Document:

Exhibit 10.1

                                                                  EXECUTION COPY

                                   FIRST LIEN
                                CREDIT AGREEMENT

                                   dated as of

                                  April 1, 2005

                                      among

                        KRISPY KREME DOUGHNUT CORPORATION

                          KRISPY KREME DOUGHNUTS, INC.

                     The SUBSIDIARY GUARANTORS Party Hereto

                            The LENDERS Party Hereto

                           CREDIT SUISSE FIRST BOSTON
                   as Administrative Agent and Issuing Lender

                                       and

                           WELLS FARGO FOOTHILL, INC.,
            as Collateral Agent, Issuing Lender and Swingline Lender

                                   Arranged by
                           CREDIT SUISSE FIRST BOSTON
                    as Sole Bookrunner and Sole Lead Arranger

                           WELLS FARGO FOOTHILL, INC.,
                              as Syndication Agent

                                       and
                            SILVER POINT FINANCE, LLC
                     as Co-Arranger and Documentation Agent

                                 ______________

                                   $75,000,000
                                 ______________

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                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01.         Defined Terms...........................................1
SECTION 1.02.         Terms Generally........................................25
SECTION 1.03.         Accounting Terms; GAAP; Historical Financial
                        Calculations.........................................25
SECTION 1.04.         Classification of Loans and Borrowings.................26

                                   ARTICLE II

                                   THE CREDITS

SECTION 2.01.         The Commitments........................................26
SECTION 2.02.         Loans and Borrowings...................................26
SECTION 2.03.         Requests for Syndicated Borrowings.....................27
SECTION 2.04.         Swingline Loans........................................28
SECTION 2.05.         Letters of Credit......................................29
SECTION 2.06.         Funding of Borrowings..................................33
SECTION 2.07.         Interest Elections.....................................34
SECTION 2.08.         Termination and Reduction of the Commitments...........35
SECTION 2.09.         Repayment of Loans; Evidence of Debt...................36
SECTION 2.10.         Prepayment of Loans....................................37
SECTION 2.11.         Fees...................................................39
SECTION 2.12.         Interest...............................................40
SECTION 2.13.         Alternate Rate of Interest.............................41
SECTION 2.14.         Increased Costs........................................42
SECTION 2.15.         Break Funding Payments.................................43
SECTION 2.16.         Taxes..................................................43
SECTION 2.17.         Payments Generally; Pro Rata Treatment; Sharing of
                        Set-offs.............................................45
SECTION 2.18.         Mitigation Obligations; Replacement of Lenders.........47

                                   ARTICLE III

                                    GUARANTEE

SECTION 3.01.         The Guarantee..........................................48
SECTION 3.02.         Obligations Unconditional..............................49
SECTION 3.03.         Reinstatement..........................................49
SECTION 3.04.         Subrogation............................................50
SECTION 3.05.         Remedies...............................................50
SECTION 3.06.         Instrument for the Payment of Money....................50

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                                      -2-

SECTION 3.07.         Continuing Guarantee...................................50
SECTION 3.08.         Rights of Contribution.................................50
SECTION 3.09.         General Limitation on Guarantee Obligations............51
SECTION 3.10.         No Reliance............................................51
SECTION 3.11.         Release of Subsidiary Guarantors.......................52

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01.         Organization; Powers...................................52
SECTION 4.02.         Authorization; Enforceability..........................52
SECTION 4.03.         Governmental Approvals; No Conflicts...................52
SECTION 4.04.         Financial Condition; No Material Adverse Change........53
SECTION 4.05.         Properties.............................................53
SECTION 4.06.         Litigation.............................................53
SECTION 4.07.         Environmental Matters..................................54
SECTION 4.08.         Compliance with Laws and Agreements....................55
SECTION 4.09.         Investment and Holding Company Status..................55
SECTION 4.10.         Taxes..................................................55
SECTION 4.11.         ERISA..................................................55
SECTION 4.12.         Disclosure.............................................55
SECTION 4.13.         Use of Credit..........................................56
SECTION 4.14.         Material Agreements and Liens..........................56
SECTION 4.15.         Montana Mills..........................................56
SECTION 4.16.         Subsidiaries and Investments...........................56
SECTION 4.17.         Real Property..........................................57
SECTION 4.18.         Solvency...............................................58
SECTION 4.19.         Labor Matters..........................................58

