Document:

EXHIBIT 10.29

                       FIRST AMENDMENT TO APPLIANCE EARLY
                       RETIREMENT AND RECYCLING AGREEMENT

         THIS FIRST AMENDMENT TO APPLIANCE EARLY RETIREMENT AND RECYCLING
AGREEMENT (hereinafter the "First Amendment") is made and entered into as of the
1st day of March, 2002, by and between THE CALIFORNIA PUBLIC UTILITIES
COMMISSION, an agency of the State of California ("CPUC") and APPLIANCE
RECYCLING CENTERS OF AMERICA, INC., a Minnesota corporation ("Contractor"). The
CPUC and Contractor are also each individually referred to herein as "Party" and
collectively as "Parties". The Effective Date of this First Amendment shall be
March 1, 2002.

                                    RECITALS

         WHEREAS, the Parties, on June 1, 2001, entered into the APPLIANCE EARLY
RETIREMENT AND RECYCLING AGREEMENT for Refrigerators, Freezers, and Room Air
Conditioners (hereinafter the "Agreement").

         WHEREAS, the Parties wish to amend said Agreement, in certain respects,
to temporarily extend the territory covered by the Agreement under the terms and
conditions set forth below and to otherwise extend the term of said Agreement.

         NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants contained herein, the payments and agreement to be made and performed
by the CPUC as set forth below, the Parties agree as follows:

         1.       EXTENDED TERRITORY

                  For the limited period of time from March 1, 2002, through
April 1, 2002 (hereinafter the "Applicable Period"), the eligible jurisdictional
residential electric service customers of Investor Owned Utility companies
eligible to participate in the Program shall be extended to include the Southern
California Edison Company Service Territory (hereinafter the "Edison
Territory").

         2.       APPLICABLE CUSTOMER INCENTIVE CHARGE

                  For all units picked up by Contractor in the Edison Territory
during the Applicable Period, the Customer Incentive shall be reduced to $35.00
per unit collected and the Customer Incentive Charge to the CPUC shall be
reduced to a corresponding charge of $35.00 per unit.

         3.       APPLICABLE MARKETING ADVERTISING CHARGE

                  For all units collected by Contractor during the Applicable
Period in the Edison Territory, the Marketing/Advertising Charge shall be
reduced to "0".

<PAGE>

         4.       EXTENDED TERM

                  The Term of the APPLIANCE EARLY RETIREMENT AND RECYCLING
AGREEMENT referenced above shall be extended from May 31, 2002 to August 31,
2002.

         5.       ACKNOWLEDGMENT

                  The parties acknowledge that the remaining terms as set forth
in the Agreement are and continue to be valid and enforceable as set forth
therein.

APPLIANCE RECYCLING                                 CALIFORNIA PUBLIC UTILITIES
CENTERS OF AMERICA, INC.                            COMMISSION

By:   /s/Linda Koenig                               By:    /s/Wesley M. Franklin
      ------------------                                   ---------------------
Its:  Controller                                    Its:   Executive Director
      ------------------                                   ---------------------
Date: March 7, 2002                                 Dated: March 7, 2002

                                       2<PAGE>

                                                                    EXHIBIT 10.1

                               U.S. $1,400,000,000

                                CREDIT AGREEMENT

                            Dated as of March 7, 2002

                                      among

                                  THE GAP, INC.

                                  as Borrower,
                                  -----------

                 THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,

                            as Subsidiary Borrowers,
                            -----------------------

                 THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,

                               as LC Subsidiaries,
                               ------------------

                THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN

                                   as Lenders,
                                   ----------

                             THE BANKS NAMED HEREIN

                                as Issuing Banks,
                                ----------------

                            SALOMON SMITH BARNEY INC.

                                       and

                        BANC OF AMERICA SECURITIES, LLC.

                             as Joint Book Managers
                             ----------------------

                        BANC OF AMERICA SECURITIES, LLC.,

                                  HSBC BANK USA

                                       and

                           J.P. MORGAN SECURITIES INC.

                            as Co-Syndication Agents,
                            ------------------------

                               ABN AMRO BANK N.V.

                             as Documentation Agent
                             ----------------------

                                       and

                           SALOMON SMITH BARNEY INC.,

                         BANC OF AMERICA SECURITIES, LLC

                                       and

                           J.P. MORGAN SECURITIES INC.

                            as Joint Lead Arrangers,
                            -----------------------

                                       and

                                CITICORP USA INC.

                                    as Agent
                                    --------

                          for the Issuing Banks and the
                     Lenders from time to time party hereto

<PAGE>

                             SCHEDULES AND EXHIBITS

SCHEDULES
---------

Schedule I-A     -        Commitment Amounts

Schedule I-B     -        List of Applicable Lending Offices

Schedule II      -        Existing Liens

Schedule III     -        Change of Control

Schedule IV      -        Outstanding Balance of Existing Letters of Credit

Schedule V       -        LC Subsidiaries

Schedule VI               Subsidiary Borrowers

Schedule VII     -        Permitted Investments

Schedule VIII    -        Plans

Schedule IX      -        Special Purpose Subsidiaries

Schedule X       -        ERISA Matters

Schedule XI      -        Subsidiaries of the Borrower

Schedule XII     -        Environmental Matters

Schedule XIII    -        Existing Debt

Schedule XIV     -        Excluded Subsidiaries

Schedule XV      -        Subsidiaries For Which Certificates To Be Issued

Schedule XVI     -        Hedge Subsidiaries

EXHIBITS
--------

Exhibit A        -        Notice of Borrowing

Exhibit B        -        Form of Promissory Note

Exhibit C        -        Form of Assignment and Acceptance

Exhibit D        -        Form of Subsidiary Guaranty

Exhibit E        -        Form of Security Agreement

Exhibit F-1      -        Form of Opinion of Counsel to the Loan Parties

Exhibit F-2      -        Form of UCC Opinion of Special New York Counsel to the
                          Loan Parties

Exhibit F-3      -        Form of Corporate Opinion of Special New York Counsel
                          to the Loan Parties

Exhibit G                 Form of Opinion of Special New York Counsel to the
                          Agent

Exhibit H        -        Form of Assumption Agreement

Exhibit I        -        Form Of Compliance Certificate

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page
<S>                  <C>                                                                          <C>
                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01         Certain Defined Terms.........................................................1

SECTION 1.02         Computation of Time Periods..................................................19

SECTION 1.03         Accounting Terms.............................................................19

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01         The Advances.................................................................19

SECTION 2.02         Making the Advances..........................................................20

SECTION 2.03         Fees.........................................................................23

SECTION 2.04         Reduction of the Advance Commitments; Reduction and Increase of the
                     Swing Line Commitments.......................................................23

SECTION 2.05         Repayment of Advances........................................................24

SECTION 2.06         Interest on Advances.........................................................24

SECTION 2.07         Additional Interest on Eurodollar Rate Advances..............................25

SECTION 2.08         Interest Rate Determination..................................................25

SECTION 2.09         Voluntary Conversion of Advances.............................................26

SECTION 2.10         Prepayments of Advances......................................................26

SECTION 2.11         Increased Costs..............................................................27

SECTION 2.12         Illegality...................................................................28

SECTION 2.13         Borrower Guaranty............................................................28

                                   ARTICLE III

                         AMOUNT AND TERMS OF LETTERS OF
                        CREDIT AND PARTICIPATIONS THEREIN

SECTION 3.01         Letters of Credit............................................................33

SECTION 3.02         Limitation on the Issuance of Letters of Credit Denominated in
                     Alternative Currencies.......................................................34
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                  <C>                                                                          <C>
SECTION 3.03         Issuing the Letters of Credit................................................35

SECTION 3.04         Reimbursement Obligations....................................................35

SECTION 3.05         Participations Purchased by the Lenders......................................35

SECTION 3.06         Letter of Credit Fees........................................................36

SECTION 3.07         Indemnification; Nature of the Issuing Banks' Duties.........................37

SECTION 3.08         Increased Costs..............................................................38

SECTION 3.09         Uniform Customs and Practice.................................................39

SECTION 3.10         Reductions and Increases in LC Commitments; Additional Issuing Banks.........39

SECTION 3.11         Existing Letters of Credit...................................................42

SECTION 3.12         Currency Provisions..........................................................42

SECTION 3.13         Borrower Guaranty............................................................44

SECTION 3.14         Dollar Payment Obligation....................................................46

SECTION 3.15         Applications; Survival of Provisions; Cash Collateral........................46

SECTION 3.16         LC Subsidiaries..............................................................46

                                   ARTICLE IV
                        PAYMENTS, TAXES, EXTENSIONS, ETC.

SECTION 4.01         Payments and Computations/Borrowings.........................................47

SECTION 4.02         Taxes/Borrowings.............................................................48

SECTION 4.03         Sharing of Payments, Etc./Borrowings.........................................50

SECTION 4.04         Evidence of Debt/Borrowings..................................................51

SECTION 4.05         Payments and Computations/Letters of Credit..................................51

SECTION 4.06         Taxes/Letters of Credit......................................................52

SECTION 4.07         Sharing of Payments, Etc./Letters of Credit..................................55

                                    ARTICLE V
                              CONDITIONS OF LENDING

SECTION 5.01         Conditions Precedent to Effectiveness of this Agreement......................55

SECTION 5.02         Conditions Precedent to Each Advance/Issuance................................58
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                  <C>                                                                          <C>
                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

SECTION 6.01         Representations and Warranties of the Borrower...............................58

                                   ARTICLE VII
                            COVENANTS OF THE BORROWER

SECTION 7.01         Affirmative Covenants........................................................61

SECTION 7.02         Negative Covenants...........................................................66

SECTION 7.03         Financial Covenant...........................................................71

SECTION 7.04         Reporting Requirements.......................................................72

                                  ARTICLE VIII
                                EVENTS OF DEFAULT

SECTION 8.01         Events of Default............................................................74

                                   ARTICLE IX
                                    THE AGENT

SECTION 9.01         Authorization and Action.....................................................77

SECTION 9.02         Agent's Reliance, Etc........................................................77

SECTION 9.03         CUSA, Citibank and Affiliates................................................78

SECTION 9.04         Lender Credit Decision.......................................................78

SECTION 9.05         Indemnification..............................................................78

SECTION 9.06         Successor Agent..............................................................79

SECTION 9.07         Documentation Agent, Co-Syndication Agents and Joint Lead Arrangers..........79

SECTION 9.08         Release of Collateral........................................................79

SECTION 9.09         Release of Guarantor.........................................................80

SECTION 9.10         Actions in Respect of Intercreditor Agreement................................80

                                    ARTICLE X
                                  MISCELLANEOUS

SECTION 10.01        Amendments, Etc..............................................................80

SECTION 10.02        Notices, Etc.................................................................81
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                  <C>                                                                          <C>
SECTION 10.03        No Waiver; Remedies..........................................................81

SECTION 10.04        Costs and Expenses...........................................................81

SECTION 10.05        Right of Set-off.............................................................82

SECTION 10.06        Binding Effect...............................................................83

SECTION 10.07        Assignments and Participations...............................................83

SECTION 10.08        Severability of Provisions...................................................86

SECTION 10.09        Independence of Provisions...................................................86

SECTION 10.10        Confidentiality..............................................................86

SECTION 10.11        Headings.....................................................................86

SECTION 10.12        Entire Agreement.............................................................86

SECTION 10.13        Execution in Counterparts....................................................87

SECTION 10.14        Consent to Jurisdiction......................................................87

SECTION 10.15        GOVERNING LAW................................................................87

SECTION 10.16        WAIVER OF JURY TRIAL.........................................................87
</TABLE>

                                       iv

<PAGE>

          CREDIT AGREEMENT, dated as of March 7, 2002 (this "Agreement"), among
                                                             ---------
The Gap, Inc., a Delaware corporation (the "Borrower"), the LC Subsidiaries (as
                                            --------
hereinafter defined), the Subsidiary Borrowers (as hereinafter defined), the
banks and financial institutions (the "Lenders") listed on the signature pages
                                       -------
hereof, the Issuing Banks (as hereinafter defined), Salomon Smith Barney Inc.
("SSB") and Banc of America Securities, LLC. ("BAS") as joint book managers (the
  ---                                          ---
"Joint Book Managers"), BAS, HSBC Bank USA ("HSBC") and J.P. Morgan Securities
 -------------------                         ----
Inc. ("JPMorgan") as co-syndication agents (the "Co-Syndication Agents"), ABN
       --------                                  ---------------------
AMRO Bank N.V. ("ABN AMRO") as documentation agent (the "Documentation Agent"),
                 --------                                -------------------
SSB, BAS and JPMorgan, as joint lead arrangers (the "Joint Lead Arrangers"), and
                                                     --------------------
Citicorp USA, Inc. ("CUSA"), as agent (the "Agent") for the Lenders and the
                     ----                   -----
Issuing Banks hereunder.

          PRELIMINARY STATEMENTS:

          (1) The Borrower, certain of its subsidiaries, certain banks and
financial institutions, and the Agent entered into a Third Amended and Restated
Credit Agreement dated as of June 26, 2001 (the "Existing 364-Day Agreement").
                                                 --------------------------

          (2) The Borrower, the financial institutions party thereto and the
Agent have entered into an Amended and Restated Credit Agreement, dated as of
June 27, 2000 (the "Existing Five-Year Agreement").
                    ----------------------------

          (3) The Borrower, the LC Subsidiaries, the Subsidiary Borrowers, the
Lenders, the Issuing Banks, the Joint Book Managers, the Co-Syndication Agents,
the Documentation Agent, the Joint Lead Arrangers and the Agent desire to enter
into this Agreement to replace the Existing 364-Day Agreement and Existing
Five-Year Agreement and provide other financing facilities to the Borrower, the
LC Subsidiaries and the Subsidiary Borrowers as set forth below.

          NOW THEREFORE, the Borrower, the LC Subsidiaries, the Subsidiary
Borrowers, the Lenders, the Issuing Banks, the Joint Book Managers, the
Co-Syndication Agents, the Documentation Agent, the Joint Lead Arrangers and the
Agent agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01 Certain Defined Terms.
          ----------------------------------

          As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):

          "Advance" means an advance by Lender to the Borrower as part of a
           -------
     Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance,
     each of which shall be a "Type" of Advance; and means a Swing Line Advance
                               ----
     by a Swing Line Lender to a Subsidiary Borrower as the context may require.

          "Advance Commitment" means, as to each Lender, the amount set forth
           ------------------
     opposite such Lender's name on Schedule I-A hereto under the caption
     Advance Commitment or, if such Lender has entered into one or more
     ------------------
     Assignment and Acceptances, the amount set forth for such Lender with
     respect thereto in the Register maintained by the Agent pursuant to Section
     10.07 hereof, in each case as such amount may be reduced pursuant to
     Section 2.04.

                                       1

<PAGE>

          "Advance Commitment Percentage" means, with respect to each Lender,
           -----------------------------
     the percentage which the then existing Advance Commitment of such Lender is
     of the Advance Commitments of all Lenders.

          "Affiliate" means, as to any Person, any other Person that, directly
           ---------
     or indirectly, controls, is controlled by, or is under common control with,
     such Person.

          "Alternative Currency" means any lawful currency other than Dollars
           --------------------
     which is freely transferable and convertible into Dollars and which an
     Issuing Bank or Swing Line Lender can obtain in the ordinary course of its
     business.

          "Applicable Facility Fee" means, as of any date a percentage per annum
           -----------------------
     determined by reference to the applicable Performance Level in effect on
     such date as set forth below:

<TABLE>
<CAPTION>
=============================================================================================================
                      LEVEL I   LEVEL II   LEVEL III   LEVEL IV   LEVEL V   LEVEL VI   LEVEL VII   LEVEL VIII
PERFORMANCE
LEVEL
=============================================================================================================
<S>                    <C>        <C>         <C>       <C>        <C>        <C>        <C>          <C>
Applicable Facility    .15%       .20%        .25%      .375%      .50%       .75%       .75%         .75%
Fee
-------------------------------------------------------------------------------------------------------------
</TABLE>

          "Applicable Lending Office" means, with respect to each Lender, such
           -------------------------
     Lender's Domestic Lending Office in the case of a Base Rate Advance, and
     such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
     Advance.

          "Applicable Letter of Credit Fee" means as of any date, a percentage
           -------------------------------
     per annum determined by reference to the applicable Performance Level in
     effect on such date as set forth below:

<TABLE>
<CAPTION>
==============================================================================================================
                       LEVEL I   LEVEL II   LEVEL III   LEVEL IV   LEVEL V   LEVEL VI   LEVEL VII   LEVEL VIII
PERFORMANCE
LEVEL
==============================================================================================================
<S>                     <C>        <C>        <C>         <C>       <C>        <C>        <C>         <C>
Applicable Letter of    .375%      .50%       .75%        1.00%     1.25%      1.50%      2.00%       2.50%
Credit Fee
--------------------------------------------------------------------------------------------------------------
</TABLE>

          "Applicable Margin" means as of any date, a percentage per annum
           -----------------
     determined by reference to the applicable Performance Level in effect on
     such date as set forth below:

<TABLE>
<CAPTION>
===========================================================================================================
                    LEVEL I   LEVEL II   LEVEL III   LEVEL IV   LEVEL V   LEVEL VI   LEVEL VII   LEVEL VIII
PERFORMANCE
LEVEL
===========================================================================================================
<S>                   <C>       <C>        <C>        <C>        <C>        <C>        <C>          <C>
Base Rate             0.0%      0.0%        .50%        .75%     1.00%      1.50%      2.00%        2.50%
Applicable Margin
-----------------------------------------------------------------------------------------------------------
Eurodollar Rate       .60%      .80%       1.25%      1.375%     1.50%      1.75%      2.25%        2.75%
Applicable Margin
-----------------------------------------------------------------------------------------------------------
</TABLE>

          "Asset Coverage Ratio" means, as of any date, the ratio of the book
           --------------------
     value of inventory of the Borrower and its Subsidiaries as reflected in
     their financial statements as of such date to the sum of the aggregate
     amount of Letter of Credit Liability plus the then outstanding amount of
     all

                                       2

<PAGE>

     Advances less cash and cash equivalents of the Borrower and its
     Subsidiaries as reflected on such financial statements, in each case as of
     such date, provided, that for the purposes of determining the Asset
                --------
     Coverage Ratio as of the last day of any Fiscal Quarter, the denominator
     thereof shall include the mark to market liability, if any, of the Borrower
     and its Subsidiaries under all Hedge Agreements in effect as of such day in
     excess of $25,000,000.

          "Assignment and Acceptance" means an assignment and acceptance entered
           -------------------------
     into by Lender and an Eligible Assignee, and accepted by the Agent, in
     substantially the form of Exhibit C hereto.

          "Assuming Lender" means an Eligible Assignee acceptable to the Agent
           ---------------
     and each Issuing Bank and not previously a Lender that becomes a Lender
     hereunder pursuant to Section 3.10(b) and which has an LC Commitment of not
     less than $25,000,000.

          "Assumption Agreement" means an agreement, substantially in the form
           --------------------
     of Exhibit H hereto, by which an Eligible Assignee agrees to become a
     Lender hereunder pursuant to Section 3.10(b), agreeing to be bound by all
     obligations of a Lender hereunder.

          "Base Rate" means, for any period, a fluctuating interest rate per
           ---------
     annum as shall be in effect from time to time which rate per annum shall at
     all times be equal to the highest of:

               (a) the rate of interest announced publicly by Citibank in New
          York, New York, from time to time, as Citibank's base rate;

               (b) 1/2% per annum above the latest three-week moving average of
          secondary market morning offering rates in the United States for
          three-month certificates of deposit of major United States money
          market banks, such three-week moving average being determined weekly
          on each Monday (or, if any such date is not a Business Day, on the
          next succeeding Business Day) for the three-week period ending on the
          previous Friday by the Agent on the basis of such rates reported by
          certificate of deposit dealers to and published by the Federal Reserve
          Bank of New York or, if such publication shall be suspended or
          terminated, on the basis of quotations for such rates received by the
          Agent from three New York certificate of deposit dealers of recognized
          standing selected by the Agent, in either case adjusted to the nearest
          1/4 of one percent or, if there is no nearest 1/4 of one percent, to
          the next higher 1/4 of one percent; and

               (c) 1/2% per annum above the Federal Funds Rate.

          "Base Rate Advance" means an Advance which bears interest as provided
           -----------------
     in Section 2.06(a).

          "Borrowing" means a borrowing, consisting of simultaneous Advances of
           ---------
     the same Type made by each of the Lenders pursuant to Section 2.01(a).

          "Business Day" means a day of the year on which banks are not required
           ------------
     or authorized to close in New York City or San Francisco, California and a
     day on which wire transfers may be effectuated among member banks of the
     Federal Reserve System through use of the fedwire funds transfer system and
     (i) if the applicable Business Day relates to any Eurodollar Rate Advances,
     a day on which dealings are carried on in the London interbank market and
     (ii) if the applicable Business Day relates to any Swing Line Advance or
     Letter of Credit denominated in an Alternative Currency, a day on which
     commercial banks are open for business in the country of

                                       3

<PAGE>

     issue of such Alternative Currency and on which dealings in such
     Alternative Currency are carried on by such commercial banks in such
     country of issue (if such Alternative Currency is other than the Euro) or
     if such Alternative Currency is the Euro, a day on which the Trans-European
     Automated Real-Time Gross Settlement Express Transfer (TARGET) System is in
     operation.

          "Capital Assets" means, with respect to any Person, all equipment,
           --------------
     fixed assets and real property or improvements of such Person, or
     replacements or substitutions therefor or additions thereto, that, in
     accordance with GAAP, have been or should be reflected as additions to
     property, plant or equipment on the balance sheet of such Person.

          "Capital Expenditures" means, with respect to any Person for any
           --------------------
     period, all expenditures made directly or indirectly by such Person during
     such period for Capital Assets (whether paid in cash or other consideration
     or accrued as a liability and including, without limitation, all
     expenditures for maintenance and repairs which are required, in accordance
     with GAAP, to be capitalized on the books of such Person). For purposes of
     this definition, the purchase price of equipment or other fixed assets that
     are purchased simultaneously with the trade-in of existing assets or with
     insurance proceeds shall be included in Capital Expenditures only to the
     extent of the gross amount by which such purchase price exceeds the credit
     granted by the seller of such assets for the assets being traded in at such
     time or the amount of such insurance proceeds, as the case may be.

          "Capital Lease" of any Person means any lease of any property (whether
           -------------
     real, personal or mixed) by such Person as lessee, which lease should, in
     accordance with generally accepted accounting principles, be required to be
     accounted for as a capital lease on the balance sheet of such Person.

          "Capital Lease Obligations" means the obligations of any Person to pay
           -------------------------
     rent or other amounts under a Capital Lease, the amount of which is
     required to be capitalized on the balance sheet of such Person in
     accordance with generally accepted accounting principles.

          "CERCLA" means the Comprehensive Environmental Response, Compensation,
           ------
     and Liability Act of 1980, as amended (42 U.S.C.Section 9601 et seq.), and
                                                                  -- ---
     any regulations promulgated thereunder.

          "Change of Control" means the occurrence, after the date of this
           -----------------
     Agreement, of (i) any Person or two or more Persons acting in concert
     acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
     Securities and Exchange Commission under the Securities Exchange Act of
     1934, as amended), directly or indirectly, of securities of the Borrower
     (or other securities convertible into such securities) representing 50% or
     more of the combined voting power of all securities of the Borrower
     entitled to vote in the election of directors; or (ii) during any period of
     up to 24 consecutive months, commencing before or after the date of this
     Agreement, individuals who at the beginning of such 24-month period were
     directors of the Borrower ceasing for any reason to constitute a majority
     of the Board of Directors of the Borrower unless the Persons replacing such
     individuals were nominated by the Board of Directors of the Borrower; or
     (iii) any Person or two or more Persons acting in concert acquiring by
     contract or otherwise, or entering into a contract or arrangement which
     upon consummation will result in its or their acquisition of, control over
     securities of the Borrower (or other securities convertible into such
     securities) representing 50% or more of the combined voting power of all
     securities of the Borrower entitled to vote in the election of directors;
     provided, that, the Person or group of Persons referred to in clauses (i)
     --------  ----
     and (iii) of this definition of Change of Control shall

                                       4

<PAGE>

     not include any Person listed on Schedule III hereto or any group of
     Persons in which one or more of the Persons listed on Schedule III are
     members.

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

          "Collateral Agent" has the meaning specified therefor in the Security
           ----------------
     Agreement.

          "Collateral Documents" means, collectively, the Security Agreement (as
           --------------------
     amended, and any supplements thereto), collateral assignments, security
     agreements, pledge agreements or other similar agreements delivered to the
     Agent and the Lender Parties pursuant to Section 5.01 or Section 7.01, and
     each of the other agreements, instruments or documents that creates or
     purports to create a Lien in favor of the Collateral Agent for the benefit
     of the Lender Parties.

          "Commitment" means an Advance Commitment or a LC Commitment, as the
           ----------
     context may require.

          "Confidential Information" means certain non-public, confidential or
           ------------------------
     proprietary information and material disclosed, from time to time, either
     orally, in writing, electronically or in some other form by the Borrower in
     connection with the Loan Documents. Confidential Information shall include,
     but not be limited to non-public, confidential or proprietary information,
     trade secrets, know-how, inventions, techniques, processes, algorithms,
     software programs, documentation, screens, icons, schematics, software
     programs, source documents and other MIS related information; contracts,
     customer lists, financial information, financial forecasts, sales and
     marketing plans and information and business plans, products and product
     designs; textile projections and results; ideas, designs and artwork for
     all types of marketing, advertising, public relations and commerce
     (including ideas, designs and artwork related to the World Wide Web and any
     Web Site of the Borrower or any Subsidiary); textile designs; advertising,
     strategies, plans and results; sourcing information; vendor lists,
     potential product labeling and marking ideas; all materials including,
     without limitation, documents, drawings, samples, sketches, designs, and
     any other information concerning, color palette and color standards
     furnished to a Recipient by the Borrower or any Subsidiary; customer
     base(s); and other non-public information relating to the Borrower's or any
     Subsidiary's business.

          "Consolidated" and any derivative thereof each means, with reference
           ------------
     to the accounts or financial reports of any Person, the consolidated
     accounts or financial reports of such Person and each Subsidiary of such
     Person determined in accordance with generally accepted accounting
     principles, including principles of consolidation, consistent with those
     applied in the preparation of the Consolidated financial statements of the
     Borrower referred to in Section 6.01(e).

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

                                       5

<PAGE>

          "Control Agreement" means "Securities Account Control Agreement" or
           -----------------
     "Account Control Agreement," as applicable, and in each case as defined in
     the Security Agreement.

          "Convert," "Conversion" and "Converted" each refers to a conversion of
           -------    ----------       ---------
     Advances of one Type into Advances of another Type pursuant to Section 2.08
     or 2.09.

          "Debt" of any Person means, without duplication, (i) all indebtedness
           ----
     of such Person for borrowed money or for the deferred purchase price
     (excluding any deferred purchase price that constitutes an account payable
     incurred in the ordinary course of business) of property or services, (ii)
     all obligations of such Person in connection with any agreement to
     purchase, redeem, exchange, convert or otherwise acquire for value any
     capital stock of such Person or to purchase, redeem or acquire for value
     any warrants, rights or options to acquire such capital stock, now or
     hereafter outstanding, (iii) all obligations of such Person evidenced by
     bonds, notes, debentures, convertible debentures or other similar
     instruments, (iv) all indebtedness created or arising under any conditional
     sale or other title retention agreement (other than under any such
     agreement which constitutes or creates an account payable incurred in the
     ordinary course of business) with respect to property acquired by such
     Person (even though the rights and remedies of the seller or lender under
     such agreement in the event of default, acceleration, or termination are
     limited to repossession or sale of such property), (v) all Capital Lease
     Obligations, (vi) obligations under direct or indirect guaranties in
     respect of, and obligations (contingent or otherwise) to purchase or
     acquire, or otherwise to assure a creditor against loss in respect of,
     indebtedness or obligations of others of the kinds referred to in clauses
     (i) through (v) above, (vii) all Debt referred to in clause (i), (ii),
     (iii), (iv), (v), or (vi) above secured by (or for which the holder of such
     Debt has an existing right, contingent or otherwise, to be secured by) any
     lien, security interest or other charge or encumbrance upon or in property
     (including, without limitation, accounts and contract rights) owned by such
     Person, even though such Person has not assumed or become liable for the
     payment of such Debt and (viii) all mandatorily redeemable preferred stock
     of such Person, valued at the applicable redemption price, plus accrued and
     unpaid dividends payable in respect of such redeemable preferred stock.

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

          "Dollars," "dollars" and the sign "$" each means lawful money of the
           -------    -------                -
     United States.

          "Domestic Lending Office" means, with respect to any Lender, the
           -----------------------
     office of such Lender specified as its "Domestic Lending Office" opposite
     its name on Schedule I-B hereto or in the Assignment and Acceptance
     pursuant to which it became Lender, or such other office of such Lender as
     such Lender may from time to time specify to the Borrower and the Agent.

          "Domestic Subsidiary" means, at any time, any of the direct or
           -------------------
     indirect Subsidiaries of the Borrower that is incorporated or organized
     under the laws of any state of the United States of America or the District
     of Columbia.

          "EBITDA" means, for any period, Net Income plus, to the extent
           ------                                    ----
     deducted in determining such Net Income, the sum of (a) Interest Expense,
     (b) income tax expense, (c) depreciation expense and (d) amortization
     expense, all determined on a Consolidated basis for the Borrower and its
     Subsidiaries in accordance with generally accepted accounting principles.

          "Effective Date" has the meaning specified in Section 5.01
           --------------

                                       6

<PAGE>

          "Eligible Assignee" means (i) a commercial bank 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; (ii) a commercial bank
     organized under the laws of any other country which is a member of the
     OECD, or a political subdivision of any 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; (iii) a
     Person that is primarily engaged in the business of commercial banking and
     that is (a) a Subsidiary of a Lender, (b) a Subsidiary of a Person of which
     a Lender is a Subsidiary, or (c) a Person of which a Lender is a
     Subsidiary; (iv) any Lender or Affiliate of a Lender; (v) any other entity
     which is an "accredited investor" (as defined in Regulation D under 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; and (vi) any other Person
     acceptable to the Issuing Banks and the Agent and, provided no Event of
     Default is continuing, the Borrower. No Loan Party or any Affiliate thereof
     shall be an Eligible Assignee.

          "Environmental Action" means any outstanding action, suit, demand,
           --------------------
     demand letter, claim, notice of noncompliance or violation, notice of
     liability or potential liability, investigation, proceeding, consent order
     or consent agreement, abatement order or other order or directive
     (conditional or otherwise) relating in any way to any Environmental Law,
     any Environmental Permit or any Hazardous Substances or arising from
     alleged injury or threat to health, safety, natural resources or the
     environment, including, without limitation, (a) by any Governmental
     Authority for enforcement, cleanup, removal, response, remedial or other
     actions or damages and (b) by any applicable Governmental Authority or any
     other third party for damages, contribution, indemnification, cost
     recovery, compensation or injunctive relief.

          "Environmental Law" means any Requirement of Law relating to (a) the
           -----------------
     generation, use, handling, transportation, treatment, storage, disposal,
     release or discharge of Hazardous Substances, (b) pollution or the
     protection of the environment, health, safety or natural resources or (c)
     occupational safety and health, industrial hygiene, land use or the
     protection of human, plant or animal health or welfare, including, without
     limitation, CERCLA, in each case as amended from time to time, and
     including the regulations promulgated and the rulings issued from time to
     time thereunder.

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

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

          "ERISA Affiliate" means any trade or business (whether or not
           ---------------
     incorporated) which is a member of a controlled group of which the Borrower
     or any Subsidiary of the Borrower is a member or which is under common
     control with the Borrower or any Subsidiary of the Borrower

                                       7

<PAGE>

     within the meaning of Section 414 of the Internal Revenue Code of 1986, as
     amended from time to time, and the regulations promulgated and rulings
     issued thereunder.

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

          "ERISA Event" means a reportable event with respect to a Plan within
           -----------
     the meaning of Section 4043 of ERISA.

          "Eurocurrency Liabilities" has the meaning assigned to that term in
           ------------------------
     Regulation D of the Board of Governors of the Federal Reserve System, as in
     effect from time to time.

          "Eurodollar Lending Office" means, with respect to any Lender, the
           -------------------------
     office of such Lender specified as its "Eurodollar Lending Office" opposite
     its name on Schedule I-B hereto or in the Assignment and Acceptance
     pursuant to which it became Lender (or, if no such office is specified, its
     Domestic Lending Office), or such other office of such Lender as such
     Lender may from time to time specify to the Borrower and the Agent.

          "Eurodollar Rate" means, for any Interest Period for each Eurodollar
           ---------------
     Rate Advance comprising part of the same Borrowing, an interest rate per
     annum equal to (i) the rate per annum (rounded upwards, if necessary, to
     the nearest 1/16 of 1%) at which deposits in U.S. dollars appear on page
     3750 (or any successor page thereto) of the Dow Jones Telerate Screen two
     Business Days before the first day of such Interest Period and for a term
     comparable to such Interest Period, or (ii) if such rate does not so appear
     on the Dow Jones Telerate Screen on any date of determination, the rate per
     annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) at which
     deposits in U.S. dollars appear on the Reuters Screen LIBO Page two
     Business Days before the first day of such Interest Period and for a term
     comparable to such Interest Period, provided, however, that if the Reuters
                                         --------  -------
     Screen LIBO Page is being used to determine the Eurodollar Rate at any date
     of determination and more than one rate is specified thereon as the London
     interbank offered rate for deposits in U.S. dollars, the applicable rate
     shall be the average of all such rates (rounded upward, if necessary, to
     the nearest whole multiple of 1/16 of 1% per annum), or (iii) if such rate
     does not so appear on either the Dow Jones Telerate Screen or Reuters
     Screen LIBO Page on any date of determination, then, the average (rounded
     upward to the nearest whole multiple of 1/16 of 1% per annum) of the rates
     per annum at which deposits in Dollars are offered by the principal office
     of each of the Reference Banks in London, England, to prime banks in the
     London interbank market at 11:00 A.M. (London time) two Business Days
     before the first day of such Interest Period in an amount substantially
     equal to such Reference Bank's Eurodollar Rate Advance comprising part of
     such Borrowing and for a period equal to such Interest Period. In such
     circumstances, the Eurodollar Rate for the Interest Period for each
     Eurodollar Rate Advance comprising part of the same Borrowing shall be
     determined by the Agent on the basis of the applicable rates given to and
     received by the Agent from the Reference Banks two Business Days prior to
     the first day of such Interest Period, subject, however, to the provisions
                                            -------  -------
     of Section 2.08.

          "Eurodollar Rate Advance" means an Advance which bears interest as
           -----------------------
     provided in Section 2.06(b).

          "Eurodollar Rate Reserve Percentage" of any Lender for any Interest
           ----------------------------------
     Period for any Eurodollar Rate Advance means the reserve percentage
     applicable during such Interest Period (or if more than one such percentage
     shall be so applicable, the daily average of such percentages for those
     days in such Interest Period during which any such percentage shall be so
     applicable) under

                                       8

<PAGE>

     regulations issued from time to time by the Board of Governors of the
     Federal Reserve System (or any successor) for determining the maximum
     reserve requirement (including, without limitation, any emergency,
     supplemental or other marginal reserve requirement) for such Lender with
     respect to liabilities or assets consisting of or including Eurocurrency
     Liabilities having a term equal to such Interest Period.

          "Events of Default" has the meaning specified in Section 8.01.
           -----------------

          "Excluded Subsidiaries" means (a) Gap International Sourcing FZE, (b)
           ---------------------
     Gap International Sourcing Srl., (c) those Subsidiaries whose assets have a
     book value of less than $500,000, are dormant (as provided under any
     applicable law), or which are in the process of being liquidated as of the
     Effective Date, (d) Special Purpose Subsidiaries, (e) Subsidiaries of
     Foreign Subsidiaries, (f) Banana Republic (East) LP and Gap (Texas) LP,
     each a California Limited partnership, and in each case so long as any
     partnership interests therein is owned by a Special Purpose Subsidiary, and
     (g) La Mer S.A., Maravan S.A.R.L. and Gap (RHC) BV. Excluded Subsidiaries
     referred to in clause (c) as of the Effective Date are listed in Schedule
     XIV hereto.

          "Existing 364-Day Agreement" has the meaning specified in Preliminary
           --------------------------
     Statement (1).

          "Existing Credit Agreements" means the Existing 364-Day Agreement and
           --------------------------
     Existing Five-Year Agreement ."

          "Existing Five-Year Agreement " has the meaning specified in
           ----------------------------
     Preliminary Statement (2).

          "Federal Funds Rate" means, for any period, a fluctuating interest
           ------------------
     rate per annum equal for each day during such period to 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 the quotations for such day on such transactions received by the
     Agent from three Federal funds brokers of recognized standing selected by
     it.

          "Fiscal Month" means any month in any Fiscal year, the duration of
           ------------
     such month being defined in accordance with generally accepted accounting
     principles consistent with those applied in the preparation of the
     Borrower's financial statements referred to in Section 6.01(e).

          "Fiscal Quarter" means any quarter in any Fiscal Year, the duration of
           --------------
     such quarter being defined in accordance with generally accepted accounting
     principles consistent with those applied in the preparation of the
     Borrower's financial statements referred to in Section 6.01(e).

          "Fiscal Year" means a fiscal year of the Borrower and its
           -----------
     Subsidiaries.

          "Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
           ---------------------------
     the amount equal to the sum of (i) Consolidated EBITDA and (ii) Lease
     Expense in each case for the Borrower and its Subsidiaries for such period,
     to (b) the sum of (i) Consolidated Interest Expense and (ii) Lease Expense,
     in each case for the Borrower and its Subsidiaries for such period.

          "Foreign Subsidiary" means, at any time, any direct or indirect
           ------------------
     Subsidiary of the Borrower that is not a Domestic Subsidiary.

                                       9

<PAGE>

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

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

          "Guarantee Supplement" has the meaning specified in the Subsidiary
           --------------------
     Guaranty.

          "Guaranteed Obligations" has the meaning specified in the Subsidiary
           ----------------------
     Guaranty.

          "Guarantor" means each Domestic Subsidiary of the Borrower party to
           ---------
     the Subsidiary Guarantee or, as the case may be, a Guarantee Supplement.

          "Hazardous Substance" means (i) any hazardous substance or toxic
           -------------------
     substance as such terms are presently defined or used in Section 101(14) of
     CERCLA (42 U.S.C Section 9601(14)), in 33 U.S.C. Section 1251 et. seq.
                                                                   --  ---
     (Clean Water Act), or 15 U.S.C. Section. 2601 et. seq. (Toxic Substances
                                                   --  ---
     Control Act) and (ii) as of any date of determination, any additional
     substances or materials which are hereafter incorporated in or added to the
     definition of "hazardous substance" or "toxic substance" for purposes of
     CERCLA or any other applicable law.

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

          "Hedge Agreements Exposure" means, with respect to all Hedge
           -------------------------
     Agreements of the Hedge Banks, the amount, if any, by which the sum of the
     (a) product of 20% of the notional amount of all such Hedge Agreements
     which are currency swap or exchange agreements, (b) the product of 15% of
     the notional amount of all such Hedge Agreements which are interest rate
     swap or exchange agreements with a tenor of more than 3 years, and (c) the
     product of 10% of the notional amount of all such Hedge Agreements which
     are interest rate swap or exchange agreements with a tenor of 3 years or
     less, in each case existing as of the Effective Date or permitted under
     Section 7.02(h), exceeds $150,000,000.

          "Hedge Bank" means any Lender or an Affiliate of a Lender, in its
           ----------
     capacity as a party to a Hedge Agreement.

                                       10

<PAGE>

          "Hedge Subsidiary" means, as of the Effective Date, the Subsidiaries
           ----------------
     of the Borrower listed on Schedule XVI hereto and, after the Effective
     Date, any other Subsidiary of the Borrower that may from time to time enter
     into a Hedge Agreement with a Hedge Bank.

          "Information Memorandum" means the information memorandum, dated as of
           ----------------------
     February 2002 prepared in connection with this Agreement.

          "Intercreditor Agreement" means an Intercreditor Agreement dated as of
           -----------------------
     the date hereof duly executed by the Agent on behalf of the Lender Parties,
     the Collateral Agent, as defined therein, and any Lender who is as of such
     date or thereafter a party to a Hedge Agreement.

          "Interest Expense" of any Person for any period means the aggregate
           ----------------
     amount of interest or fees paid, accrued or scheduled to be paid or accrued
     in respect of any Debt (including the interest portion of rentals under
     Capital Leases) and all but the principal component of payments in respect
     of conditional sales, equipment trust or other title retention agreements
     paid, accrued or scheduled to be paid or accrued by such Person during such
     period, net of interest income, determined in accordance with generally
     accepted accounting principles.

          "Interest Period" means, for each Eurodollar Rate Advance comprising
           ---------------
     part of the same Borrowing, the period commencing on the date of such Type
     of Advance or the date of the Conversion of any Advance into such Type of
     an Advance and ending on the last day of the period selected by the
     Borrower pursuant to the provisions below and, thereafter, each subsequent
     period commencing on the last day of the immediately preceding Interest
     Period and ending on the last day of the period selected by the Borrower
     pursuant to the provisions below. The duration of each such Interest Period
     shall be 1, 2, 3, 6 or, if acceptable to the Lenders, 9 or 12 months in the
     case of a Eurodollar Rate Advance, in each case as the Borrower may, upon
     notice received by the Agent not later than 12:00 noon (New York City time)
     on the third Business Day prior to the first day of such Interest Period,
     select; provided, however, that:
             --------  -------

               (i) the Borrower may not select any Interest Period which ends
          after the Termination Date;

               (ii) Interest Periods commencing on the same date for Advances
          comprising part of the same Borrowing shall be of the same duration;

               (iii) whenever the last day of any Interest Period would
          otherwise occur on a day other than a Business Day, the last day of
          such Interest Period shall be extended to occur on the next succeeding
          Business Day, provided, in the case of any Interest Period for a
                        --------
          Eurodollar Rate Advance, that if such extension would cause the last
          day of such Interest Period to occur in the next following calendar
          month, the last day of such Interest Period shall occur on the next
          preceding Business Day; and

               (iv) the Borrower may request in a Notice of Borrowing an
          Interest Period of 9 or 12 months for a Eurodollar Rate Advance and
          the Interest Period for such Eurodollar Rate Advance shall be 9 or 12
          months, if, and only if, the Agent determines a Eurodollar Rate for
          the tenor of such Interest Period and the Lenders do not notify the
          Agent pursuant to Section 2.08(b) that the Eurodollar Rate for such
          Interest Period will not adequately reflect the cost to the Lenders of
          making, funding or maintaining their respective Eurodollar Rate
          Advances for such Interest Period; if both of the preceding conditions
          are not satisfied with respect to such requested 9 or 12 month
          Interest Period,

                                       11

<PAGE>

          the duration of the requested Interest Period shall be the alternative
          specified in the Notice of Borrowing, or, if no alternative Interest
          Period is selected, 6 months.

          "Issue" means, with respect to any Letter of Credit, either to issue,
           -----
     or to extend the expiry of, or to renew, or to increase the amount of, such
     Letter of Credit, and the term "Issued" or "Issuance" shall have
                                     ------      --------
     corresponding meanings.

          "Issuing Bank" means Citibank N.A., HSBC Bank U.S.A. or Bank of
           ------------
     America, N.A., or any other Lender which agrees to become, and is
     designated as an Issuing Bank under Section 3.10(c) or any Affiliate
     thereof as agreed to from time to time by the Borrower and such Issuing
     Bank, that may from time to time Issue Letters of Credit for the account of
     the Borrower or for the account of any LC Subsidiary.

          "Issuing Commitment" means, as to any Issuing Bank, the amount set
           ------------------
     forth opposite such Issuing Bank's name on Schedule I-A hereto under the
     caption "Issuing Commitment," as such amount may be reduced or increased
     pursuant to Section 3.10(d).

          "LC Commitment" means, as to any Lender, the amount set forth opposite
           -------------
     such Lender's name on Schedule I-A hereto under the caption "LC Commitment"
                                                                  -------------
     or, if such Lender has entered into one or more Assignment and Acceptances,
     the amount set forth for such Lender with respect thereto in the Register
     maintained by the Agent pursuant to Section 10.07(c) hereof, in each case
     as such amount may be reduced or increased from time to time pursuant to
     Section 3.10(d).

          "LC Commitment Percentage" means, with respect to each Lender, the
           ------------------------
     percentage which the then existing LC Commitment of such Lender is of the
     LC Commitments of all Lenders; provided, however, that with respect to
                                    --------  -------
     Letters of Credit which expire after the Termination Date has occurred, the
     LC Commitment Percentage of each Lender shall be the percentage which
     Lender's LC Commitment immediately prior to the Termination Date is of the
     LC Commitment of all Lenders immediately prior to the Termination Date.

          "LC Subsidiary" means, as of the date hereof, the Subsidiaries of the
           -------------
     Borrower listed on Schedule V hereto and, after the date hereof, any other
     Subsidiary of the Borrower that may from time to time become a party hereto
     (with respect to Letters of Credit only) and in connection therewith such
     other Subsidiary shall execute such documents as are reasonably requested
     by the Agent to evidence its agreement to be bound hereunder as an LC
     Subsidiary, and for whose account an Issuing Bank may from time to time
     Issue Letters of Credit.

          "Lease Expense" means, with respect to any Person, for any period for
           -------------
     such Person and its subsidiaries on a Consolidated basis, lease and rental
     expense accrued during such period under all leases and rental agreements,
     other than Capital Leases and leases of personal property, determined in
     conformity with generally accepted accounting principles.

          "Lender Party" means any Lender and any Issuing Bank.
           ------------

          "Lenders" means the Lenders listed on the signature pages hereof as
           -------
     Lenders and as Swing Line Lenders, as the context may require, and each
     Eligible Assignee that shall become a party hereto pursuant to Section
     10.07.

          "Letter of Credit" means either a Trade Letter of Credit or a Standby
           ----------------
     Letter of Credit which in either case is in form satisfactory to the
     respective Issuing Bank, which is at any time

                                       12

<PAGE>

     Issued by such Issuing Bank pursuant to Article III, in each case as
     amended, supplemented or otherwise modified from time to time.

          "Letter of Credit Liability" means, as of any date of determination,
           --------------------------
     all then existing liabilities of the Borrower and the LC Subsidiaries to
     the Issuing Banks in respect of the Letters of Credit Issued for the
     Borrower's account and for the account of the LC Subsidiaries, whether such
     liability is contingent or fixed, and shall, in each case, consist of the
     sum of (i) the aggregate maximum amount (the determination of such maximum
     amount to assume compliance with all conditions for drawing) then available
     to be drawn under such Letters of Credit (including, without limitation,
     amounts available under such Letters of Credit for which a draft has been
     presented but not yet honored) and (ii) the aggregate amount which has then
     been paid by, and not been reimbursed to, the Issuing Banks under such
     Letters of Credit. For the purposes of determining the Letter of Credit
     Liability, the face amount of Letters of Credit outstanding in an
     Alternative Currency shall be expressed as the equivalent of such
     Alternative Currency in Dollars.

