Document:

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                                                                 Exhibit 10.10.3

                                                                  EXECUTION COPY

                      AMENDED, RESTATED AND CONSOLIDATED

                          LOAN AND SECURITY AGREEMENT

                   SOUTHERN STATES COOPERATIVE, INCORPORATED
                                  AS BORROWER

                                     WITH

                                  COBANK, ACB
                            AS LENDER AND AS AGENT

                                      AND

                  EACH OF THE FINANCIAL INSTITUTIONS NOW AND
               HEREAFTER A PARTY HERETO AND LISTED ON SCHEDULE A
                                ATTACHED HERETO
                                  AS LENDERS

                           AS OF SEPTEMBER 18, 2001
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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                          PAGE
<S>                                                                                                                       <C>
I.        DEFINITIONS.................................................................................................   3

          1.1       Accounting Terms..................................................................................   3
          1.2       General Terms.....................................................................................   3
          1.3       Uniform Commercial Code Terms.....................................................................  31
          1.4       Certain Matters of Construction...................................................................  31

II.       ADVANCES, PAYMENTS..........................................................................................  31

          2.1       Revolving Advances................................................................................  31
          2.2       Procedure for Revolving Advances Borrowing........................................................  32
          2.3       Disbursement of Advance Proceeds..................................................................  34
          2.4       Term Loan.........................................................................................  35
          2.5       Maximum Revolving Advances and Maximum Credit Limit...............................................  35
          2.6       Repayment of Advances.............................................................................  35
          2.7       [Reserved]........................................................................................  36
          2.8       Statement of Account..............................................................................  36
          2.9       Letters of Credit.................................................................................  36
          2.10      Issuance of Letters of Credit.....................................................................  37
          2.11      Requirements For Issuance of Letters of Credit....................................................  38
          2.12      Additional Payments...............................................................................  40
          2.13      Manner of Borrowing and Payment...................................................................  40
          2.14      Mandatory Prepayments.............................................................................  43
          2.15      Use of Advance Proceeds...........................................................................  45
          2.16      [Reserved]........................................................................................  45
          2.17      Existing Financing Agreements.....................................................................  45

III.      INTEREST AND FEES...........................................................................................  46

          3.1       Interest..........................................................................................  46
          3.2       Letter of Credit Fees.............................................................................  46
          3.3(a)    Origination Fee...................................................................................   1
          3.4       Taxes.............................................................................................  47
          3.5       Computation of Interest and Fees..................................................................  49
          3.6       Maximum Charges...................................................................................  49
          3.7       Increased Costs...................................................................................  49
          3.8       Basis For Determining Interest Rate Inadequate or Unfair..........................................  50
          3.9       Capital Adequacy..................................................................................  51

IV.       COLLATERAL and GENERAL TERMS................................................................................  51

          4.1       Security Interest in the Collateral...............................................................  51
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                                       i
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<S>                                                                                                             <C>
          4.2        Perfection of Security Interest..........................................................  51
          4.3        Disposition of Collateral................................................................  53
          4.4        Preservation of Collateral...............................................................  53
          4.5        Ownership of Collateral..................................................................  54
          4.6        Defense of Agent's and Lenders' Interests................................................  54
          4.7        Books and Records........................................................................  54
          4.8        Financial Disclosure.....................................................................  55
          4.9        Compliance with Laws.....................................................................  55
          4.10       Inspection of Premises...................................................................  55
          4.11       Insurance................................................................................  56
          4.12       Failure to Pay Insurance.................................................................  57
          4.13       Payment of Taxes.........................................................................  57
          4.14       Payment of Leasehold Obligations.........................................................  57
          4.15       Receivables..............................................................................  58
          4.16       Inventory................................................................................  60
          4.17       Maintenance of Equipment.................................................................  60
          4.18       Exculpation of Liability.................................................................  60
          4.19       Environmental Matters....................................................................  60
          4.20       Financing Statements.....................................................................  63
          4.21       CoBank Stock.............................................................................  63
          4.22       Revised Article 9........................................................................  63
          4.23       Wachovia Purchase Agreement..............................................................  64
          4.24       Wholesale Receivables....................................................................  65
          4.25       Custodian, Etc...........................................................................  65

V.        REPRESENTATIONS AND WARRANTIES......................................................................  65

          5.1        Authority................................................................................  65
          5.2        Formation and Qualification..............................................................  66
          5.3        Survival of Representations and Warranties...............................................  66
          5.4        Tax Returns..............................................................................  66
          5.5        Financial Statements.....................................................................  67
          5.6        Corporate Name...........................................................................  67
          5.7        O.S.H.A. and Environmental Compliance....................................................  67
          5.8        Solvency; No Litigation, Violation, Indebtedness or Default..............................  68
          5.9        Patents, Trademarks, Copyrights and Licenses.............................................  69
          5.10       Licenses and Permits.....................................................................  70
          5.11       Default of Indebtedness..................................................................  70
          5.12       No Default...............................................................................  70
          5.13       No Burdensome Restrictions...............................................................  70
          5.14       No Labor Disputes........................................................................  70
          5.15       Margin Regulations.......................................................................  70
          5.16       Investment Company Act...................................................................  70
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                                      ii
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<S>                                                                                                              <C>
          5.17       Disclosure................................................................................  70
          5.18       Swaps.....................................................................................  71
          5.19       Conflicting Agreements....................................................................  71
          5.20       Application of Certain Laws and Regulations...............................................  71
          5.21       Business and Property of Borrower.........................................................  71
          5.22       Commercial Tort Claims....................................................................  71
          5.23       Letter-of-Credit Rights...................................................................  71
          5.24       Deposit Accounts..........................................................................  71
          5.25       Compliance with Laws......................................................................  71

VI.       AFFIRMATIVE COVENANTS................................................................................  71

          6.1        Payment of Fees...........................................................................  72
          6.2        Conduct of Business and Maintenance of Existence and Assets...............................  72
          6.3        Violations................................................................................  72
          6.4        Government Receivables....................................................................  72
          6.5        Adjusted Net Worth........................................................................  72
          6.6        Funded Debt...............................................................................  73
          6.7        EBITDAR/Interest and Dividends............................................................  73
          6.8        EBITDAR...................................................................................  74
          6.9        Execution of Supplemental Instruments.....................................................  74
          6.10       Payment of Indebtedness...................................................................  74
          6.11       Standards of Financial Statements.........................................................  74
          6.12       CoBank Stock..............................................................................  74
          6.13       Commercial Tort Claims....................................................................  75
          6.14       Compliance with Applicable Laws...........................................................  75

VII.      NEGATIVE COVENANTS...................................................................................  75

          7.1        Merger, Consolidation, Acquisition and Sale of Assets.....................................  75
          7.2        Creation of Liens.........................................................................  75
          7.3        Guarantees................................................................................  75
          7.4        Investments...............................................................................  76
          7.5        Loans.....................................................................................  76
          7.6        Capital Expenditures......................................................................  76
          7.7        Dividends.................................................................................  76
          7.8        Indebtedness..............................................................................  76
          7.9        Nature of Business........................................................................  77
          7.10       Transactions with Affiliates..............................................................  77
          7.11       Leases....................................................................................  77
          7.12       Subsidiaries..............................................................................  77
          7.13       Fiscal Year and Accounting Changes........................................................  77
          7.14       Pledge of Credit..........................................................................  77
          7.15       Amendment of Articles of Incorporation, By-Laws...........................................  78
</TABLE>
                                      iii
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<S>                                                                                                           <C>
          7.16       Compliance with ERISA................................................................... 78
          7.17       Prepayment of Indebtedness.............................................................. 78
          7.18       Material Agreements..................................................................... 78
          7.19       Statesman and MLCC...................................................................... 78
          7.20       Interest Hedging Instrument............................................................. 78
          7.21       Deposit Accounts........................................................................ 78

VIII.     CONDITIONS PRECEDENT AND SUBSEQUENT................................................................ 79

          8.1        Conditions to Initial Advances.......................................................... 79
          8.2        Conditions Subsequent................................................................... 81
          8.3        Conditions to Each Advance.............................................................. 83
          8.4        Form and Substance Satisfactory......................................................... 84

IX.       INFORMATION AS TO BORROWER......................................................................... 84

          9.1        Disclosure of Material Matters.......................................................... 84
          9.2        Schedules............................................................................... 84
          9.3        Environmental Reports................................................................... 84
          9.4        Litigation.............................................................................. 84
          9.5        Material Occurrences.................................................................... 85
          9.6        Government Receivables.................................................................. 85
          9.7        Annual Financial Statements............................................................. 85
          9.8        Quarterly Financial Statements.......................................................... 86
          9.9        Monthly Financial Statements............................................................ 87
          9.10       Other Reports........................................................................... 87
          9.11       Additional Information.................................................................. 87
          9.12       Projected Operating Budget.............................................................. 88
          9.13       Variances From Operating Budget......................................................... 88
          9.14       Notice of Suits, Adverse Events......................................................... 88
          9.15       ERISA Notices and Requests.............................................................. 88
          9.16       Borrowing Base Certificate.............................................................. 89

X.        EVENTS OF DEFAULT.................................................................................. 89

XI.       LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT......................................................... 92

          11.1       Cure.................................................................................... 92
          11.2       Rights and Remedies..................................................................... 92
          11.3       Agent's Discretion...................................................................... 93
          11.4       Setoff.................................................................................. 93
          11.5       Rights and Remedies not Exclusive....................................................... 93
          11.6       Third Parties........................................................................... 94

XII.      WAIVERS AND JUDICIAL PROCEEDINGS................................................................... 94
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<S>                                                                                                           <C>
          12.1       Waiver of Notice.......................................................................   94
          12.2       Delay..................................................................................   94
          12.3       Jury Waiver............................................................................   94

XIII.     EFFECTIVE DATE AND TERMINATION....................................................................   94

          13.1       Term...................................................................................   94
          13.2       Termination............................................................................   94

XIV.      REGARDING AGENT...................................................................................   95

          14.1       Appointment............................................................................   95
          14.2       Nature of Duties.......................................................................   95
          14.3       Lack of Reliance on Agent and Resignation..............................................   96
          14.4       Certain Rights of Agent................................................................   97
          14.5       Reliance...............................................................................   97
          14.6       Notice of Default......................................................................   97
          14.7       Indemnification........................................................................   97
          14.8       Agent in its Individual Capacity.......................................................   97
          14.9       Borrower's Undertaking to Agent........................................................   98

XV        MISCELLANEOUS.....................................................................................   98

          15.1       Governing Law..........................................................................   98
          15.2       Entire Understanding...................................................................   98
          15.3       Successors and Assigns; Participations; New Lenders....................................  100
          15.4       Application of Payments................................................................  102
          15.5       Indemnity..............................................................................  102
          15.6       Notice.................................................................................  103
          15.7       Survival...............................................................................  104
          15.8       Severability...........................................................................  104
          15.9       Expenses...............................................................................  104
          15.10      Injunctive Relief......................................................................  105
          15.11      Consequential Damages..................................................................  105
          15.12      Captions...............................................................................  105
          15.13      Counterparts; Telecopied Signatures....................................................  105
          15.14      Construction...........................................................................  105
          15.15      Confidentiality; Sharing Information...................................................  105
</TABLE>

                                       v
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LIST OF EXHIBITS AND SCHEDULES

Schedules

Schedule A             Commitment Percentage
                       Addresses of Lenders
Schedule 1.2(a)        Existing Interest Hedging Instruments
Schedule 1.2(b)        Managed Coops
Schedule 1.2(c)        Permitted Encumbrances
Schedule 2.9           Existing L/Cs
Schedule 4.5           Equipment and Inventory Locations
Schedule 4.15(c)       Location of Executive Offices
Schedule 4.19          Real Property
Schedule 5.2(a)        States of Qualification and Good Standing
Schedule 5.2(b)        Subsidiaries and Affiliates
Schedule 5.4           Federal Tax Identification Number
Schedule 5.6           Prior Names
Schedule 5.7           Environmental Compliance
Schedule 5.8(b)        Litigation
Schedule 5.8(d)        Plans
Schedule 5.9           Intellectual Property, Source Code Escrow Agreements
Schedule 5.10          Licenses and Permits
Schedule 5.14          Labor Disputes
Schedule 5.18          Swaps
Schedule 5.22          Commercial Tort Claims
Schedule 5.23          Letter of Credit Rights
Schedule 5.24          Deposit Accounts
Schedule 7.3           Guarantees
Schedule 7.4           Investments
Schedule 7.8           Indebtedness

Exhibits

Exhibit 1.2            Managed Cooperative Agreement
Exhibit 2.1(a)         Revolving Credit Note
Exhibit 2.1(b)         Swing Line Note
Exhibit 2.4            Term Note
Exhibit 4.15(h)        Borrower's Cash Management Procedures
Exhibit 5.5(b)         Financial Projections
Exhibit 8.1(i)         Financial Condition Certificate
Exhibit 9.16           Borrowing Base Certificate

                                      vi
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Exhibit 15.3           Commitment Transfer Supplement

                                      vii
<PAGE>

                      AMENDED, RESTATED AND CONSOLIDATED
                          LOAN AND SECURITY AGREEMENT

     Amended, Restated and Consolidated Loan and Security Agreement dated
September 18, 2001 by and among Southern States Cooperative, Incorporated, a
Virginia agricultural cooperative corporation ("Borrower"), the financial
institutions which are now or which hereafter become a party hereto and listed
on Schedule A attached hereto and made a part hereof (as such Schedule A may
hereafter be amended, modified or replaced from time to time) in their capacity
as lenders and, as applicable, in their capacity as Issuing Banks (collectively,
"Lenders" and individually a "Lender") and CoBank, ACB, as agent for Lenders
("Agent").

                                  BACKGROUND

     A.   Borrower, Agent and Lenders are parties to that certain Revolving
Credit Agreement dated as of January 12, 1999 (as it has been amended and
modified from time to time, "Syndicated Loan Agreement"). The Syndicated Loan
Agreement and all instruments, documents and agreements executed in connection
therewith, or related thereto are referred to herein collectively as the
"Syndicated Loan Documents."

     B.   Borrower and CoBank, ACB, in its individual capacity ("CoBank") are
parties to that certain Master Loan Agreement dated as of February 1, 1997, that
certain Consolidating Supplement dated as of February 1, 1997 and that certain
Amended and Restated Letter of Credit Commitment Supplement dated as of June 29,
2000 ("Letter of Credit Supplement") (as each has been amended and modified from
time to time collectively, "MLA"). In connection with the Letter of Credit
Supplement, CoBank has issued that certain Letter of Credit 00098003 in favor of
Southern States Cooperative, Incorporated Patrons Through Custodian Rex Honodel
For Promissory Note Holders Under Payment Plus Program with an expiry date of
April 12, 2001 ("CoBank Letter of Credit"). The MLA, the Letter of Credit and
all instruments, documents and agreements executed in connection therewith, or
related thereto are referred to herein collectively as the "MLA Loan Documents."

     C.   Borrower and Wachovia Bank, N.A. ("Wachovia") are parties to that
certain Amended and Restated Reimbursement Agreement dated as of October 13,
1998 (as it has been amended and modified from time to time, "Wachovia
Reimbursement Agreement"). The Wachovia Reimbursement Agreement and all
instruments, documents and agreements executed in connection therewith, or
related thereto are referred to herein collectively as the "Wachovia Loan
Documents."

     D.   Borrower and Allfirst Bank ("Allfirst") are parties to that certain
Revolving Credit Agreement dated as of November 3, 2000 (as it has been amended
and modified from time to time, "Allfirst Credit Agreement"). The Allfirst
Credit Agreement and all instruments, documents and agreements executed in
connection therewith, or related thereto are referred to herein collectively as
the "Allfirst Loan Documents."

     E.   Borrower and SunTrust Bank ("SunTrust") are parties to that certain
Reimbursement Agreement dated as of September 1, 1990 and that certain
Reimbursement Agreement dated as of
<PAGE>

September 1, 1985 (as each has been amended and modified from time to time,
collectively, "SunTrust Reimbursement Agreement"). The SunTrust Reimbursement
Agreement and all instruments, documents and agreements executed in connection
therewith, or related thereto are referred to herein collectively as the
"SunTrust Reimbursement Documents." Borrower has executed and delivered to
SunTrust that certain Commercial Note dated as of March 7, 2000 providing for a
line of credit (as it has been amended and modified from time to time, "SunTrust
Note"). The SunTrust Note and all instruments, documents and agreements executed
in connection therewith, or related thereto are referred to herein collectively
as the "SunTrust Line of Credit Documents." The SunTrust Line of Credit
Documents and the SunTrust Reimbursement Documents are collectively referred to
as "SunTrust Loan Documents."

     F.   Borrower and CoBank, as collateral agent are parties to that certain
Security Agreement dated as of January 9, 2001 pursuant to which Borrower
granted to CoBank as collateral agent a security interest in certain Collateral
(as defined therein) for the benefit of Senior Lenders (as defined therein) (as
it has been amended and modified from time to time, "Security Agreement").
Borrower, Secured Parties (as defined therein), Agent and CoBank as collateral
agent are parties to that certain Intercreditor Agreement dated as of January 9,
2001 (as it has been amended and modified from time to time "Intercreditor
Agreement").

     G.   Borrower, Agent, Lenders, CoBank, Wachovia, Allfirst, SunTrust,
AgFirst, FCB and Northwest Farm Credit Services, FLCA are parties to that
certain Extension Agreement and Omnibus Amendment to Existing Financing
Documents dated April 9, 2001, that certain Second Extension Agreement and
Omnibus Amendment to Existing Financing Documents dated May 8, 2001 that certain
Third Extension Agreement and Omnibus Amendment to Existing Financing Documents
dated June 29, 2001 and that certain Fourth Extension Agreement and Omnibus
Amendment to Existing Financing Documents dated July 27, 2001 (collectively,
"Extension Agreements"). Borrower, Agent and Lenders (as defined therein) are
also parties to that certain Section 547 Commencement Date Agreement dated as of
April 1, 2001 (as amended in conjunction with the Extension Agreements, the
"Tolling Agreement").

     H.   The Syndicated Loan Documents, MLA Loan Documents, Wachovia Loan
Documents, Allfirst Loan Documents, SunTrust Loan Documents, Security Agreement
and Intercreditor Agreement and the Extension Agreements are collectively
referred to herein as the "Existing Financing Agreements".

     I.   Borrower has requested and Lenders have agreed to amend, restate,
consolidate and increase the commitments under the Existing Financing Agreements
pursuant to the terms and conditions of this Agreement. In addition, Borrower
has informed Agent and Lenders that in conjunction with restructuring of the
indebtedness of Borrower and certain of its subsidiaries, it intends to utilize
a portion of the increase of the commitments to purchase certain assets from
Statesman Financial Corporation ("Statesman") and Michigan Livestock Credit
Corporation ("MLCC") and Statesman and MLCC intend to utilize the proceeds of
the purchase price of such assets to repay amounts owed to the Statesman Lenders
and MLCC Lenders, respectively. Borrower, Agent, and Lenders agree that the
liens and security interests granted to Collateral Agent pursuant to the
Security Agreement continue hereunder for the benefit of Lenders and to secure
the Obligations.

                                       2
<PAGE>

     IN CONSIDERATION of the mutual covenants and undertakings herein contained,
and with the foregoing Background incorporated as if set forth more fully below,
Borrower, Lenders and Agent hereby agree as follows:

     I.   DEFINITIONS.

     1.1  Accounting Terms. As used in this Agreement, the Notes, or any
          ----------------
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
                                                                      --------
however, whenever such accounting terms are used for the purposes of determining
-------
compliance with financial covenants in this Agreement, unless otherwise defined
in Section 1.2 such accounting terms shall be defined in accordance with GAAP as
applied in preparation of the audited financial statements of Borrower for the
fiscal year ended June 30, 2000.

     1.2  General Terms. For purposes of this Agreement the following terms
          -------------
shall have the following meanings:

     "Accounts" shall mean all of Borrower's accounts receivable, including
      --------
without limitation, all "accounts" (as defined in the Uniform Commercial Code),
whether now existing or hereafter created or arising and all rights to receive
payment created or arising from sale of goods or rendition of services made
under Borrower's corporate name or any of Borrower's trade names or styles or
through any of Borrower's divisions.

     "Accountants" shall mean certified public accounting firm(s) of recognized
      -----------
standing and reasonably acceptable to Agent.

     "Adjusted Net Worth" shall mean, at a particular date, the sum of (a)
      ------------------
shareholders' and patrons' equity and capital securities, plus (b) the
                                                          ----
cumulative total of all non-cash debits to balance sheet and income statement
accounts required under application of FAS 133, minus (c) the cumulative total
of all non-cash credits to the balance sheet and income statement accounts
required under application of FAS 133, plus (d) the amount of Bank Charges in
excess of $13,000,000, plus (e) Restructuring Charges incurred after the Closing
                       ----
Date.

     "Advances" shall mean and include all advances and extensions of credit
      --------
made to or for the benefit of Borrower, including without limitation, the
Revolving Advances, Overnight Advances, Letters of Credit, and the Term Loan.

     "Advance Rates" shall mean collectively the Receivables Advance Rates and
      -------------
the Inventory Advance Rate, as in effect from time to time.

     "Advisors" shall have the meaning set forth in Section 15.9(b) hereof.
      --------

     "Affiliate" of any Person shall mean (a) any Person which, directly or
      ---------
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer

                                       3
<PAGE>

(i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote 5% or more of the
securities having ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

     "Agent" shall have the meaning set forth in the preamble to this Agreement
      -----
and shall include its successors in such capacity, and its successors in
interest and assigns.

     "Agricultural Liens" shall have the meaning given to such term in the UCC.
      ------------------

     "AgriMoney Notes" shall mean the senior unsecured notes of the Borrower
      ---------------
referred to in Borrower's registration statement on Form S-1 (Number 333-36104),
filed with the Securities and Exchange Commission on November 14, 2000, as
amended from time to time.

     "Agway" shall mean Agway, Inc., a Delaware corporation, with it principal
      -----
place of business at 333 Butternut Drive, DeWitt, New York 13214.

     "Agway Agreements" shall mean, collectively, that certain Asset Purchase
      ----------------
Agreement dated as of June 20, 2000 between Agway and Borrower and that certain
Promissory Note executed by Borrower in favor of Agway dated July 31, 2000 in
the original principal amount of $13,300,000 and the Agway Security Agreement,
each as amended or modified from time to time.

     "Agway Security Agreement" shall mean that certain Amended and Restated
      ------------------------
Security Agreement between Borrower and Agway of even date herewith.

     "Allfirst" shall have the meaning set forth in the Background.
      --------

     "Allfirst Credit Agreement" shall have the meaning set forth in the
      -------------------------
Background.

     "Allfirst Loan Documents" shall have the meaning set forth in the
      -----------------------
Background.

     "Alternate Base Rate" shall mean, for any day, a rate per annum equal to
      -------------------
the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 1/2 of 1%.

     "Amended and Restated Trademark Security Agreement" shall mean that certain
      -------------------------------------------------
Amended and Restated Trademark Security Agreement from Borrower of even date
herewith.

                                       4
<PAGE>

     "Applicable Excess Cash Flow Percentage" shall mean a percentage, based on
      --------------------------------------
upon the Funded Debt to EBITDAR Ratio, as of the end of the fiscal year then
most recently ended for which annual financial statements have been delivered
pursuant to Section 9.7:

                                                Applicable Excess Cash Flow
          Funded Debt/EBITDAR Ratio                       Percentage
       ---------------------------------    ----------------------------------

       Greater than 3.5:1                                    75%
       Less than or equal to 3.5:1                           50%

     "Applicable Lending Office" shall mean, with respect to any Lender, (i) in
      -------------------------
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its LIBOR Rate Loans, its Euro-Dollar Lending Office. Each Lender shall
notify the Agent and the Borrower prior to any change of any of its Applicable
Lending Offices.

     "Authority" shall have the meaning set forth in Section 4.19(d).
      ---------

     "Availability Period" shall mean the period from the Closing Date through
      -------------------
the last Business Day immediately preceding the Maturity Date.

     "Bank Charges" shall mean extension and origination fees and Expenses
      ------------
incurred from January 8, 2001 in connection with the restructuring of the credit
facilities contemplated hereby.

     "Base Rate" shall mean the average of the per annum rates of interest
      ---------
referred to as the "Prime Rate" as reported in the Money Rates Section of The
                                                                          ---
Wall Street Journal, on the date of determination. If The Wall Street Journal is
-------------------                                   -----------------------
not published on such day, or does not report on such rate, such rate shall be
as reported by such other similar publication or source as Agent may select.

     "Base Rate Loan" shall mean any Advance that bears interest based upon the
      --------------
Alternate Base Rate.

     "Blocked Accounts" shall have the meaning set forth in Section 4.15(h).
      ----------------

     "Blue Ridge Agent" shall mean Wachovia Bank, N.A. and its successors and
      ----------------
assigns in its capacity as administrative agent pursuant to the Wachovia
Purchase Agreement.

     "Borrower" shall have the meaning set forth in the preamble to this
      --------
Agreement and shall extend to all permitted successors and assigns.

     "Borrower's Account" shall have the meaning set forth in Section 2.8.
      ------------------

     "Borrowing Base Certificate" shall have the meaning set forth in Section
      --------------------------
9.16 hereof.

     "Business Day" shall mean with respect to LIBOR Rate Loans, any day on
      ------------
which commercial banks are open for domestic and international business,
including dealings in Dollar deposits in London,

                                       5
<PAGE>

England, New York, New York and Denver, Colorado, and with respect to all other
matters, any day other than a day on which commercial banks in New York, New
York or Denver, Colorado are authorized or required by law to close.

     "Cash Equivalents" means (a) securities issued or directly and fully
      ----------------
guaranteed or insured by the United States or any agency or instrumentality
thereof with maturities of not more than twelve months from the date of
acquisition, (b) Dollars time deposits, certificates of deposit, "money market"
accounts or money market mutual funds, and repurchase agreements relating to
direct obligations of the United States with, and commercial paper, fixed rate
notes and loan participations (with maturities of up to 270 days for any such
loan participations) issued by, either (i) a Lender or (ii) a domestic
commercial bank with a short term commercial paper rating of at least A-1 by
Standard & Poor's Ratings Group or P-1 by Moody's Investors Service, Inc. (c)
commercial paper and fixed rate notes issued by a domestic commercial bank that
does not have ratings required under clause (b) of this definition with
maturities of up to 60 days in an aggregate amount not to exceed $5,000,000, (e)
obligations of any domestic Governmental Body with respect to which interest is
exempt from federal income tax with a long term rating of at least AA- by S&P or
Aa-3 by Moody's, and (f) "low floaters" (industrial revenue bonds issued as
floating rate notes or bonds and backed by a stand-by letter of credit issued by
a Lender or a domestic commercial bank having the ratings required under clause
(b) of this definition).

     "CERCLA" shall mean the Comprehensive Environmental Response, Compensation
      ------
and Liability Act of 1980, as amended, 42 U.S.C. (S)9601 et seq.
                                                         ------

     "Change of Control" shall mean (a) the acquisition of ownership, directly
      -----------------
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were not nominated in accordance with Bylaws of the
Borrower; or (c) the acquisition of direct or indirect control of the Borrower
by any Person or group.

     "Charges" shall mean all taxes, charges, fees, imposts, levies or other
      -------
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, Borrower or any
of its Affiliates.

     "Chattel Paper" shall have the meaning given to such term in the UCC.
      -------------

     "Closing Date" shall mean August 31, 2001, or such other date as may be
      ------------
agreed to by the parties hereto.

                                       6
<PAGE>

     "CoBank" shall have the meaning set forth in the Background, and shall
      ------
include its successors and assigns.

     "CoBank Letter of Credit" shall have the meaning set forth in the
      -----------------------
Background.

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time
      ----
to time and the regulations promulgated thereunder.

     "Collateral" shall mean and include all of Borrower's present and future
      ----------
assets and property whether now owned or hereafter acquired or arising,
including without limitation,

          (a)  Receivables;

          (b)  General Intangibles, which shall include, without limitation, all
Payment Intangibles, choses in action, causes of action, corporate or other
business records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, intellectual property, all claims under guaranties,
security interests or other security held by or granted to Borrower to secure
payment of any of the Receivables by a Customer, all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables);

          (c)  Inventory;

          (d)  Equipment;

          (e)  Real Property;

          (f)  Subsidiary Stock and Membership Interests;

          (g)  Leasehold Interests;

          (h)  right, title and interest in and to (i) its respective goods and
other property including, but not limited to, all merchandise returned or
rejected by Customers, relating to or securing any of the Receivables; (ii) all
of Borrower's rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to
Borrower from any Customer relating to the Receivables; (iv) other property,
including warranty claims, relating to any goods securing this Agreement; (v)
all of Borrower's contract rights, Letter-of-Credit Rights, rights of payment
which have been earned under a contract right, instruments, Documents, chattel
paper (including Electronic Chattel Paper (as defined in the UCC)), warehouse
receipts, Deposit Accounts, money, securities, patronage dividends, patronage
refunds, stock retirement payments, CoBank Class-E stock (but subject to
CoBank's priority statutory lien on such stock), retirement payment thereon and
proceeds thereof, and Investment Property; (vi) if and when obtained by
Borrower, all supporting obligations including real and personal property of
third parties in which Borrower has been granted a lien or security interest as
security for the payment or enforcement of

                                       7
<PAGE>

Receivables; and (vii) any Commercial Tort Claims, other goods, personal
property or real property now owned or hereafter acquired in which Borrower has
granted a security interest or may in the future grant a security interest to
Agent hereunder, or in any amendment or supplement hereto or thereto, or under
any other agreement between Agent and Borrower;

          (i)  ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by
Borrower or in which it has an interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), (d), (e), (f), (g), or (h) of this
Paragraph;

          (j)  Farm Products, including, without limitation, all poultry,
livestock, and fish and their young, together with all products and replacements
for such poultry, fish, and livestock, all crops, annual or perennial, and all
products of such crops, and all feed, seed, fertilizer, chemicals, medicines and
other supplies used or produced in Borrower's farming, agricultural or
aquacultural operations; and

          (k)  proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h),
(i) and (j) in whatever form, including, but not limited to: cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including, without limitation, hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.

     "Collateral Dispositions" shall have the meaning set forth in Section 2.14
      -----------------------
hereof.

     "Collateral Pledge Agreement" shall mean, collectively, that certain
      ---------------------------
Collateral Pledge Agreement from Borrower and that certain Collateral Pledge
Agreement from Southern States Holdings, Inc., each of even date herewith.

     "Commercial Tort Claims" shall have the meaning given to such term in the
      ----------------------
UCC.

     "Commitment Percentage" of any Lender shall mean the percentage set forth
      ---------------------
opposite such Lender's name on Schedule A attached hereto and made a part hereof
as same may be adjusted upon any assignment by a Lender pursuant to Section
15.3(b) hereof.

     "Commitment Transfer Supplement" shall mean a document in the form of
      ------------------------------
Exhibit 15.3 hereto, properly completed and otherwise in form and substance
------------
satisfactory to Agent by which the Purchasing Lender purchases and assumes all
or a portion of the obligation of the transferring Lender to make Advances under
this Agreement.

     "Consents" shall mean all filings and all licenses, permits, consents,
      --------
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on Borrower's
or any Guarantor's business, including, without limitation, any Consents
required under all applicable federal, state or other applicable law.

     "Consumer Wholesale Dealer Distribution" shall have the meaning given to
      --------------------------------------
such term in the Agway Agreements.

                                       8
<PAGE>

     "Contingent Obligations" means, with respect to any Person, all guarantees
      ----------------------
and other contingent obligations and liabilities of such Person, whether direct
or indirect (including, without limitation, agreements to "keep well" or
maintain the net worth or working capital of any other Person, to repurchase
accounts, receivables or other property, or otherwise to purchase any
obligation, stock, assets, goods or services, or otherwise ensure a creditor
against loss) with respect to any indebtedness or other obligation or liability
of any other Person, other than the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and recourse
obligations with respect to securitizations. For purposes of this Agreement
requiring a valuation of a Contingent Obligation, such Contingent Obligation, if
in the nature of a guarantee, repurchase obligation or other contingent
liability that can be measured by reference to an underlying financial
obligation, shall be considered to be valued at the maximum principal face or
notional amount of the obligations guaranteed or otherwise supported thereby,
and if any other type of Contingent Obligation, shall be valued in accordance
with the value assigned thereto by GAAP.

     "Contract Rate" shall mean, as applicable, the Revolving Interest Rate or
      -------------
the Term Loan Rate.

     "Controlled Group" shall mean all members of a controlled group of
      ----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414 of the Code.

     "Crop Plan Receivable Advance Rate" shall mean sixty-five percent (65%), as
      ---------------------------------
such Advance Rate may be increased or decreased from time to time in accordance
with the terms hereof.

     "Crop Plan Receivables" shall mean each Receivable of Borrower that arises
      ---------------------
pursuant to Borrower's Payment Plan 01 for Crop Accounts or Payment Plan 04 for
Crop Accounts, each such plan as in effect as of the date hereof.

     "Customer" shall mean and include the account debtor with respect to any
      --------
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.

     "Custodian Agreement" shall have the meaning set forth in Section 4.25
      -------------------
hereof.

     "Debt Basket" shall have the meaning set forth in Section 7.8 hereof.
      -----------

     "Default" shall mean the occurrence of an event which, with the giving of
      -------
notice or passage of time or both, would constitute an Event of Default.

     "Default Rate" shall have the meaning set forth in Section 3.1 hereof.
      ------------

     "Defaulting Lender" shall have the meaning set forth in Section 2.13(g)(i)
      -----------------
hereof.

     "Deposit Account" shall have the meaning given to such term in the UCC.
      ---------------

                                       9
<PAGE>

     "Deposit Account Control Agreement(s)" shall mean those certain Deposit
      ------------------------------------
Account Control Agreements entered into by and among Borrower, Agent and each of
the financial institutions relating to the Deposit Accounts identified on
Schedule 5.24 hereto.

     "Depository Accounts" shall have the meaning set forth in Section 4.15(h)
      -------------------
hereof.

     "Designated Lender" shall have the meaning set forth in Section 15.2
      -----------------
hereof.

     "Documents" shall have the meaning set forth in the Uniform Commercial
      ---------
Code.

     "Dollar" and the sign "$" shall mean lawful money of the United States of
      ------
America.

     "Domestic Lending Office" shall mean, as to each Lender, its office, branch
      -----------------------
or affiliate where such Lender or any corporation or bank controlling such
Lender makes or maintains any Base Rate Loans.

     "Earnings Before Interest and Taxes" shall mean for any period the sum of
      ----------------------------------
(i) net savings (or loss) of Borrower for such period (excluding extraordinary
gains) plus (ii) all GAAP interest expense of Borrower for such period, plus
       ----                                                             ----
(iii) all charges against income of Borrower for such period for federal, state
and local income taxes.

     "EBITDAR" shall mean for any period the sum of (i) Earnings Before Interest
and Taxes for such period plus (ii) depreciation expenses for such period, plus
                          ----                                             ----
(iii) amortization expenses for such period, plus (iv) Restructuring Charges,
                                             ----
plus (v) Bank Charges solely to the extent such Bank Charges are not included in
----
interest expense, plus (vi) the total of all non-cash debits to Borrower's
                  ----
balance sheet and income statement accounts as required under application of FAS
133, minus (vii) the total of all non-cash credits to the balance sheet and
     -----
income statement accounts required under application of FAS 133, plus (viii)
                                                                 ----
distributions on capital securities, plus (ix) Ernst & Young Restructuring
                                     ----
Charges, minus (x) non-cash patronage income, each as determined in accordance
         -----
with GAAP, on a trailing four quarter basis.

     "Eligible Assignee" shall mean (a) unless an Event of Default has occurred
      -----------------
and is continuing at the time any assignment is effected in accordance with
Section 15.3 (i) a Lender, (ii) a Person that is primarily engaged in the
business of commercial banking and that is (x) a Subsidiary of a Lender, (y) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (z) a Person of
which a Lender is a Subsidiary, and (iii) a financial institution organized
under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000, (iv) a commercial bank organized
under the laws of any other country which is a member of the Organization of
Economic Cooperation and Development, or a political subdivision of such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States, (v) any other entity which is an "accredited investor" (as
defined in Regulation D of the Securities Act of 1933, as amended) which extends
credit or buys loans as one of its businesses, including but not limited to,
insurance companies, mutual funds and lease financing companies (provided that
in any event, such Person is not a direct competitor of Borrower or holds a
controlling interest (i.e., the ability to directly or indirectly elect a
majority of the board of directors) of any direct competitor), and (b) if an
Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 15.3, any Person approved

                                      10
<PAGE>

by the Agent (which approval shall not be unreasonably withheld); provided,
                                                                  --------
however, that in no event shall the Borrower or an affiliate of the Borrower
-------
qualify as an Eligible Assignee.

         "Eligible Crop Plan Receivables" shall mean those Crop Plan Receivables
          ------------------------------
that meet all of the criteria of an Eligible Receivable.

         "Eligible Inventory" shall mean and include Inventory (excluding raw
          ------------------
materials and work in process), with respect to Borrower valued at the lower of
cost or market value, determined on a first-in-first-out basis (except in the
case of retail inventory, which shall be determined on an average cost basis),
which is not, in Agent's reasonable opinion, a product no longer actively sold
by Borrower, unmerchantable, obsolete, affected by shrinkage (due to perishable
items, animal damage, mold, water damage, or otherwise), slow moving, damaged,
packaging materials, pallets or covers, in-transit for which title has not
passed to Borrower or otherwise not at a location of Borrower listed on Schedule
                                                                        --------
4.5, or which constitutes a deposit for future delivery of inventory and which
---
Agent, in its sole reasonable discretion, shall not deem ineligible Inventory,
based on such considerations as Agent may from time to time deem appropriate
including, without limitation, whether the Inventory is subject to a perfected,
first priority security interest in favor of Agent and whether the Inventory
conforms to all standards imposed by any governmental agency, division or
department thereof which has regulatory authority over such goods or the use or
sale thereof.

         "Eligible Long Term Receivables" shall mean the Long Term Receivables
          ------------------------------
that meet all of the criteria of an Eligible Receivable.

         "Eligible Managed Coop Receivables" shall mean those Managed Coop
          ---------------------------------
Receivables that meet all of the criteria of an Eligible Receivable.

         "Eligible Receivables" shall mean and include with respect to Borrower,
each Receivable of Borrower arising in the ordinary course of Borrower's
business and which Agent, in its sole reasonable credit judgment, shall deem to
be an Eligible Receivable, based on such considerations as Agent may from time
to time deem appropriate. A Crop Plan Receivable, Trade Receivable, Long Term
Receivable and Managed Coop Receivable shall not be deemed eligible unless such
Receivable is subject to Agent's first priority perfected security interest and
no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent. Any portion of an
otherwise Eligible Receivable that is subject to reduction, including without
limitation, volume rebates to customers and offsets due to accounts payable,
shall not be an Eligible Receivable. In addition, no Crop Plan Receivable, Trade
Receivable, Long Term Receivable and Managed Coop Receivable shall be an
Eligible Receivable if:

               (a)  it arises out of a sale made by Borrower to an Affiliate
(other than a Managed Coop) of Borrower or to a Person controlled by an
Affiliate of Borrower (other than a Managed Coop);

               (b)  it is unpaid more than sixty (60) days after the original
due date or, solely with respect to Receivables arising from the Consumer
Wholesale Dealer Distribution business, unpaid more than ninety (90) days after
the invoice date;

                                      11
<PAGE>

               (c)  it is a note receivable arising from a Receivable unpaid
more than sixty (60) days after the original Receivable due date or, solely with
respect to Receivables arising from the Consumer Wholesale Dealer Distribution
business, unpaid more than ninety (90) days after the invoice date;

               (d)  fifty percent (50%) or more of the Receivables from a
Customer are not deemed Eligible Receivables hereunder;

               (e)  any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached or is untrue;

               (f)  the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws, (viii) take any action for the purpose of effecting any of
the foregoing, or (ix) become deceased;

               (g)  it arises out of a sale to a Customer outside the
continental United States of America;

               (h)  it arises out of a sale to the Customer on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper or an instrument
(unless Agent has a first priority, perfected security interest in such chattel
paper or instrument);

               (i)  Agent believes, in its sole reasonable judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;

               (j)  the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless Borrower
assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
                                                                         -- ---
and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
                             -- ---
applicable statutes or ordinances;

               (k)  the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by the Borrower and accepted by
the Customer or the Receivable otherwise does not represent a final sale;

               (l)  the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Receivable
exceeds such limit;

                                      12
<PAGE>

               (m)  the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of
Borrower or the Receivable is contingent in any respect or for any reason;

               (n)  the Borrower has made any agreement with any Customer for
any deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;

               (o)  shipment of the merchandise or the rendition of services has
not been completed;

               (p)  any return, rejection or repossession of the merchandise has
occurred or has been attempted;

               (q)  such Receivable is not payable to Borrower;

               (r)  such Receivable arises from non-trade activities;

               (s)  such Receivable is subject to a constructive trust or other
rights of third parties established pursuant to the Packers and Stockard Act,
Perishable Agricultural Commodities Act, Poultry Producers Protection Act, or
similar state or federal laws;

               (t)  the Receivable is a Wholesale Receivable; or

               (u)  such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.

         "Eligible Trade Receivable" shall mean all Trade Receivables that meet
          -------------------------
all of the criteria of an Eligible Receivable.

         "Environmental Complaint" shall have the meaning set forth in Section
          -----------------------
4.19(d) hereof.

         "Environmental Laws" shall mean all federal, state and local
          ------------------
environmental, land use, zoning, health, chemical use, safety and sanitation
laws (including common law), statutes, ordinances and codes relating to the
protection of the environment and/or governing the use, storage, treatment,
generation, ___ transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, standards, decisions, permits,
orders, directives and enforceable policies, guidelines and interpretations of
federal, state and local governmental agencies and authorities with respect
thereto, now in force or hereafter amended or adopted.

         "Equipment" shall mean and include all of Borrower's goods (other than
          ---------
Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, supplies,
accessories, imbedded software, and all replacements and substitutions therefor
or accessions thereto.

                                      13
<PAGE>

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

         "Ernst & Young Restructuring Charges" shall mean professional fees paid
          -----------------------------------
to Ernst & Young Corporate Finance directly relating to the restructuring
contemplated by this Agreement, solely to the extent such professional fees are
not included in Bank Charges, interest expenses or Restructuring Charges.

         "Euro-Dollar Lending Office" shall mean, as to each Lender, its office,
          --------------------------
branch or affiliate where such Lender or any corporation or bank controlling
such Lender makes or maintains any LIBOR Rate Loans.

         "Event of Default" shall mean the occurrence of any of the events set
          ----------------
forth in Article X hereof.

         "Excess Cash Flow" shall mean for any fiscal year, the sum of (a)
          ----------------
EBITDAR, plus (b) net cash proceeds from asset sales, plus (c) cash insurance
         ----                                         ----
proceeds, plus (d) proceeds of issuance of long-term debt (including AgriMoney
          ----
Notes), minus (e) any net cash proceeds from asset sales actually paid to Agent,
        -----
Lenders and Agway, minus (f) the cash payments related to asset write-downs and
                   -----
other expenses directly related to the closure or sale of locations or the sale
or liquidation of business units, minus (g) cash interest paid, minus (h) cash
                                  -----                         -----
patronage paid in an amount up to the amount permitted under Section 7.7 of this
Agreement, minus (i) capital expenditures in an amount up to $25,000,000, minus
           -----                                                          -----
(j) net cash taxes paid, minus (k) without duplication, cash dividends paid in
                         -----
an amount up to $1,000,000, minus (l) the amount of principal payments actually
                            -----
made on term debt other than short-term AgriMoney notes, minus (m) dividends
                                                         -----
paid on GoldKist Securities, minus (n) retirement of member equities and
                             -----
redemptions of capital stock in an amount up to $2,000,000, minus (o) the net
                                                            -----
change in working capital (excluding cash and equivalents, debt, tax-related
accounts and customer deposits), minus (p) net change in the total Revolving
                                 -----
Advances hereunder, minus (q) net change in the outstanding balance of Long Term
                    -----
Receivables, minus (r) net change in long-term investments, minus (s) gains or
             -----                                          -----
losses on the sales of assets to the extent already included in the calculation.

         "Existing Financing Agreements" shall have the meaning set forth in the
          -----------------------------
Background.

         "Existing Indebtedness" shall have the meaning set forth in Section
          ---------------------
2.17 hereof.

         "Existing L/C Collateral" shall have the meaning set forth in Section
          -----------------------
2.9 hereof.

         "Existing L/Cs" shall have the meaning set forth in Section 2.9 hereof.
          -------------

         "Expenses" shall have the meaning set forth in Section 15.9 hereof
          --------

         "Extension Agreements" shall have the meaning set forth in the
          --------------------
Background.

         "Extension Requirements" shall mean the payment by Borrower (a) as a
          ----------------------
permanent reduction in the Term Loan and/or the Maximum Revolver Amount, in
cash, of at least $73,000,000 in addition to the Required Scheduled Payments of
the Term Loan on or before September 30, 2002, such that Borrower shall have
repaid in cash a total of $158,000,000 that has been applied as permanent
reduction in the

                                      14
<PAGE>

Maximum Revolver Amount and/or the Term Loan and (b) as a prepayment under the
Agway Agreements in an amount equal to at least $2,000,000 as required by
Section 1 of the Letter Agreement between Borrower and Agway dated as of
September 14, 2001.

         "Facility Fee" shall mean a facility fee payable to Agent on behalf of
          ------------
Lenders (to be distributed to Lenders based on each Lender's Commitment
Percentage) based upon the Funded Debt to EBITDAR Ratio as of the end of the
fiscal quarter then most recently ended for which quarterly financial statements
have been delivered pursuant to Section 9.8:

             Funded Debt/ EBITDAR Ratio                  Facility Fee Multiplier

             Greater than 5.0:1                          50 basis points

             Greater than 4.5:1, less than or equal to   50 basis points
             5.0:1

             Greater than 4.0:1, less than or equal to   50 basis points
             4.5:1

             Greater than 3.5:1, less than or equal to   50 basis points
             4.0:1

             Less than or equal to 3.5:1                 37.5 basis points

         The Facility Fee shall be in an amount equal to the corresponding
Facility Fee Multiplier times the Maximum Revolver Amount in effect from time to
time during each month, provided that, to the extent the Maximum Revolver Amount
changes during any calendar month, the Facility Fee shall be calculated based on
the actual number of days each such Maximum Revolver Amount is in effect.

For purposes of the foregoing (i) the Funded Debt to EBITDAR Ratio shall be
determined as of the end of each fiscal quarter of Borrower based on Borrower's
financial statements delivered pursuant to Section 9.8 and (ii) each change in
the Facility Fee resulting from a change in the Funded Debt to EBITDAR Ratio
shall be effective during the period commencing on and including the date of
delivery to Agent of such financial statements indicating such change and ending
on the day immediately preceding the effective date of the next such change;
provided however that the Funded Debt to EBITDAR Ratio shall be deemed to be
greater than 5.0:1 if (A) Borrower fails to deliver the financial statements
required to be delivered by it pursuant to Section 9.8 during the period from
the expiration of the time for delivery thereof until such financial statements
are delivered or (B) an Event of Default (other than that caused by a failure to
deliver financial statements as described in clause (A) above) has occurred and
is continuing.

         "Farm Credit Participant" shall mean a Participant chartered under the
          -----------------------
Farm Credit Act of 1971, as amended.

         "Farm Products" shall have the meaning given to such term in the UCC.
          -------------

                                      15
<PAGE>

         "Federal Funds Rate" shall mean, for any day, the weighted average of
          ------------------
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.

         "Financing Services and Contributed Capital Agreement" shall mean the
          ----------------------------------------------------
Fourth Amended and Restated Financing Services and Contributed Capital Agreement
between Borrower and Statesman dated as of January 12, 1999, as amended,
restated, modified and replaced from time to time with the prior written consent
of Agent.

         "Formula Amount" shall have the meaning set forth in Section 2.1(a).
          --------------

         "Funded Debt" shall mean the sum of, as of the date of determination,
          -----------
without duplication, (a) all short-term indebtedness for borrowed money of
Borrower, plus (b) all long-term indebtedness for borrowed money of Borrower,
          ----
plus (c) all amounts outstanding under Permitted Securitizations (including, but
----
without duplication, such obligations as may be considered Contingent
Obligations), plus (d) the amounts of all Indebtedness on the balance sheet of
              ----
Statesman and/or any joint venture with John Deere (including, but without
duplication, such obligations as may be considered Contingent Obligations), plus
                                                                            ----
(e) all obligations with respect to AgriMoney Notes, plus (f) the outstanding
                                                     ----
amounts of all Letters of Credit other than Existing L/Cs and other Letters of
Credit that are issued to support other items of Funded Debt included in this
definition.

         "Funded Debt to EBITDAR Ratio" shall mean the ratio of Funded Debt to
          ----------------------------
EBITDAR.

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

         "General Intangibles" shall have the meaning set forth in the UCC and
          -------------------
as amplified by the definition of Collateral hereunder.

         "GoldKist Documents" shall mean, collectively, (i) the Amended and
          ------------------
Restated Trust Agreement among the Borrower, as depositor, First Union National
Bank, as property trustee, and the Administrative Trustee (as defined therein)
dated October 5, 1999; (ii) the Guarantee Agreement between Borrower, as
guarantor, and First Union National Bank, as guarantee trustee, dated October 5,
1999; (iii) the Junior Subordinated Indenture between the Borrower and First
Union National Bank, as trustee, dated October 5, 1999; and (iv) the Purchase
Agreement among the Borrower, Southern States Capital Trust I and Gold Kist
Inc., dated October 5, 1999.

         "GoldKist Security" shall mean Step-Up Rate Capital Securities, Series
          -----------------
A issued by Southern States Capital Trust I and Step-Up Rate Series B Cumulative
Redeemable Preferred Securities issued by Borrower.

                                      16
<PAGE>

         "Government Acts" shall have the meaning set forth in Section 2.11(e).
          ---------------

         "Governmental Body" shall mean any nation or government, any state or
          -----------------
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.

         "Guarantee" shall mean any guaranty of the obligations of Borrower
          ---------
executed by a Guarantor in favor of Agent for the ratable benefit of Lenders.

