issued under the New Indenture.

          OBLIGATIONS - all Loans, all LC Obligations and all other advances,
     debts, liabilities, obligations, covenants and duties, together with all
     interest, fees and other charges thereon, owing, arising, due or payable
     from Borrower to Agent, for its benefit and the benefit of the Lenders,
     from Borrower to any Lender or from Borrower to Bank, of any kind or
     nature, present or future, whether or not evidenced by any note, guaranty
     or other instrument, whether arising under the Agreement or any of the
     other Loan Documents whether direct or indirect (including those acquired
     by assignment), absolute or contingent, primary or secondary, due or to
     become due, now existing or hereafter arising and however acquired,
     including without limitation any Derivative Obligations owing to Agent or
     Bank. Without limitation of the foregoing, the Obligations shall include
     all "Obligations" existing on the Closing Date under, and as such term is
     separately defined in, the Original Loan Agreement.

          ORDINARY INVENTORY - Inventory other than Christmas Tree Inventory.

          ORIGINAL LOAN AGREEMENT - as defined in the first paragraph of the
     Agreement.

                                      A-12
<Page>

          OTHER AGREEMENTS - any and all agreements, instruments and documents
     (other than the Agreement and the Security Documents), heretofore, now or
     hereafter executed by Borrower, any Subsidiary of Borrower or any other
     third party and delivered to Agent in respect of the transactions
     contemplated by the Agreement.

          OVERADVANCE - as defined in subsection 1.1.1(b) of the Agreement.

          PARTICIPATING LENDER - each Person who shall be granted the right by a
     Lender to participate in any of the Loans described in the Agreement and
     who shall have entered into a participation agreement in form and substance
     satisfactory to such Lender.

          PERMITTED LIENS - any Lien of a kind specified in subsection 8.2.5 of
     the Agreement.

          PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money Indebtedness of
     Borrower or any of its Subsidiaries incurred after the date hereof which is
     secured by a Purchase Money Lien and which, when aggregated with the
     principal amount of all other Purchase Money Indebtedness and Capitalized
     Lease Obligations of Borrower and its Subsidiaries at the time outstanding,
     does not exceed $6,000,000. For the purposes of this definition, the
     principal amount of any Purchase Money Indebtedness consisting of
     capitalized leases shall be computed as a Capitalized Lease Obligation.

          PERSON - an individual, partnership, corporation, limited liability
     company, joint stock company, land trust, business trust, or unincorporated
     organization, or a government or agency or political subdivision thereof.

          PLAN - an employee benefit plan now or hereafter maintained for
     employees of Borrower that is covered by Title IV of ERISA.

          PRIOR HELLER NOTE - that certain 8% Convertible Subordinated
     Pay-in-Kind Note due 2004, made by Borrower on or about December 31, 1996
     in favor of Heller.

          PRIOR INDENTURE - that certain Indenture, dated as of December 24,
     1997, between Borrower and U.S. Trust Company of California, N.A. as
     Trustee.

          PRIOR BONDS - Borrower's $100,000,000 10 1/2% Senior Subordinated
     Notes due 2007 issued under the Prior Indenture.

          PROJECTIONS - Borrower's forecasted Consolidated and consolidating (i)
     balance sheets, (ii) profit and loss statements, (iii) cash flow
     statements, and (iv) capitalization statements, all prepared on a
     consistent basis with Borrower's historical financial statements, together
     with appropriate supporting details and a statement of underlying
     assumptions.

                                      A-13
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          PROPERTY - any interest in any kind of property or asset, whether
     real, personal or mixed, or tangible or intangible.

          PURCHASE MONEY INDEBTEDNESS - means and includes (i) Indebtedness
     (other than the Obligations) for the payment of all or any part of the
     purchase price of any fixed assets, (ii) any Indebtedness (other than the
     Obligations) incurred at the time of or within 10 days prior to or after
     the acquisition of any fixed assets for the purpose of financing all or any
     part of the purchase price thereof, and (iii) any renewals, extensions or
     refinancings thereof, but not any increases in the principal amounts
     thereof outstanding at the time.

          PURCHASE MONEY LIEN - a Lien upon fixed assets which secures Purchase
     Money Indebtedness, but only if such Lien shall at all times be confined
     solely to the fixed assets (and proceeds thereof) the purchase price of
     which was financed through the incurrence of the Purchase Money
     Indebtedness secured by such Lien.

          REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
     ERISA.

          RESTRICTED INVESTMENT - any investment made in cash or by delivery of
     Property to any Person, whether by acquisition of stock, Indebtedness or
     other obligation or Security, or by loan, advance or capital contribution,
     or otherwise, or in any Property except the following:

               (i)  investments, to the extent existing on the Closing Date, in
          one or more Subsidiaries of Borrower by Borrower;

               (ii) Property to be used in the ordinary course of business;

               (iii) Current Assets arising from the sale of goods and services
          in the ordinary course of business of Borrower or any Subsidiary of
          Borrower;

               (iv) investments in direct obligations of the United States of
          America, or any agency thereof or obligations guaranteed by the United
          States of America, provided that such obligations mature within one
          year from the date of acquisition thereof;

               (v)  investments in certificates of deposit maturing within one
          year from the date of acquisition issued by a bank or trust company
          organized under the laws of the United States or any state thereof
          having capital surplus and undivided profits aggregating at least
          $100,000,000; and

               (vi) investments in commercial paper given the highest rating by
          a national credit rating agency and maturing not more than 270 days
          from the date of creation thereof.

                                      A-14
<Page>

          REVOLVING CREDIT LOAN - a Loan made by any Lender as provided in
     subsection 1.1 of the Agreement.

          REVOLVING LOAN COMMITMENT - with respect to any Lender, the amount of
     such Lender's commitment pursuant to subsection 1.1.1 of the Agreement, as
     set forth below such Lender's name on the signature page thereof.

          REVOLVING LOAN PERCENTAGE - with respect to each Lender, the
     percentage equal to the quotient of such Lender's Revolving Loan Commitment
     DIVIDED BY the aggregate of all Revolving Loan Commitments.

          SEASONAL ADVANCE - the amount by which the Revolving Credit Loans at
     any time outstanding exceed the sum of clauses (ii)(1) and (ii)(2)
     contained in the definition of the term Borrowing Base.

          SCHEDULE OF ACCOUNTS - as defined in subsection 6.2.1 of the
     Agreement.

          SECURED SUBORDINATED DEBT - the $12,000,000 of secured subordinated
     Indebtedness of Borrower owing to Catalyst and evidenced by the Secured
     Subordinated Debt Documents.

          SECURED SUBORDINATED DEBT DOCUMENTS - the Secured Subordinated Note,
     the Catalyst Securities Purchase Agreement, and each of the agreements,
     documents and other instruments (including without limitation any
     guarantees and security agreements) executed in connection with the Secured
     Subordinated Note and the Catalyst Securities Purchase Agreement, in each
     case as in effect as of the date hereof.

          SECURED SUBORDINATED NOTE - the $12,000,000 Secured Senior
     Subordinated Note due 2003 dated November 20, 2001 and made by Borrower in
     favor of Catalyst as in effect as of the date hereof.

          SECURITY - shall have the same meaning as in Section 2(1) of the
     Securities Act of 1933, as amended.

          SECURITY DOCUMENTS - the Guaranty Agreements, the Mortgages and all
     other instruments and agreements now or at any time hereafter securing the
     whole or any part of the Obligations.

          SERIES A PREFERRED STOCK - Borrower's 13% Series A Cumulative
     Preferred Stock.

          SERIES B PREFERRED STOCK - Borrower's 13% Series B Cumulative
     Preferred Stock.

                                      A-15
<Page>

          SERIES B-1 PREFERRED STOCK - Borrower's 12% Series B-1 Cumulative
     Preferred Stock.

          SOLVENT - as to any Person, such Person (i) owns Property whose fair
     saleable value is greater than the amount required to pay all of such
     Person's Indebtedness (including contingent debts), (ii) is able to pay all
     of its Indebtedness as such Indebtedness matures and (iii) has capital
     sufficient to carry on its business and transactions and all business and
     transactions in which it is about to engage.

          SOUTHWESTERN DIVISION - the business operations of Lone Star.

          STATUTORY RESERVES - a fraction (expressed as a decimal) the numerator
     of which is the number one, and the denominator of which is the number one
     MINUS the aggregate of the maximum reserve percentages (including, without
     limitation, any marginal, special, emergency or supplemental reserves),
     expressed as a decimal, established by the Board of Governors of the
     Federal Reserve System and any other banking authority to which Bank or any
     Lender is subject for Eurocurrency Liabilities (as defined in Regulation D
     of the Board of Governors of the Federal Reserve System or any successor
     thereto). Such reserve percentages shall include, without limitation, those
     imposed under such Regulation D. LIBOR Portions shall be deemed to
     constitute Eurocurrency Liabilities and as such shall be deemed to be
     subject to such reserve requirements without benefit of or credit for
     proration, exceptions or offsets which may be available from time to time
     to Bank or any Lender under such Regulation D. Statutory Reserves shall be
     adjusted automatically on and as of the effective date of any change in any
     reserve percentage.

          SUBORDINATED DEBT - Indebtedness of Borrower that is subordinated to
     the Obligations in a manner satisfactory to Agent and contains terms,
     including, without limitation, payment terms, satisfactory to Agent. The
     term "Subordinated Debt" shall include, without limitation, the
     Indebtedness evidenced by the New Bonds, the Indebtedness evidenced by the
     New Heller Note and the Secured Subordinated Debt.

          SUBSIDIARY - any corporation of which a Person owns, directly or
     indirectly through one or more intermediaries, more than 50% of the Voting
     Stock at the time of determination.

          SUBSIDIARY LOANS - Indebtedness of CSCT and/or Lone Star to Borrower
     incurred from time to time after the Closing Date; PROVIDED, that such
     loans shall only be permitted to CSCT or Lone Star to the extent of the
     portion of the Borrowing Base which is attributable to the Eligible
     Accounts and Eligible Inventory of either CSCT or Lone Star, as applicable
     (or to the extent such loan is part of a Seasonal Advance).

          SWINGLINE LOANS - as defined in subsection 1.1.2 of the Agreement.

                                      A-16
<Page>

          TAX - in relation to any LIBOR Portion and the applicable LIBOR Rate,
     any tax, levy, impost, duty, deduction, withholding or charges of whatever
     nature required by any Legal Requirement (i) to be paid by any Lender
     and/or (ii) to be withheld or deducted from any payment otherwise required
     hereby to be made by Borrower to any Lender; PROVIDED, that the term "Tax"
     shall not include any taxes imposed upon the net income of Lender by the
     United States of America, United Kingdom or any political subdivision
     thereof.

          TAX LIABILITIES - as defined in subsection 2.11 of the Agreement.

          TERM - as defined in subsection 4.1 of the Agreement.

          TOTAL CREDIT FACILITY - $55,000,000.

          VOTING STOCK - Securities of any class or classes of a corporation the
     holders of which are ordinarily, in the absence of contingencies, entitled
     to elect a majority of the corporate directors (or Persons performing
     similar functions).

          WESTERN DIVISION - business operations of Borrower.

     OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.

     CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section or subsection, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles,
subsection titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Loan Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof.

                                      A-17
<Page>

                                LIST OF EXHIBITS

Exhibit 6.1.1       Borrower's and each Subsidiary's Business Locations

Exhibit 7.1.1       Jurisdictions in which Borrower and each Subsidiary is
                    Authorized to do Business

Exhibit 7.1.4       Capital Structure

Exhibit 7.1.5       Corporate Names; Transactions

Exhibit 7.1.14      Tax Identification Numbers

Exhibit 7.1.16      Patents, Trademarks, Copyrights and Licenses

Exhibit 7.1.19      Contracts Restricting Right to Incur Debts

Exhibit 7.1.20      Litigation

Exhibit 7.1.22      Operating Leases; Capitalized Leases

Exhibit 7.1.23      Pension Plans

Exhibit 7.1.25      Labor Contracts

Exhibit 8.1.3       Compliance Certificate

Exhibit 8.2.5       Permitted Liens

Exhibit 8.3         Financial Covenants

Exhibit A           Real Property Subject to Mortgages

<Page>

                                  EXHIBIT 8.1.3

                             COMPLIANCE CERTIFICATE

                            [Letterhead of Borrower]

                                                       __________________, 200__

-----------------------------

-----------------------------

-----------------------------

-----------------------------

     The undersigned, the chief financial officer of Color Spot Nurseries, Inc.,
a Delaware corporation ("Borrower"), on behalf of Borrower in his capacity as
Chief Financial Officer, gives this certificate to Fleet Capital Corporation, as
agent ("Agent"), in accordance with the requirements of subsection 8.1.3 of that
certain Amended and Restated Loan and Security Agreement dated November 20,
2001, by and among Borrower, Agent and the Lenders party thereto ("Loan
Agreement"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan Agreement.

     1.   Based upon my review of the balance sheets and statements of income of
Borrower for the [fiscal year] [quarterly period] ending ________________, 20__,
copies of which are attached hereto, I hereby certify that:

          (i)   The Interest Coverage Ratio is ____ to ____;

          (ii)  The Fixed Charge Coverage Ratio is ____ to ____;

          (iii) EBITDA is $____________; and

          (iv)  Capital Expenditures during the period and for the fiscal year
                to date total $__________ and $__________, respectively.

          [LIST OTHERS, IF ANY]

     2.   No Default exists on the date hereof, other than: __________________
________________________________________________ [if none, so state]; and
<Page>

     3.   No Event of Default exists on the date hereof, other than __________
____________________________________________________ [if none, so state].

                                        Very truly yours,

                                        -------------------------------
                                        Chief Financial Officer

                                       2
<Page>

                                   EXHIBIT 8.3

                               FINANCIAL COVENANTS

     CONSOLIDATED ADJUSTED NET EARNINGS - with respect to any fiscal period, the
Consolidated net earnings (or loss) after the provision for income taxes, but
before the deduction for non-cash preferred stock dividends, for such fiscal
period of Borrower, as reflected on the financial statements of Borrower
supplied to Lenders pursuant to subsection 8.1.3 of the Agreement, but excluding
(to the extent included in the calculation of Consolidated net earnings (or
loss)):

          (i)   any gain or loss from asset dispositions (other than sales of
     inventory;

          (ii)  any gain arising from any write-up of assets;

          (iii) the income (or loss) of any Person accrued prior to the date it
     became a Subsidiary of the Borrower or is merged into or consolidated with
     the Borrower;

          (iv)  the income (or loss) of any Person (other than a subsidiary of
     the Borrower) in which the Borrower or any of its wholly-owned subsidiaries
     has an ownership interest unless received in a cash distribution or
     requiring the payment of cash;

          (v)   extraordinary gains as defined under GAAP and extraordinary
     non-cash losses, net of the related tax effects; and

          (vi)  non-cash gains or losses due to changes in GAAP.

     EBITDA - with respect to any fiscal period, the sum of Borrower's
Consolidated Adjusted Net Earnings plus amounts deducted in determining
Consolidated Adjusted Net Earnings in respect of: (a) any provision for (or less
any benefit from) income taxes whether current or deferred; (b) amortization and
depreciation expense, (c) Interest Expense for such period, all as determined in
accordance with GAAP and (d) the lesser of (i) the fees, costs and expenses
incurred in connection with the closing of the Loan Agreement and the
transactions contemplated thereby in the amounts, and for the fiscal periods,
set forth in the ATTACHMENT 1 to this Exhibit 8.3 and (ii) the fees, costs and
expenses actually incurred in connection with the closing of the Loan Agreement
and the transactions contemplated thereby in the actual amounts and during the
actual periods incurred.

     FIXED CHARGE COVERAGE RATIO - with respect to any fiscal period, the ratio
of (i) Consolidated EBITDA for such period MINUS the income taxes payable in
cash during such period MINUS non-financed Capital Expenditures for such period
to (ii) Consolidated Fixed Charges of Borrower and its Subsidiaries.
<Page>

     FIXED CHARGES - with respect to any fiscal period, scheduled principal
payments and Interest Expense required to be paid in cash by Borrower or any of
its Subsidiaries on a Consolidated basis during such period with respect to
Indebtedness for Money Borrowed.

     INTEREST COVERAGE RATIO - with respect to any fiscal period, the ratio of
(i) Consolidated EBITDA for such period to (ii) Consolidated Interest Expense of
Borrower and its Subsidiaries, excluding interest paid-in-kind for such period
as provided under the Subordinated Debt note agreements, and amortization of
deferred financing fees, all as determined in accordance with GAAP.

     INTEREST EXPENSE - with respect to any fiscal period, the interest expenses
payable in cash by Borrower or any of its Subsidiaries on a Consolidated basis
for such period.

     COVENANTS

     INTEREST COVERAGE RATIO - Borrower shall not permit the Interest Coverage
Ratio for any period set forth below to be less than the ratio set forth
opposite such period below:

<Table>
<Caption>
                     PERIOD                                               RATIO
                     ------                                               -----
<S>                                                                   <C>
Twelve (12) month period ending on December 31, 2001                  1.50 to 1.00

Twelve (12) month period ending on March 31, 2002                     1.60 to 1.00

Twelve (12) month period  ending on June 30, 2002,                    1.65 to 1.00
Twelve (12) month period ending on September 30, 2002
and Twelve (12) month period ending on December 31, 2002

Twelve (12) month period ending on March 31, 2003                     1.70 to 1.00

Twelve (12) month  period  ending on June 30, 2003 and                1.80 to 1.00
each Twelve (12) month  period  ending on the
last day of any fiscal quarter thereafter
</Table>

     FIXED CHARGE COVERAGE RATIO - Borrower shall not permit the Fixed Charge
Coverage Ratio for any period set forth below to be less than the ratio set
forth opposite such period below:

<Table>
<Caption>
                     PERIOD                                               RATIO
                     ------                                               -----
<S>                                                                   <C>
Twelve (12) month period ending on December 31, 2001                  1.00 to 1.00

Twelve (12) month period ending on March 31, 2002                     1.15 to 1.00

Twelve (12) month  period  ending on June 30, 2002 and                1.20 to 1.00
each Twelve (12) month  period  ending on the
last day of any fiscal quarter thereafter
</Table>

<Page>

     MINIMUM EBITDA - Borrower shall achieve EBITDA for each period set forth
below of not less than the amount set forth opposite such period below:

<Table>
<Caption>
                     PERIOD                                              AMOUNT
                     ------                                              ------
<S>                                                                   <C>
Twelve (12) month period ending on December 31, 2001                  $15,000,000

Twelve (12) month period ending on March 31, 2002                     $15,500,000

Twelve (12) month period ending on June 30, 2002                      $17,000,000

Twelve (12) month period ending on September 30, 2002                 $18,000,000

Twelve (12) month period ending on December 31, 2002                  $18,500,000

Twelve (12) month period ending on March 31, 2003                     $19,000,000

Twelve (12) month  period  ending on June 30, 2003 and                $20,000,000
each Twelve (12) month  period  ending on the
last day of any fiscal quarter thereafter

</Table>

<Page>

                                  ATTACHMENT 1

                               see attached pages

<Page>

                                    EXHIBIT A

                       REAL PROPERTY SUBJECT TO MORTGAGES<Page>

                                                                    Exhibit 10.2

                                                                  EXECUTION COPY
================================================================================

                          SECURITIES PURCHASE AGREEMENT

                                  BY AND AMONG

                           COLOR SPOT NURSERIES, INC.,

                        COLOR SPOT CHRISTMAS TREES, INC.,

                                LONE STAR, INC.,

                              LSGR HOLDINGS, INC.,

                            LONE STAR GROWERS, L.P.,

                                ODA NURSERY, INC.

                                       AND

                           CATALYST EQUITY FUND, L.P.