                                    ARTICLE V

                                   CONDITIONS

SECTION 5.01.         Effective Date.........................................58
SECTION 5.02.         Each Credit Event......................................62

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

SECTION 6.01.         Financial Statements and Other Information.............62
SECTION 6.02.         Notices of Material Events.............................66
SECTION 6.03.         Existence; Conduct of Business.........................67
SECTION 6.04.         Payment of Obligations.................................67
SECTION 6.05.         Maintenance of Properties; Insurance...................67
SECTION 6.06.         Books and Records; Inspection Rights...................68

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                                      -3-

SECTION 6.07.         Compliance with Laws...................................68
SECTION 6.08.         Use of Proceeds and Letters of Credit..................69
SECTION 6.09.         Hedging Agreements.....................................70
SECTION 6.10.         Certain Obligations Respecting Subsidiaries; Further
                        Assurances...........................................70
SECTION 6.11.         Ownership of the Borrower..............................72
SECTION 6.12.         Collection of Accounts and Payments; Creation of
                        Depositary Account...................................72
SECTION 6.13.         Ratings................................................72
SECTION 6.14.         Separateness...........................................72
SECTION 6.15.         Pledge of Equity Interests in Consolidated Joint
                        Ventures.............................................72
SECTION 6.16.         Post Closing Appraisals................................73
SECTION 6.17.         Post Closing Mortgages.................................73
SECTION 6.18.         Post Closing Environmental Surveys.....................74
SECTION 6.19.         Issuance of Subsidiary Stock Certificate...............74

                                   ARTICLE VII

                               NEGATIVE COVENANTS

SECTION 7.01.         Indebtedness...........................................75
SECTION 7.02.         Liens..................................................76
SECTION 7.03.         Fundamental Changes....................................77
SECTION 7.04.         Lines of Business......................................79
SECTION 7.05.         Investments............................................79
SECTION 7.06.         Restricted Payments....................................80
SECTION 7.07.         Transactions with Affiliates...........................81
SECTION 7.08.         Restrictive Agreements.................................81
SECTION 7.09.         Certain Financial Covenants............................82
SECTION 7.10.         Sale-Leasebacks; Synthetic Leases......................83
SECTION 7.11.         Parent Guarantor as Holding Company....................83
SECTION 7.12.         Limitations on Voluntary Prepayments of Certain
                        Other Indebtedness...................................84
SECTION 7.13.         Modifications of Certain Documents.....................84
SECTION 7.14.         Change in Fiscal Year; Accounting Policies; Capital
                        Stock................................................84
SECTION 7.15.         No New Bank Accounts Without Prior Written Notice......84

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

                                   ARTICLE IX

                   THE ADMINISTRATIVE AGENT, COLLATERAL AGENT,
                              LENDERS AND ARRANGER

                                    ARTICLE X

                                  MISCELLANEOUS

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                                      -4-

SECTION 10.01.        Notices; Electronic Communications.....................90
SECTION 10.02.        Waivers; Amendments....................................91
SECTION 10.03.        Expenses; Indemnity; Damage Waiver.....................93
SECTION 10.04.        Successors and Assigns.................................95
SECTION 10.05.        Survival...............................................97
SECTION 10.06.        Counterparts; Integration; Effectiveness...............97
SECTION 10.07.        Severability...........................................98
SECTION 10.08.        Right of Setoff........................................98
SECTION 10.09.        Governing Law; Jurisdiction; Etc.......................98
SECTION 10.10.        WAIVER OF JURY TRIAL...................................99
SECTION 10.11.        Headings...............................................99
SECTION 10.12.        Treatment of Certain Information; Confidentiality......99
SECTION 10.13.        USA PATRIOT Act........................................100