         "Guarantor"  shall mean (unless the Guarantee shall have been released
          ---------
in writing by Agent subject to the terms of Section 15.2(b)(ix) hereof)
Statesman Financial Corporation, Agriland Exchange, Inc., Southern States
Holdings, Inc., SSC Insurance Agency, Incorporated, Wetsel, Inc., Southern
States Underwriters, Incorporated, Southern States Ventures, L.C. and Virginia
Seed Service, Inc., Michigan Livestock Credit Corporation and any other Person
who may hereafter guarantee payment or performance of the whole or any part of
the Obligations, "Guarantors" means collectively any and/or all such Persons.
                  ----------

         "Hazardous Discharge" shall have the meaning set forth in Section
          -------------------
4.19(d) hereof.

         "Hazardous Substance" shall mean, without limitation, any flammable
          -------------------
materials, explosives, radon, radioactive materials, asbestos, lead based
paints, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum
and petroleum products, methane, hazardous or toxic substances, wastes, or other
similar materials as defined in or subject to regulation under CERCLA, the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et
                                                                             ---
seq.), RCRA, TSCA or any other applicable Environmental Law and in the
---
regulations adopted pursuant thereto, including but not limited to the laws of
the State of New York.

         "Indebtedness" of a Person at a particular date shall mean all
          ------------
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock, patrons' equity,
prepayment bonus credits, accrued expenses and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, all indebtedness secured by a Lien on assets owned
by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person and all Contingent Obligations. Any
indebtedness of such Person resulting from the acquisition by such Person of any
assets subject to any Lien shall be deemed, for the purposes hereof, to be the
equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred.

         "Instrument" shall have the meaning given to such term in the UCC.
          ----------

         "Intercreditor Agreement" shall have the meaning set forth in the
          -----------------------
Background.

                                      17
<PAGE>

         "Intercreditor and Agency Agreement" shall mean that certain
          ----------------------------------
Intercreditor and Agency Agreement among CoBank, ACB, as collateral agent,
Agway, Agent, Lenders, and Borrower entered into in connection herewith.

         "Interest Expense and Dividends" shall mean the sum of (a) gross
          ------------------------------
interest expense, plus (b) cash distributions on trust preferred securities and
                  ----
cash dividends on preferred and common stock, plus (c) Bank Charges not
                                              ----
otherwise included in interest expense plus Ernst & Young Restructuring Charges,
                                       ----
minus (d) without duplication and only in an amount up to an amount equal to
-----
Bank Charges not otherwise included in interest expense plus Ernst & Young
                                                        ----
Restructuring Charges, (i) for the trailing twelve months ended September 30,
2001, the amount of Bank Charges plus Ernst & Young Restructuring Charges in
                                 ----
excess of $3,300,000, (ii) for the trailing twelve months ended December 31,
2001, the amount of Bank Charges plus Ernst & Young Restructuring Charges in
                                 ----
excess of $5,500,000, (iii) for the trailing twelve months ended March 31, 2002,
the amount of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                           ----
$6,900,000, (iv) for the trailing twelve months ended June 30, 2002, the amount
of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                ----
$7,600,000, (v) for the trailing twelve months ended September 30, 2002, the
amount of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                       ----
$8,700,000, (vi) for the trailing twelve months ended December 31, 2002, the
amount of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                       ----
$8,700,000, (vii) for the trailing twelve months ended March 31, 2003, the
amount of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                       ----
$7,600,000, or (viii) for the trailing twelve months ended June 30, 2003, the
amount of Bank Charges plus Ernst & Young Restructuring Charges in excess of
                       ----
$5,400,000.

         "Interest Hedging Instrument" shall mean any documentation evidencing
          ---------------------------
any interest rate swap, interest "cap" or "collar" or any other interest rate
hedging device or swap agreement (as defined in 11 U.S.C. ss.101) between
Borrower and Agent or any Lender (or any Affiliate of a Lender). All such
Interest Hedging Instruments, existing as of the date hereof, along with, for
each Interest Hedging Instrument, a description of the applicable methodologies
for marking to market, are listed on Schedule 1.2(a) attached hereto and made a
                                     ---------------
part hereof.

         "Interest Period" shall mean the period provided for any LIBOR Rate
          ---------------
Loan pursuant to Section 2.2(b).

         "Inventory" shall mean and include as to Borrower all of such
          ---------
Borrower's now owned or hereafter acquired goods, merchandise, grain, petroleum,
fertilizer and other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower's business
or used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other Loan Documents representing them.

         "Inventory Advance Rate" shall have the meaning set forth in Section
          ----------------------
2.1(a)(ii)(B) hereof.

         "Investment Property" shall have the meaning given to such term in the
          -------------------
UCC.

                                      18
<PAGE>

         "Issuing Bank" shall mean any Lender that issues, has outstanding any
          ------------
issued, or causes to be issued, Existing L/Cs or any Letter of Credit for the
account of Borrower in accordance with this Agreement.

         "John Deere" shall mean Deere Credit, Inc. or an Affiliate of Deere
          ----------
Credit, Inc. created for the purpose of entering into a joint venture
transaction with, either directly or indirectly through a wholly owned
subsidiary of, Borrower.

         "L/C Sublimit" shall mean $15,000,000.
          ------------

         "Leasehold Interests" shall mean all of Borrower's right, title and
          -------------------
interest in and to the premises located at 6606 West Broad Street, Richmond,
Virginia 23230.

         "Lender" and "Lenders" shall have the meaning ascribed to such term in
          --------------------
the preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.

         "Letters of Credit" shall have the meaning set forth in Section 2.9.
          -----------------

         "Letter of Credit Fees" shall have the meaning set forth in Section
          ---------------------
3.2.

         "Letter-of-Credit Rights" shall have the meaning given to such term in
          -----------------------
the UCC.

         "Letter of Credit Supplement" shall have the meaning set forth in the
          ---------------------------
Background.

         "LIBOR Based Rate" shall mean a rate for deposits in Dollars, with
          ----------------
maturities comparable to the selected Interest Period, that appears on the
display designated as page "3750" of the Telerate Service (or such other page as
may replace page 3750 of the service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for Dollars deposits), determined as of 1:00 p.m.
(New York time), two (2) Business Days prior to the commencement of such
Interest Period.

         "LIBOR Rate Loan" shall mean an Advance at any time that bears interest
          ---------------
based on the LIBOR Rate.

         "LIBOR Rate" shall mean for any LIBOR Rate Loan for the then current
          ----------
Interest Period relating thereto the interest rate per annum determined by Agent
by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the LIBOR Based Rate by (ii) a number equal
to 1.00 minus the Reserve Percentage.

         "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
          ----
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.

                                      19
<PAGE>

         "Loan Documents" shall mean this Agreement, the Mortgages, the Notes,
          --------------
the Amended and Restated Trademark Security Agreement, the Collateral Pledge
Agreement, the Custodian Agreement, the Deposit Account Control Agreements, the
Guarantees, environmental indemnity agreement, Intercreditor and Agency
Agreement, and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed by
Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of
the transactions contemplated by this Agreement, all as may be amended,
restated, replaced, modified or substituted from time to time.

         "Long Term AgriMoney" shall have the meaning set forth in Section 7.8
          -------------------
below.

         "Long Term Receivable Advance Rate" shall mean 30%, as such Advance
          ---------------------------------
Rate may be increased or decreased from time to time in accordance with the
terms hereof.

         "Long Term Receivable" shall mean each Receivable of Borrower which has
          --------------------
a final maturity date which is more than twelve months after the date such
Receivable arises.

         "Long Term Receivable Sublimit" shall mean Three Million Five Hundred
          -----------------------------
Thousand Dollars ($3,500,000).

         "Managed Coop" shall mean agricultural cooperatives as set forth on
          ------------
Schedule 1.2(b) hereto for which the Borrower performs various financial,
management and accounting services under a Managed Cooperative Agreement.

         "Managed Coop Advance Rate" shall mean fifty percent (50%), as such
          -------------------------
Advance Rate may be increased or decreased from time to time in accordance with
the terms hereof.

         "Managed Cooperative Agreement" shall mean an agreement between
          -----------------------------
Borrower and a Managed Coop, which is substantially identical in substance to
the form of Managed Cooperative Agreement attached hereto as Exhibit 1.2, except
with respect Orange-Madison Cooperative, Inc., for which a different form is in
place (and a copy of which has been delivered to Agent).

         "Managed Coop Receivable" shall mean each Receivable of Borrower that
          -----------------------
arises pursuant to a Managed Cooperative Agreement.

         "Material Adverse Effect" shall mean a material adverse effect on (a)
          -----------------------
the condition, operations, assets, business or prospects of the applicable
Person or Persons, (b) Borrower's ability to pay the Obligations in accordance
with the terms thereof or the ability of (i) Statesman, (ii) MLCC, (iii)
Southern States Holdings, Inc. (iv) Wetsel, Inc. or (v) the other Guarantors
taken as a whole, to perform their respective obligations under the Guarantee to
which it is a party (provided that a merger of MLCC into Statesman in and of
itself shall not constitute a Material Adverse Effect), (c) the value of the
Collateral taken as a whole, or Agent's Liens on the Collateral or the priority
of any such Lien or (d) the practical realization of the benefits of Agent's and
each Lender's rights and remedies under this Agreement and the Loan Documents.

                                      20
<PAGE>

         "Maturity Date" shall mean February 15, 2003; provided however, that so
          -------------
long as no Event of Default has occurred and is continuing, upon satisfaction of
the Extension Requirements, the Maturity Date shall be extended through August
15, 2003.

         "Maximum Credit Limit" shall mean an amount equal to (a) the lesser of
          --------------------
(i) the Maximum Revolver Amount, and (ii) the Formula Amount, plus (b)
                                                              ----
$200,000,000 (the initial principal amount of Term Loan), minus (c) all
                                                          -----
principal payments actually received and, without duplication, all scheduled
principal payments to have been made under the Term Loan, through the date of
determination.

         "Maximum Revolver Amount" shall mean $225,000,000 except during the
          -----------------------
Seasonal Overline Period and $270,000,000 during the Seasonal Overline Period,
as such amount may be reduced from time to time in accordance with the terms
hereof.

         "MLA Loan Documents" shall have the meaning set forth in the
          ------------------
Background.

         "MLCC" shall mean Michigan Livestock Credit Corporation, a Virginia
          ----
corporation with its principal place of business at 6606 West Broad Street,
Richmond, Virginia 23230.

         "MLCC Indebtedness" shall mean all liabilities and obligations of MLCC
          -----------------
to the MLCC Lenders under the MLCC Loan Documents.

         "MLCC Lenders" shall mean, collectively, (i) CoBank, Bank of America,
          ------------
N.A., First Union National Bank, SunTrust Bank, Wachovia Bank, N.A., each in
their capacity as Banks under that certain Revolving Credit Agreement dated as
of November 6, 1998 among MLCC, Agent (as defined therein) and Banks (as defined
therein), as it has been amended and modified from time to time ("MLCC Loan
Documents").

         "Monthly Advances" shall have the meaning set forth in Section 3.1
          ----------------
hereof.

         "Mortgages" shall mean collectively the mortgages and deeds of trust on
          ---------
the Real Property and Leasehold Interests securing all or any part of the
Obligations together with all extensions, renewals, amendments, supplements,
modifications, restatements, substitutions and replacements thereto and thereof.

         "Multiemployer Plan" shall mean a "multiemployer plan" as defined in
          ------------------
Sections 3(37) and 4001(a)(3) of ERISA.

         "NOAA" shall mean the National Oceanic and Atmospheric Administration.
          ----

         "NOAA Loan Agreement" shall mean the Approval and Agreement Letter
          -------------------
dated September 7, 2000 and all notes, assignments, security agreements and
other documents issued in connection therewith or entered into thereunder.

         "Non-Defaulting Lenders" shall have the meaning set forth in Section
          ----------------------
2.13(g) hereof.

                                      21
<PAGE>

         "Notes" shall mean collectively, the Term Notes, the Revolving Credit
          -----
Notes and the Swing Line Note.

         "Obligations" shall mean and include any and all Indebtedness and
          -----------
liabilities of Borrower to Agent or Lenders or any corporation that directly or
indirectly controls or is controlled by or is under common control with Agent or
any Lender, of every kind, nature and description, direct or indirect, secured
or unsecured, joint, several, joint and several, absolute or contingent, due or
to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, in connection with, or related to, this Agreement
and/or any of the other Loan Documents, regardless of how such indebtedness or
liabilities arise or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument, any Swap Obligations, and all
obligations of Borrower to Agent and/or Lenders to perform acts or refrain from
taking any action associated with the foregoing, but excluding any obligations
and liabilities of Borrower under the Wachovia Securitization.

         "Origination Fee" shall have the meaning set forth in Section 3.3(a)
          ---------------
hereof.

         "Other Taxes" shall have the meaning set forth in Section 3.4(b)
          -----------
hereof.

         "Overnight Advance" shall have the meaning set forth in Section 2.1(c)
          -----------------
hereof.

         "Overnight Advance Request" shall have the meaning set forth in Section
          -------------------------
2.1(c) hereof.

         "Overnight Funding Commitment" shall mean $15,000,000.
          ----------------------------

         "Overnight Lender" shall mean CoBank.
          ----------------

         "Overnight Maturity Date" shall have the meaning set forth in Section
          -----------------------
2.1(c) hereof.

         "Overnight Rate" shall have the meaning set forth in Section 2.1(c)
          --------------
hereof.

         "Parent" of any Person shall mean a corporation or other entity owning,
          ------
directly or indirectly at least 50% of the shares of stock or other ownership
interests having ordinary voting power to elect a majority of the directors of
the Person, or other Persons performing similar functions for any such Person.

         "Participant" shall mean each Person who shall be granted the right by
          -----------
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender and
pursuant to Section 15.3(b).

         "Payment Intangibles" shall have the meaning given to such term in the
          -------------------
UCC.

         "Payment Office" shall mean initially 5500 S. Quebec Street, Greenwood
          --------------
Village, Colorado 80111-1913; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrower and to each Lender to be the
Payment Office.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation.
          ----

                                      22
<PAGE>

         "Permitted Encumbrances" shall mean (a) Liens in favor of (i)
          ----------------------
Collateral Agent (as defined in the Intercreditor and Agency Agreement), (ii)
Agent for the benefit of itself and Lenders, and (iii) Agway; (b) Liens for
taxes, assessments or other governmental charges not delinquent or being
contested in good faith and by appropriate proceedings and with respect to which
proper reserves have been established by Borrower (the amount of such Liens not
to exceed $100,000 individually and $1,000,000 in the aggregate); provided,
                                                                  --------
that, except with respect to Liens on real estate, the Lien shall have no effect
----
on the priority of the Liens in favor of Agent or the value of the assets in
which Agent has such a Lien; (c) Liens disclosed on Schedule 1.2(c) hereto; (d)
                                                    ---------------
deposits or pledges to secure obligations under worker's compensation, social
security or similar laws, or under unemployment insurance; (e) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), statutory obligations, surety and appeal bonds and other obligations
of like nature arising in the ordinary course of Borrower's business; (f)
judgment Liens that do not constitute an Event of Default and have been stayed
or bonded pending appeal, and mechanic's, materialmen's, landlord,
warehouseman's, carrier's or other like Liens arising in the ordinary course of
Borrower's business with respect to obligations which are not past due for more
than 30 days or which are being contested in good faith by Borrower; (g) Liens
placed upon Equipment hereafter acquired to secure all or a portion of the
purchase price thereof, provided that (i) any such lien shall not encumber any
other property of the Borrower and (ii) the aggregate amount of Indebtedness
secured by such Liens incurred as a result of such purchases during any fiscal
year shall not exceed, when combined, without duplication, with capital
expenditures incurred during the corresponding fiscal year, the amount provided
for in Section 7.6, provided that the total of such purchase money Indebtedness
shall not exceed $10,000,000 in any such fiscal year; (h) easements,
right-of-ways, restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use, and enjoyment
by Borrower of the property or assets encumbered thereby, (i) liens granted
pursuant to the requirements of a Permitted Securitization Transaction, (j) the
CoBank lien on CoBank Class-E Stock held by the Borrower, (k) liens granted
pursuant to the NOAA Loan Agreement on the notes evidencing loans to Customers
and other Persons which were used for the construction of aquaculture grow out
facilities and liens on specific fingerling facilities and processing plants
existing as of the date hereof and set forth on Schedule 1.2(c) in connection
                                                ---------------
with the financing of such facilities and plants by NOAA, (l) liens on the
assets of Silver Lake Cotton Gin in conjunction with its existing credit
facility, (m) liens existing on assets acquired or taken by Borrower as payment
on, or in satisfaction of, obligations owing to it (subject to commercially
reasonable standards in acceptance of such property in payment or satisfaction
of debt) and (n) other liens securing amounts owing under the Debt Basket in an
amount not to exceed $1,000,000; provided however, that any Collateral subject
to a Permitted Encumbrance other than as set forth in clause (a) above, shall
not be "Eligible" in the calculation of the Formula Amount.

         "Permitted Securitization Transaction" shall mean the Wachovia
          ------------------------------------
Securitization or a replacement securitization facility for an amount not to
exceed $40,000,000 and on terms not less favorable to the Borrower than those of
the Wachovia Securitization.

         "Person" shall mean Borrower, any Guarantor or any individual, sole
          ------
proprietorship, partnership, corporation, business trust, joint stock company,
trust, unincorporated organization, association, limited liability company,
limited liability partnership, institution, public benefit corporation, joint
venture,

                                      23
<PAGE>

cooperative organization, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division, agency,
body or department thereof).

         "Plan" shall mean any employee benefit plan within the meaning of
          ----
Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

         "Pro Forma Balance Sheet" shall have the meaning set forth in Section
          -----------------------
5.5(a) hereof.

         "Pro Forma Financial Statements" shall have the meaning set forth in
          ------------------------------
Section 5.5(b) hereof.

         "Projections" shall have the meaning set forth in Section 5.5(b)
          -----------
hereof.

         "Purchasing Lender" shall have the meaning set forth in Section 15.3(c)
          -----------------
hereof.

         "RCRA" shall mean the Resource Conservation and Recovery Act, 42
          ----
U.S.C. (S)6901 et seq., as same may be amended from time to time.

         "Real Property" shall mean all of Borrower's right, title and interest
          -------------
in and to the owned and leased premises identified on Schedule 4.19 hereto and
                                                      -------------
any other owned and leased premises hereafter acquired, used or occupied by
Borrower.

         "Receivables" shall mean collectively, all Accounts, notes receivable,
          -----------
contract rights, Chattel Paper, Payment Intangibles, drafts and acceptances,
Documents (including documents of title), Instruments (including those
evidencing indebtedness owed to Borrower by its Affiliates), letters of credit,
and all other forms of obligations owing to Borrower including, without
limitation obligations arising out of or in connection with the sale or lease of
Inventory or the rendition of services, all guarantees and other supporting
obligations and security thereof and therefor, all whether now existing or
hereafter created or arising, including, without limitation, Receivables
acquired from Statesman and/or MLCC.

         "Receivables Advance Rate" shall mean collectively, and individually as
          ------------------------
applicable, the Crop Plan Receivable Advance Rate, Trade Receivable Advance
Rate, Long Term Receivable Advance Rate and the Managed Coop Advance Rate.

         "Register" shall have the meaning set forth in Section 15.3 hereof.
          --------

         "Related Security" shall mean with respect to any Wholesale Receivable,
          ----------------
all of the Borrower's right, title and interest in and to: (a) all contracts
that relate to such Wholesale Receivable; (b) all merchandise (including
returned merchandise), if any, relating to the sale which gave rise to such
Wholesale Receivable; (c) all security deposits and other security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Wholesale Receivable, whether pursuant to the contract related
to such Wholesale Receivable or otherwise; (d) all UCC financing statements
covering any collateral securing payment of such Wholesale Receivable; (e) all
guarantees and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Wholesale Receivable

                                      24
<PAGE>

whether pursuant to the contract related to such Wholesale Receivable or
otherwise; (f) all insurance policies, and all claims thereunder, related to
such Wholesale Receivable, in each case to the extent directly related to rights
to payment, collection and enforcement, and other rights with respect to such
Wholesale Receivable; (g) all monies due or to become due with respect to the
foregoing whether now existing or hereafter acquired, (h) all books and records
related to any of the foregoing; (i) all lockbox accounts and all related
agreements between the borrower and the lockbox banks, in each case to the
extent constituting or representing items described in clause (j) below; (j) all
collections in respect of, and other proceeds (as defined in the UCC) of,
Wholesale Receivables or any other of the foregoing including, without
limitation, all funds which either are received by the Borrower, Southern States
Receivables Corp. or Statesman, as servicer, from or on behalf of the obligors
in payment of any amounts owed (including, without limitation, finance charges,
interest and all other charges) in respect of Wholesale Receivables, or are
applied to such amounts owed by the obligors (including without limitation,
insurance payments, if any, that the Borrower or Statesman applies in the
ordinary course of its business to amounts owed in respect of any Wholesale
Receivable and net proceeds of sale or other disposition of repossessed goods or
other collateral or property of the obligors or any other party directly or
indirectly liable for payment of such Wholesale Receivable and available to be
applied thereon).

         "Releases" shall mean to release, spill, discharge, leak or dispose.
          --------

         "Reportable Event" shall mean a reportable event described in Section
          ----------------
4043(b) of ERISA or the regulations promulgated thereunder.

         "Required Lenders" shall mean Lenders holding at least sixty-six and
          ----------------
two thirds percent (66 2/3%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding sixty-six and two thirds percent (66
2/3%) of the Commitment Percentages; provided however, that (i) if there are
only three Lenders, and (ii) Agent in its capacity as a Lender holds at least 66
2/3% of the Advances, or if no Advances are outstanding, 66 2/3% of the
Commitment Percentages, then one additional Lender, other than Agent in its
capacity as Lender, shall be required to constitute Required Lenders.

         "Reserve Percentage" shall mean the maximum effective percentage in
          ------------------
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding.

         "Restructuring Charges" shall mean charges related to asset write-downs
          ---------------------
and other expenses directly related to the closure or sale of locations or the
sale or liquidation of business units. To the extent these Restructuring Charges
are incurred after the Closing Date, such Restructuring Charges shall not exceed
$5,000,000 in cash payments and $35,000,000 in total charges (including cash
payments).

         "Restructuring Plan" shall mean disposition of assets relating to the
          ------------------
closing of facilities, the disposition of which has been approved by Lenders
prior to the date hereof or pursuant to Section 4.3 hereof and such asset
dispositions that may be approved by Lenders hereafter.

         "Revised Article 9" shall have the meaning set forth in Section 4.22
          -----------------
hereof.

                                      25
<PAGE>

         "Revolver Applicable Margin" shall mean the spread over the LIBOR Rate
          --------------------------
or the Alternate Base Rate (as applicable), based upon the Funded Debt to
EBITDAR Ratio, as of the end of the fiscal quarter then most recently ended for
which quarterly financial statements have been delivered pursuant to Section
9.8:

<TABLE>
               Funded Debt/ EBITDAR Ratio                   LIBOR              Alternate Base
                                                                               Rate
<S>                                                         <C>                <C>
               Greater than 5.0:1                           325 basis points   200 basis points

               Greater than 4.5:1, less than or equal to    300 basis points   175 basis points
               5.0:1

               Greater than 4.0:1, less than or equal to    275 basis points   150 basis points
               4.5:1

               Greater than 3.5:1, less than or equal to    250 basis points   100 basis points
               4.0:1

               Less than or equal to 3.5:1                  225 basis points   50 basis points
</TABLE>

         For purposes of the foregoing (i) the Funded Debt to EBITDAR Ratio
shall be determined as of the end of each fiscal quarter of Borrower based on
Borrower's financial statements delivered pursuant to Section 9.8 and (ii) each
change in the Revolver Applicable Margin resulting from a change in the Funded
Debt to EBITDAR Ratio shall be effective during the period commencing on and
including the date of delivery to Agent of such financial statements indicating
such change and ending on the day immediately preceding the effective date of
the next such change; provided however that the Funded Debt to EBITDAR Ratio
shall be deemed to be greater than 5.0:1 if Borrower fails to deliver the
financial statements required to be delivered by it pursuant to Section 9.8
during the period from the expiration of the time for delivery thereof until
such financial statements are delivered; provided that upon satisfaction of the
Extension Requirements, the applicable Revolver Applicable Margin levels shall
be reduced by 50 basis points.

         "Revolving Advances" shall mean Advances made other than Letters of
          ------------------
Credit and the Term Loan.

         "Revolving Credit Notes" shall mean, collectively, the promissory notes
          ----------------------
referred to in Section 2.1(a) hereof.

         "Revolving Interest Rate" shall mean the LIBOR Rate or the Alternate
          -----------------------
Base Rate (as applicable) plus the corresponding Revolver Applicable Margin.

         "Scheduled Term Reduction" shall have the meaning set forth in Section
          ------------------------
2.6(d) hereof.

         "Seasonal Overline Block" shall have the meaning set forth in the
          -----------------------
definition of "Seasonal Overline Period".

                                      26
<PAGE>

         "Seasonal Overline Period" shall mean a period of 210 days during any
          ------------------------
fiscal year, provided that the Seasonal Overline Period must be comprised of one
90 consecutive day block and one 120 consecutive day block (each a "Seasonal
Overline Block"). Borrower shall notify Agent at least 15 days before the
beginning of any such period that the next 90 or 120 (as applicable) days will
be a Seasonal Overline Block; provided that if the first Seasonal Overline Block
is for 90 days, then Borrower may continue that Seasonal Overline Block for an
additional 30 days upon 15 days notice prior to the expiration of such Seasonal
Overline Block and the second Seasonal Overline Block will thus be only 90 days;
provided further that each Seasonal Overline Block must be separated by a period
of at least 30 consecutive days; provided further that, Borrower may request on
the Closing Date a Seasonal Overline Block to begin on the Closing Date.

         "Security Agreement" shall have the meaning set forth in the
          ------------------
Background.

         "Settlement Date" shall mean the Closing Date and thereafter Wednesday
          ---------------
of each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.

         "Statesman" shall mean Statesman Financial Corporation, a Virginia
          ---------
corporation, with its principal place of business at 6606 West Broad Street,
Richmond, Virginia 23230.

         "Statesman Indebtedness" shall mean all liabilities and obligations of
          ----------------------
Statesman to the Statesman Lenders under the Statesman Loan Documents.

         "Statesman Lenders" shall mean, collectively, (i) CoBank, Bank of
          -----------------
America, N.A., First Union National Bank, SunTrust Bank, Wachovia Bank, N.A.,
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
York Branch, DG Bank Deutsche Genossenschaftsbank AG Cayman Islands Branch, and
Allfirst Bank, each in their capacity as Banks under that certain Revolving
Credit Agreement dated as of January 12, 1999, among Statesman, Agent (as
defined therein) and Banks (as defined therein), as it has been amended and
modified from time to time, (ii) CoBank as party to that certain Master Loan
Agreement dated as of Nov. 1, 1996 and that certain Multiple Advance Term Loan
Supplement dated as of Nov. 1, 1996 each between CoBank and Statesman, as each
has been amended and modified from time to time, and (iii) Wachovia as party to
that certain Credit Agreement dated as of April 8, 1999 between Wachovia and
Statesman, as it has been amended and modified from time to time (collectively,
the "Statesman Loan Documents").

         "Subordinated Debt" shall mean any Indebtedness that by its terms, or
          -----------------
by agreement, is subordinated in right of payment to the Obligations on terms
satisfactory to Agent and Required Lenders.

         "Subsidiary" shall mean a corporation or other entity of whose shares
          ----------
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

         "Subsidiary Stock and Membership Interests" shall mean all of the
          -----------------------------------------
issued and outstanding shares of stock, membership or other interests owned by
Borrower of Statesman, Virginia Seed Service, Inc., a

                                      27
<PAGE>

Virginia corporation, Southern States Underwriters, Incorporated, a Virginia
corporation, Southern States Holdings, Inc., a Virginia corporation, Wetsel,
Inc., a Virginia corporation, SSC Insurance Agency, Incorporated, a Virginia
corporation, and Agriland Exchange, Inc., a Michigan corporation, Southern
States Receivables Corp., a Virginia corporation, Southern States Insurance
Exchange, a Virginia insurance reciprocal and Southern States Ventures, L.C., a
Virginia limited liability company, Cooperative Milling, Inc. a Pennsylvania
corporation, Equine Specialty Feed Company, LLC, a Virginia company,
Southerngate Terminal, LLC, a North Carolina limited liability company, Allied
Seed, LLC, a Wyoming limited liability company, CF Industries, Inc., a Delaware
corporation, Cooperative Seeds, Inc., an Indiana corporation, FFR Cooperative,
Inc., a Wisconsin corporation, Premium Beef Systems, LLC, a Virginia limited
liability company, Pro-Pet, LLC, a Delaware limited liability company, Silver
Lake Growers Gin, LLC, a North Carolina limited liability company, Universal
Cooperative Inc., a Minnesota corporation and any future Subsidiary.

         "SunTrust" shall have the meaning set forth in the Background.
          --------

         "SunTrust Note" shall have the meaning set forth in the Background.
          -------------

         "SunTrust Line of Credit Documents" shall have the meaning set forth in
          ---------------------------------
the Background.

         "SunTrust Loan Documents" shall have the meaning set forth in the
          -----------------------
Background.

         "SunTrust Reimbursement Agreement" shall have the meaning set forth in
          --------------------------------
the Background.

         "SunTrust Reimbursement Documents" shall have the meaning set forth in
          --------------------------------
the Background.

         "Swap Obligations" shall mean all existing and future debts,
          ----------------
liabilities and obligations of every kind and nature arising under or in
connection with any Interest Hedging Instrument, including, without limitation,
any debts, liabilities or obligations arising in connection with termination of
an Interest Hedging Instrument.

         "Swing Line Note" shall have the meaning set forth in Section 2.1(c).
          ---------------

         "Syndicated Loan Agreement" shall have the meaning set forth in the
          -------------------------
Background.

         "Syndicated Loan Documents" shall have the meaning set forth in the
          -------------------------
Background.

         "Taxes" shall have the meaning set forth in Section 3.4(a) hereof.
          -----

         "Term" shall have the meaning set forth in Section 13.1 hereof.
          ----

         "Term Applicable Margin" shall mean the spread over the LIBOR Rate or
          ----------------------
the Alternate Base Rate (as applicable), based upon the Funded Debt to EBITDAR
Ratio, as of the end of the fiscal quarter then most recently ended for which
quarterly financial statements have been delivered pursuant to Section 9.8:

               Funded Debt/EBITDAR Ratio        LIBOR        Alternate Base Rate

                                      28
<PAGE>

<TABLE>
<S>                                                              <C>                  <C>
               Greater than 5.0:1                                375 basis points     250 basis points

               Greater than 4.5:1, less than or equal to         350 basis points     225 basis points
               5.0:1

               Greater than 4.0:1, less than or equal to         325 basis points     200 basis points
               4.5:1

               Greater than 3.5:1, less than or equal to         300 basis points     150 basis points
               4.0:1

               Less than or equal to 3.5:1                       275 basis points     100 basis points
</TABLE>

         For purposes of the foregoing (i) the Funded Debt to EBITDAR Ratio
shall be determined as of the end of each fiscal quarter of Borrower based on
Borrower's financial statements delivered pursuant to Section 9.8 and (ii) each
change in the Term Applicable Margin resulting from a change in the Funded Debt
to EBITDAR Ratio shall be effective during the period commencing on and
including the date of delivery to Agent of such financial statements indicating
such change and ending on the day immediately preceding the effective date of
the next such change; provided however that the Funded Debt to EBITDAR Ratio
shall be deemed to be greater than 5.0:1 if Borrower fails to deliver the
financial statements required to be delivered by it pursuant to Section 9.8
during the period from the expiration of the time for delivery thereof until
such financial statements are delivered; provided that upon satisfaction of the
Extension Requirements, the applicable Term Applicable Margin levels shall be
reduced by 50 basis points.

         "Term Loan" shall have the meaning set forth in Section 2.4 hereof.
          ---------

         "Term Loan Rate" shall mean the LIBOR Rate or Alternate Base Rate (as
          --------------
applicable) plus the Term Applicable Margin.

         "Term Notes" shall mean, collectively, the promissory notes described
          ----------
in Section 2.4 hereof.

         "Termination Event" shall mean (a) a Reportable Event with respect to
          -----------------
any Plan or Multiemployer Plan; (b) the withdrawal of Borrower or any member of
the Controlled Group from a Plan or Multiemployer Plan during a plan year in
which such entity was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (c) the providing of notice of intent to terminate a Plan in a
distress termination described in Section 4041(c) of ERISA; (d) the institution
by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (e) any
event or condition (i) which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (f) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower or any member of the Controlled Group from a Multiemployer Plan.

         "Tolling Agreement" shall have the meaning set forth in the Background
          -----------------
hereof.

                                      29
<PAGE>

         "Trade Receivables" shall mean, collectively, Receivables of Borrower
          -----------------
that arise from the sale of goods and/or the providing of services in the
ordinary course of Borrower's business and Receivables of Statesman that were
sold to Borrower in conjunction with the debt restructuring of Borrower
contemplated hereby.

         "Trade Receivable Advance Rate" shall mean eighty percent (80%), as
          -----------------------------
such Advance Rate may be increased or decreased from time to time in accordance
with the terms hereof.

         "Transferee" shall have the meaning set forth in Section 15.3(b)
          ----------
hereof.

         "TSCA" shall mean the Toxic Substances Control Act, 15 U.S.C.ss.2601 et
          ----
seq., as amended.

         "Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
          -----------------------      ---
Code as adopted and in effect in the State of New York from time to time.

         "Wachovia" shall have the meaning set forth in the Background.
          --------

         "Wachovia Loan Documents" shall have the meaning set forth in the
          -----------------------
Background.

         "Wachovia Purchase Agreement" shall mean the Receivables Purchase
          ---------------------------
Agreement dated as of November 22, 2000, as amended, supplemented, restated or
otherwise modified, from time to time, among Southern States Receivables Corp.
as seller and Statesman Financial Corporation as servicer and the Borrower as a
seller party, Blue Ridge Asset Funding Corporation as purchaser and Wachovia
Bank, N.A. as administrative agent

         "Wachovia Reimbursement Agreement" shall have the meaning set forth in
          --------------------------------
the Background.

         "Wachovia Securitization" shall mean the sale of Wholesale Receivables
          -----------------------
and the sale of Related Security by Borrower to Southern States Receivables
Corp. pursuant to the Purchase and Sale Agreement dated as of November 22, 2000
between the sellers named therein and Southern States Receivables Corp. and the
sale of an undivided percentage ownership interest in the Wholesale Receivables
by Southern States Receivables Corp. to Blue Ridge Asset Funding Corporation
pursuant to the Wachovia Purchase Agreement, each as amended from time to time.

         "Week" shall mean the time period commencing with the opening of
          ----
business on a Wednesday and ending on the end of business the following Tuesday.

         "Wholesale Receivables" shall mean any Receivable owing from a Person,
          ---------------------
whether constituting an account, chattel paper, instrument or general
intangible, including the right to payment of any interest or finance charges
and other amounts with respect thereto, and arising from the sale of goods or
services by the Feed, Fertilizer, Petroleum and Farm and Home business units of
the Southern States Wholesale Division but excluding accounts, chattel paper,
instruments or general intangibles arising from the sale of goods or services
within the Consumer Wholesale Dealer Distribution business of Agway (as defined
in the Agway Agreements).

                                      30
<PAGE>

     1.3   Uniform Commercial Code Terms. It is the specific intent of Borrower,
           -----------------------------
Agent and Lenders that references to terms defined in the Uniform Commercial
Code shall have the definitions set forth in the Uniform Commercial Code as the
Uniform Commercial Code is in effect from time to time in the State of New York.

     1.4   Certain Matters of Construction. The terms "herein", "hereof" and
           -------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
                                                        ---- -----
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent and/or Lenders are a
party, including, without limitation, references to any of the Loan Documents,
shall include any and all modifications, amendments or restatements thereto and
any and all extensions or renewals thereof.

     II.   ADVANCES, PAYMENTS.

     2.1   Revolving Advances.
           ------------------

           (a)   Subject to the terms and conditions set forth in this Agreement
during the Availability Period, each Lender, severally and not jointly, will
make Revolving Advances to Borrower in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of the lesser of (i) the Maximum
Revolver Amount less the aggregate amount of outstanding Letters of Credit or
(ii) an amount equal to the sum of:

           (A)   without duplication (1) the product of the Crop Plan Receivable
                 Advance Rate times the value of Eligible Crop Plan Receivables,
                 plus (2) the product of the Managed Coop Advance Rate times the
                 ----
                 value of Eligible Managed Coop Receivables, plus (3) the
                                                             ----
                 product of the Trade Receivable Advance Rate times the value of
                 Eligible Trade Receivables plus (4) the product of the Long
                                            ----
                 Term Receivables Advance Rate times the value of Eligible Long
                 Term Receivables (not to exceed the Long Term Receivable
                 Sublimit); plus

           (B)   the lesser of 60%, subject to the provisions of Section 2.1(b)
                 hereof ("Inventory Advance Rate"), of the value of the Eligible
                 Inventory, minus
                            -----

           (C)   the aggregate amount of outstanding Letters of Credit, minus
                                                                        -----

           (D)   the aggregate amount of outstanding Overnight Advances, minus
                                                                         -----

           (E)   such reserves as Agent or Required Lenders may reasonably deem
                 proper and necessary from time to time.

The amount derived from the sum of (x) Sections 2.1(a)(ii)(A), and (B) minus (y)
                                                                       -----
the sum of Section 2.1 (a)(ii)(C), (D) and (E) at any time and from time to time
shall be referred to as the "Formula Amount". Each Lender's respective
Commitment Percentage of the Revolving Advances shall be evidenced by a

                                      31
<PAGE>

promissory note issued in favor of each such Lender (collectively, "Revolving
Credit Notes") substantially in the form attached hereto as Exhibit 2.1(a).
                                                            --------------

           (b)   The Advance Rates may be increased (subject to Section 15.2(b)
hereof) or decreased by Agent at any time and from time to time in the exercise
of its reasonable discretion. Borrower consents to any such increases or
decreases and acknowledges that decreasing the Advance Rates or increasing the
reserves may limit or restrict Advances requested by Borrower. Discretionary
action taken at any one time shall not be deemed an agreement, commitment or
course of dealing to do so at any future time.

           (c)   In addition to Borrower's right to request a Revolving Advance,
Borrower may, subject to the terms and conditions set forth herein, at any time
before 12:30 P.M. (Eastern Time) on a Business Day, request the Overnight Lender
to make, and the Overnight Lender agrees to make, an Advance to Borrower on the
same Business Day ("Overnight Advance") in accordance with the provisions of
this Section. Each Business Day by 11:00 A.M. (Eastern Time) the Overnight
Lender shall notify Borrower of the interest rate ("Overnight Rate") that it
will charge on all Overnight Advances made that Business Day. Borrower's request
for an Overnight Advance ("Overnight Advance Request") may be made orally or in
writing by facsimile (if orally, shall be confirmed in writing on the same
Business Day), must be directed to the Overnight Lender, and must specify: (a)
the amount of such Overnight Advance, and (b) the date when such Overnight
Advance will be due and payable ("Overnight Maturity Date"), which Overnight
Maturity Date may not be later than the fifth Business Day thereafter. If
Borrower submits an Overnight Advance Request prior to 12:30 P.M. (Eastern Time)
on a Business Day, the Overnight Lender may on the same Business Day, fund such
Overnight Advance. Each Overnight Advance shall bear interest (for a minimum of
one day) at the applicable Overnight Rate and shall be payable as follows: (x)
principal shall be payable in full on the Overnight Maturity Date applicable to
such Overnight Advance, and (y) interest shall be payable as provided in Section
3.1 hereof. Such payment may, at Borrower's discretion, and subject to the
conditions of this Agreement, be made by a Revolving Advance. Upon the
occurrence of an Event of Default or if the Overnight Advance is not paid on the
Overnight Maturity Date, such Overnight Advance shall automatically convert to a
Revolving Advance without regard to availability to borrow under Section 2.1(a)
hereof. Overnight Advances shall be made only by the Overnight Lender.
Borrower's entitlement to receive, and the Overnight Lender's obligation to
fund, any Overnight Advance shall be subject to the conditions and limitations
set forth in Sections 2.1 and 2.2 hereof and applicable to Revolving Advances
generally, and, in addition, the aggregate outstanding principal amount of all
such Overnight Advances shall not at any time exceed the Overnight Funding
Commitment. Borrower's obligation to repay Overnight Advances shall also be
evidenced by a promissory note issued in favor of Overnight Lender ("Swing Line
Note") substantially in the form attached hereto as Exhibit 2.1(c).

           (d)   Subject to the terms and conditions of this Agreement, after
resetting a portion of the Existing Indebtedness into the Term Loan as
contemplated by Section 2.4 below and after calculating the outstanding face
amounts of the Existing L/Cs, the remaining balance of the Existing Indebtedness
shall be consolidated and reset as part of the initial Revolving Advance.

     2.2   Procedure for Revolving Advances Borrowing.
           ------------------------------------------

                                      32
<PAGE>

           (a)   Borrower may notify Agent prior to noon Eastern Time on the
Business Day of Borrower's request to incur, on that day, a Revolving Advance
hereunder. Should any amount required to be paid as interest hereunder or as
fees or other charges under this Agreement or any other agreement with Agent or
Lenders, or with respect to any other Obligation, become due, upon three (3)
days prior notice to Borrower, it shall be deemed a request for a Revolving
Advance as of the date such payment is due, in the amount required to pay in
full such interest, fee, charge or Obligation under this Agreement or any other
Loan Documents, and such request shall be irrevocable.

           (b)   Notwithstanding the provisions of (a) above, if Borrower
desires to obtain a LIBOR Rate Loan, Borrower shall give Agent at least three
(3) Business Days' prior written notice, specifying (i) the date of the proposed
borrowing (which shall be a Business Day), (ii) the type of borrowing and the
amount on the date of such Advance to be borrowed, which amount shall be at
least $3,000,000 and thereafter in integral multiples of $1,000,000, and (iii)
the duration of the first Interest Period therefor. Interest Periods for LIBOR
Rate Loans shall be for one, two, three or six consecutive months; provided, if
                                                                   --------
an Interest Period would end on a day that is not a Business Day, it shall end
on the next succeeding Business Day unless such day falls in the next succeeding
calendar month in which case the Interest Period shall end on the next preceding
Business Day. No LIBOR Rate Loan shall be made available to Borrower during the
continuance of a Default or an Event of Default.

           (c)   Each Interest Period of a LIBOR Rate Loan shall commence on the
date such LIBOR Rate Loan is made and shall end on such date as Borrower may
elect as set forth in (b)(iii) above, provided that the exact length of each
Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the last day of the Term. Borrower shall elect the initial Interest Period
applicable to a LIBOR Rate Loan by its notice of borrowing given to Agent
pursuant to Section 2.2(b) or by its notice of conversion given to Agent
pursuant to Section 2.2(d), as the case may be. Borrower shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Agent of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such LIBOR Rate Loan.
If Agent does not receive timely notice of the Interest Period elected by
Borrower, Borrower shall be deemed to have elected to convert to a Base Rate
Loan subject to Section 2.2(d) herein below.

           (d)   Provided that no Default or Event of Default shall have
occurred and be continuing, Borrower may, on the last Business Day of the then
current Interest Period applicable to any outstanding LIBOR Rate Loan, or on any
Business Day with respect to Base Rate Loans, convert any such Advance into an
Advance of another type in the same aggregate principal amount provided that any
conversion of a LIBOR Rate Loan shall be made only on the last Business Day of
the then current Interest Period applicable to such LIBOR Rate Loan. If Borrower
desires to convert an Advance, Borrower shall give Agent not less than three (3)
Business Day's prior written notice to convert from a Base Rate Loan to a LIBOR
Rate Loan or one (1) Business Day's prior written notice to convert from a LIBOR
Rate Loan to a Base Rate Loan, specifying the date of such conversion, the
Advances to be converted and if the conversion is from a Base Rate Loan to LIBOR
Rate Loan, the duration of the first Interest Period therefor. After giving
effect to each such conversion, there shall not be outstanding more than ten
(10) LIBOR Rate Loans, in the aggregate.

                                      33
<PAGE>

           (e)   At its option and upon three (3) Business Days' prior written
notice, Borrower may prepay the LIBOR Rate Loans in whole at any time or in part
from time to time, without premium or penalty, but with accrued interest on the
principal being prepaid to the date of such repayment. Borrower shall specify
the date of prepayment of Advances which are LIBOR Rate Loans and the amount of
such prepayment. In the event that any prepayment of a LIBOR Rate Loan is
required or permitted on a date other than the last Business Day of the then
current Interest Period with respect thereto, Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.

           (f)   Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
Lenders may sustain or incur as a consequence of any prepayment, conversion of
or any default by Borrower in the payment of the principal of or interest on any
LIBOR Rate Loan or failure by Borrower to complete a borrowing of, a prepayment
of or conversion of or to a LIBOR Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
providers of funds obtained by them in order to make or maintain LIBOR Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Agent or any Lender to Borrower shall be
conclusive absent manifest error.

           (g)   Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the Applicable Lending Office) to make or maintain its LIBOR Rate Loans, the
obligation of Lenders to make LIBOR Rate Loans hereunder shall forthwith be
cancelled and Borrower shall, if any affected LIBOR Rate Loans are then
outstanding, promptly upon request from Agent, either pay all such affected
LIBOR Rate Loans or convert such affected LIBOR Rate Loans into loans of another
type. If any such payment or conversion of any LIBOR Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such LIBOR Rate
Loan, Borrower shall pay Agent, upon Agent's request, such amount or amounts as
may be necessary to compensate Lenders for any loss or expense sustained or
incurred by Lenders in respect of such LIBOR Rate Loan as a result of such
payment or conversion, including (but not limited to) any interest or other
amounts payable by Lenders to providers of funds obtained by Lenders in order to
make or maintain such LIBOR Rate Loan. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Lenders to
Borrower shall be conclusive absent manifest error.

     2.3   Disbursement of Advance Proceeds. All Advances shall be disbursed
           --------------------------------
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or Lenders,
shall be charged to Borrower's Account on Agent's books. During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrower or deemed to have been requested by
Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving
Advances and to the extent Lenders make such Revolving Advances, be made
available to the Borrower not later than 3:00 p.m. (Eastern Time) on the day so
requested by way of credit to Borrower's operating account at SunTrust Bank,
Richmond, VA, or such other bank as Borrower may

                                      34
<PAGE>

designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.

     2.4   Term Loan. Subject to the terms and conditions of this Agreement,
           ---------
each Lender agrees that a portion of the Existing Indebtedness in the aggregate
amount of $200,000,000 shall be consolidated and reset as a term loan ("Term
Loan") at Closing. Each Lender's respective Commitment Percentage of the Term
Loan shall be evidenced by a promissory note issued in favor of each such Lender
(collectively, "Term Notes") in substantially the form attached hereto as
Exhibit 2.4.
-----------

     2.5   Maximum Revolving Advances and Maximum Credit Limit.
           ---------------------------------------------------

           (a)   The aggregate balance of Revolving Advances outstanding at any
time shall not exceed the lesser of (a) Maximum Revolver Amount or (b) the
Formula Amount. The aggregate balance of all Advances outstanding at any time
shall not exceed the Maximum Credit Limit.

           (b)   The aggregate balance of (i) total Advances outstanding at any
time in excess of the Maximum Credit Limit and (ii) Revolving Advances
outstanding at any time in excess of the lesser of (i) the Maximum Revolver
Amount or (ii) the Formula Amount, shall be immediately due and payable without
the necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred.

     2.6   Repayment of Advances.
           ---------------------

           (a)   The outstanding Revolving Advances shall be due and payable in
full on the last day of the Term subject to earlier repayment and/or prepayment
as herein provided. The Term Loan shall be due and payable as provided in
Section 2.4, Section 2. 6(d) and Section 2.14 hereof and in the Term Notes.

           (b)   All payments of principal, interest, fees and other amounts
payable hereunder, or under any other Loan Document shall be made to Agent at
the Payment Office not later than 1:00 P.M. (Mountain Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Upon three (3) days prior notice to
Borrower, Agent shall have the right to effectuate payment on any and all
Obligations due and owing hereunder by charging Borrower's Account or by making
a Revolving Advance and applying the proceeds thereof to such Obligations.

           (c)   Borrower shall timely pay principal, interest, fees and all
other amounts payable hereunder, or under any other Loan Documents, without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.

           (d)   Subject to the terms of Section 2.14 below, the Term Loan shall
be payable as follows ("Scheduled Term Reduction") unless otherwise accelerated
following the occurrence of an Event of Default:

                                      35
<PAGE>

     Payment Date                                   Amount
     ------------                                   ------

     September 30, 2001                             $5 million
     December 31, 2001                              $20 million
     March 31, 2002                                 $18 million
     June 30, 2002                                  $17 million
     September 30, 2002                             $25 million
     December 31, 2002                              $30 million
     February 15, 2003 (Maturity Date)              Remaining principal balance
                                                    due (unless extended as
                                                    provided below)

If the Maturity Date is extended after satisfaction of the Extension
Requirements, then the following payments shall also be made (unless sooner
paid):

     March 31, 2003                                         $15 million
     June 30, 2003                                          $15 million
     August 15, 2003 (extended Maturity Date)               Remaining principal
                                                            balance

     2.7   [Reserved].
            --------

     2.8   Statement of Account. Agent shall maintain, in accordance with its
           --------------------
customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
                                                                  --------
however, the failure by Agent to record, or any error in recording, the date and
-------
amount of any Advance shall not adversely affect Agent or any Lender. Each
month, Agent shall send to Borrower a statement showing the accounting for the
Advances made, payments made or credited in respect thereof, and other
transactions between Agent and Borrower, during such month. The monthly
statements shall be deemed correct and binding upon Borrower in the absence of
manifest error and shall constitute an account statement between Lenders and
Borrower unless Agent receives a written statement of Borrower's specific
exceptions thereto within fifteen (15) days after such statement is received by
Borrower. The records of Agent with respect to the Borrower's Account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.