                ------------------------------------------------

                          $12,000,000 PRINCIPAL AMOUNT

                    SECURED SENIOR SUBORDINATED NOTE DUE 2003

                ------------------------------------------------

                          DATED AS OF NOVEMBER 20, 2001

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

<Page>

                                TABLE OF CONTENTS
<Table>
<Caption>
                                                                                                               PAGE
                                                                                                               ----
<S>      <C>                                                                                                   <C>
1.       DEFINITIONS; COLLATERAL DEFINITIONS; ACCOUNTING TERMS....................................................2
         1.1      Definitions.....................................................................................2
         1.2      Accounting Terms and Computations..............................................................18
         1.3      Covenants......................................................................................18
         1.4      Captions; Construction and Interpretation......................................................18
         1.5      Determinations.................................................................................18

2.       PURCHASE AND SALE OF THE NOTE...........................................................................18
         2.1      Authorization..................................................................................18
         2.2      Purchase of the Note; Issue Price..............................................................19
         2.3      Closing........................................................................................19
         2.4      Use of Proceeds................................................................................19

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS........................................19
         3.1      Organization and Qualification.................................................................20
         3.2      Corporate or Other Power.......................................................................20
         3.3      Authorization; Binding Obligations.............................................................20
         3.4      Subsidiaries...................................................................................20
         3.5      Conflict with Other Instruments; Existing Defaults.............................................21
         3.6      Governmental and Other Third Party Consents....................................................21
         3.7      Capitalization.................................................................................22
         3.8      Names; Business Locations......................................................................22
         3.9      Financial Statements...........................................................................23
         3.10     Absence of Certain Changes.....................................................................23
         3.11     Existing Indebtedness; Existing Liens; Investments.............................................24
         3.12     Litigation.....................................................................................25
         3.13     Transactions With Affiliates...................................................................26
         3.14     Compliance with Laws; Permits..................................................................26
         3.15     Real Property..................................................................................27
         3.16     Employee Benefit Plans; ERISA..................................................................27
         3.17     Taxes..........................................................................................28
         3.18     Title to Property; Liens.......................................................................29
         3.19     Environmental Matters..........................................................................29
         3.20     Intellectual Property..........................................................................30
         3.21     Labor Relations................................................................................30
         3.22     Insurance......................................................................................31
         3.23     Business Relationships.........................................................................31
         3.24     Solvency.......................................................................................31
         3.25     Depository and Other Accounts..................................................................31
         3.26     Brokers; Certain Expenses......................................................................32

                                       i
<Page>
         3.27     No Event of Default............................................................................32
         3.28     Financial Sophistication.......................................................................32
         3.29     Equipment......................................................................................32
         3.30     Senior Status..................................................................................33
         3.31     10 1/2% Notes..................................................................................33
         3.32     Inventory......................................................................................33
         3.33     Accounts.......................................................................................33
         3.34     SEC Filings....................................................................................33
         3.35     Disclosure.....................................................................................33
         3.36     Survival of Representations and Warranties.....................................................34

4.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........................................................34
         4.1      Investment Intent..............................................................................34
         4.2      Accredited Investor Status.....................................................................34

5.       CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER..........................................................34
         5.1      Closing Date...................................................................................35
         5.2      Representations and Warranties; No Default.....................................................35
         5.3      Payment of  Fees...............................................................................35
         5.4      Purchase Permitted By Applicable Laws..........................................................35
         5.5      No Injunction, Order or Suit...................................................................35
         5.6      Delivery of Certain Closing Documents..........................................................36
         5.7      Senior Credit Facility.........................................................................36
         5.8      Opinion of Counsel.............................................................................36
         5.9      Delivery of Corporate Documents................................................................37
         5.10     Insurance......................................................................................37
         5.11     Third-Party Consents...........................................................................37
         5.12     Financial Statements...........................................................................38
         5.13     Exchange Offer.................................................................................38
         5.14     Restructuring of Heller Note...................................................................38
         5.15     Restructuring of Series A Preferred Stock......................................................38
         5.16     Proceedings Satisfactory.......................................................................38

6.       ACTIONS AND DOCUMENTS RELATING TO THE COLLATERAL........................................................38

7.       INDEMNIFICATION; FEES AND EXPENSES......................................................................39
         7.1      Transfer Taxes.................................................................................39
         7.2      Losses.........................................................................................39
         7.3      Indemnification Procedures.....................................................................40
         7.4      Contribution...................................................................................41
         7.5      Commitment Fee.................................................................................41
         7.6      Reimbursement of Deal-Related Costs and Expenses...............................................41
         7.7      Costs and Expenses.............................................................................42

                                       ii
<Page>

8.       AFFIRMATIVE COVENANTS...................................................................................43
         8.1      Payment of Note and Other Obligations..........................................................43
         8.2      Performance of Investment Documents............................................................43
         8.3      Visits and Inspections; Lender Meeting.........................................................43
         8.4      Notices........................................................................................43
         8.5      Financial Statements...........................................................................44
         8.6      Guarantor Financial Statements.................................................................45
         8.7      Landlord and Storage Agreements................................................................45
         8.8      Projections....................................................................................45
         8.9      Subsidiaries...................................................................................45
         8.10     Compliance with Laws; Consents.................................................................46
         8.11     Legal Existence................................................................................46
         8.12     Books and Records..............................................................................46
         8.13     Maintenance of Properties......................................................................46
         8.14     Insurance......................................................................................46
         8.15     Payment of Obligations.........................................................................47
         8.16     Compliance with Material Contracts.............................................................48
         8.17     Environmental Matters..........................................................................48
         8.18     Future Information.............................................................................48
         8.19     Further Assurances.............................................................................48
         8.20     Financial Covenants............................................................................49
         8.21     Senior Status..................................................................................50
         8.22     10 1/2% Notes..................................................................................50
         8.23     Lien on Realty.................................................................................50
         8.24     Opinions.......................................................................................51
         8.25     Delivery of Collateral.........................................................................51

9.       NEGATIVE COVENANTS......................................................................................51
         9.1      Mergers; Consolidations; Acquisitions; Structural Changes......................................51
         9.2      Loans..........................................................................................51
         9.3      Total Indebtedness.............................................................................52
         9.4      Affiliate Transactions.........................................................................52
         9.5      Limitation on Liens............................................................................53
         9.6      Payments and Amendments of Subordinated Debt...................................................53
         9.7      Amendments Regarding Preferred Stock...........................................................54
         9.8      Amendments of Bank Credit Documents............................................................54
         9.9      Distributions..................................................................................54
         9.10     Capital Expenditures...........................................................................54
         9.11     Disposition of Assets..........................................................................55
         9.12     Additional Securities..........................................................................55
         9.13     Bill-and-Hold Sales, Etc.......................................................................55
         9.14     Restricted Investment..........................................................................55
         9.15     Subsidiaries and Joint Ventures................................................................55
         9.16     Tax Consolidation..............................................................................55

                                       iii
<Page>

         9.17     Fiscal Year End................................................................................56
         9.18     Limitations on Payment Restrictions Affecting Subsidiaries.....................................56
         9.19     Change in Business.............................................................................56
         9.20     Subordination..................................................................................56
         9.21     Accounting Changes.............................................................................56
         9.22     Hazardous Substances...........................................................................56

10.      DEFAULTS AND REMEDIES...................................................................................56
         10.1     Events of Default..............................................................................56
         10.2     Acceleration...................................................................................59
         10.3     Set Off and Sharing of Payments................................................................60
         10.4     Other Remedies.................................................................................60
         10.5     Appointment of Receiver........................................................................60
         10.6     Waiver of Past Defaults........................................................................60

11.      WAIVER..................................................................................................60

12.      POWER OF ATTORNEY.......................................................................................61

13.      MISCELLANEOUS...........................................................................................61
         13.1     Survival of Representations and Warranties; Purchaser Investigation............................61
         13.2     Consent to Amendments..........................................................................61
         13.3     Entire Agreement...............................................................................62
         13.4     Severability...................................................................................62
         13.5     Successors and Assigns; Assignments............................................................62
         13.6     Certain Agreements of the Company Parties......................................................62
         13.7     Notices........................................................................................63
         13.8     Counterparts...................................................................................64
         13.9     Governing Law..................................................................................64
         13.10    Limitation of Liability........................................................................64
         13.11    Publicity......................................................................................65
         13.12    Waiver of Trial by Jury........................................................................65
         13.13    Cumulative Effect; Conflict of Terms...........................................................65
         13.14    Time of Essence................................................................................65
         13.15    Interpretation.................................................................................65
         13.16    Consent to Forum...............................................................................65
</Table>
                                       iv
<Page>

                                            TABLE OF CONTENTS (Continued)
<Table>
<Caption>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
</Table>

                                       v
<Page>

                                            TABLE OF CONTENTS (Continued)
<Table>
<Caption>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
</Table>

                                       vi
<Page>

                                            TABLE OF CONTENTS (Continued)
<Table>
<Caption>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
</Table>

                                       vii
<Page>

                                    EXHIBITS

         Exhibit A      --   Form of Secured Senior Subordinated Note
         Exhibit B      --   Form of Guarantee
         Exhibit C      --   Form of Compliance Certificate

                                       viii
<Page>

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT is entered into as of November 20,
2001 (this "AGREEMENT"), by and among COLOR SPOT NURSERIES, INC., a Delaware
corporation (the "COMPANY"), COLOR SPOT CHRISTMAS TREES, INC., a Delaware
corporation and wholly-owned subsidiary of the Company ("CSCT"), LONE STAR,
INC., a Delaware corporation and wholly-owned subsidiary of the Company ("LONE
STAR"), LSGR HOLDINGS, INC., a Delaware corporation and wholly-owned subsidiary
of the Company ("LSGR"), LONE STAR GROWERS, L.P., a Delaware limited partnership
and indirect wholly-owned subsidiary of the Company ("LONE STAR GROWERS"), ODA
NURSERY, INC., a California corporation and wholly-owned subsidiary of the
Company (collectively, the "GUARANTORS"), and CATALYST EQUITY FUND, L.P., a
Delaware limited partnership (the "PURCHASER"). The Company, the Guarantors and
each of their respective present and future Subsidiaries may be individually
referred to as a "COMPANY PARTY" and collectively referred to as the "COMPANY
PARTIES".

                                 R E C I T A L S

         A. The Company is a wholesale nursery engaged in the business of
providing plants and merchandising services primarily to home centers, mass
merchants, independent garden centers and commercial landscapers.

         B. The Company is restructuring a substantial portion of its existing
indebtedness (the "REFINANCING").

         C. In connection with the Refinancing, the Company has authorized the
issuance and sale of a Note (as defined in SECTION 2.1) to the Purchaser,
immediately upon the consummation of the Refinancing, as provided herein, in the
aggregate principal amount of $12,000,000, and the Purchaser is willing to
purchase the Note on the terms and subject to the conditions set forth herein.
Concurrently with the issuance of the Note, and as further inducement to the
Purchaser to purchase the Note and as consideration therefor, the Company and
the Purchaser will enter into certain Collateral Documents.

         D. To further induce the Purchaser to purchase the Note, and in
consideration therefor, each Guarantor has agreed to issue an absolute and
unconditional guarantee, in substantially the form of EXHIBIT B, of all of the
obligations of the Company under this Agreement, the other Investment Documents
and the Note (the "GUARANTEE"), secured by a lien on all of each Guarantor's
right, title and interest in all of its respective assets, subordinated only to
the prior lien of the Bank under the Bank Credit Documents. Concurrently with
the execution and delivery of the Guarantee, and as further inducement to the
Purchaser to purchase the Note and as consideration therefor, the Company and
the Guarantors will enter into certain Collateral Documents.

<Page>

         E. Concurrently with the sale of the Note, the Company is entering into
a $55,000,000 Amended and Restated Loan and Security Agreement of even date
herewith with Fleet Capital Corporation, as agent for the financial institutions
party thereto as Lenders (the "BANK") and the lenders from time to time party
thereto, as the same may be amended, restated, supplemented or otherwise
modified from time to time (the "BANK CREDIT AGREEMENT").

                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.       DEFINITIONS; COLLATERAL DEFINITIONS; ACCOUNTING TERMS.

         1.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to the
singular and the plural forms thereof):

                  "ACCOUNT DEBTOR" shall mean any Person who is or may become
obligated under or on account of an Account.

                  "ACCOUNTS" shall mean all accounts, contract rights, chattel
paper, instruments and documents, whether now owned or hereafter created or
acquired by the Company or any of its Subsidiaries, or in which the Company or
any of its Subsidiaries now has or hereafter acquires any interest.

                  "AGENT" shall have the meaning specified in the Bank Credit
Agreement (as in effect on the date hereof).

                  "AFFILIATE" shall mean a person (other than a Subsidiary): (i)
which directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of a
Person; or (iii) 10% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a Person.

                  "AGREEMENT" shall mean this Agreement, together with the
Exhibits and the Disclosure Schedules hereto, in each case as amended, restated,
supplemented or otherwise modified from time to time.

                  "APPLICABLE LAWS" shall mean all applicable provisions of all
(i) constitutions, treaties, statutes, laws, rules, regulations and ordinances
of any Governmental Authority and all

                                      2
<Page>

common law duties, (ii) Consents of any Governmental Authority and (iii) orders,
decisions, rulings, judgments, directives or decrees of any Governmental
Authority.

                  "ASSIGNEE" shall have the meaning specified in SECTION 13.5.

                  "ASSIGNMENT" shall mean an assignment or other transfer of any
Note pursuant to the terms of such Note.

                  "BANK" shall have the meaning specified in Recital E.

                  "BANK CREDIT AGREEMENT" shall have the meaning specified in
Recital E.

                  "BANK CREDIT DOCUMENTS" shall mean the Bank Credit Agreement
(as in effect on the date hereof) and all notes and other instruments,
guaranties, security agreements, pledge agreements and other documents
contemplated by the Bank Credit Agreement (as in effect on the date hereof) and
executed and delivered in connection therewith.

                  "BANKRUPTCY LAWS" shall mean Title 11 of the United States
Code (11 U.S.C. Section 101, ET SEQ.), as amended from time to time, and any
other federal or state law relating to bankruptcy, insolvency or reorganization
or for the relief of debtors.

                  "BENEFIT PLAN" shall mean any of the following: (i) each
termination or severance agreement involving any Company Party, on the one hand,
and any of its respective employees whose annual compensation is at a base rate
equal to or exceeding $125,000, on the other hand, (ii) all employee benefit
plans, as defined in ERISA Section 3(3), and (iii) all other profit-sharing,
bonus, stock option, stock purchase, stock bonus, restricted stock, stock
appreciation right, phantom stock, vacation pay, holiday pay, tuition
reimbursement, scholarship, severance, dependent care assistance, excess
benefit, incentive compensation, salary continuation, supplemental retirement,
employee loan or loan guarantee program, split dollar, cafeteria plan, and other
compensation arrangements (provided, that such compensation arrangements require
payments of at least $125,000 per year); in each case maintained or contributed
to by the Company or Guarantor for the benefit of their respective employees (or
former employees) and/or their beneficiaries. An arrangement will not fail to be
a Benefit Plan simply because it only covers one individual, or because the
Company's obligations under such arrangement arise by reason of its being a
"successor employer" under Applicable Laws. Furthermore, a Voluntary Employees'
Beneficiary Association under Section 501(c)(9) of the Code will be considered a
Benefit Plan for this purpose.

                  "BOARD OF DIRECTORS" shall mean, with respect to any Person,
the board of directors (or similar governing body) of such Person.

                                      3
<Page>

                  "BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which banking institutions in the city of New York, New York
or in the city of Roseland, New Jersey are authorized or required by law to
close.

                  "CAPITAL EXPENDITURES" shall mean expenditures made or
liabilities incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including the total principal portion of Capitalized Lease
Obligations.

                  "CAPITAL LEASE" shall mean any lease or agreement of the
Company Parties for the right to use property (whether real, personal or mixed)
which has been or is required to be capitalized on the consolidated balance
sheet of the Company Parties in accordance with GAAP.

                  "CAPITALIZED LEASE OBLIGATIONS" shall mean any indebtedness
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

                  "CHANGE IN CONTROL" shall mean the occurrence of one or more
of the following events:

                           (i) any sale, lease, exchange or other transfer (in
any one transaction or a series of related transactions) of all or substantially
all of the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "GROUP"), together with any
Affiliates thereof (whether or not otherwise in compliance with the provisions
of this Agreement);

                           (ii) the approval by the holders of the capital stock
of the Company of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Agreement);

                           (iii) any Person or Group (other than KCSN
Acquisition Company, L.P. and its Affiliates, Kohlberg & Company, LLC and its
Affiliates, Kohlberg Management IV, LLC and its Affiliates, Michael F. Vukelich
and his Affiliates, SunAmerica Asset Management Corp., AIG Global Investment
Corp., Ares Management, L.P., TCW/Crescent Mezzanine, LLC, or the holders of the
10 1/2% Notes (immediately prior to the issuance of the 13% Notes) or any
combination of such entities and their respective Affiliates) shall become the
owner, directly or indirectly, beneficially or of record, of more than 35% of
the shares of the issued and outstanding capital stock of the Company that is
generally entitled to vote for the election of directors (other than the Series
A Preferred Stock or the Series B Preferred Stock, but not the Series B-1
Preferred Stock);

                           (iv) the replacement of a majority of the Company's
directors over a two-year period from the directors who constituted the
directors of the Company at the beginning

                                      4
<Page>

of such period, and such replacement shall not have been approved by any of (A)
the Purchaser, (B) the holders of a majority of the issued and outstanding
shares of Series B Preferred Stock, but not the Series B-1 Preferred Stock, but
not the Series B-1 Preferred Stock, or (C) the vote of a majority of the
directors of the Company then still in office who either were directors at the
beginning of such period or whose election as a director was previously so
approved;

                           (v) (Intentionally omitted);

                           (vi) the occurrence of any "Change of Control" under
and as defined in the 13% Indenture, or the Certificates of Designation for the
Series A Preferred Stock or the Series B Preferred Stock, but not the Series B-1
Preferred Stock;

                           (vii) either (x) David Barrett ceases for any reason
whatsoever to be the chief executive officer of the Company and is not replaced
within sixty (60) days by a chief executive officer reasonably acceptable to the
Purchaser or (y) Charles Ferer ceases for any reason whatsoever to be the chief
financial officer of the Company and is not replaced within sixty (60) days by a
chief financial officer reasonably acceptable to the Purchaser; or

                           (viii) if David Barrett ceases for any reason
whatsoever to be the chief executive officer of the Company and Charles Ferer
ceases for any reason whatsoever to be the chief financial officer of the
Company within a six (6) month period.

                  "CLOSING" shall have the meaning specified in SECTION 2.3.

                  "CLOSING DATE" shall have the meaning specified in SECTION
2.3.

                  "CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute, and the treasury regulations promulgated
thereunder, as in effect from time to time.

                  "COLLATERAL" shall mean the collateral under the Collateral
Documents, however defined.

                  "COLLATERAL DOCUMENTS" shall mean, collectively, the Company
Security Agreement, the Company Intellectual Property Security Agreement, the
Company Pledge Agreement, the Guarantee, the Guarantor Security Agreement, the
Guarantor Intellectual Property Security Agreement, the Guarantor Pledge
Agreement, the fee and leasehold mortgages, the landlord waivers and consents,
the notices of security interest in deposit accounts, the UCC financing
statements, any fixture filings, patent, trademark and copyright filings,
assignments, acknowledgments and any other agreements, instruments and documents
delivered from time to time in connection therewith or otherwise to secure the
Obligations or any other obligations of the Company Parties or any other Person
under this Agreement, the Note or any other Investment

                                      5
<Page>

Document, in each case as amended, restated, supplemented or otherwise modified
from time to time.

                  "COMPANY" shall have the meaning specified in the preamble.

                  "COMPANY INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
that certain Trademark Security Agreement of even date herewith by and between
the Company and the Purchaser.

                  "COMPANY PARTY" and "COMPANY PARTIES" shall have the meaning
specified in the preamble.

                  "COMPANY PLEDGE AGREEMENT" shall mean that certain Pledge
Agreement of even date herewith by and between the Company and the Purchaser.

                  "COMPANY SECURITY AGREEMENT" shall mean that certain Security
Agreement of even date herewith by and between the Company and the Purchaser.

                  "CONDITIONAL SALES PROGRAM" shall mean the Company Parties'
rebate program for certain of its Account Debtors as heretofore conducted in the
ordinary course of business.

                  "CONSENT" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, license, exemption or order of, or any
registration, certificate, qualification, declaration or filing with, or any
notice to, any Person, including, without limitation, any Governmental
Authority.

                  "CONSOLIDATED" means the consolidation in accordance with GAAP
of the accounts or other items as to which such term applies.

                  "CONSOLIDATED ADJUSTED NET EARNINGS" shall mean with respect
to any fiscal period, the Consolidated net earnings (or loss) after the
provision for income taxes, but before the deduction for non-cash preferred
stock dividends, for such fiscal period of the Company, as reflected in the
financial statements of the Company supplied to the Purchaser pursuant to
SECTION 8.5 of the Agreement, but excluding (to the extent included in the
calculation of Consolidated net earnings (or loss)):

                           (i) any gain or loss from asset dispositions (other
than sales of inventory);

                           (ii) any gain arising from any write-up of assets;

                           (iii) the income (or loss) of any Person accrued
prior to the date it became a Subsidiary of the Company or is merged into or
consolidated with the Company;

                                      6
<Page>

                           (iv) the income (or loss) of any Person (other than a
Subsidiary of the Company) in which the Company or any of its wholly-owned
Subsidiaries has an ownership interest unless received in a cash distribution or
requiring the payment of cash;

                           (v) extraordinary gains as defined under GAAP and
extraordinary non-cash losses, net of the related tax effects; and

                           (vi) non-cash gains or losses due to changes in GAAP.

                  "CONTINGENT OBLIGATIONS" shall mean, with respect to any
Person, any obligation, or arrangement, direct or indirect, contingent or
otherwise, of such Person (i) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation ("PRIMARY OBLIGATIONS") of another Person,
including, without limitation, any direct or indirect guarantee of such
Indebtedness (other than any endorsement for collection or deposit in the
ordinary course of business) or any other direct or indirect obligation, by
agreement or otherwise, to purchase or repurchase any such Primary Obligation or
any property constituting direct or indirect security therefor, or to provide
funds for the payment or discharge of any such Primary Obligation (whether in
the form of loans, advances, or purchases of property, securities or services,
capital contributions, dividends or otherwise), letters of credit and
reimbursement obligations for letters of credit, (ii) to provide funds to
maintain the financial condition of any other Person, (iii) otherwise to
indemnify or hold harmless the holders of Primary Obligations of another Person
against loss in respect thereof or (iv) in connection with any synthetic lease
or other off-balance sheet lease transaction. The amount of any Contingent
Obligation under clauses (i) and (ii) above shall be the maximum amount
guaranteed or otherwise supported by the Contingent Obligation.

                  "CONVERTIBLE SECURITIES" shall mean, with respect to any
Person, any securities or other obligations issued or issuable by such Person or
any other Person that are exercisable or exchangeable for, or convertible into,
any Securities of such Person.

                  "DEFAULT" shall mean any Event of Default or any event or
condition which, with the giving of notice or the lapse of time or both, becomes
an Event of Default.

                  "DERIVATIVE OBLIGATIONS" shall mean every obligation of a
Person under any forward contract, futures contract, swap, option or other
financing agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreement), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices.

                  "DISCLOSURE SCHEDULES" shall have the meaning specified in the
introductory paragraph of SECTION 3.

                  "DISTRIBUTION" shall mean and include, in respect of any
Person, (i) the payment of any dividends or other distributions on Securities
(except distributions in such Securities), (ii) the

                                      7
<Page>

redemption or acquisition of Securities of such Person, as the case may be, and
(iii) any payment or prepayment of principal of, premium (if any) or interest,
fees or other charges on or with respect to or any redemption, purchase or other
acquisition for value, retirement, defeasance or sinking fund or similar payment
with respect to any Indebtedness or any payment in violation of the
subordination provisions of any Indebtedness except regularly scheduled or
required principal payments (other than any required change of control or asset
proceeds payments) or interest payments of the Indebtedness permitted under
SECTION 9.3 of this Agreement.

                  "EBITDA" shall mean with respect to any fiscal period, the sum
of the Company's Consolidated Adjusted Net Earnings plus amounts deducted in
determining Consolidated Adjusted Net Earnings in respect of: (i) any provision
for (or less any benefit from) income taxes whether current or deferred; (ii)
amortization and depreciation expenses; (iii) Interest Expense for such period,
all as determined in accordance with GAAP and (iv) the lesser of (a) the fees,
costs and expenses incurred in connection with the closing of the Bank Credit
Agreement (as in effect on the date hereof) and the transactions contemplated
thereby in the amounts, and for the fiscal periods, set forth in Attachment 1 to
Exhibit 8.3 of the Bank Credit Agreement (as in effect on the date hereof) and
(b) the fees, costs and expenses actually incurred in connection with the
closing of the Bank Credit Agreement (as in effect on the date hereof) and the
transactions contemplated thereby in the actual amounts and during the actual
periods incurred.

                  "ENVIRONMENTAL CONDITIONS" shall mean any Release of any
Hazardous Materials (whether or not such Release constituted at the time thereof
a violation of any Environmental Laws) or any violation of any Environmental Law
as a result of which any Environmental Person has or may become liable to any
Person or by reason of which the business, condition or operations of such
Environmental Person or any of its assets or properties may suffer or be
subjected to any Lien or liability.