<PAGE>

SCHEDULE I       -     Commitments
SCHEDULE II      -     Material Agreements and Liens
SCHEDULE III     -     Restrictive Agreements
SCHEDULE IV      -     Litigation
SCHEDULE V       -     Environmental Matters
SCHEDULE VI      -     Subsidiaries and Investments
SCHEDULE VII     -     Real Property
SCHEDULE VIII    -     Labor Matters
SCHEDULE IX      -     Specified Contingent Obligations
SCHEDULE X       -     Transactions with Affiliates
SCHEDULE XI      -     Certain Real Property
SCHEDULE XII           Borrowing Base Pro Forma Components

EXHIBIT A        -     Form of Assignment and Acceptance
EXHIBIT B        -     Form of Borrowing Base Certificate
EXHIBIT C        -     Form of Security Agreement
EXHIBIT D        -     Form of Guarantee Assumption Agreement
EXHIBIT E        -     Form of Intercreditor Agreement
EXHIBIT F        -     Form of Concentration Account Control Agreement
EXHIBIT G        -     Form of Investment Account Control Agreement
EXHIBIT H        -     Form of Request for Loan
EXHIBIT I        -     Form of  Interest Election Request
EXHIBIT J        -     Form of  Subordination, Non-Disturbance and
                         Attornment Agreement
EXHIBIT K        -     Form of Promissory Note

<PAGE>

     FIRST LIEN CREDIT AGREEMENT dated as of April 1, 2005, among KRISPY KREME
DOUGHNUT CORPORATION, a North Carolina corporation (the "Borrower"), KRISPY
KREME DOUGHNUTS, INC., a North Carolina corporation (the "Parent Guarantor"),
the SUBSIDIARY GUARANTORS (as defined below), the LENDERS (as defined below),
CREDIT SUISSE FIRST BOSTON, as Administrative Agent and Issuing Lender, and
WELLS FARGO FOOTHILL, INC., as Collateral Agent, Issuing Lender and Swingline
Lender.

     Each of the Parent Guarantor and the Borrower has requested that the
Lenders extend credit to the Borrower, under the guarantee of the Guarantors (as
defined below), in an aggregate principal or face amount not exceeding
$75,000,000, to finance the operations of the Borrower and the Guarantors and
for other purposes. The Lenders are prepared to extend such credit upon the
terms and conditions hereof, and, accordingly, 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, means that such
Loan, or the Loans constituting such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

     "Acceptable Appraisal" means with respect to any land, buildings,
improvements, fixtures and other equipment, an appraisal of the value thereof
(as determined on any reasonable basis) performed by an MAI-designated member of
the Appraisal Institute according to MAI standards.

     "Adjusted LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, an interest rate per annum equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest
Period.

     "Administrative Agent" means CSFB, 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.

     "Affiliated Parties" means the Parent Guarantor and its Subsidiaries.

     "Agents" means the Administrative Agent and the Collateral Agent.

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                                      -2-

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

     "Applicable Margin" means: (a) with respect to any ABR Loan, 1.75% per
annum; and (b) with respect to any Eurodollar Loan, 2.75% per annum.

     "Applicable Percentage" means, with respect to any Lender, the percentage
of the total Commitments represented by such Lender's Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.

     "Arranger" means CSFB.

     "Asset Prepayment Event" means a Disposition or a Casualty Event.

     "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 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

     "Availability Period" means the period from and including the first
Business Day after the Effective Date to but excluding the earlier of the
Commitment Termination Date and the date of termination of the Commitments.

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

     "Borrower" has the meaning assigned to such term in the recital of parties
hereto.

     "Borrowing" means (a) all Syndicated ABR Loans made, converted or continued
on the same date, (b) all Eurodollar Loans that have the same Interest Period or
(c) a Swingline Loan.

     "Borrowing Base" means, as at any date, (x) the aggregate amount of
Consolidated EBITDA for the most recent twelve consecutive month period just
ended for which financial statements pursuant to Section 6.01(a), (b) or (c)
have been, or should have been, delivered times (y) 1.5. On the Effective Date
the Borrowing Base shall be computed using monthly Consolidated EBITDA amounts
set forth below and the amounts set forth below shall continue to be utilized to
compute twelve month Consolidated EBITDA for Borrowing Base purposes only
notwithstanding any restatement of Consolidated EBITDA for such month that
occurs in the future. Until a month set forth below is eliminated from the
calculation of twelve month Consolidated EBITDA by passage of time and the
delivery of a calculation of Consolidated EBITDA for such month pursuant to
Section 6.01, the Consolidated EBITDA amount for such month shall be deemed for
Borrowing Base purposes to be as set forth on Schedule XII.