     2.9   Letters of Credit.
           -----------------

     Subject to the terms and conditions hereof, CoBank, in its capacity as an
Issuing Bank, upon written request of Borrower, shall issue or cause the
issuance of Letters of Credit ("Letters of Credit") on behalf of Borrower;
provided, however, that Issuing Bank will not be required to issue or cause to
--------  -------
be issued any Letters of Credit to the extent that the face amount of such
Letters of Credit would then cause the sum of (i) the outstanding Revolving
Advances, plus (ii) Overnight Advances, plus (ii) outstanding Letters of
          ----                          ----

                                      36
<PAGE>

Credit to exceed the Maximum Revolver Amount or if such issuance would cause the
outstanding Revolving Advances to exceed the Formula Amount. The maximum amount
of outstanding Letters of Credit shall not exceed, in the aggregate at any time,
the L/C Sublimit. All disbursements or payments related to Letters of Credit
shall be deemed to be Revolving Advances and shall bear interest at the
Revolving Interest Rate for Base Rate Loans; Letters of Credit that have not
been drawn upon shall not bear interest.

All Letters of Credit outstanding under the Existing Financing Agreements (each
an "Existing L/C") shall be deemed Letters of Credit issued hereunder, shall be
subject to the L/C Sublimit and the issuer thereof shall be deemed the Issuing
Bank with respect thereto. Each Existing L/C is shown on Schedule 2.9 attached
                                                         ------------
hereto and made part hereof and all agreements, including without limitation,
security agreements, mortgages, deeds of trust and reimbursement agreements
corresponding to the issuance of the Existing L/Cs shall continue in full force
and effect and be deemed to have been executed under the terms hereof and to the
extent of any express inconsistency with the terms hereof, the terms hereof
shall control. This Agreement represents a consolidation of all Existing
Indebtedness and as such any Issuing Bank holding a security interest in any
real or personal property of Borrower (whether Borrower holds legal and/or
equitable title thereto) (collectively, along with any rights of subrogation,
indemnification and contribution with respect to the reimbursement obligations
under the Existing L/Cs, the "Existing L/C Collateral") to secure any
obligations associated with an Existing L/C shall be deemed to hold such
Existing L/C Collateral as collateral agent for Agent and Lenders and to the
extent applicable, Article XIV hereof and Section 15.2 shall be applicable to
such Issuing Bank as an "Agent" for the Lenders. All proceeds from the
disposition of any of the Existing L/C Collateral shall be turned over to Agent
to be applied in accordance with the terms hereof and distributed based on each
Lender's Commitment Percentage.

     2.10  Issuance of Letters of Credit.
           -----------------------------

           (a)   Borrower shall execute and deliver to Issuing Bank, all letter
of credit agreements and other Loan Documents (in form and substance
satisfactory to Issuing Bank in its sole discretion) required by Issuing Bank
for such purposes.

           (b)   Each Letter of Credit, other than Existing L/Cs (and renewals
and extensions thereof) to the extent that they do not comply as of the date
hereof, shall among other things, (i) provide for the payment of sight drafts or
acceptances of usance drafts when presented for honor thereunder in accordance
with the terms thereof and when accompanied by the documents described therein
and (ii) have an expiry date not later than six (6) months after such Letter of
Credit's date of issuance but in no event later than five (5) Business Days
prior to the last day of the Term. Each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof adhered to by the Issuing Bank and, to the extent not
inconsistent therewith, the laws of the State of New York.

           (c)   Prior to five (5) Business Days before the last day of the
Term, Borrower shall provide cash collateral to Agent in an amount equal to or
exceeding the amount of all outstanding Existing L/Cs issued for the account of
Borrower which have an expiry date later than five (5) Business Days prior to
the last day of the Term, in form satisfactory to Agent, in its sole discretion,
and pursuant to documentation, in form and substance satisfactory to Agent, in
its sole discretion.

                                      37
<PAGE>

           (d)   Issuing Bank shall notify Lenders of the request by Borrower
for a Letter of Credit hereunder.

     2.11  Requirements For Issuance of Letters of Credit.
           ----------------------------------------------

           (a)   In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent, each Lender and each Issuing Bank
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuing Bank and expenses
and reasonable attorneys' fees incurred by Agent, any Lender or Issuing Bank
arising out of, or in connection with, any Letter of Credit issued or to be
issued for the account of Borrower. Borrower shall be bound by Agent's and any
Issuing Bank's regulations and good faith interpretations of any Letter of
Credit issued or created for Borrower's account, although this interpretation
may be different from its own; and, neither Agent, nor any Lender, nor any
Issuing Bank nor any of their correspondents shall be liable for any error,
negligence or mistakes, whether of omission or commission, in following
Borrower's instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit, except for Agent's, any Lender's, any Issuing Bank's or such
correspondents' gross (but not mere) negligence or willful misconduct.

           (b)   Borrower shall authorize and direct any Issuing Bank to name
Borrower as the "Applicant" or "Account Party" of each Letter of Credit. Except
with respect to Existing L/Cs, if Agent is not the Issuing Bank of any Letter of
Credit, Borrower shall authorize and direct the Issuing Bank to deliver to Agent
all instruments, documents, and other writings and property received by the
Issuing Bank pursuant to the Letter of Credit and to accept and rely upon
Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit, the application therefor or any acceptance
therefor.

           (c)   In connection with the Existing L/Cs and all other Letters of
Credit issued or caused to be issued by Issuing Bank under this Agreement,
Borrower hereby appoints Issuing Bank, or Issuing Bank's designee, as its
attorney, with full power and authority if an Event of Default or Default shall
have occurred, (i) to sign and/or endorse Borrower's name upon any warehouse or
other receipts, letter of credit applications and acceptances; (ii) to sign
Borrower's name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department ("Customs") in the name of Borrower or
Issuing Bank or Issuing Bank's designee, and to sign and deliver to Customs
officials powers of attorney in the name of Borrower for such purpose; and (iv)
to complete in such Borrower's name or Issuing Bank's, or in the name of Issuing
Bank's designee, any order, sale or transaction, obtain the necessary documents
in connection therewith, and collect the proceeds thereof. Neither Issuing Bank
nor its designee nor their attorneys or agents will be liable for any acts or
omissions nor for any error of judgment or mistakes of fact or law, except for
Issuing Bank's or its designee's or their agent's or attorney's gross (not mere)
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.

           (d)   Each Lender shall to the extent of the percentage amount equal
to the product of such Lender's Commitment Percentage times the aggregate amount
of all unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit, including, without
limitation, the Existing L/Cs, be deemed to have irrevocably purchased an
undivided

                                      38
<PAGE>

participation in each such unreimbursed reimbursement obligation. In the event
that at the time a disbursement is made the unpaid balance of Revolving Advances
exceeds or would exceed, with the making of such disbursement, the lesser of the
Maximum Revolver Amount or the Formula Amount, and such disbursement is not
reimbursed by Borrower within two (2) Business Days, Issuing Bank shall promptly
notify each Lender and upon Issuing Bank's demand each Lender shall pay to
Issuing Bank such Lender's proportionate share of such unreimbursed disbursement
together with such Lender's proportionate share of Issuing Bank's unreimbursed
reasonable costs and expenses relating to such unreimbursed disbursement. Upon
receipt by Issuing Bank of a repayment from Borrower of any amount disbursed by
Issuing Bank for which Issuing Bank had already been reimbursed by Lenders,
Issuing Bank shall deliver to each Lender that Lender's pro rata share (based on
its Commitment Percentage) of such repayment. Each Lender's participation
commitment on a Letter of Credit shall continue until the last to occur of any
of the following events: (A) Issuing Bank ceases to be obligated to issue or
cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued
hereunder remains outstanding and uncancelled or (C) all Persons (other than the
Borrower) have been fully reimbursed for all payments made under or relating to
Letters of Credit.

           (e)   Indemnification:
                 ---------------

                 (i)    In addition to amounts payable as elsewhere provided in
this Agreement, without duplication, Borrower hereby agrees to protect,
indemnify, pay and save Issuing Bank, Agent and Lenders harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which Issuing Bank,
Agent and/or Lenders (as applicable) may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of the Letters of Credit
for the account of Borrower or (B) the failure of Issuing Bank to honor a
drawing under any Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto governmental
authority (all such acts or omissions herein called "Government Acts"). Rights
to indemnification hereunder shall survive termination of this Agreement.

                 (ii)   As between Borrower and Issuing Bank, Agent and Lenders,
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by Issuing Bank by the respective beneficiaries of such
Letters of Credit for the account of Borrower. In furtherance and not in
limitation of the foregoing, Issuing Bank shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effects of any
document submitted by any party in connection with the application for and
issuance of such Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency, of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may prove to
be invalid or ineffective for any reason; (C) failure of the beneficiary of any
such Letter of Credit to comply fully with conditions required in order to draw
upon such Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they are in cipher, unless any of the foregoing are
caused by Issuer's gross negligence or willful misconduct; (E) errors in
interpretation of technical terms; (F) any loss or delay in the transmission of
any document required in order to make a drawing under any such Letter of Credit
or of the proceeds thereof, unless caused by Issuing Bank's gross (but not mere)
negligence or willful misconduct; (G) the misapplication by the beneficiary of

                                      39
<PAGE>

any such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; and (H) any consequences arising from causes beyond the control of
Issuing Bank, including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of any of Issuer's rights or
powers hereunder.

                 (iii)  In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or omitted by
Issuer in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not create any liability
on the part of Issuing Bank to Borrower.

           (f)   The term "Lender" shall, unless the context otherwise
indicates, include any Issuing Bank in its individual capacity as a Lender.

     2.12  Additional Payments. Any sums expended by Agent or any Lender due to
           -------------------
Borrower's failure to perform or comply with its obligations under this
Agreement or any other Loan Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations and Agent will endeavor to provide notice of such charge to
Borrower's Account as soon as reasonably practicable thereafter.

     2.13  Manner of Borrowing and Payment.
           -------------------------------

           (a)   Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Term Loan
shall be deemed to have been advanced on the Closing Date in accordance with the
applicable Commitment Percentages of Lenders. Revolving Advances that may be
made by Lenders from time to time shall be made available for the use and
benefit of Borrower in accordance with the terms of Section 2.3 above.

           (b)   Upon Borrower's request for a Revolving Advance in accordance
with Section 2.2 above, Agent shall promptly notify the Lenders of such request,
and subject to the terms of this Agreement, each Lender shall provide Agent such
Lender's Commitment Percentage of the requested Revolving Advance. Should such
notice from Agent be sent prior to 1:00 p.m., Eastern Time, each Lender shall
remit to Agent its respective Commitment Percentage of the requested Revolving
Advance, in immediately available funds, prior to 3:00 p.m. Eastern Time, on the
Business Day Agent is scheduled to make the Requested Advance. Neither Agent nor
any other Lender shall be obligated for any reason whatsoever, to remit or
advance the Commitment Percentage of any other Lender. Agent shall not be
required to make the full amount of the requested Revolving Advance unless and
until it receives funds representing each other Lender's Commitment Percentage
of such requested Revolving Advance, but Agent shall advance to Borrower that
portion of the requested Revolving Advance equal to the Commitment Percentages
which it has received from the Lenders.

           (c)   [Intentionally Omitted].

                                      40
<PAGE>

          (d)  Each Lender shall be entitled to earn interest at the applicable
Contract Rate on outstanding Advances which it has funded.

          (e)  (i)   Each payment (including each prepayment) by Borrower on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrower on account of the principal of and interest on the Term Loan, shall be
applied to that portion of the Term Loan evidenced by the respective Term Notes
pro rata according to the Commitment Percentages of Lenders. Except as expressly
provided herein, all payments (including prepayments) to be made by Borrower on
account of principal, interest and fees shall be made without set off or
counterclaim and shall be made to Agent on behalf of the Lenders at the Payment
Office, in accordance with Section 2.6 above.

               (ii)  Commencing with the first Business Day following the
Closing Date, borrowings of Revolving Advances shall be advanced to Borrower in
accordance with Section 2.13(b) and each payment by Borrower on account of
Revolving Advances shall be applied first to the Overnight Advances plus accrued
and unpaid interest thereon and then to Lenders in accordance with Section
2.13(e)(i).

          (f)  If any Lender or Participant (a "Benefited Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such Benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender's Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of Lenders; provided, however, that if
                                                     --------  -------
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. Each Lender so purchasing a portion of another Lender's Advances may
exercise all rights of payment (including, without limitation, rights of set-
off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.

               (i)   Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the requested
Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next
Settlement Date and, in reliance upon such assumption, make available to
Borrower a corresponding amount. Agent will promptly notify Borrower of its
receipt of any such notice from a Lender. If such amount is made available to
Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds
Rate (computed on the basis of a year of 360 days) during such period as quoted
by Agent, times (ii) such amount, times (iii) the number of days from and
including

                                      41
<PAGE>

such Settlement Date to the date on which such amount becomes immediately
available to Agent. A certificate of Agent submitted to any Lender with respect
to any amounts owing under this paragraph (f) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent
by such Lender within three (3) Business Days after such Settlement Date, Agent
shall be entitled to recover such an amount, with interest thereon at the rate
per annum then applicable to Revolving Advances bearing interest based on the
Alternate Base Rate hereunder, on demand from Borrower; provided, however, that
                                                        --------  -------
Agent's right to such recovery shall not prejudice or otherwise adversely affect
Borrower's rights (if any) against such Lender.

          (g)  (i)    Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrower that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.13(g) while such Lender Default remains in effect.

               (ii)   Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.

               (iii)  A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Loan Documents. All amendments,
waivers and other modifications of this Agreement and the Loan Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender.

               (iv)   Other than as expressly set forth in this Section 2.13(g),
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.13(g) shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Loan Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.

                                      42
<PAGE>

               (v)    In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.

    2.14  Mandatory Prepayments.
          ---------------------

          (a)  When Borrower sells, transfers or otherwise disposes of any
Collateral other than Inventory in the ordinary course of business and sales of
Equipment as permitted by Section 4.3(e) (collectively, "Collateral
Dispositions"), Borrower shall (subject to Agway sharing in such proceeds to the
extent provided in the Intercreditor and Agency Agreement) repay the Advances in
an amount equal to the net proceeds of such sale (i.e., gross proceeds less the
reasonable costs of such sales or other dispositions), such repayments to be
made promptly but in no event more than five (5) Business Days following receipt
of such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent and subject to Agent's lien hereunder. The foregoing shall
not be deemed to be implied consent to any such sale otherwise prohibited by the
terms and conditions hereof. Such prepayments shall be applied as follows:

               (i)    100% of net cash proceeds (subject to Agway sharing in
such proceeds to the extent provided in the Intercreditor and Agency Agreement)
from Collateral Disposition and redemption and/or retirement of ownership and/or
equity interests held by Borrower (with the exception of Wholesale Receivables
sold pursuant to a Permitted Securitization Transaction and receivables sold to
Statesman prior to any transaction with John Deere) shall be applied to the next
due Scheduled Term Reductions.

               (ii)   100% of the net cash proceeds received by Agent on behalf
of Lenders from the sale of Receivables, whether in conjunction with the
proposed transaction with John Deere or otherwise (other than to Statesman prior
to any transaction with John Deere, and a Permitted Securitization Transaction)
shall be used to permanently reduce the Maximum Revolver Amount in an amount
equal to at least the availability under the Formula Amount supported by such
Receivables, and the balance, if any, to the outstanding balance of the Term
Loan (subject to clause (v) and (vii) below).

               (iii)  100% of net cash proceeds from the issuance of debt
(subject to existing contractual limitations thereon) under terms and conditions
acceptable to the Lenders, shall be applied to the next due Scheduled Term
Reductions, provided that the Borrower shall not be required to use the proceeds
from AgriMoney Notes with initial maturities of one year or less.

               (iv)   100% of the net cash proceeds from any capital raising
transaction or modifications to existing agreements (subject to mandatory
redemption requirements under the terms of the GoldKist Documents) shall be
applied to the next due Scheduled Term Reductions.

               (v)    Should Borrower enter into a transaction with John Deere
or otherwise sell Receivables as contemplated in clause (ii) above, the net cash
proceeds from the corresponding sales of Receivables received by Agent on behalf
of Lenders, shall be used to permanently reduce the Maximum Revolver Amounts
and/or the Term Loan in accordance with clause (ii) above but Lenders will
permit a portion of such proceeds to be applied in substitution of the Scheduled
Term Reductions, as follows: (A) of the first $60,000,000 applied as permanent
reductions to the Maximum Revolver Amount and/or the Term

                                      43
<PAGE>

Loan (as applicable), no amount (i.e. zero dollars) shall be deemed substituted
for Scheduled Term Reductions, (B) of the next $40,000,000 applied as an
additional permanent reduction of the Maximum Revolver Amount and/or Term Loan
(as applicable), such amount (i.e. up to $40,000,000), shall be deemed
substituted in part for the Scheduled Term Reductions in accordance with clause
(vii) below, provided that the amount "substituted" shall exclude amounts
actually paid to reduce the Term Loan, and (C) of the proceeds in excess of the
first $100,000,000 that are applied as a permanent reduction of the Maximum
Revolver Amount and/or the Term Loan (as described above), 40% shall be deemed
substituted in part for the Scheduled Term Reductions from the date of such
payment in accordance with clause (vii) below, provided that the amount
substituted shall exclude amounts actually paid to reduce the Term Loan such
that in no event shall the total of amounts applied pursuant to this clause (C)
in substitution of the Scheduled Term Reduction and the actual amount of Term
Loan payments applied to the Scheduled Term Reductions exceed 40% of the total
amount of all proceeds from the corresponding sales of Receivables in excess of
$100,000,000.

               (vi)   Should Borrower achieve working capital reduction from the
closing of additional retail stores or other facilities and net cash proceeds
that are traceable, pursuant to reporting to be provided by location/or in
Agent's discretion, to such reduction are used to permanently reduce the Maximum
Revolver Amount, then 50% of such cash proceeds used for such permanent
reduction shall be deemed substituted for a portion of the remaining Scheduled
Term Reductions (excluding the final payment due at Maturity) in accordance with
clause (vii) below provided that the maximum amount so substituted shall not
exceed $15,000,000.

               (vii)  Payments described in clauses (ii), (v) and (vi) above
that are to be deemed substituted for a portion of the Scheduled Term
Reduction(s) shall be applied in substitution at the option of the Borrower (A)
to the pro rata reduction of the Scheduled Term Reduction(s) from the date such
payment is made through September 30, 2002, (B) to the pro rata reduction of the
Scheduled Term Reductions from the date such payment is made through December
31, 2002, or (C) to the pro rata reduction of the Scheduled Term Reductions from
and including September 30, 2002 through December 31, 2002.

          (b)  Borrower shall prepay the outstanding amount of the Advances in
an amount equal to the Applicable Excess Cash Flow Percentage of Excess Cash
Flow for each fiscal year commencing on or after July 1, 2001, payable upon
delivery of the financial statements to Agent referred to in and required by
Section 9.7 for such fiscal year but in any event not later than ninety (90)
days after the end of each such fiscal year, which amount shall be applied
first, pro rata to the Scheduled Term Reductions in the inverse order of the
maturities thereof and, second, to the remaining Advances in such order as Agent
may determine, subject to Borrower's ability to reborrow Revolving Advances in
accordance with the terms hereof. In the event that the financial statements are
not so delivered, then a calculation based upon estimated amounts shall be made
by Agent upon which calculation Borrower shall make the prepayment required by
this Section 2.14(b), subject to adjustment when the financial statements are
delivered to Agent as required hereby. The calculation made by Agent shall not
be deemed a waiver of any rights Agent or Lenders may have as a result of the
failure by Borrower to deliver such financial statements.

                                      44
<PAGE>

          (c)  To the extent Borrower pays dividends on the GoldKist Securities
on or after October 5, 2001 through July 5, 2002 (the aggregate maximum
permitted amount to be paid not to exceed $8,550,000) Borrower shall promptly
calculate and pay to Agent for the benefit of Lenders no later than July 10,
2002, an amount equal to the excess of such dividends over the amount of Long
Term AgriMoney raised through July 5, 2002, shall be applied to the Term Loan in
the inverse order of the Scheduled Term Reductions (not including, unless the
Scheduled Term Reductions are otherwise repaid in full, the payment due at the
then current Maturity Date).

    2.15  Use of Advance Proceeds. Borrower shall apply the proceeds of initial
          -----------------------
Advances to (i) purchase certain assets of Statesman and MLCC which proceeds
will then be used by Statesman and MLCC, respectively, to satisfy the Statesman
Indebtedness and MLCC Indebtedness, respectively, (ii) pay fees and expenses
relating to this transaction, and (iii) to provide for Borrower's working
capital needs.

    2.16  [Reserved].
          ----------

    2.17  Existing Financing Agreements.
          -----------------------------

          (a)  Borrower hereby acknowledges and confirms that as of the close of
business on September 17, 2001, Borrower is indebted to (i) the Lenders, without
defense, setoff, claim or counterclaim, under the Syndicated Loan Documents, in
the aggregate principal amount of $173,389,973.00, plus all accrued but unpaid
interest, fees, costs and expenses (including attorneys' fees) incurred to date
as provided in the Syndicated Loan Documents, (ii) CoBank, without defense,
setoff, claim or counterclaim, under the MLA Loan Documents, in the aggregate
principal amount of $46,121,375.46, plus all accrued but unpaid interest, all
fees, costs and expenses (including attorneys' fees) incurred to date as
provided in the MLA Loan Documents, (iii) Wachovia, without defense, setoff,
claim or counterclaim, under the Wachovia Loan Documents, in the aggregate
principal amount of $6,944,015.92, plus all accrued but unpaid interest, fees,
costs and expenses (including attorneys' fees) incurred to date as provided in
the Wachovia Loan Documents, (iv) Allfirst, without defense, setoff, claim or
counterclaim, under the Allfirst Loan Documents, in the aggregate principal
amount of $13,488,296.51, plus all accrued but unpaid interest, fees, costs and
expenses (including attorneys' fees) incurred to date as provided in the
Allfirst Loan Documents, and (v) SunTrust, without defense, setoff, claim or
counterclaim, under the SunTrust Loan Documents, in the aggregate principal
amount of $11,806,394.17, plus all accrued but unpaid interest, fees, costs and
expenses (including attorneys' fees) incurred to date as provided in the
SunTrust Loan Documents (collectively, "Existing Indebtedness").

          (b)  Except as otherwise provided in Section 2.9 with respect to
agreements, instruments and documents relating to Existing L/Cs and Existing L/C
Collateral, this Agreement and the other Loan Documents along with, to the
extent applicable, the Agway Security Agreement and the Intercreditor and Agency
Agreement, amend, restate and consolidate all notes, agreements or documents
heretofore evidencing or securing the Existing Indebtedness. The execution and
delivery of this Agreement and the other Loan Documents, however, does not
evidence or represent a refinancing, repayment, accord and/or satisfaction or
novation of the Existing Indebtedness. All of Lenders' obligations to Borrower
with respect to loans or advances to be made concurrently herewith or after the
date hereof are set forth in this Agreement. All liens and security interests
previously granted to Collateral Agent pursuant to the Security

                                      45
<PAGE>

Agreement and to any Lender pursuant to, or in connection with, the Existing
Financing Agreements are acknowledged and reconfirmed, remain in full force and
effect as amended, consolidated and restated hereby, and are not intended to be
released, replaced or impaired. Without advancing cash, appropriate bookkeeping
entries shall be made on the books of Agent, each Lender and Borrower to
evidence the consolidation effectuated hereunder and shall be deemed Advances
hereunder.

          (c)  As of the date hereof, the Tolling Agreement is hereby terminated
and of no further force or effect.

    III.  INTEREST AND FEES.

    3.1   Interest. Interest on Advances shall be payable in arrears on the
          --------
tenth day of each month with respect to Base Rate Loans and, with respect to
LIBOR Rate Loans at the end of each Interest Period or, for LIBOR Rate Loans
with an Interest Period in excess of three months, at the earlier of (a) the end
of each three month period after the commencement of such LIBOR Rate Loan or (b)
the end of the Interest Period. Interest charges shall be computed on the actual
principal amount of Advances outstanding during the month (the "Monthly
Advances") at a rate per annum equal to (i) with respect to Revolving Advances,
the applicable Revolving Interest Rate and (ii) with respect to the applicable
Term Loan, the Term Loan Rate (as applicable, the "Contract Rate"). Whenever,
subsequent to the date of this Agreement, the Alternate Base Rate is increased
or decreased, the applicable Contract Rate shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Alternate Base Rate during the time such change or changes remain in effect.
The LIBOR Rate shall be adjusted with respect to LIBOR Rate Loans without notice
or demand of any kind on the effective date of any change in the Reserve
Percentage as of such effective date. Upon and after the occurrence of an Event
of Default, and during the continuation thereof, (i) the Obligations other than
LIBOR Rate Loans shall bear interest at the applicable Contract Rate plus three
hundred (300) basis points per annum and (ii) LIBOR Rate Loans shall bear
interest at the Revolving Interest Rate for LIBOR Rate Loans plus three hundred
(300) basis points per annum as applicable, the ("Default Rate").

    3.2   Letter of Credit Fees. Borrower shall pay (x) to Agent, for the
          ---------------------
benefit of Lenders, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by the per annum rate equal to the Revolver
Applicable Margin for LIBOR Rate Advances then in effect, such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable monthly in arrears on the tenth day of each month and on the
last day of the Term; provided that, no such fees shall be payable with respect
to Existing L/Cs for which similar fees have previously been paid by Borrower
for the corresponding period covered thereby, and (y) to the Issuing Bank, any
and all fees and expenses as agreed upon by the Issuing Bank and the Borrower in
connection with any Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to the Issuing Bank (all of the
foregoing fees, the "Letter of Credit Fees"). All such charges shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this

                                      46
<PAGE>

Agreement for any reason. Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuing Bank's prevailing charges for that type of
transaction. All Letter of Credit Fees payable hereunder shall be deemed earned
in full on the date when the same are due and payable hereunder and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason.

    On demand after the occurrence of a Default or Event of Default, Borrower,
at the direction of Agent or Required Lenders, will cause cash to be deposited
and maintained in an account with Agent, as cash collateral, in an amount equal
to one hundred and five percent (105%) of the outstanding Letters of Credit and
Borrower hereby irrevocably authorizes Agent, in its discretion, on Borrower's
behalf and in Borrower's name, to open such an account and to make and maintain
deposits therein, or in an account opened by Borrower, in the amounts required
to be made by Borrower, out of the proceeds of Receivables or other Collateral
or out of any other funds of Borrower coming into any Lender's possession at any
time. For such purposes, Agent may cause Revolving Advances to be made. Agent
will invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent and Borrower mutually agree and the net
return on such investments shall be credited to such account and constitute
additional cash collateral. Borrower may not withdraw amounts credited to any
such account except upon payment and performance in full of all Obligations and
termination of this Agreement.

    3.3   (a)  Origination Fee. Upon the execution of this Agreement, Borrower
               ---------------
shall pay to Agent for the ratable benefit of Lenders based on each Lender's
Commitment Percentage an origination fee ("Origination Fee") in an amount equal
to 150 basis points on the highest Maximum Revolver Amount (i.e. $270,000,000)
and 175 basis points on the initial balance of the Term Loan (i.e.
$200,000,000).

          (b)  Facility Fee. Borrower shall pay to Agent for the ratable benefit
               ------------
of Lenders the Facility Fee, which Facility Fee shall be payable to Agent
monthly, in arrears on the last day of each month.

    3.4   Taxes.
          -----

          (a)  Any and all payments by the Borrower to or for the account of any
Lender or Agent hereunder or under any Note shall be made free and clear of and
without deduction for any and all present or future taxes, assessments or other
governmental charges imposed by any jurisdiction, whether domestic or foreign,
and all liabilities with respect thereto, excluding, in the case of each Lender
or Agent, taxes, assessments or other governmental charges:

               (i)    measured by its overall net income, and franchise taxes
imposed on it in lieu of such income taxes, by the jurisdiction in which such
Lender or Agent, as the case may be, is incorporated, has its principal office
or maintains its Applicable Lending Office, or

               (ii)   which would not have been imposed but for (A) the failure
of such Lender or Agent, as the case may be, to provide an Internal Revenue
Service Form W-8BEN or W-8ECI, as the case may be, or any substitute or
successor form prescribed by the Internal Revenue Service pursuant to paragraph
(d) below, to establish entitlement to exemption from or reduction in the rate
of such tax, assessment or other governmental charge if such Lender or Agent is
legally entitled to such exemption or

                                      47
<PAGE>

reduction and such Lender or Agent has no general policy not to avail itself of
such exemption or reduction or (B) a determination by a taxing authority or a
court of competent jurisdiction that a certification, documentation or other
proof provided by such Lender or the Agent to establish an exemption from such
tax, assessment or other governmental charge is false;

     (all such non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder or under any Note to any Lender or Agent, (i) the sum payable
shall be increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section 3.4) such Lender or Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) the Borrower shall make such
deductions and withholdings, (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxation authority or other authority in
accordance with applicable law not later than the date when due and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section 15.6,
the original or a certified copy of a receipt evidencing payment such Taxes
promptly after the date on which payment of such Taxes is due.

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

          (c)  The Borrower agrees to indemnify each Lender and each Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 3.4) paid by such Lender or Agent (as the case may be) with respect to
any Note, this Agreement or any other Loan Document or any payment pursuant
hereto or thereto and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
promptly upon, and in any event within 10 days after, the date such Lender or
Agent (as the case may be) makes demand therefor in writing, signed by an
authorized officer of such Lender or Agent and setting forth in reasonable
detail the calculation thereof.

          (d)  (i) Each Lender (including any Purchasing Lender pursuant to
Section 15.3) organized under the laws of a jurisdiction outside the United
States of America, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, shall provide the Borrower and Agent with Internal Revenue Service Form
W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest to zero or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States. From time to time
thereafter such Lender shall, whenever required to do so by applicable law (but
only to the extent that such Lender remains lawfully able to do so consistent
with its general policies), provide the Borrower with Internal Revenue

                                      48
<PAGE>

Service Form W-8BEN or W-8ECI, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest to zero or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States.

          (e)  If the Borrower is or will be required to pay additional amounts
to or for the account of any Lender pursuant to this Section 3.4, then such
Lender will, if the Borrower so requests, use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or reduce any
such additional payment which may thereafter accrue, within a reasonable period
of time after the Borrower makes such request if such change, in the good faith
judgment of such Lender, is not otherwise disadvantageous to such Lender in any
respect, but failure to do so shall not impose any liability on such Lender or
impair the obligation of the Borrower to pay any amounts to which this Section
3.4 applies.

          (f)  A certificate of any Lender or Agent claiming compensation under
this Section 3.4 and setting forth the additional amount or amounts to be paid
to it hereunder and setting forth in reasonable detail the basis for such
compensation shall be conclusive in the absence of manifest error.

    3.5   Computation of Interest and Fees. Interest and fees hereunder shall be
          --------------------------------
computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
Contract Rate during such extension. All contractual rates of interest
chargeable on outstanding Advances shall continue to accrue and be paid even
after default, maturity, acceleration, judgment, bankruptcy, insolvency
proceedings of any kind or the happening of any event or occurrence similar or
dissimilar until all Obligations are indefeasibly paid and satisfied in full.

    3.6   Maximum Charges. In no event whatsoever shall interest and other
          ---------------
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.

    3.7   Increased Costs. In the event that any applicable law, treaty or
          ---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any LIBOR Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

          (a)  subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any other Loan Documents or change the basis
of taxation of payments to Agent or any

                                      49
<PAGE>

Lender of principal, fees, interest or any other amount payable hereunder or
under any Loan Documents (except for changes in the rate of tax on the overall
net income of Agent or any Lender by the jurisdiction in which it maintains its
principal office or its Applicable Lending Office);

          (b)  impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

          (c)  impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement or any other Loan
Document; and

the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrower shall pay Agent or such Lender, within five (5) days of
demand, such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the LIBOR
Rate. In determining such amount or amounts, Agent or such Lender may use any
reasonable averaging or attribution methods. Agent or such Lender shall certify
the amount of such additional cost or reduced amount to Borrower together with
the calculation thereof, and in such event such certification shall be
conclusive absent manifest error.

    3.8   Basis For Determining Interest Rate Inadequate or Unfair. In the event
          --------------------------------------------------------
that Agent or any Lender shall have determined that:

          (a)  reasonable means do not exist for ascertaining the LIBOR Rate
applicable pursuant to Section 2.2 hereof for any Interest Period; or

          (b)  Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a
proposed conversion of a Base Rate Loan into a LIBOR Rate Loan, then Agent shall
give Borrower prompt written, telephonic or telegraphic notice of such
determination. If such notice is given, (i) any such requested LIBOR Rate Loan
shall be made as a Base Rate Loan, unless Borrower shall notify Agent no later
than 10:00 a.m. (Eastern time) two (2) Business Days prior to the date of such
proposed borrowing, that its request for such borrowing shall be cancelled or
made as an unaffected type of LIBOR Rate Loan, (ii) any Base Rate Loan or LIBOR
Rate Loan which was to have been converted to an affected type of LIBOR Rate
Loan shall be continued as or converted into a Base Rate Loan, or, if Borrower
shall notify Agent, no later than 10:00 a.m. (Eastern Time) two (2) Business
Days prior to the proposed conversion, shall be maintained as an unaffected type
of LIBOR Rate Loan, and (iii) any outstanding affected LIBOR Rate Loans shall be
converted into a Base Rate Loan, or, if Borrower shall notify Agent, no later
than 10:00 a.m. (Eastern Time) two (2) Business Days prior to the last Business
Day of the then current Interest Period applicable to such affected LIBOR Rate
Loan, shall be converted into an unaffected type of LIBOR Rate Loan, in either
case, on the last Business Day of the then current Interest

                                      50
<PAGE>

Period for such affected LIBOR Rate Loans. Until such notice has been withdrawn,
Lenders shall have no obligation to make an affected type of LIBOR Rate Loan or
maintain outstanding affected LIBOR Rate Loans and Borrower shall not have the
right to convert a Base Rate Loan or an unaffected type of LIBOR Rate Loan into
an affected type of LIBOR Rate Loan.

     3.9    Capital Adequacy.
            ----------------

            (a)   In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any LIBOR Rate Loans with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on Agent or any Lender's capital as a consequence of
its obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrower shall pay upon demand to Agent or such Lender, within
five (5) days of demand, such additional amount or amounts as will compensate
Agent or such Lender for such reduction. In determining such amount or amounts,
Agent or such Lender may use any reasonable averaging or attribution methods.
The protection of this Section 3.9 shall be available to Agent and each Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition.

            (b)   Agent or such Lender shall give Borrower a certificate setting
forth such amount or amounts as shall be necessary to compensate Agent or such
Lender with respect to Section 3.9(a) hereof and the calculations used in
reaching such amount and such certificate when delivered to Borrower shall be
conclusive absent manifest error.

     IV.    COLLATERAL AND GENERAL TERMS

     4.1    Security Interest in the Collateral. To secure the prompt payment
            -----------------------------------
and performance to Agent and each Lender of the Obligations, Borrower hereby
reaffirms its prior grant to Agent, as collateral agent under the Security
Agreement, of a security interest in any of the Collateral described herein, and
assigns, pledges and grants to Agent for the ratable benefit of each Lender a
continuing lien and security interest in and to all of its right, title and
interest in and to the Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located. Borrower shall mark its books and
records as may be necessary or appropriate to evidence, protect and perfect
Agent's security interest and shall cause its financial statements to reflect
such security interest.

     4.2    Perfection of Security Interest.
            -------------------------------

                                      51
<PAGE>

            (a)   Borrower shall take all action that may be necessary or
desirable, or that Agent may request, so as at all times to maintain the
validity, perfection, enforceability and priority of Agent's security interest
in the Collateral or to enable Agent to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to, (i) immediately
discharging all Liens other than Permitted Encumbrances, (ii) obtaining landlord
and/or mortgage lien waivers, (iii) delivering to Agent, endorsed or accompanied
by such instruments of assignment as Agent may specify, and stamping or marking,
in such manner as Agent may specify, any and all chattel paper, instruments,
letters of credits and advices thereof and documents evidencing or forming a
part of the Collateral, (iv) entering into warehousing, lockbox and other
custodial arrangements satisfactory to Agent, and (v) executing and delivering
financing statements, instruments of pledge, mortgages, notices and assignments,
in each case in form and substance satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent's security
interest under the Uniform Commercial Code or other applicable law. Borrower
shall enter into a Deposit Account Control Agreement with all financial
institutions where Borrower maintains Deposit Accounts, including each corporate
bank accounts, retail depository accounts, and other Deposit Accounts; provided
however, that notwithstanding anything to the contrary contained in this
subsection, Borrower shall not be required to enter into Deposit Account Control
Agreements with respect to any retail depository account in which the financial
institution is not a Lender and in which Borrower maintains an average daily
collected balance (determined on a trailing six (6) month basis, counting the
actual number of days elapsed) of less than $10,000 and Borrower shall not be
deemed in violation of this provision if such average daily collected balance in
a Deposit Account exceeds $10,000 in any one month, provided further, that if
such average daily collected balance exceeds $10,000 for two (2) consecutive
months, then Borrower shall either obtain a Deposit Account Control Agreement
within thirty (30) days of such determination or close and move such Deposit
Account to a Lender or a financial institution with whom a Deposit Account
Control Agreement has been obtained.

            (b)   Agent is hereby authorized to file financing statements naming
Borrower as debtor, in accordance with the Uniform Commercial Code as adopted in
the State of New York, and if necessary, to the extent applicable, to otherwise
file financing statements without Borrower's signature if permitted by law.
Borrower hereby authorizes Agent to file all financing statements and amendments
to financing statements describing the Collateral in any filing office as Agent,
in its sole discretion may determine, including financing statements listing
"All Assets" in the collateral description therein. Borrower agrees to comply
with the requirements of all federal and state laws and requests of Agent in
order for Agent to have and maintain a valid and perfected first security
interest in the Collateral including, without limitation, executing and causing
any other Person to execute such documents as Agent may require to obtain
Control (as defined in the UCC) over all Deposit Accounts, Electronic Chattel
Paper, Letter-of-Credit Rights and Investment Property.

            (c)   Borrower hereby authorizes Agent to file all effective
financing statements pursuant to 7 U.S.C. ss.1631, and amendments to all
effective financing statements describing the Collateral in any offices as
Agent, in its sole discretion may determine. If requested by Agent, Borrower
will provide Agent with a list of the buyers, commission merchants and selling
agents to or through whom Borrower may sell Farm Products. Borrower authorizes
Agent to notify all such buyers, commission merchants and selling

                                      52
<PAGE>

agents, or any other Person of Agent's security interest in Borrower's Farm
Products unless prohibited by law.

     All charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, shall be charged to Borrower's
Account as a Revolving Advance of a Base Rate Loan and added to the Obligations,
or, at Agent's option, shall be paid by Borrower to Agent for the ratable
benefit of Lenders immediately upon demand. Except with respect to CoBank's
statutory lien on the Class-E stock, retirement payments thereon and proceeds
thereof, Borrower's grant to Agent of security interests, liens, and mortgages
are granted for the benefit of all Lenders, and Agent shall hold and enforce
such rights and interests for the benefit of all Lenders to secure all
Obligations.

     4.3    Disposition of Collateral. Borrower will safeguard and protect all
            -------------------------
Collateral for Agent's general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Inventory in the ordinary
course of business and (b) receivables to Southern States Receivables Corp. or
any successor securitization entity pursuant to a Permitted Securitization
Transaction; (c) assets outside of the ordinary course of business in an
aggregate amount not to exceed $3,000,000 in any fiscal year, so long as no
individual transaction is in an amount in excess of $100,000; (d) assets
contemplated by the Restructuring Plan (for minimum dollars amounts scheduled by
Borrower and acceptable to Lenders); (e) equipment which is obsolete or no
longer useful in Borrower's business provided that aggregate net cash proceeds
in excess of $50,000 in any single transaction or series of related transactions
must be reinvested in Borrower within 120 days or applied to reduce the Term
Loan, (f) subject to the terms of Section 7.19, sales of assets not to exceed
$25,000,000 outstanding at any time, in accordance with the Financing Services
and Contributed Capital Agreement; and (g) a sale and lease back of computer
equipment and software with a book value not to exceed $5,000,000. Provided that
with respect to (a) through (g) above, unless otherwise indicated, the net cash
proceeds of the Collateral Disposition are immediately paid to the Agent to be
applied as set forth in Section 2.14 above. Should Borrower reach agreement with
John Deere regarding a joint venture opportunity, Agent and Lenders shall review
the proposed terms and agree to not unreasonably withhold their consent to any
sales or dispositions of assets in conjunction with such joint venture.

     4.4    Preservation of Collateral. In addition to the rights and remedies
            --------------------------
set forth in Article XI hereof, Agent, at Borrower's expense: (a) may at any
time take such steps as Agent deems necessary to protect Agent's and Lender's
interest in and to preserve the Collateral, including, after the occurrence of
an Event of Default and during the continuance thereof, the hiring of such
security guards or the placing of other security protection measures, and
protecting, feeding, exercising, harvesting, storing, packaging, processing and
transporting the Collateral, all as Agent may deem appropriate; (b) after the
occurrence of an Event of Default and during the continuance thereof, may employ
and maintain at any of Borrower's premises a custodian who shall have full
authority to do all acts necessary to protect Agent's interests in the
Collateral; (c) after the occurrence of an Event of Default and during the
continuance thereof, may lease warehouse facilities to which Agent may move all
or part of the Collateral; (d) may use Borrower's owned or leased lifts, hoists,
trucks and other facilities or equipment for handling or, after the occurrence
of an Event of Default and during the continuance thereof, removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over

                                      53
<PAGE>

and through any of Borrower's owned or leased property. Borrower shall cooperate
fully with all of Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Agent may direct. All of Agent's expenses
related to the foregoing and for preserving the Collateral, including any
expenses relating to the bonding of a custodian, shall be charged to Borrower's
Account as a Revolving Advance, without regard to availability to borrow under
Section 2.1(a) hereof, as a Base Rate Loan and added to the Obligations.

     4.5   Ownership of Collateral. With respect to the Collateral, at the time
           -----------------------
the Collateral becomes subject to Agent's security interest: (a) Borrower shall
be the sole owner of and fully authorized and able to sell, transfer, pledge
and/or grant a first priority security interest in each and every item of the
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (b) each document
and agreement executed by Borrower or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (c) all signatures and endorsements of Borrower that appear on such
documents and agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall be located at
the locations set forth on Schedule 4.5 and shall not be removed from any
                           ------------
location(s) on Schedule 4.5 without the prior written consent of Agent except
               ------------
with respect to the sale of Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof.

     4.6    Defense of Agent's and Lenders' Interests. Until (a) payment and
            -----------------------------------------
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period Borrower shall not, without each Lender's prior
written consent, pledge, sell (except Inventory in the ordinary course of
business, or Real Property and Equipment to the extent permitted in Section 4.3
hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or
allow or suffer to be encumbered in any way except for Permitted Encumbrances,
any part of the Collateral. Borrower shall defend Agent's interests in the
Collateral against any and all Persons whatsoever. At any time following demand
by Agent for payment of all Obligations, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including without limitation: labels, stationery,
documents, instruments and advertising materials. If Agent exercises this right
to take possession of the Collateral, Borrower shall, upon demand, assemble it
in the best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law. Subject
to the terms of Section 4.15(d), Borrower shall, and Agent may in its reasonable
discretion, at its option, instruct all suppliers, carriers, forwarders,
warehouses or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver same to Agent
and/or subject to Agent's order and if they shall come into Borrower's
possession, they, and each of them, shall be held by Borrower in trust as
Agent's trustee, and Borrower will immediately deliver them to Agent in their
original form together with any necessary endorsement.

     4.7    Books and Records. Borrower shall (a) keep proper books of record
            -----------------
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and

                                      54
<PAGE>

claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrower.

     4.8    Financial Disclosure. Borrower hereby irrevocably authorizes and
            --------------------
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each Lender (upon such Lender's
request) copies of any of Borrower's financial statements, trial balances or
other accounting records of any sort in the accountant's or auditor's
possession, and to disclose to Agent and each Lender (upon such Lender's
request) any information such accountants may have concerning Borrower's
financial status and business operations. Borrower hereby authorizes all
federal, state and municipal authorities to furnish to Agent and each Lender
(upon such Lender's request) copies of reports or examinations relating to
Borrower, whether made by Borrower or otherwise; provided, however, that Agent
and each Lender (upon such Lender's request) will attempt to obtain such
information or materials directly from Borrower prior to obtaining such
information or materials from such accountants or such authorities. If
applicable, any such non-public information shall be held by Agent and Lenders
subject to the provisions of Section 15.15 hereof.

     4.9    Compliance with Laws. Borrower shall comply with all acts, rules,
            --------------------
regulations and orders, including, without limitation, state and federal
securities laws and regulations of any legislative, administrative or judicial
body or official applicable to the Collateral or any part thereof and/or to the
operation of Borrower's business the non-compliance with which could reasonably
be expected to have a Material Adverse Effect on Borrower. Borrower may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent's Lien on or security interest
in the Collateral. The assets of Borrower at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets of Borrower so that such insurance shall
remain in full force and effect.

     4.10   Inspection of Premises. At all reasonable times Agent and each
            ----------------------
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of Borrower's
business. Agent, any Lender and their agents may enter upon any of Borrower's
premises at any time during business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of such Borrower's business;
provided that so long as no Default or Event of Default has occurred and is
continuing, such Collateral review and inspection (during such times when no
Default or Event of Default is continuing) shall be limited to 4 times per
calendar year.

                                      55
<PAGE>

     4.11   Insurance. Borrower shall bear the full risk of any loss of any
            ---------
nature whatsoever with respect to the Collateral. At Borrower's own cost and
expense in amounts and with carriers acceptable to Agent, Borrower shall (a)
keep all its insurable properties and properties in which Borrower has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, where an
exposure exists to loss from such loss perils, and for such amounts, as is
customary in the case of companies engaged in businesses similar to Borrower's;
provided that, business interruption insurance shall be maintained on all
locations on which it is maintained as of the date hereof and all additional
locations where the failure to maintain such insurance might have or result in a
Material Adverse Effect; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured's officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of Borrower either directly or through authority
to draw upon such funds or to direct generally the disposition of such assets;
(c) maintain public and product liability insurance against claims for personal
injury, death or property damage suffered by others; (d) maintain all such
worker's compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which Borrower is engaged in business; (e) furnish
Agent with (i) certificates of insurance or copies of all policies and evidence
of the maintenance of such policies by the renewal thereof at least thirty (30)
days before any expiration date, and (ii) appropriate loss payable endorsements
in form and substance satisfactory to Agent, naming Agent as a co-insured and
lender loss payee as its interests may appear with respect to all insurance
coverage referred to in clauses (a) and (c) above, and providing (A) that all
proceeds thereunder shall be payable to Agent, (B) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (C) that such policy and additional insured and lender loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and
Borrower to make payment for such loss to Agent and not to Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to Borrower and Agent jointly, Agent may endorse Borrower's name thereon
and do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. All loss recoveries received
by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine. Any surplus shall be paid
by Agent to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Agent, on demand. Anything
hereinabove to the contrary notwithstanding, and subject to the fulfillment of
the conditions set forth below, Agent shall remit to Borrower insurance proceeds
received by Agent during any calendar year under insurance policies procured and
maintained by Borrower which insure Borrower's insurable properties to the
extent such insurance proceeds do not exceed $5,000,000 in the aggregate during
such calendar year or $1,000,000 per occurrence. In the event the amount of
insurance proceeds received by Agent for any occurrence exceeds $1,000,000, then
Agent shall not be obligated to remit the insurance proceeds to Borrower unless
Borrower shall provide Agent with evidence reasonably satisfactory to Agent that
the insurance proceeds will be used by Borrower to repair, replace or restore
the insured property which was the subject of the insurable loss. In the event
Borrower has previously received (or, after giving effect to any proposed
remittance by Agent to Borrower would receive) insurance proceeds which equal or
exceed $5,000,000 in the aggregate during any calendar year, then Agent may, in
its sole discretion, either remit the insurance

                                      56
<PAGE>

proceeds to Borrower upon Borrower providing Agent with evidence reasonably
satisfactory to Agent that the insurance proceeds will be used by Borrower to
repair, replace or restore the insured property which was the subject of the
insurable loss, or apply the proceeds to the Obligations, as aforesaid. The
agreement of Agent to remit insurance proceeds in the manner above provided
shall be subject in each instance to satisfaction of each of the following
conditions: (x) No Event of Default or Default shall then have occurred or be
continuing, and (y) Borrower shall use such insurance proceeds to repair,
replace or restore the insurable property which was the subject of the insurable
loss and for no other purpose.

     4.12   Failure to Pay Insurance. If Borrower fails to obtain insurance as
            ------------------------
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of Borrower,
and charge Borrower's Account therefor as a Revolving Advance of a Base Rate
Loan and such expenses so paid shall be part of the Obligations.

     4.13   Payment of Taxes. Borrower will pay, when due, all taxes,
            ----------------
assessments and other Charges lawfully levied or assessed upon Borrower or any
of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes except to the extent such taxes,
assessments and other charges are not delinquent or are being contested in good
faith and by appropriate proceedings and with respect to which appropriate
reserves have been established by Borrower; provided that, the aggregate amount
of such taxes, assessments and other charges being so contested shall not exceed
$1,000,000. If any tax by any governmental authority is or may be imposed on or
as a result of any transaction between Borrower and Agent or any Lender which
Agent or any Lender may be required to withhold or pay or if any taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made which, in Agent's or any Lender's
opinion, may possibly create a valid Lien on the Collateral other than a
Permitted Encumbrance, Agent may, without any obligation to do so, without
notice to Borrower pay the taxes, assessments or other Charges and Borrower
hereby indemnifies and holds Agent and each Lender harmless in respect thereof.
The amount of any payment by Agent under this Section 4.13 shall be charged to
Borrower's Account as a Revolving Advance, without regard to availability to
borrow under Section 2.1(a) hereof, and added to the Obligations and, until
Borrower shall furnish Agent with an indemnity therefor (or supply Agent with
evidence satisfactory to Agent that due provision for the payment thereof has
been made), Agent may hold without interest any balance standing to Borrower's
credit and Agent shall retain its security interest in any and all Collateral
held by Agent.