          "Lien" means any assignment, chattel mortgage, pledge or other
           ----
     security interest or any mortgage, deed of trust or other lien, or other
     charge or encumbrance, upon property or rights (including after-acquired
     property or rights), or any preferential arrangement with respect to
     property or rights (including after-acquired property or rights) which has
     the practical effect of constituting a security interest or lien.

          "Loan Documents" means, collectively, this Agreement, any note
           --------------
     delivered pursuant to Section 2.02(a), the Subsidiary Guaranty, the
     Collateral Documents, each application or agreement and other documents
     delivered in connection with Letters of Credit pursuant to Section 3.03, in
     each case as amended, supplemented or otherwise modified hereafter from
     time to time in accordance with the terms thereof and Section 8.01.

          "Loan Parties" means, collectively, the Borrower and each of the
           ------------
     Subsidiaries of the Borrower party to any Loan Document.

          "Majority Lenders" means the Lenders having at least 51% of the
           ----------------
     aggregate "Credit Exposure." For the purposes hereof, "Credit Exposure" of
     any Lender shall mean, at any date of determination, the maximum dollar
     amount that such Lender could be then required by the terms hereof
     (assuming all conditions to Borrowings and Issuances were satisfied) to
     expend to (i) purchase participations in Letters of Credit pursuant to
     Section 3.05 hereof (including any amounts so expended and not reimbursed
     at the date of determination) and (ii) fund Advances (including any amounts
     so expended to fund Advances outstanding on the date of determination).

          "Margin Stock" has the meaning assigned to such term in Regulation U
           ------------
     of the Board of Governors of the Federal Reserve System, as in effect from
     time to time.

          "Material Adverse Change" means any material adverse change in the
           -----------------------
     business, condition (financial or otherwise), results of operations, or
     prospects of the Borrower and its Subsidiaries, taken as a whole; provided,
                                                                       --------
     that a downgrade of the Borrower's public debt ratings or a Negative
     Pronouncement shall not by itself be deemed to be a material adverse
     change; provided, further, the occurrence or subsistence of any such
             --------  -------
     material adverse change which has been disclosed (a) by the Borrower in any
     filing made with the Securities and Exchange Commission prior to the date
     of this Agreement, (b) by the Borrower in a public announcement prior to
     the date of this Agreement, or (c) in the Information Memorandum prior to
     the date of this of this Agreement, shall not constitute a Material Adverse
     Change.

                                       13

<PAGE>

          "Material Adverse Effect" means a material adverse effect on the
           -----------------------
     financial condition or results of operations of the Borrower and its
     Subsidiaries taken as a whole.

          "Moody's" means Moody's Investors Service, Inc.
           -------

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

          "Negative Pronouncement" means a public announcement by either S&P or
           ----------------------
     Moody's in respect to a possible downgrade of, or negative outlook with
     respect to, the public debt rating of the Borrower.

          "Net Income" of any Person means, for any period, net income before
           ----------
     (i) extraordinary items, (ii) the results of discontinued operations and
     (iii) the effect of any cumulative change in accounting principles,
     determined in accordance with generally accepted accounting principles,
     plus, in respect of the Fiscal Year ending February 2, 2002, (iv)
     $52,000,000 of fabric writeoffs in such Fiscal Year for cancelled
     product orders, (v) $51,000,000 of charges in such Fiscal Year due to
     excess corporate facilities space, (vi) $25,000,000 of charges in such
     Fiscal Year due to workforce reduction initiatives, and (vii)
     $15,000,000 of charges due to distribution center closings in such Fiscal
     Year.

          "Notice of Borrowing" has the meaning specified in Section 2.02(a).
           -------------------

          "Obligation" means, with respect to any Person, any payment,
           ----------
     performance or other obligation of such Person of any kind, including,
     without limitation, any liability of such Person on any claim, whether or
     not the right of any creditor to payment in respect of such claim is
     reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
     disputed, undisputed, legal, equitable, secured or unsecured, and whether
     or not such claim is discharged, stayed or otherwise affected by any
     proceeding referred to in Section 8.01(e). Without limiting the generality
     of the foregoing, the Obligations of the Loan Parties under the Loan
     Documents include (a) the obligation to pay principal, interest,
     commissions, charges, expenses, fees, attorneys' fees and disbursements,
     indemnity payments and other amounts payable by any Loan Party under any
     Loan Document and (b) the obligation of any Loan Party to reimburse any
     amount in respect of any of the foregoing items that any Lender Party, in
     its sole discretion, may elect to pay or advance on behalf of such Loan
     Party.

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

          "Operating Indebtedness" means Debt to any Operating Lender arising
           ----------------------
     under (i) any purchasing card program established to enable headquarters
     and field staff of the Borrower or any of its Subsidiaries to purchase
     goods and supplies from vendors and (ii) any travel and entertainment card
     program established to enable headquarters and field staff of the Borrower
     or any of its Subsidiaries to make payments for expenses incurred related
     to travel and entertainment, provided, that the aggregate amount of such
                                  --------
     Debt shall not exceed $10,000,000 at any time outstanding.

          "Operating Indebtedness Agreement" means the agreement which governs
           --------------------------------
     the terms of the Operating Indebtedness between an Operating Lender and the
     Borrower or its respective Subsidiary.

                                       14

<PAGE>

          "Operating Lender" means a Lender or an Affiliate thereof which has
           ----------------
     extended Operating Indebtedness to the Borrower or one of its Subsidiaries
     pursuant to an Operating Indebtedness Agreement and which has become party
     to the Intercreditor Agreement in that capacity.

          "Other Taxes" has the meaning specified in Section 4.02(b).
           -----------

          "Payment Office" means the office of the respective Issuing Bank as
           --------------
     shall be from time to time selected by such Issuing Bank and notified by
     such Issuing Bank to the Borrower, the LC Subsidiaries, and the Lenders.

          "Performance Level" means Performance Level I, Performance Level II,
           -----------------
     Performance Level III, Performance Level IV, Performance Level V,
     Performance Level VI, Performance Level VII, or Performance Level VIII as
     identified by reference to the Public Debt Rating in effect on such date as
     set forth below:

-------------------------------------------------------------------------------
Performance Level                            Public Debt Rating
-------------------------------------------------------------------------------
Level I                   Long-Term Senior Unsecured Debt of the Borrower Rated
                          at least BBB+ by Standard & Poor's or Baa1 by Moody's
                                                             --
-------------------------------------------------------------------------------
Level II                  Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level I but at least
                          BBB by Standard & Poor's or Baa2 by Moody's
                                                   --
-------------------------------------------------------------------------------
Level III                 Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level II but at
                          least BBB- by Standard & Poor's and Baa3 by
                                                          ---
                          Moody's
-------------------------------------------------------------------------------
Level IV                  Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level III but at
                          least BBB- by Standard & Poor's or Baa3 by
                                                          --
                          Moody's
-------------------------------------------------------------------------------
Level V                   Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level IV but at
                          least BB+ by Standard & Poor's and Ba1 by
                                                         ---
                          Moody's
-------------------------------------------------------------------------------
Level VI                  Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level V but at least
                          BB by Standard & Poor's or Ba2 by Moody's
                                                  --
-------------------------------------------------------------------------------
Level VII                 Long-Term Senior Unsecured Debt of the
                          Borrower Rated less than Level VI but at
                          least BB- by Standard & Poor's or Ba3 by
                                                         --
                          Moody's
-------------------------------------------------------------------------------
Level VIII                Long-Term Senior Unsecured Debt of the Borrower Rated
                          less than Level VII
-------------------------------------------------------------------------------

     For purposes of this definition, the public debt ratings above shall be
     determined by the lowest rating that has been most recently announced by
     either S&P or Moody's, as the case may be, for any class of
     non-credit-enhanced long-term senior unsecured debt issued by the Borrower.
     For purposes of this definition, (a) if only one of S&P and Moody's shall
     have in effect a public debt rating, the Performance Level shall be
     determined by reference to the available rating; (b) if neither S&P nor
     Moody's shall have in effect a public debt rating, the applicable
     Performance

                                       15

<PAGE>

     Level will be Performance Level VIII; (c) if the ratings on the Borrower's
     long-term senior unsecured debt established by S&P and Moody's shall fall
     within different levels and are equal to or higher than BBB- and Baa3,
     respectively, the Performance Level in regards to the Applicable Letter of
     Credit Fee, Applicable Facility Fee and Applicable Margin will be
     determined by the higher of the two ratings, provided, that, if either of
                                                  --------  ----
     such ratings by S&P and Moody's are less than BBB- or Baa3, respectively,
     the Performance Level in regards to the Applicable Letter of Credit Fee,
     Applicable Facility Fee and Applicable Margin will be determined by the
     lower of the two ratings; provided, further, that, in the event that the
                               --------  -------  ----
     lower of such ratings is more than one level below the higher of such
     ratings, the Performance Level in regards to the Applicable Letter of
     Credit Fee, Applicable Facility Fee and Applicable Margin will be
     determined based upon the level that is one level above the lower of such
     ratings; (d) if any rating established by S&P or Moody's shall be changed,
     such change shall be effective as of the date on which such change is first
     announced publicly by the rating agency making such change; and (e) if S&P
     or Moody's shall change the basis on which ratings are established, each
     reference to the public debt rating announced by S&P or Moody's, as the
     case may be, shall refer to the then equivalent rating by S&P or Moody's,
     as the case may be.

          "Permitted Lien" means:
           --------------

          (i) Liens for taxes, assessments or governmental charges or levies to
     the extent not past due or to the extent contested, in good faith, by
     appropriate proceedings and for which adequate reserves have been
     established;

          (ii) Liens imposed by law, such as materialman's, mechanic's,
     carrier's, worker's, landlord's and repairman's Liens and other similar
     Liens arising in the ordinary course of business which relate to
     obligations which are not overdue for a period of more than 30 days or
     which are being contested in good faith, by appropriate proceedings and for
     which reserves required by generally accepted accounting principles have
     been established;

          (iii) pledges or deposits in the ordinary course of business to secure
     obligations under worker's compensation or unemployment laws or similar
     legislation or to secure the performance of leases or contracts (including
     insurance contracts issued by insurance companies which are Subsidiaries of
     the Borrower) entered into in the ordinary course of business or of public
     or statutory obligations, bids, or appeal bonds;

          (iv) zoning restrictions, easements, licenses, landlord's Liens or
     restrictions on the use of property which do not materially impair the use
     of such property in the operation of the business of the Borrower or any of
     its Subsidiaries;

          (v) Liens upon assets subject to a Capital Lease and securing payment
     of the obligations arising under such Capital Lease;

          (vi) Liens of the Borrower and its Subsidiaries not described in the
     foregoing clauses (i) through (v) existing on the Effective Date and listed
     on Schedule II hereto and any extensions, renewals or replacements of such
     Liens for the same or lesser amount, provided, that, no such extension,
                                          --------  ----
     renewal or replacement shall extend to or cover any property not
     theretofore subject to the Lien being extended, renewed or replaced;

          (vii) judgment Liens in respect of judgments that do not constitute an
     Event of Default under Section 8.01(f); and

                                       16

<PAGE>

          (vii) Liens arising out of or pursuant to this Agreement or any
     Collateral Document.

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

          "Plan" means an employee benefit plan (other than a Multiemployer
           ----
     Plan) maintained by the Borrower, any Subsidiary of the Borrower or any
     ERISA Affiliate for its employees and subject to Title IV of ERISA.

          "RCRA" means the Resource Conservation and Recovery Act of 1976, as
           ----
     amended (42 U.S.C Section 6901 et seq.), and any regulations promulgated
                                    -- ---
     thereunder.

          "Recipient" has the meaning specified in Section 10.10.
           ---------

          "Reference Banks" means Citibank, N.A., JPMorgan Chase Bank, HSBC and
           ---------------
     Bank of America, N.A.

          "Responsible Officer" means, with respect to any certificate, report
           -------------------
     or notice to be delivered or given hereunder, unless the context otherwise
     requires, the president, chief executive officer, chief financial officer
     or treasurer of the Borrower or other executive officer of the Borrower who
     in the normal performance of his or her operational duties would have
     knowledge of the subject matter relating to such certificate, report or
     notice.

          "Register" has the meaning specified in Section 10.07(c).
           --------

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

          "Retail Assets" means property (tangible and intangible) that is used,
           -------------
     sold or consumed in a Retail Business.

          "Retail Business" means, with respect to any Person, that such Person
           ---------------
     is engaged in the business of manufacturing, producing, supplying,
     distributing or selling apparel, home furnishings, accessories, specialty
     foods and related products or goods.

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

          "Secured Obligations" has the meaning specified in Section 2 of the
           -------------------
     Security Agreement.

          "Secured Parties" means, collectively, the Agent, the Lender Parties,
           ---------------
     and the other Persons the Obligations owing to which are or are purported
     to be secured by the Collateral under the terms of the Collateral
     Documents.

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
     regulations promulgated and the rulings issued thereunder.

          "Security Agreement" has the meaning specified in Section 5.01(b).
           ------------------

                                       17

<PAGE>

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

          "Special Purpose Subsidiary" means a Domestic Subsidiary of the
           --------------------------
     Borrower that holds certain trademarks and service marks and Subsidiaries
     thereof. Special Purpose Subsidiaries as of the Effective Date are listed
     on Schedule IX hereto.

          "Standby Letter of Credit" means a letter of credit or other credit
           ------------------------
     support instrument issued for the benefit of a Person party to a
     contractual arrangement with the Borrower or any of its Subsidiaries as
     credit support for the obligations of the Borrower or such Subsidiary
     thereunder.

          "Subsidiary" means, with respect to any Person, any corporation,
           ----------
     partnership, trust or other Person of which more than 50% of the
     outstanding capital stock (or similar property right in the case of
     partnerships and trusts and other Persons) having ordinary voting power to
     elect a majority of the board of directors of such corporation (or similar
     governing body or Person with respect to partnerships and trusts and other
     Persons) (irrespective of whether or not at the time capital stock of any
     other class or classes of such corporation shall or might have voting power
     upon the occurrence of any contingency) is at the time directly or
     indirectly owned by such Person, by such Person and one or more other
     Subsidiaries of such Person, or by one or more other Subsidiaries of such
     Person.

          "Subsidiary Borrower" means, as of the date hereof, the Subsidiaries
           -------------------
     of the Borrower listed on Schedule VI.

          "Subsidiary Guaranty" has the meaning specified in Section 5.01(b).
           -------------------

          "Subsidiary Swing Line Obligations" has the meaning specified in
           ---------------------------------
     Section 2.13(b).

          "Subsidiary LC Obligations" has the meaning specified in Section
           -------------------------
     3.13(b).

          "Swing Line Advance" means an advance made by a Swing Line Lender
           ------------------
     pursuant to Section 2.01(b).

          "Swing Line Lender" means each Lender designated as such on the
           -----------------
     signature pages hereto.

          "Swing Line Commitment" means, with respect to each Swing Line Lender
           ---------------------
     at any time, the amount set forth opposite such Swing Line Lender's name on
     Schedule I-A hereto under the caption Swing Line Commitment, as such amount
                                           ---------------------
     may be reduced or increased from time to time

                                       18

<PAGE>

     pursuant to Section 2.04(b), provided, that the aggregate of all Swing Line
                                  --------
     Commitments may not be more than $75,000,000 (or its equivalent in the
     respective Alternative Currencies).

          "Taxes" has the meaning specified in Section 4.02(a).
           -----

          "Termination Date" means, March 6, 2004, or the earlier date of
           ----------------
     termination in whole of the Commitments pursuant to Section 2.04 or 8.01.

          "Total Assets" of any Person means all property, whether real,
           ------------
     personal, tangible, intangible or otherwise, which, in accordance with
     generally accepted accounting principles, should be included in determining
     total assets as shown on the assets portion of a balance sheet of such
     Person.

          "Trade Letter of Credit" means a direct-pay trade or documentary
           ----------------------
     letter of credit issued for the benefit of a vendor in connection with the
     purchase of goods by the Borrower or any of its Subsidiaries in the
     ordinary course of business.

          "Type" refers to the distinction among Advances bearing interest at
           ----
     the Base Rate and Advances bearing interest at the Eurodollar Rate.

          "UCP" has the meaning specified in Section 3.09.
           ---

          "Withdrawal Liability" has the meaning specified in Part I of Subtitle
           --------------------
     E of Title IV of ERISA.

          SECTION 1.02 Computation of Time Periods. In this Agreement in the
          ----------------------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".

          SECTION 1.03 Accounting Terms. All accounting terms not specifically
          -----------------------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 6.01(e).

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

          SECTION 2.01 The Advances. (a) Each Lender severally agrees, on the
          -------------------------
terms and conditions hereinafter set forth, to make Advances to the Borrower
from time to time on any Business Day during the period from the date hereof
until the Termination Date in an aggregate amount not to exceed at any time
outstanding such Lender's Advance Commitment, provided, that, the Lenders shall
                                              --------  ----
not be obligated to, and shall not, make any Advances as part of a Borrowing if
after giving effect to such Borrowing, either (i) the sum of the then
outstanding aggregate amount of all Borrowings, the aggregate Swing Line
Commitment then in effect (computed without giving regard to usage), the then
outstanding Hedge Agreements Exposure and the then outstanding aggregate amount
of all Letter of Credit Liability shall exceed the aggregate amount of the LC
Commitment in effect from time to time, or (ii) the sum of the then outstanding
aggregate amount of all Borrowings, the aggregate Swing Line Commitment then in
effect (computed without giving regard to usage), the then outstanding Hedge
Agreements Exposure and the outstanding aggregate amount of all Letter of Credit
Liability in respect of Standby Letters of Credit shall exceed the aggregate
amount of the Advance Commitment in effect from time to time. Each Borrowing
shall be in an aggregate amount not less than (A) $15,000,000, in the case of a
Borrowing

                                       19

<PAGE>

consisting of Eurodollar Rate Advances and (B) $1,000,000, in the case of a
Borrowing consisting of Base Rate Advances, or, in each case, in integral
multiples of $1,000,000 in excess thereof and shall consist of Advances of the
same Type made on the same day by the Lenders ratably according to their
respective Advance Commitments. Within the limits of each Lender's Advance
Commitment, the Borrower may from time to time borrow, prepay pursuant to
Section 2.10 and reborrow under this Section 2.01.

          (b) The Swing Line Advances. A Subsidiary Borrower may request the
              -----------------------
     respective Swing Line Lender to make, and such Swing Line Lender shall on
     the terms and conditions hereinafter set forth, make Swing Line Advances in
     Dollars or the respective Alternative Currency to such Subsidiary Borrower
     from time to time on any Business Day during the period from the Effective
     Date until the Termination Date (i) in an amount, when combined with all
     Swing Line Advances of all Swing Line Lenders, not to exceed the aggregate
     Swing Line Commitment of all Swing Line Lenders at such time and (ii) in an
     amount, when combined with all Swing Line Advances by such Swing Line
     Lender, not to exceed the Swing Line Commitment of such Swing Line Lender
     at such time. No Swing Line Advance shall be used for the purpose of
     funding the payment of principal of any other Swing Line Advance. Each
     Swing Line Advance shall be in an amount of $100,000 (or its equivalent in
     the respective Alternative Currency) or an integral multiple thereof and
     shall bear interest at a rate to be agreed on by the respective Subsidiary
     Borrower and the respective Swing Line Lender. Within the limits of the
     first sentence of this Section 2.01(b), the respective Subsidiary Borrower
     may borrow under this Section 2.01(b), repay pursuant to Section 2.05(b),
     prepay pursuant to Section 2.10(b) and reborrow under this Section 2.01(b).

          SECTION 2.02 Making the Advances. (a) Each Borrowing shall be made on
          --------------------------------
notice given not later than (i) 12:00 noon (New York City time) on the third
Business Day prior to the date of the proposed Borrowing, if such proposed
Borrowing consists of Eurodollar Rate Advances and (ii) 10:00 A.M. (New York
City time) on the day of such proposed Borrowing, if such proposed Borrowing
consists of Base Rate Advances, by the Borrower to the Agent, which shall give
to each Lender prompt notice thereof by telecopier. Each such notice of a
Borrowing (a "Notice of Borrowing") shall be by telecopier or telephone (and if
              -------------------
by telephone, confirmed immediately in writing), in substantially the form of
Exhibit A hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing and (iv) in the case of a Borrowing comprised of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each Lender shall,
before 2:00 p.m. (New York City time) on the date of such Borrowing, make
available for the account of its Applicable Lending Office to the Agent at its
address referred to in Section 10.02, in same day funds, such Lender's ratable
portion of such Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article V, the Agent will
make such funds available to the Borrower at the Agent's aforesaid address.

               (b) (i) Each Swing Line Advance shall be made on such notice and
     on such terms (subject to the provisions of Section 2.05(b)) as are agreed
     to from time to time between the respective Subsidiary Borrower and the
     respective Swing Line Lender. Upon fulfillment of the applicable conditions
     set forth in Article V, the respective Swing Line Lender will make such
     funds available to the respective Subsidiary Borrower. No later than 30
     days after the end of each calendar quarter, each Swing Line Lender shall
     deliver to the Agent a report as to the outstanding amount of Swing Line
     Advances by such Swing Line Lender as of the end of such quarter and the
     identity of the respective Subsidiary Borrower. In addition, each Swing
     Line Lender will provide such information as to the Swing Line Advances
     made by such Swing Line Lender as is requested by the Agent from time to
     time.

                                       20

<PAGE>

                    (ii) Upon demand by the respective Swing Line Lender, with a
          copy of such demand to the Agent (which shall give prompt notice
          thereof to each Lender), each Lender shall purchase from such Swing
          Line Lender, and such Swing Line Lender shall sell and assign to each
          such Lender, such Lender's ratable share (as determined by reference
          to such Lender's LC Commitment Percentage) of any outstanding Swing
          Line Advance by such Swing Line Lender as of the date of such demand,
          by making available to the respective Swing Line Lender, an amount
          equal to such ratable share. If such Swing Line Advance is denominated
          in an Alternative Currency, the payment to be made by the Lenders
          pursuant to the preceding sentence shall be Converted into Dollars by
          the Swing Line Lender at a rate determined by such Swing Line Lender
          as provided in Section 3.12(a). Each Lender hereby agrees to purchase
          its ratable share of an outstanding Swing Line Advance on (A) the
          Business Day on which demand therefor is made by the respective Swing
          Line Lender so long as notice of such demand is given not later than
          one Business Day prior to such Business Day or (B) the first Business
          Day next succeeding such demand if notice of such demand is given
          after such time. The respective Subsidiary Borrower, hereby agrees to
          each such sale and assignment. Upon any such assignment by the
          respective Swing Line Lender to any Lender of a portion of a Swing
          Line Advance, the respective Swing Line Lender represents and warrants
          to such Lender that such Swing Line Lender is the legal and beneficial
          owner of such interest being assigned by it, but makes no other
          representation or warranty and assumes no responsibility with respect
          to such Swing Line Advance, the Loan Documents or any Loan Party. If
          and to the extent that any Lender shall not have so made its ratable
          share of any applicable Swing Line Advance available to the respective
          Swing Line Lender in accordance with the foregoing provisions of this
          Section 2.02(b)(ii), such Lender hereby agrees to pay to the
          respective Swing Line Lender forthwith on demand the amount of its
          ratable share, together with interest thereon, for each day from the
          date of demand by such Swing Line Lender therefor until the date such
          amount is paid to such Swing Line Lender, at the Federal Funds Rate.
          If such Lender shall pay to such Swing Line Lender the amount of its
          ratable share on any Business Day, such amount so paid in respect of
          principal shall constitute a Swing Line Advance made by such Lender on
          such Business Day for all purposes of this Agreement, and the
          outstanding principal amount of the Swing Line Advance made by the
          respective Swing Line Lender shall be reduced by such amount on such
          Business Day.

                    (iii) The obligation of each Lender to purchase its ratable
          share of each outstanding Swing Line Advance upon demand by the
          respective Swing Line Lender therefor pursuant to clause (ii) of this
          Section 2.02(b) shall be absolute, unconditional and irrevocable, and
          shall be made strictly in accordance with the terms of clause (ii) of
          this Section 2.02(b) under all circumstances, including, without
          limitation, the following circumstances:

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

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

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

                                       21

<PAGE>

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

               (E)  the failure of the respective Subsidiary Borrower to comply
                    with the applicable conditions set forth in Article V.

          (c) Anything in subsection (a) above to the contrary notwithstanding,
     the Borrower may not select Eurodollar Rate Advances for any Borrowing if
     the aggregate amount of such Borrowing is less than $1,000,000 multiplied
     by the number of Lenders.

          (d) Each Notice of Borrowing shall be irrevocable and binding on the
     Borrower or the respective Subsidiary Borrower, as the case may be. In the
     case of any Borrowing which the related Notice of Borrowing specifies is to
     be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
     Lender against any loss, cost or expense incurred by such Lender as a
     result of any failure to fulfill on or before the date specified in such
     Notice of Borrowing for such Borrowing the applicable conditions set forth
     in Article V, including, without limitation, any loss (including loss of
     anticipated profits), cost or expense incurred by reason of the liquidation
     or reemployment of deposits or other funds acquired by such Lender to fund
     the Eurodollar Rate Advance to be made by such Lender as part of such
     Borrowing when such Advance, as a result of such failure, is not made on
     such date.

          (e) Unless the Agent shall have received notice from a Lender (i) in
     the case of any Borrowing consisting of (A) Eurodollar Rate Advances or (B)
     Base Rate Advances for which the Notice of Borrowing is given other than on
     the date thereof, prior to the date of such Borrowing or (ii) in the case
     of any Borrowing consisting of Base Rate Advances for which the Notice of
     Borrowing is given on the date thereof, prior to the time at which such
     Lender is required to fund such Borrowing, which notice shall in either
     case state that such Lender will not make available to the Agent such
     Lender's ratable portion of such Borrowing, the Agent may assume that such
     Lender has made such portion available to the Agent on the date of such
     Borrowing in accordance with subsection (a) of this Section 2.02 and the
     Agent may, in reliance upon such assumption, make available to the Borrower
     or the respective Subsidiary Borrower on such date a corresponding amount.
     If and to the extent that such Lender shall not have so made such ratable
     portion available to the Agent, such Lender and the Borrower or the
     respective Subsidiary Borrower severally agree to repay to the Agent
     forthwith on demand such corresponding amount together with interest
     thereon, for each day from the date such amount is made available to the
     Borrower or the respective Subsidiary Borrower until the date such amount
     is repaid to the Agent at (x) in the case of the Borrower or the respective
     Subsidiary Borrower, the interest rate applicable at the time to Advances
     comprising such Borrowing and (y) in the case of such Lender, the Federal
     Funds Rate. If such Lender shall repay to the Agent such corresponding
     amount, such amount so repaid shall constitute such Lender's Advance as
     part of such Borrowing for purposes of this Agreement.

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

          (g) The Borrower shall, if requested by any Lender, execute and
     deliver a promissory note, in substantially the form of Exhibit B hereto,
     payable to the order of such Lender in an

                                       22

<PAGE>

     original principal amount equal to such Lender's Advance Commitment, duly
     executed by the Borrower.

          SECTION 2.03 Fees. (a) Facility Fee. The Borrower agrees to pay to the
          -----------------      ------------
Agent for the account of each Lender a facility fee, from the date hereof in the
case of each initial Lender and from the effective date specified in the
Assumption Agreement or in the Assignment and Acceptance, respectively, pursuant
to which it became Lender in the case of each other Lender until the Termination
Date at a rate per annum equal to the Applicable Facility Fee in effect from
time to time, on the amount of such Lender's Advance Commitment (computed
without giving effect to any usage of the Advance Commitment of such Lender),
payable quarterly in arrears on the last day of each January, April, July and
October and on the Termination Date.

          (b) Utilization Fee. The Borrower agrees to pay to the Agent for the
              ---------------
     account of each Lender a utilization fee, accruing, during all periods from
     and after the date hereof when the aggregate amount of outstanding Advances
     (including any outstanding Swing Line Advances) exceeds 25% of the
     aggregate Advance Commitments (without regard to any usage thereof), at the
     rate of 0.25% per annum on the aggregate amount of Advances (including any
     Swing Line Advances) by such Lender outstanding from time to time during
     such periods, payable quarterly in arrears on the last day of each January,
     April, July and October and on the Termination Date.

          (c) Other Fees. The Borrower hereby agrees to pay the fees and charges
              ----------
     referred to in that certain letter agreement, dated as of the date hereof,
     among the Borrower, the Issuing Banks and the Agent.

          SECTION 2.04 Reduction of the Advance Commitments; Reduction and
          ----------------------------------------------------------------
Increase of the Swing Line Commitments. (a) The Borrower shall have the right,
--------------------------------------
upon at least three Business Days' notice to the Agent, to irrevocably terminate
in whole or reduce ratably in part the unused portions of the respective Advance
Commitments of the Lenders, provided, that, after giving effect to such
                            --------  ----
reduction, the Advance Commitments are not less than the sum of the aggregate
amount of all Letter of Credit Liability in respect of then outstanding Standby
Letters of Credit, the aggregate Swing Line Commitment then in effect (computed
without giving regard to usage), and the then outstanding amount of all
Borrowings; provided, further, that, each partial reduction shall be in the
            --------  -------  ----
aggregate amount of $25,000,000 or an integral multiple of $1,000,000 in excess
thereof.

          (b) (i) Not more frequently than four times in any calendar year
     starting on the Effective Date, the Borrower shall have the right, upon at
     least three Business Days' notice to the Agent and the respective Swing
     Line Lenders to irrevocably terminate in whole or reduce in part the unused
     portion of the Swing Line Commitment of one or more Swing Line Lenders or
     increase the amount of any Swing Line Commitment; provided, that, after
                                                       --------  ----
     giving effect to any such reduction, the Swing Line Commitment of any Swing
     Line Lender is not less than the outstanding amount of all Swing Line
     Advances by such Swing Line Lender; provided, further, that, each partial
                                         --------  -------  ----
     reduction or increase shall be in the amount of $5,000,000 or an integral
     multiple of $1,000,000 in excess thereof (or in each case, the equivalent
     amount in the respective Alternative Currency) or as otherwise agreed to by
     the respective Swing Line Lender, provided, further, that, the aggregate
                                       --------  -------  ----
     amount of all Swing Line Commitments, after giving effect to any increase
     thereof proposed herein, shall not exceed $75,000,000 and at the time of
     any proposed increase in any Swing Line Commitment and after giving effect
     thereto, no event has occurred and is continuing which constitutes an Event
     of Default or Default and, provided, further, that, the Agent shall record
                                --------  -------  ----
     any such increase or decrease in a Swing Line Commitment in the Register;
     and that the amount of any increase or decrease in the aggregate Swing Line
     Commitment will decrease or increase, respectively, the aggregate Issuing
     Commitments by such amount, and with

                                       23

<PAGE>

     such amount to be applied to ratably decrease or increase the Issuing
     Commitment of each Issuing Bank on the basis of their then existing Issuing
     Commitments, and the Agent shall promptly after each such increase or
     decrease notify the Borrower and each Issuing Bank of the Issuing
     Commitment then in effect of each Issuing Bank.

                    (ii) The Borrower may at any time, upon at least 2 Business
          Days' prior written notice to the respective Swing Line Lender and the
          Agent, increase the Swing Line Commitment of a Swing Line Lender and
          at the same time reduce by an equivalent amount the Swing Line
          Commitment of one or more of the other Swing Line Lenders; provided,
                                                                     --------
          that such notice is consented to by the Swing Line Lender whose
          ----
          commitment is increased and provided, further, that the Agent shall
                                      --------  -------
          record each such increase and decrease of the Swing Line Commitment of
          the respective Swing Line Bank in the Register, provided, further,
                                                          --------  -------
          that after giving effect to such reduction of a Swing Line Lender's
          Swing Line Commitment, such Swing Line Commitment is not less than the
          outstanding amount of all Swing Line Advances of such Swing Line
          Lender.

          SECTION 2.05 Repayment of Advances. (a) The Borrower shall repay in
          ----------------------------------
full the principal amount of each Advance made pursuant to Section 2.01(a) owing
to each Lender, together with accrued interest and fees thereon, on March 1,
2003, and shall not be permitted to request any Advance for ten days thereafter,
provided, that if a certified resolution (in form and substance satisfactory to
--------
the Agent) of the board of directors of the Borrower authorizing it to incur
indebtedness hereunder to the Termination Date (or other evidence reasonably
satisfactory to the Agent with respect to the Borrower's ability to incur such
indebtedness) is delivered to the Agent prior to February 15, 2003, then the
Borrower shall be permitted to request Advances hereunder on and after March 1,
2003 and shall repay in full the principal amount of each such Advance, together
with accrued interest and fees thereon, on the Termination Date.

          (b) Swing Line Advances. The respective Subsidiary Borrower shall
              -------------------
     repay the respective Swing Line Lender and each Lender that has made a
     Swing Line Advance on the earlier of (i) the maturity date for each Swing
     Line Advance (which maturity shall be no later than 30 days after the date
     of such Advance) and (ii) the Termination Date, the principal amount of
     each such Swing Line Advance made by the Swing Line Lender and each such
     Lender and outstanding on such date.

          SECTION 2.06 Interest on Advances. The Borrower or the respective
          ---------------------------------
Subsidiary Borrower, as the case may be, shall pay interest on the unpaid
principal amount of each Advance made by each Lender from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:

          (a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
              ------------------
     per annum equal at all times to the sum of (x) the Base Rate in effect from
     time to time plus (y) the respective Applicable Margin in effect from time
     to time, payable quarterly on the last day of each April, July, October,
     and January and on the date such Base Rate Advance shall be Converted or
     paid in full; provided, that, any amount of principal which is not paid
                   --------  ----
     when due (whether at stated maturity, by acceleration or otherwise) shall
     bear interest, from the date on which such amount is due until such amount
     is paid in full, payable on demand, at a rate per annum equal at all times
     to 2% per annum above the rate per annum required to be paid on such
     Advance immediately prior to the date on which such principal amount become
     due.

          (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
              ------------------------
     Advance, a rate per annum equal at all times during each Interest Period
     for such Advance to the sum of (x) the

                                       24

<PAGE>

     Eurodollar Rate for such Interest Period plus (y) the respective Applicable
                                              ----
     Margin in effect from time to time, payable on the last day of such
     Interest Period and, if such Interest Period has a duration of more than
     three months, on each day which occurs during such Interest Period every
     three months from the first day of such Interest Period; provided, that,
                                                              --------  ----
     any amount of principal which is not paid when due (whether at stated
     maturity, by acceleration or otherwise) shall bear interest, from the date
     on which such amount is due until such amount is paid in full, payable on
     demand, at a rate per annum equal at all times to 2% per annum above the
     rate per annum required to be paid on such Advance (as if such Advance were
     a Base Rate Advance) immediately prior to the date on which such principal
     amount became due.

          (c) Swing Line Advances. If such Advance is a Swing Line Advance, a
              -------------------
     rate per annum as agreed upon by the respective Swing Line Lender and
     respective Subsidiary Borrower.

          SECTION 2.07 Additional Interest on Eurodollar Rate Advances. The
          ------------------------------------------------------------
Borrower shall pay to each Lender, so long as such Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each Eurodollar Rate Advance of such Lender, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
Eurodollar Rate for the Interest Period for such Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period,
payable on each date on which interest is payable on such Advance. Such
additional interest shall be determined by such Lender and notified to the
Borrower through the Agent.

          SECTION 2.08 Interest Rate Determination. (a) Each Reference Bank
          ----------------------------------------
agrees to furnish to the Agent timely information for the purpose of determining
the Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Agent for the purpose of determining such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.06(a) or (b), and the
applicable rate, if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section 2.06(b).

          (b) If, with respect to any Eurodollar Rate Advances, the Majority
     Lenders notify the Agent that the Eurodollar Rate for any Interest Period
     for such Advances will not adequately reflect the cost to such Majority
     Lenders of making, funding or maintaining their respective Eurodollar Rate
     Advances for such Interest Period, the Agent shall forthwith so notify the
     Borrower and the Lenders, whereupon:

                    (i) each outstanding Eurodollar Rate Advance will
          automatically, on the last day of the then existing Interest Period
          therefor, Convert into a Base Rate Advance, and

                    (ii) the obligation of the Lenders to make, or to Convert
          Advances into, Eurodollar Rate Advances shall be suspended until the
          Agent shall notify the Borrower and the Lenders that the circumstances
          causing such suspension no longer exist.

          (c) If the Borrower shall fail to select the duration of any Interest
     Period for any Eurodollar Rate Advances in accordance with the provisions
     contained in the definition of "Interest Period" in Section 1.01, the Agent
                                     ---------------
     will forthwith so notify the Borrower and the Lenders

                                       25

<PAGE>

     and such Advances will automatically, on the last day of the then existing
     Interest Period therefor, Convert into Base Rate Advances.

          (d) On the date on which the aggregate unpaid principal amount of
     Advances comprising any Borrowing shall be reduced, by payment or
     prepayment or otherwise, to less than $1,000,000 multiplied by the number
     of Lenders, such Advances shall, if they are Advances of a Type other than
     Base Rate Advances, automatically Convert on the last day of the Interest
     Period with respect to such Advance into Base Rate Advances, and on and
     after such date the right of the Borrower to Convert such Advances into
     Advances of a Type other than Base Rate Advances shall terminate; provided,
                                                                       --------
     however, that if and so long as each such Advance shall be of the same Type
     -------
     and have the same Interest Period as Advances comprising another Borrowing
     or other Borrowings, and the aggregate unpaid principal amount of all such
     Advances shall equal or exceed $1,000,000 multiplied by the number of
     Lenders, the Borrower shall have the right to continue all such Advances
     as, or to Convert all such Advances into, Advances of such Type having such
     Interest Period.

          (e) Upon the occurrence and during the continuance of any Event of
     Default, (i) each Eurodollar Rate Advance will automatically, on the last
     day of the then existing Interest Period therefor, convert into a Base Rate
     Advance and (ii) the obligations of the Lenders to make, or to convert
     Advances into, Eurodollar Rate Advances will be suspended.

          (f) If fewer than two Reference Banks furnish timely information to
     the Agent for determining the Eurodollar Rate for any Eurodollar Rate
     Advances,

                    (i) the Agent shall forthwith notify the Borrower and the
          Lenders that the interest rate cannot be determined for such
          Eurodollar Rate Advances,

                    (ii) each such Advance will automatically, on the last day
          of the then existing Interest Period therefor, Convert into a Base
          Rate Advance (or if such Advance is then a Base Rate Advance, will
          continue as a Base Rate Advance), and

                    (iii) the obligation of the Lenders to make, or to Convert
          Advances into, Eurodollar Rate Advances shall be suspended until the
          Agent shall notify the Borrower and the Lenders that the circumstances
          causing such suspension no longer exist.

          SECTION 2.09 Voluntary Conversion of Advances. The Borrower may on any
          ---------------------------------------------
Business Day, upon notice given to the Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all
Advances of one Type comprising the same Borrowing into Advances of another
Type; provided, however, that any Conversion of any Eurodollar Rate Advances
      --------  -------
into Advances of another Type shall be made on, and only on, the last day of an
Interest Period for such Eurodollar Rate Advances. Each such notice of a
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the Interest Period
for each such Advance.

          SECTION 2.10 Prepayments of Advances.
          ------------------------------------

          (a) The Borrower may (i) upon at least two Business Days', in the case
     of Eurodollar Rate Advances and (ii) on the same Business Day, in the case
     of Base Rate Advances, notice to the Agent (to be received by the Agent
     prior to 12:00 noon (New York City time)) stating the

                                       26

<PAGE>

     proposed date and aggregate principal amount of the prepayment, and if such
     notice is given the Borrower shall, prepay the outstanding principal
     amounts of the Advances comprising part of the same Borrowing in whole or
     ratably in part, together with accrued interest to the date of such
     prepayment on the principal amount prepaid (provided that any prepayment in
     connection with the termination and refinancing of this Agreement may be
     conditioned on the closing of such refinancing); provided, however, that
                                                      --------  -------
     (x) each partial prepayment shall be in an aggregate principal amount not
     less than $15,000,000 if made with respect to Eurodollar Rate Advances, or
     $1,000,000, if made with respect to Base Rate Advances, and in each case in
     $1,000,000 integral multiples in excess thereof and (y) in the case of any
     such prepayment of a Eurodollar Rate Advance, the Borrower shall be
     obligated to reimburse the Lenders in respect thereof pursuant to Section
     10.04(b).

          (b) The right of any Subsidiary Borrower to prepay any Swing Line
     Advance shall be as set forth in an agreement between the respective Swing
     Line Lender and the respective Subsidiary Borrower.

          SECTION 2.11 Increased Costs. (a) If, due to either (i) the
          ----------------------------
introduction of or any change at any time after the date of this Agreement
(other than any change by way of imposition or increase of reserve requirements
in the case of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance after the date of this Agreement with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost (other than an increase
in taxes, which increase is dealt with exclusively in Article IV) to any Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Advances,
then the Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost; provided, that, the Borrower shall have no obligation to
                --------  ----
reimburse any Lender for increased costs incurred more than 60 days prior to the
date of such demand. A certificate as to the amount of such increased cost
setting forth the basis for the calculation of such increased costs, submitted
to the Borrower and the Agent by such Lender, shall be conclusive and binding
for all purposes, absent manifest error.

          (b) If, at any time after the date of this Agreement, any Lender
     determines that compliance with any law or regulation or any guideline or
     request from any central bank or other governmental authority (whether or
     not having the force of law) affects or would affect the amount of capital
     required or expected to be maintained by such Lender or any corporation
     controlling such Lender and that the amount of such capital is increased by
     or based upon the existence of such Lender's commitment to lend hereunder
     and other commitments of this type, then, upon demand by such Lender (with
     a copy of such demand to the Agent), the Borrower shall immediately pay to
     the Agent for the account of such Lender, from time to time as specified by
     such Lender, additional amounts sufficient to compensate such Lender or
     such corporation in the light of such circumstances, to the extent that
     such Lender reasonably determines such increase in capital to be allocable
     to the existence of such Lender's commitment to lend hereunder; provided,
                                                                     --------
     that, the Borrower shall have no obligation to pay such compensatory
     ----
     amounts that relate to an actual increase in the capital of such Lender
     undertaken by such Lender more than 60 days prior to the date of such
     demand. A certificate as to such amounts submitted to the Borrower and the
     Agent by such Lender and setting forth the basis for the calculation of
     such amount shall be conclusive and binding for all purposes, absent
     manifest error.

          (c) Without affecting its rights under Sections 2.11(a) or 2.11(b) or
     any other provision of this Agreement, each Lender agrees that if there is
     any increase in any cost to or reduction in any amount receivable by such
     Lender with respect to which the Borrower would be

                                       27

<PAGE>

     obligated to compensate such Lender pursuant to Sections 2.11(a) or
     2.11(b), such Lender shall use reasonable efforts to select an alternative
     Applicable Lending Office which would not result in any such increase in
     any cost to or reduction in any amount receivable by such Lender; provided,
                                                                       --------
     however, that no Lender shall be obligated to select an alternative
     -------
     Applicable Lending Office if such Lender determines that (i) as a result of
     such selection such Lender would be in violation of any applicable law,
     regulation, treaty, or guideline, or would incur additional costs or
     expenses or (ii) such selection would be inadvisable for regulatory reasons
     or inconsistent with the interests of such Lender.

          (d) Without prejudice to the survival of any other agreement of the
     Borrower hereunder, the agreements and obligations of the Borrower
     contained in this Section 2.11 shall survive the payment in full (after the
     Termination Date) of all Obligations.

          SECTION 2.12 Illegality. (a) Notwithstanding any other provision of
          -----------------------
this Agreement, if any Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful or impossible, or any central bank or other governmental authority
asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to fund or
maintain Eurodollar Rate Advances hereunder, (i) the obligation of the Lenders
to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances of all Lenders then
outstanding, together with interest accrued thereon, unless the Borrower, within
five Business Days of notice from the Agent, Converts all Eurodollar Rate
Advances of all Lenders then outstanding into Advances of another Type in
accordance with Section 2.09.

          (b) Without affecting its rights under Section 2.12(a) or under any
     other provision of this Agreement, each Lender agrees that if it becomes
     unlawful or impossible for such Lender to make, maintain or fund its
     Eurodollar Rate Advances as contemplated by this Agreement, such Lender
     shall use reasonable efforts to select an alternative Applicable Lending
     Office from which such Lender may maintain and give effect to its
     obligations under this Agreement with respect to making, funding and
     maintaining such Eurodollar Rate Advances; provided, however, that no
                                                --------  -------
     Lender shall be obligated to select an alternative Applicable Lending
     Office if such Lender determines that (i) as a result of such selection
     such Lender would be in violation of any applicable law, regulation, or
     treaty, or would incur additional costs or expenses or (ii) such selection
     would be inadvisable for regulatory reasons or inconsistent with the
     interests of such Lender.

          SECTION 2.13 Borrower Guaranty.
          ------------------------------

          (a) Generally. The Swing Line Lenders may, from time to time, make
              ---------
     Swing Line Advances for the account of each Subsidiary Borrower as provided
     herein, the Hedge Banks may, from time to time, enter into Hedge Agreements
     with one or more Hedge Subsidiaries and the Operating Lenders now have and
     hereafter may, from time to time, extend Operating Indebtedness to one or
     more Subsidiaries of the Borrower, provided, that, the repayment and other
                                        --------  ----
     obligations of each such Subsidiary Borrower in respect of such Swing Line
     Advances and each Hedge Subsidiary in respect of such Hedge Agreements and
     of each such Subsidiary in respect of Operating Indebtedness are and remain
     unconditionally guaranteed by the Borrower pursuant to this Section 2.13.

          (b) Guaranty.
              --------

                                       28

<PAGE>

                    (i) The Borrower hereby unconditionally and irrevocably
          guarantees the punctual payment when due, whether at stated maturity,
          by acceleration or otherwise, of all obligations of the Subsidiary
          Borrowers now or hereafter existing under this Agreement with respect
          to the Swing Line Advances issued for the account of any of the
          Subsidiary Borrowers, including any extensions, modifications,
          substitutions, amendments and renewals thereof, whether for repayment
          obligations, interest, fees, expenses or otherwise (such obligations
          being the "Subsidiary Swing Line Obligations"), and agrees to pay any
                     ---------------------------------
          and all expenses (including reasonable counsel fees and expenses in
          accordance with Section 10.04 hereof) incurred by the Swing Line
          Lenders or the Lenders in enforcing any rights hereunder with respect
          to the Subsidiary Swing Line Obligations. Without limiting the
          generality of the foregoing, the Borrower's liability shall extend to
          all amounts which constitute part of the Subsidiary Swing Line
          Obligations and would be owed by any Subsidiary Borrower to the Swing
          Line Lenders or the Lenders hereunder, or under the Swing Line
          Advances issued for the account of a Subsidiary Borrower, but for the
          fact that they are unenforceable or not allowable due to the existence
          of a bankruptcy, reorganization or similar proceeding involving such
          Subsidiary Borrower.