                  "ENVIRONMENTAL LAWS" shall mean all Applicable Laws relating
to Hazardous Materials or the protection of human health or the environment,
including all requirements pertaining to reporting, permitting, investigating or
remediating Releases or threatened Releases of Hazardous Materials into the
environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
Without limiting the generality of the foregoing, the term "ENVIRONMENTAL LAWS"
shall include the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, ET SEQ.) ("CERCLA"), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, ET SEQ.), the Federal
Clean Water Act (33 U.S.C. Section 1251, ET SEQ.), the Clean Air Act (42 U.S.C.
Section 7401, ET SEQ.), the Toxic Substances Control Act (15 U.S.C. Section
2601, ET SEQ.) and the Occupational Safety and Health Act (29 U.S.C. Section
651, ET SEQ.), as such laws may be amended from time to time, and any other
present or future federal, state, local or foreign statute, ordinance, rule,
regulation, order, judgment, decree, permit, license or request or binding
determination of, or agreement with, any Governmental Authority relating to or
imposing liability or establishing standards of conduct for the protection of
human health or safety or the environment.

                                      8
<Page>

                  "ENVIRONMENTAL PERSONS" shall mean, collectively, (i) all
Company Parties and any of their respective Affiliates, (ii) any other Person in
which any of the Persons listed in clause (i) above was at any time, or is, a
partner, joint venturer, member or other participant, and (iii) any predecessor
or former partnership, joint venture, trust, association, corporation, limited
liability company or other Person, whether in existence as of the date hereof or
at any time prior to the date hereof, the assets, properties, liabilities or
obligations of which have been acquired or assumed by any of the Persons listed
in clause (i) above or to which any of the Persons listed in clause (i) above
has succeeded.

                  "EQUIPMENT" shall have the meaning ascribed to such term under
the UCC.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute, including the rules and
regulations promulgated thereunder, in each case as amended from time to time.

                  "EVENT OF DEFAULT" shall have the meaning specified in SECTION
10.1.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations promulgated
thereunder.

                  "FISCAL QUARTER" shall mean any of the four quarters of a
Fiscal Year.

                  "FISCAL YEAR" shall mean with respect to each Company Party,
the 52-week period ending on December 31 in each calendar year.

                  "FIXED CHARGE COVERAGE RATIO" shall mean with respect to any
fiscal period, the ratio of (i) Consolidated EBITDA for such period minus the
income taxes payable in cash during such period minus non-financed Capital
Expenditures for such period to (ii) Consolidated Fixed Charges of the Company
and its Subsidiaries.

                  "FIXED CHARGES" shall mean with respect to any fiscal period,
scheduled principal payments and Interest Expense required to be paid in cash by
the Company or any of its Subsidiaries on a Consolidated basis during such
period with respect to Indebtedness for Money Borrowed.

                  "FULLY DILUTED BASIS" shall mean, at any time, a basis that
includes all Securities of a Person issued and outstanding at such time and all
additional Securities of that Person which would be issued upon the conversion,
purchase, exchange or exercise of all Securities of the Person outstanding at
such time.

                  "GAAP" shall mean generally accepted accounting principles and
practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial

                                      9
<Page>

Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, all as in
effect from time to time on the date hereof, applied on a basis consistent with
prior periods.

                  "GOVERNMENTAL AUTHORITY" shall mean any nation or government,
and any state or political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including, without limitation, the Securities Exchange
Commission, the United States Environmental Protection Agency and the Federal
Trade Commission), and any court, tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.

                  "GUARANTEE" shall have the meaning specified in Recital D.

                  "GUARANTORS" shall have the meaning specified in the preamble.

                  "GUARANTOR INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall
mean that certain Trademark Security Agreement of even date herewith by and
between the Guarantors and the Purchaser.

                  "GUARANTOR PLEDGE AGREEMENT" shall mean that certain Pledge
Agreement of even date herewith by and among Lone Star, LSGR and the Purchaser.

                  "GUARANTOR SECURITY AGREEMENT" shall mean that certain
Security Agreement of even date herewith by and between the Guarantors and the
Purchaser.

                  "HAZARDOUS MATERIALS" or "HAZARDOUS SUBSTANCES"shall mean any
substance (i) the presence of which requires investigation or remediation under
any Applicable Laws, (ii) that is defined or becomes defined as a "hazardous
waste" or "hazardous substance" under any Applicable Laws (including, without
limitation, all Environmental Laws), (iii) that is toxic, explosive, corrosive,
inflammable, infectious, radioactive, carcinogenic, mutagenic, biohazardous or
otherwise hazardous and is or becomes regulated by any Governmental Authority,
(iv) the presence of which on any real property causes or threatens to cause a
nuisance upon the real property or to adjacent properties or poses or threatens
to pose a hazard to any real property or to the health or safety of Persons on
or about any real property, or (v) that contains gasoline or other petroleum
hydrocarbons, polychlorinated biphenyls or asbestos.

                  "HOLDER" shall mean any Person (including, without limitation,
the Purchaser) in whose name any Note is registered in the register required to
be maintained by the Company pursuant to Section 8 of the Note.

                  "IMMEDIATE FAMILY" of a Person includes such Person's spouse,
and the parents, children, grandchildren and siblings of such Person or his or
her spouse and their spouses and

                                      10
<Page>

other Persons related to the foregoing by blood, adoption or marriage within the
second degree of kinship.

                  "INDEBTEDNESS" shall mean, with respect to any Person and
without duplication:

                           (i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness is to be
determined including, without limitation, Capitalized Lease Obligations;

                           (ii) all obligations of other Persons which such
Person has guaranteed;

                           (iii) all reimbursement obligations in connection
with letters of credit or letter of credit guarantees issued for the account of
such Person;

                           (iv) Derivative Obligations; and

                           (v) in the case of the Company (without duplication),
the Obligations.

                  "INDEMNIFIED PARTIES" shall have the meaning specified in
SECTION 7.2.

                  "INTERCREDITOR AGREEMENT" shall mean the Subordination
Agreement between the Bank and the Purchaser, and acknowledged by the Company.

                  "INTEREST COVERAGE RATIO" shall mean with respect to any
fiscal period, the ratio of (i) Consolidated EBITDA for such period to (ii)
Consolidated Interest Expense of the Company and its Subsidiaries, excluding
interest paid-in-kind for such period as provided under the Subordinated Debt
note agreements, and amortization of deferred financing fees, all as determined
in accordance with GAAP.

                  "INTEREST EXPENSE" shall mean with respect to any fiscal
period, the interest expenses payable in cash by the Company or its Subsidiaries
on a Consolidated basis for such period.

                  "INVESTMENT DOCUMENTS" shall mean, collectively, this
Agreement, the Note, the Guarantee, the Collateral Documents, the Intercreditor
Agreement, and all other agreements, instruments, certificates, closing and
other letters and other documents executed and/or delivered in connection
herewith or therewith, in each case as amended, restated, supplemented or
otherwise modified from time to time.

                  "INVESTMENTS" shall mean, as applied to any Person, (i) any
direct or indirect acquisition by such Person of Securities, other securities or
other interests of, or investments in, any other Person, or all or any
substantial part of the business or assets of any other Person, and

                                      11
<Page>

(ii) any direct or indirect loan, gift, advance or capital contribution by such
Person to any other Person.

                  "JUDGMENT LIENS" shall mean any money judgments, writs of
attachment or similar processes (collectively, "JUDGMENTS"), which are issued or
rendered against the Company or any Subsidiary of the Company or Guarantor or
any Subsidiary of Guarantor, or any of their respective Property (i) in the case
of money Judgments, in an amount of $250,000 or more for any single judgment,
attachment or process or $500,000 or more for all such judgments, attachments or
processes in the aggregate, in each case in excess of any applicable insurance
with respect to which the insurer has admitted liability, and (ii) in the case
of non-monetary Judgments, such Judgment or Judgments (in the aggregate) would
reasonably be expected to have a material adverse effect on the business of any
of the Company Parties, in each case which Judgment is not stayed, released,
insured, bonded or discharged within forty-five (45) days of filing.

                  "LENDERS" shall mean the financial institutions from time to
time party to the Bank Credit Agreement (as in effect on the date hereof), as
lenders.

                  "LIEN" shall mean any lien (statutory or other), pledge,
mortgage, deed of trust, assignment, deposit arrangement, priority, security
interest, charge or encumbrance or other preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a lessor under
a Capital Lease having substantially the same economic effect), any agreement to
give or refrain from giving any lien, pledge, mortgage, security interest,
charge or other encumbrance of any kind, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing or existence
of any financing statement or other similar form of notice under the laws of any
jurisdiction or any security agreement authorizing any Person to file such a
financing statement, whether arising by contract, operation of law, or
otherwise.

                  "LOSSES" shall have the meaning specified in SECTION 7.2.

                  "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall
mean any event, matter, condition or circumstance which individually or in the
aggregate (i) has or would reasonably be expected to have a material adverse
effect on or material adverse change in, as the case may be, the business,
assets, condition (financial or otherwise), properties (whether real, personal
or otherwise), operations or performance of the Company Parties, taken as a
whole, (ii) would materially impair or reasonably be expected to impair the
ability of any Company Party to perform or observe its obligations under this
Agreement or any other Investment Document or Bank Credit Document to which it
is a party or (iii) affects the legality, binding effect, validity or
enforceability of this Agreement or any other Investment Document or the
perfection or priority of any Lien granted to the Purchaser under any Collateral
Document or the Bank under the Bank Credit Documents.

                                      12
<Page>

                  "MONEY BORROWED" shall mean, without duplications, (i)
Indebtedness arising from the lending of money by any Person to any Company
Party, (ii) Indebtedness, whether or not in any such case arising from the
lending by any Person of money to any Company Party, (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit, (B) which
constitute obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property, (iii) Indebtedness that constitutes a Capitalized Lease Obligation,
(iv) reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Company Party under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by such Company Party.

                  "MORTGAGES" shall mean the mortgages, deeds of trust and
leasehold mortgages executed by the Company Parties in favor of the Purchaser
and by which the Company Parties grant and convey to the Purchaser, as security
for the Obligations, a Lien upon the Real Property of the Company Parties.

                  "MULTIEMPLOYER PLAN" shall have the meaning ascribed to such
term by ERISA.

                  "NEW HELLER NOTE" shall mean that certain 8% Subordinated
Promissory Note due 2005, made by the Company as of the date hereof in favor of
Heller Equity Capital Corporation.

                  "NOTE" shall have the meaning set forth in SECTION 2.1, and
shall also include, where applicable, any additional note or notes issued by the
Company in connection with any Assignments.

                  "OBLIGATIONS" shall mean any and all present and future loans,
advances, Indebtedness, claims, guarantees, liabilities or obligations of the
Company Parties, or of any other Person for or on behalf of the Company Parties,
owing to the Purchaser, any Affiliate of the Purchaser or any Indemnified Party,
of whatever nature, character or description, arising under or in connection
with this Agreement, the Note, the Collateral Documents, and any other
Investment Document or otherwise, any and all agreements, instruments or other
documents heretofore or hereafter executed or delivered in connection with any
of the foregoing, in each case whether due or not due, direct or indirect, joint
and/or several, absolute or contingent, voluntary or involuntary, liquidated or
unliquidated, determined or undetermined, now or hereafter existing, amended,
renewed, extended, replaced, exchanged, restated, refinanced, refunded or
restructured, whether or not from time to time decreased or extinguished and
later increased, created or incurred, whether for principal, interest, premiums,
fees, costs, expenses (including, without limitation, attorneys' fees) or other
amounts incurred for administration, collection, enforcement or otherwise,
whether or not arising after the commencement of any proceeding under the
Bankruptcy Laws (including, without limitation, post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding, and
whether or not recovery of any such

                                      13
<Page>

obligation or liability may be barred by any statute of limitations or such
Indebtedness, claim, liability or obligation may otherwise be unenforceable.

                  "ODA NOTE" shall mean that certain $1,000,000 Note due 2004,
made by the Company as of September 5, 1997 in favor of Kenneth Oda.

                  "OPERATING LICENSES" shall mean, collectively, all licenses,
franchises, permits, consents, approvals, registrations, certificates and
authorizations of all Governmental Authorities necessary or advisable to the
conduct of the businesses of any of the Company Parties.

                  "ORGANIZATIONAL I.D. NUMBER" shall mean, with respect to any
Company Party, the organizational identification number assigned to such Company
Party by the applicable governmental unit or agency of the jurisdiction of
organization of such Company Party.

                  "OTHER DEBT DOCUMENT" shall mean any agreement, instrument or
other document evidencing or governing any Indebtedness of any Company Party,
other than the Note and any other Investment Document, but including, without
limitation, the Bank Credit Documents, the 10 1/2% Notes, the 13% Notes, the
Heller Note and the Oda Note.

                  "PERMITTED LIENS", with respect to the Company, shall have the
meaning set forth in SECTION 9.5.

                  "PERMITTED PURCHASE MONEY INDEBTEDNESS" shall mean Purchase
Money Indebtedness of the Company Parties incurred after the date hereof which
is secured by a Purchase Money Lien and the principal amount of which, when
aggregated with the principal amount of all other such Indebtedness and
Capitalized Lease Obligations of the Company Parties at the time outstanding,
does not exceed $6,600,000. For the purposes of this definition, the principal
amount of any Purchase Money Indebtedness consisting of capitalized leases (as
opposed to operating leases) shall be computed as a Capitalized Lease
Obligation.

                  "PERSON" shall mean any individual, trustee, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, limited liability
partnership and other entity or any Governmental Authority.

                  "PREMISES" shall mean any and all real property, including all
buildings and improvements now or hereafter located thereon and all
appurtenances thereto, now or hereafter owned, leased, occupied or used by the
Company Parties.

                  "PROJECTIONS" means the Company's forecasted Consolidated (i)
balance sheets, (ii) profit and loss statements, (iii) cash flow statements,
(iv) capitalization statements, and (v) calculation of the financial covenants
under SECTION 8.20 of this Agreement, all prepared on a consistent basis with
the historical financial statements of the Company, together with appropriate
supporting details and a statement of underlying assumptions.

                                      14
<Page>

                  "PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.

                  "PURCHASE PRICE" shall have the meaning specified in SECTION
2.2.

                  "PURCHASER" shall have the meaning specified in the preamble.

                  "PURCHASE MONEY INDEBTEDNESS" shall mean and include (i)
Indebtedness (other than the Obligations) for the payment of all or any part of
the purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within ten (10) days prior to or after
the acquisition of any fixed assets for the purpose of financing all or any part
of the purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof, but not any increases in the principal amounts thereof
outstanding at the time.

                  "PURCHASE MONEY LIEN" shall mean a Lien upon fixed assets
which secures Purchase Money Indebtedness, but only if such Lien shall at all
times be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured by
such Lien.

                  "RATE CONTRACTS" shall mean forward contracts, futures
contracts, swaps, options or other similar financial products designed to
provide protection against fluctuations in interest, currency or exchange rates,
commodities or other indices.

                  "REAL PROPERTY" shall mean any and all real property now or
hereafter owned, leased or operated by any Company Party.

                  "RELEASE" shall mean any release (whether threatened or
actual), migration, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, seeping, leaching, dumping or disposing into
the environment or the workplace of any Hazardous Materials, and otherwise as
defined in any Environmental Laws.

                  "REPORTABLE EVENT" shall mean any of the events set forth in
Section 4043 of ERISA.

                  "RESTRICTED INVESTMENTS" shall mean any investment made in
cash or by delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following: (i)
investments by the Company, to the extent existing on the Closing Date, in one
or more Subsidiaries of the Company, (ii) Property to be used in the ordinary
course of business, (iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of the Company or any of its
Subsidiaries, (iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United States of
America, PROVIDED that such obligations mature within one year from the date of
acquisition

                                      15
<Page>

thereof, (v) investments in certificates of deposit maturing within one year
from the date of acquisition issued by a bank or trust company organized under
the laws of the United States or any state thereof having capital surplus and
undivided profits aggregating at least $100,000,000, and (vi) investments in
commercial paper given the highest rating by a national credit rating agency and
maturing not more than 270 days from the date of creation thereof.

                  "SALE AND LEASEBACK TRANSACTION" shall mean any transaction in
which any Company Party becomes liable, directly or indirectly, with respect to
any lease, whether an operating lease or a Capital Lease, of any property
(whether real, personal or mixed), whether now owned or hereafter acquired, (i)
which any Company Party has sold or transferred or is to sell or transfer to any
other Person or (ii) which any Company Party intends to use for substantially
the same purposes as any other property which has been or is to be sold or
transferred by any Company Party to any other Person in connection with such
lease.

                  "SECURITY" shall mean all shares of stock, partnership
interests, membership interests or units or other ownership interests in any
other Person and all warrants, options or other rights to subscribe for or
purchase, or obligations to issue, the same, any Convertible Securities of such
Person, including, without limitation, any options or similar rights issued or
issuable under any employee stock option plan, pension plan or other employee
benefit plan of such Person, or any plan for, or other rights to, phantom stock
or other arrangement intended to result in payments by such Person which track
or reflect the value (or change in value) of the same.

                  "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, all as the same
shall be in effect at the time.

                  "SERIES A PREFERRED STOCK" shall mean the Company's 13% Series
A Cumulative Preferred Stock.

                  "SERIES B PREFERRED STOCK" shall mean, collectively, the
Company's 13% Series B Cumulative Preferred Stock and 12% Series B-1 Cumulative
Preferred Stock.

                  "SITE" shall mean any real property previously, currently or
hereafter owned, leased or operated by any Environmental Person.

                  "SOLVENT" shall mean, with respect to any Person, on the date
of determination, that (i) the present fair saleable value of the assets of such
Person in an arm's-length transaction will exceed the amount that will be
required to be paid on or with respect to the probable liability on the existing
debts (whether matured or unmatured, liquidated or unliquidated, absolute, fixed
or contingent) of such Person as they become absolute and matured, (ii) the sum
of the debts (whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent) of such Person will not exceed all of the
property of such Person at a fair valuation, (iii) the capital of such Person
will not be unreasonably small for such Person to carry on its businesses, and

                                      16
<Page>

(iv) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay such debts and
liabilities as they mature. For purposes of the preceding sentence, the amount
of Contingent Obligations at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that are reasonably expected to become an actual or matured
liability.

                  "SUBORDINATED DEBT" shall mean any Indebtedness of the Company
that is subordinated to the Obligations in a manner satisfactory to Purchaser
and contains terms, including, without limitation, payment terms, satisfactory
to Purchaser. The term "Subordinated Debt" shall include, without limitation,
the Indebtedness evidenced by the 13% Notes, the New Heller Note and the Oda
Note.

                  "SUBSIDIARY" and "SUBSIDIARIES" shall mean, with respect to
any specified Person, any other Person of which more than fifty percent (50%) of
the total voting power of Securities entitled to vote (without regard to the
occurrence of any contingency) in the election of directors (or other Persons
performing similar functions) are at the time directly or indirectly owned by
such specified Person. Unless otherwise indicated, the term "SUBSIDIARY" refers
to a Subsidiary of the Company or the Guarantors, whether directly or indirectly
owned.

                  "TAX" or "TAXES" shall mean any present and future income,
excise, sales, use, stamp or franchise taxes and any other taxes, fees, duties,
levies, with Guarantors or other charges of any nature whatsoever imposed by any
taxing authority, whether federal, state, local or foreign, together with any
interest and penalties and additions to tax.

                  "10 1/2% INDENTURE" shall mean that certain Indenture, dated
as of December 24, 1997, between the Company and U.S. Trust Company of
California, N.A., as Trustee, with respect to the 10 1/2% Notes.

                  "10 1/2% NOTES" shall mean the Company's existing 10 1/2%
Senior Subordinated Notes due 2007 issued under the 10 1/2% IndenturE.

                  "13% INDENTURE" shall mean that certain Indenture, of even
date herewith, between the Company and The Bank of New York, as Trustee, with
respect to the 13% Notes.

                  "13% NOTES" shall mean the Company's 13% Senior Subordinated
Notes due 2005 issued under the 13% Indenture.

                  "TYPE OF ORGANIZATION" means with respect to any Company
Party, the kind or type of entity by which any Company Party is organized, such
as a corporation or limited liability company.

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

                                      17
<Page>

                  "VOTING STOCK" of a Person shall mean all classes of
Securities of such Person then outstanding and normally entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees (or persons performing similar functions) thereof.

         1.2 ACCOUNTING TERMS AND COMPUTATIONS. For purposes of this Agreement,
(i) all accounting terms used in this Agreement that are not expressly defined
herein have the meanings given to them under GAAP, (ii) all computations made
pursuant to this Agreement or any other Investment Document shall be made in
accordance with GAAP, (iii) all financial statements and other financial
information to be delivered by the Company Parties hereunder or under any other
Investment Document shall be prepared in accordance with GAAP, except that any
interim financial statements or other financial information which are unaudited
may be subject to year-end audit adjustments and may omit footnotes and (iv) all
computations, financial statements and other financial information of the
Company Parties hereunder shall be determined on a consolidated basis in
accordance with GAAP.

         1.3 COVENANTS. To the extent that this Agreement contains any covenants
or agreements of any Company Party not a signatory hereto, the Company shall
cause such Company Party to comply with such covenants and agreements. All
covenants and agreements under this Agreement shall each be given independent
effect so that if a particular action or condition is not permitted by any such
covenant, the fact that it would be permitted by another covenant, by an
exception thereto, or be otherwise within the limitations thereof, shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.

         1.4 CAPTIONS; CONSTRUCTION AND INTERPRETATION. The captions in this
Agreement are for convenience of reference only, do not constitute a part of
this Agreement and are not to be considered in construing or interpreting this
Agreement. All section, preamble, recital, exhibit, schedule, disclosure
schedule, annex, clause and party references are to this Agreement unless
otherwise stated. No party, nor its counsel, shall be deemed the drafter of this
Agreement for purposes of construing the provisions of this Agreement, and all
provisions of this Agreement shall be construed in accordance with their fair
meaning, and not strictly for or against any party.

         1.5 DETERMINATIONS. Any determination or calculation contemplated by
this Agreement or any other Investment Document that is made by the Purchaser
shall be final and conclusive and binding upon the Company Parties in the
absence of manifest error.