     4.14   Payment of Leasehold Obligations. Borrower shall at all times pay,
            --------------------------------
when and as due, its rental obligations under all leases under which it is a
tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so; provided that, Borrower shall
not be obligated to maintain any lease in full force and effect if the failure
to do so would not be reasonably expected to result in a Material Adverse
Effect. Without becoming a tenant thereunder or assuming such leases, if
Borrower defaults under any such lease, Agent and/or Lenders may pay charges to
a lessor or landlord if Agent deems it reasonably appropriate to preserve or
protect the Collateral and such expense shall be an Obligation of Borrower
hereunder.

                                      57
<PAGE>

     4.15   Receivables.
            -----------

            (a)   Nature of Receivables. Each Eligible Receivable shall be a
                  ---------------------
bona fide and valid obligation representing a bona fide indebtedness incurred by
the Customer or obligor therein named, for a fixed sum as set forth in the
invoice or obligation relating thereto (provided immaterial or unintentional
invoice errors shall not be deemed to be a breach hereof) with respect to an
absolute sale or lease and delivery of goods upon stated terms of Borrower, or
work, labor or services theretofore rendered by Borrower as of the date each
Receivable is created or for obligations of Customer otherwise created by
contract. Each Eligible Receivable shall be due and owing in accordance with
Borrower's standard terms of sale without dispute, setoff or counterclaim.

            (b)   Solvency of Customers. Each Customer, to the best of
                  ---------------------
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due, or with respect to such Customers of Borrower who are not
solvent, to the extent reasonably appropriate in Borrower's business judgment or
as required by GAAP, Borrower has set up on its books and in its financial
records bad debt reserves adequate to cover such Receivables.

            (c)   Locations of Borrower. Borrower's chief executive office is
                  ---------------------
located at the address set forth on Schedule 4.15(c) hereto. Until written
                                    ----------------
notice is given to Agent by Borrower of any other office at which Borrower keeps
its records pertaining to Receivables, all such records shall be kept at the
offices indicated as such on Schedule 4.15(c).

            (d)   Collection of Receivables. Upon the occurrence of an Event of
                  -------------------------
Default or until Borrower's authority to do so is terminated by Agent (which
notice Agent may give at any time when Agent in its sole discretion deems it to
be in Lenders' best interest to do so), Borrower will, at Borrower's sole cost
and expense, but on Agent's behalf and for Agent's account, collect in trust for
Agent on behalf of Lenders all amounts received on Receivables, and shall not
commingle such collections with Borrower's funds or use the same except to pay
Obligations. Borrower shall, upon request, deliver to Agent, or deposit in the
Blocked Account, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness. Borrower shall not maintain, in the aggregate, an amount in excess
of $5,000,000 in collected balances, in its Deposit Accounts, bank accounts,
Blocked Accounts, and/or investment accounts and any such excess shall
immediately be remitted to Agent to be applied first to Expenses, then to
outstanding Revolving Advances, then to the Term Loan and the remaining
Obligations.

            (e)   Notification of Assignment of Receivables. At any time, Agent,
                  -----------------------------------------
in its reasonable credit judgment or upon direction of the Required Lenders,
shall have the right to send notice of the assignment of, and Agent's security
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. Thereafter, Agent shall have
the sole right to collect the Receivables, take possession of the Collateral, or
both. Agent's actual collection expenses, including, but not limited to,
stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrower's Account and added to the Obligations.

                                      58
<PAGE>

            (f)   Power of Agent to Act on Borrower's Behalf. Agent shall have
                  ------------------------------------------
the right to receive, endorse, assign and/or deliver in the name of Agent or
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or Agent's designee as Borrower's attorney with power
(i) to endorse Borrower's name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) to sign
Borrower's name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign Borrower's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of Borrower's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a proof
of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done with
gross (not mere) negligence or willful misconduct; this power being coupled with
an interest is irrevocable while any of the Obligations remain unpaid. Agent
shall have the right at any time to change the address for delivery of mail
addressed to Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to Borrower.

            (g)   No Liability. Neither Agent nor any Lender shall, under any
                  ------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Agent may, without notice or consent from
Borrower, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. Agent is authorized and empowered to accept the
return of the goods represented by any of the Receivables, without notice to or
consent by Borrower, all without discharging or in any way affecting Borrower's
liability hereunder.

            (h)   Establishment of a Lockbox Account, Dominion Account. All
                  ----------------------------------------------------
proceeds of Collateral shall be deposited by Borrower into a lockbox account,
concentration account, dominion account or such other "blocked account"
(collectively, "Blocked Accounts") as Agent may require pursuant to an
arrangement with such bank as may be selected by Borrower and be acceptable to
Agent, it being acknowledged that as of the date hereof, Borrower's current cash
management procedures as outlined on Exhibit 4.15(h) (so long as all of the
Deposit Accounts are subject to a daily sweep of collected funds to a Blocked
Account), hereto are satisfactory. Borrower and Agent shall enter into a control
agreement with such bank, pursuant to which Borrower shall have access to and
may give instructions to bank regarding

                                      59
<PAGE>

such Blocked Account until such bank receives notice from Agent that there has
been a Default or Event of Default hereunder. At such time, bank will cease
complying with Borrower's instructions concerning the Blocked Accounts or funds
on deposit therein. Agent shall have a first priority perfected security
interest in and to the Blocked Accounts and all funds deposited therein and
Borrower shall obtain the agreement by such bank to waive any offset rights
against the funds so deposited. Neither Agent nor any Lender assumes any
responsibility for such "Blocked Accounts" arrangement, including without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder. Alternatively, Agent, in its
discretion, may establish depository accounts ("Depository Accounts") in the
name of Agent at a bank or banks for the deposit of such funds and Borrower
shall deposit all proceeds of Collateral or cause same to be deposited, in kind,
in such Depository Accounts of Agent in lieu of depositing proceeds to the
Blocked Accounts.

            (i)   Adjustments. Borrower will not, without Agent's consent,
                  -----------
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary and made in
the ordinary course of business of Borrower.

            (j)   To the extent any Receivables are secured by an Agricultural
Lien in favor of Borrower, Borrower shall properly perfect such Agricultural
Lien under applicable state laws.

     4.16   Inventory. To the extent Inventory held for sale or lease has been
            ---------
produced by Borrower, it has been and will be produced by Borrower in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders thereunder.

     4.17   Maintenance of Equipment. The Equipment shall be maintained in good
            ------------------------
operating condition and repair (reasonable wear and tear excepted) and, subject
to Section 7.6, 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. Borrower shall not use or operate the Equipment in violation of
any law, statute, ordinance, code, rule or regulation. Borrower shall have the
right to sell Equipment to the extent set forth in Section 4.3 hereof.

     4.18   Exculpation of Liability. Except as expressly provided herein,
            ------------------------
nothing herein contained shall be construed to constitute Agent or any Lender as
Borrower's agent for any purpose whatsoever, nor shall Agent or any Lender be
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of
the cause thereof. Neither Agent nor any Lender, whether by anything herein or
in any assignment or otherwise, assume any of Borrower's obligations under any
contract or agreement assigned to Agent or such Lender, and neither Agent nor
any Lender shall be responsible in any way for the performance by Borrower of
any of the terms and conditions thereof, and no delegation to Agent and Lenders
of Borrower's duty of performance is intended hereby.

     4.19   Environmental Matters.
            ---------------------

                                      60
<PAGE>

               (a)  Borrower shall ensure that the Real Property remains in
compliance with all Environmental Laws and it shall not place or permit to be
placed any Hazardous Substances on any Real Property except as not prohibited by
applicable Environmental Laws.

               (b)  Borrower shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.

               (c)  Borrower shall (i) employ in connection with the use of the
Real Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.

               (d)  In the event Borrower obtains, gives or receives notice of
any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any written notice of violation, written
request for information or notification hat it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or Borrower's interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person, including any state
agency responsible in whole or in part for environmental matters in the state in
which the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrower
shall, within seven (7) Business Days, give written notice of same to Agent and
the Lenders detailing facts and circumstances of which Borrower is aware giving
rise to the Hazardous Discharge or Environmental Complaint. Borrower will
promptly update Agent and Lenders on any material changes regarding such events.
Such information is to be provided to allow Agent to protect its security
interest in the Real Property and is not intended to create nor shall it create
any obligation upon Agent or any Lender with respect thereto.

               (e)  Borrower shall promptly forward to Agent and Lenders copies
of any request for information, notification of potential liability, demand
letter relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrower shall promptly forward to Agent and
Lenders copies of all documents and reports concerning a Hazardous Discharge at
the Real Property that Borrower is required to file under any Environmental
Laws. Such information is to be provided solely to allow Agent to protect
Agent's security interest in the Real Property and the Collateral.

               (f)  Borrower shall respond promptly to any Hazardous Discharge
or Environmental Complaint and take all necessary action in order to safeguard
the health of any Person and to avoid

                                      61
<PAGE>

subjecting the Collateral or Real Property to any Lien. If Borrower shall fail
to so respond promptly to any Hazardous Discharge or Environmental Complaint or
Borrower shall fail to comply with any of the requirements of any Environmental
Laws, Agent on behalf of Lenders may, but without the obligation to do so, for
the sole purpose of protecting Agent's interest in Collateral: (A) give such
notices or (B) enter onto the Real Property (or authorize third parties to enter
onto the Real Property) and take such actions as Agent (or such third parties as
directed by Agent) deem reasonably necessary or advisable, to clean up, remove,
mitigate or otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Base Rate Loans constituting Revolving Advances shall be
paid upon demand by Borrower, and until paid shall be added to and become a part
of the Obligations secured by the Liens created by the terms of this Agreement
or any other agreement between Agent, any Lender and Borrower.

               (g)  Promptly upon the written request of Agent or the Required
Lenders from time to time, Borrower shall provide Agent and Lenders, at
Borrower's expense, with an environmental site assessment or environmental audit
report prepared by an environmental engineering firm acceptable in the
reasonable opinion of Agent, to assess with a reasonable degree of certainty the
existence of a Hazardous Discharge and the potential costs in connection with
abatement, cleanup and removal of any Hazardous Substances found on, under, at
or within the Real Property. Any report or investigation of such Hazardous
Discharge proposed and acceptable to an appropriate Authority that is charged to
oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent.
If such estimates, individually or in the aggregate, exceed $100,000, Agent or
the Required Lenders shall have the right to require Borrower to post a bond,
letter of credit or other security reasonably satisfactory to Agent or the
Required Lenders to secure payment of these costs and expenses.

               (h)  Borrower shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrower's
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Borrower's
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.

               (i)  For purposes of this Agreement, all references to Real
Property shall be deemed to include all of Borrower's right, title and interest
in and to its owned and leased premises.

                                      62
<PAGE>

         4.20  Financing Statements. Except as respects the financing statements
               --------------------
filed by Agent on behalf of Lenders and the financing statements described on
Schedule 1.2(c), no financing statement covering any of the Collateral or any
---------------
proceeds thereof is on file in any public office.

         4.21  CoBank Stock. CoBank shall continue to have an exclusive
               ------------
statutory first Lien for the benefit of CoBank in all equity and distributions
which Borrower may now or hereafter acquire in CoBank or be entitled to
including, without limitation, CoBank Class E stock (or any other stock of
CoBank), patronage dividends, retirement payments thereon and proceeds thereof.
The proceeds of such collateral shall not, however, be applied to the
Obligations due to any other Lender until CoBank is paid in full. CoBank shall
not be obligated to set off or otherwise apply such equities to the Borrower's
Obligations to CoBank under any theory of marshalling of assets or otherwise.

         4.22  Revised Article 9.
               -----------------

         Borrower acknowledges and agrees to the following provisions in light
of the enactment of revisions to Article 9 of the Uniform Commercial Code and
corresponding revisions to other sections of the Uniform Commercial Code
("Revised Article 9"), in the form or substantially in the form approved by the
American Law Institute and the National Conference of Commissioners on Uniform
State Laws, as contained in Appendix XVI of the 1999 edition of the Uniform
Commercial Code Official Text:

               (a)  Attachment. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral is all property of Borrower
described in the definition of Collateral set forth in Section 1.2 hereof,
whether or not within the scope of Revised Article 9 and shall include, without
limitation, the following categories of assets as defined in Revised Article 9:
all accounts, instruments (including promissory notes), all chattel paper
(whether tangible or electronic), letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), general intangibles (including
payment intangibles and software) related or pertaining thereto, all deposit
accounts, securities and all other investment property, supporting obligations
and any and all proceeds thereof, wherever located, whether now owned or
hereafter acquired.

               (b)  Perfection by Filing. Agent may at any time and from time to
time, file financing statements, continuation statements and amendments thereto
that describe the Collateral or words of similar effect and which contain any
other information required by Part 5 of Revised Article 9 for the sufficiency or
filing office acceptance of any financing statement, continuation statement or
amendment, including whether Borrower is an organization, the type or
organization and any organization identification number issued to Borrower.
Borrower agrees to furnish any such information to Agent promptly upon request.
Any such financing statements, continuation statements or amendments may be
signed by Agent on behalf of Borrower (if a signature is required) and may be
filed at any time in any jurisdictions by Agent, whether or not Revised Article
9 is then in effect in such jurisdiction.

               (c)  Other Perfection, etc. At any time and from time to time,
Borrower shall, whether or not Revised Article 9 is in effect in any applicable
jurisdiction, take such steps as Agent may reasonably request for Agent (i) to
obtain possession and/or "control" of any investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper (as such terms are defined
in Revised Article 9) as set forth in Revised Article 9, and, where control is
established by written agreement, such agreement shall be in form

                                      63
<PAGE>

and substance reasonably satisfactory to Agent, and (ii) otherwise to insure
the continued perfection and priority of Agent's security interest in any of the
Collateral and of the preservation of its rights therein, whether in
anticipation of or following the effectiveness of Revised Article 9 in any
applicable jurisdiction.

               (d)  Other Provisions. In applying the law of any jurisdiction in
which Revised Article 9 is not in effect, all references in this Agreement to
any section of Article 9 (which are Revised Article 9 references) shall be
deemed to be references to the appropriate corresponding section(s) of Article 9
as in effect in those jurisdictions.

               (e)  Savings Clause. Nothing contained in this Section 4.22 shall
be construed to narrow the scope of Agent's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of Agent or Lenders hereunder,
and this Section shall be construed to augment and enhance Agent's and Lenders
rights in and to the Collateral.

         4.23  Wachovia Purchase Agreement.
               ---------------------------

               (a)  The Lenders hereby agree that until the Purchaser's Total
Investment (as defined in the Wachovia Purchase Agreement) and all other amounts
owed under the Transaction Documents (as defined in the Wachovia Purchase
Agreement) have been indefeasibly paid in full in accordance with the terms of
the Transaction Documents (as defined in the Wachovia Purchase Agreement), and
the Wachovia Purchase Agreement has terminated in accordance with its terms, the
Lenders will not, directly or indirectly, without the prior written consent of
the Blue Ridge Agent, (A) exercise any right or remedy or take any action to
enforce (including, without limitation, any right, remedy or action provided in
this Agreement or any agreement or instrument executed in connection herewith)
any lien or other security interest granted to the Agent or any Lender in any of
the capital stock of Southern States Receivables Corp. or (B) take, obtain or
hold or take any action to take, obtain or hold (or permit anyone acting on its
behalf to take, obtain or hold or take any action to take, obtain or hold) any
assets of Southern States Receivables Corp., whether as a result of any
administrative, legal or equitable action, or otherwise or (C) object to or
contest in any administrative, legal or equitable action or proceeding
(including, without limitation, any insolvency, bankruptcy, receivership,
liquidation, reorganization, winding up, readjustment, composition or other
similar proceeding relating to the Borrower or Southern States Receivables Corp.
or their respective property) or object to or contest in an other manner the
interest of the Administrative Agent, the Purchaser or any Liquidity Bank (as
such terms are defined in the Wachovia Purchase Agreement) in the property and
assets of Southern States Receivables Corp. or (D) cause or permit Section 25 of
the Collateral Pledge Agreement, dated of even date herewith, to be amended,
modified, supplemented, or deleted.

               (b)  The Blue Ridge Agent shall be a third party beneficiary with
respect to this Section 4.23.

               (c)  So long as the capital stock of Southern States Receivables
Corp. or any of its successors in interest is pledged to secure the Obligations,
and the Wachovia Securitization is in place, this Section 4.23 shall not be
amended, modified or supplemented without the prior written consent of the Blue
Ridge Agent, which consent shall be at the sole and reasonable discretion of the
Blue Ridge Agent, and the

                                      64
<PAGE>

provisions of this Section 4.23 shall be contained in any agreement that amends
and restates this Agreement. Agent and Lenders agree that no such party shall
enter into any additional agreement that would adversely affect the rights of
the Blue Ridge Agent hereunder.

         4.24  Wholesale Receivables.
               ---------------------

               (a)  Agent and Lenders agree that Wholesale Receivables and
Related Security sold by Borrower to Southern States Receivables Corp. pursuant
to the Wachovia Securitization shall be sold free and clear of Agent's Lien on
such Wholesale Receivables, provided that Agent's Lien shall immediately attach
to such Wholesale Receivables upon any repurchase of any such Wholesale
Receivables or Related Security by Borrower.

               (b)  The Blue Ridge Agent shall be a third party beneficiary with
respect to this Section 4.24.

               (c)  So long as the capital stock of Southern States Receivables
Corp. or any of its successors in interest is pledged to secure the Obligations
and the Wachovia Securitization is in place, this Section 4.24 shall not be
amended, modified or supplemented without the prior written consent of the Blue
Ridge Agent, which consent shall be at the sole and reasonable discretion of the
Blue Ridge Agent, and the provisions of this Section 4.24 shall be contained in
any agreement that amends and restates this Agreement. Agent and Lenders agree
that no such party shall enter into any additional agreement that would
adversely affect the rights of the Blue Ridge Agent hereunder.

         4.25  Custodian, Etc. Borrower shall enter into a custodian agreement
               --------------
("Custodian Agreement"), in form and substance satisfactory to Agent, pursuant
to which (i) all notes, instruments, chattel paper which are in an amount in
excess of $100,000, (ii) until January 1, 2002, all notes, instruments, and
chattel paper located in Mississippi, Alabama and Florida (if the Receivables
related thereto are to be considered as Eligible Receivables), and (iii) all
vehicle titles (with Agent's lien noted thereon), are held by a custodian for
the benefit of Agent on behalf of Lenders. All notes, instruments and chattel
paper shall contain a notation, in form and substance satisfactory to Agent,
that such notes, instruments and chattel paper are subject to the security
interest of Agent.

         V.    REPRESENTATIONS AND WARRANTIES.

         Borrower represents and warrants as follows:

         5.1   Authority. Borrower has full power, authority and legal right to
               ---------
enter into this Agreement and the Loan Documents and to perform all its
respective Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Loan Documents (a) are within
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of Borrower's by-laws, certificate of incorporation or other
applicable documents relating to Borrower's formation or to the conduct of
Borrower's business or of any material agreement or undertaking to which
Borrower is a party or by which Borrower is bound, and (b) will not conflict
with nor result in any breach in any of the provisions of or constitute a
default under or result in the creation of any Lien except Permitted

                                      65
<PAGE>

Encumbrances upon any asset of Borrower under the provisions of any agreement,
charter document, instrument, by-law, or other instrument to which Borrower or
its property is a party or by which it may be bound.

         5.2   Formation and Qualification.
               ---------------------------

               (a)  Borrower is duly incorporated and in good standing under the
laws of the state identified on Schedule 5.2(a) and is qualified to do business
                                ---------------
and is in good standing in the states listed on Schedule 5.2(a) which constitute
                                                ---------------
all states in which qualification and good standing are necessary for Borrower
to conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on Borrower.
Borrower has delivered to Agent true and complete copies of its certificate of
incorporation and by-laws and will promptly notify Agent of any amendment or
changes thereto. Borrower is not incorporated or organized in any state other
than as identified as the state of incorporation on Schedule 5.2(a).

               (b)  The only Subsidiaries and Affiliates of Borrower are listed
on Schedule 5.2(b).
   ---------------

         5.3   Survival of Representations and Warranties. All representations
               ------------------------------------------
and warranties of Borrower contained in this Agreement and the Loan Documents
shall be true at the time of Borrower's execution of this Agreement and the Loan
Documents, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto.

         5.4   Tax Returns. Borrower's federal tax identification number is set
               -----------
forth on Schedule 5.4. Borrower has filed all federal, state and local tax
         ------------
returns and other reports it is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are due and payable. State
and local income tax returns of Borrower have been examined and reported upon by
the appropriate taxing authority or closed by applicable statute and satisfied
for all fiscal years prior to and including the fiscal year ending June 30,
1996. Federal income tax returns of Borrower have been examined and reported
upon by the appropriate taxing authority or closed by applicable statute and
satisfied for all fiscal years prior to and including the fiscal year ending
June 30, 1997. The provision for taxes on the books of Borrower are adequate for
all years not closed by applicable statutes, and for its current fiscal year,
and Borrower has no knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.

                                      66
<PAGE>

         5.5   Financial Statements.
               --------------------

               (a)  The pro forma balance sheet of Borrower on a consolidated
basis (the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated under this Agreement
and is accurate, complete and correct in all material respects and fairly
reflects the financial condition of Borrower on a pro forma consolidated basis
as of the Closing Date after giving effect to this Agreement. The Pro Forma
Balance Sheet has been certified as accurate, complete and correct in all
material respects by the President and Chief Financial Officer of Borrower.

               (b)  The twenty-four-month projected balance sheet and operating
statement as of the Closing Date prepared on a monthly basis, copies of which
are annexed hereto as Exhibit 5.5(b) (the "Projections") were prepared by the
                      --------------
Chief Financial Officer of Borrower, are based on underlying assumptions which
provide a reasonable basis for the projections contained therein and reflect
Borrower's judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. The Projections
together with the Pro Forma Balance Sheet, are referred to as the "Pro Forma
Financial Statements".

               (c)  The draft consolidated balance sheets of the Borrower and
its Subsidiaries, and of Statesman (on a consolidated and consolidating basis
with Michigan Livestock Credit Corporation) and such other Persons described
therein as of June 30, 2001, and the related statements of income, changes in
stockholder's equity, and changes in cash flow for the period ended on such
date, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants concur and present fairly the financial position of the
Borrower and its Subsidiaries at such date and the results of their operations
for such period. Since June 30, 2001 there has been no change in the condition,
financial or otherwise, of Borrower or its Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Borrower and their
Subsidiaries, except as disclosed in writing as of Closing Date to the Lenders
and changes in the ordinary course of business, none of which individually or in
the aggregate has been materially adverse.

         5.6   Corporate Name. Borrower has not been known by any other
               --------------
corporate name in the past five years and does not sell Inventory under any
other name except as set forth on Schedule 5.6, nor except as set forth on
                                  ------------
Schedule 5.6 has Borrower been the surviving corporation of a merger or
------------
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years.

         5.7   O.S.H.A. and Environmental Compliance.
               -------------------------------------

               (a)  Except as disclosed on Schedule 5.7 attached hereto and made
                                           ------------
a part hereof, Borrower has duly complied with, and its facilities, business,
assets, property, leaseholds and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
RCRA and all other Environmental Laws; there have been no outstanding citations,
notices or orders of non-compliance issued to Borrower or relating to its
business, assets, property, leaseholds or Equipment under any such laws, rules
or regulations.

                                      67
<PAGE>

               (b)  Borrower has been issued all material federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.

               (c)  Except as disclosed on Schedule 5.7 attached hereto and made
                                           ------------
a part hereof and except as would not have a material adverse effect on the Real
Property in question (it being agreed that in any event any remedial costs or
damages in excess of $100,000 per Real Property or $1,000,000 in the aggregate
for all Real Property, shall be deemed or have a material adverse effect for
purposes hereof), (i) there are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any premises
leased by Borrower; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property or any premises leased by
Borrower; (iii) neither the Real Property nor any premises leased by Borrower
has ever been used as a treatment, storage or disposal facility of Hazardous
Waste; and (iv) no Hazardous Substances are present on the Real Property or any
premises leased by Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of Borrower or of its tenants.

         5.8   Solvency; No Litigation, Violation, Indebtedness or Default.
               -----------------------------------------------------------

               (a)  Borrower is solvent, able to pay its debts as they mature,
has capital sufficient to carry on its business and all businesses in which it
is about to engage, and (i) as of the Closing Date, the fair present saleable
value of its assets, calculated on a going concern basis, is in excess of the
amount of its liabilities and (ii) subsequent to the Closing Date, the fair
saleable value of its assets (calculated on a going concern basis) will be in
excess of the amount of its liabilities.

               (b)  Except as disclosed in Schedule 5.8(b), Borrower does not
                                           ---------------
have (i) any pending or threatened litigation, arbitration, actions or
proceedings which involve the possibility of having a Material Adverse Effect on
Borrower, nor (ii) any liabilities or indebtedness for borrowed money other than
the Obligations.

               (c)  Borrower is not in violation of any applicable foreign,
federal, state, or local statute, regulation or ordinance in any respect which
could reasonably be expected to have a Material Adverse Effect on Borrower, nor
is Borrower in violation of any order of any court, governmental authority or
arbitration board or tribunal. In addition, the issuance, redemption and other
action concerning any securities issued by Borrower have been and will continue
to be made and conducted in compliance with all applicable laws and governmental
rules and regulations, including, without limitation, state and federal
securities laws.

               (d)  Neither Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d)
                                                                ---------------
hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
                               ---------------
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and Borrower and each member
of the Controlled Group has met all applicable minimum funding requirements
under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is
intended to be a qualified plan under Section 401(a) of the

                                      68
<PAGE>

Code as currently in effect has been determined by the Internal Revenue Service
to be qualified under Section 401(a) of the Code and the trust related thereto
is exempt from federal income tax under Section 501(a) of the Code, (iii)
neither Borrower nor any member of the Controlled Group has incurred any
liability to the PBGC other than for the payment of premiums, and there are no
premium payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and neither Borrower nor any member of the Controlled
Group knows of any facts or circumstances which would materially change the
value of such assets and accrued benefits and other liabilities; (vi) neither
Borrower nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) neither Borrower nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B of
the Code, and no fact exists which could give rise to any such liability, (viii)
neither Borrower nor any member of the Controlled Group nor any fiduciary of,
nor any trustee to, any Plan, has engaged in a "prohibited transaction"
described in Section 406 of the ERISA or Section 4975 of the Code nor taken any
action which would constitute or result in a Termination Event with respect to
any such Plan which is subject to ERISA, (ix) Borrower and each member of the
Controlled Group has made all contributions due and payable with respect to each
Plan, (x) there exists no event described in Section 4043(b) of ERISA, for which
the thirty (30) day notice period contained in 29 CFR ss.2615.3 has not been
waived, (xi) neither Borrower nor any member of the Controlled Group has any
fiduciary responsibility for investments with respect to any plan existing for
the benefit of persons other than employees or former employees of Borrower and
any member of the Controlled Group, and (xii) neither Borrower nor any member of
the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.

         5.9   Patents, Trademarks, Copyrights and Licenses. All patents, patent
               --------------------------------------------
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by Borrower are set
forth on Schedule 5.9, are valid and have been duly registered or filed with all
         ------------
appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, design right, tradename, trade secret or license
and Borrower is not aware of any grounds for any challenge, except as set forth
in Schedule 5.9 hereto. Each patent, patent application, patent license,
   ------------
trademark, trademark application, trademark license, service mark, service mark
application, service mark license, copyright, copyright application and
copyright license owned or held by Borrower and all trade secrets used by
Borrower consist of original material or property developed by Borrower or was
lawfully acquired by Borrower from the proper and lawful owner thereof. Each of
such items has been maintained so as to preserve the value thereof from the date
of creation or acquisition thereof. With respect to all software used by
Borrower, Borrower is in possession of all source and object codes related to
each piece of software or is the beneficiary of a source code escrow agreement,
each such source code escrow agreement being listed on Schedule 5.9 hereto.
                                                       ------------

                                      69
<PAGE>

         5.10  Licenses and Permits. Except as set forth in Schedule 5.10,
               --------------------                         -------------
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state,
provincial or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect.

         5.11  Default of Indebtedness. Neither Borrower nor any Guarantor is in
               -----------------------
default in the payment of the principal of or interest on any Indebtedness or
under any instrument or agreement under or subject to which any Indebtedness has
been issued and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time or the giving of
notice, or both, constitutes or would constitute an event of default thereunder,
which might be reasonably likely to result in a Material Adverse Effect.

         5.12  No Default. Neither Borrower nor any Guarantor is in default in
               ----------
the payment or performance of any of its contractual obligations which might be
reasonably likely to result in a Material Adverse Effect, and no Default has
occurred.

         5.13  No Burdensome Restrictions. Neither Borrower nor any Guarantor is
               --------------------------
a party to any contract or agreement the performance of which could have a
Material Adverse Effect. Borrower has not agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.

         5.14  No Labor Disputes. Neither Borrower nor any Guarantor is involved
               -----------------
in any labor dispute; there are no strikes or walkouts or union organization of
Borrower's or any Guarantor's employees threatened or in existence and no labor
contract is scheduled to expire during the Term other than as set forth on
Schedule 5.14 hereto.
-------------

         5.15  Margin Regulations. Borrower is not engaged, nor will it engage,
               ------------------
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.

         5.16  Investment Company Act. Borrower is not an "investment company"
               ----------------------
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.

         5.17  Disclosure. No representation or warranty made by Borrower in
               ----------
this Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of fact
or omits to state any fact necessary to make the statements herein or therein
not misleading. There is no fact known to Borrower or which reasonably should be
known to Borrower which

                                      70
<PAGE>

Borrower has not disclosed to Agent in writing with respect to the transactions
contemplated by this Agreement which could reasonably be expected to have a
Material Adverse Effect on Borrower.

    5.18  Swaps. Other than Interest Hedging Instruments and except as set forth
          -----
on Schedule 5.18 attached hereto and made a part hereof, Borrower is not a party
   -------------
to, nor will it be a party to, any swap agreement, interest rate swap, or other
interest hedging device whereby Borrower has agreed or will agree to swap
interest rates or currencies unless same is unsecured and provides that damages
upon termination following an event of default thereunder are payable on an
unlimited "two-way basis" without regard to fault on the part of either party.

    5.19  Conflicting Agreements. No provision of any mortgage, indenture,
          ----------------------
contract, agreement, judgment, decree or order binding on Borrower or affecting
the Collateral conflicts with, or requires any Consent which has not already
been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Loan Documents.

    5.20  Application of Certain Laws and Regulations. Neither Borrower nor any
          -------------------------------------------
Affiliate of Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.

    5.21  Business and Property of Borrower. Upon and after the Closing Date,
          ---------------------------------
Borrower does not propose to engage in any business other than business of the
same general type as conducted by it on the date of this Agreement, or
reasonably related thereto. On the Closing Date, Borrower will own all the
property and possess all of the rights and Consents necessary for the conduct of
the business of Borrower.

    5.22  Commercial Tort Claims. Borrower has no Commercial Tort Claims except
          ----------------------
as shown on Schedule 5.22 attached hereto and made a part hereof.

    5.23  Letter-of-Credit Rights. Borrower has no Letter-of-Credit Rights
          -----------------------
except as shown on Schedule 5.23 attached hereto and made a part hereof.

    5.24  Deposit Accounts. All Deposit Accounts of Borrower are shown on
          ----------------
Schedule 5.24(a) attached hereto and made a part hereof. All Deposit Accounts of
Managed Coops are shown on Schedule 5.24(b) attached hereto and made a part
hereof.

    5.25  Compliance with Laws. Borrower has duly complied with, and its
          --------------------
Property, business operations and leaseholds are in compliance in all material
respects with, the provision of all federal, state and local laws, including,
without limitation, all federal and state securities law, rules and regulations
applicable to Borrower, its Properties or the conduct of its business and there
have been no citations, notices or orders of noncompliance issued against
Borrower under any such law, rule or regulation which if adversely determined
would be reasonably likely to have or result in a Material Adverse Effect.

    VI.   AFFIRMATIVE COVENANTS.

    Borrower shall, until payment in full of the Obligations and termination of
this Agreement:

                                      71
<PAGE>

     6.1  Payment of Fees. Pay to Agent or Lenders on demand all usual and
          ---------------
customary fees and expenses which Agent or any Lender incurs in connection with
(a) the forwarding of Advance proceeds and (b) the establishment and maintenance
of any Blocked Accounts or Depository Accounts as provided for in Section
4.15(h). Agent may, without making demand, charge Borrower's Account for all
such fees and expenses.

     6.2  Conduct of Business and Maintenance of Existence and Assets. (a)
          -----------------------------------------------------------
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect on Borrower; and (c)
make all such reports and pay all such franchise and other taxes and license
fees and do all such other acts and things as may be lawfully required to
maintain its rights, licenses, leases, powers and franchises under the laws of
the United States or any political subdivision thereof.

     6.3  Violations. Promptly notify Agent in writing of any violation of any
          ----------
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to Borrower which could reasonably be expected to have a
Material Adverse Effect on Borrower.

     6.4  Government Receivables. Take all steps necessary to protect Agent's
          ----------------------
interest in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between Borrower and the United States, any
state, municipality, local government, or any department, agency or
instrumentality of any of them.

     6.5  Adjusted Net Worth. Maintain an Adjusted Net Worth in at least the
          ------------------
following amounts, measured as of the end of the corresponding periods:

      -----------------------------------------------------
       Period                            Amount
      -----------------------------------------------------
       Fiscal quarter ending:
      -----------------------------------------------------
       September, 2001                   $230,000,000
      -----------------------------------------------------
       December, 2001                    $220,000,000
      -----------------------------------------------------
       March, 2002                       $217,000,000
      -----------------------------------------------------
       June, 2002                        $228,000,000
      -----------------------------------------------------
       September, 2002                   $215,000,000
      -----------------------------------------------------
       December, 2002                    $213,000,000
      -----------------------------------------------------

                                      72
<PAGE>

      -----------------------------------------------------
       March, 2003                       $218,000,000
      -----------------------------------------------------
       June, 2003                        $243,000,000
      -----------------------------------------------------

     6.6  Funded Debt. Maintain at all times a Funded Debt to EBITDAR Ratio of
          -----------
not greater than the following amounts for the corresponding periods, measured
as of the end of the corresponding periods:

      -----------------------------------------------------
       Period                            Amount
      -----------------------------------------------------
       Fiscal quarter ending:
      -----------------------------------------------------
       September, 2001                   7.6 to 1
      -----------------------------------------------------
       December, 2001                    7.25 to 1
      -----------------------------------------------------
       March, 2002                       7.25 to 1
      -----------------------------------------------------
       June, 2002                        5.65 to 1
      -----------------------------------------------------
       September, 2002                   5.80 to 1
      -----------------------------------------------------
       December, 2002                    5.20 to 1
      -----------------------------------------------------
       March, 2003                       5.40 to 1
      -----------------------------------------------------
       June, 2003                        4.0 to 1
      -----------------------------------------------------

     6.7  EBITDAR/Interest and Dividends. Maintain at all times a ratio of
          ------------------------------
EBITDAR to Interest Expense and Dividends of not less than the following amounts
for the corresponding periods, measured as of the end of the corresponding
periods:

      -----------------------------------------------------
       Period                            Amount
      -----------------------------------------------------
       Fiscal quarter ending:
      -----------------------------------------------------
       September, 2001                   1.4 to 1
      -----------------------------------------------------
       December, 2001                    1.4 to 1
      -----------------------------------------------------
       March, 2002                       1.4 to 1
      -----------------------------------------------------
       June, 2002                        1.4 to 1
      -----------------------------------------------------
       September, 2002                   1.5 to 1
      -----------------------------------------------------
       December, 2002                    1.5 to 1
      -----------------------------------------------------
       March, 2003                       1.6 to 1
      -----------------------------------------------------
       June, 2003                        1.8 to 1
      -----------------------------------------------------

                                      73
<PAGE>

     6.8   EBITDAR. Maintain an EBITDAR of at least the following amounts as of
           -------
the corresponding fiscal quarterly period set forth below, measured as of the
end of the corresponding periods:

      -----------------------------------------------------
       Period                            Amount
      -----------------------------------------------------
       Fiscal quarter ending:
      -----------------------------------------------------
       September, 2001                   $64,000,000
      -----------------------------------------------------
       December, 2001                    $64,000,000
      -----------------------------------------------------
       March, 2002                       $64,000,000
      -----------------------------------------------------
       June, 2002                        $70,000,000
      -----------------------------------------------------
       September, 2002                   $70,000,000
      -----------------------------------------------------
       December, 2002                    $75,000,000
      -----------------------------------------------------
       March, 2003                       $75,000,000
      -----------------------------------------------------
       June, 2003                        $90,000,000
      -----------------------------------------------------

     6.9   Execution of Supplemental Instruments. Execute and deliver to Agent
           -------------------------------------
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.

     6.10  Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
           -----------------------
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.

     6.11  Standards of Financial Statements. Cause all financial statements
           ---------------------------------
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which
GAAP is applicable to be complete and correct in all material respects (subject,
in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).

     6.12  CoBank Stock. Retain eligibility to make and make such investment in
           ------------
CoBank as may from time to time be required in accordance with the Farm Credit
Act of 1971, as amended, the regulations of the Farm Credit Administration, the
bylaws of CoBank, and the capital plan of CoBank as adopted by CoBank's board of
directors, all as may be amended from time to time.

                                      74
<PAGE>

     6.13  Commercial Tort Claims. Provide written notice to Agent of any
           ----------------------
Commercial Tort Claim to which Borrower is or becomes a party or which otherwise
inures to the benefit of Borrower. Such notice shall contain a sufficient
description of the Commercial Tort Claim including the parties, the court in
which the claim was commenced (if applicable), the docket number assigned to the
case (if applicable), and a detailed explanation of the events giving rise to
such claim. Borrower shall grant Agent a security interest in such Commercial
Tort Claim to secure payment of the Obligations. Borrower shall execute and
deliver such instruments, documents and agreements as Agent may require in order
to obtain and perfect such security interest including, without limitation, a
security agreement or amendment to this Agreement all in form and substance
satisfactory to Agent. Borrower authorizes Agent to file (without Borrower's
signature), financing statements or amendments to existing financing statements
as Agent deems necessary to perfect the security interest.

     6.14  Compliance with Applicable Laws. Comply in all material respects with
           -------------------------------
all applicable laws, statutes, regulations and orders of, and all restrictions
imposed by, any arbitrator, court, regulator body or other governmental
authority, including without limitation paying all taxes (subject to the
provisions of Section 4.13) and other statutory obligations when due (including,
without limitation causing any insurance Affiliate to comply in all material
respects of all applicable insurance statutes, regulations and orders of, and
all applicable restrictions imposed by, any applicable jurisdictions) and all
federal and state securities laws. Borrower will, and will cause each of its
Subsidiaries to, comply in all material respects with all contracts, agreements,
leases and other instruments to which it is a party or by which its property is
bound or affected.

     VII.  NEGATIVE COVENANTS.

     Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:

     7.1   Merger, Consolidation, Acquisition and Sale of Assets.
           -----------------------------------------------------

           (a)  Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it.

           (b)  Sell, lease, transfer or otherwise dispose of any of its
properties or assets including by way of sale and leaseback transactions, except
as set forth in Section 4.3.

           (c)  Change its type of organization, jurisdiction of organization or
other legal structure, or organize or incorporate in more than one state or
jurisdiction.

     7.2   Creation of Liens. Create or suffer to exist any Lien or encumbrance
           -----------------
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.

     7.3   Guarantees. Become liable upon the obligations of any Person by
           ----------
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, and (b) the endorsement of checks in
                           ------------
the ordinary course of business.

                                      75
<PAGE>

     7.4  Investments. Purchase or acquire obligations or stock of, or any other
          -----------
interest in, any Person, except (a) existing investments as set forth on
Schedule 7.4 ("Existing Investments") and additional investments in Existing
------------
Investments in an amount not to exceed $2,500,000 in the aggregate as well as a
contemplated $300,000 investment to be made in Silver Lake Cotton Gin, (b)
noncash investments that do not result in a change of control; including such
items as noncash patronage refunds and other noncash distributions and
allocations of income and profits and undistributed subscriber savings accounts,
(c) investments in Cash Equivalents in an aggregate amount not to exceed
$5,000,000; and (d) investments required in conjunction with Permitted
Securitization Transactions; provided however, that should Borrower reach
agreement with John Deere regarding a joint venture opportunity, Agent and
Lenders agree to review the proposed terms of such joint venture and agree to
not unreasonably withhold consent to any reasonable investment requirement in
conjunction with such joint venture.

     7.5  Loans. Make advances, loans or extensions of credit to any Person,
          -----
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to (a) the extension of trade credit in connection with the sale of
Inventory in the ordinary course of its business, (b) commitments to advance
funds under crop loan programs and the provision of other forms of credit to its
Customers in the ordinary course of business (which include loans to Customers
and other Persons for the construction of aquacultural grow out facilities
(which loans shall be refinanced with loans from NOAA, the proceeds of such
refinance shall be used to reduce permanently the Maximum Revolver Amount)), and
(c) Managed Coops pursuant to Managed Cooperative Agreements.

     7.6  Capital Expenditures. Contract for, purchase or make any expenditure
          --------------------
or commitments for fixed or capital assets (including capitalized leases) in any
fiscal year in an amount in excess of $25,000,000.

     7.7  Dividends. Declare, pay or make any dividend or distribution on any
          ---------
shares of the common stock or preferred stock of Borrower (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of Borrower;
provided, however, that so long as no Default or Event of Default has occurred
and is continuing (or would result from the making of such distribution or
dividends), Borrower may make distributions and pay dividends, and redeem or
retire any common or preferred stock, all in the ordinary course of its business
consistent with current practices and in accordance with the terms of its Bylaws
and Articles of Formation in effect as of the Closing Date as well as make
payments of cash patronage in an amount not to exceed 40% of the total patronage
paid at such time.

     7.8  Indebtedness. Create, incur, assume or suffer to exist any
          ------------
Indebtedness (exclusive of trade debt) except in respect of (a) Indebtedness to
Lenders, (b) Indebtedness in connection with purchase money security interests
on Equipment; provided, however, that the maximum aggregate amount outstanding
              --------  -------
at any time of such Indebtedness when combined (without duplication) with
capital expenditures shall not exceed $25,000,000, (c) up to $10,000,000 in the
aggregate of Indebtedness in connection with the NOAA Loan Agreement, such
indebtedness to be used for (i) the refinancing of loans to Customers and other
Persons which were used for the construction of aquacultural grow out facilities
and (ii) financing or refinancing of specific fingerling facilities, nurseries,
production and processing plants, the proceeds of such

                                      76
<PAGE>

refinancings to be used to reduce permanently the Maximum Revolver Amount (d)
Indebtedness evidenced by AgriMoney Notes provided that the purchase price of
AgriMoney Notes with an initial term in excess of one year ("Long Term
AgriMoney") are used to repay the Term Loan and then used to repay other
Obligations, (e) Swap Obligations, (f) existing Indebtedness as set forth on
Schedule 7.8 hereto and (g) additional debt and/or liabilities not constituting
indebtedness for borrowed money in an aggregate amount (including without
limitation permitted operating lease obligations) not to exceed $2,500,000
("Debt Basket").

     7.9   Nature of Business. Substantially change the nature of the business
           ------------------
in which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted or any
business reasonably related thereto.

     7.10  Transactions with Affiliates. Directly or indirectly, purchase,
           ----------------------------
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions entered into in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate (including permitted sales of Receivables pursuant to (a) a Permitted
Securitization Transaction and (b) the Financing Services and Contributed
Capital Agreement between Statesman and Borrower (prior to any transaction with
John Deere), and transactions in the ordinary course of business and consistent
with past practices involving Southern States Insurance Exchange.

     7.11  Leases. Enter as lessee into any lease arrangement for real or
           ------
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $30,000,000 in any one fiscal year and the landlord of
such leased real property has executed a Landlord Waiver in form and substance
satisfactory to Agent in its sole discretion.

     7.12  Subsidiaries.
           ------------

           (a)  Form any new Subsidiary except in connection with a Permitted
Securitization Transaction.

           (b)  Enter into any partnership, joint venture or similar arrangement
except as otherwise contemplated in Section 7.4 above.

     7.13  Fiscal Year and Accounting Changes. Change its fiscal year end from
           ----------------------------------
June 30 or make any change (i) in accounting treatment and reporting practices
except as required by GAAP or (ii) in tax reporting treatment except as required
by law.

     7.14  Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
           ----------------
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than Borrower's business as conducted on
the date of this Agreement.

                                      77
<PAGE>

     7.15  Amendment of Articles of Incorporation, By-Laws. Amend, modify or
           -----------------------------------------------
waive any term or material provision of its Articles of Incorporation or By-Laws
unless required by law or change its jurisdiction of formation or "location" as
defined in the UCC.

     7.16  Compliance with ERISA. (i) (x) Maintain, or permit any member of the
           ---------------------
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
                                          ---------------
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in Section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of Borrower or any member of the Controlled Group or the
imposition of a lien on the property of Borrower or any member of the Controlled
Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the
                      ---------------
Controlled Group to incur, any withdrawal liability to any Multiemployer Plan;
(vii) fail promptly to notify Agent of the occurrence of any Termination Event,
(viii) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the requirements of ERISA or the Code or other applicable laws in
respect of any Plan, (ix) fail to meet, or permit any member of the Controlled
Group to fail to meet, all minimum funding requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan.

     7.17  Prepayment of Indebtedness. At any time, directly or indirectly,
           --------------------------
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of Borrower or amend or modify, in any
material manner, any Subordinated Debt instruments; provided that this Section
7.17 shall not be deemed to prohibit payment of amounts under the Agway Note and
AgriMoney Notes in accordance with the specific terms thereof which do not
constitute a voluntary prepayment by Borrower.

     7.18  Material Agreements. Enter into any amendment, waiver or modification
           -------------------
of any material agreement including, without limitation, the Agway Agreements or
any related agreements without the prior written consent of Required Lenders if
such amendment, waiver or modification might reasonably be expected to result in
a Material Adverse Effect.

     7.19  Statesman and MLCC. Incur or permit to exist any Indebtedness at
           ------------------
Statesman or MLCC, nor maintain equity in amounts in excess of $40,000,000 at
Statesman and MLCC, in the aggregate. (Any such excess equity shall promptly be
distributed to Borrower to be applied in accordance with Section 2.14 hereof.)

     7.20  Interest Hedging Instrument. Enter into any interest rate swap, swap
           ---------------------------
agreement or other Interest Hedging Instrument that creates a Swap Obligation.

     7.21  Deposit Accounts. Have an average daily collected balance (determined
           ----------------
on a trailing six (6) months basis, counting the actual number of days elapsed)
in an amount in excess of $10,000 for two (2)

                                      78
<PAGE>

consecutive months, in any Deposit Account unless Agent has or obtains a Deposit
Account Control Agreement for such Deposit Account in accordance with Section
4.2(a).

     VIII.  CONDITIONS PRECEDENT AND SUBSEQUENT.

     8.1    Conditions to Initial Advances. The agreement of Lenders to make the
            ------------------------------
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:

            (a)  Notes. Agent shall have received the Notes duly executed and
                 -----
delivered by an authorized officer of Borrower;

            (b)  Filings, Registrations and Recordings. Each document
                 -------------------------------------
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or Lien upon the Collateral
shall have been delivered to Agent in proper form for filing, registration or
recordation in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested;

            (c)  Corporate Proceedings of Borrower. Agent shall have received a
                 ---------------------------------
copy of the resolutions in form and substance reasonably satisfactory to Agent,
each of the Board of Directors of Borrower and each Guarantor, as applicable,
authorizing (i) the execution, delivery and performance of this Agreement, and
the other Loan Documents and (ii) the granting by Borrower of the security
interests in and liens upon the Collateral in each case certified by the
Secretary or an Assistant Secretary of Borrower as of the Closing Date; and,
such certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such certificate;

            (d)  Incumbency Certificates of Borrower. Agent shall have received
                 -----------------------------------
a certificate of the Secretary or an Assistant Secretary of Borrower and each
Guarantor, dated the Closing Date, as to the incumbency and signature of the
officers of Borrower executing this Agreement and each Guarantor, any
certificate or other Loan Documents to be delivered by it pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary;

            (e)  Certificates. Agent shall have received a copy of the Articles
                 ------------
or Certificate of Incorporation of Borrower and each Guarantor, and all
amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of the By-
Laws of Borrower and each Guarantor certified as accurate and complete by the
Secretary of Borrower and each Guarantor;

            (f)  Good Standing Certificates. Agent shall have received good
                 --------------------------
standing certificates for Borrower and Guarantors dated not more than 30 days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of Borrower's and each Guarantor's jurisdiction of incorporation and
each jurisdiction where the conduct of Borrower's business activities or the
ownership of its properties necessitates qualification;

                                      79
<PAGE>

          (g)  Legal Opinion. Agent shall have received the executed legal
               -------------
opinion of Latham & Watkins and Troutman Sanders Mays & Valentine LLP in form
and substance satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes, and related
agreements as Agent may reasonably require and Borrower hereby authorizes and
directs such counsel to deliver such opinions to Agent and Lenders;

          (h)  No Litigation. (i) No litigation, investigation or proceeding
               -------------
before or by any arbitrator or Governmental Body shall be continuing or
threatened against Borrower or against the officers or directors of Borrower (A)
in connection with the Loan Documents or any of the transactions contemplated
thereby and which, in the reasonable opinion of Agent, is deemed material or (B)
which could, in the reasonable opinion of Agent, have a Material Adverse Effect;
and (ii) no injunction, writ, restraining order or other order of any nature
materially adverse to Borrower or the conduct of its business or inconsistent
with the due consummation of the Transactions shall have been issued by any
Governmental Body;

          (i)  Financial Condition Certificates. Agent shall have received an
               --------------------------------
executed Financial Condition Certificate in the form of Exhibit 8.1(i).

