Document:

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                                WARRANT AGREEMENT

                         Dated as of September 19, 2000

                                     between

                              PATHMARK STORES, INC.

                                       and

                      CHASEMELLON SHAREHOLDER SERVICES, LLC

                                as Warrant Agent

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                                           WARRANT AGREEMENT
                                           TABLE OF CONTENTS
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                                                                                             Page
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SECTION 1.   Defined Terms......................................................................1
             1.1    Rules of Construction.......................................................4

SECTION 2.   Issuance, Form, Execution, Delivery and Registration of Warrant Certificates.......5
             2.1    Issuance of Warrants........................................................5
             2.2    Execution of Warrant Certificates...........................................5
             2.3    Countersignature and Delivery...............................................5
             2.4    Form of Warrant Certificates................................................6
             2.5    Temporary Warrant Certificates..............................................6
             2.6    Registration, Registration of Transfers and Exchanges.......................7
             2.7    Book-Entry Provisions for Global Warrants...................................8
             2.8    Special Transfer Provisions.................................................9
             2.9    Offices for Exercise, Etc..................................................10
             2.10   Cancellation...............................................................10
             2.11   Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates.........11

SECTION 3.   Terms of Warrants; Exercise of Warrants...........................................12
             3.1    Exercise Period............................................................12
             3.2    Manner of Exercise.........................................................12
             3.3    Issuance of Warrant Shares.................................................13
             3.4    Fractional Warrant Shares..................................................13
             3.5    Sufficient Authorized Share Capital........................................13
             3.6    Payment of Taxes...........................................................14

SECTION 4.   Adjustment of Exercise Price and Number of Warrant Shares Issuable................14
             4.1    Adjustments................................................................14
             4.2    Tender Offers: Exchange Offers.............................................17
             4.3    Other Events...............................................................17
             4.4    When No Adjustment Required................................................17
             4.5    Superseding Adjustment.....................................................18
             4.6    Minimum Adjustment.........................................................19
             4.7    Notice of Adjustment.......................................................19
             4.8    Notice of Certain Transactions.............................................19
             4.9    Adjustment to Warrant Certificate..........................................20
             4.10   Challenge to Good Faith Determination......................................20
             4.11   Treasury Stock.............................................................20

SECTION 5.   Warrant Agent.....................................................................20
             5.1    Appointment of Warrant Agent...............................................20
             5.2    Rights and Duties of Warrant Agent.........................................20
             5.3    Individual Rights of Warrant Agent.........................................22

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             5.4    Warrant Agent's Disclaimer.................................................22
             5.5    Compensation and Indemnity.................................................22
             5.6    Successor Warrant Agent....................................................24

SECTION 6.   Miscellaneous.....................................................................25
             6.1    Reports....................................................................25
             6.2    Notices to the Company and Warrant Agent...................................25
             6.3    Supplements and Amendments.................................................26
             6.4    Severability...............................................................27
             6.5    Successors.................................................................27
             6.6    Termination................................................................27
             6.7    Governing Law..............................................................27
             6.8    Submission to Jurisdiction; Appointment of Agent for Service; Waiver.......27
             6.9    Benefits of this Agreement.................................................28
             6.10   Counterparts...............................................................28
             6.11   Table of Contents..........................................................28

Exhibits

EXHIBIT A    -      Form of Face of Global Warrant Certificate

EXHIBIT B    -      Form of Face of Definitive Warrant Certificate

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                                       ii

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              WARRANT AGREEMENT dated as of September 19, 2000 (the "Agreement")
between Pathmark Stores, Inc., a company organized under the laws of Delaware
(the "Company"), and Chase Mellon Shareholder Services, L.L.C., a New Jersey
limited liability Company as warrant agent (in such capacity, the "Warrant
Agent").

                              W I T N E S S E T H:
                              - - - - - - - - - -

              WHEREAS, under the Disclosure Statement dated June 7, 2000, the
Company agreed to enter into this Agreement with the Warrant Agent to issue the
Warrants (as defined below) which will entitle the holders thereof to purchase
5,294,118 shares of Common Stock (as defined below) at an Exercise Price (as
defined below) of $22.31 based on a reorganization value of the Company of $1.3
billion; and

              WHEREAS, the Company desires the Warrant Agent to assist the
Company in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Warrants may be issued, exchanged,
cancelled, replaced and exercised; and

              WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein;

              NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:

              SECTION 1. Defined Terms.

              1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:

              "Affiliate" means, as applied to any Person, any other Person
         directly or indirectly controlling, controlled by, or under direct or
         indirect common control with such Person. For purposes of this
         definition, "control" (including, with correlative meanings, the terms
         "controlling," "controlled by" and "under common control with"), as
         applied to any Person, is defined to mean the possession, directly or
         indirectly, of the power to direct or cause the direction of the
         management and policies of such Person, whether through the ownership
         of voting securities, by contract or otherwise.

              "Agreement" shall have the meaning set forth in the preamble of
         this Agreement.

              "Amended Certificate of Incorporation" shall mean the amended and
         restated Certificate of Incorporation of the Company, as amended under
         the Plan of Reorganization.

              "Bankruptcy Law" means Title 11, United States Code (the
         "Bankruptcy Code") or any similar United States Federal, state or
         foreign law for the relief of creditors.
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                                       2

              "Board" means the Board of Directors of the Company.

              "Business Day" means a day other than a Saturday, Sunday or other
         day on which commercial banks in New York City are authorized or
         required by law to close.

              "Cashless Exercise" has the meaning specified in Section 3.2
         hereof.

              "Cashless Exercise Ratio" means a fraction, the numerator of which
         is the excess of the Current Market Value (as defined below) per share
         of Common Stock on the Exercise Date over the Exercise Price per share
         as of the Exercise Date and the denominator of which is the Current
         Market Value per share of Common Stock on the Exercise Date.

              "Combination" has the meaning specified in Section 4.1(e) hereof.

              "Commission" means the Securities and Exchange Commission.

              "Common Stock" shall mean the new common stock of the Company, par
         value $0.01 per share as issued under the Amended Certificate of
         Incorporation.

              "Current Market Value," per share of Common Stock or any other
         security at any date, means (i) if the security is not registered under
         the Exchange Act, the fair market value of the security (without any
         discount for lack of liquidity, the amount of such security offered to
         be purchased or the fact that such securities may represent a minority
         interest in a private company or a company under the control of another
         Person) as determined in good faith by the Board and certified in a
         board resolution that is delivered to the Warrant Agent, and determined
         to be fair, from a financial point of view, to the holders of such
         security or another security exercisable for such security, by an
         Independent Financial Expert (as set forth in such Independent
         Financial Expert's written fairness opinion); or (ii) if the security
         is registered under the Exchange Act, the average of the last reported
         sale price of the security (or the equivalent in an over-the-counter
         market) for each Business Day (as defined herein) during the period
         commencing 15 Business Days before such date and ending on the date one
         day prior to such date, or if the security has been registered under
         the Exchange Act for less than 15 consecutive Business Days before such
         date, the average of the daily closing bid prices (or such equivalent)
         for all of the Business Days before such date for which daily closing
         bid prices are available (provided, however, that if the closing bid
         price is not determinable for at least 10 Business Days in such period,
         the "Current Market Value" of the security shall be determined as if
         the security were not registered under the Exchange Act). The Company
         shall pay the fees and expenses of any Independent Financial Expert in
         the determination of Current Market Value.

              "Definitive Warrants" means Warrants in definitive registered form
         substantially in the form of Exhibit B.

              "DTC" means The Depository Trust Company or its successors.

              "DWAC" means the Depositary/Deposit Withdraw at Custodian system.
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                                       3

              "Exchange Act" means the Securities Exchange Act of 1934, as
         amended (or any successor act), and the rules and regulations
         promulgated thereunder.

              "Exercise Date" means the date on which a Warrant is exercised by
         the Holder thereof.

              "Exercisability Date" means the first day after the Issue Date.

              "Exercise Price" means the purchase price per Warrant Share to be
         paid upon the exercise of each Warrant, which price shall be $22.31 per
         Warrant Share as adjusted in accordance with the terms hereof.

              "Expiration Date" means September 19, 2010.

              "Holder" means the registered holder of a Warrant.

              "Independent Financial Expert" means an internationally recognized
         investment bank that does not (and whose directors, executive officers
         and 5% or greater stockholders do not) have a direct or indirect
         financial interest in the Company or any of its subsidiaries or
         Affiliates, which has not been for at least five years, and at the time
         it is called upon to give independent financial advice to the Company
         is not (and none of its directors, executive officers nor 5% or greater
         stockholders is), a promoter, director, or officer of the Company or
         any of its subsidiaries or Affiliates. The Independent Financial Expert
         may be compensated and indemnified by the company for opinions or
         services it provides as an Independent Financial Expert.

              "Issue Date" means September 19, 2000, the date on which the
         Warrants are first issued.

              "Majority Holders" means the Holders of a majority of the then
         outstanding Warrants.

              "Nasdaq National Market" means the Nasdaq Stock Market.

              "Officer" means the principal executive officer, the principal
         financial officer, the treasurer or the principal accounting officer of
         the Company.

              "Officers' Certificate" means a certificate signed on behalf of
         the Company by two officers of the Company, one of whom must be the
         principal executive officer, the principal financial officer, the
         treasurer or the principal accounting officer of the Company.

              "Person" means any individual, firm corporation, partnership,
         joint venture, limited liability company, association, joint-stock
         company, trust, unincorporated organization, government or any agency
         or political subdivision thereof or any other entity, and shall include
         any successor (by merger or otherwise) of such entity.
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                                       4

              "Plan of Reorganization" means the joint plan of reorganization of
         the Company and certain of its Affiliates under chapter 11 of the
         Bankruptcy Code.

              "Qualified Institutional Buyer" or "QIB" shall have the meaning
         specified in Rule 144A under the Securities Act.

              "Repurchase Price" means, in respect of a Warrant, (i) the excess
         of the Current Market Value of a share of Common Stock of the Company
         over the Exercise Price per share of Common Stock, multiplied by (ii)
         the number of Warrant Shares that would be obtained if one Warrant was
         exercised on the date of repurchase.

              "Right" has the meaning specified in Section 4.4 hereof.

              "Securities Act" means the Securities Act of 1933, as amended.

              "shares of Common Stock" has the meaning specified in the Preamble
         hereto.

              "Successor Company" has the meaning specified in Section 4.1(e)
         hereof.

              "Warrant Agent" means Chase Mellon Shareholder Services, L.L.C.,
         or the successor or successors of such Warrant Agent appointed in
         accordance with the terms hereof.

              "Warrant Certificates" means the certificates evidencing the
         Warrants to be delivered pursuant to this Agreement, substantially in
         the form of Exhibits A and B hereto.

              "Warrant Registrar" has the meaning specified in Section 2.6
         hereof.

              "Warrant Shares" has the meaning specified in Section 2.1(c)
         hereof.

              "Warrants" shall mean the new warrants issued hereunder and all
         warrants issued upon transfer, division or combination of, or in
         substitution for, any thereof. All Warrants shall at all times be
         identical as to terms and conditions and date, except as to the number
         of shares of Common Stock for which they may be exercised.

              1.2 Rules of Construction. Unless the text otherwise required:

              (i) a term has the meaning assigned to it;

              (ii) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with United States generally accepted
         accounting principles ("U.S. GAAP") as in effect from time to time.

              (iii) "or" is not exclusive;

              (iv) "including" means including, without limitation; and
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                                       5

              (v) words in the singular include the plural and words in the
         plural include the singular.

              SECTION 2. Issuance, Form, Execution, Delivery and Registration of
                         Warrant Certificates.

              2.1 Issuance of Warrants. (a) On the Issue Date and in accordance
with the Plan of Reorganization, the Company shall issue Warrants to the holders
of the 11.625% Subordinated Notes due 2002 of the Company (the "Subordinated
Notes"), the 12.625% Subordinated Debentures due 2002 of the Company (the
"Subordinated Debentures") and the 10.75% Junior Subordinated Referred Coupon
Notes due 2003 of the Company (the "Junior Subordinated Notes") entitling
holders of such existing bonds of the Company to purchase an aggregate of
5,294,118 shares, as adjusted in accordance with Section 4 of this Agreement.

              (b) Each one dollar worth of the Subordinated Notes and the
Subordinated Debentures will entitle its holder to receive 0.01265 Warrants and
each dollar worth of Junior Subordinated Notes will entitle its holder to
receive 0.005487 Warrants. Any Holder of a fraction of a Warrant will be
entitled to receive an additional Warrant if such fraction is higher than 0.5.
Each Warrant issued under this Agreement shall be evidenced by a Warrant
Certificate.

              (c) Each Warrant Certificate shall evidence the number of Warrants
specified therein, and each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to purchase from the
Company (and the Company shall issue and sell to such holder of the Warrant) one
share of Common Stock of the Company (the shares purchasable upon exercise of a
Warrant being hereinafter referred to as the "Warrant Shares," subject to
adjustment as provided in Section 4 hereof).

              2.2 Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by two Officers of the Company. Such
signatures may be the manual or facsimile signatures of the present or any
future such officers. Typographical and other minor errors or defects in any
such reproduction of any such signature shall not affect the validity or
enforceability of any Warrant Certificate that has been duly countersigned and
delivered by the Warrant Agent.

              In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be countersigned and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the Person who signed such
Warrant Certificate had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by such Persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Agreement any such Person was not such an officer.

              2.3 Countersignature and Delivery. Subject to the immediately
following paragraph, Warrant Certificates shall be countersigned by manual
signature and dated the date of countersignature by the Warrant Agent and shall
not be valid for any purpose unless so

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                                       6

countersigned and dated. The Warrant Certificates shall be numbered and shall be
registered in the Warrant Register.

              Upon the receipt by the Warrant Agent of a written order of the
Company set forth in an Officers' Certificate, specifying the amount of Warrants
to be countersigned, the date of such Warrants and such other information as the
Warrant Agent may reasonably request, the Warrant Agent is authorized, to
countersign the Warrant Certificates upon receipt from the Company at any time
and from time to time of the Warrant Certificates, duly executed as provided in
Section 2.2 hereof, and deliver them, without any further action by the Company.
Such countersignature shall be by a duly authorized signatory of the Warrant
Agent (although it shall not be necessary for the same signatory to sign all
Warrant Certificates).

              In case any authorized signatory of the Warrant Agent who shall
have countersigned any of the Warrant Certificates shall cease to be such
authorized signatory before the Warrant Certificate shall be disposed of by the
Company, such Warrant Certificate nevertheless may be delivered or disposed of
as though the Person who countersigned such Warrant Certificate had not ceased
to be such authorized signatory of the Warrant Agent; and any Warrant
Certificate may be countersigned on behalf of the Warrant Agent by such Persons
as, at the actual time of countersignature of such Warrant Certificates, shall
be the duly authorized signatories of the Warrant Agent, although at the time of
the execution and delivery of this Agreement any such Person is not such an
authorized signatory.

              The Warrant Agent's countersignature on all Warrant Certificates
shall be in substantially the form set forth in Exhibits A and B hereto.

              2.4 Form of Warrant Certificates. The Warrant Certificates
evidencing the Warrants to be delivered pursuant to this Agreement shall be
(each such Warrant a "Global Warrant") substantially in the form set forth in
Exhibit A attached hereto. Such Global Warrants shall represent such of the
outstanding Warrants as shall be specified therein and each shall provide that
it shall represent the aggregate amount of outstanding Warrants from time to
time endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be decreased or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of outstanding Warrants represented thereby
shall be made by the Warrant Agent and DTC in accordance with written
instructions given by the holder thereof. The Depository Trust Company shall act
as the Depositary (the "Depositary") with respect to the Global Warrants until a
successor, if any, shall be appointed by the Company. Except as provided in
Section 2.8(b), owners of beneficial interests in a Global Warrant will not be
entitled to receive physical delivery of Definitive Warrants.

              2.5 Temporary Warrant Certificates. Pending the preparation of
Definitive Warrant Certificates, the Company may execute, and the Warrant Agent,
upon receipt of written instructions from the Company (which shall include
names, addresses and delivery instructions), shall countersign and deliver to
the Holders, temporary Warrant Certificates, which are printed, lithographed,
typewritten or otherwise produced, substantially of the tenor of the Definitive
Warrant Certificates in lieu of which they are issued and with such appropriate
insertions,

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                                       7

omissions, substitutions and other variations as the officers executing such
Warrant Certificates may determine, as evidenced by their execution of such
Warrant Certificates.

              If temporary Warrant Certificates are issued, the Company will
cause Definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of Definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for Definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 2.11 hereof.
Subject to the provisions of Section 3.6 hereof, such exchange shall be without
charge to the holder (nor shall the Warrant Agent be responsible for any such
charges). Upon surrender for cancellation of any one or more temporary Warrant
Certificates, the Company shall execute, and the Warrant Agent, upon receipt of
written instructions from the (which shall include names, addresses and delivery
instructions), from the Company, shall countersign and deliver in exchange
therefor, one or more Definitive Warrant Certificates representing in the
aggregate a like number of Warrants. Until so exchanged, the holder of a
temporary Warrant Certificate shall in all respects be entitled to the same
benefits under this Agreement as a holder of a Definitive Warrant Certificate.

              2.6 Registration, Registration of Transfers and Exchanges. The
Company will keep, at the office or agency maintained by the Company for such
purpose, a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of, and registration of transfer and exchange of, Warrants as provided herein.
Each person designated by the Company from time to time as a Person authorized
to register the transfer and exchange of the Warrants is hereinafter called,
individually and collectively, the "Warrant Registrar." The Company hereby
initially appoints the Warrant Agent as Warrant Registrar. Upon prior written
notice to the Warrant Agent and any acting Warrant Registrar, the Company may
appoint a successor Warrant Registrar for such purposes.

              The Company will at all times designate one Person (who may be the
Company and who need not be a Warrant Registrar) to act as repository of a
master list of names and addresses of the holders of Warrants (the "Warrant
Register"). The Warrant Agent will act as such repository unless and until some
other Person is, by written prior notice from the Company to the Warrant Agent
and the Warrant Registrar, designated by the Company to act as such. In the
event the Warrant Registrar is not the repository, the Company shall cause the
Warrant Registrar to furnish to such repository, on a current basis, such
information as to all registrations of transfer and exchanges effected by the
Warrant Registrar as may be necessary to enable such, repository, to maintain
the Warrant Register on as current a basis as is practicable.

              When Warrants are presented to the Warrant Agent with a request to
register the transfer of the Warrants or exchange Warrants for an equal number
of Warrants of other authorized denominations, the Warrant Agent shall register
the transfer or make the exchange requested if the requirements under this
Warrant Agreement as set forth herein for such transactions are met; provided,
however, that the Warrants presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Company and the Warrant Agent, duly
executed by the holder thereof or by his attorney, duly authorized in writing.

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                                       8

              Furthermore, any Holder of a Global Warrant shall, by acceptance
of such Global Warrant, agree that transfers of beneficial interests in such
Global Warrant may be effected only through a book-entry system maintained by
the Holder of such Global Warrant (or its agent), and that ownership of a
beneficial interest in the Warrant shall be required to be reflected in a book
entry.

              All Warrants issued upon any registration of, transfer or exchange
of Warrants shall be the valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrants surrendered upon such registration of transfer or exchange.

              2.7 Book-Entry Provisions for Global Warrants. (a) Registered
Owner of Global Warrants. Each Global Warrant initially shall (i) be registered
in the name of DTC for such global Warrant or the nominee of the Depositary and
(ii) be delivered to the Warrant Agent as custodian for such Depositary.

              Members of, or participants in, DTC ("Agent Members") shall have
no rights under this Agreement with respect to any Global Warrant held on their
behalf by DTC, or the Warrant Agent, as its custodian, or under the Global
Warrant, and DTC may be treated by the Company, the Warrant Agent, and any agent
of either the Company or the Warrant Agent as the absolute owner of such Global
Warrant for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Warrant Agent, or any agent of either, the
Company or the Warrant Agent from giving effect to any written certification,
proxy or other authorization furnished by DTC or shall impair, as between DTC
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Warrant.

              (b) Transfers of a Global Warrant shall be limited to transfers of
such Global Warrant in whole, but not in part, to DTC, its successors or their
respective nominees. Interests of beneficial owners in a Global Warrant may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 2.8. If required to do so pursuant to any applicable law
or regulation, beneficial owners may obtain Warrants in definitive form, in
exchange for their beneficial interests in a Global Warrant upon written request
in accordance with DTC's and the Warrant Registrar's procedures. In addition,
Definitive Warrants shall be transferred to all beneficial owners in exchange
for their beneficial interests in a Global Warrant if (i) DTC (A) notifies, in
writing, the Company that it is unwilling or unable to continue as depository
for the Global Warrant and the Company thereupon fails to appoint a successor
depository upon 90 days or (B) has ceased to be a clearing agency registered
under the Exchange Act and the Company thereupon fails to appoint a successor
depository upon 90 days, (ii) upon the continuance of an Event of Default under
the Indenture or (iii) the Company, at its option, promptly notifies the Warrant
Agent in writing that it elects to cause issuance of Definitive Warrants. In
addition, beneficial interests in a Global Warrant may be exchanged for
Definitive Warrants upon request but only upon at least 20 days' prior written
notice given to the Warrant Agent by or on behalf of DTC in accordance with
customary procedures. In all cases, Definitive Warrants delivered in exchange
for any Global Warrants or beneficial interest therein will be registered in
names, and issued in any approved denominations, requested by or on behalf of
DTC (in accordance with its customary procedures).
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                                       9

              (c) In connection with any transfer of a portion of the beneficial
interest in a Global Warrant pursuant to subsection (b) of this Section 2.7 to
beneficial owners who are required to hold Definitive Warrants, the Warrant
Registrar shall reflect on its books and records the date and a decrease in the
amount of such Global Warrant in an amount equal to the amount of the beneficial
interest in the Global Warrant to be transferred and the Company shall execute,
and the Warrant Agent shall countersign and deliver (to each beneficial owner
identified by DTC for such transfer), one or more Definitive Warrants of like
tenor and amount.

              (d) In connection with the transfer of an entire Global Warrant to
beneficial owners pursuant to subsection (b) of this Section 2.7, such Global
Warrant shall be deemed to be surrendered to the Warrant Agent for cancellation,
and the Company shall execute, and the Warrant Agent shall countersign and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such Global Warrant, an equal aggregate amount of
Definitive Warrants of authorized denominations.

              (e) The Holder of a Global Warrant may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent, Members, to take any action which a Holder is entitled
to take under this Agreement or the Warrants.

              2.8 Special Transfer Provisions. (a) Any beneficial interest in
one of the Global Warrants that is transferred to a Person who takes delivery in
the form of an interest in the other Global Warrant will, upon transfer, cease
to be an interest in such Global Warrant and become an interest in the other
Global Warrant and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in such
other Global Warrant for as long as it remains such an interest.

              (b) General. The provisions hereof shall be qualified in their
entirety by any applicable securities laws of the United States and any other
applicable jurisdiction and by the procedures of any applicable clearing agency,
in each case as in effect from time to time, and all such laws and clearing
procedures shall be deemed to be incorporated herein by reference. The Warrant
Agent shall not register a transfer of any Warrant Certificate unless such
transfer complies with the restrictions on transfer of such Warrant Certificate
set forth in this Warrant Agreement.

              The Warrant Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 2.7 or this
Section 2.8. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Warrant Registrar.

              (c) No Obligation of the Warrant Agent. (i) The Warrant Agent
shall have no duty, responsibility or obligation to any beneficial owner of a
Global Warrant, a member of, or a participant in DTC or other Person with
respect to any ownership interest in the Warrants, with respect to the accuracy
of the records of DTC or its nominee or of any participant or member thereof or
with respect to the delivery to any participant, member, beneficial owner or
other Person (other than DTC) of any notice (including any notice of redemption)
or the payment of any amount, under or with respect to such Warrants. All
notices and communications with

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                                       10

respect to the Warrants shall be given to the Holders and all payments in
respect of the Warrants represented by the Global Warrant shall be made by wire
transfer of immediately available funds to the accounts specified by the Holder
of the Global Warrant. With respect to Definitive Warrants, the Company will
make all payments by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The rights of
beneficial owners in any Global Warrant shall be exercised only through DTC
subject to the applicable rules and procedures of DTC. The Warrant Agent may
rely and shall be fully protected and indemnified pursuant to Section 5.5 in
relying upon information furnished by DTC with respect to any beneficial owners,
its members and participants.

              (ii) The Warrant Agent shall have no responsibility, obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Agreement or under applicable law, with respect to
any transfer of any interest in any Warrant (including without limitation any
transfers between or among DTC participants, members or beneficial owners in any
Global Warrant) other than to require delivery of such certificates and other
documentation of evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Agreement, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.

              2.9 Offices for Exercise, Etc. So long as any of the Warrants
remain outstanding, the Company will designate and maintain in the Borough of
Manhattan, The City of New York: (a) an office or agency where the Warrant
Certificates may be presented for exercise, (b) an office or agency where the
Warrant Certificates may be presented for registration of transfer and for
exchange (including the exchange of temporary Warrant Certificates for
Definitive Warrant Certificates pursuant to Section 2.5 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
provided, however, that an office or agency shall at all times be maintained in
the Borough of Manhattan, The City of New York as provided in the first sentence
of this Section. In addition to such office or offices or agency or agencies,
the Company may from time to time designate and maintain one or more additional
offices or agencies, within or outside The City of New York where Warrant
Certificates may be presented for exercise or for registration of transfer or
for exchange, and the Company may from time to time change or rescind such
designation, as it may deem desirable or expedient. The Company will give to the
Warrant Agent and the Warrant Registrar written notice of the location of any
such office or agency and of any change of location thereof. The Company hereby
designates the Warrant Agent at its designated office, pursuant to Section 6.2,
in the Borough of Manhattan, The City of New York (the "Warrant Agent Office"),
as the initial agency maintained for each such purpose. In case the Company
shall fail to maintain any such office or agency or shall fail to give such
notice of the location or of any change in the location thereof, presentations
and demands may be made and notice may be served at the Warrant Agent Office and
the Company appoints the Warrant Agent as its agent to receive all such
presentations, surrenders, notices and demands.

              2.10 Cancellation. All Warrant Certificates surrendered for the
purpose of exercise (in whole or in part), exchange, substitution or transfer
shall, if surrendered to the

<PAGE>
                                       11

Company or to any of its agents, be delivered to the Warrant Agent for
cancellation or in cancellation form, or if surrendered to the Warrant Agent
shall be cancelled by it, and no Warrant Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. If the Company purchases or acquires Warrants and if the Company so
chooses, the Company may deliver to the Warrant Agent for cancellation and
retirement, and the Warrant Agent shall so cancel and retire (subject to the
record retention provisions of the Exchange Act), the Warrant Certificates
evidencing said Warrants. The Warrant Agent shall destroy such cancelled Warrant
Certificates, and in such case shall upon the written request of the Company
deliver a certificate of destruction thereof to the Company. The Warrant Agent
shall account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all monies received by the Warrant Agent for the
purchase of the Warrant Shares through the exercise of such Warrants.

              2.11 Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity satisfactory to them (which may
include posting a bond) and, in the case of mutilation or defacement, upon
surrender thereof to the Warrant Agent for cancellation, then, in the absence of
written notice to the Company or the Warrant Agent that such Warrant Certificate
has been acquired by a bona fide purchaser or holder in due course, the Company
shall execute, and an authorized signatory, of the Warrant Agent shall manually
countersign and deliver, in exchange for or in lieu of the lost, stolen,
destroyed, defaced or mutilated Warrant Certificate, a new Warrant Certificate
representing a like number of Warrants, bearing a number or other distinguishing
symbol not contemporaneously outstanding. Upon the issuance of any new Warrant
Certificate under this Section, the Company may require the payment from the
holder of such Warrant Certificate of a sum sufficient to cover any tax, stamp
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Warrant Agent and the
Warrant Registrar) in connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section in lieu of any lost, stolen or
destroyed Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 2.11 are exclusive with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.

              The Warrant Agent is hereby authorized to countersign Warrant
Certificates in accordance with the provisions of this Agreement, and deliver
the new Warrant Certificates required pursuant to the provisions of this
Section.
<PAGE>
                                       12

              SECTION 3. Terms of Warrants; Exercise of Warrants

              3.1 Exercise Period. Subject to the terms of the this Agreement,
each Warrant Holder shall have the right, which may be exercised commencing at
the opening, of business on the Exercisability Date and until 5:00 p.m., New
York City time on the Expiration Date, to receive from the Company the number of
fully paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares. Each Warrant not exercised prior
to 5:00 p.m., New York City time, on the Expiration Date shall become null and
void and all rights thereunder and all rights in respect thereof under this
Agreement shall cease as of such time.

              The Company shall give written notice not less than 90, and not
more than 120 days prior to the Expiration Date to the Warrant Agent and the
Holders of the outstanding Warrants to the effect that the Warrants will
terminate and become null and void as of 5:00 p.m., New York City time, on the
Expiration Date; provided, however, that the failure by the Company to give such
notice as provided in this Section shall not affect such termination and
becoming null and void of the Warrants as of 5:00 p.m., New York City time, on
the Expiration Date.

              3.2 Manner of Exercise. A Warrant may be exercised at any time on
or after the Exercisability Date and prior to the Expiration Date upon (i)
surrender to the Warrant Agent of the Warrant Certificates, together with the
form of election to purchase properly completed and executed by the Holder
thereof and (ii) payment to the Warrant Agent, for the account of the Company,
of the Exercise Price for each share of Common Stock or other securities
issuable upon exercise of such Warrants. The Exercise Price may be paid (i) in
cash or by certified or official bank check or by wire transfer to an account
designated by the Company for such purpose (a "Cash Exercise") or (ii) without
the payment of cash, by reducing the number of shares of Common Stock that would
be obtainable upon the exercise of a Warrant and payment of the Exercise Price
in cash so as to yield a number of shares of Common Stock upon the exercise of
such Warrant equal to the product of (a) the number of shares of Common Stock
for which such Warrant is exercisable as of the date of exercise (if the
Exercise Price were being paid in cash) and (b) the Cashless Exercise Ratio. An
exercise of a Warrant in accordance with clause (ii) of the immediately
preceding sentence is herein called a "Cashless Exercise." Upon surrender of a
Warrant Certificate representing more than one Warrant in connection with the
holder's option to elect a Cashless Exercise, the number of shares of Common
Stock deliverable upon a Cashless Exercise shall be equal to the number of
shares of Common Stock issuable upon the exercise of Warrants that the holder
specifies are to be exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. Upon request of the Warrant Agent, the Company shall
promptly inform in writing the Warrant Agent of the number of shares of Common
Stock that may be delivered to a Holder upon a "cashless" exercise, and the
Warrant Agent shall incur no liability and shall be fully protected in relying
on such information provided to it by the Company. The Warrant Agent shall have
no obligation to take any action under this Section with respect to a "cashless"
exercise, nor shall it incur any liability for failing to take any such action,
if it has not received all such relevant information requested regarding such
"cashless" exercise from the Company. All provisions of this Agreement shall be
applicable with respect to a surrender of a Warrant Certificate pursuant to a
Cashless Exercise for less than the full number of Warrants represented thereby.
Upon surrender of the Warrant Certificate and payment of the Exercise Price in
accordance with this Agreement, the Company will issue shares

<PAGE>
                                       13

of Common Stock of the Company for each Warrant evidenced by such Warrant
Certificate, subject to adjustment as described herein. Whenever there occurs a
Cashless Exercise, the Company shall deliver to the Warrant Agent a certificate
setting forth the Cashless Exercise Ratio. The Warrant Agent shall be entitled
to rely or such certificate and shall be under no duty, obligation or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty, obligation or responsibility to any Holder to determine whether the
Cashless Exercise Ratio is correct or with respect to the method employed in
determining the Cashless Exercise Ratio or the validity or value of any shares
of Common Stock.

              3.3 Issuance of Warrant Shares. Subject to Section 2.10, upon the
surrender of Warrant Certificates and payment of the Exercise Price, as set
forth above, the Company shall issue shares of Common Stock in such name or
names as the Holder may designate, for the number of full Warrant Shares so
purchased upon the exercise of such Warrants or other securities or property to
which it is entitled, registered or otherwise to the Person or Persons entitled
to receive the same, together with cash as provided in Section 3.4 in respect of
any fractional Warrant Shares otherwise issuable upon such exercise. Such shares
of Common Stock shall be deemed to have been issued and any Person so designated
shall be deemed to have become a Holder of record of such Warrant Shares as of
the date of the surrender of such Warrant Certificates and payment of the per
share Exercise Price or upon a Cashless Exercise.

              The Company hereby agrees that no service charge will be made for
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the Warrant Agent designated for that purpose. Holders may be
required to make payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
transfer or exchange of Warrant Certificates and shall notify the Warrant Agent
of any applicable amounts payable hereunder.

              3.4 Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
pursuant thereto. If any fraction of a Warrant Share would, except for the
provisions of this Section 3.4, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company may, at its option, pay an amount in
cash equal to the Current Market Value for one Warrant Share on the Business Day
immediately preceding the date the Warrant is exercised, multiplied by such
fraction, computed to the nearest whole U.S. Dollars.

              The Warrant Agent shall have no duty or obligation with regard to
the payment, calculation or valuation of fractional shares unless and until it
has received written instructions (and sufficient cash, if necessary, to satisfy
the Company's obligations) from the Company regarding fractional shares and the
Company has otherwise complied with the relevant provisions of this Agreement.

              3.5 Sufficient Authorized Share Capital. The Company has and will
maintain an authorized share capital sufficient for the issuance of such number
of shares of Common

<PAGE>
                                       14

Stock as will be issuable upon the exercise of all outstanding Warrants. Such
shares of Common Stock, when issued and paid for in accordance with the
Agreement, will be duly and validly issued, fully paid and nonassessable, free
of preemptive rights and free from all liens, charges and security interests
with respect to the issue thereof.

              3.6 Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of the Warrants and the Warrant
Shares issuable upon the exercise of Warrants, provided, however, that the
Company shall not be required to pay any tax or taxes or governmental charges
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificates or Warrant Shares in a name other than that of the Holder
of a Warrant Certificate surrendered upon the exercise of a Warrant, and the
Company shall not be required to issue or deliver such Warrant Certificates
unless or until the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or governmental charges or shall have
established to the satisfaction of the Company that such tax or governmental
charges has been paid.

              SECTION 4. Adjustment of Exercise Price and Number of Warrant
Shares Issuable.

              4.1 Adjustments. The Exercise Price and the number of Warrant
Shares purchasable upon the exercise of Warrants shall be subject to adjustment
from time to time as follows:

              (a) Adjustments under the Plan of Reorganization. In the event
         that the Company makes adjustments to the aggregate claims, the
         percentage allocations or the number of shares of Common Stock to be
         issued on account of existing bonds of the Company under the Plan of
         Reorganization, the Company may change the number of Warrants to be
         issued, the number of shares of Common Stock purchasable under the
         terms of such Warrants and the Exercise Price in accordance with any
         such adjustments under the Plan of Reorganization. Any adjustment made
         pursuant to this Section 4.1 (a) shall become effective on the Issue
         Date.