20       PURCHASE AND SALE OF THE NOTE.

         2.1 AUTHORIZATION. The Company has authorized the issuance and sale to
the Purchaser of a Secured Senior Subordinated Note Due 2003 in the principal
amount of $12,000,000, in substantially the form of EXHIBIT A (as the same may
be amended, restated, supplemented, modified, renewed, replaced, refinanced or
restructured from time to time, the "NOTE"). The Company has also authorized the
grant to the Purchaser of a security interest in all

                                      18
<Page>

of the assets of the Company in accordance with the Company Security Agreement
and the Company Intellectual Property Agreement, subject only to Permitted
Liens. Each Guarantor has authorized the issuance of an absolute and
unconditional Guarantee, in substantially the form of EXHIBIT B, of all of the
obligations of the Company under this Agreement, the other Investment Documents
and the Note, secured by a lien on all of its right, title and interest in all
of its respective assets in accordance with the Guarantor Security Agreement and
the Guarantor Intellectual Property Security Agreement, subject only to
Permitted Liens.

         2.2 PURCHASE OF THE NOTE; ISSUE PRICE. Subject to the terms and
conditions contained herein and in the other Investment Documents, and in
reliance upon the representations, warranties, covenants and agreements
contained herein and therein, at the Closing, the Company shall issue and sell
to the Purchaser the Note, and the Purchaser shall purchase the Note from the
Company. The aggregate purchase price to be paid by the Purchaser for the Note
(the "PURCHASE PRICE") shall be $12,000,000, payable as provided in SECTION 2.3.

         2.3 CLOSING. The closing of the issuance and sale of the Note under
this Agreement (the "CLOSING") shall take place at the offices of Riordan &
McKinzie, 300 South Grand Avenue, Los Angeles, California, or such other place
as the parties may mutually agree on the date hereof or as soon as practicable
thereafter immediately following the satisfaction or waiver of the conditions
precedent set forth in SECTION 5 and SECTION 6 and concurrently with the
consummation of the Refinancing (such date being referred to as the "CLOSING
DATE"), subject to SECTION 11. At the Closing, the Company shall deliver to the
Purchaser, among other things, the Note, duly executed by the Company against
delivery by the Purchaser of the Purchase Price (net of amounts permitted to be
withheld pursuant to SECTION 5.3), at the direction and on behalf of the
Company, by wire transfer in immediately available funds to such bank as the
Company may request in writing at least two (2) Business Days prior to the
Closing for credit to an account designated in writing by the Company.

         2.4 USE OF PROCEEDS. The Company Parties shall use the proceeds from
the issuance and sale of the Notes as contemplated hereunder solely in
connection with the Refinancing, for general operating capital needs of the
Company in a manner consistent with the provisions of this Agreement and
applicable law, and the payment of fees in connection with this Agreement.

30 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS. In
connection with the following representations and warranties, the Company and
the Guarantors have delivered to Purchaser disclosure schedules as attached
hereto (the "DISCLOSURE SCHEDULES"), arranged in numbered parts corresponding to
the numbering in this Agreement of the following representations and warranties.
The information disclosed in any numbered part shall be deemed to relate to and
to qualify only the particular representation or warranty set forth in the
corresponding numbered section in this Agreement and shall not be deemed to
relate to or to qualify any other representation or warranty. To induce the
Purchaser to purchase the Note under this Agreement, the Company and the
Guarantors, jointly and severally,

                                      19
<Page>

represent and warrant to the Purchaser that, except as expressly set forth in
the respective Disclosure Schedules:

         3.1 ORGANIZATION AND QUALIFICATION. Except for Lone Star Growers, the
Company and each Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation. Lone Star
Growers is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company and each Guarantor
has all requisite power and authority, and all Operating Licenses, necessary to
own or lease and operate its properties and assets and to carry on its business
as now conducted and as proposed to be conducted, and is duly qualified or
licensed to do business in each jurisdiction in which the character of the
properties or assets owned, leased or operated by it or the nature of the
activities conducted makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed could not reasonably be
expected to result in a Material Adverse Effect.

         3.2 CORPORATE OR OTHER POWER. The Company and each Guarantor have the
requisite power and authority to execute, deliver, carry out and perform their
respective obligations under this Agreement and all other Investment Documents
to which they are a party, including, without limitation, the power and
authority to issue, sell and deliver the Note to be issued and sold by the
Company to the Purchaser hereunder and grant the security interests and guaranty
the obligations as set forth herein.

         3.3 AUTHORIZATION; BINDING OBLIGATIONS. The execution, delivery and
performance of this Agreement and each of the other Investment Documents to
which either the Company or the Guarantors is a party, the issuance, sale and
delivery by the Company of the Note as contemplated hereunder and the
consummation of the other transactions contemplated hereby and thereby have been
duly authorized by all requisite action on the part of the Company and the
Guarantors, as applicable, and by the stockholders, partners, Board of Directors
and officers of each entity, as applicable. This Agreement has been duly
executed and delivered by the Company and each Guarantor and, at the Closing,
each of the other Investment Documents will be duly executed and delivered by
the Company and the Guarantors to the extent that any of them is a party
thereto. This Agreement is, and each other Investment Document will at the
Closing be, a legal, valid and binding obligation of the Company and the
Guarantors to the extent that any of them is a party thereto, enforceable
against the Company and the Guarantors in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.

         3.4 SUBSIDIARIES. The Company does not own or hold any Securities of
any Person other than the Guarantors, and has no other Subsidiaries. Other than
Lone Star's 1% partnership interest in Lone Star Growers and LSGR's 99%
partnership interest in Lone Star Growers, no Guarantor owns or holds any
Securities of any other Person and has no Subsidiaries. The Company Parties do
not have any joint venture relationships.

                                      20
<Page>

         3.5      CONFLICT WITH OTHER INSTRUMENTS; EXISTING DEFAULTS.

                  (a) The execution, delivery and performance of this Agreement
by the Company and the Guarantors and of each other Investment Document to which
any Company Party is a party, the issuance, sale and delivery by the Company of
the Note and the consummation of the other transactions contemplated hereby and
thereby do not and will not (i) violate or conflict with (A) the charter, bylaws
or organizational documents of the Company or the Guarantors, in each case as in
effect on the date hereof, (B) any term of any lease, credit agreement,
indenture, note, mortgage, instrument or other agreement to which any Company
Party is a party or by which any of its or their properties or assets are bound
(including, without limitation, any material contract or Other Debt Document),
or any agreement with respect to intellectual property, the violation of which
would reasonably be expected to have a Material Adverse Effect, or (C) any
Applicable Laws, the violation of which would reasonably be expected to have a
Material Adverse Effect, or (ii) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the assets or properties
now owned or hereafter acquired by any Company Party, except for Liens under the
Bank Credit Agreement (as in effect on the date hereof) and this Agreement.

                  (b) After giving effect to the consummation of the
transactions contemplated hereby, neither the Company nor any Guarantor is in
default, breach or violation of (i) its charter, bylaws or organizational
documents, as in effect as of the date hereof, (ii) any material lease, credit
agreement, indenture, note, mortgage, instrument or other agreement to which it
is a party or by which any of its properties or assets are bound (including,
without limitation, any material contract or Other Debt Document or any
agreement with respect to intellectual property) or (iii) any Applicable Laws,
the violation of which would reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, after giving effect to
the consummation of the transactions contemplated hereby, there does not exist
any "default" or "event of default" (in each case as defined in any Other Debt
Document) or any default under the Bank Credit Agreement (as in effect on the
date hereof) or any other credit or financing agreement to which the Company or
any Guarantor is a party or by which any of their respective properties or
assets are bound.

                  (c) Except as set forth on SCHEDULE 3.5, no Indebtedness for
Money Borrowed of the Company or any Guarantor ranks senior to or pari passu
with the Indebtedness evidenced by the Note or the Guarantee, other than the
Indebtedness under the Bank Credit Documents and the 10 1/2% Notes.

         3.6 GOVERNMENTAL AND OTHER THIRD PARTY CONSENTS. Except for the
Consents listed in SCHEDULE 3.6, neither the Company nor any Guarantor is
required to obtain any Consent from, or is required to make any declaration or
filing with, any Governmental Authority or any other Person (including
stockholders or partners) in connection with the execution, delivery and
performance of this Agreement or any other Investment Document, including,
without limitation, the issuance, sale and delivery of the Notes, or for the
purpose of maintaining in full force and

                                      21
<Page>

effect any Operating Licenses. Each of the Consents which have been obtained or
made in connection with the execution, delivery and performance of this
Agreement or any other Investment Document is in full force and effect. The time
within which any administrative or judicial appeal, reconsideration, rehearing
or other review of any such Consent may be taken or instituted has lapsed, and
no such appeal, reconsideration or rehearing or other review has been taken or
instituted.

         3.7 CAPITALIZATION. SCHEDULE 3.7 sets forth a true, correct and
complete description of the authorized Securities of each Company Party and the
number of shares or securities of each class of Securities that is issued and
outstanding or partnership interest, as appropriate, with respect to each
Company Party as of the date hereof. All of the issued and outstanding shares of
capital stock of each Company Party have been duly authorized and are validly
issued, fully paid and non-assessable, and are free and clear of any Liens and
other restrictions including any restrictions on the right to vote, sell or
otherwise dispose of such capital stock other than restrictions under applicable
securities laws and of any preemptive or other similar rights to subscribe for
or to purchase any such capital stock. Except as set forth on SCHEDULE 3.7,
there are (i) no voting trusts or other agreements or undertakings with respect
to the voting of the Securities of any Company Party to which any Company Party
is a party or of which any Company Party has knowledge, and (ii) no agreements
to which the Company Parties, any of their respective directors or officers, is
a party granting any other Person any rights of first offer or first refusal,
registration rights or "drag-along," "tag-along" or similar rights with respect
to any transfer of any Securities of the Company Parties to which any Company
Party is a party or of which any Company Party has knowledge. All Securities of
the Company Parties that have been issued have been issued and offered in
compliance in all material respects with all applicable federal and state
securities laws. No obligations (whether fixed or contingent) on the part of any
Company Party, any of their respective directors or officers, or any other
Person exist with respect to the purchase, repurchase or redemption of any
outstanding Securities of any Company Party. No additional shares of Capital
Stock of the Company Parties will become issuable to any Person pursuant to any
"anti-dilution" provisions of any such issued and outstanding Security of the
Company on account of the issuance of the Note.

         3.8      NAMES; BUSINESS LOCATIONS.

                  (a No Company Party has been known as or has used any legal,
fictitious or trade names except those listed on SCHEDULE 3.8 hereto. Except as
set forth on SCHEDULE 3.8, since January 1, 1997, no Company Party has been the
surviving entity of a merger or consolidation or has acquired all or
substantially all of the assets of any Person. The Company Parties' respective
states of incorporation or organization and type of organization are set forth
on SCHEDULE 3.8. The respective exact legal names of each Company Party are set
forth on SCHEDULE 3.8.

                  (b Each Company Party's chief executive office and other
places of business as of the date hereof are as listed on SCHEDULE 3.8 hereto as
updated from time to time by the

                                      22
<Page>

Company. During the preceding one-year period, none of the Company Parties has
had an office or place of business other than as listed on SCHEDULE 3.8. Except
as shown on SCHEDULE 3.8, as of the date hereof, no Inventory is stored with a
bailee, distributor, warehouseman or similar party, nor is any Inventory
consigned to any Person.

         3.9 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
true and complete copies of (i) the consolidated balance sheets of the Company
as at December 31, 2000, and June 30, 2000 and 1999, and the related
consolidated statements of income and cash flows for the fiscal years then
ended, each audited by an independent accounting firm, and (ii) the unaudited
consolidated balance sheet of the Company as of June 30, 2001, and related
consolidated statement of income for the fiscal period then ended (collectively,
the "FINANCIAL STATEMENTS"). The Financial Statements (a) present fully and
fairly the financial position and results of operations of the Company and the
Guarantors, as applicable, as of the respective dates of such statements and for
the periods covered thereby and (b) were prepared in accordance with GAAP,
applied on a consistent basis throughout the periods covered thereby, except
that the June 30, 2001 financial statements do not contain all GAAP adjustments
or footnotes required by GAAP. Except as set forth on SCHEDULE 3.9 or except as
not required to be disclosed on the Financial Statements by GAAP, there is no
Contingent Obligation or other liability material to the Company or Guarantor
that is not reflected on the face of the consolidated balance sheet of the
Company and Guarantor at June 30, 2001.

         3.10 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 3.10
or with respect to the transactions set forth in this Agreement (including,
without limitation, the transactions contemplated by the Bank Credit Agreement
(as in effect on the date hereof), the 10 1/2% Notes, the 13% Notes, the Series
A Preferred Stock, the Series B Preferred Stock and the New Heller Note), since
June 30, 2001 through the date of this Agreement, there has not been:

                  (a Any transaction involving the Company or any Guarantor not
in the ordinary course of business, including, without limitation, any sale of
any assets or properties (other than inventory in the ordinary course of
business);

                  (b Any declaration, setting aside or payment of any dividend
or other distribution or payment (whether in cash, stock or property) with
respect to the Securities of the Company or any Guarantor, or any redemption,
purchase or other acquisition of securities of the Company or any Guarantor, or
any payment to any stockholder or partner of the Company or any Guarantor not in
his, her or its capacity as a stockholder or partner;

                  (c Any damage, destruction or loss, whether or not covered by
insurance, to any material assets or properties of the Company or any Guarantor;

                  (d Any Material Adverse Change (after giving effect to the
Refinancing);

                                      23
<Page>

                  (e Any Indebtedness for Money Borrowed incurred by the Company
or any Guarantor or any commitment to incur Indebtedness for Money Borrowed
entered into by the Company or any Guarantor;

                  (f Any payment, satisfaction, discharge or cancellation of any
material debts or claims of the Company or any Guarantor other than in the
ordinary course of business consistent with past practices;

                  (g Any mortgage, pledge or Lien encumbering any of the assets
or properties of the Company or any Guarantor, or any assumption of, or taking
any assets or properties subject to, any liability;

                  (h Any offer, issuance or sale of any shares of Securities of
the Company or any Guarantor;

                  (i Any alteration or change in the Company's or any
Guarantor's credit guidelines and policies, charge-off policies or accounting
methods, quality control procedures or policies or manner of preparing its
financial statements or maintaining its books of account;

                  (j Any settlement of any litigation, entry of a consent decree
or entry of any judgment against the Company or any Guarantor with a value of
$100,000 or more;

                  (k Any revaluation by the Company or any Guarantor of any of
their respective assets, including without limitation, any write-offs, increases
in any reserves except in the ordinary course of business consistent with past
practice or any write-up or write-down of the value of inventory, property,
plant, equipment or any other asset;

                  (l Any proceeding or other steps for the dissolution, winding
up, reorganization or bankruptcy by the Company or any Guarantor;

                  (m Any revaluation or repricing of any Securities of the
Company or any Guarantor; or

                  (n Any agreement to do any of the foregoing.

         3.11     EXISTING INDEBTEDNESS; EXISTING LIENS; INVESTMENTS.

                  (a SCHEDULE 3.11 sets forth a true, correct and complete list,
and describes, as of the date or dates indicated therein, as applicable:

                           (i0 all Indebtedness for Money Borrowed of the
Company Parties on a consolidated and consolidating basis which will be
outstanding immediately after the Closing

                                      24
<Page>

Date, showing, as to each Indebtedness, the payee thereof and the total amount
outstanding (by principal, interest and other amounts, if applicable);

                           (ii0 all Liens (except Permitted Liens) in respect of
any property or assets of the Company and/or any Guarantor which will exist
immediately after the Closing Date, showing, as to each Lien, the name of the
grantor and secured party, the Indebtedness secured thereby, the name of the
debtor (if different from the grantor) and the assets or other property covered
by such Lien;

                           (iii0 all Investments of the Company and the
Guarantors immediately after the Closing Date, if any; and

                           (iv0 all UCC financing statements existing as of
November 15, 2001, naming the Company or any Guarantor as a debtor, showing, as
to each financing statement, the basis for the filing.

                  (b The Company has previously delivered to the Purchaser a
true and correct trade payables aging schedule for the Company and the
Guarantors as of November 15, 2001.

                  (c Neither the Company nor any Guarantor has on the date
hereof any material Contingent Obligations, liabilities for Taxes, liabilities
for product defects or under warranties, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments. No Company Party is obligated as surety or indemnitor under any
surety or similar bond or other contract issued or entered into to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person. Except for the Bank Credit Agreement (as in effect on
the date hereof) and the 10 1/2% Indenture, 13% Indenture, the Series A
Preferred Stock and the Series B Preferred Stock, no Company Party is a party or
subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, none of which prohibit the execution of or compliance with
this Agreement or the other Investment Documents.

                  (d Immediately following the Closing, neither the Company nor
any Guarantor will have any Indebtedness, for Money Borrowed whether accrued,
absolute, contingent or otherwise (whether individually or in the aggregate),
except for the Indebtedness for Money Borrowed set forth on SCHEDULE 3.11.

         3.12 LITIGATION. Except as set forth on SCHEDULE 3.12, there are no
actions, suits, arbitration proceedings, investigations, inquiries or other
proceedings, whether governmental or non-governmental, before any Governmental
Authority pending or, to the knowledge of the Company Parties, threatened
against, relating to or affecting any Company Party, or any officer, director or
employee thereof in his or her capacity as such, or any of its or their
respective assets, properties or businesses which could reasonably be expected
to have a Material Adverse Effect. Except as set forth on SCHEDULE 3.12, there
is not in effect any order, judgment, decree, injunction

                                      25
<Page>

or ruling of any Governmental Authority against, relating to or affecting any of
the Company Parties or any officer, director or employee thereof in his or her
capacity as such. None of the Company Parties is in default under any order,
judgment, decree, injunction or ruling of any Governmental Authority, or is
subject to or a party to any order, judgment, decree or ruling arising out of
any action, suit or proceeding under any Applicable Laws.

         3.13     TRANSACTIONS WITH AFFILIATES.

                  (a Except as set forth on SCHEDULE 3.13(a) or as contemplated
by this Agreement, immediately following the Closing Date:

                           (i0 neither the Company nor any Guarantor will be
indebted, directly or indirectly, to any of its own officers or directors, the
officers or directors of its Affiliates, or to any members of the Immediate
Families of such officers or directors, except for, in the case of officers,
compensation payable in the ordinary course of business and reasonable travel
advances accrued in the ordinary course of business consistent with past
practices;

                           (ii0 no officer or director of the Company or any
Guarantor, and no member or members of their Immediate Families, will (A) be
indebted to the Company or any Guarantor in any amount whatsoever or (B) have
any direct or indirect ownership interests in any Person which competes,
directly or indirectly, with the Company or any Guarantor; and

                           (iii0 there are no voting or similar agreements
between or among the stockholders or partners of any Company Party to which any
Company Party is a party or of which any Company Party has knowledge.

                  (b Immediately following the Closing Date, and except for
interests in employee benefit plans, no officer, director or employee of any
Company Party, and no member, or Affiliate of a member, or of the Immediate
Families of any of the foregoing, will have any direct or indirect interest in
any contract, commitment, license, agreement, obligation or arrangement to which
any Company Party is a party, other than employment agreements described in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 and as
set forth on SCHEDULE 3.13(b).

         3.14 COMPLIANCE WITH LAWS; PERMITS. Each of the Company Parties and its
respective properties, operations and assets, is in material compliance with all
Applicable Laws (including, without limitation, securities laws). There have
been no citations, notices or orders of noncompliance issued to any Company
Party with respect to any pending or uncured violation, potential violation, or
alleged violation of any Applicable Law. Each of the Company Parties has
established and maintains an adequate monitoring system to insure that it
remains in compliance in all material respect with all federal, state and local
rules, laws and regulations applicable to it. No Inventory has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. Section 201, ET SEQ.), as
amended. None of the Company Parties is an "investment company" or a company

                                      26
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"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended. Each of the Company Parties has all material
Operating Licenses required under Applicable Laws to own their respective assets
or conduct their respective businesses as now conducted and as proposed to be
conducted. All such Operating Licenses of the Company Parties are validly issued
and in full force and effect, and each of the Company Parties have fulfilled and
performed in all material respects their obligations with respect thereto and
have full power and authority to operate thereunder.

         3.15     REAL PROPERTY.

                  (a SCHEDULE 3.15 sets forth Real Property owned by any Company
Party.

                  (b SCHEDULE 3.15 sets forth a complete and correct description
of leases, subleases or licenses of any real property to which the Company and
any Guarantor will be a party immediately after the Closing. The Company and the
Guarantors have delivered to the Purchaser true, correct and complete copies of
the leases listed on SCHEDULE 3.15. Neither the Company nor any Guarantor leases
or otherwise holds or uses any other real property. With respect to each such
lease:

                           (i) there are no disputes, oral agreements or
forbearance programs in effect as to any such lease, sublease or license; and

                           (ii) except with respect to the Bank Credit Agreement
(as in effect on the date hereof), neither the Company nor any Guarantor has
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest therein.

                  (c Except for landlord consents in connection with the actions
described in SECTION 8.23, no Consent of any party to such lease is required in
connection with the consummation of the transactions contemplated by this
Agreement, the Note or the other Investment Documents, including, without
limitation, the issuance and sale of the Securities, and no such event shall be
prohibited by, or shall constitute a default under, such lease.

         3.16     EMPLOYEE BENEFIT PLANS; ERISA.

                  (a SCHEDULE 3.16 sets forth a true, correct and complete list
of all Benefit Plans of the Company and the Guarantors as of the date hereof;

                  (b The Company Parties are in compliance in all material
respects with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Benefit Plan. No fact or situation that would
reasonably be expected to result in a Material Adverse Change in the financial
condition of the Company Parties exists in connection with any Benefit Plan.

                                      27
<Page>

                  (c All costs of administering and contributions required to be
made to each Benefit Plan under the terms of that Benefit Plan, ERISA, the Code,
or any other Applicable Law have been timely made by the Company Parties and are
fully deductible in the year for which they were paid. All other amounts that
should be accrued to date as liabilities of the Company Parties under or with
respect to each Benefit Plan (including administrative expenses and incurred but
not reported claims) for the current plan year of each such plan have been
recorded on the books of the Company. There is and will be no material liability
of any Company Party (i) with respect to any Benefit Plan that has previously
been terminated by a Company Party or any predecessor Person under any
Multiemployer Plan or (ii) under any insurance policy or similar arrangement
procured in connection with any Benefit Plan in the nature of a retroactive rate
adjustment, loss sharing arrangement, or other liability.