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                                      -3-

     "Borrowing Base Certificate" means a certificate of a Financial Officer of
the Borrower, substantially in the form of Exhibit B and appropriately
completed.

     "Business Day" means any day (a) 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 and (b) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurodollar Borrowing, or to a notice by the
Borrower with respect to any such borrowing, payment, prepayment, continuation,
conversion, or Interest Period, that is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.

     "Capital Expenditures" means, for any period, expenditures (including the
aggregate amount of Capital Lease Obligations incurred during such period) made
by any member of the Financial Test Group to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements, but
excluding repairs) during such period computed in accordance with GAAP.

     "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

     "Casualty Event" means, with respect to any property of any Person, any
loss of or damage to, or any condemnation or other taking of, such property for
which such Person or any of its Included Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.

     "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 USC ss. 9601 et seq.), as amended from time to time,
and any regulations promulgated with respect thereto and any state or local
counterparts thereto.

     "Change in Control" means (a) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of the voting stock of the
Parent Guarantor; or (b) as of any date a majority of the Board of Directors of
the Parent Guarantor consists of individuals who were not either (i) directors
of the Parent Guarantor as of the corresponding date of the previous year, (ii)
selected or nominated to become directors by the Board of Directors of the
Parent Guarantor of which a majority consisted of individuals described in
clause (i), or (iii) selected or nominated to become directors by the Board of
Directors of the Parent Guarantor of which a majority consisted of individuals
described in clause (i) and individuals described in clause (ii).

     "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

<PAGE>
                                      -4-

(c) compliance by any Lender or the Issuing Lender (or, for purposes of Section
2.14(b), by any lending office of such Lender or by such Lender's or the Issuing
Lender'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.

     "Class", when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans constituting such Borrowing, are Syndicated Loans or
Swingline Loans.

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

     "Collateral" has the meaning assigned to such term in the Intercreditor
Agreement.

     "Collateral Account" has the meaning assigned to such term in Section 4.01
of the Security Agreement.

     "Collateral Agent" means Wells Fargo Foothill, Inc., a California
corporation, in its capacity as collateral agent for the Administrative Agent
and the Lenders under the Security Documents.

     "Commitment" means, with respect to each Lender, the commitment of such
Lender to make Syndicated 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 Credit Exposure hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.08
or 2.10 or (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 10.04. The initial amount of each Lender's
Commitment is set forth on Schedule I, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Commitment, as applicable.
The initial aggregate amount of the Lenders' Commitments is $75,000,000.

     "Commitment Termination Date" means the third anniversary of the date
hereof.

     "Concentration Account Bank" means each bank at which a Concentration
Account or a Depositary Account is maintained.

     "Concentration Account Control Agreement" means a Control Agreement
substantially in the form of Exhibit F among the Borrower, the Collateral Agent
and a Concentration Account Bank or such other form as may be reasonably
acceptable to the Collateral Agent.

     "Concentration Accounts" means (a) account number 2000014820290 maintained
at Wachovia Bank, National Association, (b) account number 5118565578 and
account number 5199249934 maintained at Branch Banking & Trust and (c) any other
account that the Administrative Agent agrees, at the request of the Borrower, to
designate as a "Concentration Account"; provided that any such account shall be
deemed to be a "Concentration Account" only if it is held in the name of the
Borrower and, pursuant to a Concentration Account Control Agreement, controlled
by the Shared Lien Collateral Agent. Any such account shall cease to be a
"Concentration Account" if the Borrower and the Administrative Agent shall so
agree.