              (b) Changes in Shares of Common Stock. In the event that at any
         time or from time to time after the date hereof the Company shall (i)
         pay a dividend or make a distribution on its shares of Common Stock in
         shares of Common Stock or other shares of capital stock, (ii) subdivide
         its outstanding shares of Common Stock into a larger number of shares
         of Common Stock, (iii) combine its outstanding shares of Common Stock
         into a smaller number of shares of Common Stock or (iv) increase or
         decrease the number of shares of Common Stock outstanding by
         reclassification of its shares of Common Stock, then the number of
         shares of Common Stock purchasable upon exercise of each Warrant
         immediately after the happening of such event shall be adjusted
         (including by adjusting the definition of "Warrant Shares") so that,
         after giving effect to such adjustment, the Holder of each Warrant
         shall be entitled to receive the number of shares of Common Stock or
         other shares of capital stock upon exercise that such Holder would have
         owned or have been entitled to receive had such Warrants been exercised
         immediately prior to the happening of the events described above (or,
         in the case of a dividend or distribution of shares of Common Stock,
         immediately prior to the record date therefor). An
<PAGE>
                                       15

         adjustment made pursuant to this Section 4.1(b) shall become effective
         immediately after the effective date, retroactive to the record date
         therefor in the case of a dividend or distribution in shares of Common
         Stock, and shall become effective immediately after the effective date
         in the case of a subdivision, combination or reclassification.

              (c) Cash Dividends and Other Distributions. In case at any time or
         from time to time after the date hereof the Company shall distribute to
         Holders of shares of Common Stock (i) any dividend or other
         distribution of cash, evidences of its indebtedness, shares of its
         capital stock or any other properties or securities or (ii) any
         options, warrants or other rights to subscribe for or purchase any of
         the foregoing (other than, in each case set forth in (i) and (ii), (x)
         any dividend or distribution described in Section 4.1(a) or (y) any
         rights, options, warrants or securities described in Section 4.1(d))
         then the number of Warrant Shares purchasable upon the exercise of each
         Warrant shall be increased to a number determined by multiplying the
         number of shares of Common Stock issuable immediately prior to the
         record date upon exercise of each Warrant by a fraction, the numerator
         of which shall be the Current Market Value of the shares of Common
         Stock comprising one Warrant Share immediately before such dividend or
         other distribution and the denominator of which shall be the Current
         Market Value of the shares of Common Stock comprising one Warrant Share
         less the sum of (x) any cash distributed per Warrant Share and (y) the
         Current Market Value of the portion, if any, of the distribution
         applicable to one Warrant Share consisting of evidences of
         indebtedness, shares of stock, securities, other property, warrants,
         options or subscription of purchase rights. Such adjustment shall be
         made whenever any distribution is made and shall become effective as of
         the date of distribution, retroactive to the record date for any such
         distribution; provided, however, that the Company is not required to
         make an adjustment pursuant to this Section 4.1(c) if at the time of
         such distribution the Company makes the same distribution to Holders of
         Warrants as it makes to holders of shares of Common Stock pro rata
         based on the number of shares of Common Stock for which such Warrants
         are exercisable (whether or not currently exercisable). No adjustment
         shall be made pursuant to this Section 4.1(c) which shall have the
         effect of decreasing the number of Warrant Shares purchasable upon
         exercise of each Warrant.

              (d) Rights Issue. In the event that at any time or from time to
         time after the date hereof the Company shall issue, sell, distribute or
         otherwise grant any rights to subscribe for or to purchase, or any
         options or warrants for the purchase of, or any securities convertible
         or exchangeable into, shares of Common Stock to all holders of shares
         of Common Stock, entitling such holders to subscribe for or purchase
         shares of Common Stock or stock or securities convertible into shares
         of Common Stock within 60 days after the record date for such issuance,
         sale, distribution or other grant, as the case may be, and the sum of
         (a) the offering price of such right, option, warrant or other security
         ('on a per share basis) and (b) any subscription, purchase, conversion
         or exchange price per share of shares of Common Stock (the
         "Consideration") is lower at the record date for such issuance than the
         then Current Market Value per share of such shares of Common Stock, the
         number of Warrant Shares purchasable upon exercise of each Warrant
         shall be increased to a number determined by multiplying the number of
         shares of Common Stock issuable immediately prior to the record date
         upon exercise of each Warrant by a fraction, the numerator of which
         shall be the number of shares of

<PAGE>
                                       16

         Common Stock outstanding on the date of issuance of such rights,
         options, warrants or securities plus the number of additional shares of
         Common Stock offered for subscription or purchase or into or for which
         such securities are convertible or exchangeable, and the denominator of
         which shall be the number of shares of Common Stock outstanding on the
         date of issuance of such rights, options, warrants or securities plus
         the total number of shares of Common Stock which could be purchased at
         the Current Market Value with the aggregate of the Consideration with
         respect to such issuance, sale, distribution or other grant. Such
         adjustment shall be made whenever such rights, options or warrants are
         issued and shall become effective retroactively immediately after the
         record date for the determination of stockholders entitled to receive
         such rights. options, warrants or securities, provided, however, that
         the Company is not required to make an adjustment pursuant to this
         Section 4.1(d) if the Company shall make the same distribution to
         Holders of Warrants. No adjustment shall be made pursuant to this
         Section 4.1(d) which shall have the effect of decreasing the number of
         shares of Common Stock purchasable upon exercise of each Warrant.

              (e) Combination; Liquidation. (i) Except as provided in clause
         (ii) below, in the event of certain consolidations or mergers of the
         Company, or the sale of all or substantially all of the assets of the
         Company to another Person (a "Combination"), each Warrant will
         thereafter be exercisable for the right to receive the kind and amount
         of shares of stock or other securities or property to which such holder
         would have been entitled as a result of such Combination had the
         Warrants been exercised immediately prior thereto. Unless clause (ii)
         is applicable to a Combination, if any Warrants shall be outstanding
         after a Combination, the Company shall provide that the surviving or
         acquiring Person (the "Successor Company") in such Combination will
         enter into an agreement with the Warrant Agent confirming the Holders'
         rights pursuant to this Section 4.1(e) and providing for adjustments,
         which shall be as nearly equivalent as may be practicable to the
         adjustments provided for in this Section 4. The provisions of this
         Section 4.1(e) shall similarly apply to successive Combinations
         involving any Successor Company.

              (ii) In the event of (A) a Combination, and, in connection
         therewith, the consideration payable to the holders of shares of Common
         Stock in exchange for their shares is payable solely in cash or (B) a
         dissolution, liquidation or winding-up of the Company, then the holders
         of the Warrants will be entitled to receive distributions on an equal
         basis with the holders of shares of Common Stock or other securities
         issuable upon exercise of the Warrants, as if the Warrants had been
         exercised immediately prior to such event, less the Exercise Price.
         Upon receipt of such payment, if any, the Warrants will expire and the
         rights of holders thereof will cease.

              (iii) In the case of any such Combination, the surviving or
         acquiring Person as described in this Section 4. 1 (e) and, in the
         event of any dissolution, liquidation or winding-up of the Company, the
         Company shall deposit promptly with the Warrant Agent the funds, if
         any, necessary to pay to the holders of the Warrants the amounts to
         which they are entitled as described above. After such funds and the
         surrendered Warrant Certificates are received, the Warrant Agent shall
         make payment to the Holders by delivering a check, or by wire transfer
         of same-day funds, in such amount as is

<PAGE>
                                       17

         appropriate (or, in the case of consideration other than cash, such
         other consideration as is appropriate) to such Person or Persons as it
         may be directed in writing by the Holders surrendering such Warrants.

              4.2 Tender Offers: Exchange Offers. In the event that the Company
or any subsidiary of the Company shall purchase shares of Common Stock pursuant
to a tender offer or an exchange offer for a price per share of Common Stock
that is greater than the then Current Market Value per share of shares of Common
Stock in effect at the end of the trading day immediately following the day on
which such tender offer or exchange offer expires, then the Company, or such
subsidiary of the Company, shall, within ten (10) Business Days of the expiry of
such tender offer or exchange offer, offer to purchase Warrants for comparable
consideration per share of Common Stock based on the number of shares of Common
Stock which the Holders of such Warrants would receive upon exercise of such
Warrants (the "Offer") (such amount less the Exercise Price in respect of such
share, the "Per Share Consideration"); provided, however, if a tender offer is
made for only a portion of the outstanding shares of Common Stock, then such
offer shall be made for such shares of Common Stock issuable upon exercise of
the Warrants in the same pro rata proportion.

              The Offer shall remain open for a period of twenty (20) Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five (5) Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase such Warrants for the applicable Per Share
Consideration.

              4.3 Other Events. If any event shall occur as to which the other
provisions of this Section 4 are not strictly applicable but the failure to make
any adjustment would have the effect of depriving holders of the benefit of all
or a portion of the exercise rights in respect of any Warrant in accordance with
the essential intent and principles of this Section 4, then, in each such case,
the Company shall appoint an Independent Financial Expert, which shall give its
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 4 necessary to preserve,
without dilution, such exercise rights. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Warrant Agent and to the
holders and shall make the adjustments described therein.

              4.4 When No Adjustment Required. Without limiting any other
exception contained in this Section 4.4 and in addition thereto, no adjustment
need be made for:

              (i) (A) grants to, exercises of Rights by, or issuances of equity
         securities to employees, directors, consultants or advisors of the
         Company or any of its subsidiaries and (B) exercises of Rights by, or
         issuances of equity securities in connection with Rights previously
         issued to former employees, former directors, former consultants (to
         the extent that all such securities do not have an aggregate value in
         excess of 15% of the equity value of the Company or represent more than
         15% of the outstanding voting power of the Company's capital stock on a
         fully diluted basis, as determined in good faith by the Board). As used
         herein, "Right" shall mean any right, option, warrant or convertible or
         exchangeable security containing the right to subscribe for or acquire
         on or more shares of Common Stock, excluding the Warrants;
<PAGE>
                                       18

              (ii) bona fide public offerings or private placements through
         investment banks of international standing;

              (iii) rights to purchase shares of Common Stock pursuant to a
         Company plan for reinvestment of dividends or interest; and

              (iv) a change in the par value of shares of Common Stock
         (including a change from par value to no par value or vice versa).

              (b) Adjustment of Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of each Warrant is adjusted, as
provided under this Section 4, the Exercise Price per share of Common Stock
payable upon exercise of such Warrant shall be adjusted (calculated to the
nearest United States Dollar ("USD") $0.01) so that it shall equal the price
determined by multiplying such Exercise Price immediately prior to such
adjustment by a fraction the numerator of which shall be the number of shares of
Common Stock purchasable upon the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter. Following any adjustment to
the Exercise Price pursuant to this Section 4, the amount payable, when
adjusted, shall never be less than the par value per share of Common Stock at
the time of such adjustment.

              If after an adjustment, a Holder of a Warrant upon exercise of it
may receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
such classes based on the relative fair market value determined in good faith by
the Board. After such allocation, the exercise privilege and the Exercise Price
of each class of shares shall thereafter be subject to adjustment on terms
comparable to those applicable to shares of Common Stock under this Section 4.

              Such adjustment shall be made successively whenever any event
listed above shall occur.

              4.5 Superseding Adjustment. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in the
adjustments pursuant to this Section 4, if any thereof shall not have been
exercised, the number of Warrant Shares purchasable upon the exercise of each
Warrant shall be readjusted as if (A) the only shares of Common Stock issuable
upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (B) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised; provided, however, that no such
readjustment shall (except by reason of an intervening adjustment under Section
4.1(b)) have the effect of decreasing the number of Warrant Shares purchasable
upon the exercise of each Warrant by an amount in excess of the amount of the
adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
<PAGE>
                                       19

              4.6 Minimum Adjustment. The adjustments required by the preceding
Sections of this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of the
number of shares of Common Stock purchasable upon exercise of Warrants that
would otherwise be required shall be made (except in the case of a subdivision
or combination of shares of Common Stock, as provided for in Section 4.1(b))
unless and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% of the number of shares of
Common Stock purchasable upon exercise of Warrants immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and not
previously made, would result in a minimum adjustment. For the purpose of any
adjustment, any event shall be deemed to have occurred at the close of business
on the date of its occurrence. In computing adjustments under this Section 4,
fractional interests in shares of Common Stock shall be taken into account to
the nearest one-hundredth of a share.

              4.7 Notice of Adjustment. Whenever the number of shares of Common
Stock and other property, if any, purchasable upon exercise of Warrants is
adjusted, as herein provided, the Company shall deliver to the Warrant Agent a
certificate of a firm of internationally recognized independent accountants (who
may be the regular accountants employed by the Company) setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
the Board determined the fair market value of any evidences of indebtedness,
other securities or property or warrants or other subscription or purchase
rights), and specifying the number of shares of Common Stock purchasable upon
exercise of Warrants after giving effect to such adjustment. The Company shall
promptly mail, or at the expense of the Company cause the Warrant Agent to mail,
a copy of such certificate to each Holder in accordance with Section 6.2. The
Warrant Agent shall be authorized and fully protected in relying on such
certificate and shall be under no duty or responsibility with respect to any
such certificate, except to exhibit the same from time to time, to any Holder
desiring an inspection thereof during reasonable business hours. The Warrant
Agent shall not at any time be under any duty, obligation or responsibility to
any Holder or any other Person to determine whether any facts exist which may
require any adjustment of the number of shares of Common Stock or other stock or
property, purchasable on exercise of the Warrants, or with respect to the nature
or extent of any such adjustment when made, or with respect to the method
employed in making such adjustment or the validity or value of any shares of
Common Stock.

              4.8 Notice of Certain Transactions. In the event that the Company
shall propose (a) to pay any dividend payable in securities of any class to the
holders of its shares of Common Stock or to make any other distribution to the
holders of its shares of Common Stock, (b) to offer the holders of its shares of
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) to effect any
reclassification of its shares of Common Stock, capital reorganization or
Combination or (d) to effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or in the event of a tender offer or
exchange offer described in Section 4.2(e), the Company shall within five (5)
Business Days of making such proposal, tender offer or exchange offer send to
the Warrant Agent and the Warrant Agent shall within five (5) Business Days
thereafter send the Holders a notice (in such

<PAGE>
                                       20

form as shall be furnished to the Warrant Agent by the Company) of such proposed
action or offer, such notice to be mailed by the Company, or at the expense of
the Company by the Warrant Agent, to the Holders at their addresses as they
appear in the Warrant Register, which shall specify the record date for the
purposes of such dividend, distribution or rights, or the date. In such issuance
or event is to take place and the date of participation therein by the holders
of shares of Common Stock, if any such date is to be fixed, and shall briefly
indicate the effect of such action on the shares of Common Stock and on the
number and kind of any other shares of stock and on other property, if any, and
the number of shares of Common Stock and other property, if any, purchasable
upon exercise of each Warrant after giving effect to any adjustment which will
be required as a result of such action. Such notice shall be given by the
Company as promptly as possible and, in the case of any action covered by clause
(a) or (b) above, at least ten (10) Business Days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action
and, in the case of any other such action, at least twenty (20) Business Days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of shares of Common Stock, whichever shall
be the earlier.

              4.9 Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Section 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock as are stated
in any Warrant Certificates issued prior to the adjustment. The Company,
however, may at any time in its sole discretion make any change in the form of
Warrant Certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant Certificate,
and any Warrant Certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant Certificate or otherwise,
may be in the form as so changed.

              4.10 Challenge to Good Faith Determination. Whenever the Board
shall be required to make a determination in good faith of the Current Market
Value of any item under Section 4, such determination may be challenged in good
faith by the Majority Holders.

              4.11 Treasury Stock. The sale or other disposition of any issued
shares of Common Stock owned or held by or for the account of the Company shall
be deemed an issuance thereof and a repurchase thereof and designation of such
shares as treasury stock shall be deemed to be a redemption thereof for the
purposes of this Agreement.

              SECTION 5. Warrant Agent.

              5.1 Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with provisions of
this Agreement and the Warrant Agent hereby accepts such appointment.

              5.2 Rights and Duties of Warrant Agent. (a) In acting under this
Warrant Agreement and in connection with the Warrant Certificates, the Warrant
Agent is acting solely as agent of the Company and does not assume any
obligation or relationship or agency or trust for or with any of the holders of
Warrant Certificates or beneficial owners of Warrants or any other Person.
<PAGE>
                                       21

              (b) The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
the advice or opinion of such counsel.

              (c) The Warrant Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted by
it in reliance upon any Warrant Certificate, certificates of shares, notice,
resolution, direction, consent, certificate, waiver, order, affidavit, statement
or other paper or document believed by it to be genuine and to have been
presented, sent or signed by the proper parties.

              (d) The Warrant Agent shall be obligated to perform only such
duties as are expressly herein and in the Warrant Certificates specifically set
forth and no implied duties or obligations shall be read into this Agreement or
the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not
be under any obligation to institute any action, suit or legal proceeding or to
take any other action which may tend to involve it in any expense or liability
for which it does not receive indemnity if such indemnity is requested. The
Warrant Agent shall not be liable, accountable or under any duty or
responsibility for the use by the Company of any of the Warrant Certificates
countersigned by the Warrant Agent and delivered by it to the Holders on behalf
of the Holders pursuant to this Agreement or for the applications by the Company
of the proceeds of the Warrants. The Warrant Agent shall have no duty,
obligations or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained herein or in the Warrant
Certificates or in the case of the receipt of any written demand from a Holder
with respect to such default, including any duty, obligations or responsibility
to initiate or attempt to initiate any proceedings at law or otherwise.

              (e) The Warrant Agent shall not at any time be under any duty,
obligations or responsibility to any Holder to determine whether any facts exist
that may require an adjustment of the number of shares of Common Stock
purchasable upon exercise of each Warrant or the Exercise Price, or with respect
to the nature or extent of any adjustment when made, or with respect to the
method employed, or herein or in any supplemental agreement provided to be
employed, in making the same. The Warrant Agent shall not be responsible to
determine the Cashless Exercise Ratio. The Warrant Agent shall not be
accountable with respect to the validity or value of any shares of Common Stock
or of any securities or property which may at any time be issued or delivered
upon the exercise of any Warrant or upon any adjustment pursuant to Section 4,
and it makes no representation with respect thereto. The Warrant Agent shall not
be responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates upon
the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Section 4, or to comply with any of the covenants of the
Company contained in Section 4.

              (f) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may require
from the Company:

              (i) an Officers' Certificate of the Company stating that, in the
         opinion of the signers, all conditions precedent, if any, provided for
         in this Warrant Agreement relating to the proposed action have been
         complied with; and
<PAGE>
                                       22

              (ii) an opinion of counsel for the Company stating that, in
         the opinion of such counsel, all such conditions precedent have been
         complied with.

              Each Officers' Certificate or opinion of counsel with respect to
compliance with a condition or covenant provided for in this Warrant Agreement
shall include:

              (1) a statement that the Person making such certificate or opinion
         has read such covenant or condition;

              (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

              (3) a statement that, in the opinion of such Person, he or she has
         made such examination or investigation as is necessary to enable him or
         her to express an informed opinion as to whether or not such covenant
         or conditions has been complied with; and

              (4) a statement as to whether or not, in the opinion of such
         Person, such condition or covenant has been complied with;

provided, however, that with respect to matters of fact an opinion of counsel
may rely on an Officers' Certificate or certificates of public officials.

              The Warrant Agent shall not be liable for any action it takes or
omits to take in good faith in reliance on any such certificate or opinion.

              (g) The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder by or from the Company available for
inspection by the Holders during normal business hours at its office designated
for such purpose. The Company shall supply the Warrant Agent from time to time
with such numbers of copies of this Agreement as the Warrant Agent may request.

              5.3 Individual Rights of Warrant Agent. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or its affiliates
or become pecuniarily interested in transactions in which the Company or its
affiliates may be interested, or contract with or lend money to the Company or
its affiliates or otherwise act as fully and freely as though it were not the
warrant agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other Person.

              5.4 Warrant Agent's Disclaimer. The Warrant Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Agreement or the Warrant Certificates and it shall not be responsible for
any statement in this Agreement or the Warrant Certificates other than its
countersignature thereon.

              5.5 Compensation and Indemnity. The Company shall pay to the
Warrant Agent from time to time such compensation as the Company and the Warrant
Agent shall from time to time agree in writing for its acceptance and execution
of this Warrant Agreement and

<PAGE>
                                       23

services hereunder. The Company shall reimburse the Warrant Agent upon request
for all disbursements, expenses and advances (including reasonable fees and
expenses of counsel) incurred or made by it in the preparation, delivery,
execution, administration, and amendment of this Agreement and the exercise and
performance of its duties hereunder, in addition to the compensation for its
services, except any such disbursements, expenses and advances as may be
attributable to the Warrant Agent's or any Agent's gross negligence or bad
faith. Such expenses shall include the reasonable compensation, disbursements,
and expenses of the Warrant Agent's accountants, experts and counsel.

              The Company shall indemnify each of the Warrant Agent and any
predecessor Warrant Agent for, and hold them harmless against, any and all loss,
damage, claim, judgment, fine, penalty, demand, settlement, cost, expense or
liability including taxes (the Warrant Agent shall have no duty or obligation
under this Section 5 or any other similar provision of this Agreement which
requires the payment by a holder of a Warrant of applicable taxes or
governmental charges unless and until it is satisfied that all such taxes and/or
governmental charges have been paid in full other than taxes or charges based on
the income of the Warrant Agent) incurred by the Warrant Agent without gross
negligence, willful misconduct or bad faith on its part in connection with
acceptance of administration of this trust and its duties under this Warrant
Agreement, including the reasonable costs, expenses and attorneys' fees and
expenses of defending itself against any claim of liability arising hereunder.
The Warrant Agent shall notify the Company promptly of any claim asserted
against the Warrant Agent for which it may seek indemnity. However, the failure
by the Warrant Agent to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Warrant
Agent shall cooperate in the defense (and may employ its own counsel
satisfactory to the Warrant Agent) at the Company's expense. The costs and
expenses incurred in enforcing the right of indemnifications shall be paid by
the Company. The Warrant Agent may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its written consent which consent shall not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Warrant Agent as a result of the
violation of this Warrant Agreement by the Warrant Agent provided that such
violation arose from the Warrant Agent's gross negligence or bad faith.

              Anything to the contrary notwithstanding, in no event shall the
Warrant Agent be liable for special, punitive, indirect consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Warrant Agent has been advised of the likelihood of
such loss or damage. Absent gross negligence or bad faith, any liability of the
Warrant Agent under this Warrant Agreement will be limited to the amount of fees
paid by the Company to the Warrant Agent. The Company's payment obligations
pursuant to this Section 5.5 shall survive the termination of this Agreement or
the expiration of the Warrants.

              To secure the Company's payment obligations in this Section 5.5,
the Warrant Agent shall have a senior lien against all money or property held or
collected by the Warrant Agent in its capacity as Warrant Agent.
<PAGE>
                                       24

              5.6 Successor Warrant Agent. (a) The Company agrees for the
benefit of the Holders that there shall at all times be a Warrant Agent
hereunder until all the Warrants have been exercised or are no longer
exercisable.

              (b) The Warrant Agent may at any time resign by giving written
notice to the Company of such intention on its part, specifying the date on
which its desired resignation shall become effective; provided, however, that
such date shall not be less than thirty (30) days after the date on which such
notice is given unless the Company otherwise agrees. The Warrant Agent hereunder
may be removed at any time by filing with it of an instrument in writing signed
by or on behalf of the Company and specifying such removal and the date when it
shall become effective, which date shall not be less than thirty (30) days after
such notice is given unless the Warrant Agent otherwise agrees. Any removal
under this Section 5.6. shall take effect upon the appointment by the Company as
hereinafter provided of a successor Warrant Agent (which shall be a Person
authorized under the laws of the jurisdiction of its organization to exercise
corporate trust powers) and the acceptance of such appointment by such successor
Warrant Agent.

              (c) In case at any time the Warrant Agent shall resign, or shall
be removed, or shall become incapable of acting, or shall be adjudged a bankrupt
or insolvent, or shall commence a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or under any other applicable Federal or
state bankruptcy, insolvency or similar law or shall consent to the appointment
of or taking possession by a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Warrant Agent or its property or
affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall take corporate action in furtherance of any such action, or a decree or
order for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law; or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant Agent
or of its property or affairs for the purpose of rehabilitation, conservation,
winding up of or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be appointed by the Company by an instrument in writing, filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
the Warrant Agent shall cease to be Warrant Agent hereunder; provided, however,
that in the event of the resignation of the Warrant Agent hereunder, such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant's Agent's notice of resignation and (ii) the appointment and acceptance
of a successor Warrant Agent hereunder. If the Company shall fail to appoint a
successor Warrant Agent within this thirty (30) day period, then the registered
holder of any warrant certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent.

              (d) Any successor Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the rights and obligations of such predecessor

<PAGE>
                                       25

with like effect as if originally named as Warrant Agent hereunder, and such
predecessor, upon full payment of its charges and disbursements then unpaid,
shall thereupon become obligated to transfer, deliver and pay over, and such
successor Warrant Agent shall be entitled to receive, all monies, securities and
other property on deposit with or held by such predecessor, as Warrant Agent
hereunder.

              (e) Any Person into which the Warrant Agent hereunder may be
merged or consolidated, or any Person resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any Person to which the Warrant
Agent shall sell or otherwise transfer all or substantially all its corporate
trust business, provided that it shall be qualified as aforesaid, shall be the
successor Warrant Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto.

              SECTION 6. Miscellaneous.

              6.1 Reports. (a) The Company will file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and the
Company has a class of securities registered under the Exchange Act, (i) all
annual and quarterly financial statements and other financial information
required to be a filed with the Commission under the Exchange Act and (ii) all
current reports that are required to be filed with the Commission on Form 8-K.

              (b) The Company will also be required (a) to file with the Warrant
Agent, and provide to each holder of the Warrants or Warrant Shares, without
cost to such holder, copies of such reports and documents within 15 days after
the date on which the Company files such reports and documents with the
Commission or the date on which the Company is required to file such reports and
documents.

              6.2 Notices to the Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
Holder of any Warrant Certificate to or on the Company shall be sufficiently
given or made (i) five business days after deposited in the mail, first class or
registered, postage prepaid, (ii) one business day after being timely delivered
to a next-day air courier or (ii) when receipt is acknowledged by the addressee,
if telecopied, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:

              Pathmark Stores, Inc.
              200 Milik Street
              Carteret, NJ 07008
              Attention: Marc A. Strassler, Esq.
                         Vice President, Secretary and General Counsel
              Telecopy:  (732) 499-3000

              with a copy to:
<PAGE>
                                       26

              Shearman & Sterling
              599 Lexington Avenue
              New York, New York  10022
              Attention: John D. Morrison, Esq.
              Telecopy:  (212) 848-7179

              In case the Company shall fail to maintain such office or agency
or shall fail to give such notice of the location or of any change in the
location thereof, presentations may be made and notices and demands may be
served at the designated office of the Warrant Agent.

              Any notice pursuant to this Agreement to be given by the Company
or by the Holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given or made (i) five business days after deposited in the mail,
first-class or registered, postage prepaid, (ii) one business day after being
timely delivered to a next-day air courier or (ii) when receipt is acknowledged
by the addressee, if telecopied, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:

              ChaseMellon Shareholder Services, L.L.C.
              44 Wall Street - 6th Floor
              New York, NY 10005
              Attention:  Relationship Manager

              with a copy to:

              ChaseMellon Shareholder Services, L.L.C.
              85 Challenger Road
              Ridgefield Park, NJ 07660
              Attention:  General Counsel

              6.3 Supplements and Amendments. This Agreement may be amended by
the parties hereto without the consent of any Holder for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Warrant Agent may
deem necessary or desirable; provided, however, that such action shall not
affect adversely the rights of the Holders or the Warrant Agent. Any amendment
or supplement to this Agreement that has or would have an adverse effect on the
interests of the Holders or the Warrant Agent shall require the written consent
of the Warrant Agent (which shall not be unreasonably withheld) and the Holders
of a majority of the outstanding Warrants. The consent of each holder of
Warrants affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of shares of Common Stock
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein) or the exercise period with respect to the Warrants
would be shortened. In determining whether the Holders of the required number of
Warrants have concurred in any direction, waiver or consent, Warrants owned by
the Company or by any Affiliate of the Company shall be disregarded and deemed
not to be outstanding, except that, for the purpose of determining whether the
Warrant Agent shall be authorized and protected in relying on any such
direction, waiver or consent, only Warrants which the Warrant Agent knows are so
owned shall

<PAGE>
                                       27

be so disregarded. Also, subject to the foregoing, only Warrants outstanding at
the time shall be considered in any such determination.

              6.4 Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.

              6.5 Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.

              6.6 Termination. This Agreement (other than the Company's
obligations with respect to Warrants previously exercised) shall terminate at
5:00 p.m., New York City time on the Expiration Date.

              6.7 Governing Law. THIS WARRANT AGREEMENT AND THE WARRANTS SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

              6.8 Submission to Jurisdiction; Appointment of Agent for Service;
Waiver. To the fullest extent permitted by applicable law, the Company
irrevocably submits to the non-exclusive jurisdiction of any federal or state
court in the Borough of Manhattan in the City of New York, County and State of
New York, United States of America, in any suit or proceeding based on or
arising under this Warrant Agreement and the Warrants, and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in any
such court. The Company, to the fullest extent permitted by applicable law,
irrevocably and fully waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding and hereby irrevocably designates and
appoints CT Corporation (the "Authorized Agent"), as its authorized agent upon
whom process may be served in any such suit or proceeding. The Company
represents that it has notified the Authorized Agent of such designation and
appointment and that the Authorized Agent has accepted the same in writing. The
Company hereby irrevocably authorizes and directs its Authorized Agent to accept
such service. The Company further agrees that service of process upon its
Authorized Agent and written notice of said service to the Company mailed by
first class mail or delivered to its Authorized Agent shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of any Person to serve process
in any other manner permitted by law. The Company agrees that a final action in
any suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other lawful manner.

              The Company hereby irrevocably waives, to the extent permitted by
law, any immunity to jurisdiction to which it may otherwise be entitled
(including, without limitation, immunity to pre-judgment attachment,
post-judgment attachment and execution) in any legal

<PAGE>
                                       28

suit, action or proceeding against it arising out of or based on this Warrant
Agreement, the Warrant Certificates or the transactions contemplated hereby.

              The provisions of this Section 6.8 are intended to be effective
upon the execution of this Warrant Agreement and the Warrant Certificates
without any further action by the Company or the Warrant Agent and the
introduction of a true copy of this Warrant Agreement into evidence shall be
conclusive and final evidence as to such matters.

              6.9 Benefits of this Agreement. (a) Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Warrant
Agent and the holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent and the holders of the
Warrant Certificates.

              (b) Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company, to share in the assets of the Company in the event of
the liquidation, dissolution or winding up of the Company's affairs or any other
matter or to receive any notice of any proceedings of the Company, except as may
be specifically provided for herein.

              (c) All rights of action in respect of this Agreement are vested
in the Holders of the Warrants, and any Holder of any Warrant, without the
consent of the Warrant Agent or the Holder of any other Warrant, may, on such
Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's rights hereunder,
including the right to exercise, exchange or surrender for purchase such
Holder's Warrants in the manner provided in this Agreement.

              6.10 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.

              6.11 Table of Contents. The table of contents and headings of the
Sections of this Agreement have been inserted for convenience of reference only,
are not intended to be considered a part hereof and shall not modify or restrict
any of the terms and provisions hereof.

<PAGE>

              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.

                                   PATHMARK STORES, INC.

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

                                   Chase Mellon Shareholder Services, L.L.C., as
                                   Warrant Agent

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

<PAGE>

                                                                    EXHIBIT A TO
                                                               WARRANT AGREEMENT

                  [FORM OF FACE OF GLOBAL WARRANT CERTIFICATE]

              UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.9 AND 2.10 OF THE
WARRANT AGREEMENT.

<PAGE>

CUSIP No.
         -------------
No.                                                                     Warrants
   -------                                                         -----

                               WARRANT CERTIFICATE

                              PATHMARK STORES, INC.

              THIS CERTIFIES THAT, ______________, or its registered assigns, is
the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement dated as of September 19, 2000 (the "Warrant Agreement") between the
Company and Chase Mellon Shareholder Services, L.L.C., as Warrant Agent (the
"Warrant Agent", which term includes any successor Warrant Agent under the
Warrant Agreement), to purchase from Pathmark Stores, Inc., a company organized
under the laws of Delaware (the "Company"), one Warrant Share per Warrant at the
exercise price of $22.31 per share (the "Exercise Price"), or by Cashless
Exercise. This Warrant is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of the Company, the
Warrant Agent and the Holders of the Warrants. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. This Warrant Certificate shall terminate and become null and void as
of 5:00 p.m. on September 19, 2010 (the "Expiration Date") or upon the exercise
hereof as to all the shares of Common Stock subject hereto. The Exercise Price
and the number of Warrant Shares purchasable upon exercise of the Warrants shall
be subject to adjustment from time to time as set forth in the Warrant
Agreement.

              Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.

              This Warrant Certificate shall not be valid unless countersigned
by the Warrant Agent, as such term is used in the Warrant Agreement.

              THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
WARRANT AGREEMENT AND THE WARRANTS WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.

<PAGE>
                                       2

              IN WITNESS WHEREOF, Pathmark Stores, Inc. has caused this Warrant
Certificate to be executed on behalf of the Company by two Officers of the
Company.

Dated:  _____________, 2000

                                         PATHMARK STORES, INC.

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

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

<PAGE>
                                       3

Countersigned:

Chase Mellon Shareholder Services, L.L.C.,
as Warrant Agent

By
  ----------------------------------------
           Authorized Signatory

<PAGE>

                    [FORM OF REVERSE OF WARRANT CERTIFICATE]

              This Warrant Certificate is issued under and in accordance with
and incorporates by reference the Warrant Agreement. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Warrant Agent at Chase Mellon Shareholder Services, L.L.C., 44
Wall Street, New York, New York, 10005.

              Warrants may be exercised at any time commencing at the opening of
business on the Exercisability Date and until 5:00 p.m. New York City time on
the Expiration Date. Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by surrender of this Warrant
Certificate with the form of election to purchase Warrant Shares attached hereto
duly executed and with the simultaneous payment of the Exercise Price in cash to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made in cash or by certified or official bank check payable to the order of
the Company or by wire transfer of funds to an account designated by the Company
for such purpose. Payment by Cashless Exercise shall be made by the surrender of
a Warrant or Warrants represented by one or more Warrant Certificates and
without payment of the Exercise Price in cash, in exchange for the issuance of
such number of shares of Common Stock equal to the product of (1) the number of
shares of Common Stock for which such Warrant would otherwise then be nominally
exercised if payment of the Exercise Price were being made in cash and (2) the
Cashless Exercise Ratio.

              The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the number of shares of Common Stock issuable upon
the exercise of each Warrant shall, subject to certain conditions, be adjusted.

              In the event the Company enters into a Combination following which
this Warrant remains outstanding, the Holder hereof will be entitled to receive
upon exercise of the Warrants the shares of capital stock or other securities or
other property of such surviving entity as such Holder would have been entitled
to receive upon or as the result of such Combination had the Holder exercised
its Warrants immediately prior to such Combination; provided, however, that in
the event that, in connection with such Combination, consideration to holders of
shares of Common Stock in exchange for their shares is payable solely in cash or
in the event of the dissolution, liquidation or winding-up of the Company, the
Holder hereof will be entitled to receive distributions on an equal basis with
the holders of shares of Common Stock or other securities issuable upon exercise
of the Warrants, as if the Warrants had been exercised immediately prior to such
events, less the Exercise Price.

              The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 3.6 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.

              Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate in
respect of the Warrant Shares as to which the Warrants shall not have been
exercised. This Warrant Certificate may be exchanged at the

<PAGE>
                                       2

designated office of the Warrant Agent by presenting this Warrant Certificate
properly endorsed with a request to exchange this Warrant Certificate for other
Warrant Certificates evidencing an equal number of Warrants. In the event any
fractional Warrant Shares would have to be issued upon the exercise of the
Warrants, the Company may, at its option, pay an amount in cash equal to the
Current Market Value for one Warrant Share on the Business Day immediately
preceding the date the Warrant is exercised, multiplied by such fraction,
computed to the nearest whole U.S. Dollar in lieu of issuing such fractional
share.

              The Warrants do not entitle any holder hereof to any of the rights
of a stockholder of the Company. All shares of Common Stock issuable by the
Company upon the exercise of the Warrants shall, upon such issue, be duly and
validly issued and fully paid and nonassessable.

              The Holder in whose name the Warrant Certificate is registered may
be deemed and treated by the Company and the Warrant Agent as the absolute owner
of the Warrant Certificate for all purposes whatsoever and neither the Company
nor the Warrant Agent shall be affected by notice to the contrary.

              This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

<PAGE>

                   FORM OF ELECTION TO PURCHASE WARRANT SHARES
                 (to be executed only upon exercise of Warrants)

                                 [        ]

              The undersigned hereby irrevocably elects to exercise
_____________ Warrants at an exercise price per Warrant Share of $_________ to
acquire an equal number of Warrant Shares on the terms and conditions specified
in the within Warrant Certificate and the Warrant Agreement therein referred to,
surrenders this Warrant Certificate and all right, title and interest therein to
___________________, and directs that the shares of Common Stock deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.

Date:  ______________, ____

                                                                               1
                                               ---------------------------------
                                               (Signature of Owner)

                                               ---------------------------------
                                               (Street Address)

                                               ---------------------------------
                                               (City)    (State)      (Zip Code)

                                               Signature Guaranteed by:

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

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

1     The signature must correspond with the name as written upon the face of
      the within Warrant Certificate in every particular, without alteration or
      enlargement or any change whatever, and must be guaranteed by a national
      bank or trust company or by a member firm of any national securities
      exchange.

<PAGE>
                                                                               2

Securities and/or check to be issued to:

Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:

Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:

         Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:

<PAGE>

                                   SCHEDULE A

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL WARRANTS

              The following increases or decreases in this Global Warrant have
been made:

<TABLE>
<CAPTION>
Date of Exchange          Amount of decrease     Amount of increase in   Number of Warrants     Signature of
                          in Number of           Number of Warrants of   of this Global         authorized officer
                          Warrants of this       this Global Warrant     Warrant following      of Warrant Agent
                          Global Warrant                                 such decrease or
                                                                         increase
<S>                       <C>                    <C>                     <C>                    <C>

</TABLE>

<PAGE>

                                                                    EXHIBIT B TO
                                                               WARRANT AGREEMENT

                       [FORM OF FACE OF DEFINITIVE WARRANT
                                  CERTIFICATE]

CUSIP No.
         -----------------
No.                                                                     Warrants
   ---------                                                     -------

                               WARRANT CERTIFICATE

                              PATHMARK STORES, INC.

              THIS CERTIFIES THAT, ______________, or its registered assigns, is
the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement dated as of September 19, 2000 (the "Warrant Agreement") between the
Company and Chase Mellon Shareholder Services, L.L.C., as Warrant Agent (the
"Warrant Agent", which term includes any successor Warrant Agent under the
Warrant Agreement), to purchase from Pathmark Stores, Inc., a company organized
under the laws of Delaware (the "Company"), one Warrant Share per Warrant at the
exercise price of $22.31 per share (the "Exercise Price"), or by Cashless
Exercise. This Warrant is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of the Company, the
Warrant Agent and the Holders of the Warrants. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. This Warrant Certificate shall terminate and become null and void as
of 5:00 p.m. on September 19, 2010 (the "Expiration Date") or upon the exercise
hereof as to all the shares of Common Stock subject hereto. The Exercise Price
and the number of Warrant Shares purchasable upon exercise of the Warrants shall
be subject to adjustment from time to time as set forth in the Warrant
Agreement.

              Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.

              This Warrant Certificate shall not be valid unless countersigned
by the Warrant Agent, as such term is used in the Warrant Agreement.

              The internal laws of the State of New York shall govern the
Warrant Agreement and the Warrants without regard to conflict of law provisions
thereof.
<PAGE>
                                        2

              IN WITNESS WHEREOF, Pathmark Stores, Inc. has caused this Warrant
Certificate to be executed on behalf of the Company by two Officers of the
Company.

Dated:  September 19, 2000

                                         PATHMARK STORES, INC.

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

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:Exhibit 10.1

                                                                  EXECUTION COPY

                              PATHMARK STORES, INC.

                                  $600,000,000

                                Credit Agreement

                         dated as of September 19, 2000

                            The Lenders Party Hereto

                              Chase Securities Inc.
                                   as Arranger

                            The Chase Manhattan Bank
                             as Administrative Agent

                               Fleet National Bank
                              as Syndication Agent

                            First Union National Bank
                             as Documentation Agent

                            GMAC Business Credit, LLC
                            as Senior Managing Agent

<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

                                    ARTICLE I

                                   Definitions

SECTION 1.01.  Defined Terms................................................1
SECTION 1.02.  Classification of Loans and Borrowings......................28
SECTION 1.03.  Terms Generally.............................................29
SECTION 1.04.  Accounting Terms; GAAP......................................29

                                   ARTICLE II

                                   The Credits

SECTION 2.01.  Commitments.................................................29
SECTION 2.02.  Loans and Borrowings........................................30
SECTION 2.03.  Requests for Borrowings.....................................30
SECTION 2.04.  Swingline Loans.............................................31
SECTION 2.05.  Letters of Credit...........................................33
SECTION 2.06.  Funding of Borrowings.......................................37
SECTION 2.07.  Interest Elections..........................................38
SECTION 2.08.  Termination and Reduction of Commitments....................40
SECTION 2.09.  Repayment of Loans; Evidence of Debt........................40
SECTION 2.10.  Amortization of Term Loans..................................41
SECTION 2.11.  Prepayment of Loans.........................................44
SECTION 2.12.  Fees........................................................47
SECTION 2.13.  Interest....................................................48
SECTION 2.14.  Alternate Rate of Interest..................................49
SECTION 2.15.  Increased Costs.............................................50
SECTION 2.16.  Break Funding Payments......................................51
SECTION 2.17.  Taxes.......................................................52
SECTION 2.18.  Payments Generally; Pro Rata Treatment;
               Sharing of Set-offs; Partial Mortgages......................53
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders..............55

                                      (i)
<PAGE>

                                   ARTICLE III
                                                                          Page

                         Representations and Warranties

SECTION 3.01.  Organization; Powers.......................................56
SECTION 3.02.  Authorization; Enforceability..............................56
SECTION 3.03.  Governmental Approvals; No Conflicts.......................57
SECTION 3.04.  Financial Condition; No Material Adverse Change............57
SECTION 3.05.  Properties.................................................58
SECTION 3.06.  Litigation and Environmental Matters, Etc..................58
SECTION 3.07.  Compliance with Laws and Agreements........................59
SECTION 3.08.  Investment and Holding Company Status......................59
SECTION 3.09.  Taxes......................................................59
SECTION 3.10.  ERISA......................................................59
SECTION 3.11.  Disclosure.................................................60
SECTION 3.12.  Subsidiaries...............................................60
SECTION 3.13.  Insurance..................................................60
SECTION 3.14.  Labor Matters..............................................60
SECTION 3.15.  Solvency.................................................. 61
SECTION 3.16.  Security Documents.........................................61
SECTION 3.17.  Federal Reserve Regulations................................62

                                   ARTICLE IV

                                   Conditions

SECTION 4.01.  Effective Date.............................................62
SECTION 4.02.  Initial and Subsequent Extensions of Credit................66

                                    ARTICLE V

                              Affirmative Covenants

SECTION 5.01.  Financial Statements and Other Information.................67
SECTION 5.02.  Notices of Material Events.................................69
SECTION 5.03.  Information Regarding Collateral...........................69
SECTION 5.04.  Existence; Conduct of Business.............................70
SECTION 5.05.  Payment of Obligations.....................................70
SECTION 5.06.  Maintenance of Properties..................................70
SECTION 5.07.  Insurance..................................................70
SECTION 5.08.  Casualty and Condemnation..................................71
SECTION 5.09.  Books and Records; Inspection..............................71
SECTION 5.10.  Compliance with Laws.......................................72
SECTION 5.11.  Use of Proceeds and Letters of Credit......................72

                                      (ii)

<PAGE>
                                                                          Page

SECTION 5.12.  Subsidiaries...............................................72
SECTION 5.13.  Further Assurances.........................................73

                                   ARTICLE VI

                               Negative Covenants

SECTION 6.01.  Indebtedness; Certain Equity Securities....................75
SECTION 6.02.  Liens......................................................77
SECTION 6.03.  Fundamental Changes........................................78
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions..79
SECTION 6.05.  Asset Sales................................................81
SECTION 6.06.  Sale/Leaseback Transactions................................82
SECTION 6.07.  Hedging Agreements.........................................82
SECTION 6.08.  Restricted Payments........................................82
SECTION 6.09.  Transactions with Affiliates...............................83
SECTION 6.10.  Restrictive Agreements.....................................83
SECTION 6.11.  Amendment of Material Documents............................84
SECTION 6.12.  Sale or Discount of Receivables............................84
SECTION 6.13.  Fiscal Year................................................84
SECTION 6.14.  Capital Expenditures.......................................84
SECTION 6.15.  Leverage Ratio.............................................85
SECTION 6.16.  Consolidated Interest and Rental Expense Coverage Ratio....86
SECTION 6.17.  Minimum Consolidated EBITDA................................86

                                   ARTICLE VII

                               Events of Default..........................87

                                  ARTICLE VIII

                           The Administrative Agent.......................89

                                   ARTICLE IX

                                  Miscellaneous

SECTION 9.01.  Notices....................................................92
SECTION 9.02.  Waivers; Amendments........................................93
SECTION 9.03.  Expenses; Indemnity; Damage Waiver.........................95
SECTION 9.04.  Successors and Assigns.....................................96
SECTION 9.05.  Survival..................................................100
SECTION 9.06.  Counterparts; Integration; Effectiveness..................100

                                     (iii)
<PAGE>
                                                                          Page

SECTION 9.07.  Severability................................................101
SECTION 9.08.  Right of Setoff.............................................101
SECTION 9.09.  Governing Law; Jurisdiction; Consent to Service of Process..101
SECTION 9.10.  WAIVER OF JURY TRIAL........................................102
SECTION 9.11.  Headings....................................................102
SECTION 9.12.  Confidentiality.............................................102
SECTION 9.13.  Interest Rate Limitation....................................103

SCHEDULES:

Schedule 1.01(a)      --   Mortgaged Properties
Schedule 1.01(b)      --   Stores Held for Sale
Schedule 2.01         --   Commitments
Schedule 3.04(c)      --   Certain Material Adverse Changes
Schedule 3.05(c)      --   Real Property
Schedule 3.05(d)      --   Condemnation Proceedings and Sales
Schedule 3.06         --   Disclosed Matters
Schedule 3.12         --   Subsidiaries
Schedule 3.13         --   Insurance
Schedule 6.01         --   Existing Indebtedness
Schedule 6.02         --   Existing Liens and Covered Real Property
Schedule 6.04         --   Existing Investments
Schedule 6.10         --   Existing Restrictions

EXHIBITS:

Exhibit A         --  Form of Assignment and Acceptance
Exhibit B-1       --  Form of Opinion of Shearman & Sterling
Exhibit B-2       --  Form of Opinion of General Counsel of the Borrower
Exhibit C         --  Form of Opinion of Local Counsel
Exhibit D         --  Form of Guarantee Agreement
Exhibit E         --  Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F         --  Form of Pledge Agreement
Exhibit G         --  Form of Security Agreement
Exhibit H         --  Form of Mortgage

                                      (iv)

<PAGE>

         CREDIT AGREEMENT dated as of September __, 2000, among PATHMARK STORES,
INC., the LENDERS party hereto, THE CHASE MANHATTAN BANK, as Administrative
Agent, FLEET NATIONAL BANK as Syndication Agent, FIRST UNION NATIONAL BANK, as
Documentation Agent, GMAC BUSINESS CREDIT, LLC, as Senior Managing Agent.

         The parties hereto agree as follows:

                                    ARTICLE I

                                   Definitions

         SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

          "Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 2 -

         "Applicable Percentage" means (a) with respect to any Revolving Lender
for purposes of Section 2.04, 2.05 or Section 9.03(c), to the extent relating to
Letters of Credit or Swingline Loans, the percentage of the total Revolving
Commitments represented by such Lender's Revolving Commitment and (b) with
respect to any Lender in respect of any indemnity claim under Section 9.03(c)
with respect to the Administrative Agent, the percentage of the total of the
Revolving Exposures, outstanding Term Loans and unused Commitments of all
Classes hereunder represented by the aggregate amount of such Lender's Revolving
Exposure, outstanding Term Loans and unused Commitments. If the Revolving
Commitments hereunder have terminated or expired, the Applicable Percentages
shall be determined based upon the Revolving Commitments most recently in
effect, giving effect to any assignments.

         "Applicable Rate" means, for any day, with respect to any Loan, the
applicable rate per annum set forth below under the caption "ABR Spread
Revolving Credit and Tranche A Term Loans", "ABR Spread Tranche B Term Loans",
"Eurodollar Spread Revolving Credit and Tranche A Term Loans" or "Eurodollar
Spread Tranche B Term Loans", as the case may be, in each case based upon the
Leverage Ratio as of the most recent determination date, provided that until the
delivery to the Administrative Agent, pursuant to Section 5.01(b), of the
Borrower's consolidated financial statements for the Borrower's first full
fiscal quarter ending after the Effective Date, the "Applicable Rate" for
Revolving Credit and Tranche A Term Loans and Tranche B Term Loans shall be the
applicable rate per annum set forth below with respect to Category 1:

<TABLE>
<CAPTION>

                                   Revolving Credit and               Tranche B Term Loans
        Leverage Ratio             Tranche A Term Loans

                                   ABR           Eurodollar           ABR           Eurodollar
                                  Spread           Spread           Spread            Spread

<S>                              <C>            <C>                <C>             <C>
          Category 1
   Greater than or equal to       2.00%            3.00%             3.00%            4.00%
          3.00 to 1

          Category 2              1.75%            2.75%             2.75%            3.75%
     Less than 3.00 to 1

          Category 3              1.50%            2.50%             2.75%            3.75%
     Less than 2.50 to 1

          Category 4              1.25%            2.25%             2.75%            3.75%
    Equal to or less than
         2.00 to 1.00

</TABLE>

         For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of each Fiscal Year based upon
the Borrower's consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 3 -

period commencing on and including the third day after the date of delivery to
the Administrative Agent of such consolidated financial statements indicating
such change and ending on the date immediately preceding the effective date of
the next such change, provided that the Leverage Ratio shall be deemed to be in
Category 1 (i) at any time that an Event of Default has occurred and is
continuing or (ii) if the Borrower fails to deliver the consolidated financial
statements required to be delivered by it pursuant to Section 5.01(a) or (b),
during the period from the expiration of the time for delivery thereof until
such consolidated financial statements are delivered.

         "Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States, provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.

         "Asset Sale" means (a) the sale by the Borrower or any Subsidiary to
any Person other than the Borrower or any wholly owned Subsidiary of (i) any of
the stock of any Subsidiary or (ii) any other assets (whether tangible or
intangible) of the Borrower or any Subsidiary and (b) the assignment by the
Borrower or any Subsidiary to any Person other than the Borrower or any wholly
owned Subsidiary of any lease, whether a Capital Lease Obligation or an
Operating Lease, to which it is a party as lessee.

         "Asset Swap" means any transaction or series of related transactions
pursuant to which the Borrower or one or more of the Subsidiaries shall
exchange, with a Person not a Subsidiary, one or more stores or facilities owned
by them for one or more stores or facilities owned by third parties where no
more than 10% of the aggregate consideration delivered by the Borrower and the
Subsidiaries shall consist of consideration other than the stores and facilities
being so exchanged.

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

         "Bankruptcy Code" means the Federal Bankruptcy Code of 1978, as amended
from time to time.

         "Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 4 -

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

         "Borrower" means Pathmark Stores, Inc., a Delaware corporation.

          "Borrowing" means (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.

         "Capital Expenditures" means, for any period, the sum (without
duplication) of (i) the additions to property, plant and equipment and other
capital expenditures of the Borrower and its consolidated Subsidiaries that are
(or would be) set forth in a consolidated statement of cash flows of the
Borrower for such period prepared in accordance with GAAP and (ii) Capital Lease
Obligations incurred by the Borrower and its consolidated Subsidiaries during
such period. For purposes of this definition, (a) the purchase price of any
Equipment that is purchased simultaneously with the trade-in or other
disposition in the ordinary course of business of existing Equipment or with
insurance proceeds received by the Borrower or any of the Subsidiaries in
respect of the actual or constructive total loss of any Equipment shall be
included in Capital Expenditures only to the extent of the gross amount of such
purchase price less the credit granted by the seller of such Equipment for the
Equipment being traded in at such time or the amount of proceeds from such other
disposition or the amount of such insurance proceeds, as the case may be, and
(b) the amount of any expenditure for any Equipment (the "New Equipment") that
replaces existing leased Equipment (the "Leased Equipment") that was purchased
at the end of the applicable lease term and then subsequently sold for a greater
amount shall be included in Capital Expenditures only to the extent of the gross
amount of the expenditure for the New Equipment less the excess of the proceeds
received by the Borrower or any of the Subsidiaries from the sale of the Leased
Equipment over the gross amount of the purchase price of the Leased Equipment.

         "Capital Lease" of any Person means any lease of real or personal
property or a combination thereof, by such Person as Lessee that is required to
be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 5 -

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any Capital Lease, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.

         "Carryover Letter of Credit" has the meaning assigned to such term in
Section 2.05(k).

         "Cash-Pay Preferred Stock" means Preferred Stock (i) that requires, or
would require, periodic payment of cash dividends or (ii) that requires, or
would require, the issuer thereof to make any other payment (including in
respect of any sinking fund or similar deposit) in cash under any circumstances
(whether as dividends, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such stock or otherwise) on any
date prior to the date that is six months after the Tranche B Maturity Date.

         "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C.ss. 9601 et seq.

         "Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
the two largest shareholders of the Borrower on the Effective Date, of shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower or (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated.

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chapter 11 Cases" means the cases filed by the Borrower and certain of
the Subsidiaries and Affiliates under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware on July 12, 2000.

         "Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B Term Loans or Swingline Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a Revolving
Commitment, Tranche A Commitment or Tranche B Commitment.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 6 -

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Security Document.

         "Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by the Borrower
or any Subsidiary in the ordinary course of business of the Borrower or such
Subsidiary.

         "Commitment" means a Revolving Commitment, Tranche A Commitment or
Tranche B Commitment, or any combination thereof (as the context requires).

         "Consolidated Capital Lease Rental Payments" means, for any period, the
aggregate amount of all rents paid or payable by the Borrower and its
consolidated Subsidiaries on a consolidated basis during such period under all
Capital Leases to which the Borrower or any Subsidiary is a party as lessee (in
each case net of any sublease income received or receivable by the Borrower and
its consolidated Subsidiaries on a consolidated basis during that period with
respect thereto), excluding, however, (a) any amount of rent for which the
Borrower or any Subsidiary is contingently liable under any lease as a result of
the assignment thereof by the Borrower or such Subsidiary to any Person and (b)
any tax, insurance, maintenance and similar expenses that the Borrower or any
Subsidiary is obligated to pay as lessee under the terms of the applicable
lease.

         "Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the aggregate
amount of letter of credit fees paid during such period, (c) provisions for
taxes based on income for such period, (d) all amounts attributable to
depreciation and amortization for such period, (e) other non-cash items
(including charges for inventory accounted for on a last in, first out basis)
reducing Consolidated Net Income for such period and (f) all extraordinary and
unusual charges during such period, and minus, without duplication and to the
extent increasing Consolidated Net Income for such period, (g) all extraordinary
and unusual gains during such period and (h) other non-cash items (other than
pension income related to the Borrower's qualified pension plan, to the extent
such pension income constitutes a non-cash item) during such period, all as
determined on a consolidated basis with respect to the Borrower and its
consolidated Subsidiaries in accordance with GAAP.

         "Consolidated EBITDAR" means, for any period, Consolidated EBITDA for
such period, plus, without duplication, Consolidated Operating Lease Rental
Payments for such period.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 7 -

         "Consolidated Interest Expense" means, for any period, the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations), accrued or paid by the Borrower and its
consolidated Subsidiaries during such period, determined on a consolidated basis
in accordance with GAAP, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Hedging Agreements, but excluding (a) any amounts referred
to in Section 2.12 payable to the Administrative Agent and the Lenders on or
before the Effective Date and (b) any deferred financing expenses amortized by
the Borrower and the Subsidiaries during such period. Notwithstanding the
foregoing, if, as at any date (a "calculation date"), fewer than four complete
consecutive fiscal quarters have elapsed subsequent to the Effective Date,
Consolidated Interest Expense shall be calculated only for the portion of such
period commencing on the Effective Date and ending on the calculation date and
shall then be annualized by multiplying the amount of such Consolidated Interest
Expense by a fraction, the numerator of which is 365 and the denominator of
which is the number of days during the period commencing on the day immediately
following the Effective Date through and including the calculation date.

         "Consolidated Net Income" means, for any period, net income or loss of
the Borrower and its consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded (a) the income (or loss) of any Person in which any other Person (other
than the Borrower or any of its consolidated Subsidiaries or any director
holding qualifying shares in compliance with applicable law) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of its consolidated Subsidiaries by such
Person during such period and (b) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Borrower or any of its consolidated Subsidiaries or the date that Person's
assets are acquired by the Borrower or any of its consolidated Subsidiaries.

         "Consolidated Operating Lease Rental Payments" means, for any period,
the aggregate amount of all rents paid or payable by the Borrower and its
consolidated Subsidiaries on a consolidated basis during such period under all
Operating Leases to which the Borrower or any Subsidiary is a party as lessee
(in each case net of any sublease income received or receivable by the Borrower
and its consolidated Subsidiaries on a consolidated basis during that period
with respect thereto), excluding, however, (a) any amount of rent for which the
Borrower or any Subsidiary is contingently liable under any lease as a result of
the assignment thereof by the Borrower or such Subsidiary to any Person and (b)
any tax, insurance, maintenance and similar expenses that the Borrower or any
Subsidiary is obligated to pay as lessee under the terms of the applicable
lease.

         "Consolidated Rental Payments" means, for any period, Consolidated
Capital Lease Rental Payments for such period plus Consolidated Operating Lease
Rental Payments for such period.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 8 -

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.

         "Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "DIP Facility" means the debtor-in-possession facility under Section
364(c)(1), (2) and (3), and Section 364(d)(1) of the Bankruptcy Code provided to
the Borrower and certain of the Subsidiaries in the Chapter 11 Cases.

         "Disclosed Matters" has the meaning assigned to such term in Section
3.06(b).

         "Disclosure Statement" means the Disclosure Statement, dated June 7,
2000, prepared by the Borrower and certain of the Subsidiaries and Affiliates
soliciting votes from holders of the Public Notes with respect to the
Reorganization Plan.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

         "Employee Stock Option Plan" means, collectively, (a) the Pathmark
Stores, Inc. 2000 Equity Plan and (b) the Pathmark Stores, Inc. 2000
Non-Employee Directors Equity Plan.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions or binding agreements
issued, promulgated or entered into by or with any Governmental Authority,
relating to the environment, preservation or reclamation of natural resources,
the handling, treatment, storage, disposal, Release or threatened Release of any
Hazardous Material or to public or employee health and safety matters.

         "Environmental Liability" means any liability (including any liability
for damages, natural resource damage, costs of environmental remediation,
administrative oversight costs, fines or penalties) of the Borrower or any
Subsidiary actually incurred and directly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

         "Equipment" shall have the meaning assigned to such term in the
Security Agreement.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 9 -

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article
VII.

         "Excess Cash Flow" means, for any period, the sum (without duplication)
of:

         (a) the Consolidated Net Income for such period, adjusted to exclude
     any gains or losses attributable to Prepayment Events; plus

         (b) depreciation, amortization and other non-cash charges or losses
     deducted in determining such Consolidated Net Income for such period; plus

         (c) the sum of (i) the amount, if any, by which Net Working Capital
     decreased during such period plus (ii) the amount, if any, by which the
     consolidated deferred revenues of the Borrower and its consolidated
     Subsidiaries increased during such period

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 10 -

     plus (iii) the aggregate principal amount of Capital Lease Obligations and
     other Indebtedness incurred during such period to finance Capital
     Expenditures; minus

         (d) the sum of (i) any non-cash gains included in determining such
     consolidated net income (or loss) for such period plus (ii) the amount, if
     any, by which Net Working Capital increased during such period plus (iii)
     the amount, if any, by which the consolidated deferred revenues of the
     Borrower and its consolidated Subsidiaries decreased during such period;
     minus

         (e) Capital Expenditures for such period to the extent not financed
     with the proceeds of Indebtedness incurred pursuant to Section
     6.01(a)(iv)); minus

         (f) the aggregate principal amount of Indebtedness repaid or prepaid by
     the Borrower and its consolidated Subsidiaries during such period,
     excluding (i) Indebtedness in respect of Revolving Loans and Letters of
     Credit, (ii) Term Loans prepaid pursuant to Section 2.11(e), (iii)
     repayments or prepayments of Indebtedness financed by incurring other
     Indebtedness (other than Indebtedness hereunder), and (iv) Indebtedness
     referred to in Section 6.01(a)(ii); minus

         (g) the amount, if any, by which the consolidated deferred expenses of
     the Borrower and its consolidated Subsidiaries increased during such
     period; minus

         (h) the aggregate amount, if any, of Restricted Payments made in cash
     by the Borrower during such period in accordance with Section 6.08 (other
     than Section 6.08(e)); minus

         (i) $15,000,000.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

         "Excluded Asset Sales" means (a) sales of (i) manufacturers' coupons to
entities engaged in the business of processing such coupons and obtaining
payment from the issuers thereof and (ii) receivables from third-party
healthcare providers and insurers, relating to reimbursements owed to the
Borrower or the Subsidiaries in connection with the sale of prescription
medicines, medical devices and other healthcare products, to entities engaged in
the business of processing and collecting such receivables from the obligors
thereunder, (b) sales of stores and related store assets listed on Schedule
1.01(b) and (c) sales of inventory made in connection with any transfer of
assets of the Borrower or the Subsidiaries, relating to the inventory
distribution functions of the Borrower's or such Subsidiary's business, to third
parties who will perform such functions under contractual out-sourcing
arrangements.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient in respect of any payment to be
made by or on account of

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 11 -

any obligation of the Borrower hereunder, (a) taxes imposed on (or measured by)
its net income or overall gross receipts or franchise taxes imposed (i) by the
United States of America, (ii) by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, or as a
result of a branch office (other than a branch office that is deemed to exist
solely as a result of the Loans or any transaction contemplated hereunder) in
the jurisdiction imposing such tax or (iii) solely as a result of activities of
such Lender that are unrelated to this transaction in the jurisdiction imposing
such tax, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the principal
office, applicable lending office or any branch office (other than a branch
office that is deemed to exist solely as a result of the Loans or any other
transaction contemplated hereunder) of any Lender is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement, designates a new lending office, becomes a party to a merger
or to a similar conveyance of its assets in which such Foreign Lender goes out
of existence or is attributable to such Foreign Lender's failure to comply with
Section 2.17(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.17(a) and complies with Section
2.17(e).

         "Existing Credit Agreement" means the Credit Agreement dated as of June
30, 1997, as amended, among the Borrower, the financial institutions from time
to time party thereto and The Chase Manhattan Bank, as Administrative Agent.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.

         "Financing Transactions" means the execution, delivery and performance
by each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof on the Effective Date and
the issuance of Letters of Credit hereunder.

         "Fiscal Year" means the fiscal year of the Borrower and the
Subsidiaries ending on the Saturday closest to January 31 of each calendar year.
For purposes of this Agreement, any particular Fiscal Year shall be designated
by reference to the calendar year in which such Fiscal

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 12 -

Year commences; thus, the 2001 Fiscal Year is the Fiscal Year ending on or about
February 2, 2002.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.

         "Fronting Fee" has the meaning assigned to such term in Section
2.12(b).

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government and, for purposes of Section 2.15(b), the National Association of
Insurance Commissioners.

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or (d) as an account party in respect
of any letter of credit or letter of guaranty issued to support such
Indebtedness, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.

         "Guarantee Agreement" means the Guarantee Agreement, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Secured Parties.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants or
contaminants, including

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 13 -

petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
materials, substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.

         "Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
entered into by the Borrower or any Subsidiary.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable incurred in the ordinary course
of business), (e) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (f) all Guarantees by
such Person of Indebtedness of others, (g) all Capital Lease Obligations of such
Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.

         "Information Memorandum" means the Confidential Information Memorandum
dated June 2000 relating to the Borrower and the Financing Transactions.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the 15th day of each January, April, July and October,
(b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 14 -

three months' duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months' duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.

         "Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.

         "Issuing Bank" means (a) The Chase Manhattan Bank and (b) any other
Lender selected by the Borrower with the consent of the Administrative Agent
(which consent shall not be unreasonably withheld), in each case in its capacity
as the issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). The Chase Manhattan Bank may arrange
for one or more Letters of Credit to be issued by any of its Affiliates, in
which case the term "Issuing Bank" shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate. Any other Issuing Bank may, with
the consent of the Borrower (which consent shall not be unreasonably withheld),
arrange for one or more Letters of Credit to be issued by Affiliates of such
Issuing Bank, in which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

         "LC Availability Period" means the period from and including the
Effective Date to but excluding the earlier of (a) the date that is five
Business Days prior to the Revolving Maturity Date and (b) the date of
termination of the Revolving Commitments.

         "LC Disbursement" means a payment made by any Issuing Bank pursuant to
a Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 15 -

Person that ceases to be a party hereto pursuant to an Assignment and
Acceptance. Unless the context otherwise requires, the term "Lenders" includes
the Swingline Lender.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement, including any "Letter of Credit" issued pursuant to Section 2.05 of
the Existing Credit Agreement or the DIP Facility and made a Letter of Credit
hereunder pursuant to Section 2.05(k).

         "Leverage Ratio" means, on any date, the ratio of (a) Total Debt as of
such date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower most recently ended as of such date, all determined on
a consolidated basis in accordance with GAAP.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Letters of Credit, the
Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and
the Security Documents.

         "Loan Parties" means the Borrower and the Subsidiary Loan Parties.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.

         "Margin Stock" shall have the meaning assigned to such term in
Regulation U.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 16 -

         "Material Adverse Effect" means (a) a material adverse effect on (i)
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole or (ii) the
ability of the Loan Parties, considered as a whole, to perform any of their
obligations of a monetary nature under any Loan Document or (b) impairment of
the rights of the Administrative Agent or the Lenders to enforce any obligations
of a monetary nature under any Loan Document.

         "Material Asset" means any fee or leasehold interest for any Related
Store and any property having a fair market value of $2,000,000 or more.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower or any Subsidiary in an aggregate principal
amount exceeding $10,000,000. For purposes of determining Material Indebtedness
at any time, the "principal amount" of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at such time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary Loan Party would be required to pay if such Hedging Agreement
were terminated at such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other substantially similar instrument granting a
Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be
substantially in the form of Exhibit H.

         "Mortgaged Property" means, initially, each parcel of real property and
the improvements thereto owned or leased by a Loan Party and identified on
Schedule 1.01(a), and, from time to time, includes each other parcel of real
property and improvements thereto with respect to which a Mortgage is granted
pursuant to Section 5.12 or 5.13.

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

         "Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds in excess of $500,000 and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments in
excess of $500,000, in each case net of (b) the sum of (i) all reasonable
commissions, discounts, fees and out-of-pocket expenses paid by the Borrower and
the Subsidiaries to third parties in connection with such event, (ii) in the
case of a sale, transfer or

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 17 -

other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or other insured damage or condemnation or similar
proceeding), the amount of all payments required to be made by the Borrower and
the Subsidiaries as a result of such event to repay Indebtedness (other than
Loans), and to pay any premium, penalty and interest with respect to such
Indebtedness, to the extent such Indebtedness is secured by such asset or
otherwise subject to mandatory prepayment as a result of such event, and (iii)
the amount of all taxes that are paid (or reasonably estimated to be payable) by
the Borrower and the Subsidiaries, and the amount of any reserves established by
the Borrower and the Subsidiaries to fund purchase price adjustments, contingent
liabilities and indemnities reasonably estimated to be payable, in each case
during the two years following the date of such event, and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower), provided that any such reserves that,
at the end of such two-year period or on such earlier date as such reserves have
been determined by the Borrower to be no longer necessary, have not been applied
to such adjustments, contingent liabilities or indemnities shall constitute
additional "Net Proceeds" and shall give rise to a Prepayment Event as
contemplated under clause (e) of the definition of such term and (iv) the
reasonable costs and expenses of any repairs, alterations or improvements made
by the Borrower or any Subsidiary to the assets sold to the extent such repairs,
alterations or improvements were required pursuant to the terms of such event.

         Notwithstanding the foregoing, with respect to any sale, transfer or
other disposition of an asset (including pursuant to a casualty or other insured
damage or condemnation or similar proceeding), if (A) the Borrower shall deliver
a certificate of a Financial Officer to the Administrative Agent within 10
Business Days of such sale, transfer or other disposition setting forth the
Borrower's intent to use the proceeds of such sale, transfer or other
disposition to repair the assets that are the subject of such sale, transfer or
other disposition or replace such assets with other similar assets to be used in
the same line of business, in each case within 270 days of receipt of such
proceeds (or, in the case of a casualty or other insured damage or condemnation,
365 days of receipt of such proceeds) and (B) no Default or Event of Default
shall have occurred and shall be continuing at the time of such certificate or
at the proposed time of the application of such proceeds, such proceeds shall
not constitute Net Proceeds except to the extent not so used at the end of such
270-day period (or, in the case of a casualty or other insured damage or
condemnation, 365-day period), at which time such proceeds not so used shall be
deemed to be Net Proceeds.

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 18 -

         "Non-Recourse Indebtedness" means, as applied to any Person, all
Indebtedness of that Person secured by Liens on specified assets of that Person
under the terms of which (a) no recourse, other than to the Liens on such
specified assets, may be had against that or any other Person for the payment of
the principal of or interest or premium on such Indebtedness or for any claim
based thereon and (b) the enforcement of all obligations relating to such
Indebtedness is limited to foreclosure or other actions with respect to such
specified assets.

         "Obligations" has the meaning assigned to such term in the Security
Agreement.

         "Operating Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.

         "Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

         "PBGC" means the Pension Benefit Guaranty Corporation defined in
Section 4002 of ERISA and any successor entity performing similar functions.

         "Perfection Certificate" means a certificate in the form of Annex 1 to
the Security Agreement or any other form approved by the Administrative Agent.