          (j)  Collateral Examination. Agent shall have completed Collateral
               ----------------------
examinations, the results of which shall be satisfactory in form and substance
to Lenders, of the Accounts, Inventory, General Intangibles, Real Property,
Leasehold Interest and Equipment of Borrower and all books and records in
connection therewith;

          (k)  Fees and Expenses. Agent shall have received all fees, costs and
               -----------------
Expenses payable to Agent and Lenders on or prior to the Closing Date pursuant
to the terms hereof;

          (l)  Financial Statements. Agent and Lenders shall have received a
               --------------------
copy of the Pro Forma Financial Statements and draft audited Financial
Statements (for Borrower and Statesman as referenced in Section 5.5(c) above)
which shall be satisfactory in all respects to Lenders;

          (m)  Insurance. Agent shall have received in form and substance
               ---------
satisfactory to Agent, certificates of insurance for casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
lender loss payee endorsement naming Agent as loss payee, and certificates of
insurance for Borrower's liability insurance policies, together with
endorsements naming Agent as a co-insured;

          (n)  Payment Instructions. Agent shall have received written
               --------------------
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;

          (o)  Consents. Agent shall have received any and all Consents
               --------
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Loan Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;

                                      80
<PAGE>

                  (p)  No Adverse Material Change. (i) since June 30, 2001,
                       --------------------------
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Agent and all Lenders shall have
been proven to be inaccurate or misleading in any material respect;

                  (q)  Agway Documentation. Agent shall have received final
                       -------------------
executed copies of the amendment to the Agway Documentation which shall contain
such terms and provisions reasonably satisfactory to Lenders;

                  (r)  Guarantees and Loan Documents. Agent shall have received
                       -----------------------------
(i) the executed Guarantees (other than from Wetsel, Inc.), and (ii) the
executed Loan Documents, all in form and substance satisfactory to Agent;

                  (s)  Closing Certificate. Agent shall have received a closing
                       -------------------
certificate signed by the Chief Financial Officer of Borrower dated as of the
date hereof, stating that (i) all representations and warranties set forth in
this Agreement and the Loan Documents are true and correct on and as of such
date, (ii) Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement and the Loan Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;

                  (t)  Borrowing Base. Agent shall have received a Borrowing
                       --------------
Base Certificate and evidence from Borrower that the aggregate amount of
Eligible Receivables and Eligible Inventory is sufficient in value and amount to
support Advances in the amount requested by Borrower on the Closing Date;

                  (u)  Certificates of Bookkeeping Entries. Agent shall have
                       -----------------------------------
received executed Certificates of Bookkeeping Entries from Borrower and each
Lender reflecting entries consistent with this Agreement;

                  (v)  Intercreditor and Agency Agreement. Agent shall have
                       ----------------------------------
received the fully executed Intercreditor and Agency Agreement in form and
substance satisfactory to Required Lenders;

                  (w)  Agent shall have received (i) acknowledgements of
Statesman and MLCC regarding termination of their respective Section 547
Commencement Date Agreements, (ii) executed copies of the documentation
regarding the purchase of assets from Statesman and MLCC by Borrower, and (iii)
payoff letters regarding credit facilities of Statesman and MLCC, respectively;
and

              8.2 Conditions Subsequent. Borrower shall deliver, cause to be
                  ---------------------
delivered, or provide evidence that the actions have occurred of each of the
following on or before the dates corresponding thereto:

                  (a)  Mortgages. On or before October 31, 2001 Agent shall have
                       ---------
received executed Mortgages; it being agreed that if any Mortgages are not
delivered to Borrower due to any circumstances other than Borrower's failure to
provide necessary information, including without limitation appropriate legal
descriptions, by October 20, 2001, then Borrower shall have ten (10) days from
the date of delivery of such Mortgages to execute and deliver such Mortgages in
recordable form to Agent (or the applicable title company);

                                      81
<PAGE>

                  (b)  Title Insurance, Surveys, Appraisals. (i) On or before
                       ------------------------------------
October 31, 2001, for each parcel of Real Property with a book value greater
than or equal to $500,000, Agent shall have received fully paid mortgagee title
insurance policies (or binding commitments to issue title insurance policies,
marked to Agent's satisfaction to evidence the form of such policies to be
delivered with respect to the Mortgages), in standard ALTA form, issued by a
title insurance company satisfactory to Agent, each in an amount equal to not
less than the fair market value of the Real Property subject to the Mortgages,
insuring the Mortgages to create a valid Lien on the Real Property with no
exceptions (other than survey exceptions) which Agent shall not have approved in
writing, and (ii) on or before January 10, 2002, Borrower shall have provided
(A) appropriate endorsements and/or amended policies evidencing that (1) all
survey exceptions to the title insurance policies have been removed or insured
over, and (2) all additional material items or exceptions (determined in Agent's
sole discretion) that either result from or are disclosed by the review of the
survey by the title insurance company or the lapse of time from the issuance of
the binding commitments, have been removed or additional insurance, including
endorsements, has been obtained to insure over any such exceptions, (B) all
endorsements requested by Agent, in its sole discretion, which the title company
is unwilling to issue without receipt of a survey (including by way of example,
a "lender's comprehensive, covenants, conditions and restrictions, access,
contiguity, subdivision and zoning endorsements); and (C) MAI appraisals for
each parcel of Real Property with a book value greater than or equal to
$500,000, except that appraisals shall not be required for those parcels of Real
Property that Borrower has leased to a third party with an option to purchase or
that is under contract for sale;

                  (c)  Blocked Accounts. On or before September 30, 2001, Agent
                       ----------------
shall have received duly executed agreements establishing the Blocked Accounts
or Depository Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral;

                  (d)  Leasehold Agreements. Borrower shall use its best efforts
                       --------------------
to obtain and cause Agent to have received landlord, mortgagee or warehouseman
agreements or other arrangements satisfactory to Agent with respect to all
premises leased by Borrower at which material levels of Equipment and/or
Inventory is located, on or before November 1, 2001; it being acknowledged that
should Borrower fail to obtain any landlord, mortgagee or warehouseman
agreements due to such landlord's, mortgagee's or warehouseman's (as applicable)
refusal to execute a document satisfactory to Agent and its counsel, Agent shall
be entitled without further notice to set aside appropriate reserves against the
Borrowing Base (in amounts equal to three months rent or other payments owed to
such landlord, mortgagee or warehouseman) and/or take such other action,
including adjusting Advance Rates, as may be warranted in Agent's discretion;

                  (e)  Vehicle Titles. Borrower shall use its best efforts to
                       --------------
cause, on or before October 31, 2001, all applications for the noting of Agent's
security interest on all vehicle titles, along with the appropriate fees, shall
have been properly tendered to the appropriate state agency(ies) in order to
assure that the Agent shall have a perfected lien and security interest in the
corresponding motor vehicles, provided that if the foregoing has not been
accomplished by October 31, 2001, Borrower shall deliver to Agent and Lenders a
status report indicating which applications have been so tendered and what, if
any, new titles have

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<PAGE>

been received back from the appropriate state agency(ies), and in any event,
all of the foregoing shall be accomplished no later than November 30, 2001.

                  (f)  Custodial Arrangements. On or before September 30, 2001,
                       ----------------------
evidence that the custodial arrangements contemplated by the Custodian Agreement
and Section 4.25 hereof have been implemented and that such Instruments and
Chattel Paper referenced in Section 4.25 hereof are being held by the Custodian
named therein;

                  (g)  Wetsel Facility. On or before October 15, 2001, evidence
                       ---------------
that the credit facility between CoBank and Wetsel, Inc. has been reinstated on
terms and conditions satisfactory to CoBank and the execution and delivery of a
Guarantee of Borrower's Obligations from Wetsel, Inc.; and

                  (h)  Financing Statements. On or before October 31, 2001, all
                       --------------------
termination statements, releases and/or amendment for financing statements filed
against Borrower and/or any assets of Borrower that are not Permitted
Encumbrances.

              8.3  Conditions to Each Advance. The agreement of Lenders to make
                   --------------------------
any Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:

                  (a)  Representations and Warranties. Each of the
                       ------------------------------
representations and warranties made by Borrower in or pursuant to this Agreement
and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date and
Borrower shall be deemed to have made such representation and warranty each time
an Advance is requested; provided that Borrower shall be permitted, so long as
the disclosures set forth therein do not constitute a Default or Event of
Default (including without limitation the impact of a Material Adverse Effect),
to update (but not delete information from, or change information existing on
such Schedule as of the date hereof) Schedules 4.5, 5.2(a), 5.7, 5.9, 5.10,
5.22, 5.23 and 5.24 in order to make such representations and warranties true
and correct in all material respects as of the date thereof;

                  (b)  No Default. No Event of Default or Default shall have
                       ----------
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Lenders,
                                                 --------  -------
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and

                  (c)  Maximum Advances. In the case of any Advances requested
                       ----------------
to be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof.

                                      83
<PAGE>

         Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.

         8.4  Form and Substance Satisfactory. All corporate and other
              -------------------------------
proceedings, and all documents, instruments and other legal matters in
connection with this Agreement shall be satisfactory in form and substance to
Agent and its counsel.

         IX.  INFORMATION AS TO BORROWER.

         Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:

         9.1  Disclosure of Material Matters. Immediately upon learning thereof,
              ------------------------------
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.

         9.2  Schedules. Deliver to Agent on or before the fifteenth (15th) day
              ---------
of each month as and for the prior month (a) accounts receivables agings (such
aging to be compiled by receivable type), (b) Inventory reports (such report to
be compiled by division), (c) other documentation supporting the Borrowing Base
Certificate as may be requested by Agent, and (d) progress reports on the
Restructuring Plan with detail of sales of assets and proceeds of such sales. In
addition, Borrower will deliver to Agent at such intervals as Agent may require:
(i) confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii)
evidence of shipment or delivery, (iv) inventory reports compiled by location,
and (v) such further schedules, documents and/or information regarding the
Collateral as Agent may require including, without limitation, trial balances
and test verifications. Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form satisfactory to
Agent and executed by Borrower and delivered to Agent from time to time, and
Borrower's failure to deliver any of such items to Agent shall not affect,
terminate, modify or otherwise limit Agent's Lien with respect to the
Collateral.

         9.3  Environmental Reports. Furnish Agent, concurrently with the
              ---------------------
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of Borrower stating, to the best of his
knowledge, that Borrower is in compliance in all material respects with all
federal, state and local laws relating to environmental protection and control
and occupational safety and health. To the extent Borrower is not in compliance
with the foregoing laws, the certificate shall set forth with specificity all
areas of non-compliance and the proposed action Borrower will implement in order
to achieve full compliance.

         9.4  Litigation. Promptly notify Agent and Lenders in writing of any
              ----------
litigation, suit or administrative proceeding affecting Borrower, whether or not
the claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect on Borrower.

                                      84
<PAGE>

         9.5  Material Occurrences. Promptly notify Agent and Lenders in writing
              --------------------
upon the occurrence of (a) any Event of Default or Default and any event which
could reasonably be expected to result in a Default or Event of Default; (b) any
event of default under the Agway Agreements; (c) any event which with the giving
of notice or lapse of time, or both, would constitute an event of default under
the Agway Agreements; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of Borrower as of the date of such
statements; (e) any accumulated retirement plan funding deficiency which, if
such deficiency continued for two plan years and was not corrected as provided
in Section 4971 of the Code, could subject Borrower to a tax imposed by Section
4971 of the Code; (f) each and every default by Borrower which might result in
the acceleration of the maturity of any Indebtedness, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; (g) any other development in
the business or affairs of Borrower which could reasonably be expected to have a
Material Adverse Effect; in each case describing the nature thereof and the
action Borrower proposes to take with respect thereto; (h) any default or event
of default under the GoldKist Documents; and (i) any event which with the giving
of notice or lapse of time, or both, would constitute a default or event of
default under the GoldKist Documents.

         9.6  Government Receivables. Notify Agent and Lenders immediately if
              ----------------------
its Receivables arising out of contracts between Borrower and the United States,
any state, municipality, local government, or any department, agency or
instrumentality of any of them exceed One Million Dollars ($1,000,000) in the
aggregate.

         9.7  Annual Financial Statements.
              ---------------------------

              (a)  (i) Furnish to Agent and Lenders within forty-five (45) days
of the Closing Date, audited financial statements of Borrower on a consolidated
basis for the fiscal year ended June 30, 2001 including, but not limited to,
statements of income and stockholders' or members' equity and cash flow and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by the Accountants along with the
Accountants' management letter, (ii) furnish Agent and Lenders within ninety
(90) days after the end of each fiscal year of Borrower beginning with the
fiscal year ending June 30, 2002, audited financial statements of Borrower on a
consolidating and consolidated basis including, but not limited to, statements
of income and stockholders' or members' equity and cash flow from the beginning
of the current fiscal year to the end of such fiscal year and the balance sheet
as at the end of such fiscal year, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and in reasonable detail and
reported upon without qualification by Accountants. The report of the
Accountants shall be accompanied by a statement of the Accountants certifying
that (x) they have caused the Loan Agreement to be reviewed, (y) in making the
examination upon which such report was based either no information came to their
attention which to their knowledge constituted an Event of Default or a Default
under this Agreement or any related agreement or, if such information came to
their attention, specifying any such Default or Event of Default, its nature,
when it occurred and whether it is continuing, and such report shall contain or
have appended thereto calculations which set forth Borrower's compliance with
the requirements or restrictions

                                      85
<PAGE>

imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and 7.11 hereof. In addition, the
reports shall be accompanied by (x) a good standing certificate of Borrower from
Borrower's state of organization, (y) the Accountants' management letters, and
(z) a certificate of Borrower's Chief Financial Officer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event, and
such certificate shall have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.7, 6.8, 7.4, 7.6, 7.8 and 7.11 hereof; and

                  (b)  Furnish to Agent and Lenders within forty-five (45) days
of the Closing Date, audited financial statements of Statesman on a
consolidating and consolidated basis for the fiscal year ended June 30, 2001
including, but not limited to, statements of income and stockholders' or
members' equity and cash flow and the balance sheet as at the end of such fiscal
year, all prepared in accordance with GAAP applied on a basis consistent with
prior practices, and in reasonable detail and reported upon without
qualification by the Accountants along with the Accountants' management letter,
and (ii) furnish Agent and Lenders within ninety (90) days after the end of each
fiscal year of Statesman audited financial statements of Statesman on a
consolidating and consolidated basis including, but not limited to, statements
of income and stockholders' or members' equity and cash flow from the beginning
of the current fiscal year to the end of such fiscal year and the balance sheet
as at the end of such fiscal year, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and in reasonable detail and
reported upon without qualification by Accountants. In addition, the reports
shall be accompanied by the Accountants' management letters.

              9.8  Quarterly Financial Statements.
                   ------------------------------

                  (a)  Furnish Agent and Lenders within 45 days after the end of
each fiscal quarter (other than the fiscal quarter ended June 30 of each fiscal
quarter, which information and reporting shall be included in the year end
financial statements), an unaudited balance sheet of Borrower on a consolidated
basis and unaudited statements of income and stockholders, equity and cash flow
of Borrower on a consolidated basis reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter,
setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments and shall include reports of
cumulative net proceeds from Collateral Dispositions to third parties (other
than those in the ordinary course of business or pursuant to a Permitted
Securitization Transaction). The reports shall be accompanied by a certificate
signed by the Chief Financial Officer of Borrower, which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.7, 6.8, 7.4, 7.6, 7.8 and 7.11 hereof; and

                                      86
<PAGE>

                  (b)  Furnish Agent and Lenders within 45 days after the end of
each fiscal quarter (other than the fiscal quarter ended June 30, which
information and reports shall be included in the year end financial statements),
an unaudited balance sheet of Statesman on a consolidated and consolidating
basis and unaudited statements of income and stockholders, equity and cash flow
of Statesman on a consolidated and consolidating basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, setting forth in comparative form the corresponding figures
for the corresponding periods of the previous fiscal year, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments.

              9.9  Monthly Financial Statements.
                   ----------------------------

                   (a)  Furnish Agent and Lenders within thirty (30) days after
the end of each month (other than the months ending March 31, June 30, September
30 and December 31 of each fiscal year, which information and reporting shall be
included in the year end and/or quarterly financial statements, as applicable),
an unaudited balance sheet of Borrower on a consolidated basis and unaudited
statements of income and stockholders' equity and cash flow of Borrower on a
consolidated basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments and shall include reports of
cumulative net proceeds from Collateral Dispositions to third parties (other
than those in the ordinary course of business or pursuant to a Permitted
Securitization Transaction). The reports shall be accompanied by a certificate
of Borrower's Chief Financial Officer of Borrower, which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event; and

                   (b)  Furnish Agent and Lenders within thirty (30) days after
the end of each month, (other than the months ending March 31, June 30,
September 30 and December 31 of each fiscal year, which information and
reporting shall be included in the year end and/or quarterly financial
statements, as applicable) an unaudited balance sheet of Statesman on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Statesman on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments.

              9.10 Other Reports. Furnish Agent and Lenders as soon as
                   -------------
available, but in any event within ten (10) days after the issuance thereof,
with copies of such financial statements, reports and returns as Borrower shall
send to its stockholders and/or members.

              9.11 Additional Information. Furnish Agent and Lenders with such
                   ----------------------
additional information as Agent or any Lender shall reasonably request in order
to enable Agent and Lenders to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Notes have been complied
with by Borrower including, without limitation and without the necessity of any
request by Agent or any Lender, (a) copies of all environmental audits and
reviews, (b) at least thirty (30) days prior thereto notice of the

                                      87
<PAGE>

closing or moving of Borrower's chief executive office identified on Schedule
4.15(c), and contemporaneous notice of Borrower's opening of any new office or
place of business or Borrower's closing of any existing office or place of
business other than Borrower's chief executive office, and (c) promptly upon
Borrower's learning thereof, notice of any labor dispute to which Borrower may
become a party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which Borrower is a
party or by which Borrower is bound.

         9.12 Projected Operating Budget. Furnish Agent and Lenders, within
              --------------------------
ninety (90) days of the commencement of Borrower's fiscal year beginning July 1,
2002, a month by month projected operating budget and cash flow of Borrower on a
consolidated basis for such fiscal year and the next fiscal year (including an
income statement for each month and a balance sheet as at the end of the last
month in each fiscal quarter), such projections to be accompanied by a
certificate signed by the President or Chief Financial Officer of Borrower to
the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.

         9.13 Variances From Operating Budget. Furnish Agent and Lenders, (a)
              -------------------------------
concurrently with the delivery of the financial statements referred to in
Section 9.7, and (b) within forty-five (45) days after the end of each month
(other than June), a written report summarizing all material variances from
budgets submitted by Borrower pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.

         9.14 Notice of Suits, Adverse Events. Furnish Agent and Lenders with
              -------------------------------
prompt notice of (i) any lapse or other termination of any Consent issued to
Borrower by any Governmental Body or any other Person that is material to the
operation of Borrower's business, (ii) any refusal by any Governmental Body or
any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs, condition or prospects of Borrower, or if copies thereof
are requested by any Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate to
Borrower.

         9.15 ERISA Notices and Requests. Furnish Agent with immediate written
              --------------------------
notice in the event that (i) Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) Borrower or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding waiver request has been filed with respect to any Plan together
with all communications received by Borrower or any member of the Controlled
Group with respect to such

                                      88
<PAGE>

request, (iv) any increase in the benefits of any existing Plan or the
establishment of any new Plan or the commencement of contributions to any Plan
to which Borrower or any member of the Controlled Group was not previously
contributing shall occur, (v) Borrower or any member of the Controlled Group
shall receive from the PBGC a notice of intention to terminate a Plan or to have
a trustee appointed to administer a Plan, together with copies of each such
notice, (vi) Borrower or any member of the Controlled Group shall receive any
favorable or unfavorable determination letter from the Internal Revenue Service
regarding the qualification of a Plan under Section 401(a) of the Code, together
with copies of each such letter; (vii) Borrower or any member of the Controlled
Group shall receive a notice regarding the imposition of withdrawal liability,
together with copies of each such notice; (viii) Borrower or any member of the
Controlled Group shall fail to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or payment; (ix) Borrower or any member of the Controlled Group
knows that (a) a Multiemployer Plan has been terminated, (b) the administrator
or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer
Plan, or (c) the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan.

         9.16 Borrowing Base Certificate. Furnish to Agent and Lenders, within
              --------------------------
15 days after the end of each calendar month, a borrowing base certificate in
the form set forth on Exhibit 9.16 hereto ("Borrowing Base Certificate") signed
by the Chief Financial Officer, Treasurer, any Assistant Treasurer or any other
person properly authorized in writing by Borrower, certifying that Borrower is
in compliance with the formula set forth in Section 2.1(a) hereof. Included with
the monthly Borrowing Base Certificate the Borrower will prepare an analysis of
customer deposits. The analysis will include (i) the dollar amount of total
customer deposits by category and (ii) the dollar amount of customer deposits
from customers that also have an accounts receivable balance.

         X. EVENTS OF DEFAULT.

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

         10.1 failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any other Loan
Document and, except in the case of a payment of principal or interest, such
other failure continues for a period of five (5) days after its due date;

         10.2 any representation or warranty made or deemed made by Borrower in
this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been false or misleading in any material respect
on the date when made or deemed to have been made;

         10.3 failure by Borrower to (i) furnish financial information when due
or when requested which is unremedied for a period of fifteen (15) days, or (ii)
permit the inspection of its books or records;

                                      89
<PAGE>

         10.4 issuance of a notice of Lien (other than a Permitted Encumbrance),
levy, assessment, injunction or attachment against a material portion of
Borrower's property which is not stayed, satisfied or lifted within thirty (30)
days;

         10.5 except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of Borrower or any Subsidiary of Borrower to perform, keep or
observe any term, provision, condition, covenant herein contained, or contained
in any Loan Document (including, without limitation, the Mortgages, or any of
them), or any other agreement or arrangement (related or unrelated), now or
hereafter entered into between Borrower and Agent and/or Lenders or any of them
and/or any Affiliate of any Lender (after taking into account any grace period
expressly provided for therein), provided that Borrower shall be permitted a
period of fifteen (15) days from the occurrence of a failure or neglect of
Borrower to perform, keep or observe any term, provision, condition or covenant
contained in Sections 4.7, 4.9, 6.3, 6.13, 9.4, 9.6 or 9.11 hereof to rectify
such failure or neglect;

         10.6 any judgment or judgments are rendered or judgment liens filed
against Borrower for an aggregate amount in excess of $5,000,000 (not covered by
insurance) which within sixty (60) days of such rendering or filing is not
either satisfied, stayed or discharged of record;

         10.7 Borrower shall (i) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be insolvent, (v) file a petition seeking to take advantage of
any other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within forty-five (45) days, any petition filed against it in
any involuntary case under such bankruptcy laws, or (vii) take any action for
the purpose of effecting any of the foregoing;

         10.8 Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;

         10.9 any Subsidiary of Borrower, or any Guarantor, shall (i) apply for,
consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;

         10.10 any change in Borrower's condition or any Guarantor's affairs
(financial or otherwise) which in Agent's or Required Lenders' opinion has, or
could reasonably be expected to result in, a Material Adverse Effect;

                                      90
<PAGE>

     10.11  any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest subject to Permitted Encumbrances;

     10.12  an event of default has occurred and been declared under the Agway
Agreements which default shall not have been cured or waived within any
applicable grace period and for which Agway is permitted to take action under
the Intercreditor Agreement;

     10.13  a default of the obligations of Borrower under any other agreement
to which it is a party shall occur which is reasonably likely to, or does,
result in a Material Adverse Effect which default is not cured within any
applicable grace period;

     10.14  termination or breach of any Guarantee or similar agreement executed
and delivered to Agent in connection with the Obligations of Borrower, or if any
Guarantor attempts to terminate, challenges the validity of, or its liability
under, any such Guarantee or similar agreement;

     10.15  any Change of Control shall occur;

     10.16  any material provision of this Agreement shall, for any reason,
cease to be valid and binding on Borrower, or Borrower shall so claim in writing
to Agent;

     10.17  (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent, trademark or tradename of
Borrower, the revocation, termination, suspension or modification of which might
reasonably be expected to result in a Material Adverse Effect on Borrower or (B)
commence proceedings to suspend, revoke, terminate or adversely modify any such
license, permit, trademark, tradename or patent and such proceedings shall not
be dismissed or discharged within sixty (60) days, or (C) schedule or conduct a
hearing on the renewal of any license, permit, trademark, tradename or patent
necessary for the continuation of Borrower's business and the staff of such
Governmental Body issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license, permit, trademark,
tradename or patent; (ii) any agreement which is necessary or material to the
operation of Borrower's business shall be revoked or terminated and not replaced
by a substitute acceptable to Agent and Required Lenders within thirty (30) days
after the date of such revocation or termination, and such revocation or
termination and non-replacement would reasonably be expected to have a Material
Adverse Effect;

     10.18  any portion of the Collateral shall be seized or taken by a
Governmental Body, or Borrower or the title and rights of Borrower shall have
become the subject matter of litigation which might, in the opinion of Agent,
upon final determination, result in impairment or loss of the security provided
by this Agreement or the Loan Documents other than pursuant to proceedings for
eminent domain or condemnation that would not otherwise result in a Material
Adverse Effect or otherwise constitute a Default or Event of Default;

     10.19  an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or

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<PAGE>

conditions, Borrower or any member of the Controlled Group shall incur, or in
the opinion of Agent or Required Lenders be reasonably likely to incur, a
liability to a Plan or the PBGC (or both) which, in the reasonable judgment of
Agent, would have a Material Adverse Effect;

     10.20  if there shall be any default by Borrower or any Subsidiary of
Borrower beyond any grace period under any agreement with any other creditor for
borrowed money in excess of $1,000,000, and (i) such default consists of the
failure to pay any principal, premium or interest with respect to such
indebtedness, or (ii) such default consists of the failure to perform any
covenant or agreement with respect to such indebtedness, if the effect of such
default is to cause or to permit the relevant creditor to cause such Borrower's
obligations which are the subject thereof to become due prior to their maturity
date or prior to their regularly scheduled date of payment;

     10.21  if there shall be any breach or default that continues beyond any
applicable cure or grace period under any Permitted Securitization Transaction;
or

     10.22  if there shall be a breach or default under the Financing Services
and Contributed Capital Agreement.

     XI.    LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

     11.1   Cure. Nothing contained in this Agreement or the Loan Documents
            ----
shall be deemed to compel Agent and/or Lenders to accept a cure of any Event of
Default hereunder.

     11.2   Rights and Remedies.
            -------------------

            (a)   In addition to all other rights, options and remedies granted
or available to Agent or Lenders under this Agreement or the Loan Documents, or
otherwise available at law or in equity, upon or at any time after the
occurrence and during the continuance of a Default or an Event of Default, Agent
and Lenders may, in their discretion, withhold or cease making Advances
hereunder.

            (b)   In addition to all other rights, options and remedies granted
or available to Agent or Lenders under this Agreement or the Loan Documents, or
otherwise available at law or in equity, upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances and
issue Letters of Credit shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter (such default not having previously
been cured), at the option of Required Lenders all Obligations (other than Swap
Obligations) shall be immediately due and payable and Lenders shall have the
right to terminate the obligation of Lenders to make Advances and (iii) a filing
of a petition against Borrower in any involuntary case under any state or
federal bankruptcy laws, the obligation of Lenders to make Advances hereunder
shall be terminated other than as may be required by an appropriate order of the
bankruptcy court having jurisdiction over Borrower. Upon the occurrence of any
Event of Default, Agent shall have the right to exercise any and all other
rights and remedies provided for herein, under the Uniform Commercial Code and
at law or equity generally, including, without limitation, the right to
foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take

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<PAGE>

possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of Borrower's premises or other premises without
legal process and without incurring liability to Borrower therefor, and Agent
may thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrower to make the Collateral available to
Agent at a convenient place. With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrower reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrower at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by Borrower. In connection with
the exercise of the foregoing remedies, Agent is granted permission to use all
of Borrower's trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied as
follows: first, to the reasonable costs, Expenses and attorneys' fees and
expenses incurred by Agent for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations and any fees payable under this
Agreement; and, third, to the principal of the Obligations. If any deficiency
shall arise, Borrower shall remain liable to Agent and Lenders therefor.

     11.3   Agent's Discretion. Agent shall have the right in its sole
            ------------------
discretion (subject to the rights of the Lenders to direct, control and consent
to actions of the Agent pursuant to the terms of this Agreement) to determine
which rights, Liens, security interests or remedies Agent may at any time
pursue, relinquish, subordinate, or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Agent's or Lenders' rights hereunder.

     11.4   Setoff. In addition to any other rights which Agent or any Lender
            ------
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply Borrower's property
held by Agent and such Lender to reduce the Obligations; provided, however, that
                                                         --------  ------
CoBank shall not be obligated to set off or otherwise apply (i) patronage
payable to Borrower or (ii) equity in CoBank held by Borrower to reduce the
Obligations.

     11.5   Rights and Remedies not Exclusive. The enumeration of the foregoing
            ---------------------------------
rights and remedies is not intended to be exhaustive and the exercise of any
right or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.

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<PAGE>

     11.6   Third Parties. No rights are intended to be created hereunder for
            -------------
the benefit of any third parties.

     XII.   WAIVERS AND JUDICIAL PROCEEDINGS.

     12.1   Waiver of Notice. Borrower hereby waives notice of non-payment of
            ----------------
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.

     12.2   Delay. No delay or omission on Agent's or any Lender's part in
            -----
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

     12.3   Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
            -----------
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     XIII.  EFFECTIVE DATE AND TERMINATION.

     13.1   Term. This Agreement, which shall inure to the benefit of and shall
            ----
be binding upon the respective successors and permitted assigns of Borrower,
Agent and each Lender, shall become effective on the date hereof and shall
continue in full force and effect until the Maturity Date (the "Term") unless
sooner terminated as herein provided. Borrower may terminate this Agreement at
any time upon fifteen (15) days' prior written notice upon payment in full of
the Obligations.

     13.2   Termination. The termination of the Agreement shall not affect
            -----------
Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact

                                      94
<PAGE>

that Borrower's Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of Borrower have been paid or performed
in full after the termination of this Agreement or Borrower has furnished Agent
and Lenders with an indemnification satisfactory to Agent and Lenders with
respect thereto. Accordingly, Borrower waives any rights which it may have under
the Uniform Commercial Code to demand the filing of termination statements with
respect to the Collateral, and Agent shall not be required to send such
termination statements to Borrower, or to file them with any filing office (at
Borrower's expense), unless and until this Agreement shall have been terminated
in accordance with its terms and all Obligations paid in full in immediately
available funds. Borrower covenants that it will not, and hereby waives any
right it may have to, file a termination statement or similar statement under
Section 9-509 of the UCC. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.

     XIV.   REGARDING AGENT.

     14.1   Appointment. Each Lender hereby designates CoBank to act as Agent
            -----------
for such Lender under this Agreement and the Loan Documents and, to the extent
applicable, designates each Issuing Bank holding, as collateral agent, Existing
L/C Collateral to secure reimbursement obligations in connection with Existing
L/Cs. For purposes of this Article XIV, the term Agent shall also include, as
the context may require, an Issuing Bank in its capacity as collateral agent
with respect to the Existing L/C Collateral. Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the Loan Documents (including, as applicable, agreements,
instruments and documents relating to the Existing L/C Collateral) and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto and Agent shall hold
all Collateral (including, as applicable, the Existing L/C Collateral), payments
of principal and interest, fees set forth in Sections 3.3(a) and 3.3(b), charges
and collections (without giving effect to any collection days) received pursuant
to this Agreement, for the ratable benefit of Lenders. Agent may perform any of
its duties hereunder by or through its agents or employees. As to any matters
not expressly provided for by this Agreement (including without limitation,
collection of the Notes) Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders or all of the Lenders (as may be required
by this Agreement), and such instructions shall be binding; provided, however,
                                                            --------  -------
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Loan Documents or
applicable law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.

     14.2   Nature of Duties. Agent shall have no duties or responsibilities
            ----------------
except those expressly set forth in this Agreement and the Loan Documents
(including, as applicable, agreements, instruments and documents relating to the
Existing L/C Collateral). Neither Agent nor any of its officers, directors,
employees or agents shall be (i) liable for any action taken or omitted by them
as such hereunder or in connection herewith, unless caused by their gross (not
mere) negligence or willful misconduct, or (ii) responsible in any manner for
any recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement, or in any of the Loan Documents or
in any certificate,

                                      95
<PAGE>

report, statement or other document referred to or provided for in, or received
by Agent under or in connection with, this Agreement or any of the Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, or any of the Loan Documents or for any
failure of Borrower to perform its obligations hereunder. Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Loan Documents, or to inspect the properties,
books or records of Borrower. The duties of Agent as respects the Advances to
Borrower shall be mechanical and administrative in nature; Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Lender;
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.

     14.3   Lack of Reliance on Agent and Resignation. Independently and without
            -----------------------------------------
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of Borrower in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of Borrower. Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Advances or at any time
or times thereafter except as shall be provided by Borrower pursuant to the
terms hereof; provided that Agent agrees to use its reasonable efforts to
promptly forward to the Lenders, to the extent Agent has knowledge that the
Lenders have not previously received such notices or reports, copies of written
notices and reports received by Agent from Borrower. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Loan Document, or of the financial condition of Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Notes, the Loan Documents or the financial condition of Borrower, or the
existence of any Event of Default or any Default.

     The Agent may be removed as Agent hereunder for cause, at any time by an
affirmative vote of all of the Lenders; provided that for purposes of such vote
CoBank, in its capacity as a Lender, shall not be entitled to vote. Agent may
resign on thirty (30) days written notice to each of Lenders and Borrower and
upon such resignation or removal, the Required Lenders will promptly designate a
successor Agent. If no successor Agent that has been duly appointed by the
Required Lenders shall have accepted such appointment within 30 days after the
retiring Agent's notice of resignation or the Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent. Any successor Agent shall be a financial institution which has
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provision of this Article XIV
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder.

                                      96
<PAGE>

     Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term "Agent" shall mean such successor agent 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. After any Agent's resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.

     14.4   Certain Rights of Agent. If Agent shall request instructions from
            -----------------------
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from the Required Lenders or all of the Lenders
(as may be required by this Agreement); and Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, Lenders
shall not have any right of action whatsoever against Agent as a result of its
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders or all of the Lenders (as may be required by this
Agreement).

     14.5   Reliance. Agent shall be entitled to rely, and shall be fully
            --------
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Loan Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.

     14.6   Notice of Default. Agent shall not be deemed to have knowledge or
            -----------------
notice of the occurrence of any Default or Event of Default hereunder or under
the Loan Documents, unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Loan Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
                                                                 --------  ----
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.

     14.7   Indemnification. To the extent Agent is not reimbursed and
            ---------------
indemnified by Borrower, each Lender will reimburse and indemnify Agent pro rata
based on its Commitment Percentage, 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 asserted against Agent in performing its duties hereunder, or
in any way relating to or arising out of this Agreement or any other Loan
Documents; provided that, Lenders shall not be liable for any portion of such
           -------- ----
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross (not mere)
negligence or willful misconduct.

     14.8   Agent in its Individual Capacity. With respect to the obligation of
            --------------------------------
Agent to lend under this Agreement, the Advances made by it shall have the same
rights and powers hereunder as any other Lender

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<PAGE>

and as if it were not performing the duties as Agent specified herein; and the
term "Lender" or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender. Agent may
engage in business with Borrower as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.

     14.9   Borrower's Undertaking to Agent. Without prejudice to its
            -------------------------------
obligations to Lenders under the other provisions of this Agreement, Borrower
hereby undertakes with Agent to pay to Agent from time to time on demand all
amounts from time to time due and payable by it for the account of Agent or
Lenders or any of them pursuant to this Agreement to the extent not already
paid. Any payment made pursuant to any such demand shall pro tanto satisfy the
                                                         --- -----
relevant Borrower's obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.

     XV.    MISCELLANEOUS.

     15.1   Governing Law. This Agreement shall be governed by and construed in
            -------------
accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against Borrower with respect to any of the Obligations, this Agreement or
any related agreement may be brought in any court of competent jurisdiction in
the State of New York, United States of America, and, by execution and delivery
of this Agreement, Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Borrower hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by registered or certified mail (return receipt requested)
directed to Borrower at its address set forth in Section 15.6 and service so
made shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America. Nothing herein shall
affect the right to serve process in any manner permitted by law or shall limit
the right of Agent or any Lender to bring proceedings against Borrower in the
courts of any other jurisdiction. Borrower waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. Any
                                                     --------------------
judicial proceeding by Borrower against Agent or any Lender involving, directly
or indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only in
courts of the State of New York or the United States District Court for the
Southern District of New York and any appellate court from any thereof.
Borrower's registered agent for service of process within the State of New York
is Corporation Service Company located at 80 State Street, Albany, New York
12207.

     15.2   Entire Understanding.
            --------------------

                                      98
<PAGE>

            (a)   This Agreement and the documents executed concurrently
herewith contain the entire understanding between Borrower, Agent and each
Lender and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless set forth in a writing or other record, signed or otherwise
authenticated by Borrower's, Agent's and, to the extent necessary, each Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Loan Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.

            (b)   The Required Lenders, and Agent with the consent in writing of
the Required Lenders, subject to the provisions of this Section 15.2 (b), may
from time to time enter into written supplemental agreements to this Agreement
or the Loan Documents executed by Borrower, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or Borrower thereunder or the conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
                                                    --------  -------
such supplemental agreement shall, without the consent of all Lenders:

                  (i)    increase the Commitment Percentage of any Lender or
change any provision requiring a pro rata distribution to Lenders.

                  (ii)   extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrower to Lenders pursuant to this Agreement.

                  (iii)  alter the definition of the term Required Lenders or
alter, amend or modify this Section 15.2(b).

                  (iv)   release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement) having an aggregate
value in excess of $2,500,000.

                  (v)    change the rights and duties of Agent.

                  (vi)   increase the Advance Rates above the Advance Rates in
effect on the Closing Date or decrease reserves lower than reserves in effect on
the Closing Date.

                  (vii)  increase the Maximum Revolver Amount.

                  (viii) increase the Maximum Credit Limit.

                  (ix)   release any Guarantor from its respective Guarantee.

                                      99
<PAGE>

     Any such supplemental agreement shall apply equally to each Lender and
shall be binding upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.

     In the event that Agent requests the consent of a Lender pursuant to this
Section 15.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have not consented to matter that was the subject of the request unless and
until a subsequent consent is obtained. In the event that Agent requests the
consent of a Lender pursuant to this Section 15.2 and such consent is denied,
then Agent may, at its option, require such Lender to assign its interest in the
Advances to Agent or to another Lender or to any other Person designated by the
Agent (the "Designated Lender"), for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees shall be paid when collected from Borrower. In
the event Agent elects to require any Lender to assign its interest to Agent or
to the Designated Lender, Agent will so notify such Lender in writing within
forty five (45) days following such Lender's denial, and such Lender will assign
its interest to Agent or the Designated Lender no later than five (5) days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, the Designated Lender, as appropriate, and Agent.

            (c)   Solely for voting purposes hereunder (including the
determination of Required Lenders), a Farm Credit Participant shall be deemed to
be a "Lender" (except to the extent the vote involves removal of the Agent from
whom such Farm Credit Participant purchased, in such Agent's capacity as a
Lender, such Participant's participation interest) with a voting interest equal
to its percentage of Advances to the total amount of Advances outstanding and,
if no Advances are outstanding, the percentage of the commitments represented by
its participation interest to the total amount of commitments, and the voting
interest of the Lender from which such Farm Credit Participant's interest was
purchased shall be reduced by such Farm Credit Participant's voting interest.

     15.3   Successors and Assigns; Participations; New Lenders.
            ---------------------------------------------------

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

            (b)   Borrower acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Transferee") but
prior to the occurrence of an Event of Default, no Lender shall sell a
participating interest to a direct competitor of Borrower or an Affiliate of a
direct competitor. Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof

                                     100
<PAGE>

provided that Borrower shall not be required to pay to any Transferee more than
the amount which it would have been required to pay to Lender which granted an
interest in its Advances or other Obligations payable hereunder to such
Transferee had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrower be required
to pay any such amount arising from the same circumstances and with respect to
the same Advances or other Obligations payable hereunder to both such Lender and
such Transferee. Borrower hereby grants to any Transferee a continuing security
interest in any deposits, moneys or other property actually or constructively
held by such Transferee as security for the Transferee's interest in the
Advances.

               (c)  Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed, sell, assign or transfer all or any part of
its rights under this Agreement and the Loan Documents to one or more Eligible
Assignee and Eligible Assignees may commit to make Advances hereunder (each a
"Purchasing Lender"), in minimum amounts of not less than the lesser of
$5,000,000 or 100% of such Lender's Commitment Percentage, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Loan Documents. Borrower hereby consents to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Loan
Documents. Borrower shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.

               (d)  Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $3,500 payable by the applicable Purchasing Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.

               (e)  Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such

                                      101
<PAGE>

Lender's possession concerning Borrower which has been delivered to such Lender
by or on behalf of Borrower pursuant to this Agreement or in connection with
such Lender's credit evaluation of Borrower, provided that such Person agrees to
be bound by Section 15.15 hereof.

         15.4  Application of Payments. Subject to the terms of this Agreement,
               -----------------------
Agent shall have the continuing and exclusive right to apply or reverse and
re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations. To the extent that Borrower makes a payment or Agent or any
Lender receives any payment or proceeds of the Collateral for Borrower's
benefit, which are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by Agent or such Lender.

         15.5  Indemnity. Borrower shall indemnify Agent, each Lender and each
               ---------
of their respective officers, directors, Affiliates, employees and agents from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any
Lender in any litigation, proceeding or investigation instituted or conducted by
any governmental agency or instrumentality or any other Person with respect to
any aspect of, or any transaction contemplated by, or referred to in, or any
matter related to, this Agreement or the Loan Documents, whether or not Agent or
any Lender is a party thereto, except to the extent that any of the foregoing
arises out of the gross (not mere) negligence or willful misconduct of the party
being indemnified.

                                      102
<PAGE>

         15.6  Notice. Any notice or request hereunder may be given to Borrower
               -------
or to Agent or any Lender at their respective addresses set forth below or at
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice or request hereunder
shall be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, or (d) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with electronic confirmation of its receipt.
Any notice or other communication required or permitted pursuant to this
Agreement shall be deemed given (i) when personally delivered to any officer of
the party to whom it is addressed, (ii) on the earlier of actual receipt thereof
or five (5) days following posting thereof by certified or registered mail,
postage prepaid, or (iii) upon actual receipt thereof when sent by a recognized
overnight delivery service or (iv) upon actual receipt thereof when sent by
telecopier to the number set forth below with electronic confirmation of its
receipt, in each case addressed to each party at its address set forth below or
at such other address as has been furnished in writing by a party to the other
by like notice:

         (A)   If to Agent at:     CoBank, ACB
                                   5500 S. Quebec Street
                                   Greenwood Village, CO 80111-1913
                                   Attention: Lori O'Flaherty, Vice President
                                   Telephone: (303) 740-4342
                                   Facsimile: (303) 694-5830

               with a copy to:     Blank Rome Comisky & McCauley LLP
                                   One Logan Square
                                   Philadelphia, PA 19103
                                   Attention: Raymond L. Shapiro, Esquire
                                   Telephone: (215) 569-5569
                                   Facsimile: (215) 569-5522

         (B)   If to a Lender other than Agent, as specified on Schedule A
               attached hereto

         (C)   If to Borrower at:  Southern States Cooperative, Incorporated
                                   6606 West Broad Street
                                   Richmond, Virginia 23230
                                   Attention: Jonathan A. Hawkins
                                   Telephone: (804) 281-1000
                                   Telecopier: (804) 281-1383

                                     103
<PAGE>

               with a copy to:     Troutman Sanders Mays & Valentine LLP
                                   1111 East Main Street
                                   P.O. Box 1122
                                   Richmond, VA 23218-1122
                                   Attention: C. Cotesworth Pinckney
                                   Telephone: (804) 697-1200
                                   Telecopier: (804) 697-1339

               with a copy to:     Latham & Watkins
                                   885 Third Avenue, Suite 1000
                                   New York, New York 10002-4802
                                   Attention: Robert Rosenberg, Esquire
                                   Telephone: (212) 906-1200
                                   Telecopier: (212) 751-4864

         15.7  Survival. The obligations of Borrower under Sections 2.2(f), 3.4,
               --------
3.7, 3.8, 3.9, 4.19(h), 14.7 and 15.5 shall survive termination of this
Agreement and the Loan Documents and payment in full of the Obligations.

         15.8  Severability. If any part of this Agreement is contrary to,
               ------------
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

         15.9  Expenses.
               --------

               (a)  At Closing and from time to time thereafter, Borrower will
pay on demand all expenses incurred from time to time by Agent (including,
without limitation, search costs, audit fees, appraisal fees, environmental fees
and the fees and expenses of legal counsel for Agent) relating to this
Agreement, and all other Loan Documents, including, without limitation, expenses
incurred in the analysis, negotiation, preparation, closing, administration and
enforcement of this Agreement and the other Loan Documents, the enforcement,
protection and defense of the rights of Agent and Lenders in and to the Advances
and Collateral or otherwise hereunder, and any and all expenses relating to
extensions, amendments, waivers or consents pursuant to the provisions hereof,
or any related agreements and documents or relating to agreements with other
creditors, or termination of this Agreement. Borrower further agrees to pay, or
reimburse Lenders for, all reasonable out-of-pocket costs and expenses,
including without limitation attorneys' fees (including the allocated costs of
in-house counsel), incurred in connection with the enforcement, protection and
defense of their rights in and to the Advances and the Collateral or otherwise
hereunder, following a Default or the occurrence of an Event of Default
hereunder or following the failure to repay the Obligations in full upon
maturity. Borrower also agrees to pay, or reimburse, actual reasonable out-of-
pocket costs and expenses incurred by a Lender in connection with its
representation on the Steering Committee and/or attendance at any Steering
Committee meeting. Collectively all of the foregoing are referred to as the
"Expenses."

                                      104
<PAGE>

               (b)  Borrower shall pay all reasonable fees, costs and expenses
of financial advisors and/or consultants, including, without limitation, Morris
Anderson & Associates, Ltd. and Freed-Maxick, (collectively, "Advisors") hired
or engaged by or on behalf of Agent, or Agent for the benefit of Lenders,
whether such Advisors are hired or engaged by Agent or its counsel. All such
fees, costs and expenses may also be charged to Borrower's account and shall be
part of the Obligations.

         15.10 Injunctive Relief. Borrower recognizes that, in the event
               -----------------
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.

         15.11 Consequential Damages. Neither Agent nor any Lender, nor any
               ---------------------
agent or attorney for any of them, shall be liable to Borrower for
consequential, incidental or punitive damages arising from any breach of
contract, tort or other wrong relating to the establishment, administration or
collection of the Obligations.

         15.12 Captions. The captions at various places in this Agreement are
               --------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

         15.13 Counterparts; Telecopied Signatures. This Agreement may be
               -----------------------------------
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto or to any document delivered pursuant hereto.

         15.14 Construction. The parties acknowledge that each party and its
               ------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         15.15 Confidentiality; Sharing Information. (a) Agent, each Lender and
               ------------------------------------
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; provided,
                                                                 --------
however, Agent, each Lender and each Transferee may disclose such confidential
-------
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process; and
(d) in connection with the exercise of any remedies under this Agreement or any
other Loan Documents; provided, further that (i) unless specifically prohibited
                      --------  -------
by applicable law or court order, Agent, each Lender and each Transferee shall
use its best efforts prior to disclosure thereof, to notify the Borrower of the
applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or

                                      105
<PAGE>

(B) pursuant to legal process and (ii) in no event shall Agent, any Lender or
any Transferee be obligated to return any materials furnished by Borrower other
than those documents and instruments in possession of Agent or any Lender in
order to perfect its Lien on the Collateral once the Obligations have been paid
in full and this Agreement has been terminated.

               (b)  Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and Borrower hereby authorizes each Lender to share any information
delivered to such Lender by Borrower and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of Section 15.15 as if it were a
Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of the Loan Agreement.

                 [Remainder of Page Intentionally Left Blank]

                                      106
<PAGE>

         IN WITNESS WHEREOF, each of the parties has signed this Agreement by
its duly authorized representative as of the day and year first above written.

BORROWER:                SOUTHERN STATES COOPERATIVE, INCORPORATED

                    By:    __________________________________
                    Name:  __________________________________
                    Title: __________________________________

     AGENT:              COBANK, ACB

                    By:    __________________________________
                    Name:     Lori O'Flaherty
                    Title:    Vice President

     LENDERS:            COBANK, ACB

                    By:    __________________________________
                    Name:     Lori O'Flaherty
                    Title:    Vice President

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-1
<PAGE>

     BANK OF AMERICA, N.A.

     By:      _____________________________________
     Name:    _____________________________________
     Title:   _____________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-2
<PAGE>

     FIRST UNION NATIONAL BANK

     By:      _________________________________
     Name:    _________________________________
     Title:   _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-3
<PAGE>

     SUNTRUST BANK

     By:      _________________________________
     Name:    _________________________________
     Title:   _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-4
<PAGE>

     WACHOVIA BANK, N.A.