<PAGE>
                                      -5-

     "Consolidated EBITDA" means the sum of the following, calculated on a
consolidated basis in accordance with GAAP for the Financial Test Group, for the
relevant fiscal period: Consolidated Net Income plus, (i) to the extent deducted
in determining Consolidated Net Income, (a) Depreciation and Amortization, (b)
Consolidated Interest Expense less Consolidated Interest Income, (c) income tax
expense, (d) extraordinary (it being understood that for the purposes of this
clause (d), "extraordinary" shall not mean extraordinary as determined in
accordance with GAAP) professional fees and expenses (including legal fees and
Kroll fees (including any success fee, the cash portion of which was permitted
by Section 7.07(g))), (e) store closure costs, and (f) costs, fees and expenses
incurred in connection with the shareholder litigations, SEC investigation and
the other Disclosed Matters (including settlement and judgment costs), (g) the
aggregate amount of all other non-cash charges reducing Consolidated Net Income
(excluding any non-cash charge that results in an accrual of a reserve for cash
charges in any future period) for such period and (h) fees and expenses incurred
in connection with the Transactions (including (x) in connection with the
delivery of the Mortgages and environmental reports following the Effective Date
and the termination of the Hedging Agreement with Wachovia Bank, National
Association and (y) the fees and expenses of Wachovia Bank National Association
and the fees of the lenders party to the Existing Credit Agreement in connection
with the waivers and consents obtained from such parties) less (ii) the
aggregate amount of all non-cash items increasing Consolidated Net Income (other
than the accrual of revenue or recording of receivables in the ordinary course
of business) for such period.

     "Consolidated Interest Coverage Ratio" means, for any Test Period, the
ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated
Interest Expense less Consolidated Interest Income for such Test Period.

     "Consolidated Interest Expense" means, for any period, interest, whether
expensed or capitalized, in respect of Indebtedness of any member of the
Financial Test Group outstanding during such period; provided that Consolidated
Interest Expense shall (i) exclude the write-off of deferred financing charges
as a result of the Transactions and the amortization of deferred financing
charges arising from the Transactions and (ii) be calculated after giving effect
to Hedging Agreements (including associated costs), but excluding unrealized
gains and losses with respect to Hedging Agreements.

     "Consolidated Interest Income" means, for any period, interest income of
any member of the Financial Test Group during such period.

     "Consolidated Joint Venture" means any Consolidated Subsidiary that is (a)
not a Wholly Owned Subsidiary and (b) engaged in Krispy Kreme franchisee or
doughnut and bakery store operations. On the date hereof Freedom Rings, LLC; New
England Dough LLC; KremeKo Inc. and Glazed Investments, LLC constitute all of
the Consolidated Joint Ventures.

     "Consolidated Leverage Ratio" means, for any Test Period, the ratio of (a)
Consolidated Total Debt on the last day of such Test Period to (b) Consolidated
EBITDA for such Test Period.

     "Consolidated Net Income" means, for any period, the Net Income of the
Financial Test Group determined on a consolidated basis in accordance with GAAP,
but (without

<PAGE>
                                      -6-

duplication), excluding, but only to the extent otherwise included in the
calculation of Net Income, (i) the income (or deficit) of any Person accrued
prior to the date it became a Subsidiary of the Parent Guarantor or is merged
into or consolidated with the Parent Guarantor or any of its Subsidiaries, (ii)
the income (or deficit) of any Person (other than members of the Financial Test
Group that are Obligors) in which the Parent Guarantor or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by a member of the Financial Test Group in the form
of cash dividends or cash distributions, (iii) the undistributed positive
earnings of any Subsidiary of the Parent Guarantor to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contract or agreement binding
on such Subsidiary (other than under any Loan Document), any constitutive
document of such Subsidiary or any law, regulation or other legal restriction
applicable to such Subsidiary, (iv) unrealized gains and losses with respect to
obligations under Hedging Agreements for such period and (v) gains and losses
from the early extinguishment of Indebtedness.

     "Consolidated Subsidiary" means a Subsidiary, the accounts of which are
customarily consolidated with those of the Parent Guarantor in accordance with
GAAP for the purpose of reporting to stockholders of the Parent Guarantor or, in
the case of a Subsidiary acquired after the Effective Date, the accounts of
which would, in accordance with GAAP, be so consolidated for that purpose.