         "Permitted Encumbrances" means:

         (a) Liens imposed by law for taxes, assessments, governmental charges
     or claims that are not yet due or are being contested in compliance with
     Section 5.05;

         (b) carriers', construction, warehousemen's, mechanics', materialmen's,
     repairmen's and other like Liens imposed by law, arising in the ordinary
     course of business and securing obligations that are not overdue by more
     than 30 days or are being contested in compliance with Section 5.05;

         (c) pledges and deposits made in the ordinary course of business in
     compliance with workers' compensation, unemployment insurance and other
     social security laws or regulations or securing liability to insurance
     carriers under insurance or self-insurance arrangements;

         (d) deposits to secure the performance of bids, trade contracts,
     leases, statutory obligations, surety and appeal bonds, payment,
     performance and return-of-money bonds and other obligations of a like
     nature, in each case in the ordinary course of business;

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 19 -

         (e) liens in respect of judgments that do not constitute an Event of
     Default under clause (k) of Article VII;

         (f) easements, zoning restrictions, minor defects, encroachments or
     irregularities in title, rights-of-way and similar encumbrances on real
     property that do not secure any monetary obligations and do not interfere
     in any material respect with the ordinary conduct of business of the
     Borrower or any Subsidiary;

         (g) leases, subleases and licenses granted to third parties not
     interfering in any material respect with the ordinary conduct of the
     business of the Borrower or any Subsidiary;

         (h) any (i) interest or title of a lessor or sublessor under any lease
     not otherwise prohibited by this Agreement, (ii) easement, restriction or
     encumbrance to which the interest or title of such lessor or sublessor may
     by subject or (iii) subordination of the interest of the lessee or
     sublessee under such lease to any restriction or encumbrance referred to in
     the preceding clause (ii);

         (i) Liens arising from filing Uniform Commercial Code financing
     statements relating solely to leases permitted by this Agreement;

         (j) Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties in connection with the
     importation of goods;

         (k) Liens in favor of issuers of Commercial Letters of Credit
     encumbering any goods or documents covered by such Commercial Letters of
     Credit and securing obligations that are not overdue for a period of more
     than 15 days;

         (l) encumbrances referred to in Schedule B of the title policies
     insuring the Mortgages; and

         (m) customary setoff rights to the extent such rights constitute a Lien
     on property.

         "Permitted Investments" means:

         (a) direct obligations of, or obligations the principal of and interest
     on which are unconditionally guaranteed by, the United States of America
     (or by any agency thereof to the extent such obligations are backed by the
     full faith and credit of the United States of America), in each case
     maturing within one year from the date of acquisition thereof;

         (b) direct obligations of, or obligations the principal of and interest
     on which are unconditionally guaranteed by, any state of the United States
     of America or any political subdivision of such state or any public
     instrumentality thereof, in each case maturing within one year from the
     date of acquisition thereof and having, at such date of

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 20 -

     acquisition, the highest rating obtainable from S&P or from Moody's (or, in
     the case of tax-exempt securities referred to as "Variable Rate Demand
     Notes", maturing within 90 days from the date of acquisition thereof and
     having, at such date of acquisition, a rating of at least A from S&P or at
     least A2 from Moody's);

         (c) investments in commercial paper maturing within 270 days from the
     date of acquisition thereof and having, at such date of acquisition, a
     rating of at least A-2 from S&P or at least P-2 from Moody's;

         (d) investments in certificates of deposit, banker's acceptances and
     time deposits maturing within one year from the date of acquisition thereof
     issued or guaranteed by or placed with, and money market deposit accounts
     issued or offered by, any domestic office of any commercial bank organized
     under the laws of the United States of America or any State thereof that
     has a combined capital and surplus and undivided profits of not less than
     $250,000,000;

         (e) Eurodollar time deposits maturing within one year from the date of
     purchase thereof from any financial institution satisfying the criteria
     described in clause (d) above;

         (f) fully collateralized repurchase agreements with a term of not more
     than 30 days for securities described in clause (a) above and entered into
     with a financial institution satisfying the criteria described in clause
     (d) above; and

         (g) mutual funds whose investment guidelines restrict such funds'
     investments primarily to those satisfying the provisions of all or any of
     clauses (a) through (e) above.

         "Permitted Pending Lien Period" means, with respect to any Real
Property Asset or Equipment, the following periods:

         (i) in the case of any fee or leasehold interest in undeveloped land
     held by the Borrower or any Subsidiary for the development of a Related
     Store, the period commencing on the date of acquisition of such interest
     until the date 270 days thereafter (at which point the Permitted Pending
     Lien Period for such interest shall lapse unless clause (ii) or (iii) below
     shall be applicable),

         (ii) in the case of any fee or leasehold interest in any Real Property
     Asset consisting of a Related Store that is under construction, the period
     commencing on the date of construction until the date one year thereafter
     (at which point the Permitted Pending Lien Period for such interest shall
     lapse unless clause (iii) below shall be applicable),

         (iii) in the case of any fee or leasehold interest in any Real Property
     Asset consisting of a Related Store the construction of which is complete,
     the period

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 21 -

     commencing on the date of such completion until the date 270 days
     thereafter (at which point the Permitted Pending Lien Period for such
     interest shall lapse), and

         (iv) in the case of any Equipment, the period commencing on the date of
     delivery of such Equipment until the date 270 days thereafter (at which
     point the Permitted Pending Lien Period for such Equipment shall lapse),

provided that if an Unavoidable Delay (as defined below) occurs during any time
period specified with respect to any Related Store in clause (i) or (ii) above,
such time period for such Related Store shall be extended for a period equal to
the duration of such Unavoidable Delay plus 5 Business Days, provided that, in
no case shall such extension exceed 90 days.

         For purposes of the foregoing, the term "Unavoidable Delay" means the
prevention of, or delay in, the performance of any construction described in
clause (i) or (ii) above as a result of the occurrence of any unforeseeable
condition or event beyond the reasonable control of the Borrower or any
Subsidiary, including any strike, lockout, labor dispute, inability to obtain
labor or materials or reasonable substitutes therefor, act of God, governmental
restriction or regulation or control, enemy or hostile governmental action,
civil commotion, insurrection, sabotage or fire or other casualty.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plainbridge" means Plainbridge, Inc., a Delaware corporation.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Pledge Agreement" means the Pledge Agreement, substantially in the
form of Exhibit F, among the Borrower, the Subsidiaries party thereto and the
Administrative Agent for the benefit of the Secured Parties.

         "Preferred Stock" means, with respect to any corporation, capital stock
issued by such corporation that is entitled to a preference or priority, in
respect of dividends or distributions upon liquidation, over some other class of
capital stock issued by such corporation.

         "Prepayment Account" has the meaning assigned to such term in Section
2.11(e).

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 22 -

         "Prepayment Event" means:

         (a) any sale, transfer or other disposition of any property or asset of
     the Borrower or any Subsidiary, other than (i) Excluded Asset Sales, (ii)
     sales, transfers and other dispositions described in clauses (a), (b) and
     (e) of Section 6.05, (iii) transfers pursuant to a Qualified Sale/Leaseback
     Transaction and (iv) other dispositions during any Fiscal Year resulting in
     aggregate Net Proceeds not exceeding $5,000,000; or

         (b) any casualty or other insured damage to, or any taking under power
     of eminent domain or by condemnation or similar proceeding of, any property
     or asset of the Borrower or any Subsidiary if the proceeds received by the
     Borrower or such Subsidiary in connection with such event become Net
     Proceeds; or

         (c) the issuance by the Borrower or any Subsidiary of any equity
     securities (including, without limitation, Preferred Stock), other than any
     such issuance of equity securities to the Borrower or a Subsidiary; or

         (d) the incurrence by the Borrower or any Subsidiary of any
     Indebtedness, other than Indebtedness permitted by Section 6.01(a); or

         (e) the existence of any reserves not applied to adjustments,
     contingent liabilities or indemnities referred to in clause (iii) of the
     definition of "Net Proceeds" upon the lapse of a period of two years from
     the date of an event giving rise to Net Proceeds, or on such earlier date
     as such reserves have been determined by the Borrower to be no longer
     necessary (it being understood that the date upon which the "Prepayment
     Event" contemplated by this clause (e) shall occur shall be the date upon
     which such two-year period expires or on such earlier date as such
     determination is made by the Borrower).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Public Notes" means, collectively, (a) the 9.625% Senior Subordinated
Notes due 2003, the 11.625% Subordinated Notes due 2002, the 12.625%
Subordinated Debentures due 2002, and the 10.75% Junior Subordinated Deferred
Coupon Notes due 2003, in each case issued by the Borrower and (b) the 11.625%
Subordinated Notes due 2002 issued by Supermarkets General Holdings Corporation.

         "Qualified Refinancing Terms" means, with respect to any Indebtedness
being refinanced at any time, that (A) the principal amount of the refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
refinanced plus any fees, expenses, premiums and penalties and (B) the interest
rates, maturities, amortization schedules, covenants, defaults, remedies and
other material terms of such refinancing Indebtedness are in each case (x) the
same

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 23 -

as the corresponding provisions of the Indebtedness so refinanced, (y) more
favorable to the Lenders than the corresponding provisions of the Indebtedness
being refinanced or (z) otherwise satisfactory to the Administrative Agent and
the Required Lenders, provided that interest rates that are less than,
maturities that are longer than and amortization schedules that result in a
longer average life to maturity than the corresponding provisions of the
Indebtedness being refinanced shall be deemed satisfactory to the Administrative
Agent and the Required Lenders.

         "Qualified Sale/Leaseback Transaction" means the sale, pursuant to a
Sale/Leaseback Transaction, of (a) any fee interest in any Real Property Asset
consisting of a Related Store the construction of which is complete, provided
that such sale occurs no more than 270 days after the later of the date of
completion of such construction and the date on which the Borrower or any
Subsidiary acquired such fee interest, or (b) any Equipment within 270 days
after the acquisition of such Equipment by the Borrower or any Subsidiary;
provided, however, that (i) no agreement in connection with such Qualified
Sale/Leaseback Transaction restricts the ability of the Borrower or any of the
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness or any
Lien upon any of its properties, assets or revenues, whether now owned or
hereafter acquired, other than the real estate or Equipment that is the subject
of such Qualified Sale/Leaseback Transaction and (ii) such Qualified
Sale/Leaseback Transaction is consummated for consideration that is at least
equal to the aggregate fair market value of the real estate (and the related
improvements) or Equipment subject thereto (determined at the time of
consummation thereof in good faith by the chief financial officer of the
Borrower and, in the case of any Qualified Sale/Leaseback Transaction or series
of related Qualified Sale/Leaseback Transactions involving net proceeds in
excess of $10,000,000, the board of directors of the Borrower).

         "Real Property Assets" means interests in land, buildings, improvements
and fixtures attached thereto or used in the operation thereof, in each case
owned or leased (as lessee) by the Borrower or any Subsidiary.

         "Register" has the meaning assigned to such term in Section 9.04.

         "Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

         "Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

         "Related Fund" means, with respect to any Lender that is a fund that
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.

         "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, trustees,
agents and advisors of such Person and such Person's Affiliates.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 24 -

         "Related Store" means any store or facility (including any grocery
store or supermarket) that is or is intended to be used by the Borrower or any
Subsidiary in connection with the business permitted under Section 6.03(b).

         "Release" has the meaning assigned to such term in Section 101(22) of
CERCLA.

         "Reorganization Plan" means the Joint Plan of Reorganization attached
as Exhibit A to the Disclosure Statement.

         "Replacement Store Sale" means the sale or closure by the Borrower or
any Subsidiary of any store (an "old store"), provided that (1) another store (a
"new store") is bought or opened by the Borrower or a Subsidiary in the
proximate geographical area of such old store within three months of the date on
which such old store is so sold or closed and (2) such new store's sales will be
treated as "same store sales" of such old store as reported by the Borrower.

         "Required Lenders" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock (including, without limitation, Preferred Stock) of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such shares of capital stock of the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such shares of capital stock of
the Borrower or any Subsidiary.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $175,000,000.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 25 -

         "Revolving", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loan constituting such Borrowing, are made pursuant to
Section 2.01(c).

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (c) of Section
2.01.

         "Revolving Maturity Date" means July 15, 2005.

         "Riskco" means Pathmark Risk Management Corporation, a New Jersey
corporation.

         "Sale/Leaseback Transaction" has the meaning assigned to such term in
Section 6.06.

         "S&P" means Standard & Poor's.

         "Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.

         "Security Agreement" means the Security Agreement, substantially in the
form of Exhibit G, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent for the benefit of the Secured Parties.

         "Security Documents" means the Security Agreement, the Pledge
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.

         "Special Purpose Subsidiary" means each wholly owned Subsidiary of the
Borrower that is organized for the purpose of, and is engaged solely in the
business of, (a) owning a fee or leasehold interest in a single Real Property
Asset and (b) owning or leasing Equipment located at such Real Property Asset,
in each case used in the operation of a Related Store, provided that, in the
case of any such Subsidiary formed after the date hereof, such interest in such
Real Property Asset and such Equipment is acquired by such wholly owned
Subsidiary (i) directly from a person other than the Borrower or any Subsidiary
or (ii) from the Borrower or any Subsidiary (A) in the case of the interest in
such Real Property Asset, no more than 270 days after the later of the date of
completion of the construction of such Related Store and the date on which the
Borrower or any Subsidiary acquired such interest and (B) in the case of
Equipment, within 270 days after the acquisition of such Equipment by the
Borrower or any Subsidiary.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 26 -

         "Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (a) Indebtedness of the
Borrower or any Subsidiary in respect of industrial revenue or development bonds
or financings, (b) workers' compensation liabilities of the Borrower or any
Subsidiary, (c) the obligations of third party insurers of the Borrower or any
Subsidiary arising by virtue of the laws of any jurisdiction requiring third
party insurers, (d) Capital Lease Obligations or obligations with respect to
Operating Leases of the Borrower or any Subsidiary, (e) performance, payment,
deposit or surety obligations of the Borrower or any Subsidiary, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry and (f) other obligations of the Borrower and the
Subsidiaries to the extent consistent with past practices of the Borrower and
the Subsidiaries or otherwise consistent with custom and practice in the
industry.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity (a) of which securities or other ownership interests representing
more than 50% of the ordinary voting power in the election of Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or held, or (b)
that is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

         "Subsidiary" means any subsidiary of the Borrower.

         "Subsidiary Loan Party" means any Subsidiary that is not a Foreign
Subsidiary or a Special Purpose Subsidiary (but only so long as such Special
Purpose Subsidiary remains liable

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 27 -

with respect to Indebtedness that prohibits such Special Purpose Subsidiary from
entering into the Guarantee Agreement and the Security Documents).

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lender" means The Chase Manhattan Bank, in its capacity as
lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Term", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans constituting such Borrowing, are made pursuant
to Section 2.01(a) or 2.01(b).

         "Term Commitments" means a Tranche A Commitment or Tranche B Commitment
or any combination thereof (as the context requires).

         "Term Loans" means Tranche A Term Loans and Tranche B Term Loans.

         "Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.

         "Total Debt" means, as of any date of determination, without
duplication, the aggregate principal amount of indebtedness (determined in
accordance with GAAP) of the Borrower and its consolidated Subsidiaries
outstanding as of such date, determined on a consolidated basis in accordance
with GAAP (other than Indebtedness of the type referred to in clause (i) of the
definition of the term "Indebtedness", except to the extent of any unreimbursed
drawings thereunder).

         "Tranche A Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche A Term Loan hereunder on
the Effective Date,

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

<PAGE>
                                     - 28 -

expressed as an amount representing the maximum principal amount of the Tranche
A Term Loan to be made by such Lender hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.08 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Tranche A Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Tranche A Commitment, as applicable. The
initial aggregate amount of the Lenders' Tranche A Commitments is $125,000,000.

         "Tranche A Lender" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.

         "Tranche A Maturity Date" means July 15, 2005.

         "Tranche A Term Loan" means a Loan made pursuant to clause (a) of
Section 2.01.

         "Tranche B Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum principal
amount of the Tranche B Term Loan to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Tranche B
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Commitment, as
applicable. The initial aggregate amount of the Lenders' Tranche B Commitments
is $300,000,000.

         "Tranche B Lender" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.

         "Tranche B Maturity Date" means July 15, 2007.

         "Tranche B Term Loan" means a Loan made pursuant to clause (b) of
Section 2.01.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by

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

<PAGE>
                                     - 29 -

Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar
Revolving Loan"). Borrowings also may be classified and referred to by Class
(e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or
by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

         SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

         SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided,
however, that for purposes of determining compliance with any covenant set forth
in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in preparing the Borrower's financial statements referred to in
Section 3.04.

                                   ARTICLE II

                                   The Credits

         SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees (a) to make a Tranche A Term Loan to the
Borrower on the Effective Date in a principal amount not exceeding its Tranche A
Commitment, (b) to make a Tranche B Term Loan to the Borrower on the Effective
Date in a principal amount not exceeding its Tranche B Commitment and (c) to
make Revolving Loans to the Borrower from time to time after the Effective Date
and during the Revolving Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment. Within the foregoing limits and subject to the terms and
conditions set

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 30 -

forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid in respect of Term Loans may not be reborrowed.

         SECTION 2.02. Loans and Borrowings.

         (a) Obligations Several. Each Loan (other than a Swingline Loan) shall
be made as part of a Borrowing consisting of Loans of the same Class and Type
made by the Lenders ratably in accordance with their respective Commitments of
the applicable Class. The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder,
provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.

         (b) Type of Loans. Subject to Section 2.14, each Revolving Borrowing
and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans
as the Borrower may request in accordance herewith. Notwithstanding anything to
the contrary contained herein, all Borrowings made on the Effective Date and
during the first two Business Days thereafter shall be ABR Borrowings. Each
Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan, so long as the exercise of such option would not cause
the Borrower to incur increased costs. Any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

         (c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Revolving
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000, provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple
of $100,000 and not less than $500,000. Borrowings of more than one Type and
Class may be outstanding at the same time, provided that there shall not at any
time be more than a total of 20 Eurodollar Borrowings outstanding.

         (d) Limitations on Interest Periods. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request, or
to elect to convert or continue, any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Maturity Date, Tranche A
Maturity Date or Tranche B Maturity Date, as applicable.

         SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing
or Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, New York City time, one Business Day before the

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<PAGE>
                                     - 31 -

date of the proposed Borrowing, provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(e) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

         (i) whether the requested Borrowing is to be a Revolving Borrowing,
     Tranche A Term Borrowing or Tranche B Term Borrowing;

         (ii) the aggregate amount of such Borrowing;

         (iii) the date of such Borrowing, which shall be a Business Day;

         (iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
     Borrowing;

         (v) in the case of a Eurodollar Borrowing, the initial Interest Period
     to be applicable thereto, which shall be a period contemplated by the
     definition of the term "Interest Period"; and

         (vi) the location and number of the Borrower's account to which funds
     are to be disbursed, which shall comply with the requirements of Section
     2.06.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

         SECTION 2.04. Swingline Loans.

         (a) Availability. Subject to the terms and conditions set forth herein,
the Swingline Lender agrees to make Swingline Loans to the Borrower from time to
time during the Revolving Availability Period, in an aggregate principal amount
at any time outstanding that will not result in (i) the aggregate principal
amount of outstanding Swingline Loans exceeding $30,000,000 or (ii) the sum of
the total Revolving Exposures exceeding the total Revolving Commitments,
provided that the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.

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<PAGE>
                                     - 32 -

         (b) Notice and Funding of Swingline Loans. To request a Swingline Loan,
the Borrower shall notify the Administrative Agent of such request by telephone
(confirmed by telecopy), not later than 1:00 p.m., New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender of any such notice received from the Borrower. The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
credit to the general deposit account of the Borrower with the Swingline Lender
(or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to an Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

         (c) Participations. The Swingline Lender may by written notice given to
the Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan
or Loans. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

         Each Revolving Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and Section
2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving
Lenders), and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the Swingline Lender. Any amounts received by the Swingline Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by the Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Revolving Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline

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

<PAGE>
                                     - 33 -

Loan pursuant to this paragraph shall not relieve the Borrower of any default in
the payment thereof.

         SECTION 2.05. Letters of Credit.

         (a) General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit for its own account, in a
form reasonably acceptable to the Administrative Agent and the applicable
Issuing Bank, at any time and from time to time during the LC Availability
Period. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, any Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
the applicable Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
applicable Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $125,000,000 and (ii) the total Revolving Exposures
shall not exceed the total Revolving Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from such Issuing Bank, a participation in such Letter of Credit
equal to such Lender's Applicable Percentage of the aggregate amount available
to be drawn under such Letter of Credit. In consideration and in furtherance of
the

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 34 -

foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the applicable Issuing Bank,
such Lender's Applicable Percentage of each LC Disbursement made by such Issuing
Bank and not reimbursed by the Borrower on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
the Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit issued by such Issuing Bank, then the Borrower
shall automatically, and without any action on the part of any Person, be deemed
to have requested in accordance with Section 2.03 that the reimbursement by the
Borrower of such LC Disbursement be financed by the proceeds of an ABR Revolving
Borrowing to be made on the Required LC Disbursement Repayment Date in an
equivalent amount (and, to the extent such ABR Revolving Borrowing is made, the
Borrower's obligation to make such payment shall be discharged and replaced by
such ABR Revolving Borrowing). As used in this Section 2.05(e), "Required LC
Disbursement Repayment Date" means, with respect to any LC Disbursement, the
date that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i)
the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt.

         If any ABR Revolving Borrowing referred to in the paragraph above
cannot be made when required (whether due to the failure to satisfy any
applicable conditions precedent or otherwise), the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the Required LC
Disbursement Repayment Date with respect thereto. If the Borrower fails to make
any such payment when due, the Administrative Agent shall notify each Revolving
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender's Applicable Percentage thereof.

         Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 35 -

Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse such Issuing Bank, then to such
Lenders and such Issuing Bank as their interests may appear. Any payment made by
a Revolving Lender pursuant to this paragraph to reimburse the applicable
Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving
Loans as contemplated above) shall not constitute a Loan and shall not relieve
the Borrower of its obligation to reimburse such LC Disbursement.

         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision herein or therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
strictly comply with the terms of such Letter of Credit or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder.

         Neither the Administrative Agent, the Lenders nor the applicable
Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of such Issuing Bank, provided that the foregoing
shall not be construed to excuse such Issuing Bank from liability to the
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit strictly comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the applicable Issuing Bank (as
finally determined by a court of competent jurisdiction), such Issuing Bank
shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
applicable Issuing Bank may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 36 -

accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.

         (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit issued by it. The
applicable Issuing Bank shall promptly notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether such Issuing Bank has made or will make an LC Disbursement thereunder,
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse such Issuing Bank and the
Revolving Lenders with respect to any such LC Disbursement.

         (h) Interim Interest. If the applicable Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans,
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
applicable Issuing Bank, except that interest accrued on and after the date of
payment by any Revolving Lender pursuant to paragraph (e) of this Section to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.

         (i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank, if any. The Administrative
Agent shall notify the Lenders of any such replacement of the replaced Issuing
Bank. At the time any such replacement shall become effective, the Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) any successor Issuing Bank shall have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 37 -

Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon, provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement.

         The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrower's risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse each
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.

         (k) Existing Letters of Credit. Pursuant to the Existing Credit
Agreement and the DIP Facility, The Chase Manhattan Bank has issued various
letters of credit for the account of the Borrower. To the extent that any such
letters of credit remain outstanding on the Effective Date then, on the
Effective Date and subject to the satisfaction of the conditions precedent set
forth in Article IV, each of such letters of credit under the Existing Credit
Agreement and the DIP Facility shall automatically, and without any action on
the part of any Person, become a "Letter of Credit" hereunder. Any such letter
of credit that becomes a "Letter of Credit" hereunder is called a "Carryover
Letter of Credit".

         SECTION 2.06. Funding of Borrowings.

         (a) Funding by Lenders. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders, provided that Swingline Loans shall be made as provided in
Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request,
provided that ABR Revolving Loans made to

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 38 -

finance the reimbursement of an LC Disbursement as provided in Section 2.05(e)
shall be remitted by the Administrative Agent to the applicable Issuing Bank.

         (b) Non-Receipt From Lenders of Funds. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.

         SECTION 2.07. Interest Elections.

         (a) Interest Election. Each Revolving Borrowing and Term Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.

         (b) Notification by Borrower. To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 39 -

         (c) Content of Notices. Each telephonic and written Interest Election
Request shall specify the following information in compliance with Section 2.02
and paragraph (f) of this Section:

         (i) the Borrowing to which such Interest Election Request applies and,
    if different options are being elected with respect to different portions
    thereof, the portions thereof to be allocated to each resulting Borrowing
    (in which case the information to be specified pursuant to clauses (iii) and
    (iv) below shall be specified for each resulting Borrowing);

         (ii) the effective date of the election made pursuant to such Interest
    Election Request, which shall be a Business Day;

         (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
    Eurodollar Borrowing; and

         (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
    Period to be applicable thereto after giving effect to such election, which
    shall be a period contemplated by the definition of the term "Interest
    Period".

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

         (d) Notification of Lenders. Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender's portion of each resulting Borrowing.

         (e) Failure to Elect; Events of Default. If the Borrower fails to
deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is
continuing and the Administrative Agent, at the request of the Required Lenders,
so notifies the Borrower, then, so long as an Event of Default is continuing (i)
no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.

         (f) Limitation on Conversion. A Borrowing of any Class may not be
converted to or continued as a Eurodollar Borrowing if after giving effect
thereto (i) the Interest Period therefor would commence before and end after a
date on which any principal of the Loans of such Class is scheduled to be repaid
and (ii) the sum of the aggregate principal amount of outstanding Eurodollar
Borrowings of such Class with Interest Periods ending on or prior to such
scheduled repayment date plus the aggregate principal amount of outstanding ABR
Borrowings

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 40 -

of such Class would be less than the aggregate principal amount of Loans of such
Class required to be repaid on such scheduled repayment date.

         SECTION 2.08. Termination and Reduction of Commitments.

         (a) Scheduled Termination and Reduction. Unless previously terminated,
(i) the Tranche A Commitments and Tranche B Commitments shall terminate at 5:00
p.m., New York City time, on the Effective Date and (ii) the Revolving
Commitments shall terminate on the Revolving Maturity Date.

         (b) Voluntary Reduction of Commitments. The Borrower may at any time
terminate, or from time to time reduce, the Commitments of any Class, provided
that (i) each reduction of the Commitments of any Class shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii)
the Borrower shall not terminate or reduce the Revolving Commitments if, after
giving effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.11(a), the sum of the Revolving Exposures would exceed the total
Revolving Commitments.

         (c) Notice of Voluntary Reduction; No Reinstatement of Commitments. The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable, provided that a notice of termination of the Revolving
Commitments delivered by the Borrower may state that such notice is conditioned
upon the effectiveness of other credit facilities, in which case such notice may
be revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         SECTION 2.09. Repayment of Loans; Evidence of Debt.

         (a) Repayment of Loans. The Borrower hereby unconditionally promises to
pay (i) to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan of such Lender on the Revolving
Maturity Date, (ii) to the Administrative Agent for the account of each Lender
the then unpaid principal amount of each Term Loan of such Lender as provided in
Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the Revolving Maturity Date and the
first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least two Business Days after such Swingline Loan is
made.

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 41 -

         (b) Maintenance of Records by Lenders. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.

         (c) Maintenance of Records by Administrative Agent. The Administrative
Agent shall maintain accounts in which it shall record (i) the amount of each
Loan made hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender's share thereof.

         (d) Effect of Entries. The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence
of the existence and amounts of the obligations recorded therein, provided that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

         (e) Promissory Notes. Any Lender may request that Loans of any Class
made by it be evidenced by a promissory note. In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent and the
Borrower. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans.

         (a) Tranche A Term Borrowings. Subject to adjustment pursuant to
paragraph (d) of this Section, the Borrower shall repay Tranche A Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:

                 Date                                    Amount

         October 15, 2000                             $  1,562,500

         January 15, 2001                             $  1,562,500
         April 15, 2001                               $  1,562,500
         July 15, 2001                                $  1,562,500
         October 15, 2001                             $  3,125,000

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 42 -

         January 15, 2002                             $  3,125,000
         April 15, 2002                               $  3,125,000
         July 15, 2002                                $  3,125,000
         October 15, 2002                             $  4,687,500

         January 15, 2003                             $  4,687,500
         April 15, 2003                               $  4,687,500
         July 15, 2003                                $  4,687,500
         October 15, 2003                             $  7,812,500

         January 15, 2004                             $  7,812,500
         April 15, 2004                               $  7,812,500
         July 15, 2004                                $  7,812,500
         October 15, 2004                              $14,062,500

         January 15, 2005                              $14,062,500
         April 15, 2005                                $14,062,500
         July 15, 2005                                 $14,062,500

         (b) Tranche B Term Borrowings. Subject to adjustment pursuant to
paragraph (d) of this Section, the Borrower shall repay Tranche B Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:

                Date                                      Amount

         October 15, 2000                                $250,000

         January 15, 2001                                $250,000
         April 15, 2001                                  $250,000
         July 15, 2001                                   $250,000
         October 15, 2001                                $250,000

         January 15, 2002                                $250,000
         April 15, 2002                                  $250,000
         July 15, 2002                                   $250,000
         October 15, 2002                                $250,000

         January 15, 2003                                $250,000
         April 15, 2003                                  $250,000
         July 15, 2003                                   $250,000
         October 15, 2003                                $250,000

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 43 -

         January 15, 2004                                $250,000
         April 15, 2004                                  $250,000
         July 15, 2004                                   $250,000
         October 15, 2004                                $250,000

         January 15, 2005                                $250,000
         April 15, 2005                                  $250,000
         July 15, 2005                                   $250,000
         October 15, 2005                             $36,875,000

         January 15, 2006                             $36,875,000
         April 15, 2006                               $36,875,000
         July 15, 2006                                $36,875,000
         October 15, 2006                             $36,875,000

         January 15, 2007                             $36,875,000
         April 15, 2007                               $36,875,000
         July 15, 2007                                $36,875,000

         (c) Payment in Full on Maturity Dates. To the extent not previously
paid, (i) all Tranche A Term Loans shall be due and payable on the Tranche A
Maturity Date and (ii) all Tranche B Term Loans shall be due and payable on the
Tranche B Maturity Date.

         (d) Adjustments to Amortization Schedules. If the initial aggregate
amount of the Lenders' Term Commitments of either Class exceeds the aggregate
principal amount of Term Loans of such Class that are made on the Effective
Date, then the scheduled repayments of Term Borrowings of such Class to be made
pursuant to this Section shall be reduced ratably by an aggregate amount equal
to such excess. Any prepayment of a Term Borrowing of either Class shall be
applied to reduce the subsequent scheduled repayments of the Term Borrowings of
such Class to be made pursuant to this Section ratably, provided that any
prepayment made pursuant to Section 2.11(a) shall be applied, first, to reduce
the next scheduled repayment of the Term Borrowings of such Class to be made
pursuant to this Section (to the extent that such scheduled repayment would
otherwise occur within 12 months of such prepayment made pursuant to Section
2.11(a)) unless and until such next scheduled repayment has been eliminated as a
result of reductions hereunder and, second, to reduce the remaining scheduled
repayments of the Term Borrowings of such Class to be made pursuant to this
Section ratably.

         (e) Notice of Payments. Prior to any repayment of any Term Borrowings
of either Class hereunder, the Borrower shall select the Borrowing or Borrowings
of the applicable Class to be repaid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than 11:00
a.m., New York City time, three Business Days before the scheduled date of such
repayment, provided that each repayment of Term Borrowings of either Class shall
be applied to repay any outstanding ABR Term Borrowings of such Class before any
other Borrowings of such Class. Each repayment of a Borrowing shall be applied

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 44 -

ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.

         SECTION 2.11. Prepayment of Loans.

         (a) Optional Prepayments. The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
the requirements of this Section.

         (b) Mandatory Prepayments--Prepayment Events. If any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, then the Borrower shall, no later than the second Business Day
after such Net Proceeds are received (or, in the case of any Prepayment Event
described in clause (e), no later than the second Business Day after such
Prepayment Event arises), pay to the Administrative Agent, for deposit in the
Prepayment Account an amount equal to (i) in the case of any Prepayment Event
described in clause (c) of the definition of the term "Prepayment Event", 50% of
such Net Proceeds and (ii) in the case of any other Prepayment Event, 100% of
such Net Proceeds. If the amounts to be so paid to the Administrative Agent on
any date exceed the aggregate principal amount of the Term Borrowings then
outstanding (less the amount of funds then on deposit in the Prepayment
Account), then the Revolving Commitments shall be permanently reduced on such
date in an aggregate amount equal to such excess.

         (c) Mandatory Prepayments--Excess Cash Flow. Following the end of each
Fiscal Year, commencing with the 2001 Fiscal Year, the Borrower shall, on or
before the date on which financial statements are delivered pursuant to Section
5.01 with respect to the Fiscal Year for which Excess Cash Flow is being
calculated (and in any event within 90 days after the end of such Fiscal Year),
pay to the Administrative Agent, for deposit in the Prepayment Account, an
amount equal to 75% of Excess Cash Flow for such Fiscal Year, provided that
after the Leverage Ratio shall have been reduced to 2.50 to 1 or less as at the
last day of two or more consecutive fiscal quarters, such required deposit shall
be in an amount equal to 50% of Excess Cash Flow for the relevant Fiscal Year.
If the amounts to be so paid to the Administrative Agent on any date exceed the
aggregate principal amount of the Term Borrowings then outstanding (less the
amount of funds then on deposit in the Prepayment Account), then the Revolving
Commitments shall be permanently reduced on such date in an aggregate amount
equal to such excess.

         (d) Mandatory Prepayments - Revolving Credit Loans Exceeding
Commitments. If (a) the sum of (i) the aggregate principal amount of all Loans
outstanding under the Revolving Commitments at any time and (ii) the LC Exposure
at such time exceeds (b) the aggregate Revolving Commitments at such time, then
the Borrower will immediately pay to the Administrative Agent, for deposit in
the Prepayment Account, an amount equal to such excess, provided that, if the
amounts to be so paid to the Administrative Agent on any date exceed the
aggregate principal amount of the Revolving Loans then outstanding, then the
Borrower will (in addition to the deposit required pursuant to this paragraph
(d)) immediately cash collateralize

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 45 -

outstanding Letters of Credit in the manner provided in Section 2.05(j) in an
amount equal to such excess.

     (e) Cash Collateralization; Application.

         (1) Amounts paid by the Borrower to the Administrative Agent as
provided in Sections 2.11(b), (c) and (d) shall be deposited in an account with
the Administrative Agent in the name of the Administrative Agent and for the
benefit of the Lenders (the "Prepayment Account"). Each such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrower under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over the Prepayment Account. Other than any interest earned on
the investment of such deposits (which investments shall be made at the option
and sole discretion of the Administrative Agent and at the Borrower's risk and
expense), such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in the Prepayment Account. Moneys in the
Prepayment Account shall be subject to withdrawal and application solely as
provided in this paragraph (e).