                  (d No circumstance exists and no event (including any action
or any failure to take any action) has occurred with respect to any Benefit Plan
currently or formerly maintained by the Company Parties, or any predecessor
Persons, or to which the Company Parties or any predecessor Persons is or has
been required to contribute, that could subject the Company Parties to any
liability (including any penalty for failure to timely file any required report
with any governmental agency) or Lien under ERISA or the Code which would
reasonably be expected to have a Material Adverse Effect, nor will the
transactions contemplated by this Agreement or the Refinancing give rise to any
such liability or Lien.

         3.17     TAXES.

                  (a The Company Parties have each filed within the required
time periods (after giving effect to any permitted extensions) all federal,
state and other Tax returns required to have been filed by it or them, and have
each paid all Taxes which were due and payable by it or them, other than Taxes
that are being contested in good faith and for which reserves have been properly
established. The Company Parties' respective federal tax identification numbers
are set forth on SCHEDULE 3.17. The provision for taxes on the books of the
Company Parties is adequate for all years not closed by applicable statutes, and
for the current fiscal year.

                  (b The Company Parties have each withheld and paid all Taxes
required to be withheld and paid by it or them in connection with amounts paid
or owing to any employee, creditor, stockholder, partner or other third party.

                  (c (i) Since January 1, 1996, none of the Company Parties has
been advised that any Tax returns have been or are being audited by any
Governmental Authority, (ii) there are no agreements, waivers or other
arrangements providing for an extension of time with respect to the assessment
of any Taxes or deficiency against the Company Parties, (iii) there are no
actions, suits, proceedings or claims now pending by or against any Company
Party in respect of any Taxes or assessments, and (iv) there is no pending or,
to the best knowledge of any Company Party, threatened audit or investigation of
any Company Party by any Governmental Authority

                                      28
<Page>

relating to any Taxes or assessments, or any claims for additional Taxes or
assessments asserted by any Governmental Authority.

                  (d No Company Party is a party to or bound by any tax sharing,
tax indemnity or tax allocation agreement or other similar arrangement.

         3.18 TITLE TO PROPERTY; LIENS. Each of the Company Parties has good and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its Real Property, and good title to all of the
Collateral and all of its other Property, in each case, free and clear of all
Liens except Permitted Liens. Each Company Party has paid or discharged all
lawful claims which, if unpaid, might become a Lien against any of the Company
Parties' Properties that is not a Permitted Lien. The Liens granted to the
Purchaser under the Collateral Documents are second priority Liens, subject only
to Permitted Liens. Each of the Company Parties holds valid leasehold interests
in all real property occupied or otherwise used in connection with its business
and good and merchantable title to its Property, and no such Property is subject
to any Lien except for the Permitted Liens. Each of the Company Parties enjoys
quiet possession under all leases to which they are parties as lessees, and all
of such leases are valid, subsisting and in full force and effect. None of such
leases contain any provision restricting the incurrence of indebtedness by the
lessee or any unusual or burdensome provision adversely affecting the current
and proposed operations of the Company Parties taken as a whole. Immediately
after the Closing, the Company Parties will have the assets, properties, rights
and Operating Licenses necessary to conduct the business that is being conducted
and as proposed to be conducted by the Company Parties.

         3.19     ENVIRONMENTAL MATTERS.

                  (a Except as set forth in SCHEDULE 3.19:

                           (i0 Each Environmental Person and each Site is in
material compliance with all, and no Environmental Person has any material
liability under, any Environmental Laws, and no Hazardous Materials are being
used by the Company or any Guarantor on any Real Property in violation of any
Environmental Law;

                           (ii0 No material Release has occurred at any Site,
and there are no present or past Environmental Conditions in any way relating to
any Environmental Person, any Site or the business or operations of any
Environmental Person;

                           (iii0 No Environmental Person is a "potentially
responsible party" within the meaning of CERCLA with respect to any federal,
state, local or foreign environmental clean-up site or with respect to
investigations or corrective actions under any Environmental Laws for such a
clean-up site;

                                      29
<Page>

                           (iv0 No Environmental Person has received notice of
any pending or uncured alleged, actual or potential responsibility, inquiry,
investigation or administrative or judicial proceeding regarding (A) any Release
by any Environmental Person at any Site or other location or (B) any violation
of or non-compliance by any Environmental Person with the conditions of any
license or permit required under any Environmental Laws or the provisions of any
Environmental Laws. No Environmental Person has received notice of any other
claim, demand or action by any Person alleging any pending or uncured actual or
threatened injury or damage to any Person, property, natural resources or the
environment arising from or relating to any Release, transportation or disposal
of any Hazardous Materials; and

                           (v0 Each Environmental Person has furnished all
notices and warnings, made all reports and has kept and maintained all records
required by, and in material compliance with, all Environmental Laws, including,
without limitation, any notices and Consents required under any Environmental
Laws in connection with the consummation of the transactions contemplated by the
Investment Documents.

                  (b SCHEDULE 3.19 sets forth a true, correct and complete list
of all environmental site assessments, audits, studies or reports relating to
any Environmental Condition or relating to the business, condition or operations
of all Environmental Persons since January 1, 1995. The Company has delivered to
the Purchaser true, correct and complete copies of all such environmental site
assessments, audits, studies or reports.

                  (c None of the items set forth on SCHEDULE 3.19 shall
individually or in the aggregate have a material effect on the Company or on any
Company Party to which such item relates.

         3.20 INTELLECTUAL PROPERTY. The Company and each of its Subsidiaries
owns or possesses all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business without any known conflict with the rights of others. All such
patents, trademarks, service marks, trade names, copyrights, licenses and other
similar rights are set forth on SCHEDULE 3.20.

         3.21     LABOR RELATIONS.

                  (a Except as would not reasonably be expected to have a
Material Adverse Effect, each of the Company Parties is in material compliance
with the Fair Labor Standards Act (29 U.S.C. Section 201, ET SEQ.), all state
wage and hour laws and all workers' compensation laws and other Applicable Laws
relating to employment and is not engaged in any unfair labor practice.

                  (b There is no labor strike, slowdown, work stoppage or charge
of unfair labor practice, and there are no material labor disputes, grievances,
complaints or arbitration proceedings, pending or materially affecting the
Company or any Guarantor nor, to the knowledge of any Company Party, is there
any basis therefor or threat thereof.

                                      30
<Page>

                  (c Except as set forth in SCHEDULE 3.21, none of the Company
Parties is bound by or subject to any written or oral, express or implied,
contract, commitment or arrangement with any labor union or other employee
organization, and no labor union or other employee organization has requested or
sought to represent any of the employees, representatives or agents of any
Company Party.

                  (d There are no petitions pending before the National Labor
Relations Board in connection with any pending claim for union representation.

         3.22 INSURANCE. SCHEDULE 3.22 sets forth a true and complete list of
all liability and other insurance coverage (including, without limitation,
product liability and product recall insurance) insuring the Company and any
Guarantor against losses arising out of or related to their respective
businesses), which list accurately describes the coverage carried and the
expiration dates of such policies). The Company and the Guarantors are covered
by insurance in scope and amount customary and reasonable for the business in
which they are engaged and will be so covered after consummation of the
transactions contemplated hereby and under the Agreement. The insurance policies
listed on SCHEDULE 3.22 constitute insurance protection against all liability,
claims and risks occurring in the ordinary course of business customarily
included within comprehensive liability coverage and at amounts and levels
customarily maintained for a business of this type. All such policies are in
full force and effect.

         3.23 BUSINESS RELATIONSHIPS. After giving effect to the consummation of
the transactions contemplated hereby and the Refinancing, there exists no actual
or, to the knowledge of the Company or any Guarantor, threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship proposed to be conducted by the Company or any Guarantor
with any material suppliers, or customers of the Company or any Guarantor, and
to the knowledge of the Company or any Guarantor there exists no present
condition or state of facts or circumstances which could materially and
adversely affect the Company or any Guarantor or prevent the Company or any
Guarantor from conducting business with such suppliers and customers after the
consummation of the transactions contemplated by this Agreement in substantially
the same manner in which it has been heretofore conducted.

         3.24 SOLVENCY. After giving effect to the consummation of the
transactions contemplated hereby and the Refinancing, each of the Company and
the Guarantors will be Solvent. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement and the other Investment Documents with the intent to hinder,
delay or defraud either present or future creditors of the Company or any
Guarantor.

         3.25 DEPOSITORY AND OTHER ACCOUNTS. SCHEDULE 3.25 sets forth a true and
complete list of all banks and other financial institutions and depositories at
which the Company Parties maintain, or will maintain, deposit accounts, spread
accounts, yield supplement reserve accounts, operating accounts, trust accounts,
trust receivable accounts or other accounts of any

                                      31
<Page>

kind or nature into which funds of the Company Parties are deposited from time
to time. SCHEDULE 3.25 correctly identifies the name and address of each such
bank, financial institution and depository, the name in which each account is
held, the purpose of the account, the account number, the contact person at such
bank, financial institution and depository and such contact person's telephone
number. The Company and the Guarantors will notify the Purchaser and supplement
SCHEDULE 3.25 as new accounts are established within two (2) Business Days
thereof.

         3.26 BROKERS; CERTAIN EXPENSES. Except as set forth in SCHEDULE 3.26,
neither the Company nor any Guarantor, nor any Affiliate of the Company or any
Guarantor, has paid or is obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary, in connection with this
Agreement, any other Investment Document or any of the transactions contemplated
hereby or thereby. Except as set forth in SCHEDULE 3.26, neither the Company nor
any Guarantor, nor any Affiliate of the Company or any Guarantor, is bound by
any agreement or commitment for the provision of investment banking or financial
advisory services with respect to any recapitalization, issuance of debt or
equity securities or other capital or financing transactions involving the
Company or any Guarantor that would operate to restrict or prevent the Closing.

         3.27 NO EVENT OF DEFAULT. No event has occurred and no condition exists
that would upon or after execution of this Agreement, the Bank Credit Documents
and the other Investment Documents constitute a "Default" or an "Event of
Default" under this Agreement, the Bank Credit Documents, the other Investment
Documents or any Other Debt Document. Except as set forth on SCHEDULE 3.27,
after giving effect to the closing on the date hereof of the transactions
contemplated by this Agreement, neither the Company nor any of its Subsidiaries
is in default in (and no event has occurred and no condition exists which
constitutes, or which with the passage of time or the giving of notice or both
would constitute, a default in) the payment of any Indebtedness to any Person
for Money Borrowed.

         3.28 FINANCIAL SOPHISTICATION. Each of the Company Parties, by reason
of its own business and financial experience or that of its professional
advisors, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of
issuing the Note and the Guarantee, as applicable, and has the capacity to
protect its own interests in connection with the transactions contemplated by
this Agreement.

         3.29 EQUIPMENT. The Equipment of the Company Parties is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the operating efficiency thereof shall be
maintained and preserved, reasonable wear and tear excepted, except where the
failure to so maintain the same would not reasonably be expected to have a
Material Adverse Effect. No Company Party will permit any Equipment to become
affixed to any real Property leased to a Company Party so that an interest
arises therein under the real estate laws of the applicable jurisdiction unless
the landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form reasonable acceptable to the Purchaser, and no
Company Party will permit any of the Equipment to become an

                                      32
<Page>

accession to any personal Property other than Equipment that is subject to first
priority (except for Permitted Liens) Liens in favor of the Purchaser.

         3.30 SENIOR STATUS. The Obligations constitute "Senior Debt" as defined
in the New Heller Note and the 13% Indenture. The Obligations constitute
"Designated Senior Debt" as defined in the 13% Indenture.

         3.31 10 1/2% NOTES. The Obligations are pari passu with the
indebtedness under the 10 1/2% Notes. The aggregate principal amount of the 10
1/2% Notes outstanding at the Closing will not be more than $5,000,000.

         3.32 INVENTORY. After considering reserves, all inventories of raw
material, purchased parts materials, work in process, finished products, goods,
spare parts, replacement and component parts, and office and other supplies used
or to be distributed, licensed or sold in connection with the business of the
Company Parties consistent with past practices ("INVENTORY") (a) was acquired in
the ordinary course of business, (b) is of good and merchantable quality, and
(c) consists substantially of a quality, quantity and condition useable,
leasable or saleable in the ordinary course of business.

         3.33 ACCOUNTS. All Accounts of the Company Parties represent amounts
due for services performed or sales actually made in the ordinary course of
business and properly reflect the amounts due.

         3.34 SEC FILINGS. The reports, statements and registration statements
(including, without limitation, any financial statements or schedules or other
information incorporated by reference therein) filed by the Company with the
Securities and Exchange Commission under the Securities Act and the Exchange Act
are referred to in this Agreement as the "SEC FILINGS." As of the respective
times such documents were filed or, as applicable, became effective, the SEC
Filings complied as to form and content, in all material respects, with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder. Taken as a whole, the SEC
Filings do not 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, in light of the circumstances under which they were made,
not misleading. There are no contracts or documents which are required under the
Securities Act or the Exchange Act to be described in the SEC Filings or to be
filed as exhibits thereto which have not been so described and filed as
required.

         3.35 DISCLOSURE.

                  (a Neither this Agreement, the Disclosure Schedules, nor any
other Investment Document, nor any certificate, report, questionnaire, statement
or document (but excluding financial projections, which are covered by clause
(b) below) furnished by or on behalf of any Company Party, nor any
representation, warranty or statement contained in any of the

                                      33
<Page>

foregoing, whether included in any materials provided to the Purchaser prior to
the date hereof or included in this Agreement or any other Investment Document
or in any Exhibit or Disclosure Schedule or in any other document or instrument
delivered at any time, taken as a whole, is, or will be, untrue with respect to
any material fact or omits, or will omit, to state a material fact necessary in
order to make the statement made herein or therein, in light of the
circumstances in which such statement was made, not misleading.

                  (b All assumptions underlying all financial projections
furnished by or on behalf of the Company Parties, whether included in any
materials provided to the Purchaser prior to the date hereof or included in this
Agreement or any other Investment Document or in any Exhibit or Disclosure
Schedule or in any other document or instrument delivered at any time, were made
in good faith and are reasonable under the circumstances and neither the Company
nor any Guarantor is aware of any facts or information that would lead it to
believe that such projections are incorrect or misleading in any respect. After
giving effect to the Refinancing, to the knowledge of any Company Party, and
except for facts or circumstances relating to the economy in general, there are
no facts or circumstances existing which could reasonably be expected to have a
Material Adverse Effect, either individually or in the aggregate.

         3.36 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Company Parties contained in this Agreement or any of the
other Investment Documents shall survive the execution, delivery and acceptance
thereof by the Purchaser and the Closing.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company as follows:

         4.1 INVESTMENT INTENT. The Purchaser is acquiring the Note for its own
account, for investment purposes, and not with a view to or for sale in
connection with any distribution thereof in violation of the law. The Purchaser
understands that the Note has not been registered under the Securities Act or
registered or qualified under any state securities laws in reliance upon
specific exemptions therefrom, which exemptions may depend upon, among other
things, the BONA FIDE nature of its investment intent as expressed herein.
Therefore, the Note is a "restricted security" which cannot be sold without
registration under the Securities Act or pursuant to an exemption therefrom, and
may have to be held indefinitely.

         4.2 ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor" (as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act). By reason of its business and financial experience, the
Purchaser has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
investment in the Note, has the capacity to protect its own interests and is
able to bear the economic risk of such investment.

5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the transactions contemplated hereby, including, without

                                      34
<Page>

limitation, to purchase the Note as provided herein, are subject to the
satisfaction, prior to or at the Closing, of the conditions set forth in this
SECTION 5; PROVIDED, HOWEVER, that any or all of such conditions may be waived,
in whole or in part, by the Purchaser in its sole and absolute discretion:

         5.1 CLOSING DATE. The Closing Date shall have occurred on or before
November 21, 2001.

         5.2 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. Each representation and
warranty made by the Company and the Guarantors in this Agreement shall be true
and correct in all respects as of the date made, and shall be true and correct
in all respects as of the Closing Date, with the same effect as if made on and
as of the Closing Date. Each of the covenants, agreements and obligations of the
Company and the Guarantors under this Agreement to be performed or satisfied by
it or them on or prior to the Closing Date shall have been performed or
satisfied by it or them on or before the date hereof. No Default or Event of
Default shall exist or result from the issuance and sale of the Note or the
other transactions contemplated by this Agreement or the Bank Credit Documents.
The Company and the Guarantors shall each have delivered to the Purchaser an
officers' certificate, signed by the Chief Executive Officer or the Chief
Financial Officer of the Company and each Guarantor, respectively, dated as of
the Closing Date, on behalf of the Company and each Guarantor, to such effect
and to the effect that each of the conditions set forth in this SECTION 5 has
been satisfied and fulfilled.

         5.3 PAYMENT OF FEES. The Company authorizes the Purchaser to pay on the
Company's behalf the commitment fee payable to Catalyst Equity Partners, L.L.C.,
in the amount of $1,200,000 and to deduct such amount from the proceeds to be
delivered by the Purchaser against delivery of the Note.

         5.4 PURCHASE PERMITTED BY APPLICABLE LAWS. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by or
violate any Applicable Laws and shall not subject any party to any Tax, penalty
or liability, under or pursuant to any Applicable Laws, and shall not be
enjoined (temporarily or permanently) under, or prohibited by or contrary to,
any injunction, order, decree or ruling. Without limiting the generality of the
foregoing, the consummation of the transactions contemplated hereby shall
otherwise comply with all applicable requirements of federal securities and
state securities or "blue sky" laws.

         5.5 NO INJUNCTION, ORDER OR SUIT. There shall not have been issued any
injunction, order, decree or ruling that prohibits or limits any of the
transactions contemplated by this Agreement or the other Investment Documents,
and there shall not be any action, suit, proceeding or investigation pending or,
to the best knowledge of the Company and the Guarantors, threatened that (i)
draws into question the validity, legality or enforceability of this Agreement
or the other Investment Documents or the consummation of the transactions
contemplated hereby or thereby or (ii) might result, in the judgment of the
Purchaser, (A) in the imposition of a penalty if the Note was delivered as
contemplated hereunder or (B) in any Material Adverse Change.

                                      35
<Page>

         5.6 DELIVERY OF CERTAIN CLOSING DOCUMENTS. The Company and the
Guarantors shall have delivered to the Purchaser the following closing
documents, each dated as of the Closing Date and in form and substance
satisfactory to the Purchaser:

                  (a This Agreement, duly executed by the Company and the
Guarantors, together with the Exhibits and Disclosure Schedules;

                  (b The Note, in substantially the form of EXHIBIT A, duly
executed by the Company;

                  (c The Guarantee, in substantially the form of EXHIBIT B, duly
executed by the Guarantors;

                  (d The Collateral Documents, duly executed by the Company and
the Guarantors, as described in SECTION 6;

                  (e The Intercreditor Agreement, duly executed by the Bank and
the Company;

                  (f A compliance certificate signed by the Chief Executive
Officer or the Chief Financial Officer of the Company, certifying on behalf of
the Company that they have reviewed this Agreement and the other Investment
Documents and that, after giving effect to (i) the Refinancing, (ii) the
incurrence of indebtedness under the Bank Credit Agreement (as in effect on the
date hereof) and the New Notes, (iii) the incurrence of Indebtedness hereunder,
and (iv) all the transactions contemplated hereby and thereby, the Company is in
compliance with the covenants contained in this Agreement and the Bank Credit
Agreement; and

                  (g Such other documents as the Purchaser may reasonably
request.

         5.7 SENIOR CREDIT FACILITY. The transactions contemplated by the Bank
Credit Agreement shall have been consummated, including, but not limited to,
entering into a senior credit facility in an amount of at least $55,000,000, and
the Company shall have delivered copies of all of the Bank Credit Documents,
certified by the Secretary of the Company, in form and substance reasonably
acceptable to the Purchaser, the Company shall have Availability (as defined in
the Bank Credit Agreement) of a seasonal overadvance in an amount not less than
$10,000,000 and the Company shall have Availability at Closing of $7,000,000 as
evidenced by delivery to the Purchaser of a borrowing base certificate as
provided for in the Bank Credit Agreement.

         5.8 OPINION OF COUNSEL. The Purchaser shall have received an opinion
letter of Brownstein Hyatt & Farber, P.C., counsel to the Company and the
Guarantors, dated as of the Closing Date and addressed to the Purchaser, in form
and substance satisfactory to the Purchaser and its legal counsel.

                                      36
<Page>

         5.9 DELIVERY OF CORPORATE DOCUMENTS. The Company and the Guarantors
shall have delivered to the Purchaser the following for each of the Company and
the Guarantors:

                  (a) Certified copies of its charter or similar organizational
documents as amended through the Closing Date, certified by its Secretary as
being in full force and effect as of the Closing Date;

                  (b) A good standing certificate, issued by the Secretary of
State of its state of incorporation or organization, dated as of the most recent
practicable date prior to the Closing Date;

                  (c) Good standing certificates from each jurisdiction in which
it is required to be qualified to transact business as a foreign corporation or
other entity, in each case dated as of the most recent practicable date prior to
the Closing Date;

                  (d) Copies of its bylaws or similar governing document as
amended through the Closing Date, certified by its Secretary as being in full
force and effect as of the Closing Date;

                  (e) Resolutions of its Board of Directors (or similar
governing body), approving and authorizing the execution, delivery and
performance of this Agreement and the other Investment Documents to which it is
a party, and approving and authorizing the execution, issuance, sale and
delivery of the Note, certified by its Secretary as being in full force and
effect as of the Closing Date;

                  (f) Incumbency certificates of its officers or general
partners who are authorized to execute, deliver and perform this Agreement, the
other Investment Documents and any other agreements, instruments, certificate or
other documents required to be executed by it in connection herewith; and

                  (g) Such other documents as the Purchaser may reasonably
request.

         5.10 INSURANCE. The Company shall deliver to the Purchaser certificates
of liability insurance with respect to the insurance policies required to be
maintained by the Company and the Guarantors as of the Closing Date pursuant to
SECTION 8.14, together with additional insured and lender's loss payable
endorsements in favor of the Purchaser, all in form and substance reasonably
satisfactory to the Purchaser.

         5.11 THIRD-PARTY CONSENTS. The Company and the Guarantors shall have
obtained all other Consents required to be obtained from all Governmental
Authorities and other Persons in connection with the transactions contemplated
by this Agreement (including, without limitation, the Consents listed on
SCHEDULE 3.6), and the Purchaser shall have approved the terms and conditions
thereof, and all applicable waiting periods shall have expired.

                                      37
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         5.12 FINANCIAL STATEMENTS. The Purchaser shall have received and been
satisfied with its review of the unaudited financial statements for the nine
months ended September 30, 2001.