     "Consolidated Total Debt" means at any date the aggregate principal amount
of all Indebtedness of the Financial Test Group (excluding obligations of the
Financial Test Group with respect to Hedging Agreements), determined on a
consolidated basis in accordance with GAAP as of such date.

     "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.
"Controlling" and "Controlled" have meanings correlative thereto.

     "Covered Property Value" means, on any date, the sum of the Median Desktop
Analysis Values for all Real Property listed in the Desktop Analysis where both
(a) such Real Property is covered by Mortgages that have been duly recorded and
in respect of each of which the Agents and the Lenders have received a legal
opinion satisfactory in form and substance to the Administrative Agent in its
reasonable judgment (provided that a legal opinion substantially in the form of
the legal opinions addressing certain real estate matters delivered pursuant to
Section 5.01(b) on the Effective Date, with such modifications as are necessary
for the relevant jurisdictions, shall be deemed to be satisfactory in form and
substance to the Administrative Agent) and (b) the Shared Lien Collateral Agent
has received title insurance commitments for such Real Property and Mortgages,
for 115% of the Median Desktop Analysis Value of such Real Property,
satisfactory in form and substance to the Administrative Agent in its reasonable
judgment, and the Borrower has caused the removal of any Liens on such Real
Property identified in such title insurance commitments to the extent that such
Liens are not permitted by Section 7.02, unless such Liens are otherwise
acceptable to the Administrative Agent, in its sole discretion. In the event
that any such title insurance commitment contains a legal description of any
Real Property that is different from the legal description set forth in a
recorded Mortgage for

<PAGE>
                                      -7-

such property, clause (a) of this definition shall not be deemed satisfied with
respect to such property unless and until a new Mortgage or amendment to the
applicable recorded Mortgage has been duly recorded reflecting the legal
description contained in such title insurance commitment.

     "Credited Institutions" means (a) CSFB in its capacities as sole bookrunner
and sole lead arranger for the financing contemplated hereby, (b) Silver Point
Finance, LLC in its capacities as co-arranger and documentation agent for the
financing contemplated hereby and (c) WFF in its capacity as syndication agent
for the financing contemplated hereby.

     "CSFB" means Credit Suisse First Boston, acting through one or more of its
branches, and any Affiliate thereof.

     "Debt Incurrence" means the incurrence by any member of the Financial Test
Group after the Effective Date of any Indebtedness, other than Indebtedness
incurred as permitted by any of paragraphs (a) through (l) of Section 7.01.

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

     "Depositary Account" has the meaning assigned to such term in Section
6.12(b).

     "Depositary Effective Date" has the meaning assigned to such term in
Section 6.12(b).

     "Depreciation and Amortization" means for any period the sum of all
depreciation and amortization expense of the Financial Test Group for such
period, as determined in accordance with GAAP.

     "Desktop Analysis" means that certain Desktop Analysis of Real Properties
performed by Keen Consultants, LLC dated March 18, 2005 and furnished to the
Lenders prior to the date hereof.

     "Disclosed Matters" means the actions, suits, investigations and
proceedings disclosed in Schedule IV and the environmental matters disclosed in
Schedule V.

     "Disposition" means any sale, assignment, transfer or other disposition of
any property (whether now owned or hereafter acquired) by any member of the
Financial Test Group to any other Person excluding any sale, assignment,
transfer or other disposition of any property permitted by Section 7.03 (other
than pursuant to clauses (d), (f) or (g) thereof).

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

     "Domestic Subsidiaries" means all Subsidiaries other than Foreign
Subsidiaries.

     "Effective Date" means the date on which the conditions specified in
Section 5.01 are satisfied (or waived in accordance with Section 10.02).

<PAGE>
                                      -8-

     "Environmental Claim" means any claim, action, suit or notice by or from
any Person as a result of or in connection with any violation of or liability
under any Environmental Law.

     "Environmental Laws" means all laws (including all common law), rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices
or binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to pollution, the environment, health and safety
(as relating to exposure to Hazardous Materials), and the preservation or
reclamation of natural resources, including without limitation any of the
foregoing relating to the management, use, disposal, arrangement for disposal,
Release or threatened Release of any Hazardous Materials.