                    (ii) The Borrower hereby unconditionally and irrevocably
          guarantees the punctual payment when due of all obligations of the
          Hedge Subsidiaries now or hereafter existing under any Hedge
          Agreements entered into by a Hedge Subsidiary with a Hedge Bank,
          including any extensions, modifications, substitutions, amendments and
          renewals thereof (such obligations being the "Hedge Subsidiary
                                                        ----------------
          Obligations"), and agrees to pay any and all expenses (including
          -----------
          reasonable counsel fees and expenses in accordance with Section 10.04
          hereof) incurred by the Hedge Banks in enforcing any rights thereunder
          with respect to the Hedge Subsidiary Obligations. Without limiting the
          generality of the foregoing, the Borrower's liability shall extend to
          all amounts which constitute part of the Hedge Subsidiary Obligations
          and would be owed by any Hedge Subsidiary to the respective Hedge Bank
          thereunder, but for the fact that they are unenforceable or not
          allowable due to the existence of a bankruptcy, reorganization or
          similar proceeding involving such Hedge Subsidiary.

                    (iii) The Borrower hereby unconditionally and irrevocably
          guarantees the punctual payment when due of all obligations of
          Subsidiaries of the Borrower now or hereafter existing under any
          Operating Indebtedness Agreement entered into by such Subsidiary with
          an Operating Lender, including any extensions, modifications,
          substitutions, amendments and renewals thereof such obligations being
          the "Subsidiary Operating Indebtedness Obligations", and agrees to pay
               ---------------------------------------------
          any and all expenses (including reasonable counsel fees and expenses
          in accordance with Section 10.04 hereof) incurred by the Operating
          Lender in enforcing any rights thereunder with respect to the
          Subsidiary Operating Indebtedness Obligations. Without limiting the
          generality of the foregoing, the Borrower's liability shall extend to
          all amounts which constitute part of the Subsidiary Operating
          Indebtedness Obligations and would be owed by any such Subsidiary to
          the respective Operating Lender thereunder, but for the fact that they
          are unenforceable or not allowable due to the existence of a
          bankruptcy, reorganization or similar proceeding involving such
          Subsidiary.

          (c) Guaranty Absolute. The Borrower guarantees that the Subsidiary
              -----------------
     Swing Line Obligations, Hedge Subsidiary Obligations and Subsidiary
     Operating Indebtedness Obligations will be paid strictly in accordance with
     their respective terms, regardless of any law, regulation or order now or
     hereafter in effect in any jurisdiction affecting any of such terms or the
     rights of the

                                       29

<PAGE>

     Swing Line Lenders, the Hedge Banks or the Operating Lenders, respectively,
     with respect thereto. The obligations of the Borrower hereunder are
     independent of the Subsidiary Swing Line Obligations, Hedge Subsidiary
     Obligations and Subsidiary Operating Indebtedness Obligations and a
     separate action or actions may be brought and prosecuted against the
     Borrower to enforce the guaranty contained in this Section 2.13,
     irrespective of whether any action is brought against any Subsidiary
     Borrower or Hedge Subsidiary or Subsidiary of the Borrower party to an
     Operating Indebtedness Agreement or whether any Subsidiary Borrower or
     Hedge Subsidiary or such Subsidiary is joined in any such action or
     actions. The liability of the Borrower under the guaranty contained in this
     Section 2.13 shall be absolute and unconditional irrespective of:

                    (i) any lack of validity or enforceability of any of the
          Subsidiary Swing Line Obligations, Hedge Subsidiary Obligations,
          Subsidiary Operating Indebtedness Obligations or any agreement or
          instrument relating thereto against any Swing Line Borrower, Hedge
          Subsidiary, such Subsidiary of the Borrower or any other Person;

                    (ii) any change in the time, manner or place of payment of,
          or in any other term of, all or any of the Subsidiary Swing Line
          Obligations or of the Hedge Subsidiary Obligations or of the
          Subsidiary Operating Indebtedness Obligations or any other amendment
          or waiver of or any consent to departure with respect to Swing Line
          Advances issued for the account of a Subsidiary Borrower or with
          respect to Hedge Agreements entered into by any Hedge Subsidiary or
          with respect to Operating Indebtedness Agreements entered into by any
          such Subsidiary of the Borrower including, without limitation, any
          increase in the Subsidiary Swing Line Obligations resulting from the
          Issuance of Swing Line Advances beyond the aggregate limitation
          specified in Section 2.01 to any and all Subsidiary Borrowers or
          otherwise;

                    (iii) any taking, exchange, release or non-perfection of any
          collateral, or any taking, release or amendment or waiver of or
          consent to departure from any other guaranty, for all or any of the
          Subsidiary Swing Line Obligations or of the Hedge Subsidiary
          Obligations or of the Subsidiary Operating Indebtedness Obligations;

                    (iv) any manner of application of collateral, or proceeds
          thereof, to all or any of the Subsidiary Swing Line Obligations or of
          the Hedge Subsidiary Obligations or of the Subsidiary Operating
          Indebtedness Obligations, or any manner of sale or other disposition
          of any collateral for all or any of the Subsidiary Swing Line
          Obligations or of the Hedge Subsidiary Obligations or of the
          Subsidiary Operating Indebtedness Obligations or any other assets of a
          Subsidiary Borrower or a Hedge Subsidiary or such Subsidiary of the
          Borrower;

                    (v) any change, restructuring or termination of the
          corporate structure or existence of a Subsidiary Borrower or a Hedge
          Subsidiary or such Subsidiary of the Borrower or any Subsidiary
          Borrower's or any Hedge Subsidiary's or any such Subsidiary's lack of
          corporate power or authority; or

                    (vi) any other circumstance which might otherwise constitute
          a defense available to, or a discharge of, a third party guarantor.

The guaranty provided in this Section 2.13 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Subsidiary Swing Line Obligations or the Hedge Subsidiary

                                       30

<PAGE>

Obligations or the Subsidiary Operating Indebtedness Obligations is rescinded or
must otherwise be returned by any Swing Line Lender, Lender, any Hedge Bank or
any Operating Lender, respectively, upon the insolvency, bankruptcy or
reorganization of a Subsidiary Borrower, a Hedge Subsidiary or any such
Subsidiary of the Borrower, as the case may be, or otherwise, all as though such
payment had not been made.

          (d) Waivers. The Borrower hereby waives, to the extent permitted by
              -------
     applicable law:

                    (i) any requirement that any Swing Line Lender or any Hedge
          Bank or any Operating Lender secure or insure any security interest or
          lien or any property subject thereto or exhaust any right or take any
          action against any Subsidiary Borrower or any Hedge Subsidiary, any
          such Subsidiary of the Borrower or any other Person or any collateral;

                    (ii) any defense arising by reason of any claim or defense
          based upon an election of remedies by any Swing Line Lender, any Hedge
          Bank or any Operating Lender (including, without limitation, an
          election to nonjudicially foreclose on any real or personal property
          collateral) which in any manner impairs, reduces, releases or
          otherwise adversely affects its subrogation, reimbursement or
          contribution rights or other rights to proceed against any Subsidiary
          Borrower, Hedge Subsidiary, any such Subsidiary of the Borrower or any
          other Person or any collateral;

                    (iii) any defense arising by reason of the failure of any
          Subsidiary Borrower, any Hedge Subsidiary or any such Subsidiary of
          the Borrower to properly execute any letter of credit application and
          agreement or otherwise comply with applicable legal formalities;

                    (iv) any defense or benefits that may be derived from
          California Civil Code Sections 2808, 2809, 2810, 2819, 2845 or 2850,
          or California Code of Civil Procedure Sections 580a, 580d or 726, or
          comparable provisions of the laws of any other jurisdiction and all
          other suretyship defenses it would otherwise have under the laws of
          California or any other jurisdiction;

                    (v) any duty on the part of any Swing Line Lender, any Hedge
          Bank or any Operating Lender to disclose to the Borrower any matter,
          fact or thing relating to the business, operation or condition of any
          Subsidiary Borrower, any Hedge Subsidiary, any such Subsidiary of the
          Borrower, or its respective assets now known or hereafter known by any
          Swing Line Lender, any Hedge Bank or any Operating Lender;

                    (vi) all benefits of any statute of limitations affecting
          the Borrower's liability under or the enforcement of the guaranty
          provided in this Section 2.13 or any of the Subsidiary Swing Line
          Obligations, Hedge Subsidiary Obligations, or the Subsidiary Operating
          Indebtedness Obligations or any collateral;

                    (vii) all setoffs and counterclaims;

                    (viii) promptness, diligence, presentment, demand for
          performance and protest;

                                       31

<PAGE>

                    (ix) notice of nonperformance, default, acceleration,
          protest or dishonor;

                    (x) except for any notice otherwise required by applicable
          laws that may not be effectively waived by the Borrower, notice of
          sale or other disposition of any collateral; and

                    (xi) notice of acceptance of the guaranty provided in this
          Section 2.13 and of the existence, creation or incurring of new or
          additional Subsidiary Swing Line Obligations, Hedge Subsidiary
          Obligations or Subsidiary Operating Indebtedness Obligations.

          (e) Notwithstanding any other provision of this Agreement to the
     contrary, it is understood and agreed by the parties hereto and by any
     Hedge Bank seeking to enforce the guaranty under this Section 2.13 or to
     otherwise obtain any benefit under this Section 2.13, that:

               (A)  to the extent that the Borrower is required to make any
                    payment with respect to the obligations of a Hedge
                    Subsidiary pursuant to the guaranty contained in this
                    Section 2.13, such payment shall be governed by the
                    provisions of Section 4.02 of this Agreement by treating the
                    recipient of such payment as a Lender Party that first
                    became a party to this Agreement immediately prior to the
                    receipt of such payment; and

               (B)  (i) any such Hedge Bank shall be bound by all the provisions
                    of this Section 2.13, (ii) the Obligations under this
                    Agreement in favor of the Lender Parties with respect to the
                    Credit Agreement and the Obligations guaranteed under this
                    Section 2.13 in favor of the Hedge Banks with respect to the
                    Hedge Agreements entered into by the Hedge Subsidiaries are
                    separate, (iii) no Lender Party shall have any claim
                    hereunder or under any other Loan Document solely as a
                    result of a claim by any Hedge Bank under this Section 2.13
                    or the Subsidiary Guaranty, and no Hedge Bank shall have any
                    claim under this Section 2.13 solely as a result of a claim
                    by any Lender Party hereunder or under any other Loan
                    Document or by any other Hedge Bank under this Section 2.13
                    or the Subsidiary Guaranty, and (iv) with respect to the
                    Obligations under the Hedge Agreements entered into by the
                    Hedge Subsidiaries, the guaranty under this Section 2.13
                    shall operate in favor of only those Lenders or Affiliates
                    of a Lender which are Hedge Banks Lenders prior to the
                    termination of this Agreement, and then only with respect to
                    the Obligations incurred under Hedge Agreements with Hedge
                    Subsidiaries in effect prior to such termination.

          (f) Notwithstanding any other provision of this Agreement to the
     contrary, it is understood and agreed by the parties hereto and by any
     Operating Lender seeking to enforce the guaranty under this Section 2.13 or
     to otherwise obtain any benefit under this Section 2.13, that:

               (A)  to the extent that the Borrower is required to make any
                    payment with respect to the obligations of any of its
                    Subsidiaries pursuant to the guaranty contained in this
                    Section 2.13, such payment shall be governed by the
                    provisions of Section 4.02 of this Agreement by treating the

                                       32

<PAGE>

                    recipient of such payment as a Lender Party that first
                    became a party to this Agreement immediately prior to the
                    receipt of such payment; and

               (B)  (i) any such Operating Lender shall be bound by all the
                    provisions of this Section 2.13, (ii) the Obligations under
                    this Agreement in favor of the Lender Parties with respect
                    to the Credit Agreement and the Obligations guaranteed under
                    this Section 2.13 in favor of the Operating Lenders with
                    respect to the Operating Indebtedness Agreements entered
                    into by the Subsidiaries of the Borrower are separate, (iii)
                    no Lender Party shall have any claim hereunder or under any
                    other Loan Document solely as a result of a claim by any
                    Operating Lender under this Section 2.13 or the Subsidiary
                    Guaranty, and no Operating Lender shall have any claim under
                    this Section 2.13 solely as a result of a claim by any
                    Lender Party hereunder or under any other Loan Document or
                    by any other Operating Lender under this Section 2.13 or the
                    Subsidiary Guaranty, and (iv) with respect to the
                    Obligations under the Operating Indebtedness Agreements
                    entered into by the Subsidiaries of the Borrower, the
                    guaranty under this Section 2.13 shall operate in favor of
                    only those Lenders or Affiliates of a Lender which are
                    Operating Lenders prior to the termination of this
                    Agreement, and then only with respect to the Obligations
                    incurred under Operating Indebtedness Agreements with such
                    Subsidiaries in effect prior to such termination.

                                   ARTICLE III

                         AMOUNT AND TERMS OF LETTERS OF
                        CREDIT AND PARTICIPATIONS THEREIN

          SECTION 3.01 Letters of Credit. (a) Each Issuing Bank agrees, on the
          ------------------------------
terms and conditions hereinafter set forth, to Issue for the account of the
Borrower or any LC Subsidiary, one or more Letters of Credit (in an aggregate
amount not in excess of the Issuing Commitment of such Issuing Bank) from time
to time during the period from the date of this Agreement until the Termination
Date in an aggregate undrawn amount not to exceed at any time the LC Commitments
of the Lenders in effect at such time (inclusive of the Dollar equivalent of
Letters of Credit Issued in an Alternative Currency), each such Letter of Credit
(except Standby Letter of Credit) upon its Issuance to expire on or before the
date which occurs one year from the date of its Issuance but in any event prior
to the Termination Date; provided, however, that an Issuing Bank shall not be
                         --------  -------
obligated to, and shall not, Issue any Letter of Credit if:

          (i) after giving effect to the Issuance of such Letter of Credit, the
     sum of the then outstanding aggregate amount of all Letter of Credit
     Liability, the then outstanding principal amount of all Borrowings, the
     then outstanding Hedge Agreements Exposure and the aggregate Swing Line
     Commitment then in effect (computed without giving regard to usage) shall
     exceed the aggregate amount of the LC Commitments in effect from time to
     time;

          (ii) after giving effect to the Issuance of such Letter of Credit, the
     then outstanding aggregate amount of all Letter of Credit Liability in
     respect of Letters of Credit Issued by such Issuing Bank shall exceed the
     Issuing Commitment of such Issuing Bank;

                                       33

<PAGE>

          (iii) after giving effect to the Issuance of any Standby Letter of
     Credit, the aggregate amount of all Letter of Credit Liability in respect
     of outstanding Standby Letters of Credit shall exceed $100,000,000; or

          (iv) the Agent or the Majority Lenders shall have notified the Issuing
     Banks and the Borrower that no further Letters of Credit are to be Issued
     by the Issuing Banks due to failure to meet any of the applicable
     conditions set forth in Article V, and such notice has not been withdrawn.

          (b) Each Issuing Bank shall provide to the Agent in writing, no later
     than 5 days after the end of each month, a report with respect to the
     outstanding Letters of Credit issued by such Issuing Bank, which report
     shall set forth the undrawn amount and drawn but unreimbursed amount as of
     the end of each day during that month of all such Letters of Credit.
     Promptly after receiving all of such reports, the Agent shall forward
     copies thereof to each Lender.

Within the limits of the obligations of the Issuing Banks set forth above and in
Section 3.02, the Borrower and each LC Subsidiary may request the Issuing Banks
to Issue one or more Letters of Credit, reimburse the Issuing Banks for payments
made thereunder pursuant to Section 3.04(a) and request the Issuing Banks to
Issue one or more additional Letters of Credit under this Section 3.01.

          SECTION 3.02 Limitation on the Issuance of Letters of Credit
          ------------------------------------------------------------
Denominated in Alternative Currencies. The Issuing Banks shall not be obligated
-------------------------------------
to, and shall not, Issue any Letter of Credit denominated in an Alternative
Currency if, after giving effect to the Issuance of any Letter of Credit
denominated in an Alternative Currency, the then outstanding aggregate amount of
all Letter of Credit Liability with respect to all Letters of Credit denominated
in an Alternative Currency equals or exceeds (on a Dollar equivalent basis)
$75,000,000.

          SECTION 3.03 Issuing the Letters of Credit. Each Letter of Credit
          ------------------------------------------
shall be Issued on notice from the Borrower or any LC Subsidiary, as the case
may be, to the respective Issuing Bank as provided in the application and
agreement governing such Letter of Credit specifying the date, amount, currency,
expiry and beneficiary thereof and whether such Letter of Credit is a Trade
Letter of Credit or Standby Letter of Credit and, if it is a Standby Letter of
Credit, the amount of all Standby Letters of Credit then outstanding,
accompanied by such documents as such Issuing Bank may specify to the Borrower
or LC Subsidiary, as the case may be, in form and substance satisfactory to such
Issuing Bank. On the date specified by the Borrower or LC Subsidiary, as the
case may be, in such notice and upon fulfillment of the applicable conditions
set forth in Section 3.01, such Issuing Bank will Issue such Letter of Credit
and shall promptly notify the Agent thereof.

          SECTION 3.04 Reimbursement Obligations. (a) The Borrower or the
          --------------------------------------
appropriate LC Subsidiary, as the case may be, shall:

          (i) pay to the respective Issuing Bank an amount equal to, and in
     reimbursement for, each amount which such Issuing Bank pays under any
     Letter of Credit not later than the date which occurs one Business Day
     after payment of such amount by such Issuing Bank under such Letter of
     Credit; and

          (ii) pay to such Issuing Bank interest on any amount paid by such
     Issuing Bank under any Letter of Credit from the date on which such Issuing
     Bank pays such amount under any Letter of Credit until such amount is
     reimbursed in full to such Issuing Bank pursuant to clause (i) above,
     payable on demand, at a fluctuating rate per annum equal to 2% per annum
     above the rate

                                       34

<PAGE>

     per annum required to be paid on Base Rate Advances immediately prior to
     the date on which such Issuing Bank makes such payment under such Letter of
     Credit.

          (b) All amounts to be reimbursed to an Issuing Bank in accordance with
     subsection (a) above may, subject to the limitations set forth in Section
     2.01 (inclusive of the minimum borrowing limitations), be paid from the
     proceeds of Advances.

          SECTION 3.05 Participations Purchased by the Lenders. (a) On the date
          ----------------------------------------------------
of Issuance of each Letter of Credit the respective Issuing Bank shall be deemed
irrevocably and unconditionally to have sold and transferred to each Lender
without recourse or warranty, and each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from such Issuing Bank,
an undivided interest and participation, to the extent of such Lender's LC
Commitment Percentage in effect from time to time, in such Letter of Credit and
all Letter of Credit Liability relating to such Letter of Credit and all
documents securing, guaranteeing, supporting, or otherwise benefiting the
payment of such Letter of Credit Liability. The Agent or such Issuing Bank will
notify each Lender promptly after the close of each calendar month of all
Letters of Credit then outstanding and of their respective dates of Issue,
outstanding amounts (on a Dollar equivalent basis) as at the end of such month,
currency, expiry dates and reference numbers.

          (b) In the event that any reimbursement obligation under Section
     3.04(a) is not paid when due to the respective Issuing Bank with respect to
     any Letter of Credit, such Issuing Bank shall promptly notify the Agent who
     shall promptly notify the Lenders of the amount of such reimbursement
     obligation (on a Dollar equivalent basis in the case of Letters of Credit
     denominated in an Alternative Currency) and each Lender shall pay to such
     Issuing Bank, in lawful money of the United States and in same day funds,
     an amount equal to such Lender's LC Commitment Percentage then in effect of
     the amount of such unpaid reimbursement obligation with such payment to be
     made on the date of notification to such Lender, if such notification is
     made prior to 12:00 noon (New York City time) on a Business Day and if such
     notification is made after 12:00 noon (New York City time) on a Business
     Day, such payment to be made on the immediately succeeding Business Day,
     and in each case with interest at the Federal Funds Rate for each day after
     such payment is due until such amount is paid to such Issuing Bank.

          (c) Promptly after the respective Issuing Bank receives a payment
     (including interest payments) on account of a reimbursement obligation with
     respect to any Letter of Credit, such Issuing Bank shall promptly pay to
     each Lender which funded its participation therein, in lawful money of the
     United States, the Dollar equivalent of funds so received, in an amount
     equal to such Lender's LC Commitment Percentage thereof.

          (d) Upon the request of any Lender, the Agent shall furnish, or cause
     the respective Issuing Bank to furnish, to such Lender copies of any
     outstanding Letter of Credit and any application and agreement for letter
     of credit as may be reasonably requested by such Lender.

          (e) The obligation of each Lender to make payments under subsection
     (b) above shall be unconditional and irrevocable and shall remain in effect
     after the occurrence of the Termination Date with respect to any Letter of
     Credit that was Issued by the respective Issuing Bank on behalf of the
     Borrower or any LC Subsidiary on or before the Termination Date and such
     payments shall be made under all circumstances, including, without
     limitation, any of the circumstances referred to in Section 3.07(b) other
     than in connection with circumstances involving any willful misconduct or
     gross negligence of such Issuing Bank in Issuing a Letter of

                                       35

<PAGE>

     Credit or in determining whether documents presented under a Letter of
     Credit comply with the terms thereof.

          (f) If any payment received on account of any reimbursement obligation
     with respect to a Letter of Credit and distributed to a Lender as a
     participant under Section 3.05(c) is thereafter recovered from the
     respective Issuing Bank in connection with any bankruptcy or insolvency
     proceeding relating to the Borrower or an LC Subsidiary, each Lender which
     received such distribution shall, upon demand by such Issuing Bank, repay
     to such Issuing Bank such Lender's ratable share of the amount so recovered
     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) of any interest or other amount paid or
     payable by such Issuing Bank in respect of the total amount so recovered.

          SECTION 3.06 Letter of Credit Fees.
          ----------------------------------

          (a) Facility Fee. The Borrower hereby agrees to pay to the Agent for
              ------------
     the account of each Lender (in accordance with its LC Commitment
     Percentage) a letter of credit facility fee, accruing from the date hereof
     in the case of each initial Lender and from the effective date specified in
     the Assumption Agreement or in the Assignment and Acceptance, respectively,
     pursuant to which it became a Lender in the case of each other Lender until
     the Termination Date, at a rate per annum equal to the Applicable Facility
     Fee in effect from time to time (i) on the total amount of LC Commitments
     in effect from time to time from and after such date (regardless of the
     actual or deemed usage thereof) less the total amount of Advance
                                     ----
     Commitments in effect from time to time from and after such date
     (regardless of the actual or deemed usage thereof), payable quarterly in
     arrears on the last day of each January, April, July and October and on the
     Termination Date and (ii) on the aggregate amount of Letter of Credit
     Liability under all Letters of Credit that are outstanding beyond the
     Termination Date (regardless of the actual or deemed usage thereof) payable
     in arrears on the last day of each January, April, July and October and on
     the first day after the Termination Date on which no Letters of Credit are
     outstanding.

          (b) Letter of Credit Fee. The Borrower hereby agrees to pay to the
              --------------------
     Agent for the account of each Lender (in accordance with its LC Commitment
     Percentage), a letter of credit fee at a rate per annum equal in the case
     of Trade Letters of Credit to the Applicable Letter of Credit Fee in effect
     from time to time, and in the case of Standby Letters of Credit, to the
     Applicable Margin applicable to Eurodollar Rate Advances in effect from
     time to time, on the maximum amount available to be drawn under each such
     Letter of Credit from time to time (the determination of such maximum
     amount to assume compliance with all conditions for drawing) from the date
     of Issuance of each such Letter of Credit until the expiry date of each
     such Letter of Credit, payable in arrears on the last day of each January,
     April, July and October prior to the expiry date of each such Letter of
     Credit and on the expiry date of each such Letter of Credit.

          (c) Issuing Bank Fees. The Borrower hereby agrees to pay to each
              -----------------
     Issuing Bank the fees and charges as agreed to from time to time by such
     Issuing Bank and the Borrower.

          SECTION 3.07 Indemnification; Nature of the Issuing Banks' Duties. (a)
          -----------------------------------------------------------------
The Borrower agrees to indemnify and save harmless the Agent, the Issuing Banks
and each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees) which the Agent, the respective Issuing Bank or such Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the Issuance of any
Letter of Credit or (ii) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or seeking to restrain an
Issuing Bank from paying any amount under any Letter of Credit; provided, that,
                                                                --------  ----
an Issuing

                                       36

<PAGE>

Bank shall not be indemnified for any of the foregoing caused by its gross
negligence or willful misconduct.

          (b) The obligations of the Borrower and each LC Subsidiary hereunder
     with respect to Letters of Credit shall be unconditional and irrevocable,
     and shall be paid strictly in accordance with the terms hereof under all
     circumstances, including, without limitation, any of the following
     circumstances:

               (i) any lack of validity or enforceability of any Letter of
          Credit or this Agreement or any agreement or instrument relating
          thereto;

               (ii) the existence of any claim, setoff, defense or other right
          which the Borrower or any LC Subsidiary may have at any time against
          the beneficiary, or any transferee, of any Letter of Credit, or the
          Issuing Banks, any Lender, or any other Person;

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

               (iv) any lack of validity, effectiveness, or sufficiency of any
          instrument transferring or assigning or purporting to transfer or
          assign any Letter of Credit or the rights or benefits thereunder or
          proceeds thereof, in whole or in part;

               (v) any loss or delay in the transmission or otherwise of any
          document required in order to make a drawing under any Letter of
          Credit or of the proceeds thereof;

               (vi) any exchange, release or non-perfection of any collateral,
          or any release or non-perfection of any collateral, or any release or
          amendment or waiver of or consent to departure from any guarantee, for
          all or any of the obligations of the Borrower or an LC Subsidiary in
          respect of the Letters of Credit;

               (vii) any change in the time, manner or place of payment of, or
          in any other terms of, all or any of the obligations of the Borrower
          or any LC Subsidiary in respect of the Letters of Credit or any other
          amendment or waiver of or any consent to departure from all or any of
          this Agreement;

               (viii) any failure of the beneficiary of a Letter of Credit to
          strictly comply with the conditions required in order to draw upon any
          Letter of Credit;

               (ix) any misapplication by the beneficiary of any Letter of
          Credit of the proceeds of any drawing under such Letter of Credit; or

               (x) any other circumstance or happening whatsoever, whether or
          not similar to the foregoing;

provided, that, notwithstanding the foregoing, an Issuing Bank shall not be
--------  ----
relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct.

          SECTION 3.08 Increased Costs. (a) Change in Law. If, at any time after
          ----------------------------      -------------
the date of this Agreement, any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose,

                                       37

<PAGE>

modify or deem applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held by or deposits
in or for the account of, the Issuing Banks or any Lender or (ii) impose on the
Issuing Banks or any Lender any other condition regarding this Agreement or the
Letters of Credit or any collateral thereon, and the result of any event
referred to in clause (i) or (ii) above shall be to increase the cost (other
than an increase in taxes, which increase is dealt with exclusively in Article
IV) to such Issuing Bank or such Lender of issuing or maintaining, funding or
purchasing participations in the Letters of Credit, then, upon demand by such
Issuing Bank or such Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of such Issuing Bank or such
Lender, from time to time as specified by such Issuing Bank or such Lender,
additional amounts sufficient to compensate such Issuing Bank or such Lender for
such increased cost; provided, that, the Borrower shall have no obligation to
                     --------  ----
reimburse an Issuing Bank or any Lender for increased costs incurred more than
60 days prior to the date of such demand. A certificate as to the amount of such
increased cost setting forth the basis for the calculation of such increased
costs, submitted by an Issuing Bank or a Lender to the Borrower, shall be
conclusive and binding for all purposes, absent manifest error.

          (b) Capital. If, at any time after the date of this Agreement, an
              -------
     Issuing Bank or any Lender determines that compliance with any law or
     regulation or any guideline or request from any central bank or other
     governmental authority (whether or not having the force of law) affects or
     would affect the amount of capital required or expected to be maintained by
     such Issuing Bank or such Lender or any corporation controlling such
     Issuing Bank or such Lender and that the amount of such capital is
     increased by or based upon the existence of such Issuing Bank's or Lender's
     commitment hereunder and other commitments of this type or the issuance of
     (or commitment to purchase of participations in) the Letters of Credit (or
     similar contingent obligations), then, upon demand by such Issuing Bank or
     such Lender (with a copy of such demand to the Agent), the Borrower shall
     pay to the Agent for the account of such Issuing Bank or such Lender, from
     time to time as specified by such Issuing Bank or such Lender, additional
     amounts sufficient to compensate such Issuing Bank or such Lender or such
     corporation in the light of such circumstances, to the extent that such
     Issuing Bank or such Lender reasonably determines such increase in capital
     to be allocable to the existence of such Issuing Bank's or such Lender's
     commitment hereunder; provided, that, the Borrower shall have no obligation
                           --------  ----
     to pay such compensatory amounts that relate to an actual increase in the
     capital of such Issuing Bank or such Lender undertaken by such Issuing Bank
     or such Lender more than 60 days prior to the date of such demand. A
     certificate as to such amounts setting forth the basis for the calculation
     of such amount submitted to the Borrower and the Agent by an Issuing Bank
     or a Lender shall be conclusive and binding for all purposes, absent
     manifest error.

          (c) Without prejudice to the survival of any other agreement of the
     Borrower hereunder, the agreements and obligations of the Borrower
     contained in this Section 3.08 shall survive the payment in full (after the
     Termination Date) of all Obligations.

          (d) Without affecting its rights under Sections 3.08(a) or 3.08(b) or
     any other provision of this Agreement, the Issuing Banks and each Lender
     agree that if there is any increase in any cost to or reduction in any
     amount receivable by the respective Issuing Bank or Lender with respect to
     which the Borrower would be obligated to compensate such Lender pursuant to
     Sections 3.08(a) or 3.08(b), the respective Issuing Bank or Lender shall
     use reasonable efforts to select an alternative issuing office or
     Applicable Lending Office, as the case may be, which would not result in
     any such increase in any cost to or reduction in any amount receivable by
     such Issuing Bank or such Lender; provided, however, that the Issuing Banks
                                       --------  -------
     and each Lender shall not be obligated to select an alternative issuing
     office or Applicable Lending Office if the respective Issuing Bank or such
     Lender determines that (i) as a result of such selection such

                                       38

<PAGE>

     Issuing Bank or such Lender would be in violation of any applicable law,
     regulation, treaty, or guideline, or would incur additional costs or
     expenses or (ii) such selection would be inadvisable for regulatory reasons
     or inconsistent with the interests of such Issuing Bank or such Lender.

          SECTION 3.09 Uniform Customs and Practice. The Uniform Customs and
          -----------------------------------------
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce ("UCP") shall in all respects be deemed a part of this
Article III as if incorporated herein and shall apply to the Letters of Credit.

          SECTION 3.10 Reductions and Increases in LC Commitments; Additional
          -------------------------------------------------------------------
Issuing Banks. (a) The Borrower shall have the right, upon at least three
-------------
Business Days' notice to the Issuing Banks and the Agent, to irrevocably
terminate in whole or reduce in part an Issuing Bank's Commitment (which
reduction shall without further act reduce in whole or ratably in part the
respective LC Commitments of the Lenders), provided, that, each partial
                                           --------  ----
reduction shall be in the aggregate amount of $25,000,000 or an integral
multiple of $1,000,000 in excess thereof and no such reduction shall reduce the
LC Commitments below the sum of the then outstanding aggregate amount of
Borrowings, the aggregate Swing Line Commitment then in effect (computed without
giving regard to usage), and the then outstanding aggregate amount of all Letter
of Credit Liability.

          (b) Not more frequently than twice in any period of twelve consecutive
     calendar months occurring after the date hereof, the Borrower shall have
     the right prior to the Termination Date to increase the amount of the LC
     Commitments of one or more Lenders and the Issuing Commitments of the
     Issuing Banks and add one or more Assuming Lenders as Lenders or as Issuing
     Banks (each such increase being an "LC Commitment Increase"), provided that
                                         ----------------------
     such Lenders shall have consented to such LC Commitment Increase (which
     consent may be granted or withheld by any Lender in its sole and absolute
     discretion), on and subject to the following terms:

                    (i) The aggregate amount of all LC Commitment Increases
          shall not exceed $300,000,000 after the date hereof;

                    (ii) The amount of each LC Commitment Increase by any Lender
          or any Assuming Lender shall be in a minimum amount of $25,000,000 or
          an integral multiple of $1,000,000 in excess thereof.

                    (iii) Each LC Commitment Increase shall increase the
          aggregate amount of the LC Commitments and of the Issuing Commitments
          by the same amount;

                    (iv) No proposed LC Commitment Increase shall occur unless
          each of the following requirements in respect thereof shall have been
          satisfied:

                         (A) The Agent shall have received from the Borrower an
               irrevocable written notice (an "LC Commitment Increase Notice"),
                                               -----------------------------
               dated not earlier than 60 days before the proposed LC Commitment
               Increase Effective Date (as defined below) therefor and not later
               than 30 days before such proposed LC Commitment Increase
               Effective Date, that (1) specifies (w) the proposed Issuing
               Commitment increase of each Issuing Bank and/or of the Lenders
               which are to become Issuing Banks and the amount of each Issuing
               Bank's Issuing Commitment after giving effect thereto, (x) the
               aggregate amount of the proposed LC Commitment Increase, (y) the
               Lenders whose LC Commitments are to be increased by the proposed
               LC Commitment Increase and/or the Assuming

                                       39

<PAGE>

               Lenders which are to become Lenders and the amount by which each
               such Lender's LC Commitment is to be so increased and/or the
               amount of each such Assuming Lender's LC Commitment and (z) the
               date (the "LC Commitment Increase Effective Date") on which the
                          -------------------------------------
               proposed LC Commitment Increase shall become effective, and (2)
               has been signed by each Lender whose LC Commitment is to be
               increased, evidencing the consent of such Lender to the proposed
               LC Commitment Increase and each Issuing Bank whose Issuing
               Commitment is to be increased, evidencing the consent of such
               Issuing Bank thereto and/or by each such Assuming Lender; and

                         (B) On and as of the LC Commitment Increase Effective
               Date of the proposed LC Commitment Increase (1) the following
               statements shall be true (and the giving of the applicable LC
               Commitment Increase Notice shall constitute a representation and
               warranty by the Borrower that on such LC Commitment Increase
               Effective Date such statements are true):

                         (x) The representations and warranties contained in
                    Section 6.01 are correct on and as of such LC Commitment
                    Increase Effective Date before and after giving effect to
                    the proposed LC Commitment Increase, as though made on and
                    as of such date, and

                         (y) No event has occurred and is continuing, or would
                    result from such LC Commitment Increase, which constitutes
                    an Event of Default or Default; and

                         (z) the Agent shall have received such other approvals,
                    opinions or documents as the Agent may reasonably request;

                    (v) Promptly following its receipt of an LC Commitment
          Increase Notice in proper form, the Agent shall deliver copies thereof
          to each Lender and Issuing Bank. If, and only if, all of the terms,
          conditions and requirements specified in paragraphs (i) through (iv)
          are satisfied in respect of any proposed LC Commitment Increase on and
          as of the proposed LC Commitment Increase Effective Date thereof and
          in the case of each such Assuming Lender, an Assumption Agreement,
          duly executed by such Assuming Lender, the Agent and the Borrower, has
          been received by the Agent, then, as of such LC Commitment Increase
          Effective Date and from and after such date, (1) the LC Commitments of
          the Lenders consenting to such LC Commitment Increase shall be
          increased by the respective amounts specified in the LC Commitment
          Increase Notice pertaining thereto, (2) references herein to the
          amounts of the Lenders' respective LC Commitments shall refer to
          respective amounts giving effect to such LC Commitment Increase, and
          (3) each such Assuming Lender shall be a Lender and Issuing Bank, if
          applicable, for all purposes hereof, and the Agent shall record all
          relevant information with respect to such Assuming Lender and its LC
          Commitment and, if applicable, with respect to any increased Issuing
          Commitment of an Issuing Bank in the Register;

                    (vi) It is understood that no Lender or Issuing Bank shall
          have any obligation whatsoever to agree to any request made by the
          Borrower for an LC Commitment Increase;

                    (vii) As part of such LC Commitment Increase, such Lender or
          Assuming Lender shall purchase assignments in the Advances and Advance

                                    40

<PAGE>

          Commitments of the other Lenders so that after giving effect thereto,
          the percentage held by each Lender of the aggregate Advance
          Commitments is the same as prior to such LC Commitment Increase and
          such Lender or Assuming Lender shall have acquired a ratable
          participation in all Swing Line Advances as contemplated by Section
          2.02(b). In connection therewith, on each LC Commitment Increase
          Effective Date, (A) each Lender whose LC Commitment has been increased
          (each such Lender being an "Increasing Lender") shall, before 2:00
                                      -----------------
          p.m. (New York City time) on such LC Commitment Increase Effective
          Date, make available for the account of its Applicable Lending Office
          to the Agent at the address specified in Section 10.02, in same day
          funds, an amount equal to the excess of (1) such Increasing Lender's
          ratable portion of the Advances then outstanding (calculated based on
          its LC Commitment as a percentage of the aggregate LC Commitments of
          the Lenders (including each such Assuming Lender) outstanding after
          giving effect to the relevant LC Commitment Increase) over (2) the
          aggregate principal amount of then outstanding Advances made by such
          Increasing Lender and (B) each such Assuming Lender shall before 2:00
          p.m. (New York City time) on such LC Commitment Increase Effective
          Date, make available for the account of its Applicable Lending Office
          to the Agent at the address specified in Section 10.02 in same day
          funds, an amount equal to such Assuming Lender's ratable portion of
          the Advances then outstanding (calculated based on its LC Commitment
          as a percentage of the aggregate LC Commitments of the Lenders
          (including each such Assuming Lender) outstanding after giving effect
          to the relevant LC Commitment Increase); and

                    (viii) After the Agent's receipt of such funds from each
          such Increasing Lender and such Assuming Lender, the Agent will
          promptly thereafter cause to be distributed like funds to the other
          Lenders for the account of their respective Applicable Lending Offices
          in an amount to each other Lender such that the aggregate amount of
          the outstanding Advances owing to each Lender (including each such
          Assuming Lender) after giving effect to such distribution equals such
          Lender's ratable portion of the Advances then outstanding (calculated
          based on its LC Commitment as a percentage of the aggregate LC
          Commitments of the Lenders outstanding after giving effect to the
          relevant LC Commitment Increase).

          (c) The Borrower may at any time, upon at least five Business Days'
     prior written notice to the Agent and the Lenders or as part of a proposed
     LC Commitment Increase, designate as an Issuing Bank any Lender that has
     agreed in writing to act as an Issuing Bank and the Issuing Commitment of
     such Lender. Thereupon, any Lender so designated as an Issuing Bank shall
     thenceforth issue Letters of Credit on the terms and subject to the
     conditions herein, and the Agent shall record all relevant information with
     respect to such Lender as such Issuing Bank and its Issuing Commitment in
     the Register.

          (d) The Borrower may at any time, upon at least 5 Business Days' prior
     written notice to the respective Issuing Bank and the Agent, increase the
     Issuing Commitment of an Issuing Bank and at the same time reduce by an
     equivalent amount the Issuing Commitment of one or more of the other
     Issuing Banks; provided, that such notice is consented to by each Issuing
                    --------  ----
     Bank affected by such increase and decrease and provided, further, that the
                                                     --------  -------
     Agent shall record each such increase and decrease of the Issuing
     Commitment of the respective Issuing Bank in the Register.

          SECTION 3.11 Existing Letters of Credit. There currently are
          ---------------------------------------
outstanding letters of credit issued pursuant to the Existing 364-Day Agreement
and letters of credit and other credit support instruments issued by one or more
Lenders pursuant to agreements between the Borrower or an LC

                                       41

<PAGE>

Subsidiary and such Lender (collectively, the "Existing Letters of Credit"), the
                                               --------------------------
outstanding balance of each of which is set forth on Schedule IV hereto (as such
Schedule may be modified between the date hereof and the fifth Business Day
after the Effective Date). From and after the date hereof and upon fulfillment
of the conditions to initial Issuance specified in Section 5.01 hereof, each
such Existing Letter of Credit shall be deemed and treated for all purposes
hereof (including, without limitation, the calculation of fees payable under
Section 3.06, and calculating the usage of the respective Issuing Bank's
commitment under Section 3.01) as a "Letter of Credit" hereunder, any
                                     ----------------
participation interest existing prior to the date hereof of any Lender in such
Existing Letters of Credit shall, without further action on its part, be deemed
extinguished in full and each Lender, without further act on its part, shall be
deemed to have purchased a participation in each such Existing Letter of Credit
as provided in Section 3.05 hereof in accordance with its LC Commitment
Percentage.

          SECTION 3.12 Currency Provisions.
          --------------------------------

          (a) Equivalents. For purposes of the provisions of Article II and III,
              -----------
     (i) the equivalent in Dollars of any Alternative Currency shall be
     determined by using the mean of the bid and offer quoted spot rates at
     which the respective Issuing Bank's or Swing Line Lender's principal office
     in New York, New York offers to exchange Dollars for such Alternative
     Currency in New York, New York at 11:00 A.M. (New York City time) on the
     Business Day on which such equivalent is to be determined and (ii) the
     equivalent in any Alternative Currency of Dollars shall be determined by
     using the mean of the bid and offer quoted spot rates at which such Issuing
     Bank's or Swing Line Lender's principal office in New York, New York offers
     to exchange such Alternative Currency for Dollars in New York, New York at
     11:00 A.M. (New York City time) on the Business Day on which such
     equivalent is to be determined.

          (b) Issuing Banks' Commitment/LC Commitments. For purposes of
              ----------------------------------------
     determining the unused portion of an Issuing Bank's commitment specified in
     Section 3.01 and of each Lender's LC Commitment, the equivalent in Dollars
     of each Letter of Credit issued by an Issuing Bank in an Alternative
     Currency as determined on the date of the Issuance of such Letter of Credit
     shall be the amount of such Issuing Bank's commitment used in connection
     with the Issuance of such Letter of Credit and the resulting proportionate
     amount of each Lender's LC Commitment used, such reduction to be calculated
     in accordance with its LC Commitment Percentage. Further adjustments shall
     be made with respect to the unused portion of an Issuing Bank's commitment
     to Issue Letters of Credit and each such Lender's LC Commitment based upon
     fluctuations thereafter in the value of the Alternative Currency of such
     Letter of Credit as provided in subsection (c) below.

          (c) Mark to Market. If, on any day, the equivalent in Dollars of the
              --------------
     aggregate face amount of all Letters of Credit then outstanding (less the
     aggregate amount of cash collateral held by all the Issuing Banks with
     respect to outstanding Letters of Credit) exceeds the total of (x) the LC
     Commitments then in effect minus (y) the sum of the then outstanding
     aggregate amount of all Borrowings and the aggregate Swing Line Commitment
     then in effect (computed without giving regard to usage), the Borrower
     shall, upon demand by the Agent, immediately deposit into the L/C
     Collateral Account (as defined in the Security Agreement) held by the
     Collateral Agent, in Dollars, (i) the Dollar amount of such excess plus
     (ii) a Dollar amount equal to the lesser of (A) $1,000,000 and (B) 10% of
     the Dollar equivalent of all then existing Letter of Credit Liability
     relating to Letters of Credit denominated in Alternative Currencies, which
     amount shall be held by the Collateral Agent in accordance with the terms
     of the Security Agreement as cash collateral for the Borrowers' and LC
     Subsidiaries' obligations with respect to outstanding Letters of Credit.
     Amounts on deposit with the Collateral Agent as cash collateral in the L/C
     Collateral Account shall be invested as provided in the Security Agreement
     and shall (so long as no Default has

                                       42

<PAGE>

     occurred and is continuing) be released to the Borrower (1) if the
     Termination Date has not occurred, on the date on which the aggregate of
     all Letter of Credit Liability does not exceed 99% of the aggregate amount
     of the LC Commitments then in effect (without regard to any usage thereof)
     minus the sum of the then outstanding aggregate amount of all Borrowings
     and the aggregate Swing Line Commitment then in effect (computed without
     giving regard to usage), or (2) if the Termination Date has occurred, in
     accordance with Section 3.15.

          (d) Monthly Report. Each Issuing Bank, on the last Business Day of
              -------------
     each month until the Termination Date, shall calculate the Letter of Credit
     Liability on such date (converting any amounts of the Letter of Credit
     Liability which are denominated in an Alternative Currency to Dollars for
     purposes of such calculation) and shall promptly send notice of (i) such
     Letter of Credit Liability and (ii) the Dollar amount of any excess of
     Letter Credit Liability over total LC Commitments to the Agent, the
     Borrower and each Lender, and the Borrower shall promptly upon receipt
     thereof make the payments provided for in subsection (c) above if
     applicable.

          SECTION 3.13 Borrower Guaranty.
          ------------------------------

          (a) Generally. The Issuing Banks may, from time to time, Issue Letters
              ---------
     of Credit for the account of each LC Subsidiary provided, that, the
                                                     --------  ----
     reimbursement and other obligations of each such LC Subsidiary are and
     remain unconditionally guaranteed by the Borrower pursuant to this Section
     3.13.

          (b) Guaranty. The Borrower hereby unconditionally and irrevocably
              --------
     guarantees the punctual payment when due, whether at stated maturity, by
     acceleration or otherwise, of all obligations of the LC Subsidiaries now or
     hereafter existing under this Agreement with respect to Letters of Credit
     issued for the account of any of the LC Subsidiaries, including any
     extensions, modifications, substitutions, amendments and renewals thereof,
     whether for reimbursement obligations, interest, fees, expenses or
     otherwise (such obligations being the "Subsidiary LC Obligations"), and
                                            -------------------------
     agrees to pay any and all expenses (including reasonable counsel fees and
     expenses in accordance with Section 10.04 hereof) incurred by the Issuing
     Banks or the Lenders in enforcing any rights hereunder with respect to the
     Subsidiary Obligations. Without limiting the generality of the foregoing,
     the Borrower's liability shall extend to all amounts which constitute part
     of the Subsidiary LC Obligations and would be owed by any LC Subsidiary to
     the Issuing Banks or the Lenders hereunder, or under the Letters of Credit
     issued for the account of an LC Subsidiary, but for the fact that they are
     unenforceable or not allowable due to the existence of a bankruptcy,
     reorganization or similar proceeding involving such LC Subsidiary.