         5.13 EXCHANGE OFFER. The Company shall have successfully completed an
exchange offer and consent solicitation, on the terms specified in the Company's
Exchange Offer and Consent Solicitation dated September 24, 2001, as amended by
the First Supplement dated November 1, 2001 and the Second Supplement dated
November 15, 2001, for at least 95% of the aggregate principal amount of the 10
1/2% Notes.

         5.14 RESTRUCTURING OF HELLER NOTE. That certain 8% Convertible
Subordinated Pay-in-Kind Note due 2004, made by the Company on or about December
31, 1996 in favor of Heller Equity Capital Corporation, shall have been
exchanged for the New Heller Note and Series B-1 Preferred Stock pursuant to
documentation acceptable to the Purchaser. The terms and conditions of the New
Heller Note (including, without limitation, subordination terms applicable to
the same) shall be acceptable to the Purchaser.

         5.15 RESTRUCTURING OF SERIES A PREFERRED STOCK. The Series A Preferred
Stock shall have been restructured pursuant to terms and conditions satisfactory
to the Purchaser.

         5.16 PROCEEDINGS SATISFACTORY. All proceedings taken prior to or at the
Closing in connection with the issuance and sale of the Note and the
consummation of the other transactions contemplated hereby, and all papers and
other documents relating thereto, shall be in form and substance reasonably
satisfactory to the Purchaser and its counsel, and the Purchaser shall have
received copies of such documents and papers, all in form and substance
reasonably satisfactory to the Purchaser and its counsel, all such documents,
where appropriate, to be counterpart originals and/or certified by proper
authorities, corporate officials and other Persons. Without limiting the
generality of the foregoing, the Company and the Guarantors shall have made such
arrangements as may be requested by the Purchaser to ensure that the proceeds
from the issuance and sale of the Note are applied in the manner set forth in
SECTION 2.4, including, without limitation, provision for the direct payment of
the obligations of the Company to be paid from such proceeds as provided in
SECTION 5.3.

6. ACTIONS AND DOCUMENTS RELATING TO THE COLLATERAL. On or prior to the Closing
Date, Purchaser shall have received the following in form and substance
reasonably satisfactory to it:

                  (a) The Company Security Agreement, the Guarantor Security
Agreement, the Company Intellectual Property Security Agreement, the Guarantor
Intellectual Property Security Agreement, the Company Pledge Agreement and the
Guarantor Pledge Agreement, each duly executed by the Company and the
Guarantors, as appropriate, together with the exhibits and schedules thereto;

                                      38
<Page>

                  (b) UCC-1 Financing Statements, naming the Company or a
Guarantor as debtor, as applicable, duly authorized or executed by the Company
or such Guarantor, as applicable, as requested by the Purchaser;

                  (c) Except as provided in SECTION 8.23, evidence that all
filings, registrations and recordings have been made in the appropriate
governmental offices, and all other action has been taken, which shall be
necessary to create, in favor of the Purchaser, a perfected second priority Lien
on the Collateral (subject only to the first priority Lien of the Bank and other
Permitted Liens), and filing of completed UCC financing statements, in each
case, in the appropriate governmental offices;

                  (d) Evidence that no Liens on the Collateral exist other than
the Permitted Liens and the Liens created by the execution of the Investment
Documents, such evidence including, without limitation, the results of searches
conducted in the UCC filing records in each of the governmental offices in which
UCC financing statements have been, or shall be, filed;

                  (e) Such other documents relating to the Collateral as the
Purchaser may reasonably request; and

                  (f) Each of the conditions precedent in the Collateral
Documents shall have been satisfied.

7. INDEMNIFICATION; FEES AND EXPENSES.

         7.1 TRANSFER TAXES. The Company and the Guarantors shall pay all
present or future stamp, documentary, excise, property, transfer and other
similar Taxes (together in each case with interest and penalties, if any)
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any payment made hereunder, or the issuance and sale
of the Note and shall hold harmless the Purchaser from and against any and all
liabilities with respect to or resulting from any delay in paying, or omission
to pay, such Taxes.

         7.2 LOSSES.

                  (a) Whether or not the transactions contemplated by this
Agreement are consummated, the Company and the Guarantors shall jointly and
severally indemnify, defend and save and hold harmless the Purchaser and its
Affiliates, and their respective employees, partners, officers, directors,
representatives, agents, attorneys, successors and assigns (the "INDEMNIFIED
PARTIES"), from and against, and shall pay on demand, any and all losses,
claims, damages, liabilities, judgments, expenses and costs, including, without
limitation, attorneys' fees and other fees and expenses incurred in, and the
costs of preparing for, investigating or defending any matter (collectively,
"LOSSES"), incurred by or asserted or awarded against such Indemnified Party in
connection with, by reason of, or arising from:

                                      39
<Page>

                           (i) The failure of any Company Party to fulfill any
of its respective covenants, agreements or undertakings under this Agreement or
any other Investment Document (or any other document or instrument executed
herewith or pursuant hereto);

                           (ii) Any third party actions, suits, proceedings or
claims brought against any Indemnified Party in connection with, arising out of
or with respect to (A) any other matters arising out of or in connection with
the transactions contemplated by this Agreement, the Note or any other
Investment Document or the Collateral or (B) the business, operations or affairs
of the Company Parties (including, without limitation, any litigation in which
any Company Party is involved); or

                           (iii) The actual or alleged presence of Hazardous
Materials on any property of any Company Party or any Environmental Condition;

PROVIDED, HOWEVER, that neither the Company nor any Guarantor shall have any
liability to any Indemnified Party for any Loss to the extent that such Loss has
been caused by such Indemnified Party's willful misconduct.

                  (b) The Company and the Guarantors shall either pay directly
all Losses which they are required to pay hereunder or reimburse any Indemnified
Party within ten (10) days after any written request for such payment. The
obligations of the Company and the Guarantors to the Indemnified Parties under
this SECTION 7 shall be separate obligations to each Indemnified Party, and the
liability of the Company and the Guarantors to such Indemnified Parties
hereunder shall not be extinguished solely because any Indemnified Party is not
entitled to indemnity hereunder.

                  (c) The obligations of the Company and the Guarantors to the
Indemnified Parties under this SECTION 7 shall survive (i) the repayment of the
Note (whether at maturity, by prepayment or acceleration or otherwise), (ii) any
transfer of the Note or any interest therein and (iii) the termination of this
Agreement or any other Investment Document.

         7.3 INDEMNIFICATION PROCEDURES. Any Person entitled to indemnification
under this SECTION 7 shall (i) give prompt written notice to the Company of any
claim with respect to which it is entitled to seek indemnification (provided
that the failure to so notify the Company shall not relieve the Company from any
liability which it may have under this SECTION 7 except to the extent that the
Company is materially prejudiced by such failure) and (ii) permit the Company to
assume the defense of such claim with counsel selected by the Company and
reasonably acceptable to such Person; PROVIDED, HOWEVER, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim and the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
Company has agreed to pay such fees or expenses, (b) the Company has failed to
notify such Person in writing within ten (10) days of its receipt of such
written notice to the Company that it will assume the defense of such claim and
employ counsel reasonably acceptable to such Person, or (c) a conflict of
interest exists between such Person, on the one

                                      40
<Page>

hand, and the Company or any Guarantor, on the other hand, with respect to such
claims (in which case, if the Person notifies the Company in writing that such
Person elects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such claim on behalf
of such Person). The Company and the Guarantors will not be subject to any
liability for any settlement made without their respective consent (but such
consent may not be unreasonably withheld). No Indemnified Party may, without the
consent of the Company and the Guarantors (which consent will not be
unreasonably withheld), consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Company and the Guarantors of a release from
all liability in respect of such claim or litigation.

         7.4 CONTRIBUTION. If the indemnification provided for in this SECTION 7
is unavailable to the Purchaser or any other Indemnified Party in respect of any
Losses, then the Company and the Guarantors, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by the
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Company Parties on the one
hand, and such Indemnified Party, on the other hand, in connection with the
actions, statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations. The relative fault of the Company
Parties, on the one hand, and such Indemnified Party, on the other hand, shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, any of the Company Parties or such
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this SECTION 7.4 were determined by PRO RATA allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

         7.5 COMMITMENT FEE. At the Closing, the Company shall pay a commitment
fee of $1,200,000 to Catalyst Equity Partners L.L.C. in connection with the
transactions contemplated by this Agreement.

         7.6 REIMBURSEMENT OF DEAL-RELATED COSTS AND EXPENSES. Notwithstanding
anything to the contrary contained herein or otherwise, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement is
terminated for any reason, and in addition to all other amounts due or owing to
the Purchaser hereunder, under any other Investment Document or otherwise, the
Company and the Guarantors shall be jointly and severally responsible, and
jointly and severally agree to promptly reimburse the Purchaser, for all costs
and expenses of every type and nature (including, without limitation, all
reasonable fees and expenses of counsel, accounting fees and expenses and other
deal-related costs and expenses) incurred by or on behalf of the Purchaser, in
connection with the Purchaser's due diligence investigation of

                                      41
<Page>

the Company, the Guarantors and their Affiliates, the preparation, negotiation,
execution, delivery and enforcement of this Agreement, the Note, and the other
Investment Documents and the consummation of the transactions contemplated
hereby. At the Purchaser's request and direction, at or prior to the Closing,
the Company and the Guarantors shall reimburse third party providers of the
Purchaser directly for all of such reasonable costs and expenses. After the
Closing, the Purchaser shall deliver an invoice to the Company detailing its
costs and expenses, which shall be credited against the $75,000 deposit
previously paid by the Company. Any balance due shall be paid by the Company
within five (5) days. If costs and expenses are less than the deposit, such
amount shall be refunded to the Company.

         7.7 COSTS AND EXPENSES. The Company and the Guarantors jointly and
severally agree to pay to the Purchaser on demand all reasonable costs and
expenses of every type and nature (including, without limitation, all reasonable
fees and expenses of attorneys, accountants and other experts and all due
diligence, collateral review, appraisal, search, filing and recording fees and
expenses) which are expended or incurred by or on behalf of the Purchaser in
connection with (i) the administration of this Agreement or the Investment
Documents and the collection and enforcement of the Obligations, whether or not
any action, suit or other proceeding is commenced, (ii) any actions for
declaratory relief in any way related to the Obligations, (iii) the protection
or preservation of any rights, powers or remedies of the Purchaser under this
Agreement or any other Investment Document, (iv) any actions taken by the
Purchaser in negotiating any amendment, waiver, consent or release of or under
this Agreement, the Note or any other Investment Document, (v) any actions taken
in reviewing the Company Parties' business and financial affairs, which actions
shall include, but not be limited to, (A) inspecting the facilities of any
Company Party or the Collateral or conducting audits or appraisals of the
financial condition of any Company Party for which the Company Parties shall be
obligated to pay an audit fee of $750 per day, per auditor, which fee shall be
subject to reasonable change from time to time by the Purchaser without notice,
(B) having an accounting or other firm selected by the Purchaser review the
books and records of any Company Party and perform a thorough and complete
examination thereof, (C) interviewing the Company Parties' employees, attorneys,
accountants, customers and any other Persons related to the Company Parties
which the Purchaser believes may have relevant information concerning the
business, condition (financial or otherwise), results of operations or prospects
of any of the Company Parties, (D) attending board or committee meetings as an
observer, and (E) undertaking any other action which the Purchaser believes is
necessary to assess accurately the financial condition and prospects of the
Company Parties; (vi) any refinancing, restructuring (whether in the nature of a
"work out" or otherwise), bankruptcy or insolvency proceeding involving any
Company Party or Affiliates, including, without limitation, any refinancing or
restructuring of this Agreement, the Note or any other Investment Documents,
(vii) any actions taken to verify, maintain, perfect and protect any Lien
granted to the Purchaser by any Company Party or any other Person under the
Investment Documents, (viii) any effort by the Purchaser to protect, assemble,
complete, collect, sell, liquidate or otherwise dispose of any collateral,
including in connection with any case under Bankruptcy Laws, or (ix) having
counsel advise the Purchaser as to its rights and responsibilities, the
perfection, protection or preservation of rights or interests under the
Investment Documents,

                                      42
<Page>

with respect to negotiations with any Company Party or with other creditors of
any Company Party or with respect to any proceeding under any Bankruptcy Law.
The Company and the Guarantors hereby consent to the taking of the foregoing
actions by the Purchaser. All amounts chargeable to the Company Parties under
this Agreement shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date demand was made or such
amount is due, as applicable, until paid in full at the rate applicable to the
Note at that time. Unless an Event of Default has occurred and is continuing,
the Purchaser shall not conduct, or retain any third party to conduct, more than
two (2) audits in any calendar year.

8. AFFIRMATIVE COVENANTS. The Company and the Guarantors jointly and severally
covenant and agree, so long as any Obligations under the Note remain
outstanding, as to the following affirmative covenants:

         8.1 PAYMENT OF NOTE AND OTHER OBLIGATIONS. The Company Parties shall
fully and timely pay all Obligations owing pursuant to the terms of this
Agreement, the Note (including, without limitation, all principal thereof,
premium, if any, annual renewal fees and interest thereon), the Guarantee and
the other Investment Documents to which they are parties, in each case on the
dates and in the manner provided for herein and therein.

         8.2 PERFORMANCE OF INVESTMENT DOCUMENTS. The Company Parties shall
perform, comply with and observe all of their obligations under this Agreement,
the Note, the Guarantee and each other Investment Document.

         8.3 VISITS AND INSPECTIONS; LENDER MEETING. The Company Parties shall
permit representatives of the Purchaser, from time to time, as often as may be
reasonably requested, but only during normal business hours, to visit and
inspect the Properties of each Company Party, inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, its business, assets, liabilities, financial condition,
business prospects and results of operations.

         8.4 NOTICES. The Company Parties shall promptly notify the Purchaser in
writing of the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any of the other
Investment Documents inaccurate, incomplete or misleading in any material
respect as of the date made or remade. In addition, the Company agrees to
provide the Purchaser with (i) ten (10) Business Days' prior written notice of
(A) any change in the legal name or jurisdiction of organization or
incorporation of any Company Party, (B) the adoption by any Company Party of any
new fictitious name or tradename and (C) any change in the chief executive
office of any Company Party, (ii) prompt written notice of any change in the
information disclosed in any exhibit hereto and (iii) as soon as possible (and
in any event within five (5) Business Days) after any Company Party obtains
knowledge thereof, written notice of (A) the occurrence of any event, act,
development or condition which constitutes a Default or Event of Default or any
"default" or "event of default" under the terms of any Other Debt Documents; or
(B) any other event or development has resulted in or which could

                                      43
<Page>

reasonably be expected to have a Material Adverse Effect. Each such notice shall
specify in reasonable detail the nature of the event, act, condition, Default,
Event of Default, default, event of default, litigation or investigation or
other proceeding and what action the Company Party or any other Person is taking
or proposes to take to cure the same.

         8.5 FINANCIAL STATEMENTS. The Company Parties shall keep, and cause
each of their respective Subsidiaries to keep, adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with customary accounting practices reflecting all its financial
transactions; and cause to be prepared and furnished to the Purchaser, the
following, all to be prepared in accordance with GAAP applied on a consistent
basis, unless the Company's certified public accountants concur in any change
therein and such change is disclosed to the Purchaser and is consistent with
GAAP:

                  (a) not later than ninety (90) days after the close of each
fiscal year of the Company, unqualified (except for a qualification for a change
in accounting principles with which the accountant concurs) audited financial
statements of the Company Parties as of the end of such year, on a Consolidated
and consolidating basis, certified by independent certified public accountants
of nationally recognized standing selected by the Company and acceptable to the
Purchaser;

                  (b) not later than thirty (30) days after the end of each
month hereafter, including the last month of the Company's fiscal year,
unaudited interim financial statements of the Company Parties (which shall
consist of an income statement, statement of cash flows and a balance sheet) as
of the end of such month and of the portion of the fiscal year then elapsed, on
a Consolidated and consolidating basis, certified by the Chief Financial Officer
of the Company as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of the Company Parties
for such month and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;

                  (c) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports which
the Company has made available to its security holders and copies of any
regular, periodic and special reports or registration statements which the
Company or any of its Subsidiaries files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor, or
any national securities exchange;

                  (d) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Benefit Plan;

                  (e) new appraisals on the fixed assets and Inventory shall be
completed annually for fixed assets and semi-annually for Inventory, to be
received on or prior to September 30th of each year for fixed assets and
Inventory and on or prior to March 31st of each year for Inventory; and

                                      44
<Page>

                  (f) such other data and information (financial and otherwise)
as the Purchaser, from time to time, may reasonably request, bearing upon or
related to the Collateral or the Company's financial condition or results of
operations.

         Concurrently with the delivery of the financial statements described in
paragraph (a) of this SECTION 8.5, the Company shall forward to the Purchaser a
copy of the accountants' letter to the Company's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall furnish to the Purchaser a certificate of the aforesaid certified
public accountants certifying to the Purchaser that, based upon their
examination of the financial statements of the Company Parties performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to the Purchaser, that they are aware that the Purchaser is
relying on such financial statements in making its decisions with respect to the
Note. Concurrently with the delivery of the financial statements described in
paragraphs (a) and (b) of this SECTION 8.5, or more frequently if requested by
the Purchaser, the Company shall cause to be prepared and furnished to the
Purchaser a Compliance Certificate in the form of EXHIBIT C hereto executed by
the Chief Financial Officer of the Company.

         8.6 GUARANTOR FINANCIAL STATEMENTS. The Company Parties shall deliver
or cause to be delivered to Purchaser financial statements for each Guarantor
(to the extent not delivered pursuant to SECTION 8.5 hereof) in form and
substance satisfactory to Purchaser at such intervals and covering such time
periods as Purchaser may request.

         8.7 LANDLORD AND STORAGE AGREEMENTS. The Company Parties shall provide
the Purchaser with copies of all agreements between any Company Party and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.

         8.8 PROJECTIONS. The Company Parties shall, no later than thirty (30)
days prior to the end of each Fiscal Year of the Company, deliver to the
Purchaser Projections of the Company Parties for the forthcoming Fiscal Year,
month by month. Notwithstanding the foregoing, with respect to the Fiscal Year
ending December 31, 2001, such Projections shall be delivered by December 15,
2001.

         8.9 SUBSIDIARIES. Promptly upon the creation or acquisition of each new
Subsidiary, the Company Parties shall cause such Subsidiary to execute and
deliver to the Purchaser a guaranty agreement and a security agreement (or
agreements) pursuant to which such Subsidiary guaranties the payment of all
Obligations and grants to the Purchaser a first priority Lien (subject only to
Permitted Liens) on all of its Properties. Additionally, the parent Company
Party shall execute and deliver to the Purchaser a pledge agreement pursuant to
which such Company Party grants to Lender a first priority Lien (subject only to
Permitted Liens) with respect to all of the issued and outstanding securities of
each such Subsidiary. Within five (5) days after the date

                                      45
<Page>

such Subsidiary becomes a Subsidiary, the applicable Company Party shall cause
such Subsidiary to have executed (if necessary) and filed any UCC-1 financing
statements furnished by the Purchaser in each jurisdiction in which such filing
is necessary to perfect the security interest of the Purchaser in the Collateral
of such Subsidiary and in which the Purchaser requests that such filing be made.
Additionally, the applicable Company Party and such Subsidiary shall have
executed and delivered to the Purchaser such other items as reasonably requested
by the Purchaser in connection with the foregoing, including resolutions,
incumbency and officers' certificates, opinions of counsel, search reports and
other certificates and documents.

         8.10 COMPLIANCE WITH LAWS; CONSENTS. The Company Parties shall comply
in all respects with the requirements of all Applicable Laws, rules, regulations
and orders of any Governmental Authority (including all Environmental Laws) and
the terms of any indenture, contract or other instrument to which it may be a
party or under which it or its properties may be bound in each case, to the
extent that the failure to so comply would reasonably be expected to have a
Material Adverse Effect as to the Company Party (it being understood that a
violation of a financial covenant under the Bank Credit Agreement which does not
also constitute a violation of the corresponding financial covenant under this
Agreement would not reasonably be expected to have a Material Adverse Effect for
this purpose). Each Company Party shall obtain and maintain all material
licenses, authorizations, consents, filings, exemptions, registrations and other
governmental approvals necessary in connection with the execution, delivery and
performance of the Investment Documents, the consummation of the transactions
therein contemplated or the operation and conduct of its business and ownership
of its properties.

         8.11 LEGAL EXISTENCE. Each of the Company Parties shall maintain and
preserve its legal existence, its material Operating Licenses and its other
material rights to transact business in each jurisdiction where transacting
business or its properties are located and all other material rights, franchises
and privileges necessary or desirable in the normal course of its business and
operations and the ownership of its properties.

         8.12 BOOKS AND RECORDS. Each of the Company Parties shall keep adequate
records and books of account, in which complete and accurate entries shall be
made in accordance with GAAP and all Applicable Laws, reflecting all financial
and other material transactions of the Company Parties.

         8.13 MAINTENANCE OF PROPERTIES. Each of the Company Parties shall
maintain and preserve all of its properties necessary or useful in the proper
conduct of its business in good working order and condition in accordance with
the general practice of other corporations of similar character and size,
ordinary wear and tear excepted.

         8.14 INSURANCE. The Company Parties shall carry and maintain in full
force and effect, at their own expense and with financially sound and reputable
insurance companies, insurance in such amounts, with such deductibles and
covering such risks as is customarily carried by companies engaged in the same
or similar businesses and owning similar properties in the

                                      46
<Page>

localities where any Company Party operates, including product liability,
comprehensive general liability, fire, extended coverage, business interruption,
public liability, property damage, worker's compensation and directors and
officers liability insurance. Insurance on the Collateral shall name the
Purchaser as additional insured and as loss payee, and, from and after the time
that all obligations of the Company Parties to the Bank under the Bank Credit
Agreement have been paid in full, with respect to any casualty or loss, provide
that the full amount of insurance proceeds shall be payable to the Purchaser.
Notwithstanding the foregoing, after such time as all obligations under the Bank
Credit Agreement have been paid in full, if the proceeds of insurance (net of
costs and taxes incurred) with respect to any loss or destruction of Equipment,
Inventory or real Property (i) are less than $500,000, unless an Event of
Default is then in existence, the Purchaser shall remit such proceeds to the
Company for use in replacing or repairing the damaged Collateral or (ii) are
equal to or greater than $500,000 the Company may request that the Purchaser
permit the Company Parties to repair or replace the damaged Collateral. If the
Purchaser agrees, in its reasonable judgment, to permit such repair or
replacement under such clause (ii), such amount shall, unless an Event of
Default is in existence, be remitted to the Company for use in replacing or
repairing the damaged Collateral, such amount shall be applied to the payment of
accrued interest and principal on the Note. Upon the request of the Purchaser,
each Company Party shall furnish the Purchaser from time to time with full
information as to the insurance carried by it and, if so requested, copies of
all such insurance policies. Each Company Party shall also furnish to the
Purchaser from time to time upon the request of the Purchaser a certificate of
its insurance broker or other insurance specialist stating that all premiums
then due on the policies relating to insurance on the Collateral have been paid,
that such policies are in full force and effect and that such insurance coverage
and such policies comply with all the requirements of this Section. All
insurance policies required under this Section shall provide that they shall not
be terminated or canceled nor shall any such policy be materially changed
without at least thirty (30) days' prior written notice to the Company and the
Purchaser. Receipt of notice of termination or cancellation of any such
insurance policies or reduction of coverages or amounts thereunder shall entitle
the Purchaser to renew any such policies, cause the coverages and amounts
thereof to be maintained at levels required pursuant to the first sentence of
this SECTION 8.14 or otherwise to obtain similar insurance in place of such
policies, in each case at the expense of the Company Parties.