         If the aggregate amount of funds on deposit in the Prepayment Account
on any day (including after giving effect to any deposit occurring on such day)
equals or exceeds $5,000,000, then the aggregate amount of funds on deposit in
the Prepayment Account on such day (the "Application Date") shall be applied by
the Administrative Agent (subject to paragraph (3) below) to the prepayment of
the Term Borrowings and the Revolving Credit Loans as follows:

         (A) first, to ABR Term Borrowings outstanding on the Application Date
     (with such application to be made on such Application Date);

         (B) second, to other outstanding Term Borrowings (with such application
     to be made on the last day of each Interest Period applicable to such Term
     Borrowings, in direct order of the maturities of such Interest Periods);

         (C) third, to outstanding ABR Revolving Loans (with such application to
     be made on the first date as of which no Term Borrowings are outstanding);

         (D) fourth, to other outstanding Revolving Loans (with such application
     to be made on the last day of each Interest Period applicable to such
     Revolving Loans, in direct order of the maturities of such Interest
     Periods); and

         (E) fifth, to cash collateralize outstanding Letters of Credit in the
     manner provided in Section 2.05(j).

         Notwithstanding the foregoing, if the Loans are declared to be
immediately due and payable (or automatically become due and payable) following
the occurrence of an Event of

                                Credit Agreement
                                ----------------

<PAGE>
                                     - 46 -

Default as provided in Article VII, the Prepayment Account and all funds then
credited to such account shall be subject to application as provided in the
Security Agreement (including, without limitation, in Section 5.02 thereof).

         (2) Except as provided in paragraph (1) above, prior to any optional or
mandatory prepayment of Borrowings hereunder, the Borrower shall select the
Borrowing or Borrowings to be prepaid and shall specify such selection in the
notice of such prepayment pursuant to paragraph (f) of this Section, provided
that each prepayment of Borrowings of any Class shall be applied to prepay ABR
Borrowings of such Class before any other Borrowings of such Class.

         (3) If any optional prepayment of Term Borrowings is to be made
pursuant to Section 2.11(a), or any amounts are to be applied to the Term
Borrowings pursuant to paragraph (1) above, at a time when Term Borrowings of
both Classes remain outstanding, the Borrower shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated between the
Tranche A Term Borrowings and Tranche B Term Borrowings pro rata based on the
aggregate principal amount of outstanding Borrowings of each such Class,
provided that to the extent Tranche A Term Loans remain outstanding on the
prepayment date, any Tranche B Lender may elect, by notice to the Administrative
Agent by telephone (confirmed by telecopy) at least one Business Day prior to
the prepayment date, to decline all or any portion of any prepayment of its
Tranche B Term Loans pursuant to this Section, in which case the aggregate
amount of the prepayment that would have been applied to prepay such Tranche B
Lender's Tranche B Term Loans but was so declined shall be applied to prepay
Tranche A Term Borrowings.

         (f) Notice to Administrative Agent. The Borrower shall notify the
Administrative Agent (and in the case of prepayment of a Swingline Loan, the
Swingline Lender) by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 Noon, New York City time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
12:00 Noon, New York City time, one Business Day before the date of prepayment
or (iii) in the case of prepayment of a Swingline Loan, not later than 1:00
p.m., New York City time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment,
provided that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.08, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in

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                                     - 47 -

the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to
the extent required by Section 2.13.

         (g) Prepayment Premium. Upon any prepayment of Tranche B Term Loans
pursuant to this Section, and upon any payment of the Tranche B Term Loans
following the declaration pursuant to Article VII of the Tranche B Term Loans to
be due and payable by reason of the occurrence of a Change in Control, (i)
during the period commencing on the Effective Date to but not including the
first anniversary thereof, the Borrower shall pay to the holders of such Loans a
prepayment premium in respect of the principal amount of such Loans so prepaid
equal to 2% of such principal amount and (ii) during the period commencing on
such first anniversary to but not including the second anniversary of the
Effective Date, the Borrower shall pay to the holders of such Loans a prepayment
premium in respect of the principal amount of such Loans so prepaid equal to 1%
of such principal amount, it being understood that no prepayment premium shall
be required pursuant to this paragraph in respect of any prepayment of such
Loans made on or after such second anniversary.

         SECTION 2.12. Fees.

         (a) Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at a
rate per annum equal to 1/2 of 1% on the average daily unused amount of the
Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the 15th day of January,
April, July and October of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing commitment fees with
respect to Revolving Commitments, a Revolving Commitment of a Lender shall be
deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of such Lender (and the Swingline Exposure of such Lender shall be
disregarded for such purpose).

         (b) Participation Fee; Fronting Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a participation
fee with respect to its participations in Letters of Credit, which shall accrue
at a rate equal to (i) in the case of the portion of such Lender's LC Exposure
that is attributable to Standby Letters of Credit, the excess of (A) the same
Applicable Rate as interest on Eurodollar Revolving Loans on the average daily
amount of such portion of such Lender's LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) over (B) the Fronting
Fee, in each case during the period from and including the Effective Date to but
excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) in the case of the portion of such Lender's LC Exposure that is
attributable to Commercial Letters of Credit, the excess of (A) one-half of the
same Applicable Rate as interest on Eurodollar Revolving Loans on the average
daily amount of such portion of

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                                     - 48 -

such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) over (B) the Fronting Fee, in each case during
the period from and including the Effective Date to but excluding the later of
the date on which such Lender's Revolving Commitment terminates and the date on
which such Lender ceases to have any LC Exposure. The Borrower also agrees to
pay to each Issuing Bank a fronting fee (the "Fronting Fee"), which shall accrue
at the rate of 1/4 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) with respect to Letters of Credit issued by such Issuing Bank
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as such Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the 15th day of January, April,
July and October of each year shall be payable on the third Business Day
following such fifteenth day, commencing on the first such date to occur after
the Effective Date, provided that all such fees shall be payable on the date on
which the Revolving Commitments terminate and any such fees accruing after the
date on which the Revolving Commitments terminate shall be payable on demand.
Any other fees payable to any Issuing Bank pursuant to this paragraph shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).

         (c) Administration Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

         (d) Fees Non-Refundable. All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent (or
to the applicable Issuing Bank, in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances.

         SECTION 2.13. Interest.

         (a) ABR Loans. The Loans comprising each ABR Borrowing (other than any
Swingline Loan) shall bear interest at the Alternate Base Rate plus the
Applicable Rate. Each Swingline Loan shall bear interest at the Alternate Base
Rate plus the Applicable Rate with respect to ABR Revolving Loans minus 0.50%.

         (b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Rate.

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                                     - 49 -

         (c) Default Interest. Notwithstanding the foregoing, if any principal
of or interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.

         (d) Timing of Payment of Interest. Accrued interest on each Loan shall
be payable in arrears (i) on each Interest Payment Date for such Loan and (ii)
in the case of Revolving Loans, upon termination of the Revolving Commitments,
provided that (A) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (B) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of
the Revolving Availability Period), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (C) in the event of any conversion of any Eurodollar Loan prior to the end
of the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.

         (e) Computation. All interest hereunder shall be computed on the basis
of a year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative Agent determines (which determination shall be
     conclusive absent manifest error) that adequate and reasonable means do not
     exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
     applicable, for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
     the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
     Period will not adequately and fairly reflect the cost to such Lenders (or
     Lender) of making or maintaining their Loans (or its Loan) included in such
     Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or

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<PAGE>
                                     - 50 -

continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) Costs of Making or Maintaining Eurodollar Loans or Letters of
Credit. If any Change in Law shall:

         (i) impose, modify or deem applicable any reserve, special deposit or
     similar requirement against assets of, deposits with or for the account of,
     or credit extended by, any Lender (except any such reserve requirement
     reflected in the Adjusted LIBO Rate) or Issuing Bank; or

         (ii) impose on any Lender or any Issuing Bank or the London interbank
     market any other condition (other than with respect to Taxes, which shall
     be governed exclusively by Section 2.17) affecting this Agreement or
     Eurodollar Loans made by such Lender or any Letter of Credit or
     participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, in
accordance with paragraph (c) below such additional amount or amounts as will
compensate such Lender or such Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

         (b) Capital Requirements. If any Lender or any Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender's or such Issuing Bank's
capital or on the capital of such Lender's or such Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company for
any such reduction suffered.

         (c) Certification. A certificate of a Lender or any Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or such
Issuing Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section and setting forth

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<PAGE>
                                     - 51 -

in reasonable detail the basis of the calculation of such amount or amounts
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or Issuing Bank, as the case may be,
the amount shown as due on any such certificate within 10 days after receipt
thereof.

         (d) Delay in Requests. Failure or delay on the part of any Lender or
any Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or such Issuing Bank's right to demand such
compensation, provided that the Borrower shall not be required to compensate a
Lender or such Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or
such Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
such Issuing Bank's intention to claim compensation therefor, and provided
further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(f) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event in accordance with the
first two sentences of this Section. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate that such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section and setting forth in reasonable detail the
basis of calculation of such amount or amounts shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

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                                     - 52 -

         SECTION 2.17. Taxes.

         (a) Gross-up for Deduction or Withholding of U.S. Taxes. Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and without deduction
for any Taxes, provided that if the Borrower shall be required to deduct any
Taxes from such payments, then (i) if such deducted Tax is an Indemnified Tax or
Other Tax the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, 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 shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

         (b) Other Taxes. In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

         (c) Indemnification. The Borrower shall indemnify the Administrative
Agent, each Lender and each Issuing Bank, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto (other than penalties, interest and reasonable expenses
arising from the gross negligence or wilful misconduct of such Lender), whether
or not such Indemnified Taxes or Other Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability and a copy of any written communication
shall be delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
and shall be conclusive absent manifest error, provided, however, that the
Lender shall not be obligated to make any of its tax returns available to the
Borrower.

         (d) Delivery by Borrower of Receipt. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

         (e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, the Code or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower or to the appropriate taxing authority if directed by
the Borrower (in each case with a copy to the Administrative Agent), at the time
or times prescribed

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                                     - 53 -

by applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate. Without limiting
the generality of the foregoing, each Foreign Lender shall, on the date it
becomes a Lender hereunder, deliver to the Borrower (with a copy to the
Administrative Agent) either (i) Form W-8ECI, (ii) Form W-8BEN evidencing such
Lender's entitlement to a complete exemption from withholding under an
applicable income tax treaty or (iii) in the case of a Lender that is not a
bank, Form W-8BEN or Form W-8IMY (or other form reasonably acceptable to the
Borrower) together with certifications to the effect that such Lender (x) is not
a bank within the meaning of Code section 881(c)(3)(A), (y) is not a 10%
shareholder of the Borrower within the meaning of Code section 881(c)(3)(B) and
(z) is not a controlled foreign corporation related to the Borrower within the
meaning of Code section 881(c)(3)(C).

         (f) Refunds of Taxes. If the Administrative Agent or a Lender (or
assignee) receives a refund in respect of, or is granted a credit against or
release or remission for, any Taxes or Other Taxes that in its sole discretion
it determines is attributable to Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall within 30 days from
the date of such receipt pay over such refund, credit, release or remission to
the Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes
or Other Taxes giving rise to such refund, credit, release or remission), net of
all reasonable out-of-pocket expenses of the Administrative Agent or such Lender
(or assignee) and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
Borrower, upon the request of the Administrative Agent or such Lender (or
assignee), agrees to repay the amount paid over to the Borrower (plus penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender (or assignee) in the event the
Administrative Agent or such Lender (or assignee) is required to repay such
refund, to such Governmental Authority. The Administrative Agent or a Lender
will in good faith consider a request by the Borrower in seeking a refund,
credit, release or remission with respect to Taxes actually indemnified by the
Borrower, provided that neither the Administrative Agent nor any Lender shall be
under an obligation to take any action that such Person determines in its sole
discretion may have an adverse consequence.

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs; Partial Mortgages.

         (a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder or under any other Loan Document (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts
payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 1:00 p.m., New
York City time, on the date when due, in immediately available funds, without
set-off or counterclaim. Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All

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such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except payments to be made directly to an
Issuing Bank or the Swingline Lender as expressly provided herein and except
that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made
directly to the Persons entitled thereto and payments pursuant to other Loan
Documents shall be made to the Persons specified therein. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment under any Loan Document shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments under each Loan Document
shall be made in dollars.

         (b) Insufficient Funds - LC Disbursements. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.

         (c) Right of Set-off. If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans, provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such

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                                     - 55 -

participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

         (d) Non-Receipt from Borrower of Funds. Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or an
Issuing Bank hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

         (e) Certain Deductions by the Administrative Agent. If any Lender shall
fail to make any payment required to be made by it pursuant to Section 2.04(c),
2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.

         (f) Reallocation of Partial Mortgage Proceeds. It is the intent of the
parties hereto that each of the Lenders shall share in all proceeds on the
Collateral on a pro rata basis. Accordingly, on each occasion that proceeds in
respect of Mortgaged Property are not allocated to Obligations owed to Revolving
Lenders due to their omission as secured obligations under the related Mortgage,
the Lenders shall purchase and sell participations in the Revolving Loans, LC
Disbursements and Swingline Loans as contemplated by paragraph (c) above in such
amounts as shall be necessary so that the benefit of the proceeds received in
respect of such Mortgage shall be shared by the Lenders ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Revolving Loans, Term Loans and participations in LC Disbursements
and Swingline Loans.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders.

         (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 2.15, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.15 or 2.17, as

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<PAGE>
                                     - 56 -

the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

         (b) Replacement of Lenders. If any Lender requests compensation under
Section 2.15, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.17, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Commitment is being assigned, each Issuing Bank and
the Swingline Lender), which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

                                   ARTICLE III

                         Representations and Warranties

         The Borrower represents and warrants to the Lenders that:

         SECTION 3.01. Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.02. Authorization; Enforceability. The Financing Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement

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                                     - 57 -

has been duly executed and delivered by the Borrower and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of the Borrower or such Loan Party (as the case may be), enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

         SECTION 3.03. Governmental Approvals; No Conflicts. The Financing
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of the Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
the Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any of the Subsidiaries, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of the Subsidiaries, except Liens created under the Loan
Documents.

         SECTION 3.04. Financial Condition; No Material Adverse Change.

         (a) Financial Condition. The Borrower has heretofore furnished to the
Lenders (i) its consolidated balance sheet and statements of income,
stockholders equity and cash flows as of and for the 1998 and 1999 Fiscal Years,
reported on by Deloitte & Touche LLP, independent public accountants, (ii) its
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal quarter and the portion of the 2000 Fiscal
Year ended April 29, 2000, certified by its chief financial officer, (iii) its
pro forma consolidated balance sheet as at January 29, 2000, adjusted to give
effect to the consummation of the Reorganization Plan and the Financing
Transactions, as if such transactions had occurred on said date, certified by
its chief financial officer and (iv) for each fiscal month during the 2000
Fiscal Year ended not later than 30 days prior to the date hereof, its monthly
"Operating Cash Flow (EBITDA)" report, certified by its chief financial officer.
Such financial statements present fairly, in all material respects and on a
consolidated basis, the actual or pro forma (as the case may be) financial
position and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (iv) above.

         (b) Undisclosed Liabilities. Except as disclosed in the financial
statements referred to above or the notes thereto or in the Information
Memorandum and except for the Disclosed Matters, after giving effect to the
Financing Transactions, neither the Borrower nor any of the Subsidiaries has, as
of the Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.

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                                     - 58 -

         (c) Material Adverse Change. Since January 29, 2000, there has been no
material adverse change in the business, assets, operations, prospects or
condition, financial or otherwise, of the Borrower and the Subsidiaries, taken
as a whole (other than as set forth in Schedule 3.04(c)).

         SECTION 3.05. Properties.

         (a) Property Generally. Each of the Borrower and the Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business (including its Mortgaged Properties). Except
as permitted by Section 6.02, all such property is free and clear of Liens.

         (b) Intellectual Property. Each of the Borrower and the Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to its business, and the use thereof by the
Borrower and the Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

         (c) Real Property. Schedule 3.05(c) sets forth the address of each real
property that is owned or leased by the Borrower or any of the Subsidiaries as
of the Effective Date that is material to the business of the Borrower or any
Subsidiary after giving effect to the Financing Transactions.

         (d) Condemnation. Except as set forth on Schedule 3.05(d), as of the
Effective Date, neither the Borrower nor any of the Subsidiaries has received
notice of (i) any pending or contemplated condemnation proceeding affecting any
Mortgaged Property where such proceeding, if determined adversely to the
Borrower, could reasonably be expected to materially and adversely affect the
operation thereof or (ii) any sale or disposition thereof in lieu of
condemnation. Except for Permitted Encumbrances, neither any Mortgaged Property
nor any interest therein is subject to any right of first refusal, option or
other contractual right to purchase such Mortgaged Property or interest therein.

         SECTION 3.06. Litigation and Environmental Matters, Etc.

         (a) Litigation. There are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of the
Subsidiaries as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than as set forth in Part A of Schedule 3.06).

         (b) Environmental Laws. Except with respect to any matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, and

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                                     - 59 -

except as set forth in Part B of Schedule 3.06 (such matters, together with the
matters set forth in Part A of Schedule 3.06, being herein called the "Disclosed
Matters"), neither the Borrower nor any of the Subsidiaries (i) is currently not
in compliance with any Environmental Law or does not maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received written notice
of any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.

         (c) Disclosed Matters, Etc. Since the date of this Agreement, there has
been no change in the status of the Disclosed Matters that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

         (d) Burdensome Restrictions. Except as disclosed in Schedule 6.10, none
of the Borrower nor any of the Subsidiaries is a party to any agreement or
arrangement that would impose restrictions upon the Borrower or any of the
Subsidiaries of the type prohibited under Section 6.10.

         SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower
and the Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of the Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

         SECTION 3.09. Taxes. Each of the Borrower and the Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts that have been
issued prior to the Effective Date, exceed by more than $500,000 the fair market
value of the

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                                     - 60 -

assets of such Plan as of such date, and the present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
such date of the most recent financial statements reflecting such amounts,
exceed by more than $1,000,000 the fair market value of the assets of all such
underfunded Plans as of such date.

         SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the
Borrower or any of the Subsidiaries is subject, and all other matters (other
than matters of a general economic nature or matters otherwise generally known)
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum or Disclosure Statement nor any of the other reports, financial
statements, certificates or other information furnished by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time (it being understood that such projected financial
information is subject to significant financial uncertainties and contingencies
and that no assurance can be given that such projections will be realized).

         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the ownership interest of the Borrower in, each Subsidiary of the Borrower and
identifies each Subsidiary that is a Subsidiary Loan Party or a Special Purpose
Subsidiary, in each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and the Subsidiaries as of
the Effective Date. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid.

         SECTION 3.14. Labor Matters. There are no strikes, lockouts or
slowdowns against the Borrower or any Subsidiary pending (or, to the knowledge
of the Borrower, threatened) that could reasonably be expected to have a
Material Adverse Effect. All payments due from the Borrower or any Subsidiary,
or for which any claim may be made against the Borrower or any Subsidiary, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or accrued as a liability on the books of the Borrower or such
Subsidiary, except to the extent that the failure to make such payments or
accrue such liability could not reasonably be expected to have a Material
Adverse Effect. The consummation of the Financing Transactions will not give
rise to any right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which the Borrower or any

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                                     - 61 -

Subsidiary is bound where such right or termination or renegotiation could
reasonably be expected to have a Material Adverse Effect.

         SECTION 3.15. Solvency. Immediately after the consummation of the
Financing Transactions to occur on the Effective Date and immediately following
the making of each Loan made on the Effective Date and after giving effect to
the application of the proceeds of such Loans, (a) the fair value of the assets
of each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date. The amount of any contingent liability at any time
shall be computed as the amount that, in light of all facts and circumstances
existing at the time, represents the amount that could reasonably be expected to
become an actual or material liability.

         SECTION 3.16. Security Documents.

         (a) Pledge Agreement. The Pledge Agreement is effective to create in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Pledge Agreement) and, when the Collateral is delivered to the
Administrative Agent, the Pledge Agreement shall constitute a fully perfected
first priority Lien on all right, title and interest of the pledgor thereunder
in such Collateral to the extent such delivery is effective to perfect a Lien on
such Collateral, in each case prior and superior in right to any other Person
other than with respect to Liens expressly permitted by Section 6.02.

         (b) Security Agreement. The Security Agreement is effective to create
in favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Security Agreement) in which a Lien may be perfected by filing a
financing statement and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on all right, title
and interest of the grantors thereunder in such Collateral (other than the
Intellectual Property (as defined in the Security Agreement), in each case prior
and superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 6.02.

         (c) Intellectual Property. When the Security Agreement is filed in the
United States Patent and Trademark Office and the United States Copyright
Office, the Security Agreement shall constitute a fully perfected Lien on all
right, title and interest of the Loan Parties in the Intellectual Property (as
defined in the Security Agreement) in which a Lien may be

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                                     - 62 -

perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person other than with respect to Liens expressly
permitted by Section 6.02 (it being understood that subsequent recordings in the
United States Patent and Trademark Office and the United States Copyright Office
may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the Loan Parties after the date hereof).

         (d) Mortgages. The Mortgages are effective to create, subject to the
exceptions listed in each title insurance policy covering such Mortgage, in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable Lien on all of the Loan Parties' right,
title and interest in and to the Mortgaged Properties thereunder and the
proceeds thereof, and when the Mortgages are filed in the appropriate recording
offices, the Mortgages shall constitute a Lien on all right, title and interest
of the Loan Parties in such Mortgaged Properties and the proceeds thereof, in
each case prior and superior in right to any other person, other than with
respect to the rights of Persons pursuant to Liens expressly permitted by
Section 6.02.

         SECTION 3.17. Federal Reserve Regulations. No part of the proceeds of
any Loan or any Letter of Credit will be used, whether directly or indirectly,
and whether immediately, incidentally or ultimately, for any purpose that
entails a violation of, or that is inconsistent with, the provisions of
Regulation U or X.

                                   ARTICLE IV

                                   Conditions

         SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):

         (a) Execution. The Administrative Agent (or its counsel) shall have
     received from each party hereto either (i) a counterpart of this Agreement
     signed on behalf of such party or (ii) written evidence satisfactory to the
     Administrative Agent (which may include telecopy transmission of a signed
     signature page of this Agreement) that such party has signed a counterpart
     of this Agreement.

         (b) Opinions. The Administrative Agent shall have received a favorable
     written opinion (addressed to the Administrative Agent and the Lenders and
     dated the Effective Date) of each of (i) Shearman & Sterling, counsel for
     the Borrower, substantially in the form of Exhibit B-1, (ii) Marc
     Strassler, General Counsel of the Borrower, substantially in the form of
     Exhibit B-2, and (iii) local counsel in each jurisdiction where a Mortgaged

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                                     - 63 -

     Property is located, substantially in the form of Exhibit C, and, in the
     case of each such opinion required by this paragraph, covering such other
     matters relating to the Loan Parties, the Loan Documents or the Financing
     Transactions as the Required Lenders shall reasonably request. The Borrower
     hereby requests such counsel to deliver such opinions.

         (c) Corporate Documents. The Administrative Agent shall have received
     such documents and certificates as the Administrative Agent or its counsel
     may reasonably request relating to the organization, existence and good
     standing of each Loan Party, the authorization of the Financing
     Transactions and any other legal matters relating to the Loan Parties, the
     Loan Documents or the Financing Transactions, all in form and substance
     satisfactory to the Administrative Agent and its counsel.

         (d) Officer's Certificate. The Administrative Agent shall have received
     a certificate, dated the Effective Date and signed by the President, a Vice
     President or a Financial Officer of the Borrower, confirming compliance
     with the conditions set forth in paragraphs (a) and (b) of Section 4.02.

         (e) Fees and Expenses. The Lenders and their Affiliates shall have
     received all fees and other amounts due and payable on or prior to the
     Effective Date, including, to the extent invoiced, reimbursement or payment
     of all out-of-pocket expenses required to be reimbursed or paid by any Loan
     Party hereunder or under any other Loan Document.

         (f) Pledge Agreement. The Administrative Agent shall have received
     counterparts of the Pledge Agreement signed on behalf of the Borrower and
     each Subsidiary Loan Party thereto, together with stock certificates
     representing all the outstanding shares of capital stock of each Subsidiary
     (other than each Special Purpose Subsidiary) owned by or on behalf of any
     Loan Party as of the Effective Date after giving effect to the Financing
     Transactions (except that stock certificates representing shares of common
     stock of a Foreign Subsidiary may be limited to 65% of the outstanding
     shares of voting common stock of such Foreign Subsidiary), promissory notes
     evidencing all intercompany Indebtedness owed to any Loan Party by the
     Borrower or any Subsidiary as of the Effective Date after giving effect to
     the Financing Transactions and stock powers and instruments of transfer,
     endorsed in blank, with respect to such stock certificates and promissory
     notes.

         (g) Security Agreement. The Administrative Agent shall have received
     counterparts of the Security Agreement signed on behalf of the Borrower and
     each Subsidiary Loan Party, together with the following:

              (i) all documents and instruments, including Uniform Commercial
         Code financing statements, required by law or reasonably requested by
         the Administrative Agent to be filed, registered or recorded to create
         or perfect the Liens intended to be created under the Security
         Agreement; and

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                                     - 64 -

              (ii) a completed Perfection Certificate dated the Effective Date
         and signed by an executive officer or Financial Officer of the
         Borrower, together with all attachments contemplated thereby, including
         the results of a search of the Uniform Commercial Code (or equivalent)
         filings made with respect to the Loan Parties in the jurisdictions
         contemplated by the Perfection Certificate and copies of the financing
         statements (or similar documents) disclosed by such search and evidence
         reasonably satisfactory to the Administrative Agent that the Liens
         indicated by such financing statements (or similar documents) are
         permitted by Section 6.02 or have been released.

         (h) Mortgages. The Administrative Agent shall have received
     counterparts of a Mortgage with respect to each Mortgaged Property signed
     on behalf of the record owner or lessee, as applicable, of such Mortgaged
     Property. The Administrative Agent shall also have received,

              (A) with respect to each Mortgaged Property that is owned by a
         Loan Party, a policy or policies of title insurance issued by a
         nationally recognized title insurance company, insuring the Lien of
         each such Mortgage as a valid first Lien on the Mortgaged Property
         described therein, free of any other Liens except as permitted by
         Section 6.02, in form and substance reasonably acceptable to the
         Administrative Agent, together with such endorsements, coinsurance and
         reinsurance as the Administrative Agent or the Required Lenders may
         reasonably request, and

              (B) with respect to each Mortgaged Property that is leased by a
         Loan Party, a consent in form satisfactory to the Administrative Agent
         from the lessor under the respective lease to the extent required under
         Section 5.13(c) (and not obtained pursuant to paragraph (n) below),
         covering such Mortgaged Properties as the Administrative Agent may
         reasonably request.

         (i) Guarantee Agreement. The Administrative Agent shall have received
     (i) counterparts of the Guarantee Agreement signed on behalf of each
     Subsidiary Loan Party and (ii) counterparts of the Indemnity, Subrogation
     and Contribution Agreement signed on behalf of the Borrower and each
     Subsidiary Loan Party.

         (j) Insurance. The Administrative Agent shall have received evidence
     satisfactory to it that the insurance required by Section 5.07 is in
     effect.

         (k) Environmental Liabilities. The Lenders shall be reasonably
     satisfied as to the amount and nature of any Environmental Liabilities to
     which the Borrower and the Subsidiaries may be subject, and the plans of
     the Borrower with respect thereto, after giving effect to the Financing
     Transactions and the consummation of the other transactions contemplated
     hereby.

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         (l) Working Capital Requirements. The Lenders shall be reasonably
     satisfied with the sufficiency of amounts available under this Agreement to
     meet the ongoing working capital requirements of the Borrower and the
     Subsidiaries following the Financing Transactions and the consummation of
     the other transactions contemplated hereby.

         (m) Financial Statements; Capitalization, Etc. The Lenders shall have
     received the financial statements referred to in Section 3.04(a), and shall
     be satisfied with the capitalization, structure and equity ownership of the
     Borrower and the Subsidiaries after giving effect to the Reorganization
     Plan, and with the tax position and contingent tax liabilities of the
     Borrower and the Subsidiaries, and any tax sharing agreements to which the
     Borrower and the Subsidiaries will be a party.

         (n) Bankruptcy Orders; Consummation of Reorganization Plan. The United
     States Bankruptcy Court for the District of Delaware shall have entered
     orders (the "Orders") confirming the Loan Documents and the Reorganization
     Plan (as the same may be amended pursuant to the Chapter 11 Cases), such
     orders and Reorganization Plan to each be in form and substance
     satisfactory to the Required Lenders, it being understood that in any event
     the Reorganization Plan (as so amended) shall provide for the conversion of
     all of the Public Notes into equity capital of the Company. Each of the
     Orders shall be in full force and effect and none of the Orders shall be
     subject to any appeal or stay, and the Borrower and each of the
     Subsidiaries and Affiliates party to the Chapter 11 Cases shall have
     emerged (or be simultaneously emerging) from the Chapter 11 Cases and shall
     have consummated (or shall be simultaneously consummating) the
     Reorganization Plan in accordance with the terms thereof, and the
     Administrative Agent shall have received evidence satisfactory in form and
     substance to it demonstrating such fact (including the conversion of all of
     the Public Notes into equity capital of the Borrower upon the terms
     contemplated by the Reorganization Plan).

         (o) Material Agreements. The Lenders shall be satisfied with the terms
     and conditions of any agreements to be entered into by the Borrower or any
     of the Subsidiaries pursuant to the Reorganization Plan, and be satisfied
     with the material trade terms and promotional arrangements to be provided
     by trade creditors generally after the Effective Date (including but not
     limited to any related agreements to be entered into between trade
     creditors and the Borrower and the Subsidiaries).

         (p) Repayment of Existing Indebtedness. The Existing Credit Agreement
     and the DIP Facility and all commitments thereunder to lend shall have been
     terminated, all amounts outstanding thereunder (other than in respect of
     the Carryover Letters of Credit which, as provided in Section 2.05(k),
     shall become "Letters of Credit" hereunder) shall have been paid in full
     and all Liens on the assets of the Borrower or any Subsidiary securing any
     obligations thereunder or under any related agreement shall have been
     permanently released and the Administrative Agent shall have received
     evidence

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<PAGE>
                                     - 66 -

     satisfactory in form and substance to it demonstrating such termination,
     payment and release.

         (q) Employment Arrangements. The Lenders shall be satisfied with
     respect to arrangements for the retention of key senior management
     personnel, including evidence of the execution and delivery of satisfactory
     employment agreements with respect to such key personnel, and shall be
     satisfied with the composition of the boards of directors of the Loan
     Parties.

         (r) Business Plan; Financial Projections. The Lenders shall have
     received and be satisfied with (a) a detailed business plan for the 2000
     Fiscal Year and (b) financial projections for the Borrower and the
     subsidiaries for the period from the Effective Date through the final
     maturity of the Term Loans.

         (s) Valuations; Due Diligence Investigation. The Lenders shall have
     received (i) a satisfactory determination of store site enterprise values,
     from an appraisal or valuation firm (or internal valuation unit of The
     Chase Manhattan Bank) satisfactory to the Administrative Agent and (ii) a
     satisfactory independent audit prepared by the Specialized Due Diligence
     Group of The Chase Manhattan Bank with respect to inventory values, and
     inventory reporting and control systems, of the Borrower and the
     Subsidiaries.

         (t) Leverage Ratio. The Administrative Agent shall have received
     evidence satisfactory to it that the Leverage Ratio as at the Effective
     Date, after giving effect to the Reorganization Plan and the Financing
     Transactions, is not greater than 3.50 to 1.

         (u) Borrowing Request. The Administrative Agent shall have received a
     Borrowing Request and a letter of credit request described in Section
     2.05(b) with respect to the Loans to be made, and Letters of Credit to be
     issued (or that, pursuant to Section 2.05(k) are to become "Letters of
     Credit" hereunder) on the Effective Date.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
9.02) at or prior to 3:00 p.m., New York City time, on the earlier of four
months after the commencement of the Chapter 11 Cases and October 31, 2000 (and,
in the event such conditions are not so satisfied or waived, the Commitments
shall terminate at such time).

         SECTION 4.02. Initial and Subsequent Extensions of Credit. The
obligation of each Lender to make a Loan on the occasion of any Borrowing, and
of each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:

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                                     - 67 -

         (a) Truth of Representations and Warranties. The representations and
     warranties of each Loan Party set forth in the Loan Documents shall be true
     and correct in all material respects on and as of the date of such
     Borrowing or the date of issuance, amendment, renewal or extension of such
     Letter of Credit, as applicable, except to the extent such representations
     and warranties specifically relate to an earlier date, in which case such
     representations and warranties shall have been true, correct and complete
     in all material respects on and as of such earlier date.

         (b) No Defaults. At the time of and immediately after giving effect to
     such Borrowing or the issuance, amendment, renewal or extension of such
     Letter of Credit, as applicable, no Default shall have occurred and be
     continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

                                    ARTICLE V

                              Affirmative Covenants

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:

         SECTION 5.01. Financial Statements and Other Information. The Borrower
will furnish to the Administrative Agent:

         (a) within 90 days after the end of each Fiscal Year, its audited
     consolidated balance sheet and related statements of operations,
     stockholders' equity and cash flows as of the end of and for such year,
     setting forth in each case in comparative form the figures for the previous
     Fiscal Year, all reported on by Deloitte & Touche LLP or other independent
     public accountants of recognized national standing (without a "going
     concern" or like qualification or exception and without any qualification
     or exception as to the scope of such audit) to the effect that such
     consolidated financial statements present fairly in all material respects
     the financial condition and results of operations of the Borrower and its
     consolidated Subsidiaries on a consolidated basis in accordance with GAAP
     consistently applied (except as otherwise disclosed in such financial
     statements);

         (b) within 45 days after the end of each of the first three fiscal
     quarters of each Fiscal Year, its consolidated balance sheet and related
     statements of operations, stockholders' equity and cash flows as of the end
     of and for such fiscal quarter and the then elapsed portion of the Fiscal
     Year, setting forth in each case in comparative form the

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                                     - 68 -

     figures for the corresponding period or periods of (or, in the case of the
     balance sheet, as of the end of) the previous Fiscal Year, all certified by
     one of its Financial Officers as presenting fairly in all material respects
     the financial condition and results of operations of the Borrower and its
     consolidated Subsidiaries on a consolidated basis in accordance with GAAP
     consistently applied, subject to normal year-end and audit adjustments and
     the absence of footnotes;

         (c) within 30 days after the end of each of the first two fiscal months
     of each fiscal quarter of the Borrower, the monthly "Operating Cash Flow
     (EBITDA)" report for such month, substantially in the form delivered to the
     Lenders prior to the Effective Date;

         (d) concurrently with any delivery of financial statements under clause
     (a) or (b) above, a certificate of a Financial Officer of the Borrower (i)
     certifying as to whether a Default has occurred and, if a Default has
     occurred, specifying the details thereof and any action taken or proposed
     to be taken with respect thereto, (ii) in the case of such financial
     statements under clause (a) or (b) above, setting forth reasonably detailed
     calculations demonstrating compliance with Sections 6.15, 6.16 and 6.17 and
     determining the Applicable Rate and (iii) stating whether any change in
     GAAP or in the application thereof has occurred since the date of the
     Borrower's audited financial statements referred to in Section 3.04 and, if
     any such change has occurred, specifying the effect of such change on the
     financial statements accompanying such certificate;

         (e) concurrently with any delivery of financial statements under clause
     (a) above, a certificate of the accounting firm that reported on such
     financial statements (i) stating that their audit has included a review of
     the terms of Article VI, Sections 6.01 through 6.05, 6.08 and 6.14 through
     6.17 of this Agreement and any definitions set forth in this Agreement
     relating thereto, in each case as they relate to accounting matters, and
     (ii) stating whether, in connection with their audit, any condition or
     event that constitutes a Default has come to their attention, specifying
     the nature and period of existence thereof, provided that such accountants
     shall not be liable by reason of any failure to obtain knowledge of any
     such Default that would not be disclosed in the course of their audit
     examination;

         (f) as soon as practicable and in any event no later than February 28
     of each Fiscal Year, a detailed consolidated budget for such Fiscal Year
     (including a projected consolidated balance sheet and related statements of
     projected operations and cash flow as of the end of and for such Fiscal
     Year) and, promptly when available, any significant revisions of such
     budget;

         (g) promptly after the same become publicly available, copies of all
     periodic and other reports, proxy statements and other materials filed by
     the Borrower or any Subsidiary with the Securities and Exchange Commission,
     or any Governmental Authority succeeding to any or all of the functions of
     said Commission, or with any national securities exchange, as the case may
     be; and

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         (h) promptly following any request therefor, such other information
     regarding the operations, business affairs and financial condition of the
     Borrower or any Subsidiary, or compliance with the terms of any Loan
     Document, as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.02. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following
promptly after any officer of the Borrower obtains knowledge thereof:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
     before any arbitrator or Governmental Authority against or affecting the
     Borrower or any Affiliate thereof that could reasonably be expected (after
     giving effect to coverage and policy limits of insurance policies
     maintained by the Borrower and the Subsidiaries issued by unaffiliated
     insurers) to result in a Material Adverse Effect; and

         (c) any other development that results in, or could reasonably be
     expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

         SECTION 5.03. Information Regarding Collateral.