          (c) Guaranty Absolute. The Borrower guarantees that the Subsidiary LC
              -----------------
     Obligations will be paid strictly in accordance with the terms hereof
     regardless of any law, regulation or order now or hereafter in effect in
     any jurisdiction affecting any of such terms or the rights of the Issuing
     Banks or the Lenders with respect thereto. The obligations of the Borrower
     hereunder are independent of the Subsidiary LC Obligations and a separate
     action or actions may be brought and prosecuted against the Borrower to
     enforce the guaranty contained in this Section 3.13, irrespective of
     whether any action is brought against any LC Subsidiary or whether any LC
     Subsidiary is joined in any such action or actions. The liability of the
     Borrower under the guaranty contained in this Section 3.13 shall be
     absolute and unconditional irrespective of:

               (i) any lack of validity or enforceability of any of the
          Subsidiary LC Obligations or any agreement or instrument relating
          thereto against any LC Subsidiary or any other Person;

                                       43

<PAGE>

               (ii) any change in the time, manner or place of payment of, or in
          any other term of, all or any of the Subsidiary Obligations, or any
          other amendment or waiver of or any consent to departure herefrom with
          respect to Letters of Credit issued for the account of an LC
          Subsidiary including, without limitation, any increase in the
          Subsidiary LC Obligations resulting from the Issuance of Letters of
          Credit beyond the aggregate limitation specified in Section 3.01 to
          any and all LC Subsidiaries or otherwise;

               (iii) any taking, exchange, release or non-perfection of any
          collateral, or any taking, release or amendment or waiver of or
          consent to departure from any other guaranty, for all or any of the
          Subsidiary Obligations;

               (iv) any manner of application of collateral, or proceeds
          thereof, to all or any of the Subsidiary Obligations, or any manner of
          sale or other disposition of any collateral for all or any of the
          Subsidiary LC Obligations or any other assets of an LC Subsidiary;

               (v) any change, restructuring or termination of the corporate
          structure or existence of an LC Subsidiary or any LC Subsidiary's lack
          of corporate power or authority; or

               (vi) any other circumstance which might otherwise constitute a
          defense available to, or a discharge of, a third party guarantor.

The guaranty provided in this Section 3.13 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Subsidiary LC Obligations is rescinded or must otherwise be returned by the
Issuing Banks or any Lender upon the insolvency, bankruptcy or reorganization of
an LC Subsidiary or otherwise, all as though such payment had not been made.

          (d) Waivers. The Borrower hereby waives, to the extent permitted by
              -------
     applicable law:

               (i) any requirement that the Issuing Banks or any Lender secure
          or insure any security interest or lien or any property subject
          thereto or exhaust any right or take any action against any LC
          Subsidiary or any other Person or any collateral;

               (ii) any defense arising by reason of any claim or defense based
          upon an election of remedies by the Issuing Banks or any Lender
          (including, without limitation, an election to nonjudicially foreclose
          on any real or personal property collateral) which in any manner
          impairs, reduces, releases or otherwise adversely affects its
          subrogation, reimbursement or contribution rights or other rights to
          proceed against any LC Subsidiary or any other Person or any
          collateral;

               (iii) any defense arising by reason of the failure of any LC
          Subsidiary to properly execute any letter of credit application and
          agreement or otherwise comply with applicable legal formalities;

               (iv) any defense or benefits that may be derived from California
          Civil Code Sections 2808, 2809, 2810, 2819, 2845 or 2850, or
          California Code of Civil Procedure Sections 580a, 580d or 726, or
          comparable provisions of the laws of any other jurisdiction and all
          other suretyship defenses it would otherwise have under the laws of
          California or any other jurisdiction;

                                       44

<PAGE>

               (v) any duty on the part of the Issuing Banks or any Lender to
          disclose to the Borrower any matter, fact or thing relating to the
          business, operation or condition of any LC Subsidiary and its
          respective assets now known or hereafter known by the Issuing Banks or
          any Lender;

               (vi) all benefits of any statute of limitations affecting the
          Borrower's liability under or the enforcement of the guaranty provided
          in this Section 3.13 or any of the Subsidiary LC Obligations or any
          collateral;

               (vii) all setoffs and counterclaims;

               (viii) promptness, diligence, presentment, demand for performance
          and protest;

               (ix) notice of nonperformance, default, acceleration, protest or
          dishonor;

               (x) except for any notice otherwise required by applicable laws
          that may not be effectively waived by the Borrower, notice of sale or
          other disposition of any collateral; and

               (xi) notice of acceptance of the guaranty provided in this
          Section 3.13 and of the existence, creation or incurring of new or
          additional Subsidiary Obligations.

          SECTION 3.14 Dollar Payment Obligation. Notwithstanding any other term
          --------------------------------------
or provision hereof to the contrary, if the Borrower or any LC Subsidiary fails
to reimburse the respective Issuing Bank for any payment made by such Issuing
Bank under a Letter of Credit denominated in an Alternative Currency by the
close of business on the Business Day when due at the Payment Office specified
for such reimbursement payment, then the payment made by such Issuing Bank in
such Alternative Currency shall be converted into Dollars (the "Dollar Payment
                                                                --------------
Amount") by such Issuing Bank as provided for herein, and each of the Borrower
------
and each LC Subsidiary for whose account such Letter of Credit was Issued agrees
that it shall be unconditionally obligated to, and shall immediately, reimburse
such Issuing Bank the Dollar Payment Amount at such Issuing Bank's then Payment
Office for Dollars.

          SECTION 3.15 Applications; Survival of Provisions; Cash Collateral.
          ------------------------------------------------------------------
This Agreement shall control over any provision of any application and agreement
for Letters of Credit to the contrary, but additive or supplemental provisions
of any such application and agreement shall apply to each Letter of Credit
Issued pursuant to such application and agreement. The provisions in this
Article shall survive the Termination Date in respect of all Letters of Credit
outstanding thereafter. On the Termination Date, the Borrower shall deposit into
the L/C Collateral Account (as defined in the Security Agreement) held by the
Collateral Agent cash (in Dollars) in an amount equal to the undrawn amount of
all Letters of Credit as security for the reimbursement of drawings thereunder
which shall be used to reimburse the respective Issuing Bank promptly upon a
drawing under its respective Letter of Credit, with the respective portion
thereof to be returned to the Borrower when the respective Letter of Credit
expires, and in connection therewith the Borrower shall execute all documents as
reasonably requested by the Collateral Agent in accordance with the Security
Agreement.

          SECTION 3.16 LC Subsidiaries. Any Subsidiary of the Borrower not an LC
          ----------------------------
Subsidiary on the date hereof may become an "LC Subsidiary" hereunder by
delivering to the respective Issuing Bank (which shall promptly forward a copy
thereof to each Lender and the Agent) an agreement, in form

                                       45

<PAGE>

and substance satisfactory to such Issuing Bank, wherein such Subsidiary agrees
to be bound by all terms and provisions of this Agreement relating to Letters of
Credit to be issued for the account of such Subsidiary and delivers a written
consent of the Borrower assenting to the inclusion of such Subsidiary as an "LC
Subsidiary" hereunder. Unless objected to by the Majority Lenders within the 10
day period referred to below, such Subsidiary shall become an "LC Subsidiary"
hereunder 10 days after such Issuing Bank notifies the Borrower that such
agreement and consent are in form and substance satisfactory to it; provided,
                                                                    --------
that, no Subsidiary shall become an "LC Subsidiary" until such Issuing Bank
----
shall have notified the Borrower in writing that such agreement and consent are
in form and substance satisfactory to such Issuing Bank.

                                   ARTICLE IV

                        PAYMENTS, TAXES, EXTENSIONS, ETC.

          SECTION 4.01 Payments and Computations/Borrowings. (a) Except as
          -------------------------------------------------
otherwise provided in Section 4.02, the Borrower and each Subsidiary Borrower,
as the case may be, shall make each payment hereunder with respect to Article
II, the Advances, the Lenders and the Agent free and clear of all claims,
charges, offsets or deductions whatsoever not later than 12:00 noon (New York
City time) on the day when due in U.S. dollars to the Agent at its address
referred to in Section 10.02 in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility or utilization fees ratably (other than
amounts payable pursuant to Section 2.07, 2.11, 3.10(b) or 4.02) to the Lenders
for the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to such Lender to be
distributed to the appropriate Lender or Lenders and applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 10.07(d), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

          (b) The Borrower, each Subsidiary Borrower and each LC Subsidiary
     hereby authorize the Agent and each Lender if and to the extent payment
     owed to the Agent or such Lender is not paid when due hereunder to charge
     from time to time against any or all of the Borrower's, such Subsidiary
     Borrower's or such LC Subsidiary's accounts with the Agent or such Lender
     any amount so due.

          (c) All computations of interest based on the Base Rate and of
     facility fees shall be made by the Agent on the basis of a year of 365 or
     366 days, as the case may be, and all computations of interest relating to
     utilization fees, or based on the Eurodollar Rate or the Federal Funds Rate
     shall be made by the Agent, and all computations of interest pursuant to
     Section 2.07 shall be made by a Lender, on the basis of a year of 360 days,
     in each case for the actual number of days (including the first day but
     excluding the last day) occurring in the period for which such interest or
     fees are payable. Each determination by the Agent (or, in the case of
     Section 2.07, by Lender) of an interest rate hereunder shall be conclusive
     and binding for all purposes, absent manifest error.

          (d) Whenever any payment hereunder shall be stated to be due on a day
     other than a Business Day, such payment shall be made on the next
     succeeding Business Day, and such extension of time shall in such case be
     included in the computation of payment of interest or facility or
     utilization fee, as the case may be; provided, however, if such extension
                                          --------  -------
     would cause

                                       46

<PAGE>

     payment of interest on or principal of Eurodollar Rate Advances to be made
     in the next following calendar month, such payment shall be made on the
     next preceding Business Day.

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

          SECTION 4.02 Taxes/Borrowings. (a) Any and all payments by the
          -----------------------------
Borrower and each Subsidiary Borrower hereunder shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender Party and the Agent, taxes imposed on its
--------- overall net income, and franchise taxes imposed on such Lender Party
or the Agent, by the jurisdiction under the laws of which such Lender Party or
the Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender Party, taxes imposed on its overall net income,
and franchise taxes imposed on such Lender Party, by the jurisdiction of such
Lender Party's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower or
                                                  -----
any Subsidiary Borrower shall be required by applicable Requirements of
Law to deduct any Taxes from or in respect of any sum payable under any Loan
Document to any Lender Party or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
4.02) such Lender Party or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower and such Subsidiary Borrower shall make such deductions, (iii) the
Borrower or respective Subsidiary Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Requirements of Law and (iv) as soon as practicable after the date of any
payment of Taxes, the Borrower or respective Subsidiary Borrower shall furnish
to the Agent, at its address referred to in Schedule I-B, the original or a
certified copy of a receipt evidencing payment thereof, to the extent such a
receipt is issued therefore, or other evidence of payment thereof that is
reasonably satisfactory to the Agent.

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

          (c) The Borrower or the respective Subsidiary Borrower will indemnify
     each of the Lender Parties and the Agent for the full amount of Taxes and
     Other Taxes (including, without limitation, any taxes of any kind imposed
     or asserted by any jurisdiction on amounts payable under this Section 4.02)
     imposed on or paid by such Lender Party or the Agent (as the case may be)
     and any liability (including penalties, additions to tax, interest and
     expenses) arising therefrom or with respect thereto, whether or not such
     Taxes or Other Taxes were correctly or legally asserted. A reimbursement
     shall be made within 30 days from the date such Lender Party or the Agent
     (as the case may be) makes written demand therefor. The Agent and each
     Lender

                                       47

<PAGE>

     Party, as the case may be, shall give prompt (within 10 Business Days)
     notice to the Borrower of the payment by the Agent or such Lender Party, as
     the case may be, of such amounts payable by the Borrower under the
     indemnity set forth in this subsection (c), and of the assertion by any
     governmental or taxing authority that such amounts are due and payable, but
     the failure to give such notice shall not affect the Borrower's or any
     Subsidiary Borrower's obligations hereunder to reimburse the Agent and each
     Lender Party for such Taxes or Other Taxes or taxes imposed or asserted on
     amounts payable under this Section 4.02, except that neither the Borrower
     nor any Subsidiary Borrower shall be liable for penalties or interest
     accrued or incurred after such 10 Business Day period until such time as it
     receives the notice contemplated above, after which time it shall be liable
     for interest and penalties accrued or incurred prior to or during such 10
     Business Day period and accrued or incurred after such receipt. Neither the
     Borrower nor any Subsidiary Borrower shall be liable for any penalties,
     interest, expense or other liability with respect to such Taxes or Other
     Taxes after it has reimbursed the amount thereof to the Agent or the
     appropriate Lender Party.

          (d) Each Lender Party organized under the laws of a jurisdiction
     outside the United States, on or prior to the date of its execution and
     delivery of this Agreement in the case of each initial Lender Party and on
     the date of the Assignment and Acceptance pursuant to which it becomes a
     Lender Party in the case of each other Lender Party, and from time to time
     thereafter if requested in writing by the Borrower (but only so long as
     such Lender Party remains lawfully able to do so), shall provide the
     Borrower 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 Party 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 payable by the Borrower or
     certifying that the interest is effectively connected with the conduct of a
     trade or business in the United States. Similarly, with respect to each
     Subsidiary Borrower organized under the laws of a jurisdiction outside of
     the United States, each Lender Party, on or prior to the date of its
     execution and delivery of this Agreement in the case of each initial Lender
     Party and on the date of the Assignment and Acceptance pursuant to which it
     becomes a Lender Party in the case of each other Lender Party, and from
     time to time thereafter if requested in writing by the Borrower or such
     Subsidiary Borrower (but only so long as such Lender Party remains lawfully
     able to do so), shall provide the Borrower or such Subsidiary Borrower with
     appropriate documentation certifying applicable exemptions from withholding
     tax imposed by any jurisdiction on payments of interest payable by such
     Subsidiary Borrower. If the forms provided by a Lender Party at the time
     such Lender Party first becomes a party to this Agreement indicate a
     withholding tax (including, without limitation, United States interest
     withholding tax) rate in excess of zero, withholding tax at such rate shall
     be considered excluded from "Taxes" unless and until such Lender Party
                                  -----
     provides the appropriate forms certifying that a lesser rate applies,
     whereupon withholding tax at such lesser rate only shall be considered
     excluded from Taxes for periods governed by such forms; provided however,
                                                             -------- -------
     that, if at the date of the Assignment and Acceptance pursuant to which a
     Lender Party becomes a party to this Agreement, the Lender Party assignor
     was entitled to payments under subsection (a) of this Section 4.02 in
     respect of withholding tax with respect to interest paid at such date,
     then, to such extent, the term Taxes shall include (in addition to
     withholding taxes that may be imposed in the future or other amounts
     otherwise includible in Taxes) withholding tax, if any, applicable with
     respect to the Lender Party assignee on such date.

          (e) For any period with respect to which a Lender Party has failed to
     provide the Borrower or any Subsidiary Borrower with the appropriate form
     described in Section 4.02(d) (other than if such failure is due to a change
                                   ----- ----
     in law occurring subsequent to the date on which a form originally was
     required to be provided, or if such form otherwise is not required under
     the

                                       48

<PAGE>

     first two sentences of subsection (d) above), such Lender Party shall not
     be entitled to indemnification under Section 4.02(a) with respect to Taxes
     imposed by any jurisdiction (including, without limitation, the United
     States); provided, however, that should a Lender Party become subject to
              --------  -------
     Taxes because of its failure to deliver a form required hereunder, the
     Borrower shall take such steps as the Lender Party shall reasonably request
     to assist the Lender Party to recover such Taxes.

          (f) Without affecting its rights under this Section 4.02 or any
     provision of this Agreement, each Lender Party agrees that if any Taxes or
     Other Taxes are imposed and required by law to be paid or to be withheld
     from any amount payable to any Lender Party or its Applicable Lending
     Office with respect to which the Borrower or any Subsidiary Borrower would
     be obligated pursuant to this Section 4.02 to increase any amounts payable
     to such Lender Party or to pay any such Taxes or Other Taxes, such Lender
     Party shall use reasonable efforts to select an alternative Applicable
     Lending Office which would not result in the imposition of such Taxes or
     Other Taxes; provided, however, that no Lender Party shall be obligated to
                  --------  -------
     select an alternative Applicable Lending Office if such Lender Party
     determines that (i) as a result of such selection such Lender Party would
     be in violation of an applicable law, regulation, or treaty, or would incur
     unreasonable additional costs or expenses or (ii) such selection would be
     inadvisable for regulatory reasons or inconsistent with the interests of
     such Lender Party.

          (g) In the event that an additional payment is made under this Section
     4.02 for the account of any Lender Party and such Lender Party, in its sole
     discretion, determines that it has finally and irrevocably received or been
     granted a credit against or release or remission for, or repayment of, any
     tax paid or payable by it in respect of or calculated with reference to the
     deduction or withholding giving rise to such payment, such Lender Party
     shall, to the extent that it determines that it can do so without prejudice
     to the retention of the amount of such credit, relief, remission or
     repayment, pay to the Borrower or Subsidiary Borrower, as the case may be,
     such amount as such Lender Party shall, in its sole discretion, have
     determined to be attributable to such deduction or withholding and which
     will leave such Lender Party (after such payment) in no worse position than
     it would have been in if the Borrower or Subsidiary Borrower had not been
     required to make such deduction or withholding. Nothing herein contained
     shall interfere with the right of a Lender Party to arrange its tax affairs
     in whatever manner it thinks fit nor oblige any Lender Party to claim any
     tax credit or to disclose any information relating to its tax affairs or
     any computations in respect thereof or require any Lender Party to do
     anything that would prejudice its ability to benefit from any other
     credits, reliefs, remissions or repayments to which it may be entitled.

          (h) Each Lender Party agrees with the Borrower that it will take all
     reasonable actions by all usual means (i) to secure and maintain the
     benefit of all benefits available to it under the provisions of any
     applicable double tax treaty concluded by the United States of America to
     which it may be entitled by reason of the location of such Lender Party's
     Applicable Lending Office or place of incorporation or its status as an
     enterprise of any jurisdiction having any such applicable double tax
     treaty, if such benefit would reduce the amount payable by the Borrower or
     any Subsidiary Borrower in accordance with this Section 4.02 and (ii)
     otherwise to cooperate with the Borrower to minimize the amount payable by
     the Borrower or any Subsidiary Borrower pursuant to this Section 4.02;
     provided, however, that no Lender Party shall be obliged to disclose to the
     --------  -------
     Borrower or any Subsidiary Borrower any information regarding its tax
     affairs or tax computations nor to reorder its tax affairs or tax planning
     pursuant thereto.

          (i) Without prejudice to the survival of any other agreement of the
     Borrower or any Subsidiary Borrower hereunder, the agreements and
     obligations of the Borrower and the

                                       49

<PAGE>

     Subsidiary Borrowers contained in this Section 4.02 shall survive the
     payment in full of the Obligations.

          SECTION 4.03 Sharing of Payments, Etc./Borrowings. If any Lender Party
          -------------------------------------------------
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Advances made by it
(other than pursuant to Section 2.07, 2.11 or 4.02) in excess of its ratable
share of payments on account of the Advances obtained by all the Lender Parties,
such Lender Party shall forthwith purchase from the other Lender Parties such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
--------  -------
thereafter recovered from such purchasing Lender Party, such purchase from each
Lender Party shall be rescinded and such Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (i) the amount of such Lender Party's required repayment to
(ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. The Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 4.03 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 Party were the direct creditor of the
Borrower in the amount of such participation.

          SECTION 4.04 Evidence of Debt/Borrowings. (a) Each Lender Party shall
          ---------------------------------------
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender Party resulting from each
Advance owing to such Lender Party from time to time, including the amounts of
principal and interest payable and paid to such Lender Party from time to time
hereunder.

          (b) The Register maintained by the Agent pursuant to Section 10.07(c)
     shall include a control account, and a subsidiary account for each Lender
     Party, in which accounts (taken together) shall be recorded (i) the date
     and amount of each Borrowing made hereunder, the Type of Advances
     comprising such Borrowing and the Interest Period applicable thereto, (ii)
     the terms of each Assignment and Acceptance delivered to and accepted by
     it, (iii) the amount of any principal or interest due and payable or to
     become due and payable from the Borrower to each Lender Party hereunder,
     and (iv) the amount of any sum received by the Agent from the Borrower
     hereunder and each Lender Party's share thereof.

          (c) The entries made in the Register shall be conclusive and binding
     for all purposes, absent manifest error.

          SECTION 4.05 Payments and Computations/Letters of Credit. (a) Except
          --------------------------------------------------------
as otherwise provided in Section 4.06, the Borrower and each LC Subsidiary, as
the case may be, shall make each payment with respect to the Letters of Credit,
the Issuing Banks or the Lenders to be made by it free and clear of all claims,
charges, offsets or deductions whatsoever not later than (i) if such payment
relates to letter of credit facility fees or amounts (other than reimbursements
for payments in an Alternative Currency made under Letters of Credit) or if such
payment relates to a Letter of Credit denominated in Dollars, 12:00 noon (New
York City time) on the day when due in Dollars to the respective Issuing Bank at
its address referred to in Section 10.02 in same day funds and (ii) if such
payment relates to reimbursement of a Letter of Credit denominated in an
Alternative Currency, (A) in such Alternative Currency, at the respective
Issuing Bank's Payment Office therefor so long as such payment is made by the
close of business on the Business Day when due and (B) thereafter in Dollars (at
the then Dollar equivalent of the amount due on such preceding Business Day), by
12:00 noon (New York City time) to the respective Issuing Bank at its address
referred to in Section 10.02 in same day funds as provided in

                                       50

<PAGE>

Section 3.14 above. The respective Issuing Bank will promptly thereafter (if
amounts are owed to the Lenders by the terms hereof) cause to be distributed
like funds relating to the payment of reimbursement obligations or letter of
credit facility fees ratably (other than amounts payable pursuant to Section
3.04(a), 3.08, or 4.06) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to such Issuing Bank or to such Lender to be distributed to the
appropriate Lender or Lenders and applied in accordance with the terms of this
Agreement. Upon the Agent's acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 10.07(d), from and after the effective date specified in such Assignment
and Acceptance, the respective Issuing Bank shall make all payments hereunder in
respect of the interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

          (b) The Borrower and each LC Subsidiary hereby authorize each Lender
     and the Issuing Banks, if and to the extent payment owed to such Lender or
     such Issuing Bank (including the immediate repayments of participations
     purchased and funded by a Lender pursuant to Section 3.05) is not paid when
     due hereunder to charge from time to time against any or all of the
     Borrower's or such LC Subsidiary's accounts with such Lender or such
     Issuing Bank any amount so due.

          (c) All computations of interest based on the Base Rate and of letter
     of credit facility fees shall be made by the respective Issuing Bank on the
     basis of a year of 365 or 366 days, as the case may be, and all
     computations of interest based on the Federal Funds Rate and of Letter of
     Credit fees shall be made by the respective Issuing Bank on the basis of a
     year of 360 days, in each case for the actual number of days (including the
     first day but excluding the last day) occurring in the period for which
     such interest or letter of credit facility fees are payable. Each
     determination by an Issuing Bank of an interest rate hereunder shall be
     conclusive and binding for all purposes, absent manifest error.

          (d) Whenever any payment hereunder shall be stated to be due on a day
     other than a Business Day, such payment shall be made on the next
     succeeding Business Day, and such extension of time shall in such case be
     included in the computation of payment of interest or letter of credit
     facility fee, as the case may be.

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

          SECTION 4.06 Taxes/Letters of Credit. (a) Any and all payments by the
          ------------------------------------
Borrower and each LC Subsidiary hereunder shall be made free and clear of and
without deduction for any and all present or future Taxes. If the Borrower or
any LC Subsidiary shall be required by applicable Requirements of Law to deduct
any Taxes from or in respect of any sum payable under any Loan

                                       51

<PAGE>

Document to any Lender or Issuing Bank, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 4.06) such
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower and
such LC Subsidiary shall make such deductions, (iii) the Borrower or respective
LC Subsidiary shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Requirements of Law
and (iv) as soon as practicable after the date of any payment of Taxes, the
Borrower or respective LC Subsidiary shall furnish to the Issuing Bank, at its
address referred to in Schedule I-B, the original or a certified copy of a
receipt evidencing payment thereof, to the extent such a receipt is issued
therefore, or other evidence of payment thereof that is reasonably satisfactory
to the Issuing Bank.

          (b) The Borrower or the respective LC Subsidiary will indemnify each
     of the Lenders and any Issuing Bank for the full amount of Taxes and Other
     Taxes (including, without limitation, any taxes of any kind imposed or
     asserted by any jurisdiction on amounts payable under this Section 4.06)
     imposed on or paid by such Lender or Issuing Bank (as the case may be) and
     any liability (including penalties, additions to tax, interest and
     expenses) arising therefrom or with respect thereto, whether or not such
     Taxes or Other Taxes were correctly or legally asserted. A reimbursement
     shall be made within 30 days from the date such Lender or Issuing Bank (as
     the case may be) makes written demand therefor. Any Issuing Bank and each
     Lender, as the case may be, shall give prompt (within 10 Business Days)
     notice to the Borrower of the payment by such Issuing Bank or such Lender,
     as the case may be, of such amounts payable by the Borrower under the
     indemnity set forth in this subsection (c), and of the assertion by any
     governmental or taxing authority that such amounts are due and payable, but
     the failure to give such notice shall not affect the Borrower's or any LC
     Subsidiary's obligations hereunder to reimburse each Issuing Bank and each
     Lender for such Taxes or Other Taxes or taxes imposed or asserted on
     amounts payable under this Section 4.06, except that neither the Borrower
     nor any LC Subsidiary shall be liable for penalties or interest accrued or
     incurred after such 10 Business Day period until such time as it receives
     the notice contemplated above, after which time it shall be liable for
     interest and penalties accrued or incurred prior to or during such 10
     Business Day period and accrued or incurred after such receipt. Neither the
     Borrower nor any LC Subsidiary shall be liable for any penalties, interest,
     expense or other liability with respect to such Taxes or Other Taxes after
     it has reimbursed the amount thereof to an Issuing Bank or the appropriate
     Lender.

          (c) Each Lender Party organized under the laws of a jurisdiction
     outside the United States, on or prior to the date of its execution and
     delivery of this Agreement in the case of each initial Lender party and on
     the date of the Assignment and Acceptance pursuant to which it becomes a
     Lender Party in the case of each other Lender Party, and from time to time
     thereafter if requested in writing by the Borrower (but only so long as
     such Lender Party remains lawfully able to do so), shall provide the
     Borrower 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 Party 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 payable by the Borrower or
     certifying that the interest is effectively connected with the conduct of a
     trade or business in the United States. Similarly, with respect to each LC
     Subsidiary organized under the laws of a jurisdiction outside the United
     States, each Lender Party, on or prior to the date of its execution and
     delivery of this Agreement in the case of each initial Lender Party and on
     the date of the Assignment and Acceptance pursuant to which it becomes a
     Lender Party in the case of each other Lender Party, and from time to time
     thereafter if requested in writing by the Borrower or such LC Subsidiary
     (but only so long as such Lender Party remains lawfully able to do so),
     shall provide the Borrower or such LC Subsidiary with appropriate
     documentation certifying applicable exemptions from withholding tax imposed
     by any jurisdiction on payments

                                       52

<PAGE>

of interest payable by such LC Subsidiary. If the forms provided by a Lender
Party at the time such Lender Party first becomes a party to this Agreement
indicate a withholding tax (including, without limitation, United States
interest withholding) tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "Taxes") unless and until such Lender Party
                                   -----
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided however, that, if at the date of
                                    -------- -------
the Assignment and Acceptance pursuant to which a Lender Party becomes a party
to this Agreement, the Lender Party assignor was entitled to payments under
subsection (a) of this Section 4.06 in respect of withholding tax with respect
to interest paid at such date, then, to such extent, the term Taxes shall
include (in addition to withholding taxes that may be imposed in the future or
other amounts otherwise includible in Taxes) withholding tax, if any, applicable
with respect to the Lender Party assignee on such date.

          (d) For any period with respect to which a Lender Party has failed to
     provide the Borrower or any LC Subsidiary with the appropriate form
     described in Section 4.06(c) (other than if such failure is due to a change
                                   ----- ----
     in law occurring subsequent to the date on which a form originally was
     required to be provided, or if such form otherwise is not required under
     the first two sentences of subsection (c) above), such Lender Party shall
     not be entitled to indemnification under Section 4.06(a) with respect to
     Taxes imposed by any jurisdiction (including, without limitation, the
     United States); provided, however, that should a Lender Party become
                     --------  -------
     subject to Taxes because of its failure to deliver a form required
     hereunder, the Borrower shall take such steps as the Lender Party shall
     reasonably request to assist the Lender Party to recover such Taxes.

          (e) Without affecting its rights under this Section 4.06 or any
     provision of this Agreement, each Lender Party agrees that if any Taxes or
     Other Taxes are imposed and required by law to be paid or to be withheld
     from any amount payable to any Lender Party or its Applicable Lending
     Office with respect to which the Borrower or any LC Subsidiary would be
     obligated pursuant to this Section 4.06 to increase any amounts payable to
     such Lender Party or to pay any such Taxes or Other Taxes, such Lender
     Party shall use reasonable efforts to select an alternative Applicable
     Lending Office which would not result in the imposition of such Taxes or
     Other Taxes; provided, however, that no Lender Party shall be obligated to
                  --------  -------
     select an alternative Applicable Lending Office if such Lender Party
     determines that (i) as a result of such selection such Lender Party would
     be in violation of an applicable law, regulation, or treaty, or would incur
     unreasonable additional costs or expenses or (ii) such selection would be
     inadvisable for regulatory reasons or inconsistent with the interests of
     such Lender Party.

          (f) In the event that an additional payment is made under this Section
     4.06 for the account of any Lender Party and such Lender Party, in its sole
     discretion, determines that it has finally and irrevocably received or been
     granted a credit against or release or remission for, or repayment of, any
     tax paid or payable by it in respect of or calculated with reference to the
     deduction or withholding giving rise to such payment, such Lender Party
     shall, to the extent that it determines that it can do so without prejudice
     to the retention of the amount of such credit, relief, remission or
     repayment, pay to the Borrower or LC Subsidiary, as the case may be, such
     amount as such Lender Party shall, in its sole discretion, have determined
     to be attributable to such deduction or withholding and which will leave
     such Lender Party (after such payment) in no worse position than it would
     have been in if the Borrower or LC Subsidiary had not been required to make
     such deduction or withholding. Nothing herein contained shall interfere
     with the right of a Lender Party to arrange its tax affairs in whatever
     manner it thinks fit nor oblige any Lender Party to claim any tax credit or
     to disclose any information relating to its tax affairs or any computations
     in respect thereof or require any Lender Party to do anything that would
     prejudice

                                       53

<PAGE>

     its ability to benefit from any other credits, reliefs, remissions or
     repayments to which it may be entitled.

          (g) Each Lender Party agrees with the Borrower that it will take all
     reasonable actions by all usual means (i) to secure and maintain the
     benefit of all benefits available to it under the provisions of any
     applicable double tax treaty concluded by the United States of America to
     which it may be entitled by reason of the location of such Lender Party's
     Applicable Lending Office or place of incorporation or its status as an
     enterprise of any jurisdiction having any such applicable double tax
     treaty, if such benefit would reduce the amount payable by the Borrower or
     any LC Subsidiary in accordance with this Section 4.02 and (ii) otherwise
     to cooperate with the Borrower to minimize the amount payable by the
     Borrower or any LC Subsidiary pursuant to this Section 4.02; provided,
                                                                  --------
     however, that no Lender Party shall be obliged to disclose to the Borrower
     -------
     or any LC Subsidiary any information regarding its tax affairs or tax
     computations nor to reorder its tax affairs or tax planning pursuant
     hereto.

          (h) Without prejudice to the survival of any other agreement of the
     Borrower or any LC Subsidiary hereunder, the agreements and obligations of
     the Borrower and the LC Subsidiaries contained in this Section 4.06 shall
     survive the payment in full of the Obligations.

          SECTION 4.07 Sharing of Payments, Etc./Letters of Credit. If any
          -------------------------------- -----------------------
Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of any Letter of
Credit Liability of the Borrower or any LC Subsidiary hereunder (other than
pursuant to Section 3.08 or 4.06) in excess of its LC Commitment Percentage of
any such payments on account of such Letter of Credit Liability obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in such other Lenders' participations purchased pursuant to
Section 3.05 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 other Lender shall be rescinded and each such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to each 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. The Borrower and each LC Subsidiary agree that
any Lender so purchasing a sub-participation from another Lender pursuant to
this Section 4.07 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
sub-participation as fully as if such Lender were the direct creditor of the
Borrower or each LC Subsidiary in the amount of such participation.

                                   ARTICLE V

                              CONDITIONS OF LENDING

          SECTION 5.01 Conditions Precedent to Effectiveness of this Agreement.
          --------------------------------------------------------------------
This Agreement shall become effective on and as of the first date (the
"Effective Date") on which the following conditions precedent have been
 --------------
satisfied:

          (a) All governmental and third party consents and approvals necessary
     in connection with the transactions contemplated hereby shall have been
     obtained (without the imposition of any conditions that are not acceptable
     to the Lenders) and shall remain in effect, and no law or regulation shall
     be applicable in the reasonable judgment of the Lenders that restrains,
     prevents or imposes materially adverse conditions upon the transactions
     contemplated hereby.

                                       54

<PAGE>

          (b) The Agent shall have received the following in form and substance
     satisfactory to the Agent:

               (i) The notes to the order of the Lenders to the extent requested
          by any Lender pursuant to Section 2.02(g).

               (ii) Certified copies of the resolutions of the board of
          directors (or persons performing similar functions) of each domestic
          Loan Party approving the Agreement and each of the Loan Documents to
          which it is or is to be a party, and of all documents evidencing other
          necessary Governmental Authorizations, or other necessary consents,
          approvals, authorizations, notices, filings or actions, with respect
          to this Agreement and any of the Loan Documents to which it is or is
          to be a party.

               (iii) A copy of a certificate of the Secretary of State (or
          equivalent Governmental Authority) of the jurisdiction of organization
          of each domestic Loan Party listing the certificate or articles of
          incorporation (or similar Constitutive Document) of each such Loan
          Party and each amendment thereto on file in the office of such
          Secretary of State (or such governmental authority) and certifying (A)
          that such amendments are the only amendments to such Person's
          certificate or articles of incorporation (or similar constitutive
          document) on file in its office, (B) if customarily available in such
          jurisdiction, that such Person has paid all franchise taxes (or the
          equivalent thereof) to the date of such certificate and (C) that such
          Person is duly organized and is in good standing under the laws of the
          jurisdiction of its organization.

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

               (v) A guarantee, in substantially the form of Exhibit D hereto
          (the "Subsidiary Guaranty"), duly executed by each wholly-owned
                -------------------
          Domestic Subsidiary (other than the Excluded Subsidiaries).

               (vi) A security agreement in substantially the form of Exhibit E
          hereto (together with each other security agreement and security
          agreement supplement delivered pursuant to Section 7.01(i), the
          "Security Agreement")), duly executed by the Borrower and each
           ------------------
          wholly-owned Domestic Subsidiary (other than the Excluded
          Subsidiaries), together with:

                    (A) to the extent available on the Effective Date,
               certificates representing the Initial Pledged Equity (as defined
               in the Security Agreement, other than equity interests in
               Excluded Subsidiaries, but including equity interests in
               first-tier Special Purpose Subsidiaries) accompanied by undated
               stock powers (or similar instruments) executed in blank;

                    (B) appropriate UCC-1 financing statements under the Uniform
               Commercial Code of all jurisdictions that the Agent may deem
               necessary or desirable in order to perfect and protect the first
               priority Liens created under the Security Agreement, covering the
               Collateral described in the Security Agreement;

                                       55

<PAGE>

                    (C) evidence that all other action that the Agent and, as
               the case may be, the Collateral Agent may deem necessary or
               desirable in order to perfect and protect the first priority
               liens and security interests created under the Security Agreement
               has been taken, including without limitation, executed Control
               Agreements in respect of all "Securities Account" and "Deposit
               Accounts" as contemplated by this Agreement and the Security
               Agreement.

               (vii) The Intercreditor Agreement duly executed by the Agent on
          behalf of the Lenders, the Collateral Agent, as defined therein, and
          any Lender who is then a party to a Hedge Agreement.

               (viii) A favorable opinion of General Counsel or Associate
          General Counsel to the Loan Parties, substantially in the form of
          Exhibit F-1 hereto and as to such other matters as any Lender through
          the Agent may reasonably request.

               (ix) Favorable opinions of Skadden, Arps, Slate, Meagher & Flom
          LLP, special New York counsel to the Loan Parties, in substantially
          the forms of Exhibits F-2 and F-3 hereto and as to such other matters
          as any Lender through the Agent may reasonably request.

               (x) A favorable opinion of Shearman & Sterling, special New York
          counsel to the Agent, in substantially the form of Exhibit G hereto
          and as to such other matters as any Lender through the Agent may
          reasonably request.

               (xi) Such other approvals, opinions or documents as the Agent may
          reasonably request.

          (c) The Borrower shall have paid all accrued fees and expenses of the
     Agent and the Lenders (including the accrued fees and expenses of counsel
     to the Agent).

          (d) All amounts owing by the Borrower or any of its Subsidiaries to
     the lenders and agents under the Existing Credit Agreements shall have
     been, or concurrently with the initial extension of credit made on the
     Effective Date shall be, paid in full, and all commitments of the lenders
     under the Existing Credit Agreements (except for the Existing Letters of
     Credit issued thereunder) shall have been, or concurrently with the initial
     extension of credit made on the Effective Date shall be, terminated in
     accordance with the terms of the Existing Credit Agreements.

          (e) The Borrower shall have issued convertible notes in a principal
     amount of not less than $1,000,000,000.

          (f) A preliminary valuation review of the domestic trademarks and
     inventories of the Loan Parties that is satisfactory to the Agent and the
     Joint Lead Arrangers.

          (g) A certificate as to the amount of cash and property, respectively,
     on the close of business on the Business Day immediately preceding the
     Effective Date in the Deposit Accounts and Securities Accounts,
     respectively, referred to in Section 5.01(b)(vi) above.

          SECTION 5.02 Conditions Precedent to Each Advance/Issuance. The
          ----------------------------------------------------------
obligation of each Lender to make an Advance (including a Swing Line Advance),
including on the occasion of each Borrowing (including the initial Borrowing),
and the obligation of each Issuing Bank to Issue each Letter

                                       56

<PAGE>

of Credit (including the initial Letter of Credit) shall be subject to the
further conditions precedent that on the date of such Advance or Issuance the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the Borrower or the respective
Subsidiary Borrower of the proceeds of such Advance and the request for Issuance
by the Borrower, a Subsidiary Borrower or an LC Subsidiary shall constitute a
representation and warranty by the Borrower, such Subsidiary Borrower or such LC
Subsidiary that on the date of such Borrowing or Issuance such statements are
true):

          (a) The representations and warranties contained in Section 6.01
     hereof, Section 6 of the Security Agreement and Section 6 of the Subsidiary
     Guaranty are correct on and as of the date of such Borrowing or Issuance,
     before and after giving effect to such Borrowing or Issuance, and to the
     application of the proceeds therefrom, as though made on and as of such
     date, and

          (b) No event has occurred and is continuing, or would result from such
     Borrowing or from the application of the proceeds therefrom or from such
     Issuance, which constitutes an Event of Default or Default.

          (c) The making of such Advance will be in compliance with the
     respective criteria set forth in Section 2.01(a)(i) and (ii) and Section
     2.01(b)(i) and (ii), as the case may be, or the Issuance of such Letter of
     Credit will be in compliance with the criteria set forth in Section
     3.01(i),(ii) and (iii), as the case may be.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

          SECTION 6.01 Representations and Warranties of the Borrower. The
          -----------------------------------------------------------
Borrower represents and warrants as follows:

          (a) The Borrower is a corporation duly organized, validly existing and
     in good standing under the laws of Delaware; each LC Subsidiary and each
     Subsidiary Borrower is a corporation duly organized, validly existing and
     in good standing under the laws of its jurisdiction of incorporation. The
     Borrower and each of its Subsidiaries possess all powers (corporate or
     otherwise) and all other authorizations and licenses necessary to engage in
     their respective businesses, except where the failure to so possess would
     not have a Material Adverse Effect.

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

                                       57

<PAGE>

          (c) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body is required
     for the due execution, delivery and performance by any Loan Party of the
     Loan Documents to which it is a party.

          (d) Each Loan Document is the legal, valid and binding obligation of
     the Loan Party thereto enforceable against such Loan Party in accordance
     with its terms, except as limited by bankruptcy, insolvency or other laws
     of general application relating to or affecting the enforcement of
     creditors' rights generally and general principles of equity (regardless of
     whether considered in a proceeding in equity or at law).

          (e) The Consolidated balance sheets of the Borrower and its
     Subsidiaries as of February 3, 2001, and the related Consolidated
     statements of income and retained earnings of the Borrower and its
     Subsidiaries for the Fiscal Year then ended, certified by Deloitte & Touche
     LLP, copies of which have been furnished to each Lender Party, fairly
     present the Consolidated financial condition of the Borrower and its
     Subsidiaries as at such date and the results of the operations of the
     Borrower and its Subsidiaries for the period ended on such date, all in
     accordance with generally accepted accounting principles consistently
     applied. Since February 3, 2001, there has been no Material Adverse Change.

          (f) There is no pending or, to the best of Borrower's knowledge,
     threatened action or proceeding affecting the Borrower or any of its
     Subsidiaries before any court, governmental agency or arbitrator, which has
     a reasonable probability (taking into account the exhaustion of all appeals
     and the assertion of all defenses) of having a Material Adverse Effect or
     which purports to affect the legality, validity or enforceability of any
     Loan Document.

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

          (h) Neither the Borrower nor any of its Subsidiaries is an "investment
     company," or an "affiliated person" of, or "promoter" or "principal
     underwriter" for, an "investment company," as such terms are defined in the
     Investment Company Act of 1940, as amended.

          (i) Set forth on Schedule VIII hereto is a complete and accurate list,
     as of the date hereof, of all Plans of the Borrower and its Subsidiaries.
     Neither the Borrower nor any ERISA Affiliate is a party or subject to, or
     has any obligation to make payments, or incur any material Withdrawal
     Liability, to, any Multiemployer Plan.

          (j) Except as provided in Schedule X, No ERISA Event has occurred with
     respect to any Plan or is reasonably expected to occur with respect to any
     Plan that, when taken together with all other such ERISA Events for which
     liability is reasonably expected to occur would reasonably be likely to
     result in a Material Adverse Effect.

          (k) Except as provided in Schedule X, Schedule B (Actuarial
     Information) to the most recently completed annual report (Form 5500
     Series) for each Plan of the Borrower or its Subsidiaries, copies of which
     have been or will be filed with the Internal Revenue Service, is complete
     and accurate in all material respects and fairly presents the funding
     status of such Plan, and since the date of such Schedule B there has been
     no material adverse change in such funding status which would reasonably be
     likely to result in a Material Adverse Effect.

                                       58

<PAGE>

          (l) Except as provided in Schedule X, Neither the Borrower nor any
     ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan
     that such Multiemployer Plan is in reorganization or has been terminated,
     within the meaning of Title IV of ERISA and no Multiemployer Plan is
     reasonably expected to be in reorganization or to be terminated, within the
     meaning of Title IV of ERISA.

          (m) Each of Borrower and its Subsidiaries is in compliance with all
     Requirements of Law applicable to their properties, assets and business
     where the failure to so comply would (as to all such failures to comply in
     the aggregate) have a Material Adverse Effect. There are no proceedings
     pending or, to the knowledge of any Loan Party, threatened in writing, to
     terminate or modify any license, permit or other approval issued by a
     Governmental Authority, the termination or modification of which (in the
     aggregate as to all such matters) would have a Material Adverse Effect.

          (n) The Borrower is, individually and together with its Subsidiaries,
     Solvent.

          (o) As of the Effective Date, set forth on Schedule XI hereto is a
     complete and accurate list of all Subsidiaries of the Borrower (except
     Excluded Subsidiaries but including Special Purpose Subsidiaries), showing
     as of the Effective Date hereof (as to each such Subsidiary) the
     jurisdiction of its organization, the number of shares or other units of
     each class of its Equity Interests authorized, and the number outstanding,
     on the date hereof and the percentage of each such class of its Equity
     Interests owned (directly or indirectly) by the Borrower or any Subsidiary
     thereof and the number of shares or other units covered by all outstanding
     options, warrants, rights of conversion or purchase and similar rights at
     the date hereof, except for any obligations or rights of the Borrower or
     any of its Subsidiaries to acquire any minority interest in any Subsidiary
     of the Borrower that is a partnership; and in the case of each Special
     Purpose Subsidiary a summary of the material assets in each such Special
     Purpose Subsidiary. All of the outstanding Equity Interests in each such
     Subsidiary have (A) (in the case of Subsidiaries that are corporations)
     been validly issued, are fully paid and non-assessable and are (B) to the
     extent owned by the Borrower or one or more of its Subsidiaries, free and
     clear of all Liens, except those created under the Collateral Documents or
     Permitted Liens.

          (p) As of the Effective Date, neither the Information Memorandum nor
     any other information, exhibit or report furnished by any Loan Party to any
     Agent or any Lender Party in connection with the negotiation and
     syndication of the Loan Documents or pursuant to the terms of the Loan
     Documents contained any untrue statement of a material fact or omitted to
     state a material fact necessary to make the statements made therein not
     misleading; provided that all financial projections, if any, that have been
     or will be prepared by the Borrower and made available to the Joint Lead
     Arrangers, the Agent, any Lender or any potential Lender, or any other
     party hereto, including, without limitation, any projections described in
     or otherwise contemplated by Section 7.04(ix) hereof, have been or will be
     prepared in good faith based upon reasonable assumptions, it being
     understood by the Lenders and all the other parties hereto that such
     projections are subject to significant uncertainties and contingencies,
     many of which are beyond the Borrower's control, and that no assurances can
     be given that the projections will be realized.

          (q) Except as described on Schedule XII hereto, the operations and
     properties of each Loan Party comply in all material respects with all
     applicable Environmental Laws and Environmental Permits, except where any
     such failure to comply would not be reasonably expected to have a Material
     Adverse Effect, and no Environmental Action is pending or, to

                                       59

<PAGE>

     Borrower's knowledge, is threatened against any Loan Party or any of their
     properties that would be reasonably likely to have a Material Adverse
     Effect.

                                  ARTICLE VII

                            COVENANTS OF THE BORROWER

          SECTION 7.01 Affirmative Covenants. The Borrower will, unless the
          ----------------------------------
Majority Lenders shall otherwise consent in writing:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
              -------------------- ----
     Subsidiaries to comply, in all material respects with all applicable laws
     (including, without limitation, all Environmental Laws), rules, regulations
     and orders, such compliance to include, without limitation, paying before
     the same become delinquent all taxes, assessments and governmental charges
     imposed upon it or upon its property except to the extent contested in good
     faith or where the failure to comply would not have a Material Adverse
     Effect.

          (b) Preservation of Existence, Etc. Preserve and maintain, and cause
              ------------------------- ----
     each of its Subsidiaries to preserve and maintain, its existence (corporate
     or otherwise), rights (charter and statutory), and franchises except if, in
     the reasonable business judgment of the Borrower or such Subsidiary, as the
     case may be, it is in its best economic interest not to preserve and
     maintain such rights or franchises and such failure to preserve and
     maintain such rights or franchises would not materially adversely affect
     the rights of the Lenders or the Issuing Banks hereunder or the ability of
     any Loan Party to perform its obligations under the respective Loan
     Documents (it being understood that the foregoing shall not prohibit, or be
     violated as a result of, any transactions be any Loan Party or other
     Subsidiary otherwise permitted under Section 7.02 below).