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-5
<PAGE>

     COOPERATIEVE CENTRALE RAIFFEISEN-

     BOERENLEENBANK B.A., "RABOBANK

     NEDERLAND", NEW YORK BRANCH

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-6
<PAGE>

     DG BANK DEUTSCHE

     GENOSSENSCHAFTSBANK AG

     CAYMAN ISLANDS BRANCH

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-7
<PAGE>

     ALLFIRST BANK

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

                                      S-8
<PAGE>

     BNP PARIBAS (CHICAGO BRANCH)

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

     By:       _________________________________
     Name:     _________________________________
     Title:    _________________________________

                                      S-9EXHIBIT 10.1
              __________________________________________________
              __________________________________________________

                         LOAN AND SECURITY AGREEMENT

                           DATED:  October 31, 2001

                                 $50,000,000

                                 by and among

                          THE LENDERS NAMED HEREIN,

                                  as Lenders

                                     and

                          FLEET CAPITAL CORPORATION,

                            as Agent and a Lender

                                     and

              HOME PRODUCTS INTERNATIONAL - NORTH AMERICA, INC.,

                                 as Borrower

              __________________________________________________
              __________________________________________________

                          Fleet Capital Corporation

                      A FleetBoston Financial Company

<PAGE>

                               TABLE OF CONTENTS

                                                                  Page

 SECTION 1.  CREDIT FACILITY......................................  1
      1.1    Revolving Credit Loans...............................  1
      1.2    Letters of Credit; LC Guaranties.....................  2
 SECTION 2.  INTEREST, FEES AND CHARGES...........................  3
      2.1    Interest.............................................  3
      2.2    Computation of Interest and Fees.....................  4
      2.3    Letter of Credit and LC Guaranty Fees................  4
      2.4    Unused Line Fee......................................  5
      2.5    Audit and Appraisal Fees.............................  5
      2.6    Reimbursement of Expenses............................  5
      2.7    Bank Charges.........................................  6
 SECTION 3.  LOAN ADMINISTRATION..................................  6
      3.1    Manner of Borrowing Revolving Credit Loans...........  6
      3.2    Payments.............................................  9
      3.3    Mandatory Prepayments................................ 10
      3.4    Application of Payments and Collections.............. 11
      3.5    All Loans to Constitute One Obligation............... 11
      3.6    Loan Account......................................... 11
      3.7    Statements of Account................................ 11
      3.8    Increased Costs...................................... 11
      3.9    Basis for Determining Interest Rate Inadequate or
               Unfair............................................. 13
 SECTION 4.  TERM AND TERMINATION................................. 13
      4.1    Term of Agreement.................................... 13
      4.2    Termination.......................................... 13
 SECTION 5.  SECURITY INTERESTS................................... 14
      5.1    Security Interest in Collateral...................... 14
      5.2    Other Collateral..................................... 15
      5.3    Lien Perfection; Further Assurances.................. 16
      5.4    Lien on Realty....................................... 16
 SECTION 6.  COLLATERAL ADMINISTRATION............................ 17
      6.1    General.............................................. 17
      6.2    Administration of Accounts........................... 17
      6.3    Administration of Inventory.......................... 19
      6.4    Administration of Equipment.......................... 19
      6.5    Payment of Charges................................... 20
 SECTION 7.  REPRESENTATIONS AND WARRANTIES....................... 20
      7.1    General Representations and Warranties............... 20
      7.2    Continuous Nature of Representations and Warranties.. 25
      7.3    Survival of Representations and Warranties........... 25
 SECTION 8.  COVENANTS AND CONTINUING AGREEMENTS.................. 25
      8.1    Affirmative Covenants................................ 25
      8.2    Negative Covenants................................... 28
      8.3    Specific Financial Covenants......................... 32
 SECTION 9.  CONDITIONS PRECEDENT................................. 32
      9.1    Documentation........................................ 32
      9.2    No Default........................................... 32
      9.3    Other Loan Documents................................. 33
      9.4    Availability......................................... 33
      9.5    No Litigation........................................ 33
 SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.... 33
      10.1   Events of Default.................................... 33
      10.2   Acceleration of the Obligations...................... 35
      10.3   Other Remedies....................................... 35
      10.4   Remedies Cumulative; No Waiver....................... 37
      10.5   Set Off and Sharing of Payments...................... 37
 SECTION 11. THE AGENT............................................ 37
      11.1   Authorization and Action............................. 37
      11.2   Agent's Reliance, Etc................................ 38
      11.3   FCC and Affiliates................................... 39
      11.4   Lender Credit Decision............................... 39
      11.5   Indemnification...................................... 39
      11.6   Rights and Remedies to be Exercised by Agent Only.... 39
      11.7   Agency Provisions Relating to Collateral............. 40
      11.8   Successor Agent...................................... 40
      11.9   Audit and Examination Reports; Disclaimer by Lenders. 41
 SECTION 12. MISCELLANEOUS........................................ 41
      12.1   Power of Attorney.................................... 41
      12.2   Indemnity............................................ 42
      12.3   Modification of Agreement; Sale of Interest.......... 42
      12.4   Severability......................................... 45
      12.5   Successors and Assigns............................... 45
      12.6   Cumulative Effect; Conflict of Terms................. 45
      12.7   Execution in Counterparts............................ 46
      12.8   Notice............................................... 46
      12.9   Consents............................................. 47
      12.10  Credit Inquiries..................................... 47
      12.11  Time of Essence...................................... 48
      12.12  Entire Agreement..................................... 48
      12.13  Interpretation....................................... 48
      12.14  GOVERNING LAW; CONSENT TO FORUM...................... 48
      12.15  WAIVERS BY BORROWER.................................. 49
      12.16  Advertisement........................................ 49

<PAGE>

                         LOAN AND SECURITY AGREEMENT

      THIS LOAN AND  SECURITY AGREEMENT  is made  this 31st  day of  October,
 2001,  by  and  among   HOME  PRODUCTS  INTERNATIONAL_NORTH  AMERICA,   INC.
 ("Borrower"), a Delaware  corporation with  its chief  executive office  and
 principal place  of business  at 4501  West 47th  Street, Chicago,  Illinois
 60632; the lenders who are signatories hereto ("Lenders"); and FLEET CAPITAL
 CORPORATION ("FCC"), a Rhode Island corporation with an office at One  South
 Wacker Drive,  Suite 1400,  Chicago, Illinois  60606, as  agent for  Lenders
 hereunder (FCC, in such capacity, being "Agent").  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.

 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  Fifty
 Million Dollars ($50,000,000) available  upon Borrower's request  therefore,
 as follows:

     1.1 Revolving Credit Loans.

                   1.1.1   Loans  and Reserves.  The  aggregate amount of the
 Revolving Credit Loans to be made  by each Lender (such Lender's  "Revolving
 Credit Loan Commitment"), pursuant to the terms hereof, shall be the  amount
 set below such Lender's name on  the signature pages hereof.  The  aggregate
 principal amount of the Revolving Credit  Loan Commitments is Fifty  Million
 Dollars ($50,000,000).   The percentage equal  to the  quotient of  (x) each
 Lender's Revolving Credit Loan Commitment,  divided by (y) the aggregate  of
 all Revolving Credit  Loan Commitments, is  that Lender's "Revolving  Credit
 Percentage".  Subject to all of the terms and conditions of this  Agreement,
 each Lender agrees, for so long as no Default or Event of Default exists, to
 make Revolving Credit Loans to Borrower  from time to time, as requested  by
 Borrower in the manner set forth in subsection 3.1.1 hereof, up to a maximum
 principal amount at  any time outstanding  equal to the  product of  (A) the
 Borrowing Base  at such  time minus  the  LC Amount  and reserves,  if  any,
 multiplied by (B) such  Lender's Revolving Credit  Percentage.  Agent  shall
 have the right to  establish reserves in such  amounts, and with respect  to
 such matters,  as Agent  shall 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,  rebates,  damages,  unearned  discounts,   returned
 products or  other matters  for which  credit memoranda  are issued  in  the
 ordinary  course  of  Borrower's  business;  (ii) shrinkage,  spoilage   and
 obsolescence of  Inventory;  (iii) slow moving  Inventory;  (iv) other  sums
 chargeable against Borrower's Loan Account  as Revolving Credit Loans  under
 any section of this Agreement; (v) amounts  owing by Borrower to any  Person
 to the extent secured by a Lien on, or trust over, any Property of  Borrower
 (other  than  a  Permitted  Lien);  and  (vi) such  other  matters,  events,
 conditions or contingencies as to which Agent, in its sole credit  judgment,
 determines reserves should be established from  time to time hereunder.   In
 the event  that  Agent establishes  any  such reserve,  Agent  shall  notify
 Borrower of  such  event and  shall  discuss  with Borrower  the  facts  and
 circumstances giving rise to the establishment of any such reserve.

           The Revolving Credit Loans shall be evidenced by promissory  notes
 to be  executed  and  delivered by  Borrower  at  the time  of  the  initial
 Revolving Credit Loan, the form of which is attached hereto and made a  part
 hereof as  Exhibit 1.1.1 (the  "Revolving Credit  Notes").   Each  Revolving
 Credit Note shall be payable  to the order of  a Lender and shall  represent
 the obligation of  Borrower to  pay the  amount of  such Lender's  Revolving
 Credit Loan Commitment or, if less, the aggregate unpaid principal amount of
 all Revolving Credit  Loans made by  such Lender to  Borrower with  interest
 thereon as prescribed in subsection 2.1.1.

           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  Credit  Percentages. Overadvances  in  the  aggregate
 amount of Five Hundred Thousand Dollars ($500,000) or less may, prior to the
 occurrence and during the continuation of a Default or Event of Default,  be
 made in  the sole  and  absolute discretion  of  Agent. Overadvances  in  an
 aggregate amount of more than Five  Hundred Thousand Dollars ($500,000)  but
 less than One Million Five Hundred Thousand Dollars ($1,500,000) may,  prior
 to the  occurrence and  during continuation  of  a Default  or an  Event  of
 Default, be made in  the sole and absolute  discretion of Required  Lenders.
 Overadvances in an  aggregate amount of  One Million  Five Hundred  Thousand
 Dollars  ($1,500,000)  or  more  and  Overadvances  to  be  made  after  the
 occurrence and during the continuation of  a Default or an Event of  Default
 shall require the consent of all Lenders.  The forgoing notwithstanding,  in
 no event,  unless  otherwise consented  to  by all  Lenders,  (x) shall  any
 Overadvances be  outstanding  for more  than  sixty (60)  consecutive  days,
 (y) after all  outstanding Overadvances  have been  repaid, shall  Agent  or
 Lenders make any additional Overadvances unless sixty (60) days or more have
 expired since the last  date on which any  Overadvances were outstanding  or
 (z) shall Overadvances be outstanding on more  than ninety (90) days  within
 any one hundred eighty day (180) period.

                   1.1.2   Use of Proceeds.  The Revolving Credit Loans shall
 be used solely for the satisfaction of existing Indebtedness of Borrower  to
 the Chase Group, for Borrower's general operating capital needs in a  manner
 consistent with the provisions of this Agreement and all applicable laws and
 for such other purposes as permitted by this Agreement.

      1.2 Letters of Credit; LC Guaranties.  (i)  Agent  agrees, on behalf of
 Lenders, for  so long  as no  Default  or Event  of  Default exists  and  if
 requested by  Borrower,  (x) to  issue  its,  or  cause  to  be  issued  its
 Affiliate's Letters of Credit for the account of Borrower or (y) to  execute
 LC Guaranties by which Lenders shall guaranty the payment or performance  by
 Borrower of its reimbursement obligation with respect to Letters of  Credit;
 provided that  the  aggregate face  amount  of  all Letters  of  Credit  and
 LC Guaranties outstanding at any time shall  not exceed Six Million  Dollars
 ($6,000,000).  No Letter  of Credit or LC  Guarantee may have an  expiration
 date that is after the last day of the  Original Term.  Any amounts paid  by
 Agent or any Lender under any  LC Guaranty or in connection with any  Letter
 of Credit  (x) shall become  part of  the  Obligations, (y) unless  paid  by
 Borrower pursuant  to  subsection 1.3(iii) below,  shall  be paid  from  the
 proceeds of a Revolving Credit  Loan requested pursuant to  subsection 3.1.1
 below, to the  extent Lenders are  required to make  Revolving Credit  Loans
 pursuant to the terms hereof and (z) otherwise, shall be payable on demand.

           (ii) Immediately upon the  issuance of  each Letter  of Credit  by
 Agent or its Affiliate or LC Guaranty  by Agent or its Affiliate  hereunder,
 each  Lender  shall  be  deemed  to  have  automatically,  irrevocably   and
 unconditionally purchased from Agent an undivided interest and participation
 in and to such Letter of Credit or LC Guaranty, the obligations of  Borrower
 in respect thereof and the liability of Agent or its Affiliate thereunder in
 an amount  equal to  the maximum  amount available  for drawing  under  such
 Letter of Credit  or, in the  case of a  LC Guaranty, the amount  guaranteed
 thereunder, multiplied by such Lender's Revolving Credit Percentage.   Agent
 will notify each Lender promptly upon presentation  to it of a draw under  a
 Letter of Credit or a demand for payment  under a LC Guaranty.  On a  weekly
 basis, or more  frequently if  requested by  Agent, each  Lender shall  make
 payment to Agent in immediately available funds, of an amount equal to  such
 Lender's pro  rata share  of the  amount of  any payment  made by  Agent  in
 respect to any  Letter of  Credit or LC Guaranty.   The  obligation of  each
 Lender to reimburse  Agent under  this Section 1.3  shall be  unconditional,
 continuing, irrevocable and absolute, except in respect of indemnity  claims
 arising out of  Agent's willful misconduct.   In the  event that any  Lender
 fails to make  payment to Agent  of any amount  due under this  Section 1.3,
 Agent shall be entitled to receive, retain and apply against such obligation
 the principal and interest otherwise payable to such Lender hereunder  until
 Agent receives such payment from such Lender or such obligation is otherwise
 fully satisfied; provided, however, that nothing contained in this  sentence
 shall relieve such Lender of its obligation to reimburse the Agent for  such
 amount in accordance with this subsection 1.3(ii).

           (iii)   Borrower  agrees,   unconditionally,    irrevocably    and
 absolutely, to pay  immediately to Agent,  for the account  of Lenders,  the
 amount drawn under a Letter of Credit or paid pursuant to a LC Guaranty.  If
 Borrower at any time fails to make such payment in accordance with the terms
 of this Agreement, Borrower shall be  deemed to have elected to borrow  from
 the Lenders on such date Revolving Credit Loans equal in aggregate amount to
 the amount paid by Agent or  the issuing Lender, as  the case may be,  under
 such Letter of Credit or  LC Guaranty. The provisions of  subsections 1.3(i)
 and (ii) notwithstanding, in the event that any Lender is prohibited by  any
 Legal Requirement  from  issuing or  participating  in any  LC Guaranty  (or
 portion thereof), then Agent shall issue such LC Guaranty (or such  Lender's
 portion thereof) in lieu of such Lender and such Lender shall not be  deemed
 to have a participation  therein.  In such  event, any payments received  by
 Agent pursuant  to subsection 1.3(iii)  of the  Loan Agreement  which  would
 otherwise be paid  by Agent to  such Lender shall  be retained  by Agent  to
 reimburse Agent for any amounts paid by Agent in respect to the  LC Guaranty
 (or portion thereof) Agent issued in lieu of such Lender.

 Section 2.  INTEREST, FEES AND CHARGES.

     2.1 Interest.

                   2.1.1   Rates  of Interest.  Interest  shall accrue on the
 Revolving Credit Loans in accordance with the terms of the Revolving  Credit
 Note.   Interest shall  accrue on  the  principal amount  of the  Base  Rate
 Advances outstanding at the end of each day at a fluctuating rate per  annum
 equal to the Applicable Margin plus the Base Rate.  Interest shall accrue on
 the principal amount of each of the LIBOR Advances outstanding at the end of
 each day at a fixed rate per annum  equal to the Applicable Margin plus  the
 LIBOR for the applicable Interest Period.   The rate of interest  applicable
 to Base Rate Advances 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.

                   2.1.2   Default Rate  of Interest.  At the option of Agent
 or Required Lenders, upon and after  the occurrence of an Event of  Default,
 and during the continuation thereof, the principal amount of all Loans shall
 bear interest  at a  rate per  annum equal  to two  percent (2%)  above  the
 interest rate otherwise applicable thereto (the "Default Rate").

                   2.1.3   Maximum Interest.  Notwithstanding anything to the
 contrary set forth in this Section 2.1, if at any time until payment in full
 of all  of  the  Obligations,  the  interest  rate  calculated  pursuant  to
 subsections 2.1.1 or 2.2.2 (the "Stated Rate")  exceeds the highest rate  of
 interest permissible under any law which  a court of competent  jurisdiction
 shall, in a final determination, deem applicable hereto (the "Maximum Lawful
 Rate"), then in such event and so long  as the Maximum Lawful Rate would  be
 so exceeded, the rate  of interest payable hereunder  shall be equal to  the
 Maximum Lawful Rate; provided, however, that  if at any time thereafter  the
 Stated Rate is less than the Maximum Lawful Rate, Borrower shall continue to
 pay interest hereunder  at the Maximum  Lawful Rate until  such time as  the
 total interest received by Lenders from the making of advances hereunder  is
 equal to the total interest which Lenders would have received had the Stated
 Rate (but for the operation of this subsection 2.1.3) been the interest rate
 payable since  the Closing  Date.   Thereafter,  the interest  rate  payable
 hereunder shall be the  Stated Rate unless and  until the Stated Rate  again
 exceeds the Maximum Lawful Rate, in which event this subsection 2.1.3  shall
 again apply.   In  no event  shall the  total interest  received by  Lenders
 pursuant to the terms hereof exceed the amount which Lenders could  lawfully
 have received had the  interest due hereunder been  calculated for the  full
 term hereof at the Maximum Lawful Rate.

     2.2 Computation of Interest and Fees.  Interest, Letter of Credit and LC
 Guaranty fees and unused line fees and collection charges hereunder shall be
 calculated daily and shall be computed on the actual number of days  elapsed
 over a year of 360 days.

     2.3 Letter of  Credit and LC Guaranty Fees.  Borrower shall pay to Agent
 either for its benefit or the ratable benefit of Lenders, as provided below:

           (i) for  standby Letters  of Credit  and LC Guaranties of  standby
 Letters of Credit,  the Applicable Margin  per annum of  the aggregate  face
 amount of such Letters of Credit and LC Guaranties outstanding from time  to
 time during  the term  of  this Agreement,  plus  all normal  and  customary
 charges associated with the issuance thereof (including, without limitation,
 a fronting  fee in  the amount  of one-eighth  of one  percent (?%)  of  the
 maximum face amount  of the  applicable Letter  of Credit  or LC  Guaranty),
 which fees and charges  shall be deemed fully  earned upon issuance of  each
 such Letter of Credit or LC Guaranty, shall be due and payable on the  first
 Business Day of each month and shall  not be subject to rebate or  proration
 upon the termination of this Agreement for any reason; and

           (ii) for  documentary  Letters  of  Credit  and  LC  Guaranties of
 documentary Letters of  Credit, a  fee equal  to the  Applicable Margin  per
 annum of the  face amount  of each  such Letter  of Credit  or LC  Guaranty,
 payable upon the issuance of such Letter  of Credit or execution of such  LC
 Guaranty and an additional fee equal  to the Applicable Margin per annum  of
 the face amount of such  Letter of Credit or  LC Guaranty payable upon  each
 renewal thereof and  each extension thereof  plus the  normal and  customary
 charges associated with the issuance and administration of each such  Letter
 of Credit or LC Guaranty (including,  without limitation, a fronting fee  in
 the amount of one-eighth of one percent  (?%) of the maximum face amount  of
 the applicable Letter  of Credit  or LC  Guaranty), which  fees and  charges
 shall be fully earned upon issuance,  renewal or extension, as the case  may
 be, of each such Letter of Credit or  LC Guaranty, shall be due and  payable
 on the first Business Day of each month, and shall not be subject to  rebate
 or proration upon the termination of this Agreement for any reason.

           (iii) Normal and customary charges associated with the issuance of
 Letters of  Credit  or LC  Guaranties  (including, without  limitation,  any
 fronting fee) shall be paid to Agent for its own benefit.  All other amounts
 paid to Agent pursuant to this Section 2.4 shall be payable to Agent for the
 ratable benefit of Lenders.

     2.4 Unused  Line  Fee.   Borrower  shall pay  to  Agent for  the ratable
 benefit of Lenders a  fee equal to  the Applicable Margin  per annum of  the
 average monthly amount by  which the Maximum  Revolving Loan Amount  exceeds
 the sum of the outstanding principal  balance of the Revolving Credit  Loans
 plus the LC Amount.  The unused line fee shall be payable monthly in arrears
 on the first day of each calendar month hereafter.

     2.5 Audit and Appraisal Fees.  Borrower shall pay to Agent out-of-pocket
 audit and  appraisal  cost  and  expenses incurred  from  time  to  time  in
 connection with audits and  appraisals of Borrower's  books and records  and
 such other matters as Agent shall deem appropriate.  If an Event of  Default
 has occurred and is continuing, then Borrower shall also pay to Agent  audit
 and appraisal fees in  accordance with Agent's current  schedule of fees  in
 effect in connection with such audits or appraisals.  Audit costs,  expenses
 and fees (if any) 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.

      2.6 Reimbursement of Expenses.  If, at any  time or times regardless of
 whether or not an  Event of Default  then exists, Agent,  any Lender or  any
 Participating Lender incurs reasonable (in respect to clauses (i), (ii)  and
 (v)) only 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  another Lender  or  a
 Participating Lender; (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 Agent and/or  Lenders 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 of  Agent,  any  Lender  or  any
 Participating Lender shall be charged to  Borrower.  All amounts  chargeable
 to Borrower under this  Section 2.6 shall be Obligations  secured by all  of
 the Collateral, shall be payable on demand to Agent, such Lender or to  such
 Participating Lender, as the case may  be, and shall bear interest from  the
 date such demand is made until paid in  full at the rate applicable to  Base
 Rate Advances from time  to time.  Borrower  shall also reimburse Agent  for
 expenses incurred by Agent  in its administration of  the Collateral to  the
 extent and in the manner provided in Section 6 hereof.

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

 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 may give  Agent a  Notice of  Revolving Credit  Loan, in  which
 notice Borrower shall specify the amount  of the proposed borrowing and  the
 proposed borrowing date, 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.  As an accommodation to  Borrower,
 Agent may permit telephonic requests for loans and electronic transmittal of
 instructions, authorizations,  agreements or  reports to  Agent by  Borrower
 from such  authorized persons  designated by  Borrower  from time  to  time.
 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  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, except for any loss
 or damage resulting  from Agent's  gross negligence  on willful  misconduct.
 Except as otherwise provided in subsection 3.1.4, each Revolving Credit Loan
 shall be made on notice, given  not later than 11:00 a.m. (Chicago time)  on
 the Business  Day of  the proposed  Revolving Credit  Loan, by  Borrower  to
 Agent, which shall  give to  each Lender  prompt written  notice thereof  by
 telecopier or  e-mail.   Each such  notice (a  "Notice of  Revolving  Credit
 Loan") shall  be in  writing or  by telephone  to Agent  at  (262) 798-4800,
 confirmed immediately in writing, specifying therein the requested date  and
 amount of such  Revolving Credit Loan.   Each Lender  shall, not later  than
 2:00 p.m. (Chicago time) on each requested  date, wire to a bank  designated
 by Agent the  amount of  that Lender's  Revolving Credit  Percentage of  the
 requested Revolving  Credit Loan.  Agent shall,  before 2:30  P.M.  (Chicago
 time) on the  date of  the proposed Revolving  Credit Loan,  subject to  the
 provisions hereof,  wire to  a bank  designated by  Borrower and  reasonably
 acceptable to Agent, the amount of such Revolving Credit Loan to the  extent
 received from Lenders.   The  failure of any  Lender to  make the  Revolving
 Credit Loan to  be made  by it shall  not relieve  any other  Lender of  its
 obligation 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, unless otherwise  notified by any Lender,  Agent,
 in its sole  discretion, may, from  its own funds,  make a Revolving  Credit
 Loan on behalf of any Lender hereto.  In such event, the Lender on behalf of
 whom Agent made  the Revolving  Credit Loan  shall reimburse  Agent for  the
 amount of Revolving Credit Loan so made on its behalf, on a weekly (or  more
 frequent basis as determined by Agent, in its sole discretion) basis and the
 entire amount of interest attributable to such Revolving Credit Loan for the
 period from the date on which said  Revolving Credit Loan was made by  Agent
 on such Lender's behalf until Agent  is reimbursed by such Lender, shall  be
 paid to Agent.

           If at  any time  one or  more Lenders  refuse or  fail to  make  a
 requested Revolving Credit Loan  when all conditions  to a Revolving  Credit
 Loan have been satisfied or waived, then Agent may, at its option, but shall
 have no obligation whatsoever  to, purchase all, but  not less than all,  of
 the Revolving Credit Notes, held by the Lender(s) who so fail or refuse, and
 to assume such Lender's commitments to make Revolving Credit Loans and  each
 such Lender shall be  obligated to sell and  transfer such Revolving  Credit
 Notes to  Agent  for  a  price  in  cash  equal  to  the  principal  balance
 outstanding plus all accrued  but unpaid interest  thereon plus all  accrued
 but unpaid  fees  due  any such  Lender  under  the terms  hereof,  and  the
 foregoing provisions  of  this  Section will be  applicable  to  Agent  with
 respect to  the  Revolving  Credit Notes  so  purchased  by it.    Any  such
 purchase, however, shall  not relieve  any such  Lender from  any breach  of
 contract claims available to Agent and/or Borrower against such Lender as  a
 result of its failure to make any such Revolving Credit Loan.

                   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, in the case of  the
 initial borrowing, in accordance with the terms of the written  disbursement
 letter from Borrower, and in the case of each subsequent borrowing, 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 Authorization.      Borrower   hereby  irrevocably
 authorizes Agent, in Agent's sole discretion, to advance to Borrower, and to
 charge to Borrower's Loan  Account hereunder as a  Base Rate Advance, a  sum
 sufficient to  pay  all  interest accrued  on  the  Obligations  during  the
 immediately preceding  month  and to  pay  all reasonable  costs,  fees  and
 expenses at any time owed by Borrower to Agent and/or any Lender hereunder.

                     3.1.4 LIBOR Advances.  Notwithstanding the provisions of
 subsection 3.1.1, in the event Borrower desires  to obtain a LIBOR  Advance,
 Borrower shall give Agent prior, written,  irrevocable notice no later  than
 11:00 A.M. Chicago  time on  the 3rd Business  Day  prior to  the  requested
 borrowing date specifying (i) Borrower's election to obtain a LIBOR Advance,
 (ii) the date of the proposed borrowing (which shall be a Business Day)  and
 (iii) the amount  to  be  borrowed,  which amount  shall  be  in  a  minimum
 principal amount of  One Million Dollars  ($1,000,000) and  may increase  in
 integral multiples of One Hundred Thousand Dollars ($100,000).  In no  event
 shall Borrower  be permitted  to  have outstanding  at  any one  time  LIBOR
 Advances with more than four (4) different Interest Periods.

                     3.1.5 Conversion  of Base Rate  Advances.  Provided that
 no Event of Default has occurred which is then continuing, Borrower may,  on
 any Business Day, convert any  Base Rate Advance into  a LIBOR Advance.   If
 Borrower desires to convert a Base  Rate Advance, Borrower shall give  Agent
 not less  than  three (3) Business  Days'  prior written  notice  (prior  to
 11:00 A.M. Chicago Time on such Business  Day), specifying the date of  such
 conversion and  the  amount  to  be converted.    Each  conversion  into  or
 conversion of a LIBOR Advance shall be in a minimum principal amount of  One
 Million Dollars ($1,000,000) and may increase  in integral multiples of  One
 Hundred Thousand Dollars ($100,000) in excess thereof.  After giving  effect
 to any conversion of  Base Rate Advances to  LIBOR Advances, Borrower  shall
 not be permitted  to have outstanding  at any one  time LIBOR Advances  with
 more than four (4)  different Interest Periods.   Upon the  day after  Agent
 receives notice from Borrower electing to obtain a LIBOR Advance, to convert
 a Base  Rate Advance  or to  continue a  LIBOR Advance,  Agent shall  notify
 Borrower of the LIBOR applicable to the requested LIBOR Advance.

                     3.1.6 Continuation  of LIBOR  Advances.   Borrower shall
 have the right on three (3) Business Days' prior irrevocable written  notice
 given to Agent by Borrower (prior to  11:00 A.M. New York City Time on  such
 Business Day),  subject to  the provisions  hereof,  to continue  any  LIBOR
 Advance into  a  subsequent Interest  Period  of  the same  or  a  different
 permitted duration,  in  each  case  subject  to  the  satisfaction  of  the
 following conditions:

                (i) in  the case  of a  continuation of  less than  all LIBOR
      Advances, the  LIBOR Advances  continued shall  each  be in  a  minimum
      principal amount of One Million  Dollars ($1,000,000) and may  increase
      in integral multiples of One Hundred Thousand Dollars ($100,000); and

                (ii) no  LIBOR Advance (or portion  thereof) may be continued
      as a LIBOR Advance if  an Event of Default  has occurred which is  then
      continuing or if,  after giving effect  to such continuation,  Borrower
      shall have outstanding LIBOR Advances with more than four (4) different
      Interest Periods.

           If Borrower shall fail  to give timely notice  of its election  to
 continue any LIBOR Advance or portion thereof as provided above, or if  such
 continuation shall not be permitted, such LIBOR Advance or portion  thereof,
 unless such LIBOR Advance shall be repaid, shall automatically be  converted
 into a Base Rate Advance at  the end of the  Interest Period then in  effect
 with respect to such LIBOR Advance.

           Notice to Lenders.  Agent shall promptly notify each Lender of any
 notices received  by  Agent from  Borrower  in respect  to  LIBOR  Advances,
 conversions of Base Rate  Advances into LIBOR  Advances or continuations  of
 LIBOR Advances.

                     3.1.7 Inability to Make LIBOR Advances.  Notwithstanding
 any other provision  hereof, if any  applicable law,  treaty, regulation  or
 directive, or any  change therein or  in the  interpretation or  application
 thereof, shall  make  it unlawful  for  any  Lender (for  purposes  of  this
 subsection 3.1.8, the term "Lender" shall include the office or branch where
 Lender or  any corporation  or bank  then controlling  any Lender  makes  or
 maintains any LIBOR Advances) to make or maintain its LIBOR Advances, or  if
 with respect to any Interest Period, Agent is unable to determine the  LIBOR
 relating thereto,  or  adverse  or unusual  conditions  in,  or  changes  in
 applicable law relating  to, the  London interbank  market make  it, in  the
 reasonable judgment of Agent, impracticable to fund therein any of the LIBOR
 Advances, or make the  projected LIBOR unreflective of  the actual costs  of
 funds therefore to Lenders, the obligation of Lenders to make LIBOR Advances
 hereunder  shall  forthwith  be  suspended  during  the  pendency  of   such
 circumstances and Borrower shall,  if any affected  LIBOR Advances are  then
 outstanding, promptly upon request from  Agent, convert such affected  LIBOR
 Advances into Base Rate Advances.

     3.2 Payments.   Except  where  evidenced by  notes or  other instruments
 issued or  made by  Borrower to  Agent  or Lenders  specifically  containing
 payment provisions which  are in conflict  with this  Section 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, (ii) the occurrence of an Event of Default in  consequence
 of which Agent  or Required Lenders  elects to accelerate  the maturity  and
 payment of the Obligations, or (iii) termination of this Agreement  pursuant
 to Section 4 hereof; provided, however, that  if an Overadvance shall  exist
 at any time, Borrower shall, on demand, repay the Overadvance.  Each payment
 (including principal prepayment) by Borrower on account of principal of  the
 Revolving Credit Loans shall be applied first to Base Rate Advances, then to
 LIBOR Advances.

                     3.2.2 Interest.    Interest  accrued  on  the  Revolving
 Credit Loans shall be due on the  earliest of (i) the first calendar day  of
 each month (for the immediately preceding month), computed through the  last
 calendar day of  the preceding month,  (ii) the last day  of the  applicable
 Interest Period for any LIBOR Advance,  (iii) the occurrence of an Event  of
 Default in  consequence  of  which  Agent  or  Required  Lenders  elects  to
 accelerate the maturity and payment  of the Obligations or  (iv) termination
 of this Agreement pursuant to Section 4 hereof.

                     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 hereof,  to Agent for its  benefit and/or the  ratable
 benefit of Lenders,  as applicable,  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 for its benefit and/or the ratable benefit of Lenders, as  applicable,
 as and when provided in this Agreement, the Other Agreements or the Security
 Documents, or on demand, whichever is later.

                     3.2.5 Prepayment of LIBOR Advances.  Borrower may prepay
 a LIBOR Advance  only upon at  least three (3)  Business Days prior  written
 notice to Agent (which notice shall be irrevocable).  Borrower shall pay  to
 Agent, upon request of Agent, such amount or amounts as shall be  sufficient
 (in the reasonable opinion of Agent) to compensate each Lender for any loss,
 cost, or  expense incurred  as a  result of:   (i) any  payment of  a  LIBOR
 Advance on a date other than  the last day of  the Interest Period for  such
 Loan; (ii) any failure  by Borrower to  borrow a LIBOR  Advance on the  date
 specified by Borrower's written notice; or (iii) any failure by Borrower  to
 pay a LIBOR Advance on the date for payment specified in Borrower's  written
 notice.  Without limiting the foregoing, Borrower shall pay to Agent for the
 ratable benefit of Lenders a "yield  maintenance fee" in an amount  computed
 as follows:  the current rate  for United States Treasury securities  (bills
 on a  discounted basis  shall be  converted  to a  bond equivalent)  with  a
 maturity date closest to  the Interest Period chosen  pursuant to the  LIBOR
 Advance as to  which the prepayment  is made, shall  be subtracted from  the
 LIBOR in effect  at the time  of prepayment.   If the  result is  zero or  a
 negative number, there shall be no yield maintenance fee.  If the result  is
 a positive number, then the resulting percentage shall be multiplied by  the
 amount of the principal balance being  prepaid.  The resulting amount  shall
 be divided by  360 and multiplied  by the number  of days  remaining in  the
 Interest Period  chosen  pursuant to  the  LIBOR  Advance as  to  which  the
 prepayment is  made.    Said  amount  shall  be  reduced  to  present  value
 calculated by using the above  referenced United States Treasury  securities
 rate and the number  of days remaining  in the term  chosen pursuant to  the
 LIBOR Advance as to which prepayment is made.  The resulting amount shall be
 the yield maintenance fee  due to Agent for  the ratable benefit of  Lenders
 upon the  prepayment of  a LIBOR  Advance.   If  by reason  of an  Event  of
 Default,  Agent  or  Required  Lenders  elects  or  elect  to  declare   the
 Obligations to be immediately  due and payable,  then any yield  maintenance
 fee with respect to a LIBOR Advance shall become due and payable in the same
 manner as though the Borrower had exercised such right of prepayment.

     3.3 Mandatory Prepayments.

                     3.3.1 Proceeds    of   Sale,    Loss,   Destruction   or
 Condemnation of Collateral.  Except as provided below or in subsection 6.4.2
 hereof, if Borrower sells any of the  Equipment or real Property, or if  any
 of the Collateral is lost or  destroyed or taken by condemnation,  Borrowers
 shall pay to  Agent for  the ratable  benefit of  Lenders, unless  otherwise
 agreed by Required Lenders, as  and when received by  any Borrower and as  a
 mandatory prepayment of the  Revolving Credit Loans,  as herein provided,  a
 sum equal to the net cash  proceeds (including insurance payments)  received
 by Borrower  from such  sale, loss,  destruction or  condemnation.   To  the
 extent that the Collateral  sold, lost, destroyed  or condemned consists  of
 Equipment or real Property,  then, except as  otherwise provided below,  the
 applicable prepayment shall be applied to reduce permanently the Fixed Asset
 Component.  Notwithstanding the foregoing, if the proceeds of insurance with
 respect to any loss  or destruction of Equipment  or real Property are  less
 than Five Hundred Thousand Dollars ($500,000)  or if no Default or Event  of
 Default exists and is continuing, such larger amount as may be consented  to
 by Required  Lenders upon  Borrower's request,  which consent  shall not  be
 unreasonably withheld  or  delayed,  Agent  and  Lenders  shall  apply  such
 proceeds to the outstanding principal balance of the Revolving Credit  Loans
 (and shall  not permanently  reduce the  Fixed  Asset Component)  and  shall
 permit Borrower  within  180 days  (or  such  longer  period  as  reasonably
 consented to by  Agent) after the  receipt by Borrower  of such proceeds  to
 reborrow such proceeds in  accordance with the terms  of this Agreement  for
 use in  replacing or  repairing the  damaged or  lost Collateral.   If  such
 damaged or lost Collateral is not  replaced or repaired within such  180 day
 (or such longer period as reasonably consented to by Agent) period, then the
 Fixed Asset Component  shall be permanently  reduced by the  amount of  such
 proceeds.

                     3.3.2 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 the Revolving Credit Loans
 made by it  in excess of  its ratable share  of payments on  account of  the
 Revolving Credit  Loans made  by all  Lenders, such  Lender shall  forthwith
 purchase from each other Lender such participations in the Revolving  Credit
 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  3.3.2 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.

     3.4 Application  of  Payments and  Collections.   All  items  of payment
 received by Agent by 12:00 noon, Chicago, Illinois time, on any Business Day
 shall be  deemed  received on  that  Business Day.    All items  of  payment
 received after 12:00 noon, 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 or any  Lender
 from or on behalf  of Borrower, and Borrower  does hereby irrevocably  agree
 that Agent and Lenders  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 and/or Required Lenders 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
 hereof 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 Event of Default exists.

     3.5 All Loans to Constitute One Obligation.  The Loans and LC Guaranties
 shall constitute one general Obligation of Borrower, and shall be secured by
 Agent's Lien upon all of the Collateral.

     3.6 Loan  Account.  Agent  shall enter all  Loans as debits  to 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,  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  be  deemed final,  binding  and
 conclusive upon Borrower unless Agent is notified by Borrower in writing  to
 the contrary within thirty (30) days  of the date each accounting is  deemed
 received by  Borrower pursuant  to Section  12.8 of  this Agreement.    Such
 notice shall  only  be  deemed an  objection  to  those  items  specifically
 objected to therein.  In the event that any item charged to Borrower's  loan
 account is reversed, Agent shall also reverse or credit back to Borrower any
 interest which accrued on such reversed item.

     3.8 Increased  Costs.    If  any  law  or  any  governmental  or  quasi-
 governmental rule, regulation,  policy, guideline or  directive (whether  or
 not having the force of  law) adopted after the  date of this Agreement  and
 having general applicability to all banks  within the jurisdiction in  which
 Agent and Lenders operate (excluding, for the avoidance of doubt, the effect
 of and phasing in of capital requirements or other regulations or guidelines
 passed prior  to the  date  of this  Agreement),  or any  interpretation  or
 application  thereof  by  any   governmental  authority  charged  with   the
 interpretation or application thereof, or the compliance of Agent or Lenders
 therewith, shall:

           (i) (1)   subject any  Lender  to any  tax  with respect  to  this
 Agreement (other  than  any  tax based  on  or  measured by  net  income  or
 otherwise in the nature of a net income tax, including, without  limitation,
 any franchise  tax  or  any similar  tax  based  on capital,  net  worth  or
 comparable basis  for measurement  or (2) change  the basis  of taxation  of
 payments to any  Lender of  principal, fees,  interest or  any other  amount
 payable hereunder or under any Loan Documents (other than in respect of  any
 tax based on or measured by net income or  otherwise in the nature of a  net
 income tax, including, without limitation, any franchise tax or any  similar
 tax based on capital, net worth or comparable basis for measurement);

           (ii) impose, modify or  hold applicable  any reserve  (except  any
 reserve taken into account  in the determination  of the applicable  LIBOR),
 special deposit, assessment or similar  requirement against assets held  by,
 or deposits in or for the account of, advances or loans by, or other  credit
 extended by,  any  office  of any  Lender,  including  (without  limitation)
 pursuant to Regulation D  of the Board of  Governors of the Federal  Reserve
 System; or

           (iii) impose on any  Lender  or the  London interbank  market  any
 other condition with respect to any Loan Document;

 and the result of any of the foregoing is to increase the cost to any Lender
 of making, renewing  or maintaining Loans  hereunder by an  amount that  any
 Lender deems to be material or to reduce the amount of any payment  (whether
 of principal, interest or otherwise)  in respect of any  of the Loans by  an
 amount that  any  Lender deems  to  be material,  then,  in any  such  case,
 Borrower shall pay  Agent for the  benefit of such  Lender, upon demand  and
 certification not later  than sixty (60) days  following its receipt  either
 from Agent  or the  affected Lender  of  notice of  the imposition  of  such
 increased costs,  such additional  amount as  will compensate  the  affected
 Lender for such additional cost  or such reduction, as  the case may be,  to
 the extent such Lender has not otherwise been compensated, with respect to a
 particular Loan, for such increased cost as  a result of an increase in  the
 Base Rate or the LIBOR.  An  officer of the affected Lender shall  determine
 the amount  of  such additional  cost  or reduced  amount  using  reasonable
 averaging and  attribution methods  and shall  certify  the amount  of  such
 additional cost or  reduced amount  to Borrower,  which certification  shall
 include a  written  explanation of  such  additional cost  or  reduction  to
 Borrower.  Such certification shall be conclusive absent manifest error.  If
 any Lender claims  any additional cost  or reduced amount  pursuant to  this
 Section 3.8, then such Lender shall use reasonable efforts (consistent  with
 legal and regulatory restrictions) to  designate a different lending  office
 or to file any certificate or  document reasonably requested by Borrower  if
 the making of such designation or filing would avoid the need for, or reduce
 the amount of, any such additional cost or reduced amount and would not,  in
 the sole discretion  of such Lender,  be otherwise  disadvantageous to  such
 Lender.  In the event that the provisions of this Section 3.8 result in  the
 effective interest  rates  being charged to Borrower  being increased, on  a
 per annum  basis, by  more than  one quarter  percent (1/4%),  Borrower  may
 require any such affected  Lender to sell and  transfer all its interest  in
 this Agreement  and its  Revolving Credit  Note  and Revolving  Credit  Loan
 Commitments to a substitute  Lender (who shall  be reasonably acceptable  to
 Agent) for  a price  in cash  equal to  principal balance  of such  affected
 Lender's outstanding Loans plus all accrued but unpaid interest thereon plus
 all accrued but  unpaid fees due  any such affected  Lender under the  terms
 hereof.  Any such sale and transfer shall  be made pursuant to the terms  of
 Section 12.3 hereof.

     3.9 Basis  for Determining Interest  Rate Inadequate or  Unfair.  In the
 event that Agent shall have determined that:

           (i) reasonable means do not exist  for ascertaining the LIBOR  for
 any Interest Period; or

           (ii) Dollar deposits in the relevant  amount and for the  relevant
 maturity are not available in the London interbank market with respect to  a
 proposed LIBOR Advance, or a proposed conversion of a Base Rate Advance into
 a LIBOR Advance; then

 Agent shall give Borrower prompt written, telephonic or electronic notice of
 the determination of  such effect.   If such notice  is given, (i) any  such
 requested LIBOR  Advance  shall be  made  as  a Base  Rate  Advance,  unless
 Borrower shall notify Agent no later than 11:00 A.M. (Chicago Time) two  (2)
 Business Days prior to the date of such proposed borrowing that the  request
 for such borrowing shall be canceled or made as an unaffected type of  LIBOR
 Advance, and (ii) any Base Rate Advance which was to have been converted  to
 an affected type of LIBOR Advance shall be continued as or converted into  a
 Base Rate  Advance,  or, if  Borrower  shall  notify Agent,  no  later  than
 11:00 A.M. (Chicago  Time)  two (2)  Business  Days prior  to  the  proposed
 conversion, shall be maintained as an unaffected type of LIBOR Advance.

 Section 4.  TERM AND TERMINATION.

     4.1 Term  of Agreement.  Subject to Agent's  and Lenders' right 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 a period of four (4)
 years from  the date  hereof, through  and including  October 31, 2005  (the
 "Original Term").

     4.2 Termination.

                     4.2.1   Termination by Agent or Lenders.  Agent may and,
 at the direction of Required Lenders, shall terminate this Agreement without
 notice upon  the  occurrence and  during  the  continuance of  an  Event  of
 Default.

                     4.2.2 Termination   by   Borrower.      Upon   at  least
 thirty (30) days prior written notice to Agent, Borrower may, at its option,
 terminate this Agreement;  provided, however, no  such termination shall  be
 effective until  Borrower has  paid all  of the  Obligations in  immediately
 available funds and all Letters of Credit and LC Guaranties have expired  or
 have been  cash  collateralized to  Agent's  satisfaction.   Any  notice  of
 termination given by Borrower shall  be irrevocable unless Required  Lenders
 and Agent otherwise agree  in writing, and Agent  and Lenders shall have  no
 obligation to make any Loans or 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  of
 this Agreement or type of Loan available hereunder may be terminated singly.

                     4.2.3 Effect  of  Termination.   All of  the Obligations
 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  all of its rights  and remedies under the  Loan
 Documents notwithstanding  such  termination  until Borrower  has  paid  the
 Obligations to  Agent  for the  ratable  benefit  of Lenders,  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 or Lenders  may
 incur as a result of dishonored checks or other items of payment received by
 Agent or any Lender 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 Lenders from any such loss or damage; or
 (ii) have retained such monetary  reserves and Liens  on the Collateral  for
 such period  of  time as  Agent,  in  its reasonable  discretion,  may  deem
 necessary to protect Agent and Lenders 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 Lenders of the Obligations, Borrower hereby  grants
 to Agent for  its benefit and  the ratable benefit  of Lenders 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;

           (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  lease or  license of  Computer Hardware  and Software  or
 Intellectual Property 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 lease  or license (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 lease or license.

     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 by Agent  to give Agent a  security
 interest in any such Commercial Tort Claim.

                     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 reasonably  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
 reasonably 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
 and 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
 irrevocably  authorizes  Agent  to  execute  and  file  any  such  financing
 statements,  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  Section 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 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 reasonably necessary by Agent  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 the Mortgages  upon
 all real Property described therein.  If Borrower shall acquire at any  time
 or times hereafter any interest in other real Property (other than leasehold
 interests in sales offices or storage facilities with an original lease term
 of less than five years), Borrower agrees promptly to execute and deliver to
 Agent, as additional security and Collateral  for the Obligations, deeds  of
 trust, security deeds, mortgages or other collateral assignments  reasonably
 satisfactory in  form  and  substance  to  Agent  and  its  counsel  (herein
 collectively referred to  as "New Mortgages")  covering such real  Property.
 The Mortgages and each  New Mortgage shall be  duly recorded (at  Borrower's
 expense) in each  office where such  recording is required  to constitute  a
 valid Lien  on  the real  Property  covered thereby.    In respect  to  each
 Mortgage and each  New Mortgage, Borrower  shall deliver to  Agent, at  such
 Borrower's expense, mortgagee  title insurance  policies issued  by a  title
 insurance company  reasonably  satisfactory  to  Agent  insuring  Agent,  as
 mortgagee;  such  policies  shall  be  in  form  and  substance   reasonably
 satisfactory to Agent and shall insure a valid first Lien in favor of  Agent
 on the Property covered thereby, subject only to those exceptions reasonably
 acceptable to Agent and  its counsel.   Said policies shall  be in form  and
 substance reasonably  satisfactory  to  Agent.   Such  Borrower  shall  also
 deliver to Agent such other  documents, including, without limitation,  ALTA
 Surveys of  the real  Property,  as Agent  and  its counsel  may  reasonably
 request relating to the real Property subject to any such New Mortgage.

 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 hereto  and shall  not,  without the  prior  written
 approval of Agent, be moved therefrom  except, prior to an Event of  Default
 and Agent's  or  Required  Lender'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 hereof.

                     6.1.2 Insurance  of Collateral.  Borrower shall maintain
 and pay for insurance upon all Collateral wherever located and with  respect
 to Borrower'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.  Borrower  shall deliver the originals  of
 such policies to Agent with satisfactory lender's loss payable endorsements,
 naming Agent as 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 thirty (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  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.   If Borrower  fails to provide  and pay for  such
 insurance, Agent may, at its option,  but shall not be required to,  procure
 the same and charge Borrower therefor.  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 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.   If
 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.  Agent  shall not  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 keep accurate  and complete records of  its Accounts and  all
 payments and collections thereon and shall submit to Agent on such  periodic
 basis as  Agent  shall  request  a sales  and  collections  report  for  the
 preceding period, in form  reasonably satisfactory to Agent.   On or  before
 the fifteenth day  of each month  from and after  the date hereof,  Borrower
 shall deliver to Agent, in form  acceptable to Agent, a detailed aged  trial
 balance of all Accounts existing as of the last day of the preceding  month,
 specifying the names, addresses, face value, dates of invoices and due dates
 for each Account  Debtor obligated  on an  Account so  listed ("Schedule  of
 Accounts"), and, upon Agent's request therefor, copies of proof of  delivery
 and the  original  copy of  all  documents, including,  without  limitation,
 repayment histories and present status reports  relating to the Accounts  so
 scheduled and such other matters and  information relating to the status  of
 then existing Accounts as Agent shall  reasonably request.  If requested  by
 Agent, after and  during the  occurrence of  an Event  of Default,  Borrower
 shall 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  copies  of
 invoices or invoice registers related thereto.

                     6.2.2 Discounts,  Allowances,  Disputes.    If  Borrower
 grants any discounts, allowances or credits  that are not shown on the  face
 of the  invoice  for  the  Account  involved,  Borrower  shall  report  such
 discounts, allowances or credits, as  the case may be,  to Agent as part  of
 the next required  Schedule of Accounts.   If any amounts  due and owing  in
 excess of One Million Dollars ($1,000,000)  are in dispute between  Borrower
 and any Account  Debtor, Borrower shall  provide Agent  with written  notice
 thereof within five (5) Business Days of Borrower becoming aware of any such
 dispute, explaining in detail the reason for the dispute, all claims related
 thereto and the amount in controversy.  Upon and after the occurrence 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  reasonable  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 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.

                     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 hereafter, in the name  of
 Agent, any designee of Agent, or Borrower, to verify the validity, amount or
 any other matter  relating to any  Accounts by  mail, telephone,  electronic
 communication or otherwise.  Borrower shall cooperate fully with Agent in an
 effort to facilitate  and promptly conclude  any such verification  process.
 If no Default  or Event  of Default has  occurred and  is continuing,  Agent
 shall give Borrower reasonable advance written notice of any such  telephone
 confirmation.

                     6.2.5 Maintenance  of Dominion Account.   Borrower shall
 maintain a Dominion Account pursuant to a lockbox arrangement acceptable  to
 Agent with  such banks  as may  be selected  by Borrower  and be  reasonably
 acceptable to Agent.  Borrower shall 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 the Dominion  Account
 shall immediately become the property of Agent and Borrower shall obtain the
 agreement by such banks  in favor of Agent  to waive any recoupment,  setoff
 rights, and any  security interest in,  or 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 endeavor  in the  first instance  to
 make collection of  its Accounts  for Agent.   All  remittances received  by
 Borrower on account  of Accounts, together  with the proceeds  of any  other
 Collateral, shall be held as Agent's  property by Borrower as trustee of  an
 express trust for  Agent's benefit  and Borrower  shall immediately  deposit
 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, or in the name of Agent's agent, and to charge the
 collection costs  and  expenses,  including reasonable  attorneys'  fees  to
 Borrower.