         (a) Changes in Corporate Name or Location, Etc. The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office or its principal place of
business or any office or facility at which Equipment or Inventory (as each such
term is defined in the Security Agreement) owned by it is located (including the
establishment of any such new office or facility), (iii) in any Loan Party's
identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer
Identification Number. The Borrower agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
perfected security interest in all the Collateral. The Borrower also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.

         (b) Annual Collateral Update. Each year, at the time of delivery of
annual financial statements with respect to the preceding Fiscal Year pursuant
to clause (a) of Section

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                                     - 70 -

5.01, the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer and the chief legal officer of the Borrower setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section.

         SECTION 5.04. Existence; Conduct of Business. The Borrower will, and
will cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business,
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03 and provided further
that neither the Borrower nor any of the Subsidiaries shall be required to
preserve, renew or keep in full force and effect any of the foregoing if the
board of directors of the Borrower or such Subsidiary, as the case may be, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower or of such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Borrower
or such Subsidiary, as the case may be.

         SECTION 5.05. Payment of Obligations. The Borrower will, and will cause
each of the Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before any penalty or fine shall be incurred by the
Borrower or such Subsidiary with respect thereto if the failure to pay any such
Indebtedness or other obligation has resulted or may result by law in an
imposition of a Lien upon any of its properties, except where (a) the validity
or amount thereof is being contested in good faith by appropriate proceedings,
(b) the Borrower or such Subsidiary has set aside on its books adequate reserves
or has made other appropriate provision with respect thereto to the extent
required in accordance with GAAP, (c) such contest effectively suspends the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 5.06. Maintenance of Properties. The Borrower will, and will
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.

         SECTION 5.07. Insurance. The Borrower will, and will cause each of the
Subsidiaries to, maintain, with financially sound and reputable insurance
companies:

         (a) Insurance Generally. Insurance with respect to its properties and
     business and the properties and businesses of the Subsidiaries against loss
     or damage of the kinds customarily carried or maintained under similar
     circumstances by corporations of established reputation engaged in similar
     businesses, in such amounts (giving effect to self-insurance), with such
     deductibles and by such methods as shall be customary for corporations
     similarly situated in the industry. Each such policy of insurance that
     insures against loss or damage with respect to any Collateral shall name
     the Administrative

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                                     - 71 -

     Agent for the benefit of Lenders as the loss payee thereunder for amounts
     in excess of $5,000,000 per occurrence and shall provide for at least 30
     days prior written notice to the Administrative Agent of any modification
     or cancellation of such policy. Upon receipt by the Administrative Agent of
     any insurance proceeds as loss payee, (i) to the extent that the Borrower
     or any of the Subsidiaries intends to use any such insurance proceeds that
     are Net Proceeds to repair, restore or replace assets of the Borrower or
     any of the Subsidiaries as provided in the second paragraph of the
     definition of the term "Net Proceeds", the Administrative Agent shall,
     subject to the provisions of such paragraph, deliver such insurance
     proceeds to the Borrower and (ii) otherwise, the Administrative Agent
     shall, and the Borrower hereby authorizes the Administrative Agent to,
     apply such insurance proceeds, to the extent that they are Net Proceeds, to
     prepay the Loans in accordance with Section 2.11(b).

         (b) Flood Hazard Insurance. If at any time the area in which any
     Mortgaged Property is located is designated (i) a "flood hazard area" in
     any Flood Insurance Rate Map published by the Federal Emergency Management
     Agency (or any successor agency), the Borrower shall obtain flood insurance
     in such total amount as is reasonable and customary for companies engaged
     in the business of operating supermarkets, and otherwise comply with the
     National Flood Insurance Program as set forth in the Flood Disaster
     Protection Act of 1973, as amended from time to time, or (ii) a "Zone 1"
     area, the Borrower shall obtain earthquake insurance in such total amount
     as is reasonable and customary for companies engaged in the business of
     operating supermarkets.

         SECTION 5.08. Casualty and Condemnation.

         (a) Notice of Casualties or Condemnation. The Borrower will furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any material portion of Collateral or the
commencement of any action or proceeding for the taking of any material portion
of Collateral under power of eminent domain or by condemnation or similar
proceeding.

         (b) Application of Insurance Proceeds to Prepayments. If any portion of
any Net Proceeds retained by or paid over to the Administrative Agent as
provided in Section 5.07 and the definition of the term "Net Proceeds" continues
to be held by the Administrative Agent on the date that is 365 days after the
receipt of such Net Proceeds by the Borrower or any Subsidiary, then such Net
Proceeds shall be applied to prepay Borrowings as provided in Section 2.11(b),
provided that the Administrative Agent shall have complied with such Section
5.07 and such definition.

         SECTION 5.09. Books and Records; Inspection. The Borrower will, and
will cause each of the Subsidiaries to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of the Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and

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<PAGE>
                                     - 72 -

inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants (provided that, so long as no Default or Event of
Default shall have occurred and be continuing, representatives of the Borrower
or such Subsidiary may be present at and participate in such discussions with
such independent accountants), all at such reasonable times during normal
business hours and as often as reasonably requested.

         SECTION 5.10. Compliance with Laws. The Borrower will, and will cause
each of the Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority (including Environmental Laws) applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

         SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of
the Term Loans will be used only for the payment of (a) amounts outstanding
under the Existing Credit Agreement and the DIP Facility and (b) fees and
expenses payable in connection with the Financing Transactions, expenses
incurred in the Chapter 11 Cases and expenses of the Reorganization Plan. The
proceeds of the Revolving Loans and Swingline Loans will be used only for
working capital and other general corporate purposes. No part of the proceeds of
any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of Regulations U and X. Letters of Credit will be issued
only for general corporate purposes.

         SECTION 5.12. Subsidiaries.

         (a) Additional Subsidiaries. If any additional Subsidiary is formed or
acquired after the Effective Date, the Borrower will notify the Administrative
Agent and the Lenders thereof and (a) if such Subsidiary is a Subsidiary Loan
Party, the Borrower will cause such Subsidiary to become a party to the
Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and
each applicable Security Document in the manner provided therein within 15
Business Days after such Subsidiary is formed or acquired and, subject to
preexisting Liens on such Subsidiary's assets and the terms thereof (to the
extent the same are permitted under this Agreement), promptly take such actions
to create and perfect Liens on such Subsidiary's assets to secure the
Obligations as the Administrative Agent or the Required Lenders shall reasonably
request and (b) if any shares of capital stock or Indebtedness of such
Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause
such shares and promissory notes evidencing such Indebtedness to be pledged
pursuant to the Pledge Agreement within 15 Business Days after such Subsidiary
is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary,
shares of common stock of such Subsidiary to be pledged pursuant to the Pledge
Agreement may be limited to 65% of the outstanding shares of voting common stock
of such Subsidiary).

         (b) Subsidiaries to be Wholly Owned. The Borrower will, and will cause
each of the Subsidiaries to, take such action from time to time as shall be
necessary to ensure that each Subsidiary Loan Party (other than Riskco) is a
wholly owned Subsidiary of the Borrower. The

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                                     - 73 -

Borrower will, and will cause each of the Subsidiaries to, take such action from
time to time as shall be necessary to ensure that at no time does the Borrower
or any Subsidiary hold less than 93% of the issued and outstanding equity
securities in Riskco or less than 93% of the issued and outstanding voting
securities of Riskco (provided that Riskco may be merged with or into another
Subsidiary Loan Party in accordance with Section 6.03). In the event that any
additional shares of stock shall be issued by any Subsidiary, the respective
Obligor agrees forthwith to deliver to the Administrative Agent pursuant to each
applicable Security Document such shares of stock (except that, if such
Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary to
be pledged pursuant to the Pledge Agreement may be limited to 65% of the
outstanding shares of voting common stock of such Subsidiary).

         SECTION 5.13. Further Assurances.

         (a) Execution of Documents and Financing Statements, Etc. The Borrower
will, and will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant or perfect or continue the
perfection of the Liens created or intended to be created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
the Loan Parties. The Borrower also agrees to provide to the Administrative
Agent, from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.

         (b) Liens on Material Assets. If (i) any Material Assets (including any
real property or improvements thereto or any interest therein) are acquired by
the Borrower or any Subsidiary Loan Party after the Effective Date (other than
assets constituting Collateral under the Security Agreement that become subject
to the Lien of the Security Agreement upon acquisition thereof) or (ii) Liens
permitted pursuant to Section 6.02 in favor of any Person other than the
Administrative Agent or the Lenders on any Material Assets are released or cease
to exist and such assets are not subject to any Liens (other than Permitted
Encumbrances) for a period of 270 days, the Borrower will notify the
Administrative Agent and the Lenders thereof, and, unless consented otherwise by
the Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations, subject (in the case
of clause (i) above) to preexisting Liens on such assets and the terms thereof
(to the extent the same are permitted under this Agreement), and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties, provided that the Loan Parties shall not be
required to subject any Real Property Asset or any Equipment to a Lien in favor
of the Administrative Agent under the Security Documents during the Permitted
Pending Lien Period for such Real Property Asset or Equipment.

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         (c) Leasehold Mortgage Consent Rights. The Borrower will, and will
cause each of the Subsidiaries to, use their respective best efforts to obtain
requisite consents from the respective lessors under any lease to which the
Borrower or any Subsidiary Loan Party is a party on the date hereof, and to
obtain lease terms in any lease entered into by the Borrower or any Subsidiary
Loan Party after the date hereof, permitting (in the case of any lease in effect
on the date hereof that otherwise prohibits such encumbrancing) or not expressly
prohibiting (in the case of any lease entered into after the date hereof) the
recording in the relevant real estate filing office of an appropriate memorandum
of lease and the encumbrancing of the leasehold interest of the Borrower or such
Subsidiary Loan Party, as the case may be, in the property that is the subject
of such lease pursuant to a Mortgage and the assignment of such leasehold
interest to the successful bidder at a foreclosure or similar sale (and to a
subsequent third party assignee by the Administrative Agent or any Lender to the
extent the Administrative Agent or such Lender is the successful bidder at such
sale) in the event of a foreclosure or similar action pursuant to such Mortgage.
It is understood that the foregoing shall apply to all leases, whether such
lease is an Operating Lease or a Capital Lease, and including any lease entered
into in connection with any Sale/Leaseback Transaction, and that, in the case of
any such lease in effect on the date hereof, such best efforts shall not be
deemed to include, in the good faith judgment of the Borrower, the material
modification of any rights or obligations, or the incurrence of any material
obligations, under the applicable lease or the expenditure of money in excess of
nominal amounts or the payment of monetary consideration other than nominal
monetary consideration.

         (d) Cash Management. The Borrower will, and will cause each of the
other Loan Parties, to establish and maintain with the Administrative Agent, The
Chase Manhattan Bank (or any of its Affiliates), or any Lender (or with other
banks that have entered into agreements with the Administrative Agent, in form
and substance satisfactory to the Administrative Agent, with respect to cash and
proceeds), cash management systems providing that all cash and proceeds of
accounts receivable and similar instruments collected by the Loan Parties in the
ordinary course of business are deposited with the Administrative Agent (or such
other banks) under arrangements permitting the creation and perfection of a
first priority security interest in all such cash and proceeds except to the
extent that the Administrative Agent otherwise consents (such consent not to be
unreasonably withheld).

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                                     - 75 -

                                   ARTICLE VI

                               Negative Covenants

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:

         SECTION 6.01. Indebtedness; Certain Equity Securities.

         (a) Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except
that:

         (i) the Borrower and the Subsidiaries may become and remain liable with
     respect to the Obligations;

         (ii) the Borrower may become and remain liable with respect to
     Indebtedness to any Subsidiary Loan Party, and any Subsidiary may become
     and remain liable with respect to Indebtedness to the Borrower or any
     Subsidiary Loan Party, provided that (x) all such intercompany Indebtedness
     shall be evidenced by promissory notes that are pledged to the
     Administrative Agent pursuant to the terms of the Pledge Agreement, (y) all
     such intercompany Indebtedness owed by the Borrower or any Subsidiary Loan
     Party shall be subordinated in right of payment to the payment in full of
     the Obligations pursuant to the terms of the applicable promissory notes or
     an intercompany subordination agreement and (z) any payment by any
     Subsidiary Loan Party under the Guarantee Agreement shall result in a pro
     tanto reduction of the amount of any intercompany Indebtedness owed by such
     Subsidiary to the Borrower or to any of the Subsidiary Loan Parties for
     whose benefit such payment is made;

         (iii) the Borrower and the Subsidiaries, as applicable, may remain
     liable with respect to Indebtedness described on Schedule 6.01;

         (iv) the Borrower and the Subsidiaries may become and remain liable
     with respect to Capital Lease Obligations, and may become and remain liable
     with respect to other Indebtedness so long as such other Indebtedness is
     secured by Liens permitted under Section 6.02(d), provided that the
     aggregate principal amount of such other Indebtedness incurred by Special
     Purpose Subsidiaries pursuant to this clause (iv) shall not exceed
     $20,000,000 at any one time outstanding;

         (v) the Borrower and the Subsidiaries may become and remain liable with
     respect to Indebtedness incurred to refinance, in whole or in part, any
     outstanding Indebtedness of the Borrower or any of the Subsidiaries
     permitted under clause (iii) or (iv) of this Section or any Indebtedness
     previously incurred pursuant to this clause (v), so long as (A)

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     such refinancing is effected upon Qualified Refinancing Terms and (B) in
     the case of any such Indebtedness secured by Liens, the conditions set
     forth in Section 6.02(e) are satisfied

         (vi) the Borrower and the Subsidiaries may become and remain liable
     with respect to Indebtedness under Hedging Agreements permitted under
     Section 6.07;

         (vii) the Borrower and the Subsidiaries may become and remain liable
     with respect to Indebtedness in respect of (i) Commercial Letters of Credit
     (in addition to any Commercial Letters of Credit issued hereunder) in an
     aggregate amount not to exceed at any time $10,000,000 and (ii) Standby
     Letters of Credit (in addition to any Standby Letters of Credit issued
     hereunder) in an aggregate amount not to exceed at any time $15,000,000;

         (viii) the Borrower and the Subsidiaries may become and remain liable
     with respect to Indebtedness in respect of indemnification and purchase
     price adjustment obligations incurred in connection with any sales of
     assets so long as such indemnification and purchase price adjustment
     obligations are customary in light of the type of sales of assets in
     connection with which they were incurred;

         (ix) the Borrower and the Subsidiaries may become and remain liable
     with respect to Indebtedness under guarantees in the ordinary course of
     business of the obligations of suppliers, customers, franchisees and
     licensees of the Borrower and the Subsidiaries in an aggregate amount not
     to exceed at any time $10,000,000;

         (x) the Borrower and the Subsidiaries may become and remain liable with
     respect to Indebtedness under guarantees of trade credit extended to
     Plainbridge in the ordinary course of business for the purchase of goods by
     Plainbridge, as the case may be, for or on behalf of the Borrower;

         (xi) the Borrower and any Subsidiary may remain and become (but shall
     not agree to be) liable with respect to Indebtedness in respect of
     leasehold interests assigned by the Borrower or such Subsidiary to any
     Person other than the Borrower or any Subsidiary, provided that the
     Indebtedness in respect of such leasehold interest was otherwise permitted
     hereunder immediately prior to such assignment;

         (xii) one or more Loan Parties may Guarantee Indebtedness of one or
     more other Loan Parties provided that such Indebtedness is otherwise
     permitted hereunder; and

         (xiii) the Borrower and the Subsidiaries may become and remain liable
     with respect to other Indebtedness in an aggregate principal amount not to
     exceed $30,000,000 at any time outstanding.

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<PAGE>
                                     - 77 -

         (b) Certain Equity Securities. The Borrower will not, and it will not
permit any Subsidiary to, issue (or otherwise become liable with respect to) any
Cash-Pay Preferred Stock.

         SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

         (a) Permitted Encumbrances;

         (b) Liens granted pursuant to the Security Documents;

         (c) Liens described in Schedule 6.02;

         (d) (i) Liens on Real Property Assets consisting of fee or leasehold
     interests in Related Stores (whether fully constructed or under
     construction), and Liens on Equipment (including rights of vendors under
     purchase contracts whereby title is retained for the purpose of securing
     the purchase price thereof), in each case securing the purchase price
     and/or cost of construction or improvement thereof or Indebtedness incurred
     to finance such purchase price and/or cost of construction or improvement,
     (ii) Liens on Real Property Assets consisting of fee or leasehold interests
     in Related Stores, and Liens on Equipment (including rights of vendors
     under purchase contracts whereby title is retained for the purpose of
     securing the purchase price thereof), in each case which Liens were in
     existence at the time of acquisition of such Real Property Assets or
     Equipment by the Borrower or any Subsidiary and which secure any
     Indebtedness, and (iii) Liens on Real Property Assets consisting of fee or
     leasehold interests in Related Stores, and Liens on Equipment (including
     rights of vendors under purchase contracts whereby title is retained for
     the purpose of securing the purchase price thereof), that are owned by any
     Subsidiary (other than any Subsidiary as of the Effective Date), in each
     case which Liens were in existence at the time such Subsidiary became a
     Subsidiary and which secure any Indebtedness; provided, however, that in
     each case

              (A) with respect to any such Lien described in clause (i) above,
         no Event of Default shall have occurred and be continuing at the time
         of incurrence of such Lien,

              (B) with respect to any such Lien described in clause (i) above,
         such Lien was granted and the Indebtedness secured by such Lien was
         incurred during the Permitted Pending Lien Period for the respective
         Real Property Assets or Equipment to be subjected to such Lien,

              (C) such Lien is limited to such Real Property Assets or Equipment
         and any fixed improvements thereafter erected thereon,

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                                     - 78 -

              (D) with respect to any such Lien described in clause (ii) or
         (iii) above, the Indebtedness secured by such Lien was not incurred in
         contemplation of the acquisition by the Borrower or any Subsidiary of
         the applicable Real Property Assets or the transaction pursuant to
         which the applicable Subsidiary became such a Subsidiary, as the case
         may be, and

              (E) the principal amount of the Indebtedness secured by such Lien
         (x) shall not exceed the cost of such property to the Borrower or any
         Subsidiary and (y) shall not be less than 70% of the fair market value
         of such property at the time of incurrence of such Indebtedness (in the
         case of any such Lien described in clause (i) above that is secured by
         Real Property Assets or Equipment), 40% of the fair market value of
         such property at the time of acquisition of the applicable Real
         Property Assets (in the case of any such Lien described in clause (ii)
         above that is secured by Real Property Assets), or 40% of the fair
         market value of such property at the time when the Subsidiary that owns
         the applicable Real Property Assets became a Subsidiary (in the case of
         any such Lien described in clause (iii) above that is secured by Real
         Property Assets);

         (e) Liens securing Indebtedness of the Borrower or any Subsidiary
     incurred to refinance, in whole or in part, any outstanding Indebtedness of
     the Borrower or such Subsidiary that is secured by Liens on Real Property
     Assets permitted under paragraph (c) or (d) of this Section; provided,
     however, that in each case (x) the Liens securing such refinancing
     Indebtedness are limited to the Real Property Assets that were subject to
     the Liens securing the Indebtedness so refinanced and (y) the principal
     amount of such refinancing Indebtedness shall not be (A) less than 60% of
     the fair market value of such Real Property Assets as of the date of such
     refinancing or (B) unless such refinancing Indebtedness is Non-Recourse
     Indebtedness, in an amount greater than 80% of the fair market value of
     such Real Property Assets as of the date of such refinancing;

         (f) Liens in favor of Amerisource Corporation (or any replacement
     supplier of pharmaceutical related inventory) relating to pharmacy-related
     inventory located in Related Stores and supplied to the Borrower by
     Amerisource Corporation (or such replacement supplier);

         (g) assignments or sales of income or revenues(including accounts
     receivable) or rights in respect of any thereof, to the extent permitted
     under Section 6.05; and

         (h) other Liens securing Indebtedness or other obligations in an
     aggregate amount not exceeding $10,000,000 at any time outstanding.

         SECTION 6.03. Fundamental Changes.

         (a) Mergers and Consolidations. The Borrower will not, and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to

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                                     - 79 -

merge into or consolidate with it, or liquidate or dissolve, except that, if at
the time thereof and immediately after giving effect thereto no Default shall
have occurred and be continuing (i) any Subsidiary may merge into the Borrower
in a transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary Loan Party in a transaction in which
the surviving entity is a Subsidiary Loan Party, (iii) any Subsidiary that is
not a Loan Party may merge into any Subsidiary that is not a Loan Party and (iv)
any Subsidiary 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 is not materially disadvantageous to the Lenders, provided that (1)
any such merger involving a Person that is not a wholly owned Subsidiary
immediately prior to such merger shall not be permitted unless such merger is
also permitted by Section 6.04 and (2) any merger of Riskco with any Subsidiary
shall result in Riskco becoming a wholly owned Subsidiary.

         (b) Lines of Business. The Borrower will not, and will not permit any
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and the Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto
(including, without limitation, on-line retailing and e-commerce businesses (to
the extent they relate to businesses of the type conducted by the Borrower and
the Subsidiaries on the date of this Agreement)).

         SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any Subsidiary to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:

         (a) Permitted Investments;

         (b) investments existing on the date hereof and set forth on Schedule
     6.04;

         (c) purchases or acquisitions by the Borrower or any Subsidiary Loan
     Party of assets from any Subsidiary Loan Party;

         (d) investments by the Borrower and the Subsidiaries in the Borrower
     and the Subsidiaries, provided that the amount of investments by the Loan
     Parties in Subsidiaries that are not Loan Parties shall be subject to the
     requirements set forth in the last sentence of this Section;

         (e) the Borrower and the Subsidiaries may make intercompany loans to
     the extent permitted under Section 6.01(a)(ii), provided that any such
     intercompany loans to

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                                     - 80 -

     Subsidiaries that are not Loan Parties shall be subject to the requirements
     set forth in the last sentence of this Section;

         (f) Guarantees constituting Indebtedness permitted by Section 6.01,
     provided that the amount of Indebtedness that is (i) outstanding with
     respect to Subsidiaries that are not Loan Parties and (ii) Guaranteed by
     any Loan Party shall be subject to the requirements set forth in the last
     sentence of this Section;

         (g) Guarantees by one or more Loan Parties of the obligations of one or
     more other Loan Parties to the extent such obligations are permitted
     hereunder;

         (h) investments received in connection with the bankruptcy or
     reorganization of, or settlement of delinquent accounts and disputes with,
     customers and suppliers, in each case in the ordinary course of business;

         (i) the Borrower and the Subsidiaries may make loans and advances to
     employees in the ordinary course of business in an aggregate amount not to
     exceed at any time outstanding $1,000,000;

         (j) the Borrower and the Subsidiaries may make and own investments in
     an aggregate amount not to exceed at any time outstanding $10,000,000
     consisting of any deferred portion of the sales price (or any other
     non-cash consideration) received by the Borrower or any Subsidiary in
     connection with any asset sale permitted under Section 6.05;

         (k) the Borrower and the Subsidiaries may acquire all (but not less
     than all) of the shares of capital stock of Riskco not owned by the
     Borrower or the Subsidiaries on the Effective Date;

         (l) the Borrower and the Subsidiaries may make additional investments
     to acquire or construct stores, provided that the aggregate amount of all
     such investments made pursuant to this paragraph (l) after the Effective
     Date shall not exceed $20,000,000 (and the amount of such investments shall
     be disregarded in determining compliance with Section 6.14);and

         (m) the Borrower and the Subsidiaries may make and own other
     investments in an aggregate amount not to exceed at any time outstanding
     $30,000,000, provided that (i) interest and dividends accreted, accrued or
     paid-in-kind on instruments or securities of another Person held or owned
     by the Borrower or a Subsidiary shall not increase the aggregate amount
     deemed invested by the Borrower or such Subsidiary in such instruments or
     securities and outstanding for purposes of this Section 6.04(m)) and (ii)
     the aggregate amount of such investments in joint ventures or minority
     interests shall not exceed $10,000,000.

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                                     - 81 -

Anything in clauses (d), (e) and (f) above to the contrary notwithstanding, (A)
the aggregate amount of investments under clause (d), intercompany loans under
clause (e) and Guarantees under clause (f) above that are made or advanced to or
for the benefit of Subsidiaries that are not Loan Parties shall not exceed in
the aggregate $5,000,000 at any one time outstanding and (B) none of the
Borrower nor any of the Subsidiaries will enter into any Guarantees of any
obligations (whether or not such obligations constitute Indebtedness) except to
the extent permitted under this Section 6.04 and Section 6.01.

         SECTION 6.05. Asset Sales. The Borrower will not, and will not permit
any Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any capital stock, nor will the Borrower permit any Subsidiary to
issue any additional shares of its capital stock or other ownership interest in
such Subsidiary, except:

         (a) sales of (i) inventory, (ii) used, worn-out, obsolete or surplus
     equipment and (iii) Permitted Investments, in each case in the ordinary
     course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary
     Loan Party;

         (c) the Borrower and the Subsidiaries may make Asset Sales, provided
     that the aggregate fair market value of the assets (including, without
     limitation, leasehold interests, goodwill and other intangible assets) sold
     pursuant to Asset Sales (other than Excluded Asset Sales and Replacement
     Store Sales) after the Effective Date shall not exceed $135,000,000 in the
     aggregate and provided further that (i) the consideration received for the
     related assets shall be in an amount at least equal to (A) the fair market
     value thereof (taking into account any restrictions on the use of such
     related assets that the Borrower or any such Subsidiary may require in
     connection with the asset sale in question) or (B) a lower amount if the
     Board of Directors of the Borrower or such Subsidiary, as the case may be,
     shall determine in good faith that the sale of such related assets for such
     lower amount is desirable in order to minimize losses being incurred by the
     Borrower or such Subsidiary, as the case may be, with respect to such
     related assets and that such sale for such lower amount is in the best
     interest of the Borrower or such Subsidiary, as the case may be; (ii) at
     least 80% of the consideration received (excluding any non-cash
     consideration received in connection with the exchange of assets of the
     Borrower or any Subsidiary for similar assets of any third party) for the
     related assets shall be cash (provided that the Borrower and its
     Subsidiaries may assign leasehold interests without regard to the condition
     set forth in this clause (ii)); (iii) after giving effect to such
     transaction, the Borrower shall be in compliance with Section 6.04; and
     (iv) the Net Proceeds of such Asset Sales shall be applied in the manner
     and to the extent required by Section 2.11;

         (d) the Borrower and the Subsidiaries may enter into Asset Swaps,
     provided that the aggregate fair market value of the stores or facilities
     transferred by the Borrower and the Subsidiaries pursuant to Asset Swaps in
     any Fiscal Year shall not exceed $45,000,000 and provided further that (i)
     any cash received by the Borrower and the Subsidiaries in

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<PAGE>
                                     - 82 -

     connection with any Asset Swap shall be treated as the proceeds of an Asset
     Sale for purposes of paragraph (c) above and Section 2.11, and (ii) any
     cash paid by the Borrower and the Subsidiaries shall be treated as Capital
     Expenditures for purposes of Section 6.14;

         (e) the Borrower and the Subsidiaries may, as lessor or sub-lessor,
     lease or sub-lease any Real Property Assets in the ordinary course of
     business;

     (f) the Borrower or any Subsidiary may, in the ordinary course of business,
     terminate any lease to which it is a party;

     (g) the Borrower or any Subsidiary may make Excluded Asset Sales;

     (h) the Borrower and the Subsidiaries may enter into any Qualified
     Sale/Leaseback Transaction permitted under Section 6.06; and

     (i) the Borrower and the Subsidiaries may make Restricted Payments to the
     extent permitted by Section 6.08.

         SECTION 6.06. Sale/Leaseback Transactions. The Borrower will not, and
will not permit any of the Subsidiaries (including any Special Purpose
Subsidiary) to, enter into any arrangement (a "Sale/Leaseback Transaction"),
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, provided that the Borrower and the
Subsidiaries may enter into any Qualified Sale/Leaseback Transaction.

         SECTION 6.07. Hedging Agreements. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.

         SECTION 6.08. Restricted Payments. The Borrower will not, and it will
not permit any Subsidiary to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except:

         (a) the Borrower may declare and pay dividends with respect to its
     capital stock payable solely in additional shares of its common stock;

         (b) the Borrower's Subsidiaries may declare and pay dividends ratably
     with respect to their capital stock;

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<PAGE>
                                     - 83 -

         (c) the Borrower may make Restricted Payments in respect of shares of
     stock, or options, issued to employees pursuant to its Employee Stock
     Option Plan, so long as the aggregate amount thereof made during any Fiscal
     Year shall not exceed $3,500,000;

         (d) the Borrower may make Restricted Payments on account of the
     purchase or redemption of any shares of capital stock of the Borrower
     (other than Preferred Stock), so long as:

              (1) at the time of such purchase or redemption, the Borrower's
         long-term debt securities are rated at least Ba1 by Moody's or at least
         BB+ by S&P; and

              (2) the aggregate amount of all such Restricted Payments made
         after the Effective Date does not exceed $15,000,000, provided that if
         at the time of such purchase or redemption the Borrower's long-term
         debt securities are rated at least Baa3 by Moody's or at least BBB- by
         S&P, then the aggregate amount of all such Restricted Payments made
         after the Effective Date (including all such Restricted Payments made
         when the Borrower's long-term debt securities are rated less than Baa3
         by Moody's or less than BBB- by S&P) shall not exceed $25,000,000; and

         (e) the Borrower and the Subsidiaries may make Restricted Payments to
     shareholders of Riskco (1) on account of the purchase or redemption of all
     (but not less than all) of the shares of capital stock of Riskco not owned
     by the Borrower or the Subsidiaries on the Effective Date; or (2) to cash
     out such shareholders in connection with a merger of Riskco with a
     Subsidiary in accordance with Section 6.03 in which Riskco becomes (or its
     successor is) a wholly owned Subsidiary.

         SECTION 6.09. Transactions with Affiliates. The Borrower will not, and
it will not permit any Subsidiary to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions that are at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among the Borrower and the Subsidiary Loan Parties, (c) any
Restricted Payment permitted by Section 6.08 or (d) reasonable and customary
fees paid to members of the Boards of Directors of the Borrower and the
Subsidiaries, it being the intent of this Section that transactions between any
Loan Party and any Subsidiary that is not a Loan Party shall be required to
satisfy the requirements of the foregoing clause (a).

         SECTION 6.10. Restrictive Agreements. The Borrower will not, and it
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
(except for preexisting agreements or arrangements applicable to (A) a property
at the time of its acquisition not incurred in contemplation of the acquisition
of such property, or (B) the property of a Subsidiary at the time of such
Subsidiary's acquisition not incurred in contemplation of such acquisition)

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                                     - 84 -

permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to guarantee Indebtedness of the
Borrower or any other Subsidiary, provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.10 (but shall apply to any amendment or
modification expanding the scope of any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) the foregoing shall not apply to
Special Purpose Subsidiaries, (v) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (vi) clause
(a) of the foregoing shall not apply to customary provisions in leases or
licenses restricting the assignment thereof.

         SECTION 6.11. Amendment of Material Documents. The Borrower will not,
and it will not permit any Subsidiary to, amend, modify or waive any of its
rights under its certificate of incorporation, by-laws or other organizational
documents or the Employee Stock Option Plan, in each case in any manner that
would be reasonably likely to result in a Material Adverse Effect.

         SECTION 6.12. Sale or Discount of Receivables. The Borrower shall not,
and shall not permit any Subsidiary to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable other than any Excluded Asset Sale
permitted pursuant to Section 6.05.

         SECTION 6.13. Fiscal Year. The Borrower shall not change the last day
of its Fiscal Year from the Saturday closest to January 31.

         SECTION 6.14. Capital Expenditures. The Borrower will not permit the
aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any Fiscal Year to exceed the amount set forth below opposite
such Fiscal Year:

     Fiscal Year                                        Amount
     -----------                                        ------

        2000                                        $115,000,000
        2001                                        $140,000,000
        2002                                        $127,500,000
        2003                                        $135,000,000
        2004                                        $135,000,000
        2005                                        $140,000,000

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                                     - 85 -

        2006                                        $145,000,000
        2007                                        $150,000,000

The amount of permitted Capital Expenditures set forth above in respect of any
Fiscal Year shall be increased by the lesser of (a) the amount of unused Capital
Expenditures for the immediately preceding fiscal year (less an amount equal to
any unused Capital Expenditures carried forward to such preceding fiscal year)
and (b) $20,000,000.