         8.15 PAYMENT OF OBLIGATIONS. Each of the Company Parties shall pay and
discharge (i) all Taxes, fees, assessments and governmental charges or levies
imposed upon it or upon its properties or assets prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien upon any properties or assets of
the any Company Party, except to the extent such taxes, fees, assessments or
governmental charges or levies, or such claims, are being contested in good
faith by appropriate proceedings and are adequately reserved against in
accordance with GAAP, (ii) all lawful claims which, if unpaid, would by law
become a Lien upon its property not constituting a Permitted Lien, and (iii)
subject to the terms of this Agreement and the terms of any applicable
subordination or intercreditor agreement, all Indebtedness, as and when due and
payable (subject to any applicable grace period with respect thereto).

                                      47
<Page>

         8.16 COMPLIANCE WITH MATERIAL CONTRACTS. The Company Parties shall
perform, comply with and observe all material terms and provisions of each of
its material contracts to be performed, complied with or observed by it,
maintain each material contract in full force and effect and enforce each
material contract in accordance with its terms; PROVIDED, that the foregoing
shall not apply to any violation of a financial covenant under the Bank Credit
Agreement (as in effect on the date hereof) which does not constitute a
violation of the corresponding financial covenant under this Agreement.

         8.17 ENVIRONMENTAL MATTERS. The Company Parties shall, upon becoming
aware of the presence of any Hazardous Substance in violation of any
Environmental Laws or the existence of any environmental liability under
applicable Environmental Laws with respect to the Premises, take all actions, at
their cost and expense, as shall be necessary or advisable to investigate and
clean up the condition of the Premises, including all removal, containment and
remedial actions, and restore the Premises to a condition in compliance with
applicable Environmental Laws.

         8.18 FUTURE INFORMATION. All data, certificates, reports, statements,
documents and other information furnished to the Purchaser by or on behalf of
the Company Parties, any of their respective representatives or agents in
connection with this Agreement, the other Investment Documents or the
transactions contemplated hereby and thereby, at the time the information is so
furnished, taken as a whole, shall not contain any untrue statement of a
material fact, shall be complete and correct in all material respects to the
extent necessary to give the Purchaser sufficient and accurate knowledge of the
subject matter thereof, and shall not omit to state a material fact necessary in
order to make the statements contained therein not misleading in light of the
circumstances under which such information is furnished.

         8.19 FURTHER ASSURANCES. Promptly after request by the Purchaser, from
time to time after the date hereof, each of the Company Parties shall execute
and deliver, and shall cause any other Persons who are required to give their
Consent to execute and deliver, such instruments, certificates and documents,
and will take all such actions, for the purposes of implementing or effectuating
the provisions of this Agreement, the Note, the Guarantee and the other
Investment Documents. Upon exercise by the Purchaser of any power, right,
privilege or remedy pursuant to this Agreement or any other Investment Document
which requires any Consent, each of the Company Parties will execute and
deliver, and will cause any other Persons to execute and deliver, all
applications, certifications, instruments and other documents and papers that
may be required to be obtained for such Consent. Promptly upon request by the
Purchaser, each of the Company Parties shall correct any material defect or
error that may exist or be discovered in this Agreement, the Note, the Guarantee
or any other Investment Document or in the execution, acknowledgment, filing or
recordation thereof. Promptly upon request by the Purchaser, each of the Company
Parties shall do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds,
conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, notices
of assignment, transfers, certificates, assurances and other instruments as the
Purchaser may require from time to time in order to (i) carry out more
effectively the purposes of the Investment Documents, (ii) to the fullest extent
permitted by

                                      48
<Page>

applicable law, subject each Company Parties' properties, assets, rights or
interest to the Liens now or hereafter intended to be covered by any of the
Collateral Documents, (iii) perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents and any of the Liens intended to be
created thereunder and (iv) assure, convey, grant, assign, transfer, preserve,
protect and confirm more effectively unto the rights granted or now or hereafter
intended to be granted to the Purchaser under any Investment Document or under
any other instrument executed in connection with any Investment Document to
which any Company Party is to be a party.

         8.20 FINANCIAL COVENANTS.

                  (a) INTEREST COVERAGE RATIO. The Company shall not permit the
Interest Coverage Ratio for any period set forth below to be less than the ratio
set forth opposite such period below:

<Table>
<Caption>
                                   PERIOD                            RATIO
                                   ------                            -----
<S>                                                              <C>
Twelve (12) month period ending on December 31, 2001             1.35 to 1.00

Twelve (12) month period ending on March 31, 2002                1.44 to 1.00

Twelve (12) month period ending on June 30, 2002                 1.49 to 1.00

Twelve (12) month period ending on September 30, 2002            1.49 to 1.00

Twelve (12) month period ending on December 31, 2002             1.49 to 1.00

Twelve (12) month period ending on March 31, 2003                1.53 to 1.00

Twelve (12) month period ending on June 30, 2003                 1.62 to 1.00

Twelve (12) month period ending on September 30, 2003            1.62 to 1.00
</Table>

                  (b) FIXED CHARGE COVERAGE RATIO. The Company shall not permit
 the Fixed Charge Coverage atio for any period set forth below to be less than
the ratio set forth opposite such period below:

<Table>
<Caption>
                                   PERIOD                            RATIO
                                   ------                            -----
<S>                                                              <C>
Twelve (12) month period ending on December 31, 2001             0.85 to 1.00

Twelve (12) month period ending on March 31, 2002                1.04 to 1.00

Twelve (12) month period ending on June 30, 2002                 1.08 to 1.00

Twelve (12) month period ending on September 30, 2002            1.08 to 1.00

                                      49
<Page>

<Caption>
                                   PERIOD                            RATIO
                                   ------                            -----
<S>                                                             <C>
Twelve (12) month period ending on December 31, 2002             1.08 to 1.00

Twelve (12) month period ending on March 31, 2003                1.08 to 1.00

Twelve (12) month period ending on June 30, 2003                 1.08 to 1.00

Twelve (12) month period ending on September 30, 2003            1.08 to 1.00
</Table>

                  (c) MINIMUM EBITDA. The Company shall achieve EBITDA for each
period set forth below of not less than the amount set forth opposite such
period below:

<Table>
<Caption>
                                   PERIOD                             AMOUNT
                                   ------                             ------
<S>                                                              <C>
Twelve (12) month period ending on December 31, 2001             $    13,500,000

Twelve (12) month period ending on March 31, 2002                $    13,950,000

Twelve (12) month period ending on June 30, 2002                 $    15,300,000

Twelve (12) month period ending on September 30, 2002            $    16,200,000

Twelve (12) month period ending on December 31, 2002             $    16,650,000

Twelve (12) month period ending on March 31, 2003                $    17,100,000

Twelve (12) month period ending on June 30, 2003                 $    18,000,000

Twelve (12) month period ending on September 30, 2003            $    18,000,000
</Table>

         8.21 SENIOR STATUS. The Obligations shall constitute "Senior Debt" as
defined in the New Heller Note and the 13% Indenture. The Obligations shall
constitute "Designated Senior Debt" as defined in the 13% Indenture.

         8.22 10 1/2% NOTES. It is mutually agreed that the Obligations rank
pari passu with the Indebtedness evidenced by the 10 1/2% NoteS.

         8.23 LIEN ON REALTY. The due and punctual payment and performance of
the Obligations shall also be secured by the Lien created by Mortgages upon all
Real Property of the Company Parties now or hereafter owned. No later than
thirty (30) days after the Closing, (i) the Company Parties shall execute,
deliver and cause to be recorded, Mortgages on each of the Real Properties owned
by the Company Parties, and (ii) the Company Parties shall cause the title
company to issue to Purchaser, mortgagee title insurance policies with respect
to such Mortgages satisfying the requirements set forth below. The Company
Parties shall deliver to Purchaser, at the Company Parties' expense, mortgagee
title insurance policies issued by a title insurance

                                      50
<Page>

company satisfactory to the Purchaser, which policies shall be in form and
substance satisfactory to the Purchaser and shall insure a valid second Lien in
favor of the Purchaser, on the Real Property covered by each Mortgage, subject
only to those exceptions reasonably acceptable to the Purchaser and its counsel.
The Company Parties shall exercise their respective reasonable best efforts to
obtain lien waivers and entry agreements, all in form and substance reasonably
satisfactory to the Purchaser, from the landlords and licensors of all Real
Property leased or licensed to any of the Company Parties (the "LIEN WAIVERS").
The Company Parties shall exercise their respective reasonable best efforts to
deliver to Purchaser, Lien Waivers, satisfying the requirements set forth above,
from the landlords and licensors of each of the Real Properties set forth on
SCHEDULE 3.16. The Company Parties shall deliver to the Purchaser such other
documents, including, without limitation, as-built survey prints of the Real
Property, as the Purchaser and its counsel may request relating to the Real
Property subject to the Mortgages.

         8.24 OPINIONS. No later than thirty (30) days after Closing, the
Company Parties shall deliver to the Purchaser opinions of legal counsel in the
states of California and Texas in form and substance as may reasonably be
required by the Purchaser with respect to the Mortgages on the Real Property of
the Company Parties.

         8.25 DELIVERY OF COLLATERAL. Upon the termination of the Bank Credit
Documents, the Company will deliver to the Purchaser any property constituting
"Collateral" as collateral for the Obligations that had been held by the Bank.

9. NEGATIVE COVENANTS. The Company and Guarantor jointly and severally covenant
and agree, so long as any Obligations remain outstanding, as to the following
negative covenants:

         9.1 MERGERS; CONSOLIDATIONS; ACQUISITIONS; STRUCTURAL CHANGES. No
Company Party shall (i) be acquired, merge, consolidate or amalgamate, or permit
any Subsidiary to be acquired, merge, consolidate or amalgamate, with or into
any Person or permit any Person to acquire control of any Company Party, (ii)
acquire, or permit any of their respective Subsidiaries to acquire, all or any
substantial part of the Properties of any Person, (iii) change, or permit any
Subsidiary to change, its state of incorporation or organization or Type of
Organization, or (iv) change, or permit any Subsidiary to change, its legal
name, except for (a) mergers of any Subsidiary of the Company into the Company
or another Subsidiary of Company and (b) acquisitions of assets consisting of
fixed assets or real property that constitute Capital Expenditures permitted
under SECTION 9.10.

         9.2 LOANS. No Company Party shall make, or permit any Subsidiary to
make, any loans or other advances of money (other than for salary, travel
advances, advances against commissions and other similar advances in the
ordinary course of business and advance payments made for Christmas tree
purchases in the ordinary course of business) to any Person other than
Subsidiary Loans (as provided for and defined in the Bank Credit Agreement (as
in effect on the date hereof)).

                                      51
<Page>

         9.3 TOTAL INDEBTEDNESS. No Company Party shall create, incur, assume,
or suffer to exist, or permit any Subsidiary to create, incur or suffer to
exist, any Indebtedness for Money Borrowed, except:

                  (a) Obligations under the Note;

                  (b) Obligations owing to the Bank under the Bank Credit
Agreement in a principal amount of up to $55,000,000 (plus, to the extent added
to principal, (i) interest with respect to such principal amount and (ii) the
costs described in Sections 2.9 and 12.2 of the Bank Credit Agreement (as in
effect on the date hereof)), minus the amount of all mandatory principal
payments and permanent commitment reductions actually made;

                  (c) Indebtedness evidenced by the 13% Notes in an aggregate
principal amount not to exceed $52,900,000;

                  (d) Indebtedness evidenced by the New Heller Note;

                  (e) (Intentionally omitted);

                  (f) Indebtedness existing on the date of this Agreement as set
forth on SCHEDULE 9.3;

                  (g) Indebtedness of any Subsidiary of the Company resulting
from a Subsidiary Loan (as provided for and defined in the Bank Credit
Agreement, as in effect on the date hereof);

                  (h) Permitted Purchase Money Indebtedness;

                  (i) Obligations incurred in connection with interest rate
protection arrangements; and

                  (j) Unsecured Indebtedness for Money Borrowed in an aggregate
principal amount not to exceed at any time in the aggregate $1,000,000.

         9.4 AFFILIATE TRANSACTIONS. No Company Party shall enter into, or be a
party to, or permit any Subsidiary to enter into or be a party to, any
transaction with any Affiliate of any Company Party, except (i) in the ordinary
course of and pursuant to the reasonable requirements of such Company Party's
business and upon fair and reasonable terms which are fully disclosed to the
Purchaser and are no less favorable to the Company Party than would be obtained
in a comparable arms-length transaction with a Person not an Affiliate of the
Company Party and (ii) usual and customary employment agreements and
indemnification arrangements contained in a Company Party's or a Subsidiary's
formation documents in effect on the date hereof.

                                      52
<Page>

         9.5 LIMITATION ON LIENS. No Company Parties shall create or suffer to
exist, or permit any Subsidiary to create or suffer to exist, any Lien upon any
of its Property, income or profits, whether now owned or hereafter acquired,
except the following (each a "PERMITTED LIEN"):

                  (a) Liens at any time granted in favor of Purchaser;

                  (b) Liens at any time granted in favor of Bank under the Bank
Credit Agreement (as in effect on the date hereof);

                  (c) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the manner
described in SECTION 3.17, but only if in the Purchaser's reasonable judgment
such Lien does not adversely affect the Purchaser's rights or the priority of
the Purchaser's Lien in the Collateral;

                  (d) Liens arising in the ordinary course of the business of a
Company Party by operation of law or regulation, but only if payment in respect
of any such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of the Company
Parties or materially impair the use thereof in the operation of the business of
the Company Parties;

                  (e) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;

                  (f) Such other Liens existing on the date of this Agreement
and listed on SCHEDULE 9.5 hereto;

                  (g) So long as no Event of Default has occurred and is
continuing, attachment, judgment and other similar non-tax Liens arising in
connection with court proceedings, but only if and for so long as the execution
or other enforcement of such Liens is and continues to be effectively stayed and
bonded on appeal, the validity and amount of the claims secured thereby are
being actively contested in good faith and by appropriate lawful proceedings and
such Liens do not, in the aggregate, materially detract from the value of the
Property of the Company Parties or materially impair the use thereof in the
operation of the Company Parties' businesses;

                  (h) Reservations, exceptions, easements, rights of way and
other similar encumbrances affecting Real Property; provided that, in
Purchaser's sole judgment, such exceptions do not in the aggregate materially
detract from the value of such Property or materially interfere with the use of
such Property in the ordinary course of the Company Parties' business, and if
such Property constitutes Collateral, Purchaser has consented thereto; and

                  (i) Such other Liens as the Purchaser may hereafter approve in
writing.

         9.6 PAYMENTS AND AMENDMENTS OF SUBORDINATED DEBT. No Company Parties
shall:

                                      53
<Page>

                  (a) Make or permit any Subsidiary to make any payment of any
part or all of any Subordinated Debt, the New Heller Note or any principal on
the Oda Note or take any other action or omit to take any other action in
respect of any Subordinated Debt, the Heller Note or the Oda Note except in
accordance with the subordination agreement relative thereto (or in the case of
the 13% Notes, the subordination provisions set forth in the 13% Indenture); or

                  (b) Without Purchaser's prior written consent, agree to (i)
any amendment or other modification of the subordination provisions of any
documentation evidencing or relating to any Subordinated Debt or (ii) any other
amendment or other modification to any documentation evidencing any Subordinated
Debt that would increase the interest rate applicable thereto, accelerate the
maturity date of any payment owing in respect thereof (including any redemption,
prepayment or defeasance provision or the Company's obligation to pay cash
interest) or otherwise modify any of the provisions of such Subordinated Debt in
any manner that adversely affects the Company or the Purchaser.

         9.7 AMENDMENTS REGARDING PREFERRED STOCK. Without the Purchaser's prior
written consent, agree to any amendment or other modification to the
documentation relating to the Series A Preferred Stock, the Series B Preferred
Stock or the Series B-1 Preferred Stock that would increase the interest or
dividend rate applicable thereto, accelerate the maturity date of any payment
owing in respect thereof (including any redemption, prepayment or defeasance
provision or the Company's obligation to pay cash dividends) or otherwise modify
any of the provisions of such preferred stock in any manner that adversely
affects the Company or the Purchaser.

         9.8 AMENDMENTS OF BANK CREDIT DOCUMENTS. No Company Party shall amend
or modify any Bank Credit Document with respect to the total amount of the
overadvance facility under the Bank Credit Agreement (as in effect on the date
hereof) and the amount outstanding under such overadvance facility shall not
exceed $10,000,000 at any point in time.

         9.9 DISTRIBUTIONS. No Company Parties shall declare or make, or permit
any Subsidiary to declare or make, any Distributions (other than Distributions
made when no Default or Event of Default exists to the Company by a Subsidiary)
except for redemptions of stock or options issued to employees whose employment
has been terminated, provided that (i) such redemptions shall not exceed
$300,000 in the aggregate and (ii) Availability (as provided for and defined in
the Bank Credit Agreement (as in effect on the date hereof)) equals or exceeds
$3,000,000 after giving effect to any such redemptions. The Company Parties
shall elect, as provided in the New Heller Note, to capitalize all interest
payments and shall not elect to make any interest payments in cash with respect
to the New Heller Note.

         9.10 CAPITAL EXPENDITURES. No Company Parties shall make Capital
Expenditures (including, without limitation, by way of capitalized leases),
excluding any reinvestments in Equipment as described in the Collateral
Documents and any casualty insurance proceeds received by the Company or any of
its Subsidiaries which are spent to replace Collateral which is

                                      54
<Page>

lost or destroyed, which, in the aggregate, as to the Company and all of its
Subsidiaries, exceed (i) $6,050,000 for the Fiscal Year ending December 31,
2001, and (ii) $6,600,000 for each other Fiscal Year commencing with the Fiscal
Year ending December 31, 2002, except that any unused portion of the Capital
Expenditure allowance for any Fiscal Year may be carried over to the immediately
succeeding Fiscal Year to be used in such succeeding Fiscal Year after all of
the Capital Expenditure allowance for that Fiscal Year has been used.

         9.11 DISPOSITION OF ASSETS. No Company Parties shall sell, lease or
otherwise dispose of any of, or permit any Subsidiary to sell, lease or
otherwise dispose of any of, its Properties, including any disposition of
Property as part of a Sale and Leaseback Transaction or securitization
transaction or the sale of any stock of a Subsidiary, to or in favor of any
Person, except for:

                  (a) so long as no Event of Default has occurred and is
continuing, sales of Inventory in the ordinary course of business;

                  (b) transfers of Property to the Company by a Subsidiary of
the Company; and

                  (c) dispositions of Equipment pursuant to Section 6.4.2 of the
Bank Credit Agreement (as in effect on the date hereof).

         9.12 ADDITIONAL SECURITIES. The Company shall not permit any other
Company Party or Subsidiary to issue any additional Securities except director's
qualifying shares. No Company Party shall issue or create any Security that
provides for redemption, right to repurchase exercisable at the holder's option,
creation of a sinking fund or cash dividend payable prior to the maturity of the
Note.

         9.13 BILL-AND-HOLD SALES, ETC. Except pursuant to the Conditional Sales
Program, no Company Parties shall make, or permit any Subsidiary to make, a sale
to any customer on a bill-and-hold, guaranteed sale, sale and return, sale on
approval or consignment basis or any sale on a repurchase or return basis.

         9.14 RESTRICTED INVESTMENT. No Company Parties shall make or have, or
permit any Subsidiary to make or have, any Restricted Investment.

         9.15 SUBSIDIARIES AND JOINT VENTURES. No Company Parties shall create,
acquire or otherwise suffer to exist any Subsidiary or joint venture arrangement
other than the Company's ownership of the Guarantors.

         9.16 TAX CONSOLIDATION. No Company Parties shall file or consent to the
filing of any consolidated income tax return with any Person (other than
Company).

         9.17 FISCAL YEAR END. No Company Parties shall change, or permit any
Subsidiary to change, its Fiscal Year.

                                      55
<Page>

         9.18 LIMITATIONS ON PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. No
Company Parties shall permit any Subsidiary to grant or otherwise agree to or
suffer to exist any consensual restrictions on the ability of such Subsidiary to
pay dividends and make other distributions to the Company, or to pay any
Indebtedness owed to the Company or transfer properties and assets to the
Company.

         9.19 CHANGE IN BUSINESS. The Company Parties shall not engage in any
material line of business substantially different from those lines of business
carried on by it at the date hereof.

         9.20 SUBORDINATION. The Company Parties shall not, without the prior
written consent of the Purchaser, directly or indirectly, contingently or
otherwise, create, incur, assume, guaranty, suffer to exist or become or remain
liable with respect to any Indebtedness that is pari passu with or senior in
right of payment to the Indebtedness for Money Borrowed evidenced by the Note
and the Guarantee, except for the obligations under the Bank Credit Documents
(as in effect on the date hereof) or with respect to up to $5,000,000 in
principal amount of the 10 1/2% Notes.

         9.21 ACCOUNTING CHANGES. No Company Party shall make any significant
change in accounting treatment or reporting practices, except as required or
permitted by GAAP.

         9.22 HAZARDOUS SUBSTANCES. No Company Party shall use, generate,
manufacture, install, treat, Release, store or dispose of any Hazardous
Substances, except in material compliance with all applicable Environmental
Laws.