     6.3  Administration of Inventory.

                     6.3.1 Records  and Reports of Inventory.  Borrower shall
 keep accurate and complete records of its Inventory.  Borrower shall furnish
 to Agent Inventory  reports in form  and detail  reasonably satisfactory  to
 Agent at such times as Agent may request, but at least once each month,  not
 later than the  fifteenth (15th) day  of such month,  concurrently with  the
 delivery of the Borrowing Base Certificate as required by subsection  8.1.4.
 Borrower shall conduct a physical inventory no less frequently than annually
 and shall provide to  Agent a report based  on each such physical  inventory
 promptly thereafter,  together with  such  supporting information  as  Agent
 shall request.

                     6.3.2 Returns  of Inventory.   If  at any  time or times
 hereafter any Account Debtor returns any Inventory to Borrower the  shipment
 of which generated an Account on  which such Account Debtor is obligated  in
 excess  of  Five  Hundred   Thousand  Dollars  ($500,000),  Borrower   shall
 immediately notify Agent of the same, specifying the reason for such  return
 and the  location,  condition  and  intended  disposition  of  the  returned
 Inventory.

     6.4  Administration of Equipment.

                     6.4.1 Records  and  Schedules  of  Equipment.   Borrower
 shall keep  accurate  records  itemizing  and  describing  the  kind,  type,
 quality, quantity and value  of its Equipment and  all dispositions made  in
 accordance with  subsection 6.4.2 hereof,  and shall  furnish Agent  with  a
 current schedule containing the foregoing information on at least an  annual
 basis and more often if requested by Agent.  Immediately 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  will not
 sell, lease  or voluntarily  otherwise dispose  of or  transfer any  of  the
 Equipment or any part  thereof without the prior  written consent of  Agent;
 provided, however, that the  foregoing restriction shall  not apply, for  so
 long as  no Default  or  Event of  Default  exists, to  (i) dispositions  of
 Equipment which,  in  the  aggregate  during  any  consecutive  twelve-month
 period, has a fair market  value or book value,  whichever is less, of  Five
 Hundred Thousand  Dollars ($500,000)  or less,  provided that  all  proceeds
 thereof are remitted to Agent for application to the Revolving Credit Loans,
 or (ii) in connection with replacements of Equipment with Equipment of  like
 or better kind, function or value,  provided that the replacement  Equipment
 shall be acquired prior  to, concurrently with or  within 180 days (or  such
 longer period as reasonably consented to by Agent) after any disposition  of
 the Equipment that  is to be  replaced, the replacement  Equipment shall  be
 free and clear  of Liens other  than Permitted Liens  that are not  Purchase
 Money Liens, and  Borrower shall  have given  Agent at  least five (5)  days
 prior written notice of any such disposition.

     6.5 Payment  of  Charges.   All  amounts  chargeable  to  Borrower under
 Section 6 hereof  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
 Advances from time to time.

 Section 7.      REPRESENTATIONS AND WARRANTIES.

     7.1 General Representations and Warranties.  To induce Agent and Lenders
 to enter  into  this Agreement  and  to make  advances  hereunder,  Borrower
 warrants, represents and covenants to Agent and Lenders that:

                     7.1.1 Organization  and Qualification.  Each of Borrower
 and its Subsidiaries is a corporation  duly organized, validly existing  and
 in good standing under  the laws of the  jurisdiction of its  incorporation.
 Each of Borrower and its Subsidiaries is duly qualified and is authorized to
 do business and is in good standing  as a foreign corporation in each  state
 or jurisdiction listed on Exhibit 7.1.1 hereto  and in all other states  and
 jurisdictions in which the failure of Borrower or any of its Subsidiaries to
 be so  qualified would  have  a material  adverse  effect on  the  financial
 condition, business or Properties of Borrower or any of its Subsidiaries.

                     7.1.2 Corporate  Power and Authority.   Each of Borrower
 and 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  action  and  do not  and  will  not
 (i) require any consent or approval of the shareholders (or members, in  the
 case of a limited liability company) of Borrower or any of its Subsidiaries;
 (ii) contravene Borrower's or any of its Subsidiaries' charter, articles  or
 certificate of incorporation or bylaws; (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  of  its
 Subsidiaries; (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 each of Borrower and  its
 Subsidiaries enforceable against it in accordance with its respective terms,
 subject, as  to  enforcement,  to  general  principles  of  equity,  and  to
 bankruptcy,  insolvency  and  similar  rights  affecting  creditors'  rights
 generally.

                     7.1.4 Capital  Structure.   Exhibit 7.1.4  hereto states
 (i) the  correct  name  of  each  of  the  Subsidiaries  of  Borrower,   its
 jurisdiction of incorporation and the percentage  of its Voting Stock  owned
 by Borrower, (ii) the name of each 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 authorized, issued  and treasury shares  of
 Borrower and each Subsidiary of Borrower.  Borrower has good title to all of
 the shares it purports to own of the stock of each of its Subsidiaries, free
 and clear in each  case of any Lien  other than Permitted  Liens.  All  such
 shares have been duly issued and  are fully paid and non-assessable.   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,  shares  of  the  capital  stock of  Borrower  or  any  of  its
 Subsidiaries.    Except  as  set  forth  in  Exhibit  7.1.4,  there  are  no
 outstanding  agreements  or  instruments  binding  upon  any  of  Borrower's
 shareholders (or  members,  in the  case  of a  limited  liability  company)
 relating to  the  ownership  of  its shares  of  capital  stock  (or  member
 interests, in the case of a limited liability company).

                     7.1.5 Corporate Names, etc.  Neither Borrower nor any of
 its Subsidiaries has  been known  as or  used any  corporate, fictitious  or
 trade names  within  the  last  five  (5)  years,  except  those  listed  on
 Exhibit 7.1.5 hereto.    Except  as  set  forth  on  Exhibit 7.1.5,  neither
 Borrower nor any of its Subsidiaries has been the surviving corporation of a
 merger or consolidation or acquired all  or substantially all of the  assets
 of any  Person.   Each  of  Borrower's  and its  Subsidiaries'  state(s)  of
 incorporation or organization, Type of Organization and Organizational  I.D.
 Number is set forth on Exhibit 7.1.5.  The exact legal name of Borrower  and
 each of its Subsidiaries is set forth on Exhibit 7.1.5.

                     7.1.6 Business  Locations.   Each of  Borrower's and its
 Subsidiaries' chief executive  office and other  places of  business are  as
 listed on  Exhibit 6.1.1  hereto.  During  the  preceding  one-year  period,
 neither Borrower nor any of its Subsidiaries  has had an office or place  of
 business 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.  Each of
 Borrower and 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 has paid  or discharged all lawful claims  which,
 if unpaid, might become a Lien against any of Borrower's Properties that  is
 not a Permitted Lien.  The  Liens granted to Agent  for its benefit and  the
 ratable benefit of Lenders under Section 5 hereof 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 Borrower  with respect  to any  Account or  Accounts.   Unless  otherwise
 indicated in writing to Agent, with respect to each 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 Borrower 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 Borrower  and the  Account
      Debtor;

                (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 security interest therein, is
      not, and will not (by voluntary act or omission of Borrower) be in  the
      future, subject to  any offset, Lien,  deduction, recoupment,  defense,
      dispute,  counterclaim  or  any  other  adverse  condition  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  Borrower and  is not  contingent in  any respect  or for  any
      reason;

                (v) Borrower  has made no  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 Borrower 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 hereof;

                (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  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  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  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, except
 where the failure to maintain, replace or repair any item of Equipment could
 not reasonably be expected to have a Material Adverse Effect.  Borrower will
 not permit  any of  the Equipment  to become  affixed to  any real  Property
 leased to Borrower 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 acceptable  to Agent, and  Borrower will not  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 for the respective periods  during which a Subsidiary  relationship
 existed) as of  September 1,  2001, 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  June 30, 2001,  there has been  no material  change in  the
 condition, financial or  otherwise, of Borrower  and 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  or  about
 December 31 of each year.

                     7.1.11  Full   Disclosure.     The  financial statements
 referred to in subsection 7.1.10 hereof do  not, nor does this Agreement  or
 any other  written  statement  of Borrower  to  Agent,  contain  any  untrue
 statement of a material fact or omit  a material fact necessary to make  the
 statements contained therein  or herein not  misleading.  There  is no  fact
 which Borrower  has failed  to disclose  to Agent  in writing  which has  or
 evidences a Material Adverse Effect or, so far as Borrower can now  foresee,
 could reasonably be expected to have or evidence a Material Adverse Effect.

                     7.1.12  Solvent  Financial Condition.   Each of Borrower
 and its Subsidiaries is now and, after giving effect to the Loans to be made
 and the Letters of Credit and LC  Guaranties to be issued 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, or has issued or entered into any  agreement
 to  assure  payment,  performance  or  completion  of  performance  of   any
 undertaking or obligation of any Person.

                     7.1.14  Taxes.    Borrower's  federal tax identification
 number is 36-2490451.   The  federal tax  identification number  of each  of
 Borrower's Subsidiaries is  shown on  Exhibit 7.1.14 hereto.   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 maintains reasonable  reserves on  its
 books therefor.  The provision  for taxes on the  books of Borrower and  its
 Subsidiaries are adequate, in Borrower's reasonable opinion,  for all  years
 not closed by applicable statutes, and for its 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.
 Each of Borrower  and its Subsidiaries  owns or possesses  all the  patents,
 trademarks, service marks, tradenames, 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  registered   patents,
 trademarks,  service  marks,  tradenames,  copyrights,  licenses  and  other
 similar rights are listed on Exhibit 7.1.16 hereto.

                     7.1.17  Governmental Consents.  Each of Borrower and 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  where the failure  to
 have or be in good standing  with respect to any such governmental  consult,
 approval,  license,  authorization,   permit,  certificate,  inspection   or
 franchise could  not  reasonably be  expected  to have  a  Material  Adverse
 Effect.

                     7.1.18  Compliance  with Laws.  Each of Borrower and 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.  Each of Borrower and 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. S201 et seq.), as amended.

                     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  restriction, which  materially  and adversely  affects  its
 business or 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  hereto, 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  hereto,  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:  (i) claiming  damages against Borrower of One  Hundred
 Thousand Dollars ($100,000) or more either individually or in the  aggregate
 when consolidated with similar or related matters; (ii) involving any  claim
 for  injunctive  relief;  or  (iii)  involving  other  matters  which  could
 reasonably be expected to have 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.   Neither Borrower  nor any of  its Subsidiaries is  in
 default,  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  with a principal amount  of One Hundred  Thousand
 Dollars ($100,000) or more.

                     7.1.22  Leases.   Exhibit 7.1.22(a) hereto is a complete
 listing of  all capitalized  leases of  Borrower  and its  Subsidiaries  and
 Exhibit 7.1.22(b) hereto is a  complete listing of  all operating leases  of
 Borrower and  its  Subsidiaries involving  annual  lease payments  of  Fifty
 Thousand Dollars ($50,000) or more.   Each of Borrower and its  Subsidiaries
 is in compliance in all material respects 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 hereto, neither Borrower nor any of its Subsidiaries has  any
 Plan.   Borrower and  each of  its  Subsidiaries is  in compliance,  in  all
 material respects,  with  the  requirements of  ERISA  and  the  regulations
 promulgated thereunder with respect to each Plan.  No fact or situation that
 could result in  a material  adverse change  in the  financial condition  of
 Borrower or any  of its  Subsidiaries exists  in connection  with any  Plan.
 Neither Borrower nor any of its Subsidiaries has any withdrawal liability in
 connection with a Multi-employer Plan.

                     7.1.24  Trade  Relations.  There exists no actual or, to
 Borrower's knowledge, threatened termination, cancellation or limitation of,
 or any modification or change in, the business 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 hereto, 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  Mexican    Subsidiary.      Agent   and  Lenders
 acknowledge that all  warranties and  representations made  with respect  to
 Mexican  Subsidiary  shall  be  deemed  to  have  been  made  to  Borrower's
 knowledge.

     7.2 Continuous   Nature  of   Representations  and   Warranties.    Each
 representation and warranty contained in this  Agreement and the other  Loan
 Documents shall be deemed to be made on the Closing Date and each subsequent
 date on which Borrower draws down any Revolving Credit Loan or requests Bank
 or Agent to issue or execute any Letters of Credit or LC Guaranty and  shall
 be accurate, complete and not misleading as of each of such date, except for
 changes in the nature of Borrower's or its respective Subsidiaries' business
 or operations  that would  render the  information in  any exhibit  attached
 hereto or  to  any other  Loan  Document either  inaccurate,  incomplete  or
 misleading, so long as  (i) Agent has consented  to such changes, (ii)  such
 changes are expressly permitted or contemplated  by this Agreement or  (iii)
 such changes could not reasonably be expected to have or evidence a Material
 Averse Effect.

     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
 Agent  and  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 to Agent or any  Lender,
 Borrower covenants that, unless otherwise  consented to by Required  Lenders
 in writing, it shall:

                     8.1.1 Visits and Inspections.  Permit representatives of
 Agent and any representatives as of any Lender who wish to accompany Agent's
 representatives, from time to time, as often as may be reasonably requested,
 but only during normal business hours and if no Default or Event of  Default
 has occurred and is continuing, upon twenty-four (24) hours advance  notice,
 to  visit  and  inspect  the  Properties   of  Borrower  and  each  of   its
 Subsidiaries, inspect, audit and make extracts  from its books and  records,
 and  discuss  with   its  officers,  its   employees  and  its   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 that  renders  any
 representation or  warranty in  this  Agreement or  any  of the  other  Loan
 Documents inaccurate, incomplete  or misleading,  in any  manner that  could
 reasonably be expected to have or evidence a Material Adverse Effect.

                     8.1.3 Financial   Statements.    Keep,  and  cause  each
 Subsidiary 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 (with  sufficient copies for  all Lenders) 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 ninety (90) days  after the close of each
      fiscal year of Borrower,  unqualified, audited financial statements  of
      Parent, Borrower  and Borrower's  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 Parent but acceptable to Agent (except for a  qualification
      for a  change  in  accounting  principles  with  which  the  accountant
      concurs);

                (ii) not  later than thirty  (30) days after  the end of each
      month hereafter, including  the last month  of Borrower's fiscal  year,
      unaudited,  interim  financial  statements  of  Parent,  Borrower   and
      Borrower's Subsidiaries as of the end of such month and of the  portion
      of Borrower's  financial  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  Parent,
      Borrower and Borrower's 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  (or
      members, in the case of a limited liability company) and copies of  any
      regular, periodic and special reports or 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; provided,  however, that with respect  to
      Form 8-K or any registration statements, Borrower shall notify Agent of
      the filing  of any  such form  or  statement and  shall supply  a  copy
      thereof to Agent upon Agent's request.

                (iv) promptly after the filing thereof, notice that  Borrower
      has filed any annual report to  be filed with ERISA in connection  with
      each Plan; upon  request of Agent,  Borrower shall deliver  to Agent  a
      copy of any such report; and

                (v) such other data and information (financial and otherwise)
      as Agent  or  Required  Lenders, from  time  to  time,  may  reasonably
      request, bearing upon or  related to the  Collateral or Borrower's  and
      each 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 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  a confirmation  by such  public
 accountants of Borrower's calculations of the financial covenants  contained
 in Section 8.3.  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 Lender a  Compliance Certificate in  the form of  Exhibit 8.1.3
 hereto executed by the Chief Financial Officer of Borrower.

            Within five (5) days  after the earlier  of the last  day of each
 fiscal year of Borrower and the date Parent or Borrower engaged  independent
 certified public  accountants  to  audit  Parent  and  Borrower's  financial
 statements, Borrower  shall deliver  to  such independent  certified  public
 accountants  a  letter  from  Parent  and/or  Borrower  addressed  to   such
 independent certified public  accountants indicating  that it  is a  primary
 intention of Parent and Borrower in engaging such accountants that Agent and
 Lenders  rely  upon  such  financial  statements  of  Parent,  Borrower  and
 Borrower's Subsidiaries.

                     8.1.4 Borrowing  Base  Certificates.   On or  before the
 15th day  of each  month from  and  after the  date hereof,  Borrower  shall
 deliver to Agent a Borrowing Base  Certificate, in the form attached  hereto
 as Exhibit 8.1.4 (as modified from  time to time by  Agent), as of the  last
 day of the immediately preceding month (or shorter period as is applicable),
 with such  supporting  materials as  Agent  shall reasonably  request.    If
 Borrower deems it advisable, or Agent shall request, Borrower shall  execute
 and deliver  to  Agent  Borrowing Base  Certificates  more  frequently  than
 monthly.

                     8.1.5 Landlord,  Storage and Other  Agreements.  Provide
 Agent with copies of all agreements (other than modifications or  amendments
 to existing agreements that do not  affect, in any material respect,  either
 Borrower's or any other party's respective obligations) between Borrower  or
 any  of  its  Subsidiaries   and  any  landlord,  warehouseman,   processor,
 distributor or consignee  which owns  or is the  lessee of  any premises  at
 which any Collateral may, from time to time,  be kept.  With respect to  any
 lease (other than leases  for sales offices),  warehousing agreement or  any
 processing agreement  in  any case  entered  into after  the  Closing  Date,
 Borrower shall  provide  Agent  with landlord  waivers,  bailee  letters  or
 processor letters with  respect to such  premises.   Such landlord  waivers,
 bailee letters or processor letters shall be in a form supplied by Agent  to
 Borrower with such reasonable revisions as are customarily accepted by Agent
 or by similar financial institutions in similar financial transactions.

                     8.1.6 Projections.  No later than thirty (30) days prior
 to the end of each fiscal year of Borrower, deliver to Agent Projections  of
 Borrower for the forthcoming fiscal year, month by month and, to the  extent
 available, any Projections (or partial Projections) for succeeding years.

                     8.1.7 Deposit  and Brokerage Accounts.  For each deposit
 account or brokerage account that Borrower  at any time opens or  maintains,
 Borrower shall, at Agent's request and  option, pursuant to an agreement  in
 form and substance  reasonably satisfactory to  Agent, cause the  depository
 bank or securities intermediary,  as applicable, to agree  to comply at  any
 time with  instructions from  Agent to  such depository  bank or  securities
 intermediary, as applicable, directing the disposition of funds from time to
 time credited to such deposit or brokerage account, without further  consent
 of Borrower.

     8.2 Negative  Covenants.    During  the  term  of  this  Agreement,  and
 thereafter for so long as there are any Obligations to Agent or any  Lender,
 Borrower covenants that, unless Required Lenders has first consented thereto
 in writing, it will not:

                     8.2.1 Mergers;  Consolidations; Acquisitions; Structural
 Changes.  Except for Permitted Acquisitions, merge or consolidate, or permit
 any Subsidiary of  Borrower to merge  or consolidate, with  any Person;  nor
 change  its  or  any  of  its   Subsidiaries'  state  of  incorporation   or
 organization or  Type of  Organization or  Organizational I.D.  Number;  nor
 change its or any of its Subsidiaries' legal names; nor acquire, nor  permit
 any of  its Subsidiaries  to acquire  all  or any  substantial part  of  the
 Properties of any Person, except for:

                (i) mergers  of any Subsidiary  of Borrower  into Borrower or
      another wholly-owned Subsidiary of Borrower; and

                (ii) acquisitions  of  assets consisting  of fixed  assets or
      real Property  that  constitute Capital  Expenditures  permitted  under
      subsection 8.2.8.

                (iii) changes  in  Borrower's or  any Subsidiaries'  state of
      incorporation, name, Type of Incorporation or Organization I.D.  Number
      if Borrower gives Agent thirty (30) days' advance written notice of any
      such change and  executes any UCC  statement or  amendment which  Agent
      reasonably requests Borrower to execute as a result of such change.

                     8.2.2 Loans.  Make, or permit any Subsidiary of Borrower
 to make, any loans or other advances of  money to any Person other than  (i)
 for salary, travel advances, advances against commissions and other  similar
 advances in  the  ordinary course  of  business), (ii) extensions  of  trade
 Credit in the  ordinary course of  business, (iii)  deposits with  financial
 institutions permitted under this Agreement and (iv) prepaid expenses.

                     8.2.3 Total  Indebtedness.   Create,  incur,  assume, or
 suffer to exist, or  permit any Subsidiary of  Borrower to create, incur  or
 suffer to exist, any Indebtedness, except:

                (i)  Obligations owing to Agent and Lenders;

                (ii) Indebtedness   arising  from   Borrower's  guarantee  of
      Parent's obligations under the Senior Subordinated Note Documents;

                (iii) Indebtedness of any Subsidiary of Borrower to Borrower;

                (iv) accounts  payable  to   trade  creditors   and   current
      operating expenses (other than for Money  Borrowed) which are not  aged
      more than ninety (90) days from  billing date or more than thirty  (30)
      days from the due date, in each case incurred in the ordinary course of
      business and paid within  such time period, unless  the same are  being
      actively  contested  in  good  faith  and  by  appropriate  and  lawful
      proceedings; and Borrower or such Subsidiary shall have set aside  such
      reserves, if any,  with respect  thereto as  are required  by GAAP  and
      deemed adequate  by Borrower  or such  Subsidiary and  its  independent
      accountants;

                (v) Obligations to pay Rentals permitted by subsection 8.2.13

                (vi) Permitted Purchase Money Indebtedness;

                (vii) Contingent  liabilities arising out  of endorsements of
      checks and other  negotiable instruments for  deposit or collection  in
      the ordinary course of business;

                (viii) Indebtedness  existing on the  Closing Date and listed
      on Exhibit 8.2.3 (including, without limitation the IRB  Indebtedness);
      and

                (ix) Indebtedness  not  included  in  paragraphs (i)  through
      (viii) above which does not exceed  at any time, in the aggregate,  the
      sum of Five Hundred Thousand Dollars ($500,000).

            Agent and  Lenders acknowledge  that Borrower  may repay  the IRB
 Indebtedness either  in  accordance with  scheduled  terms or  by  voluntary
 prepayment.

                     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  or stockholder,  except in  the
 ordinary course of and pursuant to the 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 or stockholder of Borrower or such Subsidiary.

                     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 its
      benefit and the ratable benefit of Lenders;

                (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 hereto, but  only if in  Agent's
      judgment such  Lien does  not adversely  affect Agent's  rights or  the
      priority of Agent's Lien in the Collateral;

                (iii) Liens  arising  in  the ordinary  course  of Borrower'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 materially  impair  the use  thereof  in  the
      operation of Borrower's business;

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

                (v) Liens   securing  Indebtedness   of  one   of  Borrower's
      Subsidiaries to Borrower or another such Subsidiary;

                (vi) Such other Liens as appear on Exhibit 8.2.5 hereto;

                (vii) Liens incurred  or deposits made in the ordinary course
      of business  (1)  in  connection  with  worker's  compensation,  social
      security, unemployment  insurance  and  other  like  laws,  or  (2)  in
      connection with sales contracts, leases, statutory obligations, work in
      progress  advances  and  other  similar  obligations  not  incurred  in
      connection with the borrowing of money  or the payment of the  deferred
      purchase price of property;

                (viii) Title   exceptions  or  encumbrances  granted  in  the
      ordinary course of business, affecting real Property owned by Borrower;
      provided that  such  exceptions  do not  in  the  aggregate  materially
      detract from the value  of such Property  or materially interfere  with
      its use in the ordinary conduct of Borrower's business;

                (ix) Such  other Liens which  are not  reasonably expected to
      have a material adverse effect on the value of the Collateral as  Agent
      may hereafter approve in writing; and

                (x) Distributions to  Parent to permit Parent to fund Mexican
      Subsidiary's working capital  needs or  Capital Expenditures;  provided
      that after giving effect to any such Distribution, the aggregate amount
      of  Parent  and/or  Borrower's  investment  in  Mexican  Subsidiary  as
      represented by Borrower's or Parent's inter-company account,  accounted
      for on a  consistent basis, does  not exceed One  Million Five  Hundred
      Thousand Dollars ($1,500,000).

                     8.2.6 Subordinated  Debt.    Except  as  provided below,
 make, or permit any Subsidiary of  Borrower to make, any direct or  indirect
 prepayment 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 provisions or agreement relative
 thereto.  Make or permit any Subsidiary of Borrower to make any other direct
 or indirect 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 in contravention of the subordination provisions or agreement  relative
 thereto.  Amend or modify any of  the terms of the Senior Subordinated  Note
 Documents in any manner materially adverse to Borrower or Agent and Lenders.
 The foregoing  notwithstanding,  Borrower  may make  repurchases  of  Senior
 Subordinated Notes or may make Distributions  to Parent to permit Parent  to
 make repurchases of Senior Subordinated Notes if after giving effect to  any
 such repurchase  or  Distribution  each  of  the  following  conditions  are
 satisfied:  (i) no Default  or Event of Default  exists and is  outstanding;
 (ii) there had occurred no  event of Default resulting  from the failure  to
 comply with the financial  covenants contained in  Section 8.3 in either  of
 the two most recently ended fiscal quarters; (iii) Borrower shall have given
 Agent at least five (5) Business Days' prior written notice of its intent to
 make any such repurchase; and (iv) average  Net Availability for the  thirty
 days  immediately  prior  to  the  date   of  the  proposed  repurchase   or
 Distribution and, on a pro forma basis for the thirty days immediately after
 the date  of the  proposed repurchase  or  distribution equals  or  exceeds:
 (x) Five Million Dollars ($5,000,000) if the date of the proposed repurchase
 or Distribution is on or between  January 1 and March 31 of any year  within
 the Original Term; and (y) Ten Million Dollars ($10,000,000) if the date  of
 the proposed  repurchase  or  Distribution is  on  or  between  April 1  and
 June 30, July 1 and September  30 or October 1 and  December 31 of any  year
 within the Original Term.

                     8.2.7 Distributions.    Declare or  make, or  permit any
 Subsidiary of Borrower to declare or make, any Distributions, except for:

                (i) Distributions by any Subsidiary of Borrower to Borrower;

                (ii) Distributions  paid solely in  capital stock of Borrower
      or any of its Subsidiaries;

                (iii) Distributions   by  Borrower   to  Parent   in  amounts
      necessary to permit Parent to repurchase  capital stock of Parent  from
      employees of Borrower or Parent or any of Borrower's Subsidiaries  upon
      the termination of their employment, so long as no Default or Event  of
      Default exists at the time of or would be caused by such making of such
      Distributions and  the aggregate  cash  amount of  such  Distributions,
      measured at the  time when made,  does not exceed  One Million  Dollars
      ($1,000,000) in any fiscal year of Borrower;

                (iv) So long  as no Default or Event of Default exists at the
      time of  or  would be  caused  by  the making  of  such  Distributions,
      Distributions by Borrower in an amount  sufficient to permit Parent  to
      pay Consolidated  tax liabilities  of Parent,  Borrower and  Borrower's
      Subsidiaries,  so  long   as  Parent   applies  the   amount  of   such
      Distributions for such purpose;

                (v) Distributions  by  Borrower  to the  extent  necessary to
      permit Parent to pay administrative costs  and expenses related to  the
      business of Borrower and its Subsidiaries,  not to exceed Five  Million
      Dollars ($5,000,000) in any fiscal year of Borrower, so long as  Parent
      applies the amount of such Distributions for such purpose;

                (vi) Distributions  by  Borrower  to  Parent  to  the  extent
      necessary to permit  Borrower to make  regularly scheduled payments  of
      interest  due  on   the  Senior   Subordinated  Notes   [and  the   IRB
      Indebtedness]; and

                (vii) Distributions permitted by subsection 8.2.6 above.

                     8.2.8 Capital  Expenditures.   Make Capital Expenditures
 (including, without limitation, by way of capitalized leases) which, in  the
 aggregate, as to Borrower and its Subsidiaries, exceed Nine Million  Dollars
 ($9,000,000) during any fiscal year of Borrower.

                     8.2.9 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 and Agent has not  requested
 Borrower to cease such  sales of Inventory, (ii) a  transfer of Property  to
 Borrower  by  a  Subsidiary  of  Borrower  or  (iii) dispositions  expressly
 authorized by this Agreement  or (iv) dispositions of investments  described
 in  paragraphs  (iv),  (v),   (vi)  and  (vii)   of  the  term   "Restricted
 Investments."

                     8.2.10  Stock   of  Subsidiaries.    Permit  any  of its
 Subsidiaries to  issue any  additional shares  of its  capital stock  except
 director's qualifying shares.

                     8.2.11  Bill-and-Hold  Sales, Etc.   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.

                     8.2.12  Restricted  Investment.  Make or have, or permit
 any Subsidiary of Borrower to make or have, any Restricted Investment.

                     8.2.13  Leases.      Become,   or  permit   any   of its
 Subsidiaries to become,  a lessee under  any operating lease  (other than  a
 lease under which Borrower or any of its Subsidiaries is lessor) of Property
 if the aggregate  Rentals payable  during any  current or  future period  of
 twelve (12) consecutive  months under the  lease in question  and all  other
 leases under which Borrower or any of its Subsidiaries is then lessee  would
 exceed Eight Million Dollars ($8,000,000).  The term "Rentals" means, as  of
 the date of determination, all payments which the lessee is required to make
 by the terms of any lease.

                     8.2.14 Tax Consolidation.  File or consent to the filing
 of any  consolidated  income  tax  return  with  any  Person  other  than  a
 Subsidiary of Borrower or Parent.

     8.3 Specific Financial Covenants.   During the term  of this  Agreement,
 and thereafter for so long as there are any Obligations to Agent or Lenders,
 Borrower covenants  that it  will be  in full  compliance with  each of  the
 financial covenants set forth on Exhibit 8.3  hereto.  If GAAP changes  from
 the basis used in  preparing the audited  financial statements delivered  to
 Agent by Borrower on or before the Closing Date, Borrower will provide Agent
 with certificates demonstrating compliance with such financial covenants and
 will include, at  the election  of Borrower or  upon the  request of  Agent,
 calculations setting  forth the  adjustments  necessary to  demonstrate  how
 Borrower is in compliance with such  financial covenants based upon GAAP  as
 in effect on the Closing Date.

 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 Lenders under the other  sections of this Agreement, Lenders  shall
 not be required to make any Loan under this Agreement unless and until  each
 of the following conditions has been and continues to be satisfied:

     9.1 Documentation.   Agent  shall have  received, in  form and substance
 satisfactory to Agent, a duly executed copy of this Agreement and the  other
 Loan  Documents,  together  with  such  additional  documents,  instruments,
 opinions and certificates  as Agent  shall require  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 Loan Documents.  Each of the conditions precedent set forth in
 the other Loan Documents shall have been satisfied.

     9.4 Availability.   Agent shall  have determined  that immediately after
 Lenders have made the initial Loans and issued the initial Letters of Credit
 and LC Guaranties contemplated hereby, and  paid all closing costs  incurred
 in connection with  the transactions contemplated  hereby, Net  Availability
 shall not be less than Twenty Million Dollars ($20,000,000).

     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.

 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 Interest, Principal or Fees. Borrower
 fails to pay any installment of principal, interest or premium, if any,  due
 in respect to outstanding Revolving Credit Loans or fees payable in  respect
 to unused Revolving  Credit Loans  or outstanding  Letters of  Credit or  LC
 Guaranties on the  due date thereof,  whether as  mandatory prepayments,  as
 payments necessary to eliminate Overadvances or otherwise.

                     10.1.2  Payment  of  Other Obligations.   Borrower shall
 fail to pay any of the  Obligations not covered by subsection 10.1.1  hereof
 on the due  date thereof (whether  due at stated  maturity, on demand,  upon
 acceleration or otherwise).

                     10.1.3  Misrepresentations. Any representation, warranty
 or other statement made or furnished to Agent and/or Lenders by or on behalf
 of Borrower, any Subsidiary  of Borrower, or any  Parent 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  manner which could reasonably be  expected
 to have or evidence a Material Adverse Effect when made or furnished or when
 reaffirmed pursuant to Section 7.2 hereof.

                     10.1.4  Breach  of  Specific Covenants.   Borrower shall
 fail or  neglect to  perform,  keep or  observe  any covenant  contained  in
 Sections 5.2, 5.3, 5.4,  6.1.1, 6.1.2,  6.2.5, 6.2.6,  8.1.1, 8.1.2,  8.1.4,
 8.1.7, 8.2 or 8.3 hereof on the  date that Borrower is required to  perform,
 keep or observe such covenant.

                     10.1.5  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 Section 10.1 hereof) and the breach  of such other covenant is not  cured
 to Agent's satisfaction within fifteen (15) days (five (5) days with respect
 to Section 8.1.3) after the sooner to occur of Borrower's receipt of  notice
 of such breach from Agent or the date on which such failure or neglect first
 becomes known to  any executive  officer or  the controller  of Borrower  or
 Parent.

                     10.1.6  Default    Under    Security     Documents/Other
 Agreements.   Any event  of default  shall occur  under, or  Borrower  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.

                     10.1.7 Other Defaults.  There shall occur any default or
 event of default on  the part of Borrower  under any agreement, document  or
 instrument to which Borrower is a party or  by which Borrower or any of  its
 Property is bound, creating or relating to any Indebtedness (other than  the
 Obligations),  in  a  principal  amount  of  One  Hundred  Thousand  Dollars
 ($100,000) or  more if  the  payment or  maturity  of such  Indebtedness  is
 accelerated in consequence of such event of default or demand for payment of
 such Indebtedness is made.

                     10.1.8  Uninsured  Losses.   Any loss, theft,  damage or
 destruction of  any of  the Collateral  with  a fair  market value  of  Five
 Hundred Thousand Dollars ($500,000)  or more not  fully covered (subject  to
 such  deductibles  and  self-insurance   retentions  as  Agent  shall   have
 permitted) by insurance.

                     10.1.9  Insolvency and Related Proceedings.  Borrower or
 Parent 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 Parent under the  Bankruptcy
 Code (if against Borrower or Parent, the continuation of such proceeding for
 more than sixty (60) days),  or Borrower or Parent  shall make any offer  of
 settlement, extension or composition to their respective unsecured creditors
 generally.

                     10.1.10  Business Disruption; Condemnation.  There shall
 occur a cessation  of a substantial  part of the  business of Borrower,  any
 Subsidiary of Borrower or  Parent for a  period which significantly  affects
 Borrower's or Parent's capacity  to continue its  business, on a  profitable
 basis; or Borrower, any  Subsidiary of Borrower or  Parent shall suffer  the
 loss or revocation of any license  or permit now held or hereafter  acquired
 by Borrower  or  Parent  which  is necessary  to  the  continued  or  lawful
 operation of  its  business;  or  Borrower  or  Parent  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  or  Parent's
 leases, uses or occupies any Property shall be canceled or terminated  prior
 to the expiration of its stated term; or any part of the Collateral shall be
 taken through condemnation or the value  of such Property which event,  with
 respect to all  of the  foregoing, could reasonably  be expected  to have  a
 Material Adverse Effect.

                     10.1.11  There shall occur a Change in Control or Parent
 shall cease  to own  and control,  beneficially and  of record,  all of  the
 issued and outstanding capital stock of Borrower.

                     10.1.12   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 Parent is in  "default" (as defined in Section 4219(c)(5)  of
 ERISA) with  respect to  payments to  a Multi-employer  Plan resulting  from
 Borrower's, such  Subsidiary's or  Parent's complete  or partial  withdrawal
 from such Plan and any  such event could reasonably  be expected to have  or
 evidence a Material Adverse Effect.

                     10.1.13   Challenge   to   Agreement.     Borrower,  any
 Subsidiary of Borrower  or Parent, 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.

                     10.1.14   Repudiation   of  or  Default  Under  Guaranty
 Agreement.  Parent shall revoke or attempt to revoke the Guaranty  Agreement
 signed by Parent, or shall repudiate Parent's liability thereunder or  shall
 be in default under the terms thereof.

                     10.1.15   Criminal Forfeiture.  Borrower, any Subsidiary
 of Borrower or Parent  shall be criminally indicted  or convicted under  any
 law that  could  lead to  a  forfeiture of  any  Property of  Borrower,  any
 Subsidiary of Borrower or Parent.

                     10.1.16  Judgments.   Final judgment or judgments (after
 the expiration of all times to appeal therefrom) for the payment of money in
 excess of Two Hundred Fifty Thousand Dollars ($250,000) with respect to  any
 one judgment or Five Hundred Thousand Dollars ($500,000) with respect to all
 outstanding judgments in  the aggregate shall  be rendered against  Borrower
 and the same  shall not (i) be  fully covered by  insurance, or  (ii) within
 thirty days after the entry thereof, have been discharged or paid or  bonded
 over or execution  thereof stayed  pending appeal,  or shall  not have  been
 discharged within five days after the expiration of any such stay.

    10.2 Acceleration  of the Obligations.   Without in  any way limiting the
 right of Agent or Required Lenders, to demand payment of any portion of  the
 Obligations payable on demand in accordance with Section 3.2 hereof, upon or
 at any time after the occurrence of an Event of Default, all or any  portion
 of the Obligations shall, at the option of Agent either acting on its own or
 at the  direction  of  Required Lenders  and  without  presentment,  demand,
 protest or  further notice  by Agent,  become at  once due  and payable  and
 Borrower shall  forthwith pay  to  Agent for  its  benefit and  the  ratable
 benefit of Lenders, the full amount of such Obligations, provided, that upon
 the occurrence of an Event of Default specified in subsection 10.1.9 hereof,
 all of the Obligations  shall become automatically  due and payable  without
 declaration, notice or demand by Agent or Required Lenders.

      Agent shall take such  action with respect to  any Default or Event  of
 Default as shall be directed by the Required Lenders; provided that,  unless
 and until Agent shall  have received such directions,  Agent may (but  shall
 not be obligated to) take such  action, or refrain from taking such  action,
 with respect to such Default or Event of Default as it shall deem  advisable
 and in the best interests of Agent  and Lenders taken as a whole,  including
 any action (or the failure to act) pursuant to the Loan Documents.

    10.3 Other  Remedies.   Upon  and  after the  occurrence  of an  Event of
 Default, Agent and/or Lenders shall have and may exercise from time to  time
 the following other rights and remedies:

                     10.3.1 All of the rights and remedies of a secured party
 under the  UCC  or under  other  applicable law,  and  all other  legal  and
 equitable rights to  which Agent or  Lenders 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  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,  Borrower agrees  not  to charge  Agent  for  storage
 thereof).

                     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 ten (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 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  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  two  (2)  Business  Days  for
 collection, first  to the  reasonable costs,  expenses and  attorneys'  fees
 incurred by Agent in collecting the Obligations, in enforcing the rights  of
 Agent and  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 Parent shall remain liable to Agent and
 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,  tradenames, 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 or Required Lenders  may, at  its or their
 option, require Borrower to deposit with Agent funds equal to the LC  Amount
 and, if Borrower fails  to promptly make such  deposit, Lenders may  advance
 such amount as a Base Rate Advance (whether or not an Overadvance is created
 thereby).  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.

    10.4 Remedies   Cumulative;  No  Waiver.     All  covenants,  conditions,
 provisions, warranties, guaranties, indemnities,  and other undertakings  of
 Borrower 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
 Lenders or contained in  any other agreement  between Agent and/or  Lenders,
 and Borrower, 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 or Lenders  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 Agent  and/or Lenders shall  have been  fully
 satisfied.  None of the undertakings, agreements, warranties, covenants  and
 representations of Borrower contained in this Agreement or any of the  other
 Loan Documents and  no Default or  Event of Default  by Borrower under  this
 Agreement or any other Loan Documents shall be deemed to have been suspended
 or waived by Agent  or Lenders, 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,  Lenders or Required Lenders  (as
 applicable) and directed to Borrower.

    10.5 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  prior
 written consent of  Agent and with  reasonably prompt  subsequent notice  to
 Borrower (any  prior  or contemporaneous  notice  to Borrower  being  hereby
 expressly waived) to set off and to appropriate and to apply any and all (i)
 balance 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  (ii) other property at  any
 time held or owing by 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.  Any Lender exercising a right to set off shall, to the  extent
 the amount of any  such set off exceeds  its Revolving Credit Percentage  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  Revolving Credit  Percentages.
 Borrower agrees, to the fullest extent permitted by law, that any Lender may
 exercise its right to set off with respect  to amounts in excess of its  pro
 rata share of the Obligations and upon doing so shall deliver such excess to
 Agent for the benefit of all Lenders in accordance with the Revolving Credit
 Percentages.

 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  (including,
 without limitation, enforcement or collection of  the Notes, 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
 Required 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 be  fully  justified  in  failing  or
 refusing to  take  any  action  under  this  Agreement  or  the  other  Loan
 Documents, or in  relation hereto or  thereto, unless Agent  shall first  be
 indemnified (upon requesting  such indemnification) to  its satisfaction  by
 Lenders against any  and all  liability and expense  which it  may incur  by
 reason of taking or continuing to take any such action.  If Agent seeks  the
 consent or approval of  Required 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  Required 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  treat the  payee of  any
 Notes or Note as the holder  thereof until Agent receives written notice  of
 the assignment  or  transfer  thereof  signed by  such  payee  and  in  form
 reasonably satisfactory  to  Agent;  (ii) 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;
 (iii) 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;  (iv) 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  terms,
 covenants or conditions of  this Agreement or  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 Borrowers or to monitor the financial condition of
 Borrower; (v) 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;  (vi) shall not be liable  to
 any Lender for any action taken, or inaction, by Agent upon the instructions
 of Required Lenders pursuant  to Section 11.1 hereof  or refraining to  take
 any action  pending such  instructions; (vii) shall  not be  liable for  any
 apportionment or distributions of payments made by it in good faith pursuant
 to the terms hereof; (viii) shall incur no liability under or in respect  of
 this Agreement  or the  other  Loan Documents  by  acting upon  any  notice,
 consent, certification, 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;  and
 (ix) may assume that  no Event of  Default has occurred  and is  continuing,
 unless Agent has  actual knowledge  of the  Event of  Default, has  received
 notice from Borrower or Borrower's independent certified public  accountants
 stating the nature of the  Event of Default, or  has received notice from  a
 Lender stating  the nature  of the  Event of  Default and  that such  Lender
 considers the Event of Default  to have occurred and  to be continuing.   In
 the event any apportionment or distribution described in clause  (vii) 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 FCC  and Affiliates.   With respect  to its  commitment hereunder to
 make Revolving Credit Loans and to issue or procure Letters of Credit and LC
 Guaranties, FCC 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  "Required
 Lenders" shall, unless  otherwise expressly  indicated, include  FCC in  its
 individual capacity as a Lender.  FCC and its Affiliates may lend money  to,
 and generally engage  in any  kind of business  with, Borrower,  any of  its
 Subsidiaries and any Person  who may do business  with or own securities  of
 Borrower or any such Subsidiary,  all as if FCC  were not Agent and  without
 any duty to account therefor to Lenders.

    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.   Except  as  otherwise
 explicitly  provided  for  herein,  Agent  shall   not  have  any  duty   or
 responsibility, either  initially or  on an  ongoing basis,  to provide  any
 Lender  with  any  credit  information  as  similar  information   regarding
 Borrowers.

    11.5 Indemnification.   Lenders agree  to indemnify Agent  (to the extent
 not reimbursed by Borrower), ratably  according to the respective  principal
 amounts of the Notes then held by each of them, 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 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 shares  of any out-of-pocket  expenses
 (including  counsel  fees)  incurred  by   Agent  in  connection  with   the
 preparation, execution, delivery, administration, modification, amendment or
 enforcement (whether through negotiations,  legal proceedings or  otherwise)
 of, or legal  advice in respect  of rights or  responsibilities under,  this
 Agreement and each  other Loan  Document, to the  extent that  Agent is  not
 reimbursed for such expenses by Borrowers.

    11.6 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
 Required 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 without the consent of Agent, except as otherwise set forth in  Section
 10.5 of the Agreement,  no Lender shall have  any right individually  (i) to
 realize upon  the security  created  by this  Agreement  or any  other  Loan
 Document, (ii) to enforce any provision of this Agreement or any other  Loan
 Document (other than such  Lender's Notes and this  Agreement to the  extent
 necessary to enforce  any such  note), or  (iii) to make  demand under  this
 Agreement or any  other Loan Document  (other than such  Lender's Notes  and
 this Agreement to the extent necessary to enforce any such note).

    11.7 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 3.3.1 and subsection 7.2.9
 hereof (and Agent  may rely conclusively  on any  such certificate,  without
 further inquiry); or (iii) in connection with any foreclosure sale or  other
 disposition of Collateral after the  occurrence and during the  continuation
 of an  Event of  Default  or (iv) 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 is cared for, protected  or
 insured or has been encumbered or that the Liens granted to Agent herein  or
 pursuant to the  Security Documents 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 Section 11.7 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, given
 Agent's own interest in the Collateral as a Lender.

    11.8 Successor  Agent.  Agent  may resign at  any time  by giving written
 notice thereof to  Lenders and  Borrower.   Upon any  such resignation,  the
 Required Lenders shall  have the right  to appoint a  successor Agent  which
 shall be reasonably  acceptable to Borrower.   If no  successor Agent  shall
 have been so appointed by the Required Lenders, and shall have accepted such
 appointment, within  30 days  after the  retiring Agent's  giving notice  of
 resignation, then the retiring Agent may, on behalf of the Lenders,  appoint
 a successor Agent, which shall be a commercial bank or financial institution
 organized under the laws  of the United  States of America  or of any  State
 thereof and having a combined capital  and surplus of at least Five  Hundred
 Million Dollars ($500,000,000) and unless an  Event of Default has  occurred
 and is continuing, which shall be  reasonably acceptable to Borrower.   Upon
 the acceptance of any appointment as  Agent hereunder by a successor  Agent,
 such successor Agent shall thereupon succeed  to and become vested with  all
 the rights, powers,  privileges and duties  of the retiring  Agent, and  the
 retiring Agent shall  be discharged from  its duties  and obligations  under
 this Agreement and  the other Loan  Documents.  After  any retiring  Agent's
 resignation hereunder  as Agent,  the provisions  of this  Section 11  shall
 inure to its benefit as to  any actions taken or omitted  to be taken by  it
 while it was Agent under this Agreement and the other Loan Documents.

    11.9 Audit  and Examination Reports;  Disclaimer by Lenders.   By signing
 this Agreement, each Lender:

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

           (b) expressly agrees and acknowledges that Agent (i) does not make
 any representation or  warranty as to  the accuracy of  any Report and  (ii)
 shall not be liable for any information contained in any Report;

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

           (d) agrees  to keep all Reports  confidential and strictly for its
 internal use, and not to distribute  except to its participants, or use  any
 Report in any  other manner, in  accordance with the  provisions of  Section
 12.3; and

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

 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 either Borrower's  or
 Agent's name, but at the cost and expense of Borrower:

                     12.1.1  At  such  time  or  times   upon  or  after  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.

                     12.1.2  At  such  time  or  times   upon  or  after  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
 and, at  Agent's  option,  with  all  warranties  regarding  the  Collateral
 disclaimed; (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  to 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.

    12.2 Indemnity.   Borrower hereby  agrees to indemnify  Agent and Lenders
 and hold Agent and  Lenders harmless from and  against any liability,  loss,
 damage, suit, action or proceeding ever suffered or incurred by Agent or any
 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  Agent and  Lenders
 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 obligation  of
 Borrower under this Section 12.2  shall survive the payment  in full of  the
 Obligations and the termination of this Agreement.

    12.3 Modification of Agreement; Sale of Interest.

           (i) The  Loan Documents constitute  the complete agreement between
 the parties  with  respect to  the  subject matter  hereof  and may  not  be
 modified, altered or  amended except by  an agreement in  writing signed  by
 Borrower, Required Lenders or all Lenders  as required by the terms  hereof,
 and, if required by the terms hereof, Agent.  Borrower may not sell,  assign
 or transfer any  of the  Loan Documents  or any  portion thereof,  including
 without limitation,  such  Borrower's rights,  title,  interests,  remedies,
 powers and  duties hereunder  or thereunder.   Borrower  hereby consents  to
 Agent's and any  Lender's sale  of participations,  assignment, transfer  or
 other disposition in accordance with the terms hereof, at any time or times,
 of any of the Loan Documents or of any portion thereof or interest  therein,
 including, without  limitation,  Agent's  and any  Lender's  rights,  title,
 interests, remedies,  powers  or  duties thereunder,  whether  evidenced  in
 writing or not; Borrower   agrees that it  will use commercially  reasonable
 efforts to assist  and cooperate  with Agent and  any Lender  in any  manner
 reasonably requested  by  Agent  or  such  Lender  to  effect  the  sale  of
 participations in  or assignment  of any  of the  Loan Documents  or of  any
 portion  thereof  or  interest   therein,  including,  without   limitation,
 assistance  in  the  preparation  of  appropriate  disclosure  documents  or
 placement memoranda and  executing appropriate amendments  to the  signature
 pages hereto  to reflect  the  addition of  any  Lenders and  such  Lender's
 respective commitments.   In addition, Borrower  will make their  management
 available to meet with potential Lenders or Participating Lenders from  time
 to time as  reasonably requested  by Agent.  The foregoing  notwithstanding,
 except with respect to sales, assignments  or transfers to Affiliates  under
 common control  pursuant to  which the  selling, assigning  or  transferring
 Lender retains its  voting rights, no  Lender shall  sell participations  or
 assign, transfer or otherwise  dispose of any of  the Loan Documents or  any
 portion thereof or interest  therein, without the  prior written consent  of
 Agent, [and  if  no  Event  of  Default  has  occurred  and  is  continuing,
 Borrower,] which consent shall not be unreasonably withheld or delayed.