         SECTION 6.15. Leverage Ratio. The Borrower will not permit the Leverage
Ratio for any four-fiscal-quarter period ending during any period set forth
below to be in excess of the ratio set forth below opposite such period:

               Period                                       Amount
               ------                                       ------

     Effective Date through fourth fiscal quarter
       of 2001 Fiscal Year                                4.25 to 1.00

     2002 Fiscal Year                                     3.75 to 1.00

     2003 Fiscal Year                                     3.25 to 1.00

     2004 Fiscal Year                                     3.00 to 1.00

     2005 Fiscal Year                                     2.75 to 1.00

     Thereafter                                           2.50 to 1.00

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                                     - 86 -

         SECTION 6.16. Consolidated Interest and Rental Expense Coverage Ratio.
The Borrower will not permit the ratio of (a) Consolidated EBITDAR of the
Borrower and the Subsidiaries to (b) the sum, without duplication, of (i)
Consolidated Interest Expense and (ii) Consolidated Rental Payments for any
four-fiscal-quarter period ending during any period set forth below to be less
than the ratio set forth below opposite such period:

               Period                                       Ratio
               ------                                       -----

     Effective Date through fourth fiscal quarter
       of 2001 Fiscal Year                                1.40 to 1.00

     2002 Fiscal Year                                     1.45 to 1.00

     2003 Fiscal Year                                     1.50 to 1.00

     2004 Fiscal Year                                     1.55 to 1.00

     2005 Fiscal Year                                     1.65 to 1.00

     Thereafter                                           1.70 to 1.00

         SECTION 6.17. Minimum Consolidated EBITDA. The Borrower will not permit
Consolidated EBITDA of the Borrower and the Subsidiaries for any
four-fiscal-quarter period ending during any period set forth below to be less
than the amount set forth below opposite such period:

               Period                                       Amount
               ------                                       ------

    Effective Date through third fiscal quarter
      of 2000 Fiscal Year                                 $170,000,000

    fourth fiscal quarter of 2000 Fiscal Year through
      fourth fiscal quarter of 2001 Fiscal Year           $160,000,000

    2002 Fiscal Year                                      $170,000,000

    2003 Fiscal Year                                      $180,000,000

    2004 Fiscal Year                                      $195,000,000

    2005 Fiscal Year                                      $210,000,000

    Thereafter                                            $220,000,000

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                                    - 87 -

                                   ARTICLE VII

                                Events of Default

         If any of the following events ("Events of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
     reimbursement obligation in respect of any LC Disbursement when and as the
     same shall become due and payable, whether at the due date thereof or at a
     date fixed for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
     or any other amount (other than an amount referred to in clause (a) of this
     Article) payable under this Agreement or any other Loan Document, when and
     as the same shall become due and payable, and such failure shall continue
     unremedied for a period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
     of any Loan Party in any Loan Document or any amendment or modification
     thereof or waiver thereunder or any representation or warranty made in
     writing by the Borrower or any Subsidiary Loan Party in any report,
     certificate, financial statement or other document furnished pursuant to or
     in connection with any Loan Document or any amendment or modification
     thereof or waiver thereunder, shall prove to have been incorrect in any
     material respect when made or deemed made;

         (d) the Borrower shall fail to observe or perform any covenant,
     condition or agreement contained in Section 5.02, 5.04 (with respect to the
     existence of the Borrower) or 5.11 or in Article VI;

         (e) any Loan Party shall fail to observe or perform any covenant,
     condition or agreement contained in any Loan Document (other than those
     specified in clause (a), (b) or (d) of this Article), and such failure
     shall continue unremedied for a period of 30 days after notice thereof from
     the Administrative Agent to the Borrower (which notice will be given at the
     request of any Lender);

         (f) the Borrower or any Subsidiary shall fail to make any payment
     (whether of principal or interest and regardless of amount) in respect of
     any Material Indebtedness, when and as the same shall become due and
     payable (after giving effect to any applicable grace period);

         (g) any event or condition occurs that results in any Material
     Indebtedness becoming due prior to its scheduled maturity or that enables
     or permits (after giving effect to any applicable grace period) the holder
     or holders of any Material Indebtedness or any trustee or agent on its or
     their behalf to cause any Material Indebtedness to become due, or to
     require the prepayment, repurchase, redemption or defeasance thereof, prior
     to

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                                     - 88 -

     its scheduled maturity, provided that this clause (g) shall not apply to
     secured Indebtedness that becomes due as a result of the voluntary sale or
     transfer of the property or assets securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
     petition shall be filed seeking (i) liquidation, reorganization or other
     relief in respect of the Borrower or any Subsidiary or its debts, or of a
     substantial part of its assets, under any Federal, state or foreign
     bankruptcy, insolvency, receivership or similar law now or hereafter in
     effect or (ii) the appointment of a receiver, trustee, custodian,
     sequestrator, conservator or similar official for the Borrower or any
     Subsidiary or for a substantial part of its assets, and, in any such case,
     such proceeding or petition shall continue undismissed for 60 days or an
     order or decree approving or ordering any of the foregoing shall be
     entered;

         (i) the Borrower or any Subsidiary shall (i) voluntarily commence any
     proceeding or file any petition seeking liquidation, reorganization or
     other relief under any Federal, state or foreign bankruptcy, insolvency,
     receivership or similar law now or hereafter in effect, (ii) consent to the
     institution of any proceeding or petition described in clause (h) of this
     Article, (iii) apply for or consent to the appointment of a receiver,
     trustee, custodian, sequestrator, conservator or similar official for the
     Borrower or any Subsidiary or for a substantial part of its assets, (iv)
     make a general assignment for the benefit of creditors or (v) by action of
     its board of directors, take any action for the purpose of effecting any of
     the foregoing;

         (j) the Borrower or any Subsidiary shall become unable, admit in
     writing its inability or fail generally to pay its debts as they become
     due;

         (k) one or more (to the extent not adequately covered by insurance, so
     long as a claim has been submitted to a solvent and unaffiliated insurance
     company and such insurance company has not disputed coverage) judgments for
     the payment of money in an aggregate amount in excess of $10,000,000 shall
     be rendered against the Borrower, any Subsidiary or any combination thereof
     and the same shall remain undischarged for a period of 60 consecutive days
     during which execution shall not be effectively stayed, or any action shall
     be legally taken by a judgment creditor to attach or levy upon any assets
     of the Borrower or any Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that when taken together with
     all other ERISA Events that have occurred, could reasonably be expected to
     result in liability of the Borrower and the Subsidiaries in an aggregate
     amount exceeding $10,000,000 for all periods;

         (m) any Lien purported to be created under any Security Document with
     respect to any material portion of the Collateral shall cease to be, or
     shall be asserted by any Loan Party not to be, a valid and perfected Lien
     on any such material portion of the Collateral,

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                                     - 89 -

     with the priority required by the applicable Security Document, except (i)
     as a result of the sale or other disposition of the applicable Collateral
     in a transaction permitted under the Loan Documents or (ii) as a result of
     the Administrative Agent's (A) failure to maintain possession of any stock
     certificates, promissory notes or other instruments delivered to it under
     the Pledge Agreement or (B) failure to take any other action required to be
     taken on its part to maintain the validity and perfection of such Liens; or
     the enforceability of any Guarantee Agreement shall be contested by any
     Loan Party;

         (n) a Change in Control shall occur; or

         (o) there shall have been asserted against any Borrower or any of the
     Subsidiaries any Environmental Liability that, in the judgment of the
     Required Lenders is reasonably likely to be determined adversely to such
     Borrower or any of the Subsidiaries, and the amount thereof (either
     individually or in the aggregate) could reasonably be expected to result in
     liability of the Borrower and the Subsidiaries in an aggregate amount
     exceeding $10,000,000 (but after deducting any portion thereof that is
     reasonably expected to be paid by other creditworthy Persons jointly and
     severally liable therefor);

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.

                                  ARTICLE VIII

                            The Administrative Agent

         Each of the Lenders and the Issuing Banks hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the

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                                     - 90 -

terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.

         The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

         The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of the Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. The Administrative
Agent shall not be deemed to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

         The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not

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                                     - 91 -

be liable for any action taken or not taken by it in accordance with the advice
of any such counsel, accountants or experts.

         The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

         Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Banks, appoint a successor Administrative Agent that shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

         Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.

         None of the Syndication Agent, Documentation Agent or Senior Managing
Agent, in its capacity as such, shall have any obligation, responsibility or
required performance hereunder and shall not become liable in any manner to any
party hereto. No party shall have

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                                     - 92 -

any obligation or liability, or owe any performance, hereunder, to the
Syndication Agent, Documentation Agent or Senior Managing Agent in its capacity
as such.

                                   ARTICLE IX

                                  Miscellaneous

         SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to the Borrower, to it at 200 Milik Street, Carteret, New Jersey
     07008, Attention of Frank Vitrano, Executive Vice President Treasurer and
     Chief Financial Officer (Telecopy No. (732) 499-6894), with a copy under
     separate cover to Marc Strassler, Senior Vice President and General Counsel
     (Telecopy No. (732) 499-6891);

         (b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan
     and Agency Services Group, One Chase Manhattan, 8th Floor, New York, New
     York 10081, Attention of Concetta Prainito (Telecopy No. (212) 552-7500),
     with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
     Attention of Barry Bergman (Telecopy No. (212) 270-5646);

         (c) if to Chase, in its capacity as an Issuing Bank, to The Chase
     Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan, 8th
     Floor, New York, New York 10081, Attention of Concetta Prainito (Telecopy
     No. (212) 552-7500), with a copy to The Chase Manhattan Bank, 270 Park
     Avenue, New York 10017, Attention of Ruby Tulloch (Telecopy No. (212)
     270-1474), and if to any other Lender in its capacity as an Issuing Bank,
     to such Lender at its address (or telecopy number) set forth in its
     Administrative Questionnaire;

         (d) if to the Swingline Lender, to The Chase Manhattan Bank, Loan and
     Agency Services Group, One Chase Manhattan, 8th Floor, New York, New York
     10081, Attention of Concetta Prainito (Telecopy No. (212) 552-7500), with a
     copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
     Attention of Ruby Tulloch (Telecopy No. (212) 270-1474); and

         (e) if to any other Lender, to it at its address (or telecopy number)
     set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other

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<PAGE>
                                     - 93 -

communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.

         SECTION 9.02. Waivers; Amendments.

         (a) No Deemed Waivers; Remedies Cumulative. No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any
Lender or Issuing Bank may have had notice or knowledge of such Default at the
time.

         (b) Amendments. Neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of this or
any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders,
provided that no such agreement shall

         (i) increase the Commitment of any Lender without the written consent
     of such Lender,

         (ii) reduce the principal amount of any Loan or LC Disbursement or
     reduce the stated rate of interest thereon, or reduce any fees payable
     hereunder, without the written consent of each Lender affected thereby,

         (iii) postpone the scheduled date of payment of the principal amount of
     any Loan or LC Disbursement, or any interest thereon, or any fees payable
     hereunder, or reduce the amount of, waive or excuse any such payment, or
     postpone the scheduled date of expiration of any Commitment, without the
     written consent of each Lender affected thereby,

         (iv) change Section 2.18(b) or (c) in a manner that would alter the pro
     rata sharing of payments required thereby, without the written consent of
     each Lender,

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<PAGE>
                                     - 94 -

         (v) change any of the provisions of this Section or the definition of
     the term "Required Lenders" or any other provision of any Loan Document
     specifying the number or percentage of Lenders (or Lenders of any Class)
     required to waive, amend or modify any rights thereunder or make any
     determination or grant any consent thereunder, without the written consent
     of each Lender (or each Lender of such Class, as the case may be),

         (vi) release all or substantially all of the Subsidiary Loan Parties
     from their Guarantee under the Guarantee Agreement (except as expressly
     provided in the Guarantee Agreement), or limit the liability of all or
     substantially all of the Subsidiary Loan Parties in respect of such
     Guarantee, without the written consent of each Lender,

         (vii) release all or substantially all of the Collateral from the Liens
     of the Security Documents (except as expressly set forth in the Security
     Documents), without the written consent of each Lender,

         (viii) change any provisions of any Loan Document in a manner that by
     its terms adversely affects the rights in respect of payments due to
     Lenders holding Loans of any Class differently than those holding Loans of
     any other Class, without the written consent of Lenders holding a majority
     in interest of the outstanding Loans and unused Commitments of each
     affected Class or

         (ix) change the rights of the Tranche B Lenders to decline mandatory
     prepayments as provided in Section 2.11, without the written consent of
     Tranche B Lenders holding a majority of the outstanding Tranche B Loans,

and provided further that (A) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, any Issuing Bank or the
Swingline Lender without the prior written consent of the Administrative Agent,
such Issuing Bank or the Swingline Lender, as the case may be, and (B) any
waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Revolving Lenders (but not the
Tranche A Lenders and Tranche B Lenders), the Tranche A Lenders (but not the
Revolving Lenders and Tranche B Lenders) or the Tranche B Lenders (but not the
Revolving Lenders and Tranche A Lenders) may be effected by an agreement or
agreements in writing entered into by the Borrower and requisite percentage in
interest of the affected Class of Lenders.

     Anything herein to the contrary notwithstanding, no consent of the Lenders
shall be required for the Administrative Agent to release any Guarantee of any
Subsidiary Loan Party, or to release any property from the Lien of any Security
Document (and the Administrative Agent is hereby authorized by the Lenders to
effect such release), to the extent that such Subsidiary Loan Party or such
property is the subject of a sale permitted hereunder (or to which the Required
Lenders shall have consented), and no consent of the Lenders shall be required
for the Administrative Agent to release any property from the Lien of any
Security Document (and

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<PAGE>
                                     - 95 -

the Administrative Agent is hereby authorized by the Lenders to effect such
release) to the extent that such property is to be covered by a Lien permitted
under clauses (d) or (e) of Section 6.02.

         SECTION 9.03. Expenses; Indemnity; Damage Waiver.

         (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including internally-allocated expenses of the Administrative Agent and its
Affiliates), including (A) expenses incurred in connection with due diligence
and (B) the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation, execution, delivery and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by each Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder, (iii) all out-of-pocket expenses incurred by the Administrative
Agent, any Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, any Issuing Bank
or any Lender, in connection with the enforcement of its rights under the Loan
Documents, including its rights under this Section, including all such
out-of-pocket expenses incurred during any workout or restructuring in respect
of such Loans or Letters of Credit and (iv) and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein.

         (b) Indemnification by Borrower. The Borrower shall indemnify the
Administrative Agent, each Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Financing Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by any Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or Release of Hazardous Materials
on or from any Mortgaged Property or any other property currently or formerly
owned or operated by the Borrower or any of the Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of the
Subsidiaries, except to the extent any such actual or alleged presence or
Release of Hazardous Materials, or conditions giving rise to such Environmental
Liability, originate after an Indemnitee has taken possession or control of such
property, or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and

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<PAGE>
                                     - 96 -

regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Affiliate of such
Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any of such Indemnitee's Affiliates).

         (c) Reimbursement by Lenders. To the extent that the Borrower fails to
pay any amount required to be paid by it to the Administrative Agent, any
Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Administrative Agent such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, such Issuing Bank or the Swingline Lender in
its capacity as such.

         (d) Waiver of Consequential Damages, Etc. To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Financing Transactions, any
Loan or Letter of Credit or the use of the proceeds thereof.

         (e) Payments. All amounts due under this Section shall be payable
promptly after written demand therefor.

         SECTION 9.04. Successors and Assigns.

         (a) Assignments Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing
Bank that issues any Letter of Credit), except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, such Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

         (b) Assignments by Lenders. Any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it) to other Lenders, their Affiliates, a Related Fund of the assigning Lender
or another Lender or to any Federal Reserve Bank without restriction, to other
financial institutions or to any entity that is regularly engaged in making,

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                                     - 97 -

purchasing or investing in loans or securities with the consent of the Borrower
and the Administrative Agent, in each case not to be unreasonably withheld,
provided that

         (i) except in the case of an assignment to a Lender, an Affiliate of a
     Lender or a Related Fund of the assigning Lender or another Lender in
     circumstances where the Borrower would not incur increased costs as a
     result of such assignment, each of the Borrower and the Administrative
     Agent (and, in the case of an assignment of all or a portion of a Revolving
     Commitment or any Lender's obligations in respect of its LC Exposure or
     Swingline Exposure, each Issuing Bank and the Swingline Lender) must give
     their prior written consent to such assignment (which consent shall not be
     unreasonably withheld),

         (ii) except in the case of an assignment to a Lender, an Affiliate of a
     Lender or a Related Fund of the assigning Lender or another Lender, or an
     assignment of the entire remaining amount of the assigning Lender's
     Commitment or Loans, the amount of the Commitment or Loans of the assigning
     Lender subject to each such assignment (determined as of the date the
     Assignment and Acceptance with respect to such assignment is delivered to
     the Administrative Agent) shall not be less than $5,000,000 (in the case of
     any such assignment of Revolving Loans or Commitments or Tranche A Term
     Loans or Commitments), or less than $1,000,000 (in the case of any such
     assignment of Tranche B Term Loans or Commitments) unless each of the
     Borrower and the Administrative Agent otherwise consent,

         (iii) each partial assignment shall be made as an assignment of a
     proportionate part of all the assigning Lender's rights and obligations
     under this Agreement, except that this clause (iii) shall not be construed
     to prohibit the assignment of a proportionate part of all the assigning
     Lender's rights and obligations in respect of one Class of Commitments or
     Loans,

         (iv) the parties to each assignment shall execute and deliver to the
     Administrative Agent an Assignment and Acceptance, together with a
     processing and recordation fee of $3,500, and

         (v) the assignee, if it shall not be a Lender, shall deliver to the
     Administrative Agent an Administrative Questionnaire,

and provided further that any consent of the Borrower otherwise required under
this paragraph shall not be required if an Event of Default under clause (a),
(b), (h) or (i) of Article VII has occurred and is continuing.

         Subject to acceptance and recording thereof pursuant to paragraph (d)
of this Section, from and after the effective date specified in each Assignment
and Acceptance the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement,

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<PAGE>
                                     - 98 -

and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.

         Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC")
of such Granting Lender, identified in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make hereunder, provided that (i) nothing herein shall constitute a
commitment to make any Loan by any SPC, (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Loan, the
Granting Lender shall make such Loan pursuant to the terms hereof, and (iii) the
rights of any such SPC shall be derivative of the rights of the Granting Lender,
and such SPC shall be subject to all of the restrictions upon the Granting
Lender herein contained. Each of the Administrative Agent, the Lenders and the
Borrower shall be entitled to rely upon and deal solely with the Granting Lender
with respect to Loans made by a Lender by or through its SPC. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to
the same extent, and as if, such Loan were made by the Granting Lender. Each
party hereto hereby agrees (which agreement shall survive the termination of
this Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of any SPC, it will not
institute against, or join any other person in instituting against, such SPC,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or similar proceedings under the laws of the United States or any
State thereof, in respect of claims arising out of this Agreement, provided that
the Granting Lender hereby agrees to indemnify, save and hold harmless each
other party hereto for any loss, cost, damage and expense arising out of their
inability to institute any such proceeding against the SPC that has made any
Loans which would otherwise have been made by said Grantor Lender.

         In addition, notwithstanding anything to the contrary contained in the
preceding paragraph, any SPC may (i) with the prior written consent of the
Borrower and the Administrative Agent (which consents shall not be unreasonably
withheld) but without paying any processing fee therefor, assign all or a
portion of its interests in any Loans to its Granting Lender or to any financial
institutions providing liquidity and/or credit facilities to or for the account
of such SPC to fund the Loans made by such SPC or to support the securities (if
any) issued by such SPC to fund such Loans (but nothing contained herein shall
be construed in derogation of the obligation of the Granting Lender to make
Loans hereunder), provided that neither the consent of the SPC nor of any such
assignee shall be required for amendments or waivers hereunder except for those
amendments or waivers for which the consent of participants is required under
paragraph (e) of this Section and (ii) disclose on a confidential basis (in the

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<PAGE>
                                     - 99 -

same manner described in Section 9.12 hereof) any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of a surety, guarantee or credit or liquidity enhancement to such SPC.

         (c) Maintenance of Register by Administrative Agent. The Administrative
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices in The City of New York a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Banks and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

         (d) Effectiveness of Assignments. Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee's completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Acceptance and record the information contained therein in
the Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.

         (e) Participations. Any Lender may, without the consent of the
Borrower, the Administrative Agent, each Issuing Bank or the Swingline Lender,
sell participations to one or more banks or other entities (a "Participant") in
all or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it),
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, each Issuing Bank 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. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents,
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 100 -

Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) Limitations on Rights of Participants. A Participant shall not be
entitled to receive any greater payment under Section 2.15 or 2.17 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.17(e) as though it were a
Lender.

         (g) Certain Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

         SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the
applicable Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 101 -

Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof that, when taken together, bear the signatures
of each of the other parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

         SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, 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 obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender may have.

         SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process.

         (a) Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York.

         (b) Submission to Jurisdiction. The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against the Borrower or its properties in the courts
of any jurisdiction.

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 102 -

         (c) Waiver of Venue. The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

         (d) Service of Process. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
9.01. Nothing in this Agreement or any other Loan Document will affect the right
of any party to this Agreement to serve process in any other manner permitted by
law.

         SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, trustees, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to any direct or indirect contractual counterparty in swap
agreements (or to such contractual counterparty's professional advisor), so long
as such contractual counterparty (or such professional advisor) agrees to be
bound by the provisions of this Section 9.12, (c) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with the ratings issued with respect to such Lender, (d)
to the extent

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 103 -

requested by any regulatory authority, (e) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (f) to any
other party to this Agreement, (g) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(h) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (i) with the consent of the Borrower or (j) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "Information" means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower, provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

         SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 104 -

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

                                                 PATHMARK STORES, INC.

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

THE CHASE MANHATTAN BANK,                           FLEET NATIONAL BANK,
  individually, as an Issuing Bank and                individually, and as
  as Administrative Agent                             Syndication Agent

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

FIRST UNION NATIONAL BANK,                          GMAC BUSINESS CREDIT, LLC,
  individually, and as Documentation Agent            individually, and as
                                                      Senior Managing Agent

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

CYPRESSTREE INVESTMENT                            CYPRESSTREE SENIOR FLOATING
  MANAGEMENT COMPANY, INC.                          RATE FUND

As: Attorney-in-Fact and on behalf of            By: CypressTree Investment
      First Allmerica Financial Life Insurance        Management Company, Inc.,
       Company as Portfolio Manager                    as Portfolio Manager

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

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 105 -

DIME COMMERCIAL CORP.                    FRANKLIN FLOATING RATE TRUST

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

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

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

FRANKLIN FLOATING RATE                   GALAXY CLO 1999-1, LTD.
  MASTER SERIES
                                         By: SAI Investment Adviser, Inc.
                                             its Collateral Manager

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

GENERAL ELECTRIC CAPITAL                 GMAC COMMERCIAL CREDIT LLC
  CORPORATION

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

KZH CYPRESSTREE-1 LLC                    KZH ING-3 LLC

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

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 106 -

KZH SOLEIL-2 LLC                         LONG LANE MASTER TRUST IV

                                         By: Fleet National Bank,
                                              as Trust Administrator
By
   -------------------------------
   Name:
   Title:                                By
                                            ------------------------
                                            Name:
                                            Title:

METROPOLITAN LIFE INSURANCE              METROPOLITAN PROPERTY AND
  COMPANY                                 CASUALTY INSURANCE COMPANY

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

MONY LIFE INSURANCE COMPANY OF           NATEXIS BANQUES POPULAIRES
  AMERICA

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

NORTH AMERICAN SENIOR                    ORIX USA CORPORATION
  FLOATING RATE FUND

By: CypressTree Investment               By
    Management Company, Inc.,               ------------------------
    as Portfolio Manager                    Name:
                                            Title:

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

                                Credit Agreement
                                ----------------

<PAGE>
                                    - 107 -

THE PROVIDENT BANK                       SUMMIT BANK

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

VAN KAMPEN PRIME RATE                    VAN KAMPEN SENIOR
  INCOME TRUST                            INCOME TRUST

By: Van Kampen Investment              By: Van Kampen Investment
     Advisory Corp.                         Advisory Corp.

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

                                Credit Agreement
                                ----------------

<PAGE>

                                                                SCHEDULE 1.01(a)

                              Mortgaged Properties

            [See definition of "Mortgaged Property" in Section 1.01]

Albany (637) & Albany Add'l Bldg
Amboy Road (681)
Amboy Road - Non Foods (680)
Aramingo (554)
Atlantic Center (619)
Baldwin (623)
Bay Plaza (647)
Bayshore (602)
Belleville (125)
Belmont (128)
Bensalem (563)
Bergenfield (194)
Boro Park (624)
Botany (175)
Brentwood (600)
Brentwood Fmr Pmk (605)
Bricktown (578)
Bristol (547)
Broad Street (557)
Brookhaven (558)
Bruckner (613)
Bruckner Boulevard (Land)
Camden (591)
Castle Center (667)
Centereach (663)
Church Road (546)
Clifton (185)
Commack (620)
Copiague (635)
Cottman (564)
Cropsey (638) & Cropsey Loading Dock Area & Cropsey Ave (Parking)
Deptford (539)
Dix Hills P/L (664)
Dupont Hwy (593)
East Brunswick (Lease) (538)
E. Harrisburg Fmr Pmk (562)
East Meadow (665)
East Paterson (193)

                                SCHEDULE 1.01(a)
                                ----------------
<PAGE>
                                     - 2 -

East Rockaway (611)
Eatontown (572)
Edgewater Com (190)
Edgewater Park (526)
Edison (535)
Elmont Land (761)
Elmora (288)
Fair Lawn (198)
Fairless Hills (529)
Fairless Hills Fmr Pmk (543)
Ferry Street (186)
Ferry Street Fmr Pmk (187)
Folsom (567) & Folsom Loading Area (567)
Forest (685) & Forest Avenue Non Foods (685) & Forest Avenue Bottle Return (685)
Frankford (553)
Franklin Sq-Land (633) & Franklin Sq-Building (633) & Franklin Square P/L (633)
Franklin Sq - Building (633)
Franklin Square P/L (633)
Franklin Township Gas (952)
Freehold (574)
Garden City (632)
Germantown (550)
Gillette (437)
Gowanus (642)
Greenvale (608)
Hackensack (153)
Harlem (609)
Hazlet (573)
Holbrook (641)
Holbrook former Rkl (715)
Hopelawn (527) & Hopelawn P/L & Hopelawn Gas
Howell (576)
Huntington Fmr Rkl (727)
Inwood (aka Washington Heights) (610) & (Inwood) Washington P/L & (Inwood)
  Washington Bsmt
Islip (639)
Jericho (666)
Jersey City (112)
Kew Gardens (607)
Kinnelon (284)
Kirkwood (586)
Lakeside (286)
Lancaster Pike (Lease) (589) & Lancaster Pike P/L & Lancaster Pike P/L (Lease)
Lawnside (551)

                                SCHEDULE 1.01(a)
                                ----------------
<PAGE>
                                     - 3 -

Levittown (618)
Linden (512)
Linden Fmr Pmk (510)
Long Island City (627)
Lyons Plaza (aka Irvington) (224)
Manahawkin (594)
Marlboro (571)
Marple (561) & Marple (Lease) (561)
Middlesex (436)
Middletown (577)
Millville (595)
Monsey (291)
Montclair (280)
Mount Vernon (648)
Nanuet (292)
Newark, DE (590)
New Dorp (683)
New Hyde Park (649)
No. Babylon (615)
No. Bergen (180)
No. Brunswick (536)
No. Yonkers (298)
Norwalk Fmr Rkl (737)
Old Bridge (581)
Old Colony (aka Jersey City-Old Colony)(114)
Oregon (552)
Ozone (626) & Ozone Park P/L
Paramus Gas (955)
Parole, MD Fmr HK (767)
Parsippany (282)
Patchogue (614)
Pike Slip (645) & Pike Slip Non Foods (645)
Pleasantville (575)
Port Jefferson (604)
Ramsey (299)
Randolph (289)
Richmond (682)
Seaford (625) and Seaford Gas (961)
Shirley (646)
Somerville (438)
So. Orange (270) & South Orange P/L (270)
So. Plainfield (421)
Springfield Gardens (616)
Starrett City (634)

                                SCHEDULE 1.01(a)
                                ----------------
<PAGE>
                                     - 4 -

Stony Brook fmr Rickel (714)
Toms River (582)
Union (452) & Union Liquor (452)
Wall Twp (579)
Warminster (560) & Warminster (Lease) (560)
Wayne (296)
Weehawken (178)
West Babylon (644)
West Paterson (196)
West Windsor (534)
Whitestone (622) & Whitestone P/L (622)
Woodbridge (580)
Woodbridge Photo Studio (583)
Woodbridge Truck Terminal (900)
Yonkers (293)

                                SCHEDULE 1.01(a)
                                ----------------
<PAGE>

                                                                SCHEDULE 1.01(b)

                              Stores Held for Sale

           [See definition of "Excluded Asset Sales" in Section 1.01]

Rickel (closed), Edgewater Park, NJ
Pathmark (closed), Hamilton Township, NJ
Rickel (closed), Johnson City, NY
Rickel (closed), Lawnside, NJ
Rickel (undeveloped), Poughkeepsie, NY
Pathmark (closed), Ivy Hill Road, Springfield Twp., PA
Pathmark (closed), Whitaker Ave., Philadelphia, Pa

                                SCHEDULE 1.01(b)
                                ----------------

<PAGE>

                                                                   SCHEDULE 2.01

                             Lenders and Commitments

             [See definition of "Lenders", "Revolving Commitments",
      "Tranche A Commitments" and "Tranche B Commitments" in Section 1.01]

<TABLE>
<CAPTION>

----------------------------------------- -------------------- ------------------- ------------------- ------------------
                LENDERS                    Revolving Credit        Tranche A           Tranche B       Total Allocation
                                              Commitments         Commitments         Commitments
----------------------------------------- -------------------- ------------------- ------------------- ------------------

<S>                                         <C>                  <C>                <C>                 <C>
The Chase Manhattan Bank                    $40,833,333.33       $29,166,666.67     $187,500,000.00     $257,500,000.00

CYPRESSTREE INVESTMENT
  MANAGEMENT COMPANY, INC.

     CypressTree Senior Floating Rate             --                   --           $    500,000.00     $    500,000.00
       Fund

     First Allmerica Financial Life               --                   --           $    500,000.00     $    500,000.00
       Insurance Company

     KZH CypressTree-1 LLC                        --                   --            $ 7,500,000.00     $ 7,500,000.00

     North American Senior Floating Rate          --                   --            $ 2,500,000.00     $ 2,500,000.00
       Fund

Dime Commercial Corp.                       $11,666,666.67       $ 8,333,333.33            --           $20,000,000.00

First Union National Bank                   $23,158,333.33       $16,541,666.67            --           $39,700,000.00

Fleet National Bank                         $23,158,333.33       $16,541,666.67      $ 5,000,000.00     $44,700,000.00

     Long Lane Master Trust IV                    --                   --            $ 3,000,000.00     $ 3,000,000.00

Franklin Floating Rate Trust                      --                   --            $ 5,000,000.00     $ 5,000,000.00

Franklin Floating Rate Master Series              --                   --            $ 1,000,000.00     $ 1,000,000.00

General Electric Capital Corporation        $17,500,000.00       $12,500,000.00            --           $30,000,000.00

GMAC Business Credit, LLC                   $23,158,333.33       $16,541,666.67      $ 5,000,000.00     $44,700,000.00

GMAC Commercial Credit LLC                  $17,500,000.00       $12,500,000.00            --           $30,000,000.00

KZH ING-3 LLC                                     --                   --            $ 1,000,000.00     $ 1,000,000.00

Metropolitan Life Insurance Company               --                   --            $12,000,000.00     $12,000,000.00

Metropolitan Property and Casualty                --                   --            $ 4,000,000.00     $ 4,000,000.00
  Insurance Company

MONY Life Insurance Company Of America            --                   --            $12,000,000.00     $12,000,000.00

Natexis Banques Populaires                  $ 1,983,333.33       $ 1,416,666.67      $ 8,000,000.00     $11,400,000.00

Orix USA Corporation                              --                   --            $ 5,000,000.00     $ 5,000,000.00

The Provident Bank                          $ 1,458,333.33       $ 1,041,666.67      $ 2,500,000.00     $ 5,000,000.00

Summit Bank                                 $14,583,333.33       $10,416,666.67                         $25,000,000.00

</TABLE>

                                 SCHEDULE 2.01
                                 -------------
<PAGE>

                                     - 2 -

<TABLE>
<CAPTION>

----------------------------------------- -------------------- ------------------- ------------------- ------------------
                LENDERS                    Revolving Credit        Tranche A           Tranche B       Total Allocation
                                              Commitments         Commitments         Commitments
----------------------------------------- -------------------- ------------------- ------------------- ------------------

<S>                                         <C>                  <C>                <C>                 <C>

SUN AMERICA

     KZH Soleil-2, LLC                            --                   --            $ 5,000,000.00     $ 5,000,000.00

     Galaxy CLO 1999-1, LTD.                      --                   --            $ 5,000,000.00     $ 5,000,000.00

VAN KAMPEN INVESTMENTS
  ADVISORY CORP.