          (c) Visitation Rights. Permit, and cause each of its Subsidiaries to
              -----------------
     permit, the Agent, any Issuing Bank and any Lender or any agents or
     representatives thereof from time to time, during reasonable business
     hours, without hindrance or delay, and upon reasonable prior notice, to
     examine and make copies of and abstracts from its records and books of
     account, to visit its properties, and to discuss the affairs, finances and
     accounts of the Borrower and its Subsidiaries with any of their respective
     directors, officers or agents.

          (d) Keeping of Books. Keep, and cause each of its Subsidiaries to
              ----------------
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial transactions and the assets and business of
     the Borrower and each of its Subsidiaries in accordance with sound business
     practice.

          (e) Maintenance of Properties, Etc. Maintain and preserve, and cause
              ------------------------- ----
     each of its Subsidiaries to maintain and preserve, all of its properties
     which are used or useful in the conduct of its business in good working
     order and condition, ordinary wear and tear excepted, consistent with sound
     business practice, except where the failure to so maintain and preserve
     would not have a Material Adverse Effect.

          (f) Maintenance of Insurance. Maintain, and cause each of its
              ------------------------
     Subsidiaries to maintain, insurance (other than earthquake or terrorism
     insurance) in amounts, from responsible and reputable insurance companies
     or associations, with limitations, of types and on terms as is customary
     for the industry; provided, that, the Borrower and each of its Subsidiaries
                       --------  ----
     may self-insure risks and liabilities in accordance with its practice as of
     the date hereof and may in

                                       60

<PAGE>

     addition self-insure risks and liabilities in amounts as are customarily
     self-insured by similarly situated Persons in the industry.

          (g) Employment of Technology, Disposal of Hazardous Materials, Etc.
              --------------------------------------------------------- ----
     (i) Employ, and cause each of its Subsidiaries to employ, appropriate
     technology and compliance procedures to maintain compliance with any
     applicable Environmental Laws except where the failure to so employ would
     not have a Material Adverse Effect, (ii) obtain and maintain, and cause
     each of its Subsidiaries to obtain and maintain, any and all material
     permits required by applicable Environmental Laws in connection with its or
     its Subsidiaries' operations and (iii) dispose of, and cause each of its
     Subsidiaries to dispose of, any and all Hazardous Substances only at
     facilities and with carriers reasonably believed to possess valid permits
     under RCRA, if applicable, and any applicable state and local Environmental
     Laws except where the failure to so dispose would not have a Material
     Adverse Effect. The Borrower shall use its best efforts, and cause each of
     its Subsidiaries to use its best efforts, to obtain all certificates
     required by law to be obtained by the Borrower and its Subsidiaries from
     all contractors employed by the Borrower or any of its Subsidiaries in
     connection with the transport or disposal of any Hazardous Substances
     except where failure to transport or dispose in accordance with any
     applicable Environmental Laws would not have a Material Adverse Effect.

          (h) Environmental Matters. If the Borrower or any of its Subsidiaries
              ---------------------
     shall:

               (i) receive written notice that any material violation of any
          Environmental Laws may have been committed or is about to be committed
          by the Borrower or any of its Subsidiaries the cure of which would
          result in expenditures exceeding $20,000,000;

               (ii) receive written notice that any administrative or judicial
          complaint or order has been filed or is about to be filed against the
          Borrower or any of its Subsidiaries alleging any material violation of
          any Environmental Laws or requiring the Borrower or any of its
          Subsidiaries to take any action (which, if taken, would result in
          expenditures exceeding $20,000,000) in connection with the release or
          threatened release of Hazardous Substances or solid waste into the
          environment; or

               (iii) receive written notice from a federal, state, foreign or
          local governmental agency or private party alleging that the Borrower
          or any of its Subsidiaries is liable or responsible for costs in
          excess of $20,000,000 associated with the response to cleanup,
          stabilization or neutralization of any Environmental Activity;

     then it shall provide the Agent with a copy of such notice within five
     Business Days of the Borrower's or such Subsidiary's receipt thereof.

          (i) Covenant to Guarantee Obligations and Give Security. The Borrower
              ---------------------------------------------------
     shall, in each case at the Borrower's expense:

               (i) in connection with the formation or acquisition of a
          wholly-owned Domestic Subsidiary or in the event a wholly-owned
          Domestic Subsidiary which was an Excluded Subsidiary (pursuant to
          clause (c) or (f) of the definition thereof) ceases to be such, within
          45 days after each such circumstance (A) furnish to the Agent a
          description of the material personal properties of such wholly-owned
          Domestic Subsidiary and (B) cause each such Domestic Subsidiary
          (except any Excluded

                                       61

<PAGE>

          Subsidiary) to duly execute and deliver to the Agent a counterpart to
          the Subsidiary Guaranty (in the form of the supplement attached as an
          exhibit thereto),

               (ii) (A) within 45 days after the formation or acquisition of a
          wholly-owned Domestic Subsidiary (except any Excluded Subsidiary) or
          after a wholly-owned Domestic Subsidiary which was an Excluded
          Subsidiary (pursuant to clause (c) or (f) of the definition thereof)
          ceases to be such, duly execute and deliver, and cause each such
          wholly-owned Domestic Subsidiary and each direct and indirect parent
          of such wholly-owned Domestic Subsidiary (if it has not already done
          so) to duly execute and deliver, to the Collateral Agent a counterpart
          to the Security Agreement (in the form of the supplement attached as
          an exhibit thereto), with respect to the Equity Interests in and
          assets of such wholly-owned Domestic Subsidiary, to the extent
          contemplated by the Security Agreement, (B) within 45 days after the
          formation or acquisition of a non-wholly-owned Domestic Subsidiary
          (except any Excluded Subsidiary), duly execute and deliver, and cause
          each direct and indirect Domestic Subsidiary which is a direct or
          indirect parent of such non-wholly-owned Domestic Subsidiary (if it
          has not already done so) to duly execute and deliver, to the
          Collateral Agent a counterpart to the Security Agreements (in the form
          of the supplement attached as an exhibit thereto), with respect to the
          Equity Interests held by the Borrower or its Subsidiary in such
          non-wholly owned Domestic Subsidiary and (C) within 45 days after the
          formation or acquisition of a first-tier Special Purpose Subsidiary
          and within 60 days after the formation or acquisition of a first-tier
          Foreign Subsidiary, duly execute and deliver, and cause its respective
          Domestic Subsidiary (if it has not already done so) to duly execute
          and deliver to the Collateral Agent a counterpart to the Security
          Agreement (in the form of a supplement attached as an exhibit thereto)
          with respect to, in the case of each such first-tier Special Purpose
          Subsidiary, the Equity Interests held by the Borrower or such Domestic
          Subsidiary in such Special Purpose Subsidiary and, in the case of each
          such first-tier Foreign Subsidiary, 65% of the voting Equity Interests
          and 100% of the non-voting Equity Interests held by the Borrower or
          such Domestic Subsidiary in such first-tier Foreign Subsidiary.

               (iii) within 45 days after such formation or acquisition of a
          wholly-owned Domestic Subsidiary (except any Excluded Subsidiary) or
          after a wholly-owned Domestic Subsidiary which was an Excluded
          Subsidiary (pursuant to clause (c) or (f) of the definition thereof)
          ceases to be such, take, and cause such wholly-owned Domestic
          Subsidiary or such parent to take, whatever action (including, without
          limitation, the filing of Uniform Commercial Code financing
          statements, the giving of notices and the endorsement of notices on
          title documents) may be necessary or advisable in the opinion of the
          Collateral Agent to vest in the Collateral Agent valid and subsisting
          Liens on the properties purported to be subject to the pledges,
          assignments, security agreements and security agreement supplements
          delivered pursuant to this Section 7.01(i), enforceable against all
          third parties in accordance with their terms,

               (iv) within 60 days after such formation or acquisition of a
          wholly-owned Domestic Subsidiary (except any Excluded Subsidiary) or
          after a wholly-owned Domestic Subsidiary which was an Excluded
          Subsidiary (pursuant to clause (c) or (f) of the definition thereof)
          ceases to be such deliver to the Agent, upon the request of the Agent
          in its sole discretion, a signed copy of a favorable opinion (subject
          to customary qualifications, limitations and exceptions), addressed to
          the Agent and the other Lender Parties, of counsel for such Domestic
          Subsidiary as a Loan Party acceptable to the Agent as to the matters
          contained in clauses (i) and (ii) above, as to such guaranties,
          guaranty

                                       62

<PAGE>

          supplements, pledges, assignments, security agreements and security
          agreement supplements being legal, valid and binding obligations of
          the respective Domestic Subsidiary as a Loan Party thereto enforceable
          in accordance with their terms, as to the matters contained in clause
          (iii) above, as to such recordings, filings, notices, endorsements and
          other actions being sufficient to create valid perfected Liens on such
          properties, and as to such other matters as the Agent may reasonably
          request, which opinions shall be substantially equivalent to the
          opinions of counsel to the Loan Parties as to such matters delivered
          on the Effective Date, and

               (v) at any time and from time to time, promptly execute and
          deliver any and all further instruments and documents and take all
          such other action as the Agent may deem necessary or desirable in
          obtaining the full benefits of, or in perfecting and preserving the
          Liens of, such guaranties, pledges, assignments, security agreements
          and security agreement supplements, to the extent required by this
          Agreement, the Security Agreement or the Subsidiary Guaranty.

          Provided that nothing in this Section 7.01(i) shall require any
          Excluded Subsidiary or any Foreign Subsidiary to guarantee the
          Obligations of any Loan Party hereunder or grant a Security Interest
          in any of its assets to secure the payment of such Obligations.

          (j) Further Assurances.
              ------------------

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

               (ii) Within 30 days of the Borrower or any Loan Party obtaining
          any rights in any trademarks or service marks, unless within such
          period such rights are transferred to a Special Purpose Subsidiary,
          the Borrower will, or will cause such Loan Party, to enter into such
          Security Agreements, Security Agreement Supplements and other
          documents and take such other actions, in each case as reasonably
          requested by the Collateral Agent so that the Collateral Agent will
          obtain a first priority security interest in such trademarks and
          service marks.

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

                                       63

<PAGE>

               (iv) (A) Maintain, and cause each of its Domestic Subsidiaries
          (other than Excluded Subsidiaries referred to in clauses (d), (e), (f)
          and (g) of the definition thereof) to maintain, no more than an
          aggregate amount of $25,000,000 in all deposit accounts and securities
          accounts of the Borrower and all such Domestic Subsidiaries (other
          than such Excluded Subsidiaries), except for deposit accounts and
          securities accounts with the Collateral Agent or with any bank or
          financial institution which has entered into an acceptable Control
          Agreement with the Collateral Agent and maintain, and cause each of
          its Domestic Subsidiaries (other than such Excluded Subsidiaries) to
          maintain, in such deposit accounts and securities accounts all amounts
          transferred therein except such amounts which are transferred
          therefrom from time to time in the ordinary course of business to pay
          obligations of the Borrower and its Subsidiaries; provided, however,
                                                            --------  -------
          that the Borrower and such Domestic Subsidiaries may maintain
          retirement plan accounts and other similar accounts maintained in the
          ordinary course of business without regard to such restriction;

                    (B) transfer, and cause each of such Domestic Subsidiaries
               to transfer, all cash received in their operations as promptly as
               practicable after receipt thereof (and in any event no later than
               the Business Day immediately succeeding receipt thereof) by each
               bank or other financial institution receiving or holding deposits
               for the Borrower or such Domestic Subsidiary to a deposit account
               of the Collateral Agent or a deposit account or a securities
               account maintained with a financial institution which has entered
               into an acceptable Control Agreement with the Collateral Agent,
               provided that such cash need not be required to be transferred on
               any Business Day from any such account in which the total funds
               in such account at the end of such Business Day are less than
               $5,000,000; and

                    (C) agrees not to enter into, and agrees to cause each of
               such Domestic Subsidiaries not to enter into, any agreement,
               other than the Loan Documents, that would restrict the flow of
               cash received in their operations as described in subclause (B)
               above.

               (v) (A) No later than sixty (60) days after the Effective Date,
          deliver to the Agent, a favorable opinion of counsel for GPS
          (Maryland), Inc., with respect to the matters set forth in paragraphs
          1, 2, 3(i), 4 and 5 of the opinion delivered on the Effective Date
          pursuant to Section 5.01(b)(viii) hereof (with appropriate changes to
          reflect the law of the State of Maryland) and certified copies of
          resolutions of the board of directors (or persons performing similar
          functions) of such foreign Loan Party approving this Agreement and
          each of the other Loan Documents to which it is or is to be a party,
          and of all documents evidencing other necessary Governmental
          Authorizations, if any, or other necessary consents, approvals,
          authorizations, notices, filings or actions, with respect to this
          Agreement and any of the other documents to which it is or is to be a
          party, together with a certificate of the Secretary or an Assistant
          Secretary (or equivalent officer) certifying the names of each such
          Loan Party authorized to sign each Loan Document to which it is or is
          to be a party and the other documents delivered hereunder and that its
          Constitutive Documents are still in force and effect, and if
          customarily available, with a certificate from the appropriate
          Governmental Authority as to the good standing of such Loan Party
          under the laws of the jurisdiction of its incorporation, with such
          resolutions and certificates, if in another language, to be translated
          into English . To the extent that such documents with respect to any
          foreign Loan Party are not delivered within the time period specified
          in Section 7.01(j)(v)(A) above and thereafter until such documents are

                                       64

<PAGE>

          delivered to the Agent, (i) in the case of a Subsidiary Borrower, such
          Subsidiary Borrower may not request, and no Swing Line Lender shall
          make to such Subsidiary Borrower, any Swing Line Advance; and (ii) in
          the case of an LC Subsidiary, such LC Subsidiary may not request the
          Issuance of, and no Issuing Bank shall Issue, any Letter of Credit for
          its account. The remedies provided herein are the exclusive remedies
          for the failure to timely deliver the respective documents herein
          referred to.

                    (B) Not later than sixty (60) days after the Effective Date,
               take such actions, and cause each other respective Loan Party to
               take such actions, so that the Subsidiaries listed on Schedule XV
               issue certificated securities evidencing the ownership interest
               therein of the respective Loan Party and pledge, and cause to be
               pledged, to the Collateral Agent such certificated securities
               pursuant to the Security Agreement.

          (vi) No later than the tenth Business Day after the Effective Date,
     take all necessary actions, and cause each respective Loan Party to take
     all necessary actions, so that each Securities Account (as defined in the
     Security Agreement and set forth on Schedule VII thereto on the Effective
     Date) is subject to an effective Securities Account Control Agreement in
     favor of the Collateral Agent by such tenth Business Day or if any such
     Securities Account is not then subject to such Securities Account Control
     Agreement, transfer by such tenth Business Day all funds in such Securities
     Account to a Deposit Account subject to an Account Control Agreement (each
     as defined in the Security Agreement) or a Securities Account then subject
     to such Securities Account Control Agreement.

          (k) Use of Proceeds. Use the proceeds of the Advances and issuances of
              ---------------
     Letters of Credit solely to repay amounts owing under the Existing Credit
     Agreements and for general corporate purposes of the Borrower and its
     Subsidiaries.

          SECTION 7.02 Negative Covenants. The Borrower will not, without the
          ------------------------------
written consent of the Majority Lenders:

          (a) Liens, Etc. Create or suffer to exist, or permit any of its
              ----- ----
     Subsidiaries to create or suffer to exist, any Lien (including an
     assignment of any right to receive income), other than:

               (i) Permitted Liens;

               (ii) Liens upon or in any real property, equipment, fixed asset
          or capital asset acquired, constructed, improved or held by the
          Borrower or any Subsidiary in the ordinary course of business to
          secure the cost of acquiring, constructing or improving such property,
          equipment or asset or to secure Debt incurred solely for the purpose
          of financing the acquisition of such property, equipment or asset, or
          Liens existing on such property, equipment or asset at the time of its
          acquisition (other than any such Liens created in contemplation of
          such acquisition, construction or improvement that were not incurred
          to finance the acquisition, construction or improvement of such
          property, equipment or asset) or extensions, renewals or replacements
          of any of the foregoing for the same or a lesser amount, provided,
                                                                   --------
          however, that no such Lien shall extend to or cover any properties of
          -------
          any character other than the real property, equipment or asset being
          acquired, constructed or improved, and no such extension, renewal or
          replacement shall extend to or cover any properties not theretofore
          subject to the Lien being extended, renewed or replaced,

                                       65

<PAGE>

                    (iii) Liens upon existing real property interests of the
          Borrower or any of its Subsidiaries to secure Debt in an aggregate
          principal amount not in excess of $600,000,000, less the value of real
          property interests sold as contemplated by Section 7.02(g)(iv) hereof,

                    (iv) Liens existing on property prior to the acquisition
          thereof by the Borrower or any of its Subsidiaries in the ordinary
          course of business or on property of a Person existing at the time
          such Person is merged into or consolidated with the Borrower or any
          Subsidiary of the Borrower or becomes a Subsidiary of the Borrower;
          provided that such Liens were not created in contemplation of such
          --------
          merger, consolidation or acquisition and do not extend to any other
          assets of the Borrower or such Subsidiary, and the replacement,
          extension or renewal of any such Lien upon or in the same property
          subject thereto or the replacement, extension or renewal (without
          increase in the amount, shortening the maturity or change in any
          direct or contingent obligor if such change would be adverse to the
          Borrower) of the Debt permitted hereunder secured thereby, and

                    (v) other Liens securing Debt and Hedge Agreements, provided
          that the aggregate amount of the Obligations secured thereby does not
          exceed $70,000,000 at any time outstanding.

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

               (i) Debt under the Loan Documents;

               (ii) Debt existing on the Effective Date and described on
          Schedule XIII hereto;

               (iii) Debt of any Subsidiary of the Borrower which is not a
          Guarantor owed to any other such Subsidiary, and Debt of a Guarantor
          owed to the Borrower or any Subsidiary of the Borrower;

               (iv) Debt incurred after the date of this Agreement and secured
          by Liens expressly permitted under Section 7.02(a)(ii) in an aggregate
          principal amount not to exceed, when aggregated with the principal
          amount of all Debt incurred under clause (v) of this Section 7.02(b),
          $50,000,000 any time outstanding;

               (v) Capitalized Leases incurred after the date of this Agreement
          which, when the principal amount thereof is aggregated with the
          principal amount of all Debt incurred under clause (iv) of this
          Section 7.02(b), do not exceed $50,000,000 at any time outstanding;

               (vi) Unsecured Debt not otherwise permitted under this Section
          7.02(b) in an aggregate amount not to exceed $200,000,000 at any time
          outstanding;

               (vii) Endorsement of negotiable instruments for deposit or
          collection or similar transactions in the ordinary course of business;

               (viii) Debt referred to in Section 7.02(a)(iii) in a principal
          amount not in excess of the amount referred to therein;

                                       66

<PAGE>

               (ix) Debt extending the maturity of, or refunding, refinancing or
          replacing, in whole or in part, any Debt incurred under clause (ii) of
          this Section 7.02(b); provided, however, that (A) the aggregate
                                --------  -------
          principal amount of such extended, refunding, refinancing or
          replacement Debt shall not be increased above the principal amount
          thereof and the premium, if any, thereon outstanding immediately prior
          to such extension, refunding, refinancing or replacement, (B) the
          direct and contingent obligors therefor shall not be changed as a
          result of or in connection with such extension, refunding, refinancing
          or replacement if such change would be adverse to the interests of the
          Borrower, (C) such extended, refunding, refinancing or replacement
          Debt shall not mature prior to the stated maturity date or mandatory
          redemption date of the Debt being so extended, refunded, refinanced or
          replaced, and (D) if the Debt being so extended, refunded, refinanced
          or replaced is subordinated in right of payment or otherwise to the
          Obligations or any of the Borrower's Subsidiaries under and in respect
          of the Loan Documents, such extended, refunding, refinancing or
          replacement Debt shall be subordinated to such Obligations to at least
          the same extent; and

               (x) Guarantees by a Guarantor of Debt of another Guarantor
          permitted hereunder or Guarantees by a Subsidiary of the Borrower
          which is not a Guarantor of Debt permitted hereunder of a Guarantor or
          of another such Subsidiary.

          (c) Mergers, Etc. Merge or consolidate with or into, or convey,
              -------  ---
     transfer, lease or otherwise dispose of (whether in one transaction or in a
     series of transactions) all or substantially all of its assets (whether now
     owned or hereafter acquired) to, any Person, or permit any of its
     Subsidiaries to do so, except (i) that any Guarantor may merge or
     consolidate with or into, or dispose of assets to, any other Guarantor or
     the Borrower, (ii) that any Subsidiary of the Borrower (which is not a
     Guarantor but including a Special Purpose Subsidiary) may merge or
     consolidate with or into, or dispose of assets to, any other Subsidiary of
     the Borrower or the Borrower and (iii) as otherwise provided in Section
     7.02(d) or (g). Notwithstanding any other provision of this Agreement, (x)
     a Subsidiary that is not a Guarantor may liquidate or dissolve if the
     Borrower determines in good faith that such liquidation or dissolution is
     in the best interests of the Borrower and (y) a Guarantor may liquidate or
     dissolve if the Borrower determines in good faith that such liquidation or
     dissolution is in the best interests of the Borrower and the assets or
     proceeds from the liquidation or dissolution of such Guarantor are
     transferred to the Borrower or another Guarantor.

          (d) Acquisition, Investments.
              -----------  -----------

               (i) Acquisitions. Without limitation of Section 7.02(c) above,
                   ------------
          purchase, or permit any of its Subsidiaries to purchase, all or
          substantially all the assets of any Person (which is not a Loan Party)
          or merge or consolidate with, or permit any Subsidiary to merge or
          consolidate with, any Person (which is not a Loan Party) (in each
          case, an "Acquisition") unless (A) each such Acquisition is for the
                    -----------
          purchase of Retail Assets and the purchase price in respect of any
          such Acquisition during the term of this Agreement is less than 10% of
          the amount equal to the "stockholders' equity" of the Borrower (as
          reflected in the respective financial statements delivered to the
          Lenders) as of end of the Fiscal Quarter immediately preceding such
          Acquisition less the aggregate purchase price in respect of all
          Acquisitions during the period from the Effective Date to the date of
          such Acquisition, (B) immediately prior to and after giving effect to
          such Acquisition no Event of Default or Default shall exist, and (C)
          in the case of any merger or consolidation, the Borrower or such
          Subsidiary is the surviving entity, except in the case of any
          Subsidiary to the extent permitted by Section 7.02(g).

                                       67

<PAGE>

               (ii) Investments. Make, or permit any of its Subsidiaries to
                    -----------
          make, an investment in any Person by way of the purchase of such
          Person's capital stock or securities or the making of capital
          contributions with respect thereto (an "Investment") unless (A) each
          such Investment is in a Person predominantly engaged in the Retail
          Business and the purchase price and dollar amount of capital
          contributions made with respect to any such Investment during the term
          of this Agreement is less than 10% of the amount equal to the
          "stockholders' equity" of the Borrower (as reflected in the respective
          financial statements delivered to the Lenders) as of the end of the
          Fiscal Quarter immediately preceding such Investment less the
          aggregate purchase price and dollar amount of capital contributions
          made with respect to all Investments during the period from the
          Effective Date to the date of such Investment and (B) at the time such
          Investment is initially announced, such Investment is made with the
          permission of the Board of Directors of the Person in whom the
          Investment is being made and immediately prior to and after giving
          effect to such Investment no Event of Default or Default shall exist.
          The foregoing limitation shall not restrict the Borrower's and its
          Subsidiaries' ability to (x) form a Subsidiary in which the Borrower
          or any Subsidiary owns, individually or collectively, all of the
          capital stock, securities or other ownership interests of such
          Subsidiary or (y) make an investment in the instruments described in
          Schedule VII hereto (provided, that with respect to securities of
                               --------
          tax-exempt issuers, the Borrower and its Subsidiaries will use
          commercially reasonable efforts to invest in such securities rated Aaa
          by Moody's or AAA by S&P) as such Schedule may be amended from time to
          time by the Borrower with consent of the Agent. The Borrower shall
          provide the Agent and each Lender a copy of each change or amendment
          made to Schedule VII hereto promptly after each such change or
          amendment thereof.

          (e) Change in Nature of Business. Make any material change in the
              ----------------------------
     nature of the business of the Borrower and its Subsidiaries as conducted as
     of the date hereof.

          (f) Restricted Payments. Declare or pay any dividends, purchase,
              -------------------
     redeem, retire, defease or otherwise acquire for value any of its Equity
     Interests now or hereafter outstanding, return any capital to its
     stockholders, partners or members (or the equivalent Persons thereof) as
     such, make any distribution of assets, Equity Interests, obligations or
     securities to its stockholders, partners or members (or the equivalent
     Persons thereof) as such, or permit any of its Subsidiaries to do any of
     the foregoing, or permit any of its Subsidiaries to purchase, redeem,
     retire, defease or otherwise acquire for value any Equity Interests in the
     Borrower, except that, so long as no Default shall have occurred and be
     continuing at the time of any action described below or would result
     therefrom:

                    (i) the Borrower may (A) declare and pay dividends and
          distributions payable either (1) in its common Equity Interests or (2)
          in cash dividends in respect of each share of its common stock in an
          amount not in excess of $.0888 per year per share, with such per share
          amount to be adjusted ratably in respect of common stock distributions
          to holders of its Equity Interests, recapitalizations, stock splits or
          any similar event, (B) purchase, redeem, retire, defease or otherwise
          acquire Equity Interests with the proceeds received contemporaneously
          from the issue of new Equity Interests with equal or inferior voting
          powers, designations, preferences and rights, and (C) repurchase its
          Equity Interests owned by management or employees and consultants
          under contract with the Borrower or any of its Subsidiaries in an
          amount not in excess of $10,000,000 in the aggregate for all such
          repurchases in any twelve month period;

                                       68

<PAGE>

                    (ii) any Subsidiary of the Borrower may declare and pay cash
          dividends (A) to the Borrower or any other Loan Party and (B) to a
          Subsidiary of any Loan Party; and

                    (iii) any of the non-wholly owned Subsidiaries of the
          Borrower may declare and pay or make dividends and other distributions
          to its shareholders, partners or members (or the equivalent persons
          thereof) generally so long as the Borrower and each of the
          Subsidiaries that own any of the Equity Interests therein receive at
          least their respective proportionate shares of any such dividend,
          distribution (based on upon their relative holdings of the Equity
          Interests therein and taking into account the relative preferences, if
          any, of the various classes of the Equity Interests therein).

          (g) Sale of Assets. Sell, lease, transfer or otherwise dispose of, or
              --------------
     permit any of its Subsidiaries to sell, lease, transfer or otherwise
     dispose of, any assets, or grant any option or other right to purchase,
     lease or otherwise acquire any assets, except:

                    (i) the Borrower and its Subsidiaries may sell inventory in
          the ordinary course of business;

                    (ii) the Borrower may sell, lease, transfer or otherwise
          dispose of any of its property or assets to any Guarantor, any
          Guarantor may sell, lease, transfer or otherwise dispose of any of its
          property or assets to the Borrower or any other Guarantor, and any
          Subsidiary of the Borrower which is not a Guarantor may sell, lease
          transfer or otherwise dispose of any of its property or assets to the
          Borrower, any Guarantor or to any other such Subsidiary;

                    (iii) the Borrower and its Subsidiaries may sell, lease,
          transfer or otherwise dispose of any obsolete, damaged or worn-out
          equipment or any other equipment that is otherwise no longer useful in
          the conduct of their business and may transfer certain distribution
          center operational assets in Kentucky to a Special Purpose Subsidiary
          or a Subsidiary thereof;

                    (iv) the Borrower and its Subsidiaries may sell real
          property interests as part of one or more sale leaseback transactions
          provided that the value of such real property interests shall not be
          in excess of $600,000,000 less the amount of Debt incurred as
          contemplated by Section 7.02(a)(iii) hereof;

                    (v) the Borrower and its Subsidiaries may sell cash
          equivalents and other instruments described in Schedule VII hereto in
          which it has invested from time to time; and

                    (vi) the Borrower and its Subsidiaries may sell, lease,
          transfer or otherwise dispose of property and assets not otherwise
          permitted pursuant to this Section 7.02(g) so long as the aggregate
          book value of all of the property and assets of the Borrower and its
          Subsidiaries sold, leased, transferred or otherwise disposed of
          pursuant to this clause (iv) in any year does not exceed 15% of the
          book value of the property and assets of the Borrower and its
          Subsidiaries as of the beginning of such year, provided, that, the
                                                         --------  ----
          gross proceeds received from such sale, lease, transfer or other
          disposition shall be at least equal to the fair market value of the
          property and assets so sold, transferred or otherwise disposed of,
          determined at the time of such sale, lease, transfer or other
          disposition.

                                       69

<PAGE>

          (h) Hedge Agreements. Enter into, or permit any of its Subsidiaries to
              ----------------
     enter into, after the date hereof any Hedge Agreement, except that the
     Borrower or any Hedge Subsidiary may enter into ordinary course
     non-speculative interest rate or currency swaps or exchange agreements with
     a tenor, in the case of such currency agreements, not in excess of two
     years and, in the case of such interest rate agreements, in excess of ten
     years, in each case from the date the Borrower or such Hedge Subsidiary
     enters into any such agreement, and with each such agreement to be
     denominated in U.S. Dollars, Canadian Dollars, Japanese Yen, Euro or any
     other major European currency, provided that, at the time the Borrower or
                                    --------
     Hedge Subsidiary enters into any such Hedge Agreement, and after giving
     effect thereto, the amount of Advances then available to the Borrower under
     Section 2.01(a) is not less than the then outstanding Hedge Agreements
     Exposure, provided, further, that at the time the Borrower or any Hedge
               --------  -------
     Subsidiary enters into any such Hedge Agreement with any Lender or
     Affiliate thereof, such Lender or Affiliate is then a party to the
     Intercreditor Agreement.

          (i) Special Purpose Subsidiaries. Transfer any property or assets
              ----------------------------
     (other than trademarks and service marks) or make any capital contribution
     (other than in the ordinary course of business), or permit any other Loan
     Party to transfer any property or assets (other than trademarks and service
     marks) or make any capital contribution (other than in the ordinary course
     of business), to any Special Purpose Subsidiary, except as provided in
     Section 7.02(g)(iii); or permit any Special Purpose Subsidiary to engage in
     any material activities other than those of the type conducted as of the
     date hereof or to incur any Liens or to incur any obligations to third
     parties other than obligations of an amount and of a nature not materially
     greater or different than those incurred prior to the date hereof; or
     modify or amend any, or permit any other Loan Party to modify or amend any,
     royalty or similar agreements with any Special Purpose Subsidiary (except
     changes in connection with Requirements of Law) if such modification or
     amendment would materially increase the financial obligations of the
     Borrower or such Loan Party thereunder in excess of its financial
     obligations on the date hereof, or enter into, or permit any other Loan
     Party to enter into, a royalty or similar agreement with any Special
     Purpose Subsidiary which contains financial obligations of the Borrower or
     such Loan Party materially more burdensome (other than additional financial
     obligations resulting from changes in connection with Requirements of Law)
     than in such agreements on the date hereof; or permit any Special Purpose
     Subsidiary to transfer any assets to any Person other than a Loan Party or
     another Special Purpose Subsidiary, except for transfers in the ordinary
     course of business of such Special Purpose Subsidiary as conducted prior to
     the date hereof; provided, that, notwithstanding any other provision of
                      --------  ----
     this Agreement, any Loan Party or any Subsidiary  thereof may convey or
     otherwise transfer trademarks and service marks to a Special Purpose
     Subsidiary.

          SECTION 7.03 Financial Covenant. So long as any Advance or any other
          -------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will, unless it has the written consent of
the Majority Lenders to do otherwise:

          (a) Asset Coverage Ratio. Maintain an Asset Coverage Ratio as of the
              --------------------
     last day of each Fiscal Quarter and as of the last day of the first two
     Fiscal Months of the last Fiscal Quarter in each Fiscal Year of not less
     than 1.75:1.00; provided, that, to the extent that the amount of cash and
                     --------  ----
     cash equivalents of the Borrower and its Subsidiaries, as reflected on the
     balance sheet of the Borrower as of the last day of the respective Fiscal
     Quarter or Fiscal Month, less $210,000,000 exceeds the sum of the then
     outstanding aggregate amount of all Letter of Credit Liability and the then
     outstanding amount of all Advances as of such last day, then the Borrower
     shall be deemed to be in compliance with this covenant for the applicable
     Fiscal Quarter or Fiscal Month, as the case may be provided, further that
                                                        --------  -------
     the Borrower shall deliver to the Agent and each Lender no

                                       70

<PAGE>

     later than 20 days after the end of each such Fiscal Month a certificate in
     the form of Compliance Certificate attached hereto as Exhibit I indicating
     the compliance or non-compliance with this conveant.

          (b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
              ---------------------------
     Ratio as of the last day of each Fiscal Quarter set forth below, determined
     on the basis of the most recently completed four consecutive Fiscal
     Quarters ending on such day, of not less than the amount set forth below
     opposite such Fiscal Quarter:

------------------------------------
    Fiscal Quarter            Ratio
------------------------------------
First Fiscal Quarter 2002    1.2:1.0
------------------------------------
Second Fiscal Quarter 2002   1.2:1.0
------------------------------------
Third Fiscal Quarter 2002    1.2:1.0
------------------------------------
Fourth Fiscal Quarter 2002   1.2:1.0
------------------------------------
First Fiscal Quarter 2003    1.4:1.0
------------------------------------
Second Fiscal Quarter 2003   1.4:1.0
------------------------------------
Third Fiscal Quarter 2003    1.4:1.0
------------------------------------
Fourth Fiscal Quarter 2003   1.4:1.0
------------------------------------

          (c) Maximum Capital Expenditures. Not make Capital Expenditures, and
              ----------------------------
     cause its Subsidiaries not to make Capital Expenditures, (i) in any Fiscal
     Year in an aggregate amount for the Borrower and its Subsidiaries in excess
     of $425,000,000 or (ii) in the first Fiscal Quarter of Fiscal Year 2004 in
     the aggregate amount for the Borrower and its Subsidiaries in excess of
     $100,000,000.

          SECTION 7.04 Reporting Requirements. The Borrower will furnish to the
          -----------------------------------
Lenders:

          (i) as soon as available and in any event within 45 days after the end
     of each of the first three Fiscal Quarters of the Borrower, Consolidated
     balance sheets of the Borrower and its Subsidiaries as of the end of such
     Fiscal Quarters and Consolidated statements of income and retained earnings
     of the Borrower and its Subsidiaries for the period commencing at the end
     of the previous Fiscal Year and ending with the end of such Fiscal Quarter,
     certified by the chief financial officer or treasurer of the Borrower and
     accompanied by a certificate of said officer stating (i) that such have
     been prepared in accordance with generally accepted accounting principles,
     (ii) whether or not he or she has knowledge of the occurrence of any Event
     of Default or Default and, if so, stating in reasonable detail the facts
     with respect thereto and (iii) whether or not the Borrower is in compliance
     with the requirements set forth in Section 7.03 (which certificate shall
     contain the computations used by such chief financial officer or treasurer
     in determining such compliance or non-compliance and shall be in the form
     of the Compliance Certificate attached hereto as Exhibit I);

          (ii) as soon as available and in any event within 90 days after the
     end of each Fiscal Year of the Borrower, a copy of the annual report for
     such year for the Borrower and its Subsidiaries, containing Consolidated
     financial statements of the Borrower and its Subsidiaries

                                       71

<PAGE>

     for such Fiscal Year certified by Deloitte & Touche LLP or other
     independent public accountants reasonably acceptable to the Majority
     Lenders;

          (iii) within 90 days after the end of each Fiscal Year of the
     Borrower, a certificate of the chief financial officer or treasurer of the
     Borrower stating (i) whether or not he or she has knowledge of the
     occurrence of any Event of Default or Default and, if so, stating in
     reasonable detail the facts with respect thereto, and (ii) whether or not
     the Borrower is in compliance with the requirements set forth in Section
     7.03 (which certificate shall contain the computations used by such chief
     financial officer or treasurer in determining such compliance or
     non-compliance and shall be in the form of the Compliance Certificate
     attached hereto as Exhibit I);

          (iv) as soon as possible and in any event within five days after a
     Responsible Officer becomes aware of each Event of Default and Default, a
     statement of a Responsible Officer of the Borrower setting forth details of
     such Event of Default or Default and the action which the Borrower has
     taken and proposes to take with respect thereto;

          (v) promptly after the sending or filing thereof, copies of all
     reports which the Borrower sends to any of its security holders, and copies
     of all reports and registration statements which the Borrower or any
     Subsidiary files with the Securities and Exchange Commission (the "SEC") or
     any national securities exchange;

          (vi) promptly after the filing or receiving thereof, copies of all
     reports and notices which the Borrower or any Subsidiary files under ERISA
     with the Internal Revenue Service or the Pension Benefit Guaranty
     Corporation or the U.S. Department of Labor or which the Borrower or any
     Subsidiary receives from such entities other than immaterial regular
     periodic notices and reports and notices and reports of general
     circulation;

          (vii) within 90 days after the end of each Fiscal Year of the
     Borrower, a summary, prepared by a Responsible Officer of the Borrower, of
     the Borrower's (and its Subsidiaries') major insurance coverages (and the
     amount of self-insurance) then in effect;

          (viii) within 30 days after the end of each Fiscal Quarter of the
     Borrower, a schedule of each Hedge Agreement outstanding as at the end of
     each Fiscal Quarter, containing calculations in reasonable detail used in
     determining the Hedge Agreements Exposure, if any, as of the end of such
     Fiscal Quarter; and

          (ix) within 30 days after the end of Fiscal Year 2002, projections for
     Fiscal Year 2003 in substantially the same format and containing
     substantially the same information as the projections for Fiscal Year 2002
     which were set forth in the Information Memorandum; and

          (x) such other information respecting the condition or operations,
     financial or otherwise, of the Borrower or any of its Subsidiaries as any
     Issuing Bank, or any Lender through the Agent, may from time to time
     reasonably request, including, without limitation, the condition, status or
     other information relating to the Collateral as provided in Section 7 (c)
     of the Security Agreement.

Notwithstanding the foregoing, the financial statements required to be delivered
by the Borrower pursuant to clauses (i) and (ii) above and the reports and
statements required to be delivered by the Borrower pursuant to clause (v) above
shall be deemed to have been delivered on the date on which the Borrower posts
reports containing such financial statements or other materials on the
Borrower's website on the internet at "www.gapinc.com" or when such reports
containing such financial statements or other

                                       72

<PAGE>

materials are posted on the SEC's website on the internet at "www.sec.gov";
provided, however, that the Borrower shall deliver paper copies of such
--------  -------
financial statements or other materials to any Lender who so requests until the
Borrower receives written notice from such Lender to cease delivering paper
copies.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

          SECTION 8.01 Events of Default. If any of the following events
          ------------------------------
("Events of Default") shall occur and be continuing:
  -----------------

          (a) Any Loan Party shall fail to pay any principal of any Advance or
     any reimbursement obligation under any Letter of Credit when the same
     becomes due and payable; or shall fail to pay any interest on any Advance,
     fees or any other amounts hereunder within five days after the same become
     due and payable by it; or

          (b) Any representation or warranty made by any Loan Party in any Loan
     Document (whether made on behalf of itself or otherwise) or by any Loan
     Party (or any of its officers) in connection with any Loan Document shall
     prove to have been incorrect in any material respect when made; or

          (c) Any Loan Party shall fail to perform or observe (i) any covenant
     contained in Section 7.01(j)(vi), 7.02 or 7.03 hereof or Section 4, 5 or 12
     of the Security Agreement (to the extent such Loan Party is a party
     thereto); (ii) any covenant contained in Section 7.01(j)(iv) hereof on its
     part to be performed or observed if the failure to perform or observe such
     covenant shall remain unremedied for three Business Days after any Loan
     Party becomes aware thereof or after written notice thereof shall have been
     given to such Loan Party by an Issuing Bank, the Agent or any Lender; or
     (iii) such other term, covenant or agreement contained in any Loan Document
     on its part to be performed or observed if the failure to perform or
     observe such other term, covenant or agreement shall remain unremedied for
     30 days after written notice thereof shall have been given to such Loan
     Party by an Issuing Bank, the Agent or any Lender; or

          (d) The Borrower or any of its Subsidiaries shall fail to pay any
     principal of or premium or interest on any Debt which is outstanding in a
     principal amount of at least $50,000,000 in the aggregate (but excluding
     Debt hereunder) of the Borrower or such Subsidiary or any Obligations under
     any Hedge Agreement to which it is a party, with a "Hedge Principal Amount"
     (as hereinbelow defined) of not less than $50,000,000, when the same
     becomes due and payable (whether by scheduled maturity, required
     prepayment, acceleration, demand or otherwise), and such failure shall
     continue after the applicable grace period, if any, specified in the
     agreement or instrument relating to such Debt or in such Hedge Agreement;
     or any other event shall occur or condition shall exist under any agreement
     or instrument relating to any such Debt or in such Hedge Agreement and
     shall continue after the applicable grace period, if any, specified in such
     agreement or instrument, if the effect of such event or condition is to
     accelerate, or to permit the acceleration of, the maturity of such Debt or
     in such Hedge Agreement; or any such Debt shall be declared to be due and
     payable, or required to be prepaid (other than by a regularly scheduled
     required prepayment), redeemed, purchased or defeased, or an offer to
     prepay, redeem, purchase or defease such Debt shall be required to be made,
     in each case prior to the stated maturity thereof or the Obligations under
     such Hedge Agreement shall be accelerated (for purposes of this paragraph,
     "Hedge Principal Amount" in respect of any Hedge Agreement at any time
     shall be the maximum aggregate amount (after giving effect to any netting

                                       73

<PAGE>

     arrangements) that the Borrower or its respective Subsidiary would be
     required to pay if such Hedge Agreement were terminated at such time);

          (e) The Borrower or any of its Subsidiaries shall generally not pay
     its debts as such debts become due, or shall admit in writing its inability
     to pay its debts generally, or shall make a general assignment for the
     benefit of creditors; or any proceeding shall be instituted by or against
     the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt
     or insolvent, or seeking liquidation, winding up, reorganization,
     arrangement, adjustment, protection, relief, or composition of it or its
     debts under any law relating to bankruptcy, insolvency or reorganization or
     relief of debtors, or seeking the entry of an order for relief or the
     appointment of a receiver, trustee, custodian or other similar official for
     it or for any substantial part of its property and, in the case of any such
     proceeding instituted against it (but not instituted by it), either such
     proceeding shall remain undismissed or unstayed for a period of 60 days, or
     any of the actions sought in such proceeding (including, without
     limitation, the entry of an order for relief against, or the appointment of
     a receiver, trustee, custodian or other similar official for, it or for any
     substantial part of its property) shall occur; or the Borrower or any of
     its Subsidiaries shall take any corporate action to authorize any of the
     actions set forth above in this subsection (e); or

          (f) One or more judgments or orders for the payment of money in excess
     of $50,000,000 in the aggregate shall be rendered against the Borrower or
     any of its Subsidiaries and either (i) enforcement proceedings shall have
     been commenced by any creditor upon such judgment or order or (ii) there
     shall be any period of thirty (30) consecutive days during which a stay of
     enforcement of such judgment or order, by reason of a pending appeal or
     otherwise, shall not be in effect; or

          (g) a Change of Control shall have occurred; or

          (h) any material provision of any of the Loan Documents after delivery
     thereof pursuant to Sections 5.01, 7.01(i) or 7.01(j) shall for any reason
     (other than pursuant to the terms thereof) cease to be valid and binding on
     or enforceable against any of the Loan Parties intended to be a party to
     it, or any such Loan Party shall so state in writing; or

          (i) any Collateral Document after delivery thereof pursuant to
     Sections 5.01, 7.01(i) or 7.01(j) shall for any reason (other than pursuant
     to the terms thereof) cease to create a valid and perfected Lien on any
     material portion of the Collateral purported to be covered thereby subject
     only to Liens permitted thereby; or

          (j) any of the following events or conditions shall have occurred and
     such event or condition, when aggregated with any and all other such events
     or conditions set forth in this subsection (j), has resulted or is
     reasonably expected to result in liabilities of the Loan Parties and/or the
     ERISA Affiliates in an aggregate amount that would have a Material Adverse
     Effect:

                    (i) any ERISA Event shall have occurred with respect to a
          Plan; or

                    (ii) any of the Loan Parties or any of the ERISA Affiliates
          shall have been notified by the sponsor of a Multiemployer Plan that
          it has incurred Withdrawal Liability to such Multiemployer Plan; or

                    (iii) any of the Loan Parties or any of the ERISA Affiliates
          shall have been notified by the sponsor of a Multiemployer Plan that
          such Multiemployer Plan is in reorganization, is insolvent or is being
          terminated, within the meaning of Title IV of

                                       74

<PAGE>

          ERISA, and, as a result of such reorganization, insolvency or
          termination, the aggregate annual contributions of the Loan Parties
          and the ERISA Affiliates to all of the Multiemployer Plans that are in
          reorganization, are insolvent or being terminated at such time have
          been or will be increased over the amounts contributed to such
          Multiemployer Plans for the plan years of such Multiemployer Plans
          immediately preceding the plan year in which such reorganization,
          insolvency or termination occurs; or

                    (iv) any "accumulated funding deficiency" (as defined in
          Section 302 of ERISA and Section 412 of the Internal Revenue Code),
          whether or not waived, shall exist with respect to one or more of the
          Plans;

                    (v) or any Lien shall exist on the property and assets of
          any of the Loan Parties or any of the ERISA Affiliates in favor of the
          PBGC.

     then, and in any such event, the Agent shall at the request, or may with
     the consent, of the Majority Lenders, by notice to the Borrower, (A)
     declare the obligation of each Lender to make Advances to be terminated,
     whereupon the same shall forthwith terminate, (B) declare the Advances, all
     interest thereon and all other amounts payable under this Agreement to be
     forthwith due and payable, whereupon the Advances, all such interest and
     all such amounts shall become and be forthwith due and payable, without
     presentment, demand, protest or further notice of any kind, all of which
     are hereby expressly waived by the Borrower, (C) declare the obligation of
     the Issuing Banks to issue further Letters of Credit to be terminated,
     whereupon the same shall forthwith terminate, and/or (D) demand from time
     to time that the Borrower, and if such demand is made the Borrower shall,
     pay to the Agent for the benefit of the Issuing Banks, an amount in
     immediately available funds equal to the then outstanding Letter of Credit
     Liability (plus the additional amounts specified by Section 3.12(c), if
     applicable) which shall be held by the Agent (or the applicable Issuing
     Bank) as cash collateral in a cash collateral account under the exclusive
     control and dominion of the Agent (or applicable Issuing Bank) and applied
     to the reduction of such Letter of Credit Liability as drawings are made on
     outstanding Letters of Credit; provided, however, that in the event of an
                                    --------  -------
     actual or deemed entry of an order for relief with respect to the Borrower
     or any of its Subsidiaries under the Federal Bankruptcy Code, the
     obligation of each Lender to make Advances shall automatically be
     terminated, the then outstanding Advances, all such interest and all such
     amounts shall automatically become and be due and payable, without
     presentment, demand, protest or any notice of any kind, all of which are
     hereby expressly waived by the Borrower and the obligation of the Issuing
     Bank to Issue Letters of Credit shall automatically be terminated.