10.      DEFAULTS AND REMEDIES.

         10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events, acts or occurrences shall constitute an event of default (each
an "EVENT OF DEFAULT"):

                  (a) The Company shall fail to pay as and when due (whether at
stated maturity, upon acceleration or demand or required prepayment or
otherwise) any principal, premium, if any, interest (in the case of interest
payments only, such failure continues for five (5) days after the date thereof)
and annual renewal fee payable under the Note or any Company Party shall fail to
make any other payment of any other amounts (including, without limitation,
fees, costs or expenses) payable under this Agreement, the Note, the Guarantee
or any other Investment Document (whether at stated maturity, upon acceleration
or demand or required prepayment or otherwise) and with respect to such other
amounts shall fail to make payments within ten (10) day's written notice
thereof;

                  (b) Any Company Party shall breach or fail to perform, comply
with or observe any agreement, covenant or obligation required to be performed
by it under SECTION 8.4, SECTION 8.20 or SECTION 9;

                                      56
<Page>

                  (c) Any Company Party shall breach or fail to perform, comply
with or observe any agreement, covenant or obligation required to be performed
by it under this Agreement, the Note or any other Collateral Documents and other
Investment Document (other than the agreements, covenants or obligations
expressly covered by clauses (a) and (b) of SECTION 10.1 and, if such breach or
failure can be cured, such breach or failure continues and shall not have been
remedied within thirty (30) calendar days after the first occurrence of such
breach or failure;

                  (d) Any representation, warranty or other statement made or
furnished to the Purchaser by or on behalf of the Company, any Subsidiary or any
Guarantor under this Agreement or any other Investment Document or any
instrument, certificate or financial statement furnished in compliance with or
in reference thereto shall be false or misleading or incorrect in any material
respect when made (or deemed made);

                  (e) Any of the Bank Credit Documents shall terminate (other
than mortgages released under the Bank Credit Agreement) or the Bank shall
notify the Company of the termination of its Revolving Loan Commitment (as
defined in the Bank Credit Agreement);

                  (f) (i) Any Company Party shall default in the payment
(whether at stated maturity, upon acceleration or demand or required prepayment
or otherwise), beyond any period of grace provided therefor, of any principal of
or interest on any other Indebtedness for Money Borrowed with a principal amount
in excess of $500,000, individually or in the aggregate, or (ii) any other
breach or default (or other event or condition) shall occur under any agreement,
indenture or instrument evidencing or governing any such other Indebtedness or
Other Debt Document, if (a) the payment or maturity of such Indebtedness is
accelerated in consequence of such Event of Default, (b) demand for payment of
such Indebtedness is made, or (c) any collection action in respect thereof is
commenced.

                  (g) Any Investment Document, or any material provision
thereof, shall cease to be of full force and effect, valid and enforceable, for
any reason other than in accordance with its terms, or any Company Party shall
contest or purport to repudiate or disavow any of its obligations under or the
validity or enforceability of any Investment Document or any material provision
thereof, including by operation of law, or any Collateral Document or financing
statement shall for any reason (other than pursuant to the terms thereof) cease
to create a valid and perfected priority lien (subject only to Permitted Liens)
and on security interest on the Collateral purported to be covered thereby;

                  (h) Any Company Party shall cease to be Solvent or there shall
be commenced against any Company Party an involuntary case seeking the
liquidation or reorganization of such Person under the Bankruptcy Laws or any
similar proceeding under any other Applicable Laws or an involuntary case or
proceeding seeking the appointment of a receiver, custodian, trustee or similar
official for it, or to take possession of all or a substantial portion of its
property or to operate all or a substantial portion of its business, and any of
the following events occur: (i) any

                                      57
<Page>

such Person consents to such involuntary case or proceeding or fails to
diligently contest it in good faith, (ii) the petition commencing the
involuntary case or proceeding is not timely controverted, (iii) the petition
commencing the involuntary case or proceeding remains undismissed and unstayed
for a period of sixty (60) days, or (iv) an order for relief shall have been
issued or entered therein or a receiver, custodian, trustee or similar official
appointed;

                  (i) Any Company Party (i) shall make any offer of settlement,
extension or composition to its unsecured creditors generally, or institute a
voluntary case seeking liquidation or reorganization under the Bankruptcy Laws
or any similar proceeding under any other Applicable Laws, or shall consent
thereto, (ii) shall consent to the conversion of an involuntary case to a
voluntary case, (iii) shall file a petition, answer a complaint or otherwise
institute any proceeding seeking, or shall consent or acquiesce to the
appointment of, a receiver, custodian, trustee or similar official for it, or to
take possession of all or a substantial portion of its property or to operate
all or a substantial portion of its business, (iv) shall make a general
assignment for the benefit of creditors, (v) shall generally not pay its debts
as they become due or shall admit in writing its inability to pay its debts
generally, or (vi) the Board of Directors of any such Person (or any committee
thereof) adopts any resolution or otherwise authorizes action to approve any of
the foregoing;

                  (j) Any Company Party shall suffer any Judgment Lien;

                  (k) There shall occur any material loss, theft, damage or
destruction of any of the Collateral such that the aggregate value of such
Collateral MINUS the amount of such Collateral covered by insurance exceeds
$500,000;

                  (l) (i) There shall occur a cessation of a substantial part of
the business of any Company Party for a period which significantly and adversely
affects such Company Party's capacity to continue its business on a profitable
basis; or any Company Party shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by such Company Party which is
necessary to the continued or lawful operation of its business; or any Company
Party shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which any
Company Party leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term; or any material part of
the Collateral shall be taken through condemnation or the value of such Property
shall be impaired through condemnation.

                  (m) A Reportable Event shall occur which, in the Purchaser's
determination, constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Benefit Plan or for the appointment by the
appropriate United States district court of a trustee for any Benefit Plan, or
if any Benefit Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Company Party is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Company Party's

                                      58
<Page>

complete or partial withdrawal from such Benefit Plan and any such event would
reasonably be expected to have a Material Adverse Effect;

                  (n) Any Company Party shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any Property of any
Company Party which shall be reasonably expected to have a Material Adverse
Effect or a material and adverse impact on the reputation or goodwill of any
Company Party;

                  (o) There shall occur any Change in Control;

                  (p) Any order, decree, fine or penalty shall be entered
against or imposed upon any of the Company Parties or any of the Real Properties
with respect to an Environmental Condition where the cost of compliance or the
amount of such fine or penalty is reasonably expected, individually or in the
aggregate, to exceed $250,000;

                  (q) Any inquiry, investigation or administrative or judicial
proceeding is commenced against any of the Company Parties with respect to any
Environmental Conditions which is reasonably expected, individually or in the
aggregate, to result in a liability equal to or in excess of $250,000; or

                  (r) Any Tax assessment Lien equal to or in excess of $250,000
shall be entered against any Company Party.

         Any adjustments in the interest rate under the Note or other remedies
available to the Purchaser hereunder or thereunder shall begin to apply
immediately upon the occurrence of an Event of Default or, in the case of
clauses (h) and (i) above, immediately prior to an Event of Default.

         10.2 ACCELERATION. If any Event of Default (other than an Event of
Default specified in clause (h) or (i) of SECTION 10.1) occurs and is
continuing, the Purchaser may, by written notice to the Company, declare all
outstanding principal of, premium, if any, accrued and unpaid interest on, and
all other amounts under the Note, and all other Obligations, to be due and
payable. Upon any such declaration of acceleration, such principal, premium, if
any, interest and other amounts shall become immediately due and payable. If an
Event of Default specified in clause (h) or (i) of SECTION 10.1 occurs, all
outstanding principal of, premium, if any, accrued and unpaid interest on, and
all other amounts under the Note, and all other Obligations, shall become
immediately due and payable without any declaration or other act on the part of
the Purchaser. The Company Parties hereby waive all presentment for payment,
demand and notice of demand, protest, notice of protest and notice of dishonor,
notice of nonpayment, diligence and all other notices of any kind to which it
may be entitled under Applicable Laws or otherwise.

         10.3 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under any Applicable Law and not by way of limitation of any
such rights, during the

                                      59
<Page>

continuance of any Event of Default, the Purchaser is hereby authorized by the
Company at any time or from time to time, with reasonably prompt subsequent
notice to the Company (any prior or contemporaneous notice to Company being
hereby expressly waived) to set off and to appropriate and to apply any and all
(i) balances held by the Purchaser at any of its offices for the account of any
Company Party (regardless of whether such balances are then due to such Company
Party), and (ii) other property at any time held or owing by the Purchaser to or
for the credit or for the account of any Company Party, against and on account
of any of the Obligations.

         10.4 OTHER REMEDIES. If any Default or Event of Default shall occur and
be continuing, the Purchaser may proceed to protect and enforce its rights and
remedies under this Agreement and any other Investment Document by exercising
all rights and remedies available under this Agreement, any other Investment
Document or Applicable Laws (including, without limitation, the UCC), either by
suit in equity or by action at law, or both, whether for the collection of
principal of or interest on the Note, to enforce the specific performance of any
covenant or other term contained in this Agreement or any other Investment
Document. No remedy conferred in this Agreement upon the Purchaser is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.

         10.5 APPOINTMENT OF RECEIVER. In addition to all other rights, powers
and remedies that the Purchaser has under this Agreement, any other Investment
Document or Applicable Laws, the Purchaser shall, upon the occurrence of an
Event of Default, be entitled (to the extent permitted by Applicable Laws), and
the Company Parties hereby consent in advance, to the appointment of a receiver
by any court of competent jurisdiction to take control of the Company Parties
for the purpose of operating and thereafter selling any Company Party to satisfy
obligations to creditors, including the Purchaser.

         10.6 WAIVER OF PAST DEFAULTS. The Purchaser may, by written notice to
the Company, waive any specified Default or Event of Default and its
consequences with respect to this Agreement, the Note or any other Investment
Document; PROVIDED, HOWEVER, that no such waiver will extend to any subsequent
or other Default or Event of Default or impair any rights of the Purchaser which
may arise as a result of such other Default or Event of Default.

11. WAIVER. The Purchaser may (a) extend the time for the performance of any of
the obligations or other acts of the Company Parties, (b) waive any inaccuracies
in the representations or warranties of the Company Parties or (c) waive
compliance with any of the conditions, covenants or agreements of the Company
Parties contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument signed by the Purchaser. Any waiver of the breach of
any term or condition shall not be construed as a waiver of any other breach or
as a subsequent waiver of the same term or condition, or as a waiver of any
other term or condition of this Agreement, the Note or any other Investment
Document. The failure by the Purchaser to assert, or any delay by Purchaser in
asserting any of its rights under this Agreement, the Note, or any other
Investment Document shall not constitute a waiver of any such rights and

                                      60
<Page>

no single or partial exercise of any such right shall preclude any other or
further exercise thereof or the exercise of any other right.

12. POWER OF ATTORNEY. The Company and the Guarantors hereby irrevocably
designate, make, constitute and appoint the Purchaser (and all Persons
designated by the Purchaser) as the Company's and each Guarantor's true and
lawful attorney (and the agent-in-fact), to endorse the Company's and any
Guarantor's name on any checks, notes, acceptances, drafts, money orders or any
other evidence of payment or proceeds of the Collateral which come into the
possession of the Purchaser or under the Purchaser's control, at such time or
times as the Purchaser or said agent, in its sole discretion, may determine
without notice to the Company or the Guarantors, but at the cost and expense of
the Company and the Guarantors. The power of attorney granted hereby shall
constitute a power coupled with an interest and shall be irrevocable.

13. MISCELLANEOUS.

         13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; PURCHASER
INVESTIGATION. All representations, warranties, covenants and agreements of the
Company Parties (or any one of them) contained herein, or made in writing by or
on behalf of them pursuant hereto or in connection herewith, shall survive the
execution and delivery of this Agreement, the issuance, sale and delivery of the
Notes, the repayment of the Note and the due diligence or other investigation of
the Company Parties and their Affiliates made by and on behalf of the Purchaser.
The Company and the Guarantors hereby agree that neither the Purchaser's review
of the books and records or condition (financial or otherwise), business,
assets, properties, operations or prospects of any Person, nor any other due
diligence investigation conducted by or on behalf of the Purchaser, shall be
deemed to modify the representations and warranties of the Company and the
Guarantors contained in this Agreement or any other Investment Document or to
constitute knowledge by the Purchaser of the existence or absence of any facts
or any other matters so as so reduce the Purchaser's right to rely on the
accuracy of the representations and warranties of the Company and the Guarantors
contained in this Agreement or any other Investment Document.

         13.2 CONSENT TO AMENDMENTS. No amendment, supplement or other
modification to this Agreement or any other Investment Document shall be
effective unless in writing and signed by the Purchaser, and the Company Parties
may take any action herein prohibited, or omit to perform any act herein
required to be performed by them, if, and only if, the Company Parties shall
have obtained the prior written consent of the Purchaser to such action or
omission. No course of dealing between the Company Parties, on the one hand, and
the Purchaser (or any successor or assignee thereof), on the other hand, nor any
delay in exercising any rights hereunder or under the Note or any other
Investment Document shall operate as a waiver of any rights of the Purchaser (or
any other Holder).

         13.3 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
the Disclosure Schedules which are all incorporated herein by this reference and
are an integral part of this

                                      61
<Page>

Agreement, the Note and the other Investment Documents constitute the full and
entire agreement and understanding between the Purchaser, on the one hand, and
the Company Parties, on the other hand, relating to the subject matter hereof
and thereof, and supersede all prior oral and written, and all contemporaneous
oral agreements and understandings relating to the subject matter hereof,
including, without limitation, the Letter dated November 7, 2001 between the
Company and the Purchaser. If any words have been added or deleted in this
Agreement or any related document as compared to any prior draft thereof, this
Agreement and the related documents shall be construed without reference to such
prior drafts and no implication shall be made regarding any such additions or
deletions.

         13.4 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

         13.5 SUCCESSORS AND ASSIGNS; ASSIGNMENTS. This Agreement shall inure to
the benefit of, and be binding upon, the parties and their respective successors
and permitted assigns. No Company Party shall assign any of its rights and
obligations hereunder or any interest herein or therein without the prior
written consent of the Purchaser. The Purchaser may, at any time and from time
to time without the consent of the Company or any Guarantor, assign, transfer or
delegate to one or more Persons (each an "ASSIGNEE") all or any part of its
right, title and interest in and to this Agreement and the other Investment
Documents, including, without limitation, all or any part of the Obligations,
subject to compliance with applicable federal and state securities laws;
PROVIDED, HOWEVER, that, in any privately negotiated transaction involving a
sale or assignment of any such right, title or interest, the transferor shall
obtain from the Assignee in writing investment intent representations which
would be customarily obtained in transactions of such nature; and PROVIDED
FURTHER, that the Company Parties shall continue to deal solely and directly
with the transferor in connection with any right, title or interest so assigned
until written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Company. Notwithstanding the foregoing, the Purchaser may not
assign any of its rights and obligations hereunder, or any interest herein or
therein, to any Person that, by virtue of its primary line of business, is a
direct competitor of the Company.

         13.6 CERTAIN AGREEMENTS OF THE COMPANY PARTIES. Each Company Party
agrees that (i) it will use its best efforts to assist and cooperate with the
Purchaser in any manner reasonably requested by the Purchaser to effect the sale
of participation in or assignments of any of the Investment Documents or any
portion thereof or interest therein, including, without limitation, assisting in
the preparation of appropriate disclosure documents and making members of
management available at reasonable times to meet with and answer questions of
potential assignees and participants, and (ii) the Purchaser may disclose credit
information regarding any Company Party to any potential participant or
assignee.

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<Page>

         13.7 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given (i) if transmitted by telecopier with
receipt acknowledged, or (ii) upon delivery, if delivered personally or by
recognized commercial courier with receipt acknowledged, or (iii) the next
Business Day, if sent by a nationally recognized overnight courier for next
Business Day delivery, addressed as follows:

                                    If to the Purchaser, to:

                                    Catalyst Equity Fund, L.P.
                                    c/o Catalyst Equity Partners, L.L.C.
                                    101 Eisenhower Parkway, 3rd Floor
                                    Roseland, NJ 07068
                                    Attention:  Michael E. France
                                    Telephone:  (973) 618-5100
                                    Telecopier:  (973) 618-9430

                                    With a copy to:

                                    Catalyst Equity Fund, L.P.
                                    c/o Catalyst Equity Partners, L.L.C.
                                    248 Main Street, Suite 100
                                    Half Moon Bay, CA  94019
                                    Attention:  George Skegas
                                    Telephone:  (650) 712-7300
                                    Telecopier:  (650) 726-6932

                                    With an additional copy to:

                                    Riordan & McKinzie
                                    300 South Grand Avenue
                                    Suite 2900
                                    Los Angeles, CA  90071
                                    Attention:  Cynthia M. Dunnett
                                    Telephone:  (213) 229-8526
                                    Telecopier:  (213) 229-8550

                                      63
<Page>

                                    If to the Company Parties (or any one of
                                    them), to:

                                    c/o Color Spot Nurseries, Inc.
                                    3478 Buskirk Avenue
                                    Pleasant Hill, CA  94523
                                    Attention:  Chief Executive Officer
                                    Telecopier:  (925) 935-0566

                                    With a copy to:

                                    Brownstein Hyatt & Farber, P.C.
                                    410 17th Street
                                    Denver, CO  80202-4437
                                    Attention:  Steven S. Siegel
                                    Telephone:  (303) 223-1100
                                    Telecopier:  (303) 223-1111

or at such other address or addresses as the Purchaser or the Company, as the
case may be, may specify by written notice given in accordance with this SECTION
13.7.

         13.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be deemed an original, but
all of which together shall constitute one instrument.

         13.9 GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT REGARD
TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.

         13.10 LIMITATION OF LIABILITY. No claim shall be made by any Company
Party or any of its or their Affiliates against the Purchaser, or any
Affiliates, partners, directors, officers, employees, agents, representatives,
attorneys, accountants or advisors of the Purchaser, for any special, indirect,
consequential, incidental or punitive damages in respect of any claim for breach
of contract or under any other theory of liability arising out of or related to
the transactions contemplated by this Agreement or any other Investment
Document, or any act, omission or event occurring in connection therewith. Each
of the Company Parties hereby waives, releases and agrees not to sue upon any
claim for such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

                                      64
<Page>

         13.11 PUBLICITY. The Company Parties and their Affiliates will consult
with the Purchaser before issuing, and provide the Purchaser reasonably ample
time and opportunity to review and comment upon, and use reasonable efforts to
agree on the form and substance of, any press release or other public statement
with respect to the transactions contemplated by this Agreement, and shall not
issue any such press release or make such other public announcement prior to
such consultation, except as required under Applicable Laws. The parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties. The Company Parties hereby consent to the preparation and publication
by the Purchaser of an advertisement "tombstone" publicly disclosing the closing
of the transactions contemplated by this Agreement.

         13.12 WAIVER OF TRIAL BY JURY. EACH OF THE COMPANY PARTIES AND THE
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS
AGREEMENT, ANY OTHER INVESTMENT DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, OR THE ACTIONS OF PURCHASER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF, REGARDLESS OF WHICH PARTY INITIATES SUCH
ACTION OR ACTIONS.

         13.13 CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the
Investment Documents are hereby made cumulative with the provisions of this
Agreement. Except as otherwise provided in any of the other Investment Documents
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Investment Documents, the
provision contained in this Agreement shall govern and control.

         13.14 TIME OF ESSENCE. Time is of the essence of this Agreement, the
Note, the Guarantee, and the other Investment Documents and Collateral
Documents.

         13.15 INTERPRETATION. No provision of this Agreement or any of the
other Investment Documents or Collateral Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.

         13.16 CONSENT TO FORUM. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF THE COMPANY PARTIES OR THE PURCHASER, EACH OF THE COMPANY PARTIES
HEREBY CONSENTS AND AGREES THAT THE STATE COURTS OF NEW JERSEY, OR, AT THE
PURCHASER'S OPTION, THE UNITED STATES DISTRICT COURT OF NEW

                                      65
<Page>

JERSEY, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE COMPANY PARTIES ON THE ONE HAND AND THE PURCHASER ON THE
OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT. THE COMPANY PARTIES EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND THE COMPANY PARTIES HEREBY WAIVE ANY OBJECTION WHICH THE COMPANY PARTIES MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. THE COMPANY PARTIES HEREBY WAIVE
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY
PARTIES AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH COMPANY PARTY'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF THE PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE PURCHASER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

                                      66
<Page>

         IN WITNESS WHEREOF, the parties have caused this Securities Purchase
Agreement to be executed and delivered by their duly authorized representatives
as of the date first written above.

                             COMPANY:

                             COLOR SPOT NURSERIES, INC.,
                             a Delaware corporation

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

                             GUARANTORS:

                             COLOR SPOT CHRISTMAS TREES, INC.,
                             a Delaware corporation

                             LONE STAR, INC.,
                             a Delaware corporation

                             LSGR HOLDINGS, INC.,
                             a Delaware corporation

                             ODA NURSERY INC.,
                             a California corporation

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

                             LONE STAR GROWERS, L.P.,
                             a Delaware limited partnership

                             By:      LONE STAR, INC.
                                      Its:  General Partner

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

<Page>

                 SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
                                   PURCHASER:

                                   CATALYST EQUITY FUND, L.P.,
                                   a Delaware limited partnership

                                   By:    CATALYST EQUITY FUND PARTNERS, L.L.C.,
                                          a Delaware limited liability company

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

                 SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

<Page>

                                    EXHIBIT C

                             COMPLIANCE CERTIFICATE

                           [Letterhead of the Company]

                                                                         , 200__

         The undersigned, the chief financial officer of Color Spot Nurseries,
Inc., a Delaware corporation (the "Company"), on behalf of the Company in his
capacity as Chief Financial Officer, gives this certificate to Catalyst Equity
Fund, L.P., a Delaware limited partnership (the "Purchaser"), in accordance with
the requirements of Section 8.5 of that certain Securities Purchase Agreement,
dated November 20, 2001, by and among the Company, the Purchaser and the
Guarantors listed therein ("Purchase Agreement"). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Purchase Agreement.

         1. Based upon my review of the balance sheet and statements of income
of Borrower for the [fiscal year] [quarterly period] ending _________________,
20__, copies of which are attached hereto, I hereby certify that:

                  (i)      The Interest Coverage Ratio is _____ to _____;

                  (ii)     The Fixed Charge Coverage Ratio is _____ to _____;

                  (iii)    EBITDA is $__________; and

                  (iv)     Capital Expenditures during the period and for the
fiscal year to date total $________ and $_________, respectively.

                  [LIST OTHERS, IF ANY]

<Page>

         2. No Default exists on the date hereof, other than:___________________
___________________________ [if none, so state]; and

         3. No Event of Default exists on the date hereof, other than __________
_________________________ [if none, so state].

                                                     Very truly yours,

                                                     ___________________________
                                                     Chief Financial Officer

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