           (ii) In  respect to any assignment  by a Lender  of its rights and
 obligations under this  Agreement (including, without  limitation, all or  a
 portion of its Revolving Loan Commitments,  the Revolving Credit Loans  owed
 to it and the  Revolving Credit Note held  by it), (x) each such  assignment
 shall be of  a uniform,  and not  a varying,  percentage of  all rights  and
 obligations, (y) except in the  case of an assignment  of all of a  Lender's
 rights and obligations under this Agreement, (A) the aggregate amount of the
 Revolving Loan Commitment of the assigning Lender being assigned pursuant to
 each such  assignment (determined  as  of the  date  of the  Assignment  and
 Acceptance with respect to such assignment)  shall in no event be less  than
 $5,000,000, and  in integral  multiples of  $1,000,000 thereafter,  or  such
 lesser amount as to  which Borrower and Agent  may consent to and  (B) after
 giving effect to  each such  assignment, the  amount of  the Revolving  Loan
 Commitment  of  the  assigning  Lender  shall  in  no  event  be  less  than
 $5,000,000, (z) the  parties  to  each such  assignment  shall  execute  and
 deliver to the Agent,  for its acceptance, an  Assignment and Acceptance  in
 the form  of  Exhibit 12.3(ii)  hereto  (an  "Assignment  and  Acceptance"),
 together with any Revolving  Credit Note, subject to  such assignment and  a
 processing and recordation fee  of $3,500, and  (aa) any Lender may  without
 the consent of Borrower or the Agent, and without paying any fee, assign  to
 any Affiliate of such Lender that is a bank or financial institution all  of
 its  rights  and   obligations  under   this  Agreement.     The   foregoing
 notwithstanding, no Person  may become a  Lender or  a Participating  Lender
 hereunder,  unless   such  Person   is   a  financial   institution   having
 stockholders' equity (or  the equivalent) of  at least  One Hundred  Million
 Dollars ($100,000,000).    Upon  such execution,  delivery,  acceptance  and
 recording, from and after  the effective date  specified in such  Assignment
 and Acceptance (x) the assignee thereunder shall  be a party hereto and,  to
 the extent that rights  and obligations hereunder have  been assigned to  it
 pursuant to such Assignment and Acceptance, have the rights and  obligations
 of a Lender hereunder and (y) the  Lender assignor thereunder shall, to  the
 extent that  rights  and obligations  hereunder  have been  assigned  by  it
 pursuant to such  Assignment and Acceptance,  relinquish its  rights and  be
 released from its obligations under this  Agreement (and, in the case of  an
 Assignment and  Acceptance  covering all  of  the remaining  portion  of  an
 assigning Lender's rights and obligations under this Agreement, such  Lender
 shall cease to be a party hereto).   If, pursuant to this Section 12.3,  any
 interest in this Agreement  or any Revolving  Credit Loan, Revolving  Credit
 Note, Letter of Credit or LC Guaranty 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  Participating Lender),  and  may cause  any  Participating
 Lender,  concurrently  with  the  effectiveness  of  such  transfer,  (a) to
 represent to  the  transferor Lender  (for  the benefit  of  the  transferor
 Lender, 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
 Revolving Credit  Loans, Revolving  Credit Notes,  Letters of  Credit or  LC
 Guaranties, (b) to  furnish to  the transferor  Lender, Agent  and  Borrower
 either U.S. Internal Revenue  Service Form W-8BEN  or U.S. Internal  Revenue
 Service Form W-8ECI  (wherein such transfer  claims entitlement to  complete
 exemption form  U.S.  federal  withholding  tax  on  all  interest  payments
 hereunder), and  (c) to agree  (for the  benefit of  the transferor  Lender,
 Agent and Borrower) to provide the  transferor Lender, Agent and Borrower  a
 new Form  W-8BEN or  Form W-8ECI  upon the  obsolescence of  any  previously
 delivered form and comparable statements in accordance with applicable  U.S.
 laws and  regulations and  amendments duly  executed and  completed by  such
 transferee, and to comply  from time to time  with all applicable U.S.  laws
 and regulations with regard to such withholding tax exemption.

           (iii) In  the event any Lender  assigns or otherwise transfers all
 or any part of its  Revolving Credit Note, any  such Lender shall so  notify
 Borrower and Borrower  shall, upon  the request  of such  Lender, issue  new
 Revolving Credit Notes in exchange for the old Revolving Credit Note.

           (iv) Any  Lender may at  any time sell  to one  or more commercial
 banks, financial institutions, or other Persons not Affiliates of  Borrowers
 (a  "Participating  Lender")  participating  interests  in  any  Loans,  the
 commitments of  that Lender  and the  other interests  of that  Lender  (the
 "originating  Lender")  hereunder  and  under  the  other  Loan   Documents;
 provided, however, that (x) no participation shall be for an amount of  less
 than  Five  Million  Dollars  ($5,000,000),  (y)  the  originating  Lender's
 obligations under this Agreement shall remain unchanged, (z) the originating
 Lender  shall  remain  solely  responsible  for  the  performance  of   such
 obligations, (aa) 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, and (bb) no Lender shall grant any participation under which  the
 Participating Lender shall have rights to approve any amendment to or waiver
 of this Agreement or the Loan Documents, except to the extent such amendment
 or waiver would: (A) extend the final maturity date for payment of the Loans
 in which such Participating Lender is participating; (B) reduce the interest
 rate or the amount  of principal or  fees applicable to  the Loans in  which
 such  Participating  Lender   is  participating;  or   (C) release  all   or
 substantially all of  the Collateral, except  as expressly provided  herein.

 In  those  cases  in  which  an  originating  Lender  grants  rights  to   a
 Participating Lender to approve any amendment to or waiver of this Agreement
 or the  other Loan  Documents respecting  the matters  described in  clauses
 (A) through  (C) of  the  preceding  sentence,  the  relevant  participation
 agreements shall provide for  a voting mechanism whereby  a majority of  the
 amount of such Lender's portion of  the Loans (irrespective of whether  held
 by such Lender or a Participating Lender) shall control the vote for all  of
 such Lender's portion of the Loans.   In the case of any participation,  the
 Participating Lender shall not have any  rights under this Agreement or  any
 of the  other  Loan  Documents entered  into  in  connection  herewith  (the
 Participating  Lender's  right  against  such  Lender  in  respect  of  such
 participation to be those set forth in the participation or other  agreement
 executed by such Lender and the Participating Lender relating thereto).   In
 no event  shall  any  Participating Lender  grant  a  participation  in  its
 participation interest in  the Loans without  the prior  written consent  of
 Agent, which approval shall  not be unreasonably withheld  or delayed.   All
 amounts payable  by  Borrower  hereunder  shall  be  determined  as  if  the
 originating Lender  had not  sold any  such participation,  except that,  if
 amounts outstanding under this Agreement are  due and unpaid, or shall  have
 been declared or shall have become due and payable upon the occurrence of an
 Event of Default,  each Participating  Lender shall  be deemed  to have  the
 right of set-off in respect of  its participating interest in amounts  owing
 under  this  Agreement  to  the  same  extent  as  if  the  amount  of   its
 participating interest were  owing directly  to it  as a  Lender under  this
 Agreement.

           (v) Notwithstanding  any  other provision  in this  Agreement, any
 Lender may at any time create a security interest in, or pledge, all or  any
 portion of its rights under and interest  in this Agreement in favor of  any
 Federal Reserve Bank in  accordance with Regulation A  of the Board or  U.S.
 Treasury Regulation  31  CFR S203.14,  and  such Federal  Reserve  Bank  may
 enforce such  pledge or  security interest  in  any manner  permitted  under
 applicable law.

           (vi) No amendment  or waiver of any provision of this Agreement or
 the Notes  or any  other Loan  Document,  nor consent  to any  departure  by
 Borrowers therefrom, shall in any event  be effective unless the same  shall
 be in writing and signed  by the Required Lenders,  and then such waiver  or
 consent shall  be  effective only  in  the  specific instance  and  for  the
 specific purpose for which given; provided, however:  (x) that no amendment,
 waiver or  consent  shall, unless  in  writing  and signed  by  each  Lender
 affected thereby  do  any  of the  following:    a) increase  the  aggregate
 Revolving  Loan  Commitments  or  subject  any  Lender  to  any   additional
 obligations, (b) reduce the principal of, or  decrease the rate of  interest
 on, the Notes  or other amount  payable hereunder other  than those  payable
 only to  FCC  in  its  capacity  as  Agent  which  may  be  reduced  by  FCC
 unilaterally, (c) postpone any date fixed for  any payment of principal  of,
 or interest on,  the Notes or  other amounts payable  hereunder, other  than
 those payable only to FCC in its capacity as Agent which may be postponed by
 FCC unilaterally, (d) reduce  the aggregate unpaid  principal amount of  the
 Notes, or the number of Lenders which  shall be required for the Lenders  or
 any of  them to  take any  action hereunder,  (e) release or  discharge  any
 Person liable for the performance of  any obligations of Borrower  hereunder
 or under any of the  Loan Documents except in  accordance with the terms  of
 such Loan  Documents  or as  otherwise  permitted herein,  (f) increase  the
 advance rates contained in the definition of the Borrowing Base, (g) to  the
 extent Agent's or Lenders' consent is required by the terms hereof,  release
 all or substantially all of the  Collateral or (h) amend this  Section 12.3;
 and (y) that no amendment,  waiver or consent shall  be effective unless  in
 writing and signed by either Required Lenders or all Lenders, as required by
 the terms hereof and, if such amendment, waiver or consent affects Agent  or
 its rights hereunder, Agent.

    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 Lender permitted under  Section 12.3
 hereof.

    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  Section 3.2
 hereof 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 certified or registered mail, return receipt requested,
 by personal delivery against receipt,  by overnight courier against  receipt
 or by facsimile and,  unless otherwise expressly  provided herein, shall  be
 deemed to  have been  validly served,  given or  delivered immediately  when
 delivered against  receipt, three  (3) Business  Days after  deposit in  the
 mail, postage prepaid, one (1) Business  Day after delivery to an  overnight
 courier or, in  the case  of facsimile  notice, when  sent (with  electronic
 confirmation of receipt), addressed as follows:

      (A)  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 copies to:       Vedder, Price, Kaufman & Kammholz
                                 222 North LaSalle Street
                                 Suite 2500
                                 Chicago, Illinois 60601
                                 Attention:  John T. McEnroe
                                 Facsimile No.:  312.609.5005

                                                   and

                                 Fleet Capital Corporation
                                 20800 Swenson Drive
                                 Suite 350
                                 Waukesha, WI 53187
                                 Attention:  Edward Bartkowski
                                 Facsimile No.:  262.798.4882

      (B)  If to Borrower:       c/o Home Products International, Inc.
                                 4501 West 47 th Street
                                 Chicago, Illinois 60632
                                 Attention:  Chief Financial Officer
                                 Facsimile No.:  773.890.0523

           With a copy to:       Much Shelist Freed Denenberg Ament &
                                 Rubenstein, P.C.
                                 200 North LaSalle Street
                                 Suite 2100
                                 Chicago, Illinois 60601
                                 Attention:  Jeffrey C. Rubinstein
                                 Facsimile No.:  312.621.1750

       (C) If to any Lender, as its address indicated on the signature  pages
 hereof or in a notice to borrower of an assignment of a Note,

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

    12.9 Consents.   Whenever Agent's, Required  Lenders' or Lenders' 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, unless otherwise specifically provided, Agent,  Required
 Lenders or Lenders, as applicable, shall  be authorized to give or  withhold
 such consent in its or their  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.

   12.10 Credit  Inquiries.  Borrower hereby  authorizes and permits Agent to
 respond  to  usual  and  customary  credit  inquiries  from  third   parties
 concerning Borrower or any of its Subsidiaries or any Guarantor.

   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 GOVERNING   LAW;  CONSENT  TO  FORUM.     THIS  AGREEMENT  HAS  BEEN
 NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN  MADE
 IN CHICAGO, ILLINOIS.  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  OR  LENDERS' OTHER  REMEDIES  IN  RESPECT  OF  SUCH
 COLLATERAL TO THE EXTENT  THAT THE LAWS OF  SUCH JURISDICTION 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 OR AGENT OR  ANY
 LENDER, BORROWER HEREBY CONSENTS AND AGREES  THAT THE CIRCUIT 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 AND LENDERS 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  BY REGISTERED  OR CERTIFIED  MAIL
 ADDRESSED TO BORROWER AT  THE ADDRESS SET FORTH  IN THIS AGREEMENT AND  THAT
 SERVICE SO MADE  SHALL BE DEEMED  COMPLETED UPON THE  EARLIER OF  BORROWER'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 AGENT  TO SERVE LEGAL  PROCESS IN ANY  OTHER
 MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR  LENDERS
 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.

   12.15 WAIVERS BY BORROWER.  BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
 (WHICH 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 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 TAKING POSSESSION OR CONTROL OF
 THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY  COURT
 PRIOR TO ALLOWING AGENT  OR LENDERS TO EXERCISE  ANY OF AGENT'S OR  LENDERS'
 REMEDIES (EXCEPT AS OTHERWISE WOULD BE  PERMITTED OR UNENFORCEABLE BY  LAW);
 (iv) THE  BENEFIT  OF  ALL  VALUATION,  APPRAISEMENT  AND  EXEMPTION   LAWS;
 (v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT  AS PROHIBITED BY LAW,  ANY
 RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR  CONSEQUENTIAL
 DAMAGES OR  ANY DAMAGES  OTHER  THAN, OR  IN  ADDITION TO,  ACTUAL  DAMAGES.
 BORROWER ACKNOWLEDGES THAT THE FOREGOING  WAIVERS ARE A MATERIAL  INDUCEMENT
 TO AGENT'S AND  LENDERS' ENTERING  INTO THIS  AGREEMENT AND  THAT AGENT  AND
 LENDERS ARE 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.

   12.16 Advertisement.  Borrower hereby authorizes Agent to publish the name
 of Borrower and the amount of the credit facility provided hereunder in  any
 "tombstone" or comparable advertisement which Agent elects to publish.

                            (Signature Page to Follow)

<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.

                                     HOME PRODUCTS
                                     INTERNATIONAL-NORTH
                                     AMERICA, INC.
                                      ("Borrower")

                                     By: /s/ James E. Winslow
                                     -----------------------------
                                     Name: James E. Winslow
                                     Title: Executive V.P. and CFO

                                     Accepted in Chicago, Illinois:

                                     FLEET CAPITAL CORPORATION
                                     ("Agent" and "Lender")

                                     By: /s/ Andrew Pappas
                                     -----------------------------
                                     Name: Andrew Pappas
                                     Title: Vice President

                                     Address:
                                     One South Wacker Drive
                                     Suite 1400
                                     Chicago, Illinois  60601
                                     Attention:  Loan Administration Manager
                                     Telecopier No.:  312.332.6537

                                     Revolving Loan Commitment:  $50,000,000

<PAGE>

                                  APPENDIX A

                             GENERAL DEFINITIONS

      When used in the  Loan and Security Agreement  dated as of  October 31,
 2001, by and among the lenders  signatory hereto ("Lenders"), Fleet  Capital
 Corporation ("FCC")  as  agent for  such  Lenders (FCC,  in  such  capacity,
 "Agent") and Home Products International -  North America, Inc., a  Delaware
 corporation ("Borrower"),  (a) the  terms  Account,  Certificated  Security,
 Chattel  Paper,  Deposit  Account,  Document,  Equipment,  Financial  Asset,
 Fixture,  General  Intangibles,  Goods,  Instrument,  Inventory,  Investment
 Property,  Security,  Proceeds,  Security  Entitlement  and   Uncertificated
 Security have the  respective meanings assigned  thereto under  the UCC  (as
 defined below);  (b) the terms  Commercial Tort  Claims, Electronic  Chattel
 Paper, Health-Care-Insurance Receivables,  Letter-of-Credit Rights,  Payment
 Intangibles, Software,  Supporting Obligations  and Tangible  Chattel  Paper
 have the  respective meanings  assigned thereto  in  the UCC  Revisions  (as
 defined below);  (c) all terms  indicating  Collateral having  the  meanings
 assigned thereto under the UCC or the UCC Revisions shall be deemed to  mean
 such Property,  whether  now  owned or  hereafter  created  or  acquired  by
 Borrower or in which  Borrower now has or  hereafter acquires any  interest;
 (d) capitalized terms which  are not otherwise  defined have the  respective
 meanings assigned thereto in said Loan  and Security Agreement; and  (e) 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 on or  under
 or on  account of  any Account,  Contract Right,  Chattel Paper  or  General
 Intangible.

      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 5% or more of any class of the  Voting Stock of a Person; or  (iii) 5%
 or more of  the Voting Stock  (or in the  case of a  Person which  is not  a
 corporation, 5% 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.

      ALTA Survey  -  a survey  prepared  in accordance  with  the  standards
 adopted by the American Land Title Association and the American Congress  on
 Surveying and  Mapping  in  1997, known  as  the  "Minimum  Standard  Detail
 Requirements of Land Title Surveys".  The ALTA Survey shall be in sufficient
 form to  satisfy the  requirements of  Chicago  Title Insurance  Company  to
 provide extended  coverage  over survey  defects  and shall  also  show  the
 location of all easements, utilities, and covenants of record, dimensions of
 all improvements, encroachments from any adjoining property, and certify  as
 to the location of any flood  plain area affecting the subject real  estate.
 The ALTA  Survey  shall  contain the  following  certification:    "To  Home
 Products International-North America,  Inc., Fleet  Capital Corporation,  as
 Agent, and Chicago Title  Insurance Company.  This  is to certify that  this
 map of plat and the survey on which it is based were made in accordance with
 the "Minimum Standard  Detail Requirements for  Land Title Surveys"  jointly
 established and adopted by  ALTA and ACSM in  1997.  (signed (SEAL)  License
 No. __________".

      Applicable Margin -  the percentages set  forth below  with respect  to
 Base Rate Advances, LIBOR  Advances, letter of credit  fees and unused  line
 fees, which percentages shall be set on the Closing Date and adjusted on the

 first day  of the  month following  the month  in which  the Borrowing  Base
 Certificate for  the  period ended  April 30,  2002 is  delivered  to  Agent
 pursuant to subsection 8.1.4  and quarterly thereafter on  the first day  of
 the month following the month in  which the Borrowing Base Certificates  for
 periods ending  on each  subsequent June 30,  September 30, December 31  and
 March 31 are delivered to Agent pursuant to subsection 8.1.4 by reference to
 Borrower's Average  Gross Availability  for the  one-month period  ended  on
 April 30, 2002  or the  most recent  June 30, September 30,  December 31  or
 March 31, as applicable, in accordance with the following:

                         Applicable Margin
                                                            Letter of Credit
    Average Gross       LIBOR      Base Rate   Unused Line       and LC
    Availability       Advances    Advances        Fee        Guaranty Fees
 -----------------     --------    ---------   -----------  ----------------
 > $30,000,000          2.25%        .25%         .375%          2.125%
 <$30,000,000, but      2.50%        .50%         .50%           2.375%
 >$20,000,000
 <$20,000,000           2.75%        .75%         .50%           2.625%

      Each change in Applicable Margin shall be effective prospectively as of
 the first day  of the  fiscal month of  Borrower next  following the  fiscal
 month during  which  the  applicable Borrowing  Base  Certificates  for  the
 periods ended  April 30, 2002  and each  subsequent June 30,  September  30,
 December 31 and  March 31  of Borrower are  delivered to  Agent pursuant  to
 subsection 8.1.4,  commencing  with  the  delivery  of  the  Borrowing  Base
 Certificate for the period ending April 30, 2002.

      From the  Closing Date  until the  first  adjustment date  as  provided
 above, the Applicable  Margin shall be  2.50% (LIBOR  Advances), .50%  (Base
 Rate Advances), .50 % (unused line fee)  and 2.50% (Letter of Credit and  LC
 Guaranty fee).  At  any time when  Borrower has failed  to deliver to  Agent
 Borrowing Base Certificates for any period  ended on June 30, September  30,
 December 31 and March 31 within the  Original Term and such failure has  not
 been cured to Agent's reasonable  satisfaction, the Applicable Margin  shall
 be the highest percentages set forth in the above schedule.

      Average  Gross  Availability   -  the  average   of  Borrower's   Gross
 Availability as determined by Agent for any three-month period ended on  any
 June 30, September 30, December 31 or March 31 within the Original Term.

      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 Advances - any Loan bearing interest computed by reference to
 the Base Rate.

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

           (i)  the Maximum Revolving Credit Amount of such date; or

           (ii) an amount equal to the sum of:

                (a)  eighty-five percent (85%) of the net amount of  Eligible
      Accounts outstanding at such date;

                                     PLUS

                (b)  the   lesser   of   (1) Twenty-Five   Million    Dollars
      ($25,000,000) or  (2) sixty  percent (60%)  of  the value  of  Eligible
      Inventory at such date calculated on the basis of the lower of cost  or
      market with the cost of raw materials and finished goods calculated  on
      a first-in, first-out basis.

                                     PLUS

                (c)  the Fixed Asset Component.

      The sum of (a),  (b) and (c)  above is hereinafter  referred to as  the
 "Collateral Borrowing  Base."    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.

      Borrowing Base Certificate - a certificate by a reasonably  responsible
 officer of Borrower, substantially in the form of Exhibit 8.1.4 (or  another
 form acceptable to  Agent) setting forth  the calculation  of the  Borrowing
 Base, including a calculation of each component thereof, all in such  detail
 as shall  be reasonably  satisfactory to  Agent.   All calculations  of  the
 Borrowing Base  in connection  with the  preparation of  any Borrowing  Base
 Certificate shall originally  be made by  Borrower and  certified to  Agent;
 provided, that  Agent shall  have the  right to  review and  adjust, in  the
 exercise of  its  reasonable credit  judgment,  any such  calculation  after
 giving notice thereof to the Borrower to the extent that such calculation is
 not in accordance with this Agreement.

      Business Day - any day excluding Saturday, Sunday and any day which  is
 a legal holiday under the laws of the States of Illinois or Wisconsin or  is
 a day on which banking institutions located in such state 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.

      Change of  Control -  means  the occurrence  of  any of  the  following
 events:  (i) any "person" (as such term is used in Sections 13(d) and  14(d)
 of the  Exchange Act),  other than  one  or more  Permitted Holders,  is  or
 becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under  the
 Exchange Act,  except that  a person  shall be  deemed to  have  "beneficial
 ownership" of all  shares that  any such person  has the  right to  acquire,
 whether such right is exercisable immediately  or only after the passage  of
 time), directly or indirectly, of more than forty percent (40%) of the total
 voting power of  the Voting  Stock of Parent  (or its  successor by  merger,
 consolidated or purchase of all or substantially all of its assets); and the
 Permitted Holders "beneficially own"  (as defined in  Rules 13d-3 and  13d-5
 under the Exchange Act), directly or  indirectly, in the aggregate a  lesser
 percentage of the total voting power of  the Voting Stock of Parent (or  its
 successor by merger, consolidated or purchase of all or substantially all of
 its assets) than such other person and do  not have the right or ability  by
 voting power, contract  or otherwise to  elect or designate  for election  a
 majority; of the  board of directors  of Parent or  such successor; or  (ii)
 during any period of two consecutive years, individuals who at the beginning
 of such period constituted the Board  of Directors of Parent (together  with
 any new  directors  whose election  by  such  Board of  Directors  or  whose
 nomination for election by the shareholders of Parent was approved by a vote
 of at least a majority of the directors  of Parent then still in office  who
 were either directors at the beginning  of such period or whose election  or
 nomination for election was previously so  approved or is a designee of  the
 Permitted Holders or was nominated or  elected by such Permitted Holders  or
 any of their designees) cease for any reason to constitute a majority of the
 Board of  Directors of  Parent then  in office;  or (iii)  the sale,  lease,
 transfer, conveyance or other  disposition (other than by  way of merger  or
 consolidation), in  one or  a  series of  related  transactions, of  all  or
 substantially all of the assets of Parent  and Borrower taken as a whole  to
 any "person"  (as such  term is  used in  Sections 13(d)  and 14(d)  of  the
 Exchange Act) other  than a Permitted  Holder; or (iv)  the adoption by  the
 stockholders of  a plan  for the  liquidation or  dissolution of  Parent  or
 Borrower.

      Chase Group - the Chase Manhattan  Bank and the other lenders party  to
 that certain  Senior Secured  Credit Agreement  by and  among Borrower,  the
 Chase Manhattan Bank,  as Administrative Agent,  and the lender  signatories
 thereto.

      Closing Date -  the date on  which all of  the conditions precedent  in
 Section 9 of the Agreement are satisfied and the initial Loan is made or the
 initial Letter of Credit or LC Guaranty is issued under the Agreement.

      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.

      Collateral Borrowing  Base  -  as  defined  within  the  definition  of
 Borrowing Base.

      Computer Hardware and  Software - all  of Borrower's rights  (including
 rights as  licensee  and lessee)  with  respect to  (i) computer  and  other
 electronic data  processing  hardware,  including  all  integrated  computer
 systems,  central  processing  units,   memory  units,  display   terminals,
 printers, computer elements, card readers, tape  drives, hard and soft  disk
 drives, cables, electrical  supply hardware,  generators, power  equalizers,
 accessories,  peripheral  devices  and  other  related  computer   hardware;
 (ii) all Software  and  all  software  programs  designed  for  use  on  the
 computers   and   electronic   data   processing   hardware   described   in
 clause (i) above, including  all operating  system software,  utilities  and
 application programs in any  form (source code and  object code in  magnetic
 tape, disk or hard copy format or any other listings whatsoever);  (iii) any
 firmware associated with  any of the  foregoing; and (iv) any  documentation
 for hardware,  Software  and  firmware described  in  clauses (i),  (ii) and
 (iii) above, including flow charts, logic diagrams, manuals, specifications,
 training materials, charts and pseudo codes.

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

      Contract Right - any right of Borrower to payment under a contract  for
 the sale or lease of goods or the  rendering of services, which right is  at
 the time not yet earned by performance.

      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.

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

      Dominion Account - a special  account established by Borrower  pursuant
 to the Agreement at a bank 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.

      Eligible Account  -  an  Account arising  in  the  ordinary  course  of
 Borrower's business from the  sale of goods or  rendition of services  which
 Agent, in  its  sole 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 Borrower to a Subsidiary  or
 an Affiliate  of Borrower  or to  a  Person controlled  by an  Affiliate  of
 Borrower; or

           (ii) it is unpaid for more than sixty (60) days after the original
 due date shown on the invoice; or

           (iii)     it is due or unpaid more than ninety (90) days after the
 original invoice date; or

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

           (v)  the total unpaid Accounts of  the Account Debtor (other  than
 Wal-Mart, Target or KMart so long as any of the foregoing's credit rating is
 5-A3 or better) exceed 20% of the net amount of all Accounts, to the  extent
 of such excess;  the total  unpaid Accounts of  any of  Wal-Mart, Target  or
 Kmart (to the  extent either  of the foregoing's  credit rating  is 5-A2  or
 better) exceed 35% of the net amount of all Accounts, to the extent of  such
 excess; or the total unpaid Accounts of any of Wal-Mart, Target or Kmart (to
 the extent any of the  foregoing's credit rating is  5-A3 or better, but  is
 less than 5-A2) exceed 30% of the net amount of all Accounts, to the  extent
 of such excess; or

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

           (vii)     the  Account  Debtor  is  also  Borrower'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 Borrower, or the Account  otherwise
 is or may become  subject to any right  of setoff by  the Account Debtor  or
 other contra situation provided that any  such Account shall only be  deemed
 to be not eligible to the extent of any such dispute, claim or setoff; or

           (viii)    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,  unless the  Account Debtor  in
 question  has  obtained  debtor-in-possession  financing,  with  terms   and
 conditions acceptable to  Agent in its  sole discretion, 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

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

           (x)  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

           (xi) the Account Debtor  is the United  States of  America or  any
 department, agency or instrumentality  thereof, unless Borrower assigns  its
 right to payment  of such  Account to Lender,  in a  manner satisfactory  to
 Agent, so as to comply with the Assignment of Claims Act of 1940 (31  U.S.C.
 S203 et seq., as amended); or

           (xii)     the Account is subject to a Lien other than a  Permitted
 Lien; or

           (xiii)    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  Borrower and  accepted by  the
 Account Debtor or the Account otherwise does not represent a final sale; or

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

           (xv) Borrower 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

           (xvi)     Borrower has made an  agreement with the Account  Debtor
 to  extend  the  time  of  payment  thereof  or  has  made  any  compromise,
 modification or settlement of such Account; or

           (xvii)    the Account is for amounts owing with respect to service
 charges, late fees or other similar charges.

      Eligible  Inventory   -  such   Inventory  of   Borrower  (other   than
 work-in-process, packaging materials and supplies) which Agent, in its  sole
 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 that is, in Agent's
 opinion, readily marketable in its current form; or

           (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, in  all material  respects, all  standards
 imposed by any 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.

      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 Percentage - as of any date, the percentage equal to  (x) one
 hundred percent (100%)  minus (y) the  percentage obtained  by dividing  the
 number of full calendar months elapsed since the Closing Date by eighty-four
 (84).

      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 Section 10.1 of the Agreement.

      Fee Letter  - that  certain  letter agreement  dated  on or  about  the
 Closing Date between Agent and Borrower.

      Fixed Asset Component - as of  any date, the lesser  of (1) the sum  of
 (x) Six Million Dollars ($6,000,000) multiplied by the Equipment  Percentage
 plus (y) Four Million Dollars ($4,000,000)  multiplied by the Real  Property
 Percentage or (2) the sum of (x) the product of eighty percent (80%) of  the
 orderly liquidation value of Borrower's Equipment less liquidation  expenses
 (as estimated by Agent) multiplied by the Equipment Percentage plus (y)  the
 product of sixty percent (60%) of the fair market value of Borrower's  owned
 real Property less liquidation expenses  (as estimated by Agent)  multiplied
 by the  Real Property  Percentage.   For purposes  of this  definition,  the
 orderly liquidation value of Borrower's Equipment and the fair market  value
 of Borrower's  owned real  Property shall  be established  by Agent  in  the
 reasonable exercise  of its  discretion  on the  Closing  Date.   After  the
 Closing Date,  Agent, in  the reasonable  exercise  of its  discretion,  may
 adjust the orderly liquidation value of Borrower's Equipment and/or the fair
 market value  of Borrower's  owned real  Property  to reflect  increases  or
 decreases in either such value.  To that end, Borrower agrees that Agent, in
 the reasonable exercise of its discretion, may, on an annual basis, or  more
 frequently as requested by Agent, if  an Event of Default exists, obtain  or
 require Borrower to obtain appraisals of Borrower's Equipment and owned real
 Property to evidence the orderly  liquidation value of Borrower's  Equipment
 or fair market value of  Borrower's owned real Property.   If no Default  or
 Event of Default exists, Agent shall  notify Borrower prior to obtaining  or
 authorizing any such appraisal.  The cost of any such appraisal such be paid
 by Borrower pursuant to Section 2.6 of the Agreement.

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

      Gross Availability  -  as of  any  date, the  excess  (if any)  of  the
 Collateral Borrowing Base  as of  such date over  the sum  of the  principal
 amount of the Revolving Loans then outstanding (including any amounts  which
 Agent may  have  paid for  the  account of  Borrower  pursuant to  the  Loan
 Documents and which have not been reimbursed by Borrower) and the LC Amount.

      Guaranty Agreement - the Continuing Guaranty  Agreement which is to  be
 executed by Parent in form and substance satisfactory to Agent.

      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, and

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

      Intellectual Property - all past, present  and future:  trade  secrets,
 know-how and  other  proprietary information;  trademarks,  internet  domain
 names, service marks,  trade dress,  trade names,  business names,  designs,
 logos,  slogans  (and   all  translations,   adaptations,  derivations   and
 combinations of  the foregoing)  indicia and  other source  and/or  business
 identifiers, and  the goodwill  of the  business  relating thereto  and  all
 registrations or applications for  registrations which have heretofore  been
 or  may  hereafter  be  issued  thereon  throughout  the  world;  copyrights
 (including copyrights for computer programs) and copyright registrations  or
 applications for registrations which have  heretofore been or may  hereafter
 be issued  throughout the  world and  all  tangible property  embodying  the
 copyrights,  unpatented  inventions  (whether  or  not  patentable);  patent
 applications and  patents;  industrial design  applications  and  registered
 industrial designs; license agreements related to  any of the foregoing  and
 income therefrom; books,  records, writings, computer  tapes or disks,  flow
 diagrams, specification  sheets,  computer software,  source  codes,  object
 codes, executable code, data,  databases and other physical  manifestations,
 embodiments or incorporations of any of the foregoing; the right to sue  for
 all past, present  and future  infringements of  any of  the foregoing;  all
 other intellectual property; and all common law and other rights  throughout
 the world in and to all of the foregoing.

      Interest Period  -  as  applicable  to  any  LIBOR  Advance,  a  period
 commencing on the date a LIBOR Advance is made, and ending on the date which
 is one (1) month, two (2) months, three (3) months, or six (6) months later,
 as may then be requested by Borrower; provided that (i) any Interest  Period
 which would otherwise end on a day which is not a Business Day shall end  in
 the next preceding or  succeeding Business Day as  is Agent's custom in  the
 market to which such LIBOR Advance relates; (ii) there remains a minimum  of
 one (1) month, two (2) months, three (3) months or six (6) months (depending
 upon which  Interest Period  Borrower selects)  in  the Original  Term;  and

 (iii) all Interest Periods of the same  duration which commence on the  same
 date shall end on the same date.

      Interest  Rate  Obligations  -  all  obligations  in  connection   with
 contracts or hedging programs, including, but  not limited to, all  interest
 rate swaps, caps,  collar agreements, or  similar arrangements, designed  to
 provide certain protections with respect  to interest rate fluctuations,  or
 any assurances, guarantees or other contractual obligations related thereto,
 including all such  obligations (i) which  are incurred by  any Borrower  to
 Agent, any Lender or any Affiliate of Agent, and (ii) which are incurred  in
 any manner by Agent, any Lender or any Affiliate of Agent in connection with
 a Borrower's interest rate protection program or contract.

      IRB Indebtedness  - all  Indebtedness for  Money Borrowed  of  Borrower
 pursuant to those certain Illinois Development Finance Authority  $4,000,000
 Variable Rate  Demand Industrial  Development  Revenue Bonds  (Selfix,  Inc.
 Project) Series  1990  dated  _________,  issued  to  _______________,  that
 certain [Loan Agreement] dated ________________ by and between Borrower  and
 __________________ and  all  related documents,  agreements,  contracts  and
 instruments..

      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.

      Legal Requirement - any requirement imposed upon 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.

      Letter of Credit  - any  letter of  credit issued  by Agent  or any  of
 Agent's Affiliates for the account of Borrower.

      LIBOR - as applicable to any LIBOR Advance, the rate per annum (rounded
 upward, if necessary, to the nearest  1/32 of one percent) as determined  on
 the basis of the offered rates for deposits in U.S. dollars, for a period of
 time comparable  to  such  LIBOR  Advance  which  appears  on  the  Telerate
 page 3750 as of 11:00 a.m. (London time)  on the day that is two  (2) London
 Banking Days  preceding  the first  day  of such  LIBOR  Advance;  provided,
 however, if the rate described above does not appear on the Telerate  System
 on any applicable interest determination date,  the LIBOR rate shall be  the
 rate (rounded upwards as described above, if necessary) for deposits in U.S.
 dollars for  a period  substantially equal  to the  interest period  on  the
 Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that
 service for the purpose of displaying such rates), as of 11:00 a.m.  (London
 Time), on the day that is two (2) London Banking Days prior to the beginning
 of such  interest period.   If  both the  Telerate and  Reuters systems  are
 unavailable, then the rate for that date will be determined on the basis  of
 the offered  rates  for  deposits in  U.S.  dollars  for a  period  of  time
 comparable to such LIBOR Advance which  are offered by four (4) major  banks
 in the London interbank market at approximately 11:00 a.m. (London time), on
 the day that is two (2) London Banking Days preceding the first day of  such
 LIBOR Advance as selected by Agent.  The principal London office of each  of
 the major London Banks so selected will be requested to provide a  quotation
 of its  U.S.  dollar  deposit  offered  rate.   If  at  least  two  (2) such
 quotations are provided, the rate for that date will be the arithmetic  mean
 of the quotations.  If fewer than two quotations are provided as  requested,
 the rate for that date will be determined  on the basis of the rates  quoted
 for loans in U.S.  dollars to leading  European banks for  a period of  time
 comparable to such LIBOR Advance offered by major banks in New York City  at
 approximately 11:00 a.m.  (New York  City  time), on  the  day that  is  two
 (2) London Banking Days preceding the first  day of such LIBOR Advance.   In
 the event that  Agent is  unable to obtain  any such  quotation as  provided
 above, it will be determined that  LIBOR pursuant to a LIBOR Advance  cannot
 be determined.   In the event  that the Board  of Governors  of the  Federal
 Reserve System  shall impose  a Reserve  Percentage  with respect  to  LIBOR
 deposits of Bank then  for any period during  which such Reserve  Percentage
 shall apply, LIBOR shall be equal to the amount determined above divided  by
 an amount equal to 1 minus the Reserve Percentage.

      LIBOR Advance - any Loan bearing interest computed by reference to  the
 LIBOR.

      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 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 Section 3.6 of the Agreement.

      Loan Documents - the Agreement, the  Other Agreements and the  Security
 Documents.

      Loans - all loans and advances of  any kind made by Lenders, and/or  by
 any affiliate of any Lender, pursuant to the Agreement.

      London Banking Day -  any date on which  commercial banks are open  for
 business in London, England.

      Material Adverse  Effect  -  (i)  a  material  adverse  effect  on  the
 business, condition  (financial  or otherwise),  operation,  performance  or
 properties of Borrower or any of  its Subsidiaries, (ii) a material  adverse
 effect on  the  rights and  remedies  of Agent  or  Lenders under  the  Loan
 Documents, (iii) the material impairment of  the ability of Borrower or  any
 of its Subsidiaries to perform its  obligations hereunder or under any  Loan
 Document, or (iv) a material adverse  effect on the value of the  Collateral
 or Agent's or Lenders' rights therein.

      Maximum Revolving  Loan Amount  - shall  mean, as  of any  date,  Fifty
 Million Dollars  ($50,000,000), as  reduced from  time to  time as  provided
 herein.  In addition,  Borrower may reduce, upon  three days' prior  written
 notice to  Agent,  the amount  of  the Maximum  Revolving  Loan.   Any  such
 reduction  (i)  shall  be  in  a  minimum  amount  of  Two  Million  Dollars
 ($2,000,000), (ii) shall  be  an  integral amount  of  One  Million  Dollars
 ($1,000,000) and (iii) shall not exceed an aggregate amount of Five  Million
 Dollars ($5,000,000)  in  any  one calendar  year  or  Ten  Million  Dollars
 ($10,000,000) during the  Original Term.   Once the  Maximum Revolving  Loan
 Amount has been reduced it may not be subsequently increased.

      Mexican Subsidiary _Seymour S.A. de C.V.

      Money Borrowed -  means (i) Indebtedness  arising from  the lending  of
 money by any Person  to Borrower; (ii) Indebtedness, whether  or not in  any
 such case  arising from  the lending  by any  Person of  money to  Borrower,
 (A) which is represented by notes payable  or drafts accepted that  evidence
 extensions of credit, (B) which constitutes 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 Borrower  under any guaranty  of obligations that  would
 constitute  Indebtedness  for   Money  Borrowed  under   clauses (i) through
 (iii) hereof, if owed directly by Borrower.

      Mortgage[s] -  the [mortgage]  [deed of  trust] [security  deed] to  be
 executed by Borrower on or about the Closing Date in favor of Agent, for its
 benefit and the  ratable benefit  of Lenders,  and by  which Borrower  shall
 grant and convey to Agent, as security for the Obligations, a Lien upon  the
 real Property of Borrower located at (i) 885 N. Chestnut, Seymour,  Indiana;
 (ii) 201 S. Jackson Park Drive, Seymour, Indiana; (iii) 400 S. Airport Road,
 Seymour, Indiana; (iv) 3016 W. Georgia Street, Louisiana, Missouri; (v)  323
 Industrial Boulevard, Thomasville,  Georgia; and (vi)  4501 W. 47th  Street,
 Chicago, Illinois.

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

      New Mortgages - as defined in Section 5.4 of the Agreement.

      Net 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 pursuant to any of the Loan Documents and which have
 not been reimbursed by  Borrower) and the LC  Amount is subtracted from  the
 Borrowing Base.  If the amount outstanding  is equal to or greater than  the
 Borrowing Base, Net Availability is zero (0).

      Notes - collectively, Revolving Credit Notes.

      Notice of  Revolving Credit  Loan and  Notice of  Equipment Loan  -  as
 defined in subsection 3.1.1 of the Agreement.

      Obligations - all  Loans 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 any Borrower  to
 Agent, any  Lender or  any of  Agent's Affiliates,  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 or  otherwise, and  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,
 and any replacements, renewals, extensions or other modifications of any  of
 them.  Without limiting the generality of the foregoing, all obligations  of
 any Borrower to Agent, any Lender or any of Agent's Affiliates with  respect
 to  Interest  Rate  Protection  Obligations  shall  be  deemed   Obligations
 hereunder.

      Organizational  I.D.   Number  -   with   respect  to   Borrower,   the
 organizational identification number assigned to Borrower by the  applicable
 governmental unit or agency of the jurisdiction of organization of Borrower.

      Original Term - as defined in Section 4.1 of the Agreement.

      Other  Agreements  -   any  and  all   agreements  (including   without
 limitation, the  Fee  Letter), 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 or any Lender in respect of the transactions contemplated
 by the Agreement.

      Overadvance - the amount,  if any, by  which the outstanding  principal
 amount of Revolving Credit  Loans plus the LC  Amount exceeds the  Borrowing
 Base.

      Parent - Home Products International, Inc., a Delaware corporation.

      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, which participation agreement shall conform  to
 the provisions of subsection 11.3(iv) of the Agreement.

      Patent Security Agreement - the  Patent and License Security  Agreement
 executed by Borrower on or about the Closing Date in favor of Agent for  its
 benefit and  the ratable  benefit of  Lenders, as  such Patent  and  License
 Agreement has been or will be amended from time to time.

      Permitted Acquisition(s) - means any acquisition(s) by Borrower of  the
 business and  substantially all  of the  assets or  all of  the  outstanding
 capital stock or  other ownership interests  of a Person  or a  merger of  a
 Person with Borrower  or a Subsidiary  of Borrower so  long as  each of  the
 following conditions precedent (collectively, the "Acquisition  Conditions")
 have been fulfilled to the satisfaction of  Agent:  (i) no Default or  Event
 of Default  shall  have occurred  and  be continuing  at  the time  of  such
 acquisition or would occur as a result thereof; (ii) the business unit being
 acquired (the "Target") is primarily located in the United States of America
 and is in the same or related line of business as Parent and Borrower; (iii)
 if the acquisition  in question is  not an asset  acquisition, Borrower  and
 Target shall  have executed  such amendments  to the  Agreement,  assumption
 agreements,   security   agreements,   guarantees,   financing   statements,
 promissory notes  or other  loan documentation  as reasonably  requested  by
 Agent to, inter alia, make the Target a guarantor of the Obligations or  co-
 borrower under the Loan Agreement and to grant to Agent for its benefit  and
 the ratable benefit of Lenders a  perfected security interest, subject  only
 to Permitted Liens, in substantially all of  the assets of the Target or  if
 the acquisition in  question is an  asset acquisition,  Borrower shall  have
 executed  such  financing  statements  and  other  collateral  documents  as
 reasonably requested  by  Agent  to grant  to  Agent  a  perfected  security
 interest, subject  only  to Permitted  Liens  in substantially  all  of  the
 acquired assets;  (iv) Agent  shall have  received  (x) copies  of  Target's
 historical financial statements for the  [two] annual periods preceding  the
 proposed acquisition  date  and  for the  most  recently  available  interim
 period, (y) a sources and uses  statement, in form and substance  reasonably
 acceptable to Agent,  in respect  to the  proposed acquisition  and (z)  the
 projections referred  to  in clause  (vi)  below; (v)  Target's  EBITDA  (as
 adjusted by Borrower which adjustments shall be subject to Agent's approval)
 for the most recently ended annual period and  the year to date is equal  to
 or greater than Zero Dollars ($0); (vi) Agent shall have received Borrower's
 and the Target's  pro forma financial  projections, which projections  shall
 demonstrate that Borrower and the Target,  on a Consolidated basis, will  be
 in compliance with  the provisions of  this Loan  Agreement, including,  but
 without limitations, Section 8.3 of the Loan Agreement immediately prior  to
 and after the consummation of the  proposed acquisition; (vii) prior to  the
 consummation of any such transaction, Agent  shall have had the  opportunity
 to audit the books, records and operations of the Target, including, without
 limitation, the accounts, inventory, machinery and equipment and real estate
 of the  Target, which  after the  consummation of  the proposed  acquisition
 would be included in  the Borrowing Base; (viii)  Borrower shall have  given
 Agent written notice of any such transaction at least thirty (30) days prior
 to the  consummation  of  any  such  transaction;  and  (ix)  prior  to  the
 consummation of any such transaction, Borrower shall have delivered to Agent
 copies of the transaction documents in substantially final form.

      Permitted Holders - (i) directors and officers of Parent on the Closing
 date and  (ii) Chase  Venture Capital  Associates,  L.P. and  any  Affiliate
 thereof.

      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 incurred after the date hereof which is secured by a Purchase Money
 Lien and which, when aggregated with the principal amount of all other  such
 Indebtedness and  Capitalized  Lease Obligations  of  Borrower at  the  time
 outstanding, does not  exceed Seven  Million Five  Hundred Thousand  Dollars
 ($7,500,000).  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.

      Pledge Agreement - the Stock Pledge Agreement executed by Parent on  or
 about the Closing Date  in favor of  Agent for its  benefit and the  ratable
 benefit of  Lenders, as  such Stock  Pledge Agreement  has been  or will  be
 amended from time to time.

      Pledge Agreement (Subsidiary) - the Stock Pledge Agreement executed  by
 Borrower and the  Closing Date in  favor of Agent  for its  benefit and  the
 ratable benefit of Lenders, as such Stock Pledge Agreement has been or  will
 be amended from time to time.

      Projections -  Borrower's  forecasted  Consolidated  and  consolidating
 (a) balance  sheets,   (b) profit  and   loss  statements,   (c) cash   flow
 statements, and (d) 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.

      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 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 - 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.

      Real Property Percentage  - as  of any  date, the  percentage equal  to
 (x) one hundred percent (100%) minus the percentage obtained by dividing the
 number of full calendar months elapsed since the Closing Date by one hundred
 twenty (120).

      Rentals - as defined in subsection 8.2.13 of the Agreement.

      Reportable Event - any  of the events set  forth in Section 4043(b)  of
 ERISA.

      Required Lenders -  as of any  date, the Lenders  with more than  fifty
 percent (50%)  of  the aggregate  principal  amount of  the  Revolving  Loan
 Commitments; provided, that  if any  time there  are two  or fewer  Lenders,
 Required Lenders  shall mean  all Lenders;  and provided,  further, that  if
 there are three Lenders,  Required Lenders shall mean  any two Lenders  with
 more than  fifty percent  (50%) of  the aggregate  principal amount  of  the
 Revolving Loan Commitments.

      Reserve  Percentage  -  the   maximum  aggregate  reserve   requirement
 (including all basic,  supplemental, marginal and  other reserves) which  is
 imposed on member banks of the Federal Reserve System against "Euro-currency
 Liabilities" as defined in Regulation D.

      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 in one  or more Subsidiaries  of Borrower to  the
 extent existing on the Closing Date;

           (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  and   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 (1) year
 from the date of acquisition thereof;

           (v)  investments in certificates  of deposit  maturing within  one
 (1) 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.

      Revolving Credit Commitments  - as defined  in subsection 1.1.1 of  the
 Agreement.

      Revolving Credit  Loan  -  a  Loan  made  by  Lenders  as  provided  in
 Section 1.1 of the Agreement.

      Revolving Credit Note -  the Revolving Credit Notes  to be executed  by
 Borrower on or about the  Closing Date in favor  of each Lender to  evidence
 the Revolving Credit Loan,  which shall be in  the form of Exhibit 1.1.1  to
 the Agreement.

      Revolving Credit Percentage  - as  defined in  subsection 1.1.1 of  the
 Agreement.

      Schedule of Accounts - as defined in subsection 6.2.1 of the Agreement.

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

      Security Documents -  the Guaranty  Agreement, the  Mortgages, any  new
 Mortgage, the Patent  Security Agreement, the  Pledge Agreement, the  Pledge
 Agreement (Subsidiary),  the  Trademark  Security Agreement  and  all  other
 instruments and agreements now or at  any time hereafter securing the  whole
 or any part of the Obligations.

      Senior Subordinated Notes - those certain subordinated promissory notes
 dated on or about May 14, 1998 in the original aggregate principal amount of
 One Hundred Twenty-Five Million Dollars ($125,000,000) executed by  Borrower
 in favor of the holders thereof.

      Senior Subordinated Note Documents - that certain Indenture dated on or
 about May 14, 1998 by and among  Parent, the subsidiary signatories  thereto
 (including, without  limitation, Borrower)  and  LaSalle National  Bank,  as
 Trustee, the Senior Subordinated Notes and all schedules, exhibits and other
 documents and agreements executed and/or delivered in connection therewith.

      Solvent - as to  any Person, that 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.

      Subordinated Debt -  Indebtedness of Borrower  that is subordinated  to
 the Obligations in a manner satisfactory to Agent.

      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.

      Tax - in relation  to any LIBOR Advance  and the applicable LIBOR,  any
 tax, levy,  impost,  duty, deduction,  withholding  or charges  of  whatever
 nature required by  any Legal  Requirement (i) to be  paid by  Agent or  any
 Lender and/or (ii) to  be withheld or  deducted from  any payment  otherwise
 required hereby to  be made by  Borrower to Agent  or any Lender;  provided,
 that the term "Tax" shall not include any taxes imposed upon the net  income
 of Agent or any Lender.

      Termination Date - the date on which the Agreement has been  terminated
 in accordance with Section 4.

      Total Credit Facility - Fifty Million Dollars ($50,000,000).

      Trademark Security  Agreement  -  the Trademark  and  License  Security
 Agreement executed by  Borrower on or  about the Closing  Date in favor  for

 Agent for its benefit and the ratable benefit of Lenders, as such  Trademark
 and License Agreement has been or will be amended from time to time.

      Type of Organization -  with respect to Borrower,  the kind or type  of
 entity by which  Borrower is  organized, such  as a  corporation or  limited
 liability company.

      UCC - the Uniform Commercial Code as in effect in the State of Illinois
 on the  date of  this Agreement,  as the  UCC may  be amended  or  otherwise
 modified, including by the UCC Revisions.

      UCC Revisions - the  revisions to Article 9 and  other Articles of  the
 Uniform Commercial  Code, as  adopted by  the State  of Illinois,  effective
 July 1, 2001.

      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).

      Other Terms.  All  other terms contained in  the Agreement shall  have,
 when the context so indicates, the meanings  provided for by the UCC 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,  paragraph or  subdivision.   Any
 pronoun used shall  be deemed  to cover all  genders.   The section  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.

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