                                   ARTICLE IX

                                    THE AGENT

          SECTION 9.01 Authorization and Action. Each Lender and each Issuing
          -------------------------------------
Bank hereby appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Advances), the 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 Majority Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that the Agent shall not be required to take any action which
--------  -------
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by the

                                       75

<PAGE>

Borrower pursuant to the terms of this Agreement and any other Loan Document
unless the distribution of such notice is otherwise provided for herein or
therein.

          Each Issuing Bank shall act on behalf of the Lenders with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may elect to act for each Issuing
Bank with respect thereto; provided, however, that such Issuing Bank shall have
                           --------  -------
all of the benefits and immunities (i) provided to the Agent in this Article IX
with respect to any acts taken or omissions suffered by such Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the applications and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent," as used in this Article IX,
                                           -----
included such Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to such Issuing Bank.

          SECTION 9.02 Agent's Reliance, Etc. Neither the Agent nor any of its
          ----------------------------------
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,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
Lender which made any Advance (or purchased or funded a participation with
respect to a Letter of Credit) as the holder and owner of the Debt resulting
therefrom until the Agent receives and accepts an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 10.07; (ii) may consult with legal counsel (including
counsel for the Borrower), 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 warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower or its Subsidiaries; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier)
believed by it to be genuine and signed or sent by the proper party or parties.

          SECTION 9.03 CUSA, Citibank and Affiliates. With respect to CUSA's
          ------------------------------------------
Advance Commitment, its LC Commitment and the Advances made by it, and with
respect to Citibank as an Issuing Bank, CUSA and Citibank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent or an Issuing Bank, as the case may be; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
          ------      -------
include CUSA and Citibank in their individual capacities. CUSA, Citibank and
each of their respective Affiliates (and, as applicable, any of their respective
officers and directors) may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if CUSA were not the
Agent or Citibank were not an Issuing Bank, as the case may be, and without any
duty to account therefor to the Lenders.

          SECTION 9.04 Lender Credit Decision. Each Lender acknowledges that it
          -----------------------------------
has, independently and without reliance upon the Agent, any Issuing Bank or any
other Lender and based on the financial statements referred to in Section 6.01
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 the Agent,
any Issuing Bank or

                                       76

<PAGE>

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.

          SECTION 9.05 Indemnification.
          ----------------------------

          (a) Agent. The Lenders agree to indemnify the Agent (to the extent not
              -----
     reimbursed by the Borrower or any Guarantor), ratably, according to their
     respective Credit Exposures, 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 the Agent in any way relating
     to or arising out of this Agreement or any action taken or omitted by the
     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
     the Agent's gross negligence or willful misconduct. Without limitation of
     the foregoing, each Lender agrees to reimburse the Agent promptly upon
     demand for its ratable share of any out-of-pocket expenses (including
     reasonable counsel fees) incurred by the Agent in connection with the
     preparation, execution, delivery, administration, modification, amendment
     or enforcement (whether through negotiations, legal proceedings or
     otherwise) of, or legal advice in respect of rights or responsibilities
     under, this Agreement, to the extent that the Agent is not reimbursed for
     such expenses by the Borrower. In the case of any investigation, litigation
     or proceeding giving rise to any such liabilities, obligations, losses,
     damages, penalties, actions, judgments, suits, costs expenses or
     disbursements, this Section 9.05(a) applies whether any such investigation,
     litigation or proceeding is brought by the Agent, an Issuing Bank, any
     Lender or a third party.

          (b) Issuing Bank. The Lenders agree to indemnify each Issuing Bank (to
              ------------
     the extent not reimbursed by the Borrower or any Guarantor), ratably
     according to their respective LC Commitment Percentages, from and against
     any and all liabilities, obligations, losses, damages, penalties, actions,
     judgments, suits, costs, expenses or disbursements of any kind or nature
     whatsoever which may be imposed on, incurred by, or asserted against such
     Issuing Bank in any way relating to or arising out of this Agreement and
     the Letters of Credit issued by it or any action taken or omitted by such
     Issuing Bank under this Agreement or the Letters of Credit Issued by it,
     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 such Issuing Bank's
     gross negligence or willful misconduct. Without limitation of the
     foregoing, each Lender agrees to reimburse such Issuing Bank promptly upon
     demand for its ratable share of any out-of-pocket expenses (including
     reasonable counsel fees) incurred by such Issuing Bank in connection with
     the preparation, execution, 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 or the Letters of Credit Issued by it, to the extent that the
     Issuing Bank is not reimbursed for such expenses by the Borrower. In the
     case of any investigation, litigation or proceeding giving rise to any such
     liabilities, obligations, losses, damages, penalties, actions, judgments,
     suits, costs expenses or disbursements, this Section 9.05(b) applies
     whether any such investigation, litigation or proceeding is brought by the
     Issuing Bank, the Agent, any Lender or a third party.

          SECTION 9.06 Successor Agent. The Agent may resign at any time by
          ----------------------------
giving 30 days' prior written notice thereof to the Lenders and the Borrower and
may be removed at any time with or without cause by the Majority Lenders;
provided, that, the Agent may resign without having given such notice if it is
required to do so as a matter of law. Upon any such resignation or removal, the
Majority Lenders, after consulting with the Borrower and giving due
consideration to any successor agent recommended by the Borrower, shall have the
right to appoint a successor Agent with the consent of the

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<PAGE>

Borrower (which shall not be unreasonably withheld). If no successor Agent shall
have been so appointed by the Majority Lenders and consented to by the Borrower,
and shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Majority Lenders' removal of the
retiring Agent, then the retiring Agent may, after consulting with the Borrower
and giving due consideration to any successor agent recommended by the Borrower,
on behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized or licensed to do business under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $100,000,000. 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 under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

          SECTION 9.07 Documentation Agent, Co-Syndication Agents and Joint Lead
          ----------------------------------------------------------------------
Arrangers. The financial institutions identified as Co-Syndication Agents, the
---------
Documentation Agent, the Joint Book Managers and the Joint Lead Arrangers herein
shall not have any rights, powers, obligations, responsibilities or duties under
this Agreement. Without limiting the foregoing, any Lender so identified as a
Co-Syndication Agent, Documentation Agent, Joint Book Manager or Joint Lead
Arranger shall not have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the financial institutions so identified as a Co-Syndication Agent,
Documentation Agent, Joint Book Manager or Joint Lead Arranger in deciding to
enter into this Agreement or in taking or not taking action hereunder.

          SECTION 9.08 Release of Collateral. Without limitation of the
          ----------------------------------
provisions of the Collateral Documents with respect thereto, upon the sale,
lease, transfer or other disposition of any item of Collateral of any Loan Party
as permitted under the terms of the Loan Documents, the Lender Parties hereby
agree that such item of Collateral shall be released from the security interest
granted under the respective Collateral Documents. In connection with the
foregoing, the Lender Parties hereby irrevocably authorize the Agent and the
Collateral Agent to release any such Collateral. The Agent will, at the
Borrower's expense, execute and deliver to the respective Loan Party such
documents as such Loan Party may reasonably request to evidence the release of
such item of Collateral from the security interest granted under the Collateral
Documents.

          SECTION 9.09 Release of Guarantor. Without limitation of the
          ---------------------------------
provisions of the Collateral Documents with respect thereto, upon the sale of
outstanding shares of capital stock and other equity, ownership and profit
interests in any Guarantor in a transaction which is permitted under Section
7.02(g), then upon request by the Borrower, the Agent, on behalf of each Lender
Party, shall confirm in writing that the liability of such Guarantor under the
Subsidiary Guaranty in respect of the Obligations hereunder is released and
discharged effective when such transaction is consummated and all requirements
hereunder in connection therewith are satisfied, including with respect to the
application of the proceeds of such sale. Each Lender Party hereby irrevocably
authorizes the Agent to release any Guarantor from time to time to the extent
provided for herein and to execute any document reasonably required in
connection therewith.

          SECTION 9.10 Actions in Respect of Intercreditor Agreement. The
          ----------------------------------------------------------
Lenders and the Issuing Banks hereby authorize the Agent, in its capacity as
Agent on behalf of the Lenders and the Issuing Banks, to enter into the
Intercreditor Agreement and hereby consent to the Agent acting as Collateral
Agent under the Intercreditor Agreement.

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<PAGE>

                                    ARTICLE X

                                  MISCELLANEOUS

          SECTION 10.01 Amendments, Etc.
          -----------------------------

          (a) Majority Lenders. Except as is otherwise expressly provided in
              ----------------
     this Section 10.01, no amendment or waiver of any provision of this
     Agreement, nor consent to any departure by the Borrower therefrom, shall in
     any event be effective unless the same shall be in writing and signed by
     the Majority Lenders, provided, however, that no amendment, waiver or
                           --------  -------
     consent by the Majority Lenders shall, unless in writing and signed by all
     the Lenders, do any of the following: (i) waive any of the conditions
     specified in Section 5.01 or 5.02, (ii) increase the Commitments of the
     Lenders (other than as provided for in Section 2.04(b) and 3.10(b)), (iii)
     reduce the principal of, or interest on, the Advances made pursuant to
     Section 2.01(a) or any reimbursement obligation in respect of any Letter of
     Credit or any fees or other amounts payable hereunder to the Lenders, (iv)
     postpone any date fixed for any payment of principal of, or interest on,
     the Advances made pursuant to Section 2.01(a) or any reimbursement
     obligation in respect of any Letter of Credit or any fees or other amounts
     payable hereunder to the Lenders, (v) change the percentage of the Advance
     Commitments, LC Commitments or of the aggregate unpaid principal amount of
     the Advances made pursuant to Section 2.01(a) or Letter of Credit Liability
     hereunder, or the number of Lenders, which shall be required for the
     Lenders or any of them to take any action hereunder, (vi) release all or
     substantially all the Collateral or all or substantially all the
     Guarantors, (vii) release the Borrower as a guarantor under Section 2.13 or
     Section 3.13, (viii) subordinate any liens granted under the Security
     Agreement or (ix) amend this subsection (a) of this Section 10.01.

          (b) Agent and Issuing Banks. No amendment, waiver or consent given or
              -----------------------
     effected pursuant to this Section 10.01 shall, unless in writing and signed
     by the Agent or each Issuing Bank, as the case may be, in addition to the
     Lenders required above to take such action, affect the rights, obligations
     or duties of the Agent or such Issuing Bank, as the case may be, under this
     Agreement.

          (c) Limitation of Scope. All waivers and consents granted under this
              -------------------
     Section 10.01 shall be effective only in the specific instance and for the
     specific purpose for which given.

          SECTION 10.02 Notices, Etc. All notices and other communications
          --------------------------
provided for hereunder shall be in writing (including telecopier) and mailed,
sent by overnight courier, telecopied or delivered, if to the Borrower or any
other Loan Party, at its address at 900 Cherry Avenue, San Bruno, CA 94066
Attention: Treasurer, Telecopier: 650-874-7809; with a copy to 2 Folsom Street,
San Francisco, CA 94105, Attention: General Counsel, Telecopier: 415-427-6982;
if to any Lender, at its Domestic Lending Office specified opposite its name on
Schedule I-B hereto; if to any other Lender, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became Lender;
if to the Agent, at its address at 399 Park Avenue, New York, New York 10043,
Attention: Credit Administration, Telecopier: 302-894-6120; and if to an Issuing
Bank, at its Domestic Lending Office specified opposite its name in Schedule I-B
hereto; with a copy, in the case of notices to the Agent, to Citicorp North
America, Inc., One Sansome Street, San Francisco, California, Attention: Carolyn
Wendler, Telecopier: 415-433-0307, or, as to each party, at such other address
or to such other person as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall, when mailed, be
effective three days after being deposited in the mails, when sent by overnight
courier, be effective one day after being sent by overnight courier, and when
telecopied, be effective when received, respectively; and when delivered by
hand, be effective upon delivery except that

                                       79

<PAGE>

notices and communications to the Agent pursuant to Article II or IX and to an
Issuing Bank pursuant to Article III or IX shall not be effective until received
by the Agent or such Issuing Bank, as the case may be.

          SECTION 10.03 No Waiver; Remedies. No failure on the part of any
          ---------------------------------
Lender, the Issuing Bank or the Agent to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

          SECTION 10.04 Costs and Expenses.
          --------------------------------

          (a) The Borrower agrees to pay on demand all reasonable costs and
     expenses of the Agent incurred in connection with the preparation,
     execution, delivery, modification and amendment of this Agreement, and the
     other documents to be delivered hereunder, including, without limitation,
     the reasonable fees and out-of-pocket expenses of counsel for the Agent
     with respect thereto and with respect to advising the Agent as to its
     rights and responsibilities under this Agreement. The Borrower further
     agrees to pay on demand all costs and expenses of the Agent, each Issuing
     Bank, each Swing Line Lender and each other Lender Party (including,
     without limitation, reasonable counsel fees and expenses), incurred in
     connection with the enforcement (whether through negotiations, legal
     proceedings or otherwise) of the Loan Documents, the Letters of Credit, the
     documents delivered in connection with the Swing Line Advances and the
     other documents to be delivered hereunder and thereunder.

          (b) If any payment of principal of, or Conversion of, any Eurodollar
     Rate Advance is made other than on the last day of the Interest Period for
     such Advance, as a result of a payment or Conversion pursuant to Sections
     2.08(d), 2.10, 2.12, acceleration of the maturity of the Advances pursuant
     to Section 8.01 or for any other reason, or by an Eligible Assignee to a
     Lender other than on the last day of an Interest Period for such Advance
     upon an assignment of rights and obligations under this Agreement pursuant
     to Section 10.07 as a result of a demand by the Borrower pursuant to
     Section 10.07(a), or if the Borrower fails for any reason to make any
     payment or prepayment of an Advance for which a notice of prepayment was
     given or that is otherwise required to be made, whether pursuant to
     Sections 2.05, 2.10, 8.01 or otherwise, the Borrower shall, upon demand by
     any Lender (with a copy of such demand to the Agent), pay to the Agent for
     the account of such Lender any amounts required to compensate such Lender
     for any additional losses, costs or expenses which it may reasonably incur
     as a result of such payment or Conversion or such failure to pay or prepay,
     as the case may be, including, without limitation, any loss (including loss
     of anticipated profits), cost or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by any
     Lender to fund or maintain such Advance.

          (c) The Borrower agrees to indemnify and hold harmless each of the
     Agent, each Lender, each Issuing Bank, each Joint Book Manager, each Joint
     Lead Arranger and each of their Affiliates and their respective officers,
     directors, employees, agents and advisors (each, an "Indemnified Party")
                                                          -----------------
     from and against any and all claims, damages, liabilities and expenses
     (including, without limitation, reasonable fees and disbursements of
     counsel), which may be incurred by or asserted against any Indemnified
     Party in connection with or arising out of any investigation, litigation,
     or proceeding (whether or not such Indemnified Party is party thereto)
     related to any acquisition or proposed acquisition by the Borrower, or by
     any Subsidiary of the Borrower, of all or any portion of the stock or
     substantially all the assets of any Person or any use or proposed use of
     the Advances or Letters of Credit by any Loan Party, except to the extent
     such

                                       80

<PAGE>

     claim, damage, liability or expense shall have resulted from such
     Indemnified Party's gross negligence or willful misconduct. In the event
     this indemnity is unenforceable as a matter of law as to a particular
     matter or consequence referred to herein, it shall be enforceable to the
     full extent permitted by law. The indemnification provisions set forth
     above shall be in addition to any liability the Borrower may otherwise
     have. Without prejudice to the survival of any other obligation of the
     Borrower hereunder, the indemnities and obligations of the Borrower
     contained in this Section 10.04 shall survive the payment in full of all
     the Obligations.

          (d) The Borrower hereby acknowledges that the funding method by each
     Lender of its Advances hereunder shall be in the sole discretion of such
     Lender. The Borrower agrees that for purposes of any determination to be
     made under Sections 2.07, 2.11(a), 2.12 or 10.04(b) of this Agreement each
     Lender shall be deemed to have funded its Eurodollar Rate Advances with
     proceeds of Dollar deposits in the London interbank market.

          SECTION 10.05 Right of Set-off. Upon (i) the occurrence and during the
          ------------------------------
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 8.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 8.01
or to demand payment of (or cash collateralization of) all then outstanding
Letter of Credit Liability, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Affiliate to or for the credit or the account
of any Loan Party against any and all of the obligations of the Loan Parties now
or hereafter existing under this Agreement to such Lender (including, to the
fullest extent permitted by law, obligations indirectly owed to such Lender by
virtue of its purchase of a participation or sub-participation of the Letter of
Credit Liability pursuant to Section 3.05), whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower and the Agent
after any such set-off and application made by such Lender or any of its
Affiliates, provided, that, the failure to give such notice shall not affect the
            --------  ----
validity of such set-off and application. The rights of each Lender and its
Affiliates under this Section 10.05 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Lender and
its Affiliates may have.

          SECTION 10.06 Binding Effect. This Agreement shall become effective
          ----------------------------
when it shall have been executed by the Borrower, each LC Subsidiary and each
Subsidiary Borrower to be a party hereto on the date hereof, each Issuing Bank
to be a party hereto on the date hereof, and the Agent and when the Agent shall
have been notified by each Lender that such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
LC Subsidiary, each Subsidiary Borrower, each Issuing Bank, the Agent and each
Lender and their respective successors and assigns, except that the Borrower,
each LC Subsidiary and each Subsidiary Borrower shall not have the right to
assign its respective rights hereunder or any interest herein without the prior
written consent of the Lenders.

          SECTION 10.07 Assignments and Participations. (a) Each Lender may, and
          --------------------------------------------
if demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.07, 2.11, 3.08, 4.02 or 4.06, upon at least 10 days' notice to such
Lender and the Agent) will, assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion, respectively, of its Advance Commitment, the
Advances owing to it, its LC Commitment and participations in Letter of Credit
Liability and Swing Line Advances); provided, however, that (i) each such
                                    --------  -------
respective assignment shall be of a percentage of all rights and obligations
under this Agreement in respect of the assigning Lender's Advance Commitment,
Advances, LC Commitment and participations in Letter of Credit Liability and
Swing Line Advances, that is constant

                                       81

<PAGE>

and not varying over time, (ii) the respective amounts of the rights and
obligations under the Advance 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 partial assignment) shall in no event be
less than $5,000,000 (or an integral multiple of $1,000,000 in excess thereof),
(iii) except during the continuance of a Default, each such assignment shall be
to an Eligible Assignee consented to by the Borrower (which shall not
unreasonably withhold its consent); provided, that, the Borrower's consent need
                                    --------  ----
not be obtained if such assignment is made to another Lender or to an Affiliate
of the assigning Lender, provided that any Lender so assigning to any of its
Affiliates shall give prompt notice thereof to the Borrower and the Agent, (iv)
each such assignment made as a result of a demand by the Borrower pursuant to
this Section 10.07(a) shall be arranged by the Borrower (at its expense,
including, without limitation, payment of the processing and recordation fee
referred to in subclause (vi) hereof) after consultation with the Agent and
shall be either an assignment of all of the rights and obligations of the
assigning Lender under this Agreement or an assignment of a portion of such
rights and obligations made concurrently with another such assignment or other
such assignments which together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 10.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, (vi) each such assignment shall be consented to by
each Issuing Bank and the Agent (which consent of the Agent shall not be
unreasonably withheld) and (vii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500; provided, that, no such fee shall be payable in
                           --------  ----
connection with an assignment by an assigning Lender to an Affiliate of such
assigning Lender. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each 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 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 or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).

          (b) By executing and delivering an Assignment and Acceptance, the
     Lender assignor thereunder and the assignee thereunder confirm to and agree
     with each other and the other parties hereto as follows: (i) other than as
     provided in such Assignment and Acceptance, such assigning Lender makes no
     representation or warranty and assumes no responsibility with respect to
     any statements, warranties or representations made in or in connection with
     this Agreement or the execution, legality, validity, enforceability,
     genuineness, sufficiency or value of this Agreement or any other instrument
     or document furnished pursuant hereto; (ii) such assigning Lender makes no
     representation or warranty and assumes no responsibility with respect to
     the financial condition of the Borrower, any LC Subsidiary, any Subsidiary
     Borrower or any other Loan Party or the performance or observance by the
     Borrower, any LC Subsidiary, any Subsidiary Borrower or any other Loan
     Party of any of its obligations under this Agreement or any other
     instrument or document furnished pursuant hereto; (iii) such assignee
     confirms that it has received a copy of this Agreement, together with
     copies of the financial statements referred to in Section 6.01 and such
     other documents and information as it has deemed appropriate to make its
     own credit analysis and decision to enter into such Assignment and
     Acceptance; (iv) such assignee will, independently and without reliance
     upon the Agent, any Issuing Bank, such assigning Lender or any other Lender
     and based on such documents and information as it shall deem appropriate at

                                       82

<PAGE>

     the time, continue to make its own credit decisions in taking or not taking
     action under this Agreement; (v) such assignee confirms that it is an
     Eligible Assignee; (vi) such assignee appoints and authorizes the Agent or
     the respective Issuing Bank to take such action as agent on its behalf and
     to exercise such powers under this Agreement as are delegated to the Agent
     or such Issuing Bank by the terms hereof, together with such powers as are
     reasonably incidental thereto; and (vii) such assignee agrees that it will
     perform in accordance with their terms all of the obligations which by the
     terms of this Agreement are required to be performed by it as Lender.

          (c) The Agent shall maintain at its address referred to in Section
     10.02 a copy of each Assignment and Acceptance delivered to and accepted by
     it and a register for the recordation of the names and addresses of the
     Lenders and the LC Commitment of and Advance Commitment of, and principal
     amount of the Advances owing to, each Lender from time to time and the
     names and addresses and the Issuing Commitment of each Issuing Bank from
     time to time (the "Register"). The entries in the Register shall be
                        --------
     conclusive and binding for all purposes, absent manifest error, and the
     Borrower, the Agent and the Lenders may treat each Person whose name is
     recorded in the Register as Lender hereunder for all purposes of this
     Agreement. The Register shall be available for inspection by the Borrower
     or any Lender at any reasonable time and from time to time upon reasonable
     prior notice.

          (d) Upon its receipt of an Assignment and Acceptance executed by an
     assigning Lender and an assignee representing that it is an Eligible
     Assignee, the Agent shall, if such Assignment and Acceptance has been
     completed and is in substantially the form of Exhibit C hereto, (i) accept
     such Assignment and Acceptance, (ii) record the information contained
     therein in the Register and (iii) give prompt notice thereof to the
     Borrower and the Issuing Banks.

          (e) Each Lender may sell participations to one or more banks or other
     entities in or to all or a portion of its rights and obligations under this
     Agreement (including, without limitation, all or a portion of its Advance
     Commitment and LC Commitment and the Advances owing to it; provided,
                                                                --------
     however, that (i) such Lender's obligations under this Agreement
     -------
     (including, without limitation, its Advance Commitment to the Borrower
     hereunder and LC Commitment) shall remain unchanged, (ii) such Lender shall
     remain solely responsible to the other parties hereto for the performance
     of such obligations, (iii) such Lender shall remain the owner of any
     Advance for all purposes of this Agreement, and (iv) the Borrower, the
     Issuing Banks, the Agent and the other Lenders shall continue to deal
     solely and directly with such Lender in connection with such Lender's
     rights and obligations under this Agreement, provided, further, that, to
                                                  --------  -------
     the extent of any such participation (unless otherwise stated therein and
     subject to the preceding proviso), the purchaser of such participation
                              -------
     shall, to the fullest extent permitted by law, have the same rights and
     benefits hereunder as it would have if it were Lender hereunder; and
     provided, further, that each such participation shall be granted pursuant
     --------  -------
     to an agreement providing that the purchaser thereof shall not have the
     right to consent or object to any action by the selling Lender (who shall
     retain such right) other than an action which would (i) reduce principal of
     or interest on any Advance, any amount due hereunder with respect to the
     Letters of Credit or other amounts or fees in which such purchaser has an
     interest, (ii) postpone any date fixed for payment of principal of or
     interest on any such Advance, such amounts due with respect to Letters of
     Credit or other amounts or such fees, (iii) extend the Termination Date or
     (iv) release all or substantially all the Collateral, all or substantially
     all the Guarantors or the Borrower as a guarantor under Section 2.13 or
     Section 3.13.

          (f) Upon written request of the Borrower to a Lender, such Lender
     shall, to the extent consistent with the policies of such Lender, inform
     the Borrower of the Dollar amount of any Full Term Participation (as
     hereinafter defined) that such Lender has entered into; provided,
                                                             --------

                                       83

<PAGE>

     however, that no Lender shall be obligated to disclose such information if
     -------
     the disclosure thereof would constitute a violation of law or regulation or
     violate any confidentiality agreement to which such Lender is subject. For
     the purposes of this subsection (f), "Full Term Participation" means a
                                           -----------------------
     participation by a Lender to another Person whereby such other Person has
     purchased (pursuant to a participation agreement) all or a portion of such
     Lender's Advance Commitment and LC Commitment from the effective date of
     such participation agreement to the Termination Date.

          (g) Notwithstanding anything herein contained to the contrary, each
     Lender may assign any of its rights and obligations under this Agreement to
     any of its Affiliates without the consent of the Borrower or the Agent,
     provided that any Lender so assigning to any of its Affiliates shall give
     prior notice thereof to the Borrower and the Agent; and each Lender or any
     of its Affiliates may assign any of its rights (including, without
     limitation, rights to payment of principal and/or interest hereunder) under
     this Agreement to any Federal Reserve Bank without notice to or consent of
     the Borrower or the Agent.

          (h) If any Lender requests any payment from the Borrower under Section
     2.11, 4.02 or 4.06, then, subject to Section 10.07(a) and provided no
     Default or Event of Default shall have occurred and be continuing, the
     Borrower may request such Lender to (and, upon such request, such Lender,
     without any obligation to pay any fees in respect thereof, shall) assign
     all of its rights and obligations under this Agreement to one or more
     Eligible Assignees acceptable to the Agent in accordance with Section
     10.07(a) provided that at the time of any such assignment the Borrower has
     paid to the Lender all amounts due it hereunder.

          SECTION 10.08 Severability of Provisions. Any provision of this
          ----------------------------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

          SECTION 10.09 Independence of Provisions. All agreements and covenants
          ----------------------------------------
hereunder shall be given independent effect such that if a particular action or
condition is prohibited by the terms of any such agreement or covenant, the fact
that such action or condition would be permitted within the limitations of
another agreement or covenant shall not be construed as allowing such action to
be taken or condition to exist.

          SECTION 10.10 Confidentiality. Each Lender, each Issuing Bank and the
          -----------------------------
Agent (for purposes of this Section 10.10, each a "Recipient") agrees that it
                                                   ---------
will not disclose to any third party any Confidential Information provided to it
by the Borrower; provided, that, the foregoing will not (i) restrict the ability
                 --------  ----
of the Agent, the Issuing Banks, the Lenders and any loan participants from
freely exchanging Confidential Information among themselves (and their
respective Affiliates, employees, attorneys, agents and advisors), (ii) restrict
the ability to disclose Confidential Information to a prospective Eligible
Assignee or participant, provided, that, such Eligible Assignee or participant
                         --------  ----
executes a confidentiality agreement with the selling Lender agreeing to be
bound by the terms hereof prior to disclosure of Confidential Information to
such Eligible Assignee or participant or (iii) prohibit the disclosure of
Confidential Information to the extent: (a) the Confidential Information is or
has already become part of the public domain at the time of disclosure, by
publication or otherwise, except by breach of this Section 10.10, (b) the
Confidential Information can be established by written evidence to have already
been in the lawful possession of the Recipient prior to the time of disclosure;
or (c) the Confidential Information is received by the Recipient from a third
party not known to have a similar restriction and without breach of this Section
10.10, or (d) the Confidential Information is required to be disclosed by order
of a court of competent jurisdiction, administrative agency or governmental
body, or by subpoena, summons or other legal process, or by law, rule or
regulation, or by applicable regulatory or

                                       84

<PAGE>

professional standards provided that prior to such disclosure the Borrower and
the non-disclosing party are each given reasonable advance notice of such order
and an opportunity to object to such disclosure; provided, that, no such notice
                                                 --------  ----
or opportunity shall be required if disclosure is required in connection with an
examination by a regulatory authority or is required in such circumstances where
the applicable Governmental Authority does not permit such notice or opportunity
(it being understood the Recipient will inform such authority of the
confidential nature of the Confidential Information being disclosed).

          SECTION 10.11 Headings. Article and Section headings in this Agreement
          ----------------------
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.

          SECTION 10.12 Entire Agreement. This Agreement sets forth the entire
          ------------------------------
agreement of the parties with respect to its subject matter and, except for the
letter agreements referred to in Sections 2.03(c) and 3.06(c), supersedes all
previous understandings, written or oral, in respect thereof.

          SECTION 10.13 Execution in Counterparts. This Agreement may be
          ---------------------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

          SECTION 10.14 Consent to Jurisdiction. (a) Each of the parties hereto
          -------------------------------------
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal court sitting in the County of New York, The City of New York,
in any action or proceeding arising out of or relating to this Agreement, and
each of the parties hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court or
such Federal court. Each of the parties hereby irrevocably agrees, to the
fullest extent each may effectively do so, that each will not assert any defense
that such courts do not have subject matter or personal jurisdiction of such
action or proceeding or over any party hereto. Each of the parties hereby
irrevocably consents to the service of copies of the summons and complaint and
any other process which may be served in any such action or proceeding by
certified mail, return receipt requested, or by delivering of a copy of such
process to such party at its address specified in Section 10.02 or by any other
method permitted by law. Each of the parties hereby agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or by any other manner provided by
law.

          (b) Nothing in this Section 10.14 shall affect the right of any of the
     parties hereto to serve legal process in any other manner permitted by law
     or affect the right of any of the parties to bring any action or proceeding
     against any of the parties or their property in the courts of other
     jurisdictions.

          SECTION 10.15 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
          ---------------------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT, IN THE
CASE OF ARTICLE III, TO THE EXTENT SUCH LAWS ARE INCONSISTENT WITH THE UCP.

          SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LC
          ----------------------------------
SUBSIDIARIES, THE SUBSIDIARY BORROWERS, THE AGENT, THE LENDERS AND EACH ISSUING
BANK HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE ADVANCES OR THE LETTERS OF CREDIT, OR THE ACTIONS OF THE AGENT, ANY LENDER
OR THE ISSUING BANK IN

                                       85

<PAGE>

CONNECTION WITH THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.

                          [The remainder of this page intentionally left blank.]

                                       86

<PAGE>

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

                                      THE BORROWER:
                                      ------------

                                      THE GAP, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       87

<PAGE>

                                      THE LC SUBSIDIARIES:
                                      --------------------

                                      BANANA REPUBLIC DIRECT, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      BANANA REPUBLIC, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      OLD NAVY INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      OLD NAVY (CANADA) INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       88

<PAGE>

                                      OLD NAVY DIRECT, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (CANADA) INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (DEUTSCHLAND) GMBH

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (IRELAND) LIMITED

                                      By: /s/ JULIE KANBERG
                                          --------------------------------------
                                          Name:   Julie Kanberg
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       89

<PAGE>

                                      GAP INTERNATIONAL SOURCING
                                      LIMITED

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL SOURCING FZE

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL SOURCING
                                      (MEXICO) S.A. DE C.V.

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL SOURCING PTE. LTD.

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       90

<PAGE>

                                      GAP (JAPAN) K.K.

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL SOURCING
                                      (HOLDINGS) LIMITED

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (NETHERLANDS) B.V.

                                      By: /s/ MIKE RACER
                                          --------------------------------------
                                          Name:   Mike Racer
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL B.V.

                                      By: /s/ MICHELLE BANKS
                                          --------------------------------------
                                          Name:   Michelle Banks
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       91

<PAGE>

                                      GPS CONSUMER DIRECT, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP DIRECT, INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (FRANCE) SAS

                                      By: /s/ LISA MERTENS
                                          --------------------------------------
                                          Name:   Lisa Mertens
                                          Title:  President

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GOLDHAWK BV

                                      By: /s/ HEIDI KUNZ
                                          --------------------------------------
                                          Name:   Heidi Kunz
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       92

<PAGE>

                                      GPS (GREAT BRITAIN) LIMITED

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       93

<PAGE>

                                   THE SUBSIDIARY BORROWERS:
                                   ------------------------

                                   GAP INTERNATIONAL SOURCING LIMITED

                                   By: /s/ ANNE GUST
                                       -----------------------------------------
                                       Name:   Anne Gust
                                       Title:  Director

                                   Address for Notices:
                                   -------------------
                                       2 Folsom Street
                                       San Francisco, CA 94105
                                       Attn: General Counsel

                                   GAP INTERNATIONAL SOURCING PTE. LTD.

                                   By: /s/ ANNE GUST
                                       -----------------------------------------
                                       Name:   Anne Gust
                                       Title:  Director

                                   Address for Notices:
                                   -------------------
                                       2 Folsom Street
                                       San Francisco, CA 94105
                                       Attn: General Counsel

                                   GAP INTERNATIONAL SOURCING (HOLDINGS) LIMITED

                                   By: /s/ ANNE GUST
                                       -----------------------------------------
                                       Name:   Anne Gust
                                       Title:  Director

                                   Address for Notices:
                                   -------------------
                                       2 Folsom Street
                                       San Francisco, CA 94105
                                       Attn: General Counsel

                                   GAP (JAPAN) K.K.

                                   By: /s/ ANNE GUST
                                       -----------------------------------------
                                       Name:   Anne Gust
                                       Title:  Director

                                   Address for Notices:
                                   -------------------
                                       2 Folsom Street
                                       San Francisco, CA 94105
                                       Attn: General Counsel

                                       94

<PAGE>

                                      GAP (NETHERLANDS) B.V.

                                      By: /s/ MIKE RACER
                                          --------------------------------------
                                          Name:   Mike Racer
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP INTERNATIONAL B.V.

                                      By: /s/ MICHELLE BANKS
                                          --------------------------------------
                                          Name:   Michelle Banks
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      OLD NAVY (CANADA) INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (CANADA) INC.

                                      By: /s/ SABRINA SIMMONS
                                          --------------------------------------
                                          Name:   Sabrina Simmons
                                          Title:  Vice President and Treasurer

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       95

<PAGE>

                                      GPS (GREAT BRITAIN) LIMITED

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (ESO) LIMITED

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (UK DISTRIBUTION) LIMITED

                                      By: /s/ HEIDI KUNZ
                                          --------------------------------------
                                          Name:   Heidi Kunz
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                      GAP (DEUTSCHLAND) GMBH

                                      By: /s/ ANNE GUST
                                          --------------------------------------
                                          Name:   Anne Gust
                                          Title:  Director

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       96

<PAGE>

                                      GAP (FRANCE) S.A.S.

                                      By: /s/ LISA MERTENS
                                          --------------------------------------
                                          Name:   Lisa Mertens
                                          Title:  President

                                      Address for Notices:
                                      -------------------
                                          2 Folsom Street
                                          San Francisco, CA 94105
                                          Attn: General Counsel

                                       97

<PAGE>

                                      THE AGENT:
                                      ---------

                                      CITICORP USA, INC.

                                      By: /s/ ANITA J. BRICKELL
                                          --------------------------------------
                                          Name:   Anita J. Brickell
                                          Title:  Vice President

                                      THE JOINT BOOK MANAGERS:
                                      ----------------------

                                      SALOMON SMITH BARNEY INC.

                                      By: /s/ RICHARD BANZIGER
                                          --------------------------------------
                                          Name:   Richard Banziger
                                          Title:  Attorney-In-Fact

                                      BANC OF AMERICA SECURITIES, LLC

                                      By: /s/ PATRICIA P. DEL GRANDE
                                          --------------------------------------
                                          Name:   Patricia P. Del Grande
                                          Title:  Managing Director

                                       98

<PAGE>

                                      THE CO-SYNDICATION AGENTS:
                                      -------------------------

                                      BANC OF AMERICA SECURITIES LLC

                                      By: /s/ PATRICIA P. DEL GRANDE
                                          --------------------------------------
                                          Name:   Patricia P. Del Grande
                                          Title:  Managing Director

                                      HSBC BANK USA

                                      By: /s/ ADRIANA COLLINS
                                          --------------------------------------
                                          Name:   Adriana Collins
                                          Title:  First Vice President

                                      J.P. MORGAN SECURITIES INC.

                                      By: /s/ LISA KOPFF
                                          --------------------------------------
                                          Name:   Lisa Kopff
                                          Title:  Vice President

                                       99

<PAGE>

                                      THE DOCUMENTATION AGENT:
                                      -----------------------

                                      ABN AMRO BANK N.V.

                                      By: /s/ DELIA B. FANCE
                                          --------------------------------------
                                          Name:   Delia B. Fance
                                          Title:  Group Vice President

                                      By: /s/ CATHERYN N. FULLER
                                          --------------------------------------
                                          Name:   Catheryn N. Fuller
                                          Title:  Senior Vice President

                                      THE JOINT LEAD ARRANGERS:
                                      ------------------------

                                      SALOMON SMITH BARNEY INC.

                                      By: /s/ RICHARD BANZIGER
                                          --------------------------------------
                                          Name:   Richard Banziger
                                          Title:  Attorney-In-Fact

                                      BANC OF AMERICA SECURITIES LLC

                                      By: /s/ PATRICIA P. DEL GRANDE
                                          --------------------------------------
                                          Name:   Patricia P. Del Grande
                                          Title:  Managing Director

                                      J.P. MORGAN SECURITIES INC.

                                      By: /s/ LISA KOPFF
                                          --------------------------------------
                                          Name:   Lisa Kopff
                                          Title:  Vice President

                                       100

<PAGE>

                                      THE LENDERS:
                                      -----------

                                      CITICORP USA, INC.

                                      By: /s/ ANITA J. BRICKELL
                                          --------------------------------------
                                          Name:   Anita J. Brickell
                                          Title:  Vice President

                                       101

<PAGE>

                                      BANK OF AMERICA, N.A.

                                      By: /s/ AMY KROVOCHECK
                                          --------------------------------------
                                          Name:   Amy Krovocheck
                                          Title:  Vice President

                                       102

<PAGE>

                                      HSBC BANK USA

                                      By: /s/ ADRIANA COLLINS
                                          --------------------------------------
                                          Name:   Adriana Collins
                                          Title:  First Vice President

                                       103

<PAGE>

                                      JPMORGAN CHASE BANK

                                      By: /s/ BARRY R. BERGMAN
                                          --------------------------------------
                                          Name:   Barry R. Bergman
                                          Title:  Vice President

                                       104

<PAGE>

                                      ABN AMRO BANK N.V.

                                      By: /s/ DELIA B. FANCE
                                          --------------------------------------
                                          Name:   Delia B. Fance
                                          Title:  Group Vice President

                                      By: /s/ CATHERYN N. FULLER
                                          --------------------------------------
                                          Name:   Catheryn N. Fuller
                                          Title:  Senior Vice President

                                       105

<PAGE>

                                      U.S. BANK NATIONAL ASSOCIATION

                                      By: /s/ JANICE T. THEDE
                                          --------------------------------------
                                          Name:   Janice T. Thede
                                          Title:  Vice President

                                       106

<PAGE>

                                      FIRST NATIONAL BANK OF OMAHA

                                      By: /s/ MARK BARATTA
                                          --------------------------------------
                                          Name:   Mark Baratta
                                          Title:  Vice President

                                       107

<PAGE>

                                      THE BANK OF NOVA SCOTIA

                                      By: /s/ MARK SPARROW
                                          --------------------------------------
                                          Name:   Mark Sparrow
                                          Title:  Director

                                       108

<PAGE>

                                      WELLS FARGO BANK NA

                                      By: /s/ KATRINA FLOWERS
                                          --------------------------------------
                                          Name:   Katrina Flowers
                                          Title:  Assistant Vice President

                                      WELLS FARGO BANK NA

                                      By: /s/ ROGER J. FLEISCHMANN
                                          --------------------------------------
                                          Name:   Roger Fleischmann
                                          Title:  Senior Vice President

                                       109

<PAGE>

                                          THE CIT GROUP/BUSINESS CREDIT, INC.

                                      By: /s/ THOMAS HAYES
                                          --------------------------------------
                                          Name:   Thomas Hayes
                                          Title:  Senior Vice President

                                       110

<PAGE>

                                      THE ISSUING BANKS:
                                      -----------------

                                      CITIBANK, N.A.

                                      By: /s/ WAJEEH FAHEEM
                                          --------------------------------------
                                          Name:   Wajeeh Faheem
                                          Title:  Vice President

                                      HSBC BANK U.S.A.

                                      By: /s/ ADRIANA COLLINS
                                          --------------------------------------
                                          Name:   Adriana Collins
                                          Title:  First Vice President

                                      BANK OF AMERICA, N.A.

                                      By: /s/ AMY KROVOCHECK
                                          --------------------------------------
                                          Name:   Amy Krovocheck
                                          Title:  Vice President

                                       111

<PAGE>

                                      THE SWING LINE LENDERS:
                                      ----------------------

                                      CITIBANK, N.A.

                                      By: /s/ WAJEEH FAHEEM
                                          --------------------------------------
                                          Name:   Wajeeh Faheem
                                          Title:  Vice President

                                      HSBC BANK U.S.A.

                                      By: /s/ ADRIANA COLLINS
                                          --------------------------------------
                                          Name:   Adriana Collins
                                          Title:  First Vice President

                                      BANK OF AMERICA, N.A.

                                      By: /s/ AMY KROVOCHECK
                                          --------------------------------------
                                          Name:   Amy Krovocheck
                                          Title:  Vice President

                                      ABN AMRO BANK N.V.

                                      By: /s/ DELIA B. FANCE
                                          --------------------------------------
                                          Name:   Delia B. Fance
                                          Title:  Group Vice President

                                      By: /s/ CATHERYN N. FULLER
                                          --------------------------------------
                                          Name:   Catheryn N. Fuller
                                          Title:  Senior Vice President

                                      JPMORGAN CHASE BANK

                                      By: /s/ BARRY R. BERGMAN
                                          --------------------------------------
                                          Name:   Barry R. Bergman
                                          Title:  Vice President

                                       112

<PAGE>

                                      THE BANK OF NOVA SCOTIA

                                      By: /s/ MARK SPARROW
                                          --------------------------------------
                                          Name:   Mark Sparrow
                                          Title:  Director

                                       113

<PAGE>

                                      HSBC BANK plc.

                                      By: /s/ STEPHEN JONES
                                          --------------------------------------
                                          Name:   Stephen Jones
                                          Title:  Relationship Manager

                                       114

<PAGE>

                                  Schedule I-A

                               COMMITMENT AMOUNTS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Lender / Swing Lender /          Advance            LC Commitment    Swing Line    Issuing
-----------------------          -------            -------------    ----------    -------
Issuing Bank                     Commitment ($)*    ($)              Commitment    Commitment
------------                     ---------------    ---              ----------    ----------
<S>                              <C>                <C>              <C>           <C>
--------------------------------------------------------------------------------------------------
Citicorp USA Inc., as Lender     $59,107,142.86       $224,375,000           N/A               N/A
--------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, as          $59,107,142.86       $224,375,000           N/A               N/A
Lender
--------------------------------------------------------------------------------------------------
HSBC Bank USA, as Lender         $28,392,857.14       $186,875,000           N/A               N/A
--------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V., as           $24,857,142.86       $150,000,000           N/A               N/A
Lender
--------------------------------------------------------------------------------------------------
Bank of America N.A., as         $59,107,142.86       $224,375,000           N/A               N/A
Lender, as Lender
--------------------------------------------------------------------------------------------------
U.S. Bank National               $21,428,571.43       $ 75,000,000           N/A               N/A
Association, as Lender
--------------------------------------------------------------------------------------------------
Bank of Nova Scotia, as          $18,714,285.71       $125,000,000           N/A               N/A
Lender
--------------------------------------------------------------------------------------------------
First National Bank of Omaha,    $ 4,285,714.29       $ 15,000,000           N/A               N/A
as Lender
--------------------------------------------------------------------------------------------------
Wells Fargo Bank NA, as          $14,285,714.29       $ 50,000,000           N/A               N/A
Lender
--------------------------------------------------------------------------------------------------
The CIT Group/Business           $35,714,285.71       $125,000,000           N/A               N/A
Credit, Inc., as Lender
--------------------------------------------------------------------------------------------------
Citibank, N.A., as Issuing                  N/A                N/A           N/A   $467,647,058.80
Bank
--------------------------------------------------------------------------------------------------
Bank of America N.A., as                    N/A                N/A           N/A   $467,647,058.80
Issuing Bank
--------------------------------------------------------------------------------------------------
HSBC Bank USA., as Issuing                  N/A                N/A           N/A   $389,705,882.40
Bank
--------------------------------------------------------------------------------------------------
Citibank, N.A., as Swing Line               N/A                N/A   $ 5,000,000               N/A
Lender
--------------------------------------------------------------------------------------------------
Bank of America N.A., as Swing              N/A                N/A   $ 5,000,000               N/A
Line Lender
--------------------------------------------------------------------------------------------------
ABN AMRO N.V., as Swing Line                N/A                N/A   $18,000,000               N/A
Lender
--------------------------------------------------------------------------------------------------
</TABLE>

-----------------------------
*    The Advance Commitment is in effect a subset of the LC Commitment and does
     not create additional credit availability.