     Van Kampen Prime Rate Income                 --                   --            $15,000,000.00     $15,000,000.00
       Trust

     Van Kampen Senior Income Trust               --                   --            $13,000,000.00     $13,000,000.00
                                          -------------------- ------------------- ------------------- ------------------

Totals                                      $175,000,000.00     $125,000,000.00     $300,000,000.00     $600,000,000.00
                                          -------------------- ------------------- ------------------- ------------------

</TABLE>

                                 SCHEDULE 2.01
                                 -------------
<PAGE>

                                                                SCHEDULE 3.04(c)

                        Certain Material Adverse Changes

                              [See Section 3.04(c)]

None, except for the Chapter 11 Cases

                                SCHEDULE 3.04(c)
                                ----------------
<PAGE>

                                                                SCHEDULE 3.05(c)

                                  Real Property

                              [See Section 3.05(c)]

                              PATHMARK SUPERMARKETS

DELAWARE

NEW CASTLE COUNTY

#586 - 4365 Kirkwood Hwy., Wilmington  19808
#589 - 3901 Lancaster Pike, Wilmington  19805
#590 - 100 College Square, Newark  19711
#593 - Dupont Highway, 148 Sunset Blvd. New Castle 19720

                                   CONNECTICUT

FAIRFIELD COUNTY

#737 - (former Rickel) 330 Connecticut Avenue, Norwalk 08654

                                    MARYLAND

ANNE ARUNDEL COUNTY

#767 - (former Hochschild Kohn) 2567 Solomon's Island Road, Annapolis 21401

                                   NEW JERSEY

ATLANTIC COUNTY

#575 - Pleasantville, 6718 Black Horse Pike, Egg Harbor Township  08232

BERGEN COUNTY

#194 - Bergenfield, 80 New Bridge Road  07621
#153 - Hackensack, 405 Route 17  07601
#198 - Fair Lawn, 2200 Maple Ave.  07410
#299 - Ramsey, 10 Triangle 17 Plaza  07446
#155 - North Hackensack, 450 Hackensack Ave.  07601
#190 - Edgewater Commons, 481 River Road, Edgewater 07020

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                     - 2 -

BURLINGTON COUNTY

#526 - Edgewater, 2110 Route 130  08010

CAMDEN COUNTY

#591 - Camden, 2881 Mt. Ephraim Ave.  08104
#551 - Lawnside, 130 White Horse Pike  08045
#546 - Church Road, 989 Church Rd., Cherry Hill 08034

CUMBERLAND COUNTY

#595 - Millville, 2225 North 2nd Street  08332

ESSEX COUNTY

#128 - Belmont Ave., 115 Belmont Ave., Belleville  07109
#270 - S. Orange, 407 Valley Rd.  07079
#186 - Ferry St., 281-295 Ferry St., Newark  07105
#187 - Ferry St (former Pathmark), 269-279 Ferry Street, Newark 07105
#125 - Belleville, 726 Washington Ave.  07109
#280 - Montclair, 35 Lackawanna Plaza  07042
#224 - Lyons Plaza, 471-79 Lyons Ave., Irvington 07111

GLOUCESTER COUNTY

#539 - Deptford, 1450 Clements Bridge Road 08096

HUDSON COUNTY

#112 - Jersey City, Route 440 & Kellogg St.  07305
#178 - Weehawken, 4100 Park Ave.  07087
#114 - Old Colony Square, 420 Grand Street, Jersey City  07302
#189 - Kearny, 145 Passaic Ave.  07032
#180 - North Bergen, 2115 69th Street 07047

MERCER COUNTY

#534 - West Windsor, 3495 Route 1 South, Princeton  08540

MIDDLESEX COUNTY

#538 - E. Brunswick, 50 Race Track Rd.  08816
#527 - Hopelawn, 95-101 New Brunswick Ave.  08861

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                     - 3 -

#581 - Old Bridge, 1043 U.S. Highway 9, Old Bridge  08857
#421 - S. Plainfield, 6301 Hadley Rd.  07080
#436 - Middlesex, 242 Lincoln Blvd.  08846
#535 - Edison, 561 U.S. Route 1, Edison  08817
#536 - No. Brunswick, 1345 U.S. Route 1  08902
#580 - Woodbridge, 1600 St. Georges Ave., Avenel  07001

MONMOUTH COUNTY

#572 - Eatontown, 50 Highway 36  07724
#574 - Freehold, 100 Schanck Rd.  07728
#573 - Hazlet, 3020 Highway 35  07730
#571 - Marlboro, 120 Route 9, Englishtown  07726
#577 - Middletown, 1123 Highway 35  07748
#576 - Howell, 2216 Highway 9  07731
#579 - Wall Twp., 1933 Highway 35  07719

MORRIS COUNTY

#437 - Gillette, 977 Valley Rd.  07933
#286 - Lakeside, Route 15 North, Woodport, Lake Hopatcong  07849
#289 - Randolph, Rte. 10 & Salem St., Dover 07801
#284 - Kinnelon, 25 Kinnelon Rd.  07405
#282 - Parsippany, 1157 Rte. 46  07054
#283 - East Hanover, 240 Rte. 10  07936

OCEAN COUNTY

#578 - Bricktown, 1930 State Hwy. 88  08723
#582 - Toms River, 1334 Lakewood Rd., Toms River 08755
#594 - Manahawkin, 517 Route 72 West 08050

PASSAIC COUNTY

#185 - Clifton, 895 Paulison Ave.  07015
#193 - E. Paterson, 498 E. 30th St.  07054
#296 - Wayne, 1070 Paterson/Hamburg Turnpike  07470
#196 - W. Paterson, Plaza 46 West, Route 46  07424
#175 - Botany Plaza, 85 Ackerman Avenue, Clifton 07011

SOMERSET COUNTY

#423 - N. Plainfield, 1280 Route 22 East  07060
#438 - Somerville, 100 Veterans Memorial  Drive  08876

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                     - 4 -

UNION COUNTY

#288 - Elmora, 211 Elmora Ave., Elizabeth  07202
#512 - Linden, 651 North Stiles St.  07036
#510 - Linden (former Pathmark), 1151 West St. Georges Ave., 07036
#452 - Union, Rte. 22 & Springfield Rd.  07083
#450 - Garwood, 10 South Ave.  07027

                                    NEW YORK

BRONX  (New York City)

#613 - Bruckner Blvd., 1851 Bruckner Blvd.  10472
#647 - Bay Plaza, 2136 Bartow Ave. 10475
#667 - Castle Center, 1720 Eastchester Rd.  10461

KINGS COUNTY  (Brooklyn - New York City)

#637 - Albany Ave., 1525 Albany Ave.  11210
#638 - Cropsey Ave., 2965 Cropsey Ave.  11214
#634 - Starrett City, 111-10 Flatlands Ave.  11207
#642 - Gowanus, 1-37 12th St.  11215
#624 - Boro Park, 1245 61st St.  11219
#619 - Atlantic Center, 625 Atlantic Avenue  11217

NEW YORK COUNTY  (New York City)

#610 - Inwood, 410 W. 207th St.  10034
#645 - Pike Slip, 227 Cherry St.  10002
     - Pike Slip Nonfoods Store, 235-247 Cherry Street  10002
#609 - Harlem, 160 E. 125th Street 10035

NASSAU COUNTY

#623 - Baldwin 1764 Grand Ave.  11510
#611 - E. Rockaway, 492 E. Atlantic Ave.  11518
#633 - Franklin Sq., 460 Franklin Ave.  11010
#608 - Greenvale, 130 Wheatley Plaza  11548
#618 - Levittown, 3635 Hempstead Turnpike  11756
#649 - New Hyde Park, 2335 New Hyde Park Rd.  11040
#625 - Seaford, 4055 Merrick Rd.  11783
#666 - Jericho, 336 North Broadway  11753
#665 - E. Meadow, 1897 Front St.  11554

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                     - 5 -

#632 - Garden City Park, 2305 Jericho Turnpike  11040
#662 - Woodbury, 8101 Jericho Turnpike 11797
#761 - Elmont (land), 1797  Dutch Broadway  11003

QUEENS COUNTY  (New York City)

#622 - Whitestone, 31-06 Farrington St.  11354
#627 - Long Island City, 42-02 Northern Blvd.  11101
#626 - Ozone Park, 92-10 Atlantic Avenue  11417
#607 - Kew Gardens, 155-15 Aquilar Avenue, Flushing 11367
#616 - Springfield Gardens, 134-40 Springfield Blvd., Jamaica  11413

RICHMOND COUNTY  (New York City)

#681 - Amboy Rd., 3155 Amboy Rd., Staten Island  10306
#683 - New Dorp, 2660 Hylan Blvd., Staten Island  10306
#682 - Richmond Ave., 2875 Richmond Ave., Staten Island  10314
#685 - Forest Ave., 1351 Forest Ave., Staten Island  10302

ROCKLAND COUNTY

#291 - Monsey, 45 Rte. 59  10952
#292 - Nanuet, East Route 59  10954

SUFFOLK COUNTY

#602 - Bayshore, 20-60 Sunrise Highway  11706
#600 - Brentwood, 101 Wicks Road  11717
#620 - Commack, 6070 Jericho Turnpike  11725
#635 - Copiague, 1255 Sunrise Highway  11726
#614 - Patchogue, 399 Route 112 11772
#641 - Holbrook, 5801 Sunrise Highway  11741
#639 - Islip, 155 Islip Ave.  11751
#664 - Dix Hills, 683 Old Country Rd.  11746
     - Dix Hills Parking Lot, 693 Old Country Road 11746
#646 - Shirley, 800 Montauk Highway 11967
#615 - N. Babylon, 1251 Deer Park Ave. 11703
#604 - Port Jefferson, 5145 Nesconset Highway 11776
#644 - West Babylon, 531 Montauk Highway 11704
#663 - Centereach, 2150 Middle Country Road 11720
#715 - Holbrook (former Rickel), 5801 Sunrise Highway 11741
#727 - Huntington (former Rickel), 5020 Jericho Turnpike, Commack 11725
#714 - Stony Brook (former Rickel), 2200 Nesconset Highway 11790
#615 - Brentwood (former Pathmark), 700 Suffolk Avenue 11717

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                     - 6 -

WESTCHESTER COUNTY

#294 - Hartsdale, 371 Central Ave.  10530
#293 - Yonkers, 1757 Central Park Ave.  10701
#297 - Port Chester, 130 Midland Ave.  10573
#298 - Yonkers North, 2540 Central Park Ave.  10710
#648 - Mount Vernon, One Pathmark Plaza  10550

                                  PENNSYLVANIA

BUCKS COUNTY

#547 - Bristol, 2671 Durham Road  19007
#529 - Fairless Hills, 500 Lincoln Highway  19030
#560 - Warminster, 700 York Road  18974
#563 - Bensalem, 2580 Knights Rd.  19020

DAUPHIN COUNTY

#562 - East Harrisburg (former Pathmark), 5070 Jonestown Road, Harrisburg 17112

DELAWARE COUNTY

#558 - Brookhaven, 5005 Edgemont Avenue  19015
#567 - Folsom, 420 MacDade Blvd.  19033
#561 - Marple, 59 Lawrence Rd., Broomall  19008
#568 - Upper Darby, 421 S. 69th Blvd.  19082
#569 - Glenolden, 140 N. MacDade Blvd.  19036

MONTGOMERY COUNTY

#528 - Cheltenham, 1000 Easton Rd., Suite 100 19095

PHILADELPHIA COUNTY   (City of Philadelphia)

#553 - Frankford, 8700 Frankford Ave.  19136
#554 - Aramingo Ave., 3500 Aramingo Ave.  19134
#556 - City Line, 4160 Monument Rd.  19131
#552 - Oregon, 330 Oregon Ave.  19148
#532 - Grays Ferry, 3021 Grays Ferry Ave.  19146
#564 - Cottman Avenue, 840 Cottman Ave.  19111
#557 - Broad Street, 2900 North Broad St.  19132
#550 - Germantown, 176-82 Chelten Ave.  19144

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                      - 7 -

                        OFFICES AND DISTRIBUTION CENTERS

Carteret office - 200 Milik Street, Carteret, NJ 07008
General Merchandise Distribution Center - 8-10 B Court South, Sutten Kilmer
   Industrial Park, Edison, NJ 08817
Trucking Depot - 286 Homestead Avenue, Avenel, NJ 07001

                                SCHEDULE 3.05(c)
                                ----------------
<PAGE>

                                                                SCHEDULE 3.05(d)

                       Condemnation Proceedings and Sales

                              [See Section 3.05(d)]

None.

                                SCHEDULE 3.05(d)
                                ----------------
<PAGE>

                                                                   SCHEDULE 3.06

                                Disclosed Matters

             [See definition of "Disclosed Matters" in Section 1.01]

Part A

None.

Part B

None.

                                 SCHEDULE 3.06
                                 -------------
<PAGE>

                                                                   SCHEDULE 3.12

                                  Subsidiaries

                               [See Section 3.12]

1.       Subsidiary Loan Parties

         1) Plainbridge, Inc.
         2) Bridge Stuart, Inc.
         3) Adbrett Corp.
         4) AAL Realty Corp.
         5) GAW Properties Corp.
         6) Pathmark Risk Management Corporation
         7) Pauls Trucking Corp.

2.       Special Purpose Subsidiaries

         1) East Brunswick Stuart, Inc.
         2) Glenolden Stuart, Inc.
         3) Lancaster Pike Stuart LLC
         4) Upper Darby Stuart LLC

3.       Shell Subsidiaries ( no assets)

         1) Supermarkets Oil Company, Inc.
         2) Bucks Stuart, Inc.

                                 SCHEDULE 3.12
                                 -------------
<PAGE>

                                                                   SCHEDULE 3.13

                                    Insurance

                               [See Section 3.13]

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
     PATHMARK STORES, INC.     Updated: August 18, 2000
     Property and Casualty Insurance Coverage
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Index  Type of Coverage                      Insurance Co.      Policy No.
===============================================================================
<S>    <C>                                   <C>                <C>

1      UNDERGROUND STORAGE TANK COVERAGE

1.1    Environmental Impairment Liability 1  Great American     BTA02149008-04
       million limit 25,000 deductible

2      UMBRELLA/EXCESS LIABILITY

2.1    Umbrella Liability 50,000,000 Excess  Chubb               79766838
       of Primary

2.2    Umbrella Liability 50,000,000 Excess  Great American      TUE3567615
       of 50 Million plus Primary

3      GENERAL LIABILITY

3.1    Comprehensive General Liability/Limit USF&G               DRE3318800
       1,000,000 Excess of 500,000 SIR

3.2    CGL-BED STUY Limit 1 million          United National     LI-7148283
        50,000 SIR

3.3    CGL-Bergen Street Limit 1 million     United National     LI-7148284
       50,000 SIR

4      DIRECTORS AND OFFICERS

4.1    Directors and Officer Liability       National Union      2807404
       15,000,000 Limit 500,000 deductable   Fire Ins.Co.

4.2    Directors and Officer Liabiilty       Reliance Insurance  NDA0103735
       10,000,000 limit Excess $15,000,000

4.3    Directors and Officer Liabiilty       Lumbermens Mutual   3DY001001
       10,000,000 limit Excess $25,000,000   Casualty Company

</TABLE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
                         Annual              Broker
Index Term               Premium   Broker    Fee                  Remarks
========================================================+======================
<S>   <C>              <C>         <C>       <C>      <C>

1

1.1   8/19/99-8/19/00      2,500   AON-NY              This policy covers tanks
                                                       @ GMDC & GHI

2

2.1   8/1/00-8/1/01       62,000   AON-NY

2.2   8/1/00-8/1/01       25,000   AON -NY

3

3.1   8/1/00-8/1/01      111,779   AON-NY

3.2   8/1/00-8/1/01       95,000   AON-NY              Includes druggist and
                                                       liquor

3.3   8/1/00-8/1/01       80,000   AON-NY

4

4.1   5/14/00-5/14/01    318,555   AON-LI

4.2   5/14/00-5/14/01    112,000   AON-LI

4.3   5/14/00-5/14/01    125,000   AON-LI

</TABLE>

                                 SCHEDULE 3.13
                                 -------------
<PAGE>

                                - 2 -

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

       TOTAL              447,917             44968
========================================================+======================

<TABLE>
<CAPTION>

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

Index  Type of Coverage                      Insurance Co.      Policy No.
===============================================================================
<S>    <C>                                   <C>                <C>

5      FIDUCIARY/PENSION TRUST LIABILITY

5.1    Fiduciary Liability 15,000,000 Limit  Reliance Insurance  NIA0106944-00
       20,000 Deductible--

6      AUTO LIABILITY

6.1    Auto Liability 1,200,000 BI, PD Limit USF&G               DRE3318900
       Excess 200,000 Deductible  per
       Occurrence

7      CRIME EMPLOYEE FIDELITY, HOLD-UP &
       BURGLARY ETC.

7.1    Blanket Crime Coverage 20,000,000     Reliance Insurance  NFA011051700
       Limit/Occurrence
       150,000 Deductible

7.2    Special Crime Coverage                Reliance Insurance  NFK2404402

8      WORKERS' COMPENSATION

8.1a   Workers' Comp Incurred Loss Retro     Fidelity &          DRE3327500
       Program                               Guaranty Co.
       (NY, PA)

8.1b   Worker's Comp Excess Statutory Limit  National Union Fire 415-87-89
       Excess of $400,000 SIR                Insurance Co.
       (NJ, DE)

8.2    Pathmark Risk Mgt. Corp.              American Motorists  7BG064718-01
       Statutory Coverage                    Insurance Co.
                                             (Kemper)

9      PROPERTY AND BUSINESS INTERRUPTION

9.1     Property B&M Business Interr.        FM Global           CS182
       Blanket All-Risk Repair & Replace

10     EMPLOYMENT PRACTICES LIABILITY

10.1   Employment Practices Limit of         National Union      280-49-30
       $10,000,000.  $500,000 deductible &   Fire Ins. Co.
       $2,000,000 --Agg. Deductible

</TABLE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
                          Annual              Broker
Index  Term               Premium   Broker    Fee                  Remarks
=========================================================+=====================
<S>   <C>              <C>         <C>       <C>      <C>

5

5.1    1/19/00-1/19/01     54,846   AON-LI

6

6.1    8/1/00-8/1/01      34,040   AON-NY                 184 Power Units @ $185
                                                          each.  No audit charge
                                                          up to 5%.

7

7.1    9/1/99-9/1/00     111,500   AON-LI

7.2    12/1/97-12/1/00     8,333   AON-LI                  3 yr . Prepaid

8

8.1a   8/1/00-1/1/01     449,087   AON-LI                  5 Month Cost

8.1b   9/15/98-9/14/00    70,717   AON-LI

8.2    4/15/00-4/15/01     3,081   AON-LI

9

9.1    7/1/00-7/1/01     588,000   N/A

10

10.1   4/10/00-4/10/01   250,833   AON-LI

</TABLE>

                                 SCHEDULE 3.13
                                 -------------
<PAGE>

                                                                   SCHEDULE 6.01

                              Existing Indebtedness

                           [See Section 6.01(a)(iii)]

                                                               Balance as of
                                                               July 29, 2000
                                                               -------------
                                                               (in thousands)

     Capital Leases - Real Estate (page 2)                           $134,711

     Capital Leases - Equipment (pages 3-8)                            47,750

     Mortgages (page 9)                                                22,714

     Industrial Revenue Bond & Other Debt (page 10)                     8,712
                                                                  -----------

                                                                     $213,687

Note

Guarantees in respect of leasehold interests assigned prior to the Effective
Date by Borrower, any predecessor or Subsidiary, to a Person other than the
Borrower or any Subsidiary. In addition to the assignment of leases of
individual stores that were closed because they were either uneconomical or
replaced with new stores, the Borrower and its Subsidiaries have assigned leases
of stores in connection with the sale of the Borrower's home center, Purity
Supreme, gas station, catalog showroom and department store divisions.

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 2 -

                          Capital Leases - Real Estate

<TABLE>
<CAPTION>

   Store #               Store Name                       7/29/00                                Lessor
   -------               ----------                       -------                                ------
<S>  <C>             <C>                                <C>                                  <C>
     112                 Jersey City                       $703,233
     153                 Hackensack                         239,242
     175                   Botony                         4,506,601
     180                North Bergen                      4,525,846
     186                Ferry Street                      4,276,716
     190              Edgewater Commons                   4,672,256
     194                 Bergenfield                      5,045,702
     224                 Lyons Plaza                      2,846,514
     280                 Lackawanna                       3,383,838
     282                 Parsippany                         445,036
     293                   Yonkers                          310,691
     298                North Yonkers                     1,118,533
     299                   Ramsey                         2,340,773
     421              South Plainfield                      159,925
     423              North Plainfield                      320,772
     436                  Middlesex                         963,425
     512                   Linden                         5,115,200
     532                 Grays Ferry                      3,251,040
     535                   Edison                         3,444,248
     547                   Bristol                        3,552,603
     552                Oregon Avenue                       768,470
     557                Broad Street                      3,121,692                             Posel Station Associates
     571                  Marlboro                        2,422,977
     576               Howell Township                    2,003,660
     579                Wall Township                     3,158,618
     580                 Woodbridge                         676,158
     590                   Newark                         1,152,515
     593               Dupont Highway                     2,608,202
     600                  Brentwood                       3,172,899
     607                 Kew Gardens                      3,579,204                                Norse Aguilar Reality
     608                  Greenvale                         866,034
     609                   Harlem                         9,253,463                          E.H. Abyssinian Development
     614                  Patchogue                       4,666,453
     619               Atlantic Center                    5,300,965
     620                   Commack                          344,605
     627              Long Island City                      832,684
     634                Starrett City                     1,188,332
     644                West Babylon                        618,578
     645                  Pike Slip                       1,768,191
     647                  Bay Plaza                       7,905,839
     649                New Hyde Park                     4,982,329
     663                 Centereach                       4,870,629
     665                 East Meadow                        502,345
     666                   Jericho                          271,804
     616             Springfield Gardens                  7,229,477                                    Springnex Reality
     667                Castle Center                    10,022,273                                      FC Acquisitions
                                                ----------------------------
                            Total                   $134,510,590

</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 3 -

                PATHMARK STORES, INC. CAPITAL LEASES - EQUIPMENT

<TABLE>
<CAPTION>

                                               Obligation        Accrued                         Obligation as
   Store #              Store Name              Current         Interest          Long-term        of 7/29/00       # leases
   -------              ----------              -------         --------          ---------           -------         ------

<S>  <C>        <C>                            <C>             <C>               <C>             <C>               <C>
     004         Pathmark Admin                       43569              0             115313            158882        1
     112         Jersey City                          46142           1202              91951            139295        4
     114         Old Colony Square                     2386             20                  0              2406        1
     125         Belleville                           23015            193                  0             23208        2
     128         Belmont                             201144           4486             324674            530304        3
     153         Hackensack                          142124           5800             494060            641984        5
     155         North Hackensack                      2386             20                  0              2406        2
     175         Botony                               72162           2599             180475            255236        2
     178         Weehawken                             5187             58               1207              6452        4
     180         North Bergen                        355706           1889             417682            775277        3
     185         Clifton                               2386             20                  0              2406        1
     186         Ferry Street                        528272           3015              28711            559998        5
     189         Kearny                                2386             20                  0              2406        1
     190         Edgewater Commons                   432951           4428             110738            548117        3
     193         Paterson East                         7899            218              19965             28082        2
     194         Bergenfield                          32255            815              54837             87907        3
     196         West Paterson                         2386             20                  0              2406        2
     198         Fairlawn                              2386             20                  0              2406        2
     199         Garfield                                 0                                                   0
     200         West Orange                           7899            218              19965             28082        2
     223         Bergen Street                         2386             20                  0              2406        1
     224         Lyons Plaza                          89357             20             136808            226185        2
     270         South Orange                         67952           1483              88195            157630        5
     280         Lackawanna                            2386             20                  0              2406        1
     282         Parsippany                          321992            351             514271            836614        5
     283         East Hanover                          2386             20                  0              2406        1
     284         Kinnelon                             63476           2965             250264            316705        2
     286         Lakeside                              2386             20                  0              2406        2
     288         Elmora                               95322           3878             359845            459045        5
     289         Randolph                              7899            218              19965             28082        4
     291         Monsey                                2386             20                  0              2406        1
     292         Nanuet                                2386             20                  0              2406        2
     293         Yonkers                               5514            197              19965             25676        1
     294         Hartsdale                                                                                    0

</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 4 -

<TABLE>
<CAPTION>
                                               Obligation        Accrued                         Obligation as
   Store #              Store Name              Current         Interest          Long-term        of 7/29/00       # leases
   -------              ----------              -------         --------          ---------           -------         ------

<S>  <C>        <C>                            <C>             <C>               <C>              <C>               <C>

     296         Wayne                               162570           1578              20052            184200        5
     297         Port Chester                        103972           3831             339836            447639        3
     298         North Yonkers                                                                                0
     299         Ramsey                              111697            985                188            112870        4
     338         East Haven                                                                                   0
     349         Danbury Drug                                                                                 0
     421         South Plainfield                                                                             0
     423         North Plainfield                     34874            449              13029             48352        2
     436         Middlesex                                                                                    0
     437         Gillette                                                                                     0
     438         Somerville                           16643             68                  0             16711        1
     450         Garwood                              69591           1044              53337            123972        4
     452         Union                               148385           6109             522179            676673        3
     512         Linden                               16643             68                  0             16711        1
     526         Edgewater Park                       38340            691              29686             68717        3
     527         Hopelawn                              2055             26                737              2818        1
     528         Cheltenham                          439949           3393                 24            443366        2
     529         Fairless Hills                                                                               0
     530         Willow Grove                        108496            917               1554            110967        3
     532         Grays Ferry                          18978            250               7085             26313        3
     534         West Windsor                                                                                 0
     535         Edison                               26756            406              28492             55654        3
     536         North Brunswick                     259820           2380              19965            282165        2
     538         East Brunswick                      302353           2448               3043            307844        3
     539         Deptford                              1993             25                715              2733        1
     540         Cherry Hill                          11484            146               4122             15752        1
     546         Church Road                         196376           5835             493989            696200        3
     547         Bristol                                                                                      0
     550         Germantown                                                                                   0
     551         Lawnside                                                                                     0
     552         Oregon Avenue                                                                                0
     553         Frankford Avenue                      5514            197              19965             25676        1
     554         Aramingo Avenue                      14714            349              29377             44440        2
     556         City Line                           214517           2072              28273            244862        4
     557         Broad Street                        417797          11801            1000420           1430018        1
     558         Brookhaven                          248726           7560             608854            865140        4
     559         Reading                                                                                      0
     560         Warminster                          287036           2554              14110            303700        3
     561         Marple                               51792            998              64503            117293        5
     563         Bensalem                             26008            433              23899             50340        3
     564         Cottman Avenue                       53095            522               6405             60022        3
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 5 -

<TABLE>
<CAPTION>
                                               Obligation        Accrued                         Obligation as
   Store #              Store Name              Current         Interest          Long-term        of 7/29/00       # leases
   -------              ----------              -------         --------          ---------           -------         ------

<S>  <C>        <C>                            <C>             <C>               <C>            <C>                <C>

     567         Folsom                               11309            409              34600             46318        2
     568         Upper Darby                           5514            197              19965             25676        1
     569         Glenolden                            13071             53                  0             13124        1
     571         Marlboro                             49375            831              41617             91823        3
     572         Eatontown                             6402            230              22208             28840        2
     573         Hazlet                               26200            661              39212             66073        2
     574         Freehold                                                                                     0
     575         Pleasantville                                                                                0
     576         Howell Township                        490             11                507              1008        1
     577         Middletown                           16643             68                  0             16711        1
     578         Bricktown                            19099            490              34020             53609        2
     579         Wall Township                        31092            394              11159             42645        1
     580         Woodbridge                                                                                   0
     581         Old Bridge                            3164             68               3273              6505        1
     582         Toms River                          102197           1027              19965            123189        2
     586         Kirkwood                             91215           1932             163679            256826        4
     588         Voorhees                                                                                     0
     589         Lancaster Pike                       67880           1355              73965            143200        4
     590         Newark                                                                                       0
     591         Camden                               51167           1864             129200            182231        2
     593         Dupont Highway                        5514            197              19965             25676        1
     594         Manahawkin                                                                                   0
     595         Millville                                                                                    0
     600         Brentwood                            64770           1897             158449            225116        3
     602         Bay Shore                           155407           4344             393272            553023        1
     604         Port Jefferson                                                                               0
     606         Huntington                           13273            151               2365             15789        1
     607         Kew Gardens                         275336           9463             813401           1098200        1
     608         Greenvale                                                                                    0
     609         Harlem                              423406          11959            1013847           1449212        1
     610         Inwood                               36968           1224              85543            123735        2
     611         East Rockaway                         5514            197              19965             25676        1
     613         Bruckner                            136829           6528             557909            701266        2
     614         Patchogue                           339619          10130             805356           1155105        3
     615         North Babylon                        81001           1904             131905            214810        3
     616         Springfield Gardens                                                                          0
     618         Levittown                             9100            275              23675             33050        2
     619         Atlantic Center                     369184           8736             626421           1004341        2
     620         Commack                             118087           3680             302495            424262        1
     622         Whitestone                            5514            197              19965             25676        1
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 6 -

<TABLE>
<CAPTION>
                                               Obligation        Accrued                         Obligation as
   Store #              Store Name              Current         Interest          Long-term        of 7/29/00       # leases
   -------              ----------              -------         --------          ---------           -------         ------

<S>  <C>        <C>                            <C>              <C>              <C>             <C>                <C>

     623         Baldwin                             239595           1628             340170            581393        4
     624         Boro Park                             5514            197              19965             25676        1
     625         Seaford                              89121            197             213103            302421        2
     626         Ozone Park                          221300           1960              17591            240851        4
     627         Long Island City                     10337            377              26103             36817        1
     628         Bedford Sty                                                                                  0
     631         New Hyde Park (Old)                 414375            951              26915            442241        2
     632         Garden City                          47537            685              24017             72239        3
     633         Franklin Square                     252633           9998             867875           1130506        2
     634         Starrett City                        76038           1895             130790            208723        3
     635         Copaigue                                                                                     0
     636         Woodmere                                                                                     0
     637         Albany Avenue                       112738            972                390            114100        2
     638         Cropsey Avenue                       70862           3175             312580            386617        1
     639         Islip                                                                                        0
     641         Holbrook                            210544           6418             534402            751364        4
     642         Gowanus                              40297            424              10228             50949        2
     644         West Babylon                                                                                 0
     645         Pike Slip                           179741            954             240369            421064        3
     646         Shirley                             219667           6774             539695            766136        3
     647         Bay Plaza                           107139           1097              22342            130578        4
     648         Mount Vernon                          1700             22                610              2332        1
     649         New Hyde Park                                                                                0
     662         Woodbury                            615603           2151              29911            647665        4
     663         Centereach                          432545           3619              13779            449943        2
     664         Dix Hills                                                                                    0
     665         East Meadow                          90216           4461             384074            478751        3
     666         Jericho                                                                                      0
     681         Amboy Road                             829              9                148               986        1
     682         Richmond                            239686           2148             353974            595808        3
     683         New Dorp                             27266            813              50742             78821        1
     685         Forest Avenue                        45058            387                  0             45445        1
                 Total Equipment                   12253324         213192           16310406          28776922      265
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 7 -

                  PLAINBRIDGE, INC. CAPITAL LEASES - EQUIPMENT

                                      GMDC
                                      AS OF
LEASE                                7/29/00
                                     -------

FORKLIFTS                            $14,967

                                    ----------
TOTAL GMDC                           $14,967
                                    ==========

<TABLE>
<CAPTION>
                                        GHI                              --------------------------
                                       AS OF                             EXPIRATION
LEASE                                 7/29/00       Lessor                  DATE           LEASE #
                                      -------       ------                  ----           -------

<S>                                  <C>        <C>                      <C>     <C>        <C>
TRAILERS                             $293,253   Pitney Bowes              12      2000       999E29
TRAILERS                              447,049   Pitney Bowes              12      2000       999E30
TRAILERS                              285,334   Pitney Bowes               1      2001       999E31
TRAILERS                              592,025   Pitney Bowes              12      2000       999E33
TRAILERS                              329,580   Pitney Bowes              12      2001       999E35
TRAILERS                              638,379   Mc Donnel Douglas         12      2002       999E37
TRAILERS                               16,727   Mc Donnel Douglas          3      2003       999E38
TRAILERS                              410,072   Mc Donnel Douglas         12      2003       999E40
TRAILERS                               84,048   Mc Donnel Douglas          1      2004       999E41
115 TRACTORS                        5,611,574   Salem Truck Leasing        2      2005       999E98002
8 SWITCHERS                           316,489   Salem Truck Leasing        2      2004       999E98003
5 YARD TRACTORS                       169,570   GE Capital                12      2004       999E98006
32 REFRIG. TRAILERS                   158,189   GE Capital                 1      2002       99001
43 DRY TRAILERS                       101,602   GE Capital                 1      2004       99002
40 REFRIG. TRAILERS                 1,419,318   GE Capital                 3      2007       99003
60 DRY TRAILERS                     1,217,826   GE Capital                 3      2009       99004
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 8 -

<TABLE>
<CAPTION>
                                        GHI                              --------------------------
                                       AS OF                             EXPIRATION
LEASE                                 7/29/00       Lessor                  DATE           LEASE #
                                      -------       ------                  ----           -------

<S>                                  <C>        <C>                      <C>     <C>        <C>

150 DRY & 50 REEFER TRAILERS        4,936,174   Salem Truck Leasing        7      2006       99013
WABASH 50 DRY TRAILERS              1,110,606   Associates Commercial      4      2007       20003
WABASH 20 REFRIG. TRAILERS            820,743                              4      2007       20004
                                                                          ----------------------------

                                --------------
TOTAL GHI                         $18,958,558
                                ==============

                                --------------
TOTAL PLAINBRIDGE                 $18,973,525
                                ==============

CONSOLIDATED PATHMARK             $47,750,447
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                      - 9 -

                                  Schedule 6.01
                              Pathmark Stores, Inc.
                              Existing Indebtedness
                                    Mortgages

<TABLE>
<CAPTION>

                                                    Interest      Maturity         Balance as of
               Indebtedness                           Rate          Date              7/29/00
-----------------------------------------------    ------------ -------------   -------------------

<S>                                                  <C>        <C>                 <C>
Wells Fargo                                           7.32%      12/01/2023          $8,399,021
1320 Willow Pass Road, Ste. 205
P.O. Box 4036
Concord, CA  94524
Re:  East Brunswick Stuart, Inc.

CapMark Services, L.P.                                7.32       12/01/2023           6,816,596
245 Peachtree Center Ave.
Suite 1800
Atlanta, GA  30303-1231
Re:  Glenolden Stuart, Inc.

Wells Fargo                                           7.32       12/01/2023           4,089,958
1320 Willow Pass Road, Ste. 205
P.O. Box 4036
Concord, CA  94524
Re:  Lancaster Pike Stuart, LLC

Wells Fargo                                           7.32       12/01/2023           3,408,300
1320 Willow Pass Road, Ste. 205
P.O. Box 4036
Concord, CA  94524
Re:  Upper Darby Stuart, LLC
                                                                                   -------------

                                                      TOTAL                          $22,713,875
                                                                                   =============
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                     - 10 -

                                  Schedule 6.01
                              Pathmark Stores, Inc.
                              Existing Indebtedness
                      Industrial Revenue Bonds & Other Debt

<TABLE>
<CAPTION>

                                                       Interest          Maturity          Balance as of
                Indebtedness                             Rate              Date               7/29/00
-------------------------------------------------    ------------     -------------     ------------------

Pathmark Stores, Inc.

<S>                                                    <C>             <C>                 <C>
Delaware Economic Development Authority                10.875%         12/01/2003           $3,000,000
c/o HSBC Bank USA
140 Broadway
New York, NY  10005-11801
Re:  Lancaster Pike

Industrial Revenue Bonds                               10.5            11/01/2003            3,375,000
c/o HSBC Bank USA
140 Broadway
New York, NY  10005-11801
Re:  Shillington

Cooperative Business Assistance Corp.                   7.0            03/01/2008              408,911
UEZ Fund
433 Market Street, 2nd Fl.
Camden, NJ  08102

New Jersey Economic Development Authority               5.0            03/01/2018            1,388,847
Local Development Financing Fund
P.O. Box 990
Trenton, NJ  08625

Forest Mall Associates                                 10.0            03/01/2002              106,573
100 Route 306
Monsey. NY  10952
Re:  Forest Avenue Mall Store

Cananwill Co.                                           6.85           01/01/2001              105,702
1234 Market St., Suite 340
Philadelphia PA
Re:  Employment Practices Liability Insurance

Cananwill Co.                                           6.85           01/01/2001              326,996
1234 Market St., Suite 340
Philadelphia PA
Re:  Director & Officers
                                                                                           ------------

                                                      TOTAL                                 $8,712,029
                                                                                           ============
</TABLE>

                                 SCHEDULE 6.01
                                 -------------
<PAGE>

                                                                   SCHEDULE 6.02

                    Existing Liens and Covered Real Property

[See definition of "Covered Real Property" in Section 1.01, and Section 6.02(c)]

1.       Liens in respect of capital leases disclosed in Schedule 6.01.

2.       Liens in respect of equipment leases disclosed in Schedule 6.01.

3.       Mortgages disclosed on Schedule 6.01.

4.       Liens on prescription pharmaceuticals in favor of AmeriSource
         Corporation pursuant to that certain Pharmaceutical Services,
         Consignment and Security Agreement dated as of August 4, 1997 between
         Pathmark Stores, Inc. and AmeriSource Corporation.

5.       Liens in favor of The Chase Manhattan Bank as Agent under the DIP
         Facility.*

6.       Liens in favor of The Chase Manhattan Bank as Agent under that certain
         credit agreement dated as of June 30, 1997 among Pathmark Stores Inc.,
         the Lenders party thereto, the Chase Manhattan Bank, as Administrative
         Agent, and CIBC Inc. and Corestates Bank, N.A., as Co-Agents.*

--------------
*    These are to be released on the Effective Date.

                                 SCHEDULE 6.02
                                 -------------
<PAGE>

                                                                   SCHEDULE 6.04

                              Existing Investments

                              [See Section 6.04(b)]

                                                  Balance as of
                                                  July 29, 2000
Pathmark Stores, Inc.

Restoration Supermarket Corporation             $     1,244,210
(One-third stock interest)

Community Supermarket Corporation                       932,041
(One-third stock interest)

North Babylon                                                 0
(50% joint venture)

Lakeside                                                      0
(50% joint venture)

Loan to Jim Donald (Chief Executive Officer)            281,250

Rockaway Realty Associates LP                         2,332,886 (Present Value)
Promissory Note

Supermarkets General Holdings Corporation

Loans to Current and Former Employees                 1,691,000
                                                 ---------------

                               TOTAL            $     6,481,387
                                                 ===============

                                 SCHEDULE 6.04
                                 -------------
<PAGE>

                                                                   SCHEDULE 6.10

                              Mortgaged Properties

                         [See Sections 3.06(d) and 6.10]

None.
                                 SCHEDULE 6.10
                                 -------------

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