                                 Sch.-I-A Page 1

<PAGE>
<TABLE>
<S>                              <C>                <C>              <C>           <C>
--------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, as                     N/A                N/A   $ 5,000,000               N/A
Swing Line Lender
--------------------------------------------------------------------------------------------------
HSBC Bank USA and HSBC                      N/A                N/A   $25,000,000               N/A
Bank plc., as Swing
Line Lenders
--------------------------------------------------------------------------------------------------
Bank of Nova Scotia, as Swing               N/A                N/A   $17,000,000               N/A
Line Lender
--------------------------------------------------------------------------------------------------
TOTAL                            $  325,000,000     $1,400,000,000   $75,000,000   $ 1,325,000,000
--------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-I-A Page 2

<PAGE>

<TABLE>
<CAPTION>

                                  Schedule I-B

                       LIST OF APPLICABLE LENDING OFFICES

--------------------------------------------------------------------------------------------------------------------
     Lender                       Domestic Lending Office                Eurodollar Lending Office
--------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                    <C>

Citicorp USA Inc./                   2 Penns Way                            2 Penns Way
Citibank, N.A.                       New Castle, DE 19720                   New Castle, DE 19720
                                     Attn: Tim Smith                        Attn: Tim Smith
                                     Tel: 302-894-6059                      Tel: 302-894-6059
                                     Fax: 302-894-6120                      Fax: 302-894-6120
--------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank                  JPMorgan Chase Bank                    JPMorgan Chase Bank
                                     270 Park Avenue                        270 Park Avenue
                                     New York, NY 10017                     New York, NY 10017
                                     Attn: Barry Bergman                    Barry Bergman, VP
                                     Tel: 212-270-0203                      212-270-0203
                                     Fax: 212-270-5646                      212-270-5646
--------------------------------------------------------------------------------------------------------------------
HSBC Bank USA                        One HSBC Center, 26th Floor            One HSBC Center, 26th Floor
                                     Buffalo, NY 14203                      Buffalo, NY 14203
                                     Attn: Marie Bax                        Attn: Marie Bax
                                     Tel: 716-841-5668                      Tel: 716-841-5668
                                     Fax: 716 841-0269                      Fax: 716 841-0269
--------------------------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V.                   208 South LaSalle Street, Suite 1500   208 South LaSalle Street, Suite 1500
                                     Chicago, IL 60604-1003                 Chicago, IL 60604-1003
                                     Attn: Sherry Manning                   Attn: Sherry Manning
                                     Tel: 312-992-5118                      Tel: 312-992-5118
                                     Fax: 312-992-5111                      Fax: 312-992-5111
--------------------------------------------------------------------------------------------------------------------
Bank of America N.A.                 1850 Gateway Blvd                      1850 Gateway Blvd
                                     Concord, CA 94520                      Concord, CA 94520
                                     Attn: Nina Lemmer                      Nina Lemmer
                                     Tel: 925-675-7478                      Tel: 925-675-7478
                                     Fax: 888-969-9281                      Fax: 888-969-9281
--------------------------------------------------------------------------------------------------------------------
U.S. Bank National Association       555 S.W. Oak Street, Suite 400         555 S.W. Oak Street, Suite 400
                                     Portland, Oregon 97204                 Portland, Oregon 97204
                                     Attn: Janet Jordan                     Attn: Janet Jordan
                                     Tel: 503-275-5871                      Tel: 503-275-5871
                                     Fax: 503-275-5428                      Fax: 503-275-5428
--------------------------------------------------------------------------------------------------------------------
First National Bank of Omaha         1620 Dodge Street                      1620 Dodge Street
                                     Omaha, NE 68197                        Omaha, NE 68197
                                     Attn: Mark Baratta                     Attn: Shelly Pruitt
                                     Tel: 402-633-3512                      Tel: 402-633-3564
                                     Fax: 402-633-3519                      Fax: 402-633-3554
--------------------------------------------------------------------------------------------------------------------
The Bank of Nova Scotia              580 California Street, suite 2100      580 California Street, suite 2100
                                     San Francisco, CA 94104                San Francisco, CA 94104
                                     Attn: Mark Sparrow                     Attn: Mark Sparrow
                                     Tel: 415-986-1100                      Tel: 415-986-1100
                                     Fax: 415-397-0791                      Fax: 415-397-0791
--------------------------------------------------------------------------------------------------------------------
Wells Fargo Bank NA                  550 California Street, 10th Floor      550 California Street, 10th Floor
                                     MAC A0112-101                          MAC A0112-101
                                     San Francisco, CA 94104                San Francisco, CA 94104
                                     Attn: Katrina Flowers                  Attn: Katrina Flowers
                                     Tel: 415-396-8634                      Tel: 415-396-8634
                                     Fax: 415-989-4319                      Fax: 415-989-4319
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-I-B Page 1

<PAGE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                         <C>
The CIT Group/Business        300 S. Grand Ave., 3rd Floor                300 S. Grand Ave., 3rd Floor
Credit, Inc.,                 Los Angeles, CA 90071                       Los Angeles, CA 90071
                              Attn: Evelyn L. Lopez or Margaret       Attn: Evelyn L. Lopez or Margaret
                                           Mak                                     Mak
                              Tel: 213 613-2585 or 213 613-2583           Tel: 213 613-2585 or 213 613-2583
                              Fax: 213 613-2588                           Fax: 213 613-2588
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-I-B Page 2

<PAGE>

                                   Schedule II

                                 EXISTING LIENS

Landlord Liens:

Lease Agreement, between Metropolitan Life Insurance Company, on behalf of the
Tower Fund, a commingled separate account, as Landlord and The Gap, Inc., as
Tenant for Gateway Business Center, Building #1, City of Grove City, Ohio, dated
January 29, 1998 (the Ohio Catalog Center)

Amended and Restated Industrial Lease Agreement, between Industrial Developments
International, Inc., as Landlord and The Gap, Inc., as Tenant for 1200 Worldwide
Blvd., Hebron, Kentucky, dated March 10, 1998 (the Gap Outlet Distribution
Center)

Industrial Lease Agreement, between Industrial Developments International, Inc.,
as Landlord, and The Gap, Inc., as Tenant for 1405 Worldwide Blvd., Hebron,
Kentucky, dated June 15, 2000 (the Old Navy Outlet Distribution Center)

                                 Sch.-III Page 1

<PAGE>
                                  Schedule III

                                CHANGE OF CONTROL

1.   Donald G. Fisher

2.   Doris F. Fisher

3.   Millard S. Drexler

4.   Any person related by blood or marriage to any of the foregoing persons and
     any trust as to which any of such persons has beneficial ownership of the
     assets of the trust.

5.   The executive officers of The Gap, Inc. as of March 7, 2002.

                                 Sch.-III Page 1

<PAGE>
                                   Schedule IV

                OUTSTANDING BALANCE OF EXISTING LETTERS OF CREDIT

                                 Sch.-IV Page 1

<PAGE>
                                   Schedule V

                                 LC SUBSIDIARIES
                         (As of date of this Agreement)

1.   Banana Republic Direct, Inc.

2.   Banana Republic, Inc.

3.   Gap (Canada) Inc.

4.   Gap (Deutschland) GmbH

5.   Gap Direct, Inc.

6.   Gap (France) SAS

7.   Gap International BV

8.   Gap International Sourcing FZE

9.   Gap International Sourcing (Holdings) Limited

10.  Gap International Sourcing Limited

11.  Gap International Sourcing (Mexico) S.A. de C.V.

12.  Gap International Sourcing Pte. Ltd.

13.  Gap (Ireland) Limited

14.  Gap (Japan) KK

15.  Gap (Netherlands) BV

16.  Goldhawk BV

17.  GPS Consumer Direct, Inc.

18.  GPS (Great Britain) Limited

19.  Old Navy (Canada) Inc.

20.  Old Navy Direct, Inc.

21.  Old Navy Inc.

                                 Sch.-V Page 1

<PAGE>

                                   Schedule VI

                              SUBSIDIARY BORROWERS

Gap (Canada) Inc.

Gap (Deutschland) GmbH

Gap (ESO) Limited

Gap (France) SAS

Gap International BV

Gap International Sourcing (Holdings) Limited

Gap International Sourcing Limited

Gap (Japan) KK

Gap (Netherlands) BV

Gap (UK Distribution) Limited

GPS (Great Britain) Limited

Old Navy (Canada) Inc.

Gap International Sourcing Pte. Ltd.

                                 Sch.-VI Page 1

<PAGE>
                                  Schedule VII

                              PERMITTED INVESTMENTS

1.   Obligations issued or guaranteed by the United States Government.

2.   Commercial paper of U.S. issuers having a rating of P-1 by Moodys or A-1 by
     S&P.

3.   Dollar denominated investments in money market funds.

4.   Banker's acceptances, certificates of deposit, eurodollar time deposits
     (including bank money market funds) and secured repurchase agreements
     involving any of the investments referred to above and having the ratings
     specified above, as applicable, with an institution or institutions whose
     commercial paper satisfies the criteria specified in 2 above.

5.   Tax-exempt securities and taxable securities issued by tax-exempt entities
     with maturities less than 365-days at the time of such investment rated Aaa
     by Moodys or AAA by S&P or Aa by Moodys or AA by S&P.

6.   Investments of a similar type by Foreign Subsidiaries in jurisdictions
     where such Foreign Subsidiaries do business.

Moodys = Moody's Investors Service, Inc.

S&P = Standard & Poor's Ratings Services, a division of the McGraw-Hill
      Companies, Inc.

                                 Sch.-VII Page 1

<PAGE>
                                  Schedule VIII

                                      PLANS

GapShare 401(k) Plan

Gap Inc. Employee Benefits Premium Payment Plan

Gap Inc. Life and Accidental Death and Dismemberment Plan (includes the Business
Travel Accident Plan)

Gap Inc. Health Insurance Plan

Gap Inc. Short-Term Disability Plan

Gap Inc. Long-Term Disability Plan

Gap Inc. Tuition Reimbursement Program

Gap Inc. Vision Plan

Gap Inc. Dependent Care Flexible Spending Account Plan

Gap Inc. Health Care Flexible Spending Account Plan

The Gap, Inc. 2001 Workforce Review Transition Benefits Plan for Employees in
Grades 23 and Below

The Gap, Inc. 2001 Workforce Review Transition Benefits Plan for Employees in
Grades 24 and Above

Banana Republic, Inc. 2001 Field Reorganization Benefits Plan

The Gap, Inc. 2002 Distribution Division Transition Benefits Plan for Employees
in Grades 19 and Below

The Gap, Inc. 2002 Distribution Division Transition Benefits Plan for Employees
in Grades 20 and Above

The Gap Inc. 2002 Transition Benefits Plan for Employees in Grades 19 and Below

The Gap Inc. 2002 Transition Benefits Plan for Employees in Grades 20 and Above

                                Sch.- VIII page 1

<PAGE>

                                   Schedule IX

                          SPECIAL PURPOSE SUBSIDIARIES

1.   Banana Republic (Apparel) Inc.

2.   Banana Republic (ITM) Inc.

3.   Gap (Apparel) Inc.

4.   Gap (ITM) Inc.

5.   Old Navy (Apparel) Inc.

6.   Old Navy (ITM) Inc.

7.   GPSDC (Fresno) LLC

8.   GPSDC (CADC) LLC

9.   GPSDC (WDC) LLC

                                 Sch.- IX Page 1

<PAGE>
                                   Schedule X

                                  ERISA MATTERS

                                      None.

                                  Sch.-X Page 1

<PAGE>

                                   Schedule XI

                          SUBSIDIARIES OF THE BORROWER

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of
                                                                                      Shares/Units
                                                                     Percentage        Covered By
    Subsidiaries of                                    Number of        Owned       Options, Warrants,
      the Borrower      Jurisdiction     Number of      Equity       by Borrower        Rights of
   (except Excluded           of       Shares/ Units   Interests       or Any         Conversion or        Material Assets (if a
     Subsidiaries)      Organization    Authorized    Outstanding    Subsidiary         Purchase        Special Purpose Subsidiary)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>            <C>            <C>            <C>                 <C>
                                                           100           100%             None.         Holds all U.S. trademarks
  Banana Republic           CA              1,000                                                        for the Banana Republic
   (Apparel) Inc.                                                                                                 brand.
-----------------------------------------------------------------------------------------------------------------------------------
                                                           n/a           100%             None.
 Banana Republic            DE                n/a                                                                    n/a
  (California) LLC
-----------------------------------------------------------------------------------------------------------------------------------
                                                           n/a           100%             None.
  Banana Republic           CA                n/a                                                                    n/a
   (Florida) LLC
-----------------------------------------------------------------------------------------------------------------------------------
                                                           100           100%             None.
  Banana Republic           CA              1,000                                                                    n/a
  (Holdings) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                           100           100%                            Holds all international
  Banana Republic           CA              1,000                                         None.          trademarks for the Banana
     (ITM) Inc.                                                                                            Republic brand.
-----------------------------------------------------------------------------------------------------------------------------------
                                                           n/a           100%
  Banana Republic           DE                n/a                                         None.                      n/a
   (New York) LLC
-----------------------------------------------------------------------------------------------------------------------------------
                                                           100           100%
  Banana Republic           CA              1,000                                         None.                      n/a
    Direct, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                           100           100%
  Banana Republic,          DE              1,000                                         None.                      n/a
        Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                         1,000           100%                           Holds all U.S. trademarks
 Gap (Apparel) Inc.         CA              1,000                                         None.             for the Gap brand.

-----------------------------------------------------------------------------------------------------------------------------------
                                                        11,000           100%
 Gap (Canada) Inc.        Canada         Unlimited    ordinary; 1                         None.                      n/a
                                                       preferred
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Florida) LLC          CA                n/a           n/a                           None.                      n/a

-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Georgia) L.P.         CA                n/a       99 LP; 1 GP                       None.                      n/a

-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Indiana) L.P.         CA                n/a      99 LP; 1 GP                        None.                      n/a

-----------------------------------------------------------------------------------------------------------------------------------
                                                       100,000           100%
   Gap (Ireland)         Ireland        1,000,000                                         None.                      n/a
      Limited
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-XI Page 1

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of
                                                                                      Shares/Units
                                                                     Percentage        Covered By
    Subsidiaries of                                    Number of        Owned       Options, Warrants,
      the Borrower      Jurisdiction     Number of      Equity       by Borrower        Rights of
   (except Excluded           of       Shares/ Units   Interests       or Any         Conversion or        Material Assets (if a
     Subsidiaries)      Organization    Authorized    Outstanding    Subsidiary         Purchase        Special Purpose Subsidiary)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>            <C>            <C>            <C>                 <C>
                                                             100         100%                           Will hold all international
 Gap (ITM) Inc.             CA            100,000                                         None.            trademarks for the Gap
                                                                                                                    brand.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Kentucky) L.P.        CA                n/a      99 LP; 1 GP                        None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Puerto Rico),     Puerto Rico         1,000          1,000                          None.                      n/a
        Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Tennessee) L.P.       CA                n/a      99 LP; 1 GP                        None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap (Wisconsin) L.P.       CA                n/a      99 LP; 1 GP                        None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                             100         100%
 Gap Direct, Inc.           CA              1,000                                         None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap Holdings, Inc.         CA              1,000            700                          None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
      Sourcing              CA                n/a            n/a                          None.                      n/a
  (Americas) LLC
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
      Sourcing              CA              1,000            100                          None.                      n/a
 (California) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
      Sourcing           Hong Kong            100            100                          None.                      n/a
 (Holdings) Limited
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
 Sourcing (JV) LLC          CA                n/a            n/a                          None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
      Sourcing          Thailand        1,000,000      1,000,000                          None.                      n/a
 (Thailand) Limited
-----------------------------------------------------------------------------------------------------------------------------------
 Gap International                                                       100%
 Sourcing (U.S.A.)          CA                100                                         None.                      n/a
        Inc.                                                 100
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap International          CA              1,000            100                          None.                      n/a
   Sourcing, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Gap International      Singapore         100,000        100,000                          None.
 Sourcing Pte. Ltd.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-XI Page 2

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of
                                                                                      Shares/Units
                                                                      Percentage       Covered By
    Subsidiaries of                                    Number of        Owned       Options, Warrants,
      the Borrower      Jurisdiction     Number of      Equity       by Borrower        Rights of
   (except Excluded           of       Shares/ Units   Interests       or Any         Conversion or        Material Assets (if a
     Subsidiaries)      Organization    Authorized    Outstanding    Subsidiary         Purchase        Special Purpose Subsidiary)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>            <C>            <C>            <C>                 <C>
   GPS (Bermuda)                                                         100%
 Insurance Services                     120,000        120,000                            None.                      n/a
      Limited            Bermuda
-----------------------------------------------------------------------------------------------------------------------------------
                                                           100           100%
 GPS (Maryland), Inc.       MD           10,000                                           None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   GPS Brand                CA           10,000          1,000                            None.                      n/a
 Services, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
    GPS Consumer            CA            1,000            100                            None.                      n/a
    Direct, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   GPS Corporate            CA            1,000            100                            None.                      n/a
  Facilities, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%                           Holds distribution center
  GPSDC (CADC) LLC          CA              n/a            n/a                            None.                  assets.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%                           Holds distribution center
 GPSDC (Fresno) LLC         CA              n/a            n/a                            None.                 assets.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
  GPSDC (New York)          DE            1,000            100                            None.                      n/a
        Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%                           Holds distribution center
  GPSDC (WDC) LLC           CA              n/a            n/a                            None.                   assets.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
  GPS Real Estate,          CA            1,000            100                            None.                      n/a
        Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%                           Holds all U.S. trademarks
   Old Navy                 CA            1,000            100                            None.          for the Old Navy brand.
(Apparel) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
      Old Navy              DE              n/a            n/a                            None.                      n/a
  (California) LLC
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   Old Navy              Canada         Unlimited          100                            None.                      n/a
 (Canada) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Old Navy (East) L.P.       CA              n/a         99 LP; 1 GP                       None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
 Old Navy (Florida)         CA               n/a           n/a                            None.                      n/a
        LLC
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   Old Navy                 CA            1,000            100                            None.                      n/a
(Holdings) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-XI Page 3

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of
                                                                                      Shares/Units
                                                                      Percentage       Covered By
    Subsidiaries of                                    Number of        Owned       Options, Warrants,
      the Borrower      Jurisdiction     Number of      Equity       by Borrower        Rights of
   (except Excluded           of       Shares/ Units   Interests       or Any         Conversion or        Material Assets (if a
     Subsidiaries)      Organization    Authorized    Outstanding    Subsidiary         Purchase        Special Purpose Subsidiary)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>            <C>            <C>            <C>                 <C>
                                                                         100%                             Holds all international
 Old Navy (ITM) Inc.        CA           1,000             100                            None.          trademarks for the Old Navy
                                                                                                                brand.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
  Old Navy (Puerto      Puerto Rico     10,000           1,000                            None.                      n/a
     Rico) Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
  Old Navy Direct,          CA           1,000             100                            None.                      n/a
        Inc.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   Old Navy Inc.            DE           1,000             100                            None.                      n/a
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
   The Fisher Gap                        7,500           1,000                            None.                      n/a
    Stores, Inc.            CA
-----------------------------------------------------------------------------------------------------------------------------------
                                                                         100%
  WCB Twenty-Eight          DE             n/a        99 LP; 1 GP                         None.                      n/a
Limited Partnership

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-XI Page 4

<PAGE>

                                  Schedule XII

                              ENVIRONMENTAL MATTERS

                                      None.

                                 Sch.-XII Page 1

<PAGE>
                                  Schedule XIII

                                  EXISTING DEBT
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------
          Amount                   Type of Debt                Date Issued               Date Expires
<S>                           <C>                        <C>                           <C>
-------------------------------------------------------------------------------------------------------------
     Euro 250,000,000            5.0% 5-Year Notes           September 1999             September 2004
                                                         by Gap International BV

-------------------------------------------------------------------------------------------------------------
      US $50,000,000            6.25% 10-Year Notes             May 1999                   May 2009
                                                           by Gap (Japan) KK

-------------------------------------------------------------------------------------------------------------
      Euro 1,998,452         Bank Guarantee for lease         June 24, 1994                Evergreen
                                payments in France
                                 Societe Generale

-------------------------------------------------------------------------------------------------------------
      Euro 3,536,078         Bank Guarantee for lease         April 4, 1997                Evergreen
                                payments in Germany
                                   Deutsche Bank

-------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Sch.-XV Page 1

<PAGE>
                                  Schedule XIV

                              EXCLUDED SUBSIDIARIES

1.       Banana Republic (Canada) Inc.

2.       Banana Republic (Hong Kong) Limited

3.       Banana Republic Limited

4.       Banana Republic (Puerto Rico) Inc.

5.       Banana Republic Stores Pty Ltd.

6.       Gap International, Inc

7.       Gap International Sourcing (Honduras) S.A. de C.V.

8.       Gap International Sourcing (Mexico) S.A. de C.V.

9.       Gap (New Jersey) L.P.

10.      GPS Distribution Facilities, LLC

11.      GPS Employee Services, Inc.

12.      GPS (Japan) Limited

13.      GPS Limited

14.      GPS Management Services, Inc.

15.      GPS Park Restaurant, Inc.

16.      GPS (Puerto Rico) Limited

17.      GPS Realty Company Inc.

18.      GPS (UK) Limited

19.      The Pottery Barn West

20.      Real Estate Ventures (Glastonbury), Inc.

21.      Real Estate Ventures (Glen Eagle), Inc.

22.      Real Estate Ventures (Wheaton), Inc.

                                 Sch.-XV Page 1

<PAGE>
                                   Schedule XV

                SUBSIDIARIES FOR WHICH CERTIFICATES TO BE ISSUED

Domestic Subsidiaries:
---------------------

1.       Banana Republic (Holdings) Inc.

2.       Banana Republic Direct, Inc.

3.       Banana Republic, Inc.

4.       The Fisher Gap Stores, Inc.

5.       Gap Direct, Inc.

6.       Gap Holdings, Inc.

7.       Gap International Sourcing (California) Inc.

8.       Gap International Sourcing (U.S.A.) Inc.

9.       GPS Consumer Direct, Inc.

10.      GPS Corporate Facilities, Inc.

11.      GPS (Maryland), Inc.

12.      GPS Real Estate, Inc.

13.      GPSDC (New York) Inc.

14.      Old Navy Direct, Inc.

15.      Old Navy (Holdings) Inc.

16.      Old Navy Inc.

Foreign Subsidiaries:
--------------------

1.       Gap (Canada) Inc.

2.       Gap (Puerto Rico) Inc.

3.       Old Navy (Canada) Inc.

4.       Old Navy (Puerto Rico) Inc.

5.       GPS (Bermuda) Insurance Services Limited

6        Gap International Sourcing Pte. Ltd.

7.       Gap (Ireland) Limited

                                 Sch.-XV Page 1

<PAGE>
                                  Schedule XVI

                               HEDGE SUBSIDIARIES

1.       Banana Republic, Inc.

2.       Gap (Canada) Inc.

3.       Gap (France) SAS

4.       Gap International BV

5.       Gap International Sourcing (Holdings) Limited

6.       Gap International Sourcing Limited

7.       Gap (Japan) KK

8.       Gap (Netherlands) BV

9.       Gap (UK Holdings) Limited

10.      GPS (Great Britain) Limited

11.      Old Navy (Canada) Inc.

12.      Old Navy Inc.

                                 Sch.-XVI Page 1

<PAGE>

                                    EXHIBIT A

                               NOTICE OF BORROWING

Citicorp USA Inc., as Agent
  for the Lenders Parties
  to the Credit Agreement referred to below

Attention:

                                     [Date]

Ladies and Gentlemen:

      The undersigned, The Gap, Inc., refers to the Credit Agreement, dated as
of March 7, 2002 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement", the terms defined
                   ----------------
therein being used herein as therein defined), among the undersigned, certain of
the undersigned's Subsidiaries, certain Lenders parties thereto, certain Issuing
Banks parties thereto, certain Joint Book Managers parties thereto, certain
Co-Syndication Agents parties thereto, the Documentation Agent, Salomon Smith
Barney Inc., Banc of America Securities, LLC and J.P. Morgan Securities Inc. as
Joint Lead Arrangers, and Citicorp USA Inc., as Agent for said Lenders and the
Issuing Banks, and hereby gives you notice, irrevocably, pursuant to Section
2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
                                             ------------------
Section 2.02(a) of the Credit Agreement:

      (i)      The Business Day of the Proposed Borrowing is______,  ______.

      (ii)     The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].

      (iii)    The aggregate amount of the Proposed Borrowing is $_____________.

      (iv)     The Interest Period for each Advance made as part of the Proposed
Borrowing is [___ month[s]].

      The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:

      (A) the representations and warranties contained in Section 6.01 of the
Credit Agreement are correct, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date;

                                Exh. A Page 1

<PAGE>

      (B) no event has occurred and is continuing, or would result
from such Proposed Borrowing or from the application of the proceeds therefrom,
which constitutes an Event of Default or Default; and

      (C) the making of the Proposed Borrowing is in compliance with
the respective criteria set forth in Section 2.01(a)(i) and (ii) of the Credit
Agreement.

                             Very truly yours,

                             THE GAP, INC

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

                                Exh. A Page 2

<PAGE>

                                    EXHIBIT B

                             FORM OF PROMISSORY NOTE

$_______________                                      Dated:  _________ __, ____

     FOR VALUE RECEIVED, the undersigned, The Gap, Inc., a Delaware corporation
(the "Borrower"), HEREBY PROMISES TO PAY to the order of [_____________________]
      --------
(the "Lender") for the account of its Applicable Lending Office on the
      ------
Termination Date (as those terms are defined in the Credit Agreement referred to
below) or prior thereto as provided in such Credit Agreement the aggregate
principal amount of the Advances (as defined below) owing to the Lender by the
Borrower pursuant to the Credit Agreement dated as of March 7, 2002 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Credit Agreement," terms defined therein, unless otherwise defined herein,
 ----------------
being used herein as therein defined), among the Borrower, certain subsidiaries
of the Borrower, the Lender and certain other banks and financial institutions
party thereto as Lenders, certain Issuing Banks, certain Joint Book Managers
parties thereto, certain Co-Syndication Agents parties thereto, the
Documentation Agent, Salomon Smith Barney Inc., Banc of America Securities, LLC
and J.P. Morgan Securities Inc. as Joint Lead Arrangers, and Citicorp USA Inc.
("CUSA"), as Agent.
  ----

     The Borrower also promises to pay interest on the unpaid principal amount
of each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement. Both principal and interest are payable in
lawful money of the United States of America to CUSA, as Agent, at [399 Park
Avenue, New York, New York 10043] (or at such other address as the Agent may
specify to the Borrower in writing) in same day funds, free and clear of and
without any deduction, with respect to the payee named above, subject to Section
4.02 of the Credit Agreement, for any and all present and future taxes,
deductions, charges or withholdings, and all liabilities with respect thereto.

     The Lender is authorized to record the date of each Advance or Conversion
or continuation thereof, each payment or prepayment of principal with respect
thereto and, in the case of Eurodollar Rate Advances, each Interest Period and
the interest rate applicable thereto, in the Lender's internal records and,
prior to any transfer hereof, on a schedule annexed hereto and made a part
hereof, and any such notation shall constitute prima facie evidence of the
accuracy of the information so recorded.

     This Promissory Note is issued pursuant to Section 2.02(g) of, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of advances (the "Advances") by the
                                                            --------
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Advance being evidenced by
this Promissory Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

     The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.

                                  Exh. B Page 1

<PAGE>

     This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York, United States, without reference to
principles of conflicts of laws other than New York General Obligations Law
(S) 5-1401.

                                                THE GAP, INC.

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

                                  Exh. B Page 2

<PAGE>

                                    EXHIBIT C

                        FORM OF ASSIGNMENT AND ACCEPTANCE

                                Dated          ,
                                      ---------

     Reference is made to the Credit Agreement, dated as of March __, 2002 (the
"Credit Agreement"), among The Gap, Inc., a Delaware corporation (the
 ----------------
"Borrower"), certain Subsidiaries of the Borrower, as "LC Subsidiaries" and
 --------                                              ---------------
"Subsidiary Borrowers," as the case may be, the Lenders (as defined in the
 --------------------
Credit Agreement), certain Issuing Banks, certain Joint Book Managers parties
thereto, certain Co-Syndication Agents parties thereto, the Documentation Agent,
Salomon Smith Barney Inc., Banc of America Securities, LLC and J.P. Morgan
Securities Inc. as Joint Lead Arrangers, and Citicorp USA Inc., as Agent for the
Lenders and Issuing Banks (the "Agent"). Terms defined in the Credit Agreement
                                -----
are used herein with the same meaning.

     __________ (the "Assignor") and ____________(the "Assignee") agree as
                      --------                         --------
follows:

     1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, such respective interests in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the date hereof which represent the respective percentage interests specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement
in respect of (i) the Assignor's Advance Commitment and the Advances owing to
the Assignor and (ii) the LC Commitment and participations in Letter of Credit
Liability of the Assignor. After giving effect to such sale and assignment, (x)
the Assignee's Advance Commitment and the amount of the Advances owing to the
Assignee and (y) such Assignee's LC Commitment and participations in Letter of
Credit Liability will be as set forth, respectively, in Section 2 of Schedule 1.

     2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interests being assigned by it hereunder and that such
interests are free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any
Subsidiary Borrower or any LC Subsidiary or the performance or observance by the
Borrower, any Subsidiary Borrower or any LC Subsidiary of any of its respective
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.

     3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Issuing Banks, the Assignor 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 the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent and the Issuing Banks to take such action on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent and the Issuing Banks by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as Lender; [and] (vi)
specifies as its Domestic Lending Office (and address for

                                  Exh. C Page 1

<PAGE>

notices) and Eurodollar Lending Office the offices set forth beneath its name on
the signature pages hereof [and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty].*

     4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date of this Assignment and Acceptance
shall be the date of acceptance thereof by the Agent, unless otherwise specified
on Schedule 1 hereto (the "Effective Date").
                           --------------

     5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

     6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make (and shall direct the Issuing Banks to
make) all payments under the Credit Agreement in respect of the interests
assigned hereby (including, without limitation, all payments of principal,
interest and utilization fees, facility fees and letter of credit facility fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Effective Date directly between themselves.

     7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.

____________________
* If the Assignee is organized under the laws of a jurisdiction outside the
United States.

                                  Exh. C Page 2

<PAGE>

                                   Schedule 1

                                       to

                            Assignment and Acceptance

                                   Dated      ,
                                         -----

Section 1.

Percentage Interest in Advance Commitment and Advances:                 _____
Percentage Interest in LC Commitment and participations in Letter of
Credit Liability:                                                       _____

Section 2.

Assignee's Advance Commitment:                                          $____
Assignee's LC Commitment:                                               $____
Aggregate outstanding principal amount of Advances owing to Assignee:   $____
Aggregate outstanding amount of Assignee's participations in Letter of
Credit Liability:                                                       $____

Section 3.

Effective Date*:     __________________, ____

                                               [NAME OF ASSIGNOR]

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

                                               [NAME OF ASSIGNEE]

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

                                               Domestic Lending Office (and
                                               address for notices)
                                                       [Address]

                                               Eurodollar Lending Office:
                                                       [Address]

____________________
* This date should be no earlier than the date of acceptance by the Agent.

                Schedule 1 to Assignment and Acceptance - Page 1

<PAGE>

Accepted this ____ day

of

CITICORP USA, INC., as Agent

By:_____________________________________

Title:

                Schedule 1 to Assignment and Acceptance - Page 2

<PAGE>

                                    EXHIBIT D

                           FORM OF SUBSIDIARY GUARANTY

                                  Exh. D Page 1

<PAGE>

                                    EXHIBIT E

                           FORM OF SECURITY AGREEMENT

                                  Exh. E Page 1

<PAGE>
                                   EXHIBIT F-1

                 FORM OF OPINION OF COUNSEL TO THE LOAN PARTIES

                          [Letterhead of The Gap, Inc.]

                                                  March ___, 2002

Citicorp USA, Inc.,
as Agent

The Lenders and Issuing Banks
(as defined below) listed
on Schedule I hereto

                  Re:  The Gap, Inc./Credit Agreement
                       ------------------------------

Ladies and Gentlemen:

                  I am Vice President and Associate General Counsel to The Gap,
Inc., a Delaware corporation (the "Company") and the domestic subsidiaries of
                                   -------
the Gap listed on Schedule II hereto (the "Subsidiaries"; and together with the
                                           ------------
Company, the "Loan Parties"), in connection with the preparation, execution and
              ------------
delivery of the Credit Agreement, dated as of March __, 2002 (the "Credit
                                                                   ------
Agreement"), among the Company and the LC Subsidiaries, the Subsidiary
---------
Borrowers, the Lenders and the Issuing Banks (as such terms are defined in the
Credit Agreement), Salomon Smith Barney Inc. ("SSB") and Banc of America
                                               ---
Securities, LLC ("BAS") as Joint Book Managers, BAS, HSBC Bank USA and JP Morgan
                  ---
Securities Inc. ("JPM") as Co-Syndication Agents, ABN AMRO Bank N.V. as
                  ---
Documentation Agent, SSB, BAS and JPM as Joint Lead Arrangers, and Citicorp USA,
Inc. as agent for the Lenders and the Issuing Banks (in such capacity, the
"Agent"), and certain other agreements, instruments and documents related to the
 -----
Credit Agreement. This opinion is being delivered pursuant to Section
5.01(b)(viii) of the Credit Agreement.

                  In my examination I have assumed the genuineness of all
signatures including endorsements, the legal capacity of natural persons, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all

<PAGE>
documents submitted to me as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to this opinion which I did not independently establish or verify, I
have relied upon statements and representations of the Loan Parties and their
officers and other representatives and of public officials, including the facts
and conclusions set forth therein.

               In rendering the opinions set forth herein, I have examined and
relied on originals or copies of the following:

               (a)  the Credit Agreement;

               (b)  the Promissory Notes executed by the Loan Parties;

               (c) the Subsidiary Guaranty, dated as of March ___, 2002 (the
"Subsidiary Guaranty"), made by the Subsidiaries party thereto in favor of
 -------------------
the Lender Parties;

               (d) the Security Agreement, dated as of March ___, 2002 (the
"Security Agreement"), from the Loan Parties party thereto (the "Grantors") in
 ------------------                                              --------
favor of the Agent as Collateral Agent (in such capacity, the "Collateral
                                                               ----------
Agent");
-----

               (e) the Securities Account Control Agreements each dated as of
March ___, 2002 (each a "Securities Account Control Agreement") among the
                         ----------         -----------------
respective Grantor, the Collateral Agent and the respective financial
institution party thereto as securities intermediary and which is the financial
institution with which one of the Securities Accounts (as defined in the
Security Agreement) is maintained;

               (f) the Deposit Account Control Agreements each dated as of
March _____, 2002 (each a "Deposit Account Control Agreement") among the
                           ---------------------------------
respective Grantor, the Collateral Agent and the respective financial
institution party thereto as the bank with which one of the Deposit Accounts
(as defined in the Security Agreement) is maintained;

               (g) unfiled copies of the Uniform Commercial Code financing
statements identifying each of the Grantors as a debtor;

               (h) certified copies of the respective Constitutive Documents (as
defined in the Credit Agreement) of each Loan Party;

<PAGE>
               (i) certified copies of certain resolutions of the respective
boards of directors, the managers or the partners, as the case may be, of each
Loan Party adopted on February 27, 2002, in the case of the Company, and on
March 6, 2002, in the case of each of the Subsidiaries;

               (j) certificates, dated on or about the date hereof, from the
Secretary of State of the State of California and the Secretary of State of the
State of Delaware as to the good standing of each of the Loan Parties in their
respective jurisdictions of organization; and

               (k) such other documents, instruments and certificates as I have
deemed necessary for the purpose of rendering this opinion.

               I am a member of the bar of the State of California and am
expressing no opinion as to the law of any other jurisdiction other than (i) the
laws of the State of California, (ii) the General Corporation Law of the State
of Delaware, (iii) the Limited Liability Company Act of the State of Delaware
and (iv) the Delaware Revised Uniform Limited Partnership Act (collectively, the
"Applicable Law").
 --------------

               Capitalized terms used herein and not otherwise defined herein
shall have the same meanings herein as ascribed thereto in the Credit Agreement.
The Credit Agreement, the Promissory Notes, the Security Agreement, the
Subsidiary Guaranty, the Securities Account Control Agreements and the Deposit
Account Control Agreements shall hereinafter be referred to collectively as the
"Transaction Agreements." The term "Governmental Approval" means any consent,
 ----------------------             ---------------------
approval, license, authorization or validation of, or filing, recording or
registration with, any governmental authority pursuant to Applicable Law. The
term "Applicable Contracts" means (i) the Indenture dated as of March 5, 2002
      --------------------
between the Company and The Bank of New York, as Trustee and (ii) those material
agreements, indentures or instruments (x) filed with the Securities and Exchange
Commission as exhibits attached to or incorporated by reference in the Company's
Form 10-K for the fiscal year ended February 3, 2001, and Forms 10-Q for the
quarterly periods ending May 5, 2001, August 4, 2001 and November 3, 2001, and
which, after due inquiry, are specifically applicable to any of the Loan Parties
in connection with the Transaction Agreements and the transactions contemplated
thereunder or (y) which, to my knowledge, are specifically applicable to any of
the Loan Parties in connection with the Transaction Agreements and the
transactions contemplated thereunder. The Lenders and the Issuing Banks are
collectively referred to herein as the "Lender Parties".
                                        --------------
4

<PAGE>
               Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that:

               1. Each of the Loan Parties that is organized under the laws of
the State of California is authorized to exercise all its powers, rights and
privileges and is in good legal standing in the State of California, and each of
the Loan Parties that is organized under the laws of the State of Delaware is
validly existing and in good standing under the laws of the State of Delaware.

               2. Each Loan Party has the power and authority to execute,
deliver and perform all of its respective obligations under each of the
Transaction Agreements to which it is a party, and the execution and delivery of
each of the Transaction Agreements by each Loan Party which is a party thereto
and the consummation by each Loan Party of the transactions contemplated thereby
have been duly authorized by all requisite action on the part of each Loan
Party. Each of the Transaction Agreements has been duly authorized, executed and
delivered by each Loan Party which is a party thereto.

               3. The execution and delivery by each Loan Party of each of the
Transaction Agreements to which it is a party and the performance by each Loan
Party of its obligations under each of the Transaction Agreements, each in
accordance with its terms, does not (i) conflict with the Constituent Documents
of each of the Loan Parties, (ii) constitute a violation of, or a default under,
any Applicable Contracts or (iii) cause the creation of any security interest or
lien (other than the liens granted under, or created by, the Loan Documents)
upon any of the property of the Loan Parties pursuant to any Applicable
Contracts to which it is a party. I call to your attention that certain of the
Applicable Contracts are governed by laws other than those as to which I express
my opinion. I express no opinion as to the effect of such other laws on the
opinions herein stated.

               4. Neither the execution, delivery or performance by any Loan
Party of the Transaction Agreements to which it is a party will contravene any
provision of any Applicable Law.

               5. No Governmental Approval, which has not been obtained or taken
and is not in full force and effect, is required to authorize, or is required in
connection with, the execution, delivery or performance of any of the
Transaction Agreements by any Loan Party.

               6. There is no action, suit or proceeding pending or, to my
knowl-

                                       5

<PAGE>
edge, overtly threatened against any Loan Party in or before any court,
Governmental Authority or arbitrator, which has a reasonable probability (taking
into account the exhaustion of all appeals and the assertion of all defenses) of
having a Material Adverse Effect or which purports to affect the legality,
validity or enforceability of any Loan Document.

               This opinion is being furnished only to you in connection with
the Transaction Agreements and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied upon
by any other person or entity (other than your successors or assigns as Lender
Parties) for any purpose without our prior written consent.

                                           Very truly yours,

                                           Thomas J. Lima
                                           Vice President and Associate
                                            General Counsel

                                       6

<PAGE>
                                   Schedule I

                                   ADDRESSEES
                                   ----------

<PAGE>
                                   Schedule II

                                  SUBSIDIARIES
                                  ------------
<TABLE>
<CAPTION>
<S>                                                 <C>

Banana Republic (California) LLC                    Gap International Sourcing (U.S.A.) Inc.

Banana Republic, Inc.                               Gap International Sourcing, Inc.

Banana Republic (Florida) LLC                       Gap International Sourcing (JV) LLC

Banana Republic (Holdings) Inc.                     GPS Brand Services, Inc.

Banana Republic (New York) LLC                      GPS Corporate Facilities, Inc.

Banana Republic Direct, Inc.                        GPS Consumer Direct, Inc.

Gap (Wisconsin) L.P.                                GPS Real Estate, Inc.

Gap (Florida) LLC                                   GPSDC (New York) Inc.

Gap (Georgia) L.P.                                  Old Navy (California) LLC

Gap (Indiana) L.P.                                  Old Navy (East) L.P.

Gap (Kentucky) L.P.                                 Old Navy (Florida) LLC

Gap (Tennessee) L.P.                                Old Navy (Holdings) Inc.

Gap Direct, Inc.                                    Old Navy Direct, Inc.

Gap Holdings, Inc.                                  Old Navy Inc.

Gap International Sourcing (California) Inc.        The Fisher Gap Stores, Inc.

Gap International Sourcing (Americas) LLC           WCB Twenty-Eight Limited Partnership
</TABLE>

                                 Exh. F-1 Page 1

<PAGE>

                                   EXHIBIT F-2

           FORM OF UCC OPINION OF SPECIAL NEW YORK COUNSEL TO THE LOAN
                                    PARTIES

                                                        March [___], 2002

Citicorp USA, Inc.,
as Collateral Agent

The Lenders and Issuing Banks
(as defined below) listed
on Schedule I hereto
   ----------

                       Re: The Gap, Inc./Credit Agreement
                           ------------------------------

Ladies and Gentlemen:

     We have acted as special counsel to The Gap, Inc., a Delaware corporation
(the "Company"), and certain domestic subsidiaries of the Company listed on
      -------
Schedule II hereto (the "Subsidiaries", and together with the Gap, the
-----------              ------------
"Grantors"), in connection with the preparation, execution and delivery of the
 --------
Security Agreement, dated as of March ___,2002 (the "Security Agreement"), from
                                                     ------------------
the Grantors referred to therein in favor of Citicorp USA, Inc., as Collateral
Agent (the "Collateral Agent"). This opinion is being delivered pursuant to
            ----------------
Section 5.01(b)(ix) of the Credit Agreement, dated as of March __, 2002 (the
"Credit Agreement") among the Company and the LC Subsidiaries, the Subsidiary
 ----------------
Borrowers, the Lenders and the Issuing Banks (as such terms are defined in the
Credit Agreement), Salomon Smith Barney Inc. ("SSB") and Banc of America
                                               ---
Securities, LLC ("BAS") as Joint Book Managers, BAS, HSBC Bank USA and JP Morgan
                  ---
Securities Inc. ("JPM") as Co-Syndication Agents, ABN AMRO Bank N.V. as
                  ---
Documentation Agent, SSB, BAS and JPM as Joint Lead Arrangers, and Citicorp USA,
Inc. as agent for the Lenders and the Issuing Banks.

     In our examination we have assumed the genuineness of all signatures
including endorsements, the legal capacity of natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as facsimile, electronic, certified
or photostatic copies, and the authenticity of the originals of such copies. As
to any facts material to this opinion which we did not independently establish
or verify, we have relied upon

<PAGE>
statements and representations of the Grantors and their officers and other
representatives and of public officials, including the facts and conclusions set
forth therein.

     In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:

     (a) the Security Agreement;

     (b) [the Securities Account Control Agreements identified in Schedule III
and each dated as of March ___, 2002 (each a "Securities Account Control
Agreement") among the respective Grantor, the Collateral Agent and the
respective financial institution party thereto as securities intermediary and
which is the financial institution with which one of the Securities Accounts (as
defined in the Security Agreement) is maintained (each a "Securities
Intermediary");] [NOTE: Securities Account Control Agreement references are
likely to be deleted: perfection to be obtained by filing]

     (c) the Deposit Account Control Agreements identified in Schedule III and
                                                              ------------
each dated as of March ___, 2002 (each a "Deposit Account Control Agreement")
among the respective Grantor, the Collateral Agent and the respective financial
institution party thereto as the bank with which one of the Deposit Accounts (as
defined in the Security Agreement) is maintained (each a "Depository");
                                                          ----------

     (d) unfiled copies of the financing statements identifying certain of the
Grantors which are organized under the laws of the State of Delaware as debtor
(the "Delaware Grantors"), and "Citicorp USA, Inc., as Collateral Agent" as
      -----------------
secured party, which we understand will be filed within ten (10) days of the
transfer of the security interest in the office of the Secretary of State of
Delaware (such filing office, the "Delaware Filing Office" and such financing
                                   ----------------------
statements, the "Delaware Financing Statements");
                 -----------------------------

     (e) unfiled copies of the financing statements identifying certain of the
Grantors which are organized under the laws of the State of California as debtor
(the "California Grantors"), and "Citicorp USA, Inc., as Collateral Agent" as
      -------------------
secured party, which we understand will be filed within ten (10) days of the
transfer of the security interest in the office of the Secretary of State of
California (such filing office, the "California Filing Office" and such
                                     ------------------------
financing statements, the "California Financing Statements");
                           -------------------------------

                                       3

<PAGE>
     (f) certificates from the Secretary of State of the State of Delaware as to
the existence and good standing in the State of Delaware (the "Delaware Good
                                                               -------------
Standing Certificates") of each of the Delaware Grantors;
---------------------

     (g) certificates from the Secretary of State of the State of California as
to the existence and good standing in the State of California (the "California
                                                                    ----------
Good Standing Certificates") of each of the California Grantors;
--------------------------

     (h) certified copies of the constitutive documents of each of the Delaware
Debtors (together with the Delaware Good Standing Certificates, the "Delaware
                                                                     --------
Organizational Documents");
------------------------

     (i) certified copies of the constitutive documents of each of the
California Debtors (together with the California Good Standing Certificates, the
"California Organizational Documents"); and
 -----------------------------------

     (j) such other documents as we have deemed necessary or appropriate as a
basis for the opinions set forth below.

     Capitalized terms used herein and not otherwise defined herein shall have
the same meanings herein as set forth in the Security Agreement. As used herein:

     1. "UCC" means (a) the New York UCC, (b) the California UCC, and (c) the
         ---
Delaware UCC (as each term is defined below) as applicable.

     2. "Possessory Certificates" means that portion of the Collateral (as
         -----------------------
defined in the Security Agreement) constituting "Certificated Securities" as
defined in Article 8 of the UCC and identified on Schedule IV hereto and
                                                  -----------
delivered on the date hereof.

     3. "Securities Accounts" means those accounts identified on Schedule VII to
         -------------------
the Security Agreement.

     4. "Deposit Accounts" means those accounts identified on Schedule VIII to
         ----------------
the Security Agreement (together with the Securities Accounts, the "Pledged
                                                                    -------
Accounts").
--------

     5. "New York UCC" means the Uniform Commercial Code as in effect on the
         ------------
date hereof in the State of New York (without regard to laws referenced in
Section 9-201 thereof).

                                       4

<PAGE>
     6. "California UCC" means the Uniform Commercial Code as in effect on the
         --------------
date hereof in the State of California (without regard to laws referenced in
Section 9-201 thereof).

     7. "Delaware UCC" means the Uniform Commercial Code as in effect on the
         ------------
date hereof in the State of Delaware (without regard to laws referenced in
Section 9-201 thereof).

     8. "UCC Collateral" means that portion of the Collateral (as such term is
         --------------
defined in the Security Agreement) which constitutes "inventory," "investment
property," "deposit accounts" and "general intangibles" (as defined in Article 9
of the UCC and subject thereto).

     9. "Financial Institutions" means together those financial institutions
         ----------------------
individually defined and listed on Schedule V.
                                   ----------

     We express no opinion with respect to any laws other than: (1) the UCC, (2)
for purposes of opinion paragraph 5, the Delaware General Corporation Law, and
(3) for purposes of opinion paragraph 9, the California General Corporation Law.

     We have this date delivered to you our opinion with respect to the
enforceability of the Security Agreement and certain other Loan Documents. We
call to your attention that the opinions set forth herein with respect to the
security interest of the Secured Party are subject to the qualifications
contained in such other opinion.

     Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

     (a) Under the New York UCC, the provisions of the Security Agreement are
effective to create a valid security interest in each Grantor's rights in the
UCC Collateral in favor of the Collateral Agent for the benefit of the Lenders
and the Issuing Banks (the "Secured Party") to secure the Secured Obligations
                            -------------
(as defined in the Security Agreement).

     (b) Pursuant to the provisions of the Security Agreement, each of the
Delaware Grantors has authorized the filing of the Delaware Financing Statements
identifying the UCC Collateral for purposes of Section 9-509 of the Delaware
UCC.

                                       5

<PAGE>
     (c) Each Delaware Financing Statement includes not only all of the types of
information required by Section 9-502(a) of the Delaware UCC but also the types
of information without which the Delaware Filing Office may refuse to accept
such Delaware Financing Statement pursuant to Section 9-516 of the Delaware UCC.

     (d) Under the Delaware UCC, the security interest of the Secured Party will
be perfected in each of the Delaware Grantor's rights in all UCC Collateral upon
the later of the attachment of the security interest and the filing of the
Delaware Financing Statements in the Delaware Filing Office. We express no
opinion with respect to (i) goods covered by a certificate of title statute,
(ii) as-extracted collateral and timber to be cut, (iii) any property subject to
a statute, regulation or treaty of the United States whose requirements for a
security interest's obtaining priority over the rights of a lien creditor with
respect to the property preempt Section 9-310(a) of the Delaware UCC, (iv) any
goods subject to a negotiable document of title, (v) money and (vi) deposit
accounts (other than in paragraph 11 below).

     (e) You have asked whether each of the Delaware Grantors is a "registered
organization" as defined in the Delaware UCC. Pursuant to ss. 103(c)(6) of the
Delaware General Corporation Law, the Secretary of State of the State of
Delaware is required to maintain a public record showing each of the Delaware
Grantors to have been organized. Based on our review of the Delaware
Organizational Documents, we are of the opinion that under the Delaware UCC and
the Delaware General Corporation Law, the Limited Liability Company Act of the
State of Delaware and the Delaware Revised Uniform Limited Partnership Act, each
of the Delaware Grantors is a "registered organization."

     (f) Pursuant to the provisions of the Security Agreement, each of the
California Grantors has authorized the filing of the California Financing
Statements identifying the UCC Collateral for purposes of Section 9509 of the
California UCC.

     (g) Each California Financing Statement includes not only all of the types
of information required by Section 9502(a) of the California UCC but also the
types of information without which the California Filing Office may refuse to
accept such California Financing Statement pursuant to Section 9516 of the
California UCC.

     (h) Under the California UCC, the security interest of the Secured Party
will be perfected in each of the California Grantor's rights in all UCC
Collateral upon the later of the attachment of the security interest and the
filing of the

                                       6

<PAGE>
California Financing Statements in the California Filing Office. We express no
opinion with respect to (i) goods covered by a certificate of title statute,
(ii) as-extracted collateral and timber to be cut, (iii) any property subject to
a statute, regulation or treaty of the United States whose requirements for a
security interest's obtaining priority over the rights of a lien creditor with
respect to the property preempt Section 9310(a) of the California UCC, (iv) any
goods subject to a negotiable document of title, (v) money and (vi) deposit
accounts (other than in paragraph 11 below).

          (i) You have asked whether each of the California Grantors is a
"registered organization" as defined in the California UCC. Pursuant to ss.ss.
110(a) and 200 of the California General Corporation Law and Sections 12160 and
12168 of the California Government Code, the Secretary of State of the State of
California is required to maintain a public record showing each of the
California Grantors to have been organized. Based on our review of the
California Organizational Documents, we are of the opinion that under the
California UCC, the California General Corporation Law and the California
Government Code, each of the California Grantors is a "registered organization."

          (j) Assuming that the Secured Party has no notice of any adverse
claims with respect to the Possessory Certificates then, upon the later of the
attachment of the security interest and the delivery of such Possessory
Certificates to the Secured Party indorsed, by an effective indorsement, either
in blank or to the Secured Party in the State of California, the Secured Party
will acquire such UCC Collateral (and the shares represented thereby) free of
any adverse claims under 8303 of the California UCC. As used herein, "notice of
adverse claim" has the meaning set forth in Section 8105 of the California UCC
and includes, without limitation, any adverse claim that the Secured Party would
discover upon any investigation which such person has a duty, imposed by statute
or regulation, to investigate.

          (k) Under the [New York] UCC, the provisions of the Deposit Account
Control Agreements [and the Securities Account Control Agreements] [NOTE: likely
to be deleted] are effective to perfect the security interest of the Secured
Party in the Grantor's rights in the Deposit Accounts [and the Securities
Accounts.]

     Our opinions are subject to the following qualifications:

          1. We have assumed that each Grantor owns, or with respect to
after-acquired property will own, the collateral, and we express no opinion with
respect to

                                       7

<PAGE>
the nature or extent of each Grantor's rights in any of the collateral and we
note that with respect to any after-acquired property, the security interest
will not attach until each Grantor acquires ownership thereof.

          2. We express no opinion with respect to proceeds of the UCC
Collateral.

          3. We have assumed that each [Deposit Account] [Securities Account] is
[either (i)] a "deposit account" and the Financial Institution is an
organization that is engaged in the business of banking [or (ii) is a
"securities account" and the Financial Institution in the ordinary course of its
business maintains securities accounts for customers and is acting in that
capacity] ([each] as defined in the UCC).

          4. We express no opinion with respect to the nature or extent of any
of the securities intermediary's rights in, or title to, the securities or other
financial assets underlying any "security entitlement" now or hereafter credited
to a securities account. We note that to the extent any Securities intermediary
maintains any financial asset in a "clearing corporation" (as defined in Section
8-102(5) of the UCC), pursuant to Section 8-111 of the UCC, the rules of such
clearing corporation may affect the rights of the securities intermediary.
Furthermore, we express no opinion with respect to any property or assets now or
hereafter credited to a securities account that is not a "financial asset" and
we express no opinion whether or to what extent any particular item of property
credited to any securities account is a "financial asset".

          5. We have assumed that the Control Agreement is the valid, binding
and enforceable obligation of each of the parties thereto.

          6. We call to your attention that pursuant to Section 9-340 of the
UCC, a bank with which a deposit account is maintained may continue to exercise
any right of recoupment or set-off against a secured party that holds a security
interest in the deposit account.

          7. We express no opinion with respect to the choice of law governing
perfection, the effect of perfection and non-perfection or priority of the
security interest of the Secured Party in the UCC Collateral.

                                       8

<PAGE>
          8. We express no opinion with respect to any goods which are
accessions to, or commingled or processed with other goods to the extent that
the security interest is limited by Section 9-335 or 9-336 of the UCC.

          9. For purposes of our opinion paragraph 5, we have assumed that each
such Delaware Grantor has not filed a certificate of incorporation or any
similar document under the laws of any jurisdiction other than the State of
Delaware and that the internal affairs of the Grantor are not otherwise subject
to the laws of any jurisdiction other than Delaware. We call to your attention
that to the extent that the internal affairs of the Grantor are subject to
regulation under the laws of another state, the State of Delaware may recognize
such authority. See, e.g., McDermott Inc. v. Lewis, 531 A.2d 206 (Del. 1987).
                ---  ----  -----------------------
Further, we have assumed that the Grantor has not and will not file (A) any
certificates of transfer, continuance or domestication, or any similar
certificates in other jurisdictions pursuant to Sections 390(a) and 388(b)(1) of
the Delaware General Corporation Law and Section 18-213 of the Delaware Limited
Liability Company Act [DRULPA] or (B) any similar certificates in any
jurisdiction other than the State of Delaware.

          10. For purposes of our opinion paragraph 9, we have assumed that each
such California Grantor is and will remain "organized solely" (within the
meaning of Section 9102(a)(70) of the California UCC) under the laws of the
State of California.

          11. Pursuant to Section 9-311(a) of the UCC, we express no opinion
with respect to any property subject to a statute, regulation or treaty of the
United States whose requirements for a security interest's obtaining priority
over the rights of a lien creditor with respect to the property preempt Section
9-310(a) of the UCC.

          12. We call to your attention that each of the issuers of the
Possessory Certificates is organized under the laws of the country identified
opposite such issuer's name in Schedule IV, and we express no opinion as to the
effect of the laws of such foreign countries on the opinions herein stated. Our
opinion with respect to the Possessory Certificates is limited to the UCC and
the laws of the jurisdiction of the issuer of the securities may affect, among
other things, whether the security is characterized as a "certificated security"
under the UCC, the exercise of remedies with respect to such security and the
exercise of voting or other rights with respect to such security.

                                       9

<PAGE>
          This opinion is being furnished only to you in connection with the
Security Agreement and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied upon
by any other person or entity (other than your successors or assigns as Lender
Parties (as defined in the Credit Agreement) for any purpose without our prior
written consent.

                                                  Very truly yours,

                                       10

<PAGE>
                                   SCHEDULE I
                                   ----------

                            Lenders and Issuing Banks
                            -------------------------

                                       11

<PAGE>
                                   SCHEDULE II
                                   -----------

                                  Subsidiaries
                                  ------------

                                       12

<PAGE>
                                  SCHEDULE III
                                  ------------

Securities Account Control Agreements:
-------------------------------------

Deposit Account Control Agreements:
----------------------------------

                                       13

<PAGE>
                                   SCHEDULE IV
                                   -----------

                             Possessory Certificates
                             -----------------------

--------------------------------------------------------------------------------
                            POSSESSORY                          CERTIFICATE
                            ----------                          -----------
          GRANTOR          CERTIFICATES       NO. OF SHARES         NO.
          -------          ------------       -------------         ---
--------------------------------------------------------------------------------
Gap International       GPS (Bermuda)            78,000              2
Sourcing (California)   Insurance Services
Inc.                    Ltd.
--------------------------------------------------------------------------------
The Gap, Inc.           Gap (Canada) Inc.         7,150             C-5
                                               1 preferred          P-2
--------------------------------------------------------------------------------
Old Navy Inc.           Old Navy (Canada)           65              C-1
                        Inc.
--------------------------------------------------------------------------------
The Gap, Inc.           Gap (Ireland) Ltd.        78,000             4
--------------------------------------------------------------------------------
The Gap, Inc.           Gap International         65,000             6
                        Sourcing Pte. Ltd.
--------------------------------------------------------------------------------

                                 Exh. F-2 Page 1

<PAGE>

                                   SCHEDULE V
                                   ----------

                             Financial Institutions
                             ----------------------

                                 Exh. F-2 Page 2

<PAGE>
                                   EXHIBIT F-3

    FORM OF CORPORATE OPINION OF SPECIAL NEW YORK COUNSEL TO THE LOAN PARTIES

                               [SASM&F Letterhead]

                                 March __, 2002

Citicorp USA, Inc.,
as Agent

The Lenders and Issuing Banks
(as defined below) listed
on Schedule I hereto

                  Re:  The Gap, Inc./Credit Agreement
                       ------------------------------

Ladies and Gentlemen:

     We have acted as special counsel to The Gap, Inc., a Delaware corporation
(the "Company"), and the domestic subsidiaries of the Company listed on Schedule
      -------
II hereto (the "Subsidiaries"; together with the Company, the "Loan Parties") in
                ------------                                   ------------
connection with the preparation, execution and delivery of the Credit Agreement,
dated as of March __, 2002 (the "Credit Agreement"), among the Company and the
                                 ----------------
LC Subsidiaries, the Subsidiary Borrowers, the Lenders and the Issuing Banks (as
such terms are defined in the Credit Agreement), Salomon Smith Barney Inc.
("SSB") and Banc of America Securities, LLC ("BAS") as Joint Book Managers, BAS,
  ---                                         ---
HSBC Bank USA and JP Morgan Securities Inc. ("JPM") as Co-Syndication Agents,
                                              ---
ABN AMRO Bank N.V. as Documentation Agent, SSB, BAS and JPM as Joint Lead
Arrangers, and Citicorp USA, Inc. as agent for the Lenders and the Issuing Banks
(in such capacity, the "Agent"), and certain other agreements, instruments and
                        -----
documents related to the Credit Agreement. This opinion is being delivered
pursuant to Section 5.01(b)(ix) of the Credit Agreement.

<PAGE>
     In our examination we have assumed the genuineness of all signatures
including endorsements, the legal capacity of natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as facsimile, electronic, certified
or photostatic copies, and the authenticity of the originals of such copies. As
to any facts material to this opinion which we did not independently establish
or verify, we have relied upon statements and representations of the Loan
Parties and their officers and other representatives and of public officials,
including the facts and conclusions set forth therein.

     In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:

     (a) the Credit Agreement;

     (b) the Promissory Notes executed by the Loan Parties;

     (c) the Subsidiary Guaranty, dated as of March ___, 2002 (the "Subsidiary
                                                                    ----------
Guaranty"), made by the Subsidiaries party thereto in favor of the Lender
--------
Parties;

     (d) the Security Agreement, dated as of March ___, 2002 (the "Security
                                                                   --------
Agreement"), from the Loan Parties party thereto (the "Grantors") in favor of
---------                                              --------
the Agent as Collateral Agent (in such capacity, the "Collateral Agent");
                                                      ----------------

     (e) the Securities Account Control Agreements each dated as of March ___,
2002 (each a "Securities Account Control Agreement") among the respective
              ------------------------------------
Grantor, the Collateral Agent and the respective financial institution party
thereto as securities intermediary and which is the financial institution with
which one of the Securities Accounts (as defined in the Security Agreement) is
maintained;

     (f) the Deposit Account Control Agreements each dated as of March ___, 2002
(each a "Deposit Account Control Agreement") among the respective Grantor, the
         ---------------------------------
Collateral Agent and the respective financial institution party thereto as the
bank with which one of the Deposit Accounts (as defined in the Security
Agreement) is maintained;

<PAGE>
     (g) the certificate of Sabrina Simmons, the Treasurer, and Thomas J. Lima,
the Vice President and Associate General Counsel, respectively, of each of the
Loan Parties, dated the date hereof, a copy of which is attached as Exhibit A
hereto; and

     (h) such other documents as we have deemed necessary or appropriate as a
basis for the opinions set forth below.

     We express no opinion as to the laws of any jurisdiction other than the
Applicable Laws of the State of New York and the Applicable Laws of the United
States of America (including, without limitation, Regulations U and X of the
Federal Reserve Board).

     Capitalized terms used herein and not otherwise defined herein shall have
the same meanings herein as ascribed thereto in the Credit Agreement. The Credit
Agreement, the Promissory Notes, the Security Agreement, the Subsidiary
Guaranty, the Securities Account Control Agreements and the Deposit Account
Control Agreements shall hereinafter be referred to collectively as the
"Transaction Agreements." "Applicable Laws" shall mean those laws, rules and
 ----------------------    ---------------
regulations which, in our experience, are normally applicable to transactions of
the type contemplated by the Transaction Agreements, without our having made any
special investigation as to the applicability of any specific law, rule or
regulation, and which are not the subject of a specific opinion herein referring
expressly to a particular law or laws. "Governmental Approval" means any
                                        ---------------------
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any governmental authority pursuant to the Applicable Laws
of the State of New York. The Lenders and the Issuing Banks are collectively
referred to herein as the "Lender Parties". References to the "UCC" shall mean
                           --------------                      ---
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

     Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

     1. Each of the Transaction Agreements constitutes the valid and binding
obligation of each Loan Party which is a party thereto, enforceable against each
such Loan Party in accordance with its terms, under the laws of the State of New
York.

                                       5

<PAGE>
     2. Neither the execution, delivery or performance by any Loan Party of the
Transaction Agreements to which it is a party, nor the compliance by any Loan
Parties with the terms and provisions thereof will contravene any provision of
any Applicable Law of the State of New York or any Applicable Law of the United
States of America.

     3. No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize, or is required in
connection with, the execution or delivery of any of the Transaction Agreements
by any Loan Party or the enforceability of any of the Transaction Agreements
against any Loan Party.

     4. None of the Loan Parties is an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.

     5. Neither the execution, delivery or performance by any Loan Party of the
Transaction Agreements to which it is a party nor the compliance by such Loan
Party with the terms and provisions thereof will violate any provision of the
Public Utility Holding Company Act of 1935, as amended.

     Our opinions are subject to the following assumptions and qualifications:

     (a) enforcement of the Transaction Agreements may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law);

     (b) we have assumed that each of the Transaction Agreements constitutes the
valid and binding obligation of each party thereto (other than the Loan Parties)
enforceable against such other party (other than the Loan Parties) in accordance
with its terms;

     (c) we express no opinion as to the effect on the opinions expressed herein
of (i) the compliance or non-compliance of the Agent or any party (other than
the Loan Parties to the extent expressly set forth herein) to the Transaction
Agreements with any state, federal or other laws or regulations applicable to
them or (ii) the legal or regulatory status or the nature of the business of the
Agent;

                                       6

<PAGE>
     (d) we express no opinion as to the enforceability of any rights to
contribution or indemnification provided for in the Transaction Agreements which
are violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or regulation);

     (e) we express no opinion as to the applicability or effect of any
fraudulent transfer or similar law on the Transaction Agreements or any
transactions contemplated thereby;

     (f) we express no opinion as to the applicability or effect of any
preference or similar law on the Transaction Agreements or any transaction
contemplated thereby;

     (g) we express no opinion on the enforceability of any provision in a
Transaction Agreement purporting to prohibit, restrict or condition the
assignment of such Transaction Agreement to the extent such restriction on
assignability is governed by sections 9-406 through 9-409 of the Uniform
Commercial Code;

     (h) certain of the remedial provisions, including waivers, with respect to
the Subsidiary Guaranty and the Security Agreement, may be unenforceable in
whole or in part, but the inclusion of such provisions does not affect the
validity of the Subsidiary Guaranty and the Security Agreement, each taken as a
whole;

     (i) enforcement of the Security Agreement may be subject to the terms of
instruments, leases, contracts or other agreements between any of the Loan
Parties and the other parties to such agreements, the rights of such other
parties and any claims or defenses of such other parties against such Loan Party
arising under or outside such instruments, leases, contracts or other
agreements;

     (j) we express no opinion with respect to Section 15 of the Security
Agreement to the extent it establishes a standard of care for collateral in the
possession or control of the Collateral Agent to the extent such standard of
care is unenforceable under Sections 1-102 and 9-207 of the Uniform Commercial
Code;

     (k) we express no opinion with respect to Section 3 of the Credit Agreement
to the extent it excuses the issuer of a letter of credit from liability to the
extent such provision is unenforceable pursuant to Section 5-103 of the Uniform
Commercial Code;

     (l) we express no opinion with respect to any provision of the Credit
Agreement to the extent it authorizes or permits any purchaser of a
participation

                                       7

<PAGE>
interest to set-off or apply any deposit, property or indebtedness with respect
to any participation interest; and

     (m) we express no opinion with respect to the validity, perfection or
priority of any security interest.

     In rendering the foregoing opinions, we have assumed, with your consent,
that:

     (a) each Loan Party is validly existing and in good standing as a
corporation, a limited liability company or a limited partnership under the laws
of its jurisdiction of organization;

     (b) each Loan Party has the power and authority to execute, deliver and
perform all of their obligations under each of the Transaction Agreements to
which it is a party and the execution and delivery of each of the Transaction
Agreements by each Loan Party which is a party thereto and the consummation by
each Loan Party of the transactions contemplated thereby have been duly
authorized by all requisite action on the part of each Loan Party. Each of the
Transaction Agreements has been duly authorized, executed and delivered by each
Loan Party which is a party thereto;

     (c) the execution, delivery and performance of any of its obligations under
the Transaction Agreements to which it is a party does not and will not conflict
with, contravene, violate or constitute a default under (i) (x) the Certificate
of Incorporation, Articles of Incorporation, Certificate of Formation, Limited
Liability Company Articles of Organization or Certificate of Limited Partnership
or (y) the By-laws, Operating Agreement or Limited Partnership Agreement, as
applicable, or their equivalent under the laws of the respective jurisdiction of
organization, of each Loan Party, (ii) any lease, indenture, instrument or other
agreement to which any Loan Party or its property is subject, (iii) any rule,
law or regulation to which any Loan Party is subject (other than Applicable Laws
as to which we express our opinion in paragraph 2 herein) or (iv) any judicial
or administrative order or decree of any governmental authority;

     (d) no authorization, consent or other approval of, notice to or filing
with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 3 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by any Loan Party of any of the Transaction Agreements
to which it is a party or the transactions contemplated thereby;

                                       8

<PAGE>
     (e) we call to your attention that (i) effective enforcement of a claim
denominated in a foreign currency may be limited by requirements that the claim
(or a judgment in respect of such claim) be converted into United States dollars
at a rate of exchange prevailing on a specified date and (ii) we express no
opinion as to whether a federal or state court would award a judgment in a
currency other than United States dollars;

     (f) we call to your attention that federal and state courts located in New
York could decline to hear a case on grounds of forum non-conveniens or any
                                                ----- --- ----------
other doctrine limiting the availability of the courts of New York as a forum
for the resolution of disputes not having a sufficient nexus to New York, and we
do not express any opinion as to any waiver of rights to assert the
applicability of forum non-conveniens doctrine or any such other doctrine;
                 ----- --- ----------
     (g) our opinion with respect to the enforceability of the choice of New
York law and choice of New York forum provisions of the Transaction Agreements
is rendered in reliance upon the Act of July 19, 1984, ch. 421, 1984 McKinney's
Sess. Laws of N.Y. 1406 (codified at N.Y. Gen. Oblig. Law (S)(S)5-1401, 5-1402
(McKinney 1989) and N.Y. CPLR 327(b) (McKinney 1990)) (the "Act") and is subject
                                                            ---
to the qualifications that such enforceability may be limited by public
policy considerations of any jurisdiction, other than the courts of the State of
New York, in which enforcement of such provisions, or of a judgment upon an
agreement containing such provisions, is sought; and

     (h) our opinion is subject to possible judicial action giving effect to
governmental actions or foreign laws affecting creditors' rights.

     We understand that you are separately receiving an opinion, with respect to
the foregoing assumptions from Thomas J. Lima, the Vice President and Associate
General Counsel of each of the Loan Parties, and we are advised that such
opinion contains qualifications. Our opinions herein stated are based on the
assumptions specified above and we express no opinion as to the effect on the
opinions herein stated of the qualifications contained in such other opinion.

     This opinion is being furnished only to you in connection with the
Transaction Agreements and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied upon
by any other person or entity (other than your successors or assigns as Lender
Parties) for any purpose without our prior written consent.

                                       9

<PAGE>
                                                     Very truly yours,

                                       10

<PAGE>
                                                                      Schedule I
                                                               to SASM&F Opinion

                                   ADDRESSEES
                                   ----------

                                      A-1

<PAGE>
                                                                     Schedule II
                                                               to SASM&F Opinion

                                  SUBSIDIARIES
                                  ------------
<TABLE>
<CAPTION>

<S>                                                 <C>
Banana Republic (California) LLC                    Gap International Sourcing (U.S.A.) Inc.

Banana Republic, Inc.                               Gap International Sourcing, Inc.

Banana Republic (Florida) LLC                       Gap International Sourcing (JV) LLC

Banana Republic (Holdings) Inc.                     GPS Brand Services, Inc.

Banana Republic (New York) LLC                      GPS Corporate Facilities, Inc.

Banana Republic Direct, Inc.                        GPS Consumer Direct, Inc.

Gap (Wisconsin) L.P.                                GPS Real Estate, Inc.

Gap (Florida) LLC                                   GPSDC (New York) Inc.

Gap (Georgia) L.P.                                  Old Navy (California) LLC

Gap (Indiana) L.P.                                  Old Navy (East) L.P.

Gap (Kentucky) L.P.                                 Old Navy (Florida) LLC

Gap (Tennessee) L.P.                                Old Navy (Holdings) Inc.

Gap Direct, Inc.                                    Old Navy Direct, Inc.

Gap Holdings, Inc.                                  Old Navy Inc.

Gap International Sourcing (California) Inc.        The Fisher Gap Stores, Inc.

Gap International Sourcing (Americas) LLC           WCB Twenty-Eight Limited Partnership
</TABLE>

                                      A-2

<PAGE>
                             Exhibit A to Opinion of
                    Skadden, Arps, Slate, Meagher & Flom LLP
                    ----------------------------------------

                              Officers' Certificate

          The undersigned are, repectively, the duly elected, qualified and
acting Vice President and Associate General Counsel, and Treasurer, of The Gap,
Inc., a Delaware corporation ("The Gap") and the domestic subsidiaries listed on
                               -------
Schedule II (together with Gap, the "Loan Parties") to the attached the Opinion
                                     ------------
(as defined below). Each of us understands that pursuant to Section 5.01(b)(ix)
of the Credit Agreement, dated as of March ___, 2002 (the "Credit Agreement"),
                                                           ----------------
among The Gap and the LC Subsidiaries, the Subsidiary Borrowers, the Lenders and
the Issuing Banks (as such terms are defined in the Credit Agreement), Salomon
Smith Barney Inc. ("SSB") and Banc of America Securities, LLC ("BAS") as Joint
                    ---                                         ---
Book Managers, BAS, HSBC Bank USA and JP Morgan Securities Inc. ("JPM") as
                                                                  ---
Co-Syndication Agents, ABN AMRO Bank N.V. as Documentation Agent, SSB, BAS and
JPM as Joint Lead Arrangers, and Citicorp USA, Inc. as agent for the Lenders and
the Issuing Banks (in such capacity, the "Agent"), and certain other agreements,
                                          -----
instruments and documents related to the Credit Agreement, Skadden, Arps, Slate,
Meagher & Flom LLP ("SASM&F"), is rendering an opinion (the "Opinion") to the
                     ------                                  -------
Agent and the Lenders. Capitalized terms used herein but not otherwise defined
herein shall have the meanings assigned to such terms as set forth in the
Opinion. Each of us further understands that SASM&F is relying on this officer's
certificate and the statements made herein in rendering such Opinion.

          With regard to the foregoing, on behalf of the Loan Parties, we hereby
certify (each of us only as to the paragraphs below which are identified on our
respective signature pages) that:

          1. Each of us is familiar with the business of the Loan Parties, and
due inquiry has been made of all persons deemed necessary or appropriate to
verify or confirm the statements contained herein.

          2. SASM&F may rely on the respective representations and warranties
that each of the Loan Parties has made in the Credit Agreement, each of the
other Loan Documents and each of the certificates delivered pursuant thereto. I
have made a careful review of each of such representations and warranties and
hereby confirm, to the best of my knowledge and belief, that such
representations and warranties are true, correct and complete on and as of the
date of this certificate.

                                      A-3

<PAGE>

          3. Set forth on Schedule I hereto are all the Governmental Approvals
which, to my knowledge and belief, are specifically applicable to each of the
Loan Parties in connection with the Transaction Agreements and the transactions
contemplated thereunder.

          4. Less than twenty-five percent (25%) of the assets of the Loan
Parties on a consolidated basis and on an unconsolidated basis consist of Margin
Stock.

          5. Each of the Loan Parties is primarily engaged directly, or
indirectly through Majority-Owned Subsidiaries, in the specialty retailer
business primarily selling causal apparel and personal care products or
businesses related thereto; and the Loan Parties (i) are not and do not hold
themselves out as being engaged primarily, nor do they propose to engage
primarily, in the business of investing, reinvesting or trading in Securities,
(ii) have not and are not engaged in, and do not propose to engage in, the
business of issuing Face-Amount Certificates of the Installment Type and has no
such certificate outstanding and (iii) do not own or propose to acquire
Investment Securities having a Value exceeding forty percent (40%) of the Value
of the total assets of the Loan Parties (exclusive of Government Securities and
cash items) on an unconsolidated basis.

          6. The Loan Parties do not own or operate facilities used for the
generation, transmission, or distribution of electric energy for sale ("Electric
Utility Facilities").                                                   --------
------------------

          7. The Loan Parties do not own or operate facilities used for the
distribution of natural or manufactured gas for heat, light, or power ("Gas
Utility Facilities").                                                   ---
------------------

          8. None of the Loan Parties, directly or indirectly, or through one or
more intermediary Companies, own, control, or hold with power to vote (a) ten
percent (10%) or more of the outstanding Voting Securities of any Company that
owns or operates any Electric Utility Facilities or Gas Utility Facilities, or
(b) any other interest, directly or indirectly, or through one or more
intermediary entities, in (i) any Company that owns or operates any Electric
Utility Facilities or Gas Utility

                                      A-4

<PAGE>

Facilities, or (ii) any of the foregoing types of entities that have
received notice of the sort described in paragraph 9 below.

          9. None of the Loan Parties have received notice that the Securities
and Exchange Commission has determined, or may determine, that any of the Loan
Parties exercises a controlling influence over the management or direction of
the policies of a gas utility company or an electric utility company as to make
it subject to the obligations, duties and liabilities imposed on holding
companies by the Public Utility Holding Company Act of 1935, as amended
("PUHCA").
  -----

          10. To the best of my knowledge, no Company that has registered with
the Securities and Exchange Commission as a public utility holding company under
PUHCA owns, directly or indirectly, through one or more intermediary entities,
ten percent (10%) or more of the outstanding Voting Securities (as defined
below) of the Loan Parties.

          11. As used in paragraph 4 of this certificate, the following term
shall have the following meaning:

          "Margin Stock" means: (i) any equity security registered or having
           ------------
unlisted trading privileges on a national securities exchange; (ii) any OTC
security designated as qualified for trading in the National Market System under
a designation plan approved by the Securities and Exchange Commission; (iii) any
debt security convertible into a margin stock or carrying a warrant or right to
subscribe to or purchase a margin stock; (iv) any warrant or right to subscribe
to or purchase a margin stock; or (v) any security issued by an investment
company registered under Section 8 of the Investment Company Act of 1940.

          12. As used in paragraphs 5 and 12 of this certificate, the following
terms shall have the following meanings:

          "Control" means the power to exercise a controlling influence over the
           -------
management or policies of a company, unless such power is solely the result of
an official position with such company.

          "Exempt Fund" means a company that is excluded from treatment as an
           -----------
investment company solely by section 3(c)(1) or 3(c)(7) of the Investment
Company Act of 1940 (applicable to certain privately offered investment funds).

                                       A-5

<PAGE>

          "Face-Amount Certificate of the Installment Type" means any
           -----------------------------------------------
certificate, investment contract, or other Security that represents an
obligation on the part of its issuer to pay a stated or determinable sum or sums
at a fixed or determinable date or dates more than 24 months after the date of
issuance, in consideration of the payment of periodic installments of a stated
or determinable amount.

          "Government Securities" means all Securities issued or guaranteed as
           ---------------------
to principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.

          "Investment Securities" includes all Securities except (A) Government
           ---------------------
Securities, (B) Securities issued by companies the only shareholders in which
are employees and former employees of a company and its subsidiaries, members of
the families of such persons and the company and its subsidiaries and (C)
Securities issued by Majority-Owned Subsidiaries of the Company which are not
engaged and do not propose to be engaged in activities within the scope of
clause (i), (ii) or (iii) of paragraph 5 of this Certificate or which are
exempted or excepted from treatment as an investment company by statute, rule or
governmental order (other than Exempt Funds).

          "Majority-Owned Subsidiary" of a person means a company fifty percent
           -------------------------
(50%) or more of the outstanding Voting Securities of which are owned by such
person, or by a company which, within the meaning of this paragraph, is a
Majority-Owned Subsidiary of such person.

          "Security" means any note, stock, treasury stock, bond, debenture,
           --------
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.

          "Value" means (i) with respect to Securities owned at the end of the
           -----
last preceding fiscal quarter for which market quotations are readily available,
the market value at the end of such quarter; (ii) with respect to other
Securities and assets owned at the end of the last preceding fiscal quarter,
fair value at the end of such quarter, as determined in good faith by or under
the direction of the board of directors; and (iii) with respect to securities
and other assets acquired after the end of the last preceding fiscal quarter,
the cost thereof.

                                      A-6

<PAGE>

          "Voting Security" means any security presently entitling the owner or
           ---------------
holder thereof to vote for the election of directors of a company (or its
equivalent, e.g., general partner or manager of a limited liability company).

          13. As used in paragraphs 8, 10 and 13 of this certificate, the
following terms shall have the following meanings:

          "Company" means a corporation, limited liability company,
           -------
partnership, association, joint-stock company, joint venture, trust, or any
receiver, trustee, or other liquidating agent of any of the foregoing in its
capacity as such.

          "Security" or "Securities" means any note, draft, stock, treasury
           --------      ----------
stock, bond, debenture, limited liability company interest, certificate of
interest or participation in any profit-sharing agreement or in any oil, gas,
other mineral royalty or lease, any collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
receiver's or trustee's certificate, or, in general, any instrument commonly
known as a "security"; or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guaranty of, assumption of
liability on, or warrant or right to subscribe to or purchase, any of the
foregoing.

          "Voting Security" or "Voting Securities" means any Security presently
           ---------------      -----------------
entitling the owner or holder thereof to vote in the direction or management of
the affairs of a Company, or any Security issued under or pursuant to any trust,
agreement, or arrangement whereby a trustee or trustees or agent or agents for
the owner or holder of such Security are presently entitled to vote in the
direction or management of the affairs of a Company; and a specified per centum
of the outstanding Voting Securities of a Company means such amount of the
outstanding Voting Securities of such Company as entitles the holder or holders
thereof to cast said specified per centum of the aggregate votes which the
holders of all the outstanding Voting Securities of such Company are entitled to
cast in the direction or management of the affairs of such Company.

                            [Signature Page Follows]

<PAGE>

IN WITNESS THEREOF, the undersigned have executed this certificate this ___ day
of March, 2002.

<TABLE>
<CAPTION>

<S>                                                      <C>
THE GAP, INC.                                            GAP INTERNATIONAL SOURCING, INC.

BANANA REPUBLIC (CALIFORNIA) LLC,                        GAP INTERNATIONAL SOURCING (JV) LLC,
by Banana Republic, Inc., its member                     by Gap International Sourcing, Inc.,
                                                         its managing member

BANANA REPUBLIC (FLORIDA) LLC, by                        GAP INTERNATIONAL SOURCING
Banana Republic, Inc., its managing member               (CALIFORNIA) INC.

BANANA REPUBLIC (HOLDINGS) INC.                          GPS CORPORATE FACILITIES, INC.

BANANA REPUBLIC (NEW YORK) LLC, by                       GPS CONSUMER DIRECT, INC.
Banana Republic, Inc., its member

BANANA REPUBLIC DIRECT, INC.                             GPS REAL ESTATE, INC.

BANANA REPUBLIC, INC.                                    GPSDC (NEW YORK) INC.

GAP (FLORIDA) LLC,                                       GPS BRAND SERVICES, INC.
by The Gap, Inc., its managing member

GAP (GEORGIA) L.P.,                                      OLD NAVY (EAST) L.P.,
by The Gap, Inc., its general partner                    by Old Navy, Inc., its general partner

GAP (INDIANA) L.P.,                                      OLD NAVY (FLORIDA) LLC,
by The Gap, Inc., its general partner                    by Old Navy, Inc., its managing member

GAP (KENTUCKY) L.P.,                                     OLD NAVY (HOLDINGS) INC.
by The Gap, Inc., its general partner

GAP (TENNESSEE) L.P.,                                    OLD NAVY DIRECT, INC.
by The Gap, Inc., its general partner

GAP (WISCONSIN) L.P.,                                    OLD NAVY INC.
by The Gap, Inc., its general partner

GAP DIRECT, INC.                                         OLD NAVY (CALIFORNIA) LLC,
                                                         by Old Navy, Inc., its member

GAP HOLDINGS, INC.                                       WCB TWENTY-EIGHT LIMITED
                                                         PARTNERSHIP, by GPS Corporate Facilities,
                                                         Inc., its general partner

GAP INTERNATIONAL SOURCING                               THE FISHER GAP STORES, INC.
(AMERICAS) LLC, by The Gap, Inc., its
member
</TABLE>

                                      A-8

<PAGE>

GAP INTERNATIONAL SOURCING
(U.S.A.) INC.

With respect to only paragraphs 1, 3, 6, 7, 8, 9, 10 and 13 above:

By:
   ------------------------------------------------------------
   Thomas J. Lima
   Vice President and Associate General Counsel

With respect to only paragraphs 1, 2, 4, 5, 11 and 12 above:

By:
   ------------------------------------------------------------
   Sabrina Simmons
   Vice President and Treasurer

                                      A-9

<PAGE>
                                                                   Schedule I to
                                                                       Exhibit A
                                                                       ---------

                             GOVERNMENTAL APPROVALS
                             ----------------------

                                      None.

                                      A-1

<PAGE>
                                    EXHIBIT G

            FORM OF OPINION OF SPECIAL NEW YORK COUNSEL TO THE AGENT

                                  March 7, 2002

To the Lenders and Issuing Banks party to
   the Credit Agreement referred to below
   and to Citicorp USA, Inc., as Agent

Ladies and Gentlemen:

                  We have acted as special New York counsel to Citicorp USA,
Inc., individually and as Agent, in connection with the preparation, execution
and delivery of the Credit Agreement dated as of March 7, 2002 (the "Credit
                                                                    -------
Agreement"), among The Gap, Inc., a Delaware corporation (the "Borrower"),
----------
certain subsidiaries of the Borrower, certain other financial institutions and
each of you. Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined.

                  In that connection, we have examined a counterpart of the
Credit Agreement, the note delivered this date thereunder, the Subsidiary
Guaranty and the Security Agreement.

                  In our examination of the Credit Agreement and such other
documents, we have assumed, without independent investigation (a) the due
execution and delivery of the Loan Documents by all parties thereto, (b) the
genuineness of all signatures, (c) the authenticity of the originals of the
documents submitted to us and (d) the conformity to originals of any documents
submitted to us as copies.

                  In addition, we have assumed, without independent
investigation, that (i) each Loan Party, each of the Lenders, and the Agent is a
corporation or other entity duly organized and validly existing under the laws
of the jurisdiction of its organization, (ii) each Loan Party, each of the
Lenders and the Agent has full power and authority (corporate and otherwise) to
execute, deliver and perform the Loan Documents to which it is a party, (iii)
the execution, delivery and performance by each Loan Party, each of the Lenders
and the Agent of the Loan Documents have been duly authorized by all necessary
action (corporate or otherwise) and do not (A) contravene the certificate of
incorporation, bylaws or other constituent documents of the Loan Parties, any of
the Lenders or the Agent, (B) violate any law, rule, regulation or order
applicable to the Loan Parties, any of the Lenders or the Agent or (C) conflict
with or result in the breach of any document or instrument binding on the the
Loan Parties, any of the Lenders or the Agent and, (iv) no authorization,
approval, consent or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other third party is required
for the due execution, delivery or performance by the Loan Parties, any of the
Lenders or the Agent of the Loan Documents or, if any such authorization,
approval, consent, action, notice or filing is required thereof, it has been
duly obtained or made and is in full force and effect.

                  Based upon the foregoing examination and assumptions and upon
such other investigation as we have deemed necessary and subject to the
qualifications set forth below, we are of the opinion that the Loan Documents
are the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its respective terms.

                  Our opinion above is subject to the following qualifications:

                                  Exh. G Page 1

<PAGE>

                           (i) Our opinion above is subject to the effect of any
                  applicable bankruptcy, insolvency (including, without
                  limitation, all laws relating to fraudulent transfers),
                  reorganization, moratorium or similar law affecting creditors'
                  rights generally.

                           (ii) Our opinion above is also subject to the effect
                  of general principles of equity, including (without
                  limitation) concepts of materiality, reasonableness, good
                  faith and fair dealing (regardless of whether considered in a
                  proceeding in equity or at law).

                           (iii) We express no opinion as to the enforceability
                  of the indemnification provisions set forth in the Loan
                  Documents to the extent enforcement thereof is contrary to
                  public policy regarding the exculpation of criminal
                  violations, intentional harm and acts of gross negligence or
                  recklessness. We express no opinion as to the creation,
                  perfection or priority of any security interests.

                           (iv) Our opinion above is limited to the law of the
                  State of New York and the federal law of the United States of
                  America and we do not express any opinion herein concerning
                  any other law. Without limiting the generality of the
                  foregoing, we express no opinion as to the effect of the law
                  of a jurisdiction other than the State of New York wherein any
                  of the Lenders may be located or wherein enforcement of the
                  Credit Agreement may be sought that limits the rates of
                  interest legally chargeable or collectible.

                  A copy of this opinion letter may be delivered by any of you
to any Person that becomes a Lender in accordance with the provisions of the
Credit Agreement. Any such Lender may rely on the opinion expressed above as if
this opinion letter were addressed and delivered to such Lender on the date
hereof.

                  This opinion letter speaks only as of the date hereof. We
expressly disclaim any responsibility to advise you or any other Lender who is
permitted to rely on the opinion expressed herein as specified in the next
preceding paragraph of any development or circumstance of any kind including any
change of law or fact that may occur after the date of this opinion letter even
though such development, circumstance or change may affect the legal analysis, a
legal conclusion or any other matter set forth in or relating to this opinion
letter. Accordingly, any Lender relying on this opinion letter at any time
should seek advice of its counsel as to the proper application of this opinion
letter at such time.

                                          Very truly yours,

SES;na

                                  Exh. G Page 2

<PAGE>
                                    EXHIBIT H

                          FORM OF ASSUMPTION AGREEMENT

                                                  Dated:  _____________, ______

The Gap, Inc.
900 Cherry Avenue
San Bruno, California 94066

Attention:  Treasurer

Citicorp USA, Inc.,
  as Agent for the Lender Parties
  to the Credit Agreement referred to below
[399 Park Avenue
New York, New York 10043]

Attention:  Credit Administration

Ladies and Gentlemen:

          Reference is made to the Credit Agreement, dated as of March 7, 2002
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement," the terms defined therein being used herein as therein
 ----------------
defined), among The Gap, Inc., a Delaware corporation (the "Borrower"), certain
                                                            --------
Subsidiaries of the Borrower, certain Lenders party thereto, certain Issuing
Banks, certain Joint Book Managers parties thereto, Co-Syndication Agents
parties thereto, the Documentation Agent, Salomon Smith Barney Inc., Banc of
America Securities, LLC and JP Morgan Securities, Inc. as Joint Lead Arrangers,
and Citicorp USA, Inc., as agent for such Lenders and the Issuing Banks.

          The undersigned (the "Assuming Lender") proposes to become an Assuming
                                ---------------
Lender pursuant to Section 3.10(b) of the Credit Agreement and, in that
connection, hereby agrees that it shall become a Lender for purposes of the
Credit Agreement on the applicable LC Commitment Increase Effective Date and
that its LC Commitment shall as of such date be $__________.

          The undersigned (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.01(e) thereof, the most recent financial statements referred to in
Section 7.04 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the 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 the Credit Agreement;
(iii) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as Lender; (v) confirms that it is an Eligible
Assignee; (vi) specifies as its Applicable Lending Offices (and address for
notices) the offices set forth beneath its name on the signature pages hereof;
and (vii) attaches the forms prescribed by the Internal Revenue Service of the
United States required under Section 4.02 of the Credit Agreement.

                                 Exh. H. Page 1

<PAGE>

          The effective date for this Assumption Agreement shall be applicable
LC Commitment Increase Effective Date. Upon delivery of this Assumption
Agreement to the Borrower and the Agent, and satisfaction of all conditions
imposed under Section 3.10(b) as of [date specified above], the undersigned
shall be a party to the Credit Agreement and have the rights and obligations of
a Lender thereunder. As of [date specified above], the Agent shall make all
payments under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and facility
fees) to the Assuming Lender.

          This Assumption Agreement may be executed in counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assumption Agreement.

                                 Exh. H. Page 2

<PAGE>

               This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                Very truly yours,

                                [NAME OF ASSUMING LENDER]

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

                                Domestic Lending Office
                                (and address for notices):

                                [Address]

                                Eurodollar Lending Office

                                [Address]

Acknowledged and Agreed to:

THE GAP, INC.

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

CITICORP USA, INC.

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

                                 Exh. H. Page 3

<PAGE>

                                    EXHIBIT I

                        [FORM OF COMPLIANCE CERTIFICATE]

                             COMPLIANCE CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFIES THAT:

                  (1) I am the duly elected ____________________________________
of The Gap, Inc., a Delaware corporation (the "Company");

                  (2) I have reviewed the terms of that certain Credit Agreement
dated as of March ___, 2002, as amended, supplemented or otherwise modified to
the date hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined in this Certificate (including Attachment No. 1 annexed hereto
and made a part hereof) being used in this Certificate as therein defined), by
and among the Company, the financial institutions party thereto, and Citicorp
USA, Inc., as Agent, and the terms of the other Loan Documents, and I have made,
or have caused to be made under my supervision, a review in reasonable detail of
the transactions and condition of Company and its Subsidiaries during the
accounting period covered by the attached financial statements; and

                  (3) The examination described in paragraph (2) above did not
disclose, and I have no knowledge of, the existence of any condition or event
which constitutes an Event of Default or Default during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate, except as set forth below.

                  Set forth [below] [in a separate attachment to this
Certificate] are all exceptions to paragraph (3) above listing, in detail, the
nature of the condition or event, the period during which it has existed and the
action which Company has taken, is taking or proposes to take with respect to
each such condition or event:

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

                                 Exh. I Page 4

<PAGE>

                  The foregoing certifications, together with the computations
set forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are made
and delivered this _____ day of _______________, _____ pursuant to Section
7.04[(i)][(iii)] of the Credit Agreement

                                            THE GAP, INC.

                                            By_____________________________

                                              Name:
                                              Title:

                                 Exh. I Page 5

<PAGE>
                                ATTACHMENT NO. 1
                            TO COMPLIANCE CERTIFICATE

                  This Attachment No. 1 is attached to and made a part of a
Compliance Certificate dated as of _________________, _____ and pertains to the
period from ________________, ____ to ________________, ____.  Subsection
references herein relate to subsections of the Credit Agreement.

A.       Asset Coverage Ratio
         (for the [Fiscal Quarter][Fiscal Month] ending _______________, _____)

         1.       Book Value of Inventory                            $__________

         2.       Letter of Credit Liability                         $__________

         3.       Outstanding Advances                               $__________

         4.       Total Liabilities (2 + 3)                          $__________

         5.       Asset Coverage Ratio (1) : (4)                     _____:1.00

         6.       Minimum ratio required under Subsection 7.03(a)    1.75 :1.00

         7.       Cash of Borrower and its Subsidiaries              $__________

         8.       Cash equivalents of Borrower and its Subsidiaries  $__________

         9.       Cash in Deposit Accounts (as defined in Security
                        Agreement)                                   $__________

         10.      Property in Securities Accounts (as defined in
                        Security Agreement)                          $__________

B.       Fixed Charge Coverage Ratio

         (for the four-Fiscal Quarter period ending ________________, _____)

         1.       Consolidated Net Income                            $__________

         2.       Consolidated Interest Expense                      $__________

         3.       Provisions for Taxes based on Income               $__________

         4.       Total Depreciation Expense                         $__________

         5.       Total Amortization Expense                         $__________

         6.       Consolidated EBITDA (1+2+3+4+5)                    $__________

         7.       Lease Expenses for the Borrower and its
                        Subsidiaries                                 $__________

         8.       Consolidated Interest Expense                      $__________

         9.       Fixed Charge Coverage Ratio ((6) + (7))/((7)+(8))  _____:1.00

                            Attach. to Exh. I Page 1

<PAGE>
         10.      Minimum ratio required under Subsection 7.03(b)    _____:1.00

C.       Consolidated Maintenance Capital Expenditures

         1.       Consolidated Maintenance Capital Expenditures
                  for Fiscal Year-to-Date                            $__________

         2.       Maximum amount of Consolidated Maintenance
                  Capital Expenditures permitted under Subsection
                  7.03(c) for Fiscal Year                           $425,000,000

                            Attach. to Exh. I Page 2

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