     "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities, and including any Lien filed against any property
covered by the Mortgages thereunder in favor of any governmental entity),
resulting from or based upon (a) a violation of any Environmental Law, (b)
arising under any Environmental Law with respect to (i) the generation, use,
handling, transportation, storage, treatment, arrangement for disposal or
disposal of any Hazardous Materials, (ii) exposure to any Hazardous Materials,
or (iii) the Release or threatened Release of any Hazardous Materials or (c) any
contract, agreement or other consensual arrangement pursuant to which liability
under any Environmental Law is assumed or imposed with respect to any of the
foregoing.

     "Equity Issuance" means (a) any issuance or sale by the Parent Guarantor or
any of its Subsidiaries after the Effective Date of (i) any of its capital
stock, (ii) any warrants or options (other than convertible Indebtedness)
exercisable in respect of its capital stock (other than any warrants or options
issued to directors, officers or employees of the Parent Guarantor or any of its
Subsidiaries pursuant to employee benefit plans established in the ordinary
course of business and any capital stock of the Parent Guarantor or any of its
Subsidiaries issued upon the exercise of such warrants or options) or (iii) any
other security or instrument representing an equity interest (or the right to
obtain any equity interest) in the Parent Guarantor or any of is Subsidiaries or
(b) the receipt by the Parent Guarantor or any of its Subsidiaries after the
Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution). The term "Equity
Issuance" shall not include any such issuance or sale to the Parent Guarantor or
any of its Subsidiaries or the receipt of any capital contribution from the
Parent Guarantor or any of its Subsidiaries.

     "Equity Rights" means, with respect to any Person, any subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including any shareholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of
any type in, such Person.

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

<PAGE>
                                      -9-

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower and/or the Parent Guarantor, 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 Parent Guarantor 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 Parent Guarantor or any its ERISA Affiliates 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 Parent Guarantor, the Borrower or any of their 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 Parent Guarantor,
the Borrower or any their ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Parent Guarantor, the Borrower or any their ERISA
Affiliates 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, means that
such Loan, or the Loans constituting 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 VIII.

     "Excluded Real Property" means real property interests of the Obligors in
the property identified in Schedule VII as Excluded Real Property.

     "Excluded Taxes" means, with respect to the Administrative Agent, the
Collateral Agent, the Issuing Lender, any Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder,
(a) taxes measured by net income, net profits or overall gross receipts, capital
or net worth (including, without limitation, branch profits or similar taxes) by
the United States of America, or by any jurisdiction, that are imposed solely as
a result of (I) the Administrative Agent, the Collateral Agent, the Issuing
Lender or any Lender (as the case may be) being or having been organized or
resident in, having or having had an office in, or doing or having done business
in such jurisdiction (other than a business that is or was deemed to arise
solely by reason of the Transactions) and (II) the Borrower being organized or
resident, maintaining an office or conducting business in such jurisdiction) and
(b) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.18(b)), any withholding tax that is
imposed pursuant to a law in effect at the time such Foreign Lender becomes a
party to this Agreement except to the extent that such Foreign Lender's assignor
(if any) was entitled, at the time of assignment, to receive additional amounts
from the Borrower with respect to such withholding tax pursuant to Section
2.16(a) or is

<PAGE>
                                      -10-

attributable to such Foreign Lender's failure or inability (other than as a
result of a Change in Law after such Lender becomes a party to this Agreement)
to comply with Section 2.16(e).

     "Existing Credit Agreement" means the Credit Agreement dated as of October
31, 2003, as amended, among the Borrower, the lenders party thereto, Wachovia
Bank, National Association, as administrative agent, and the syndication agent
and the co-documentation agents referred to therein.

     "Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published 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, with respect to any Obligor, the chief financial
officer, principal accounting officer, treasurer or controller of such Obligor.

     "Financial Test Group" means the Parent Guarantor and the Consolidated
Subsidiaries, but excluding the Consolidated Joint Ventures. In determining the
Financial Test Group for any date or period of time, only entities that are
members of the Financial Test Group as of such date or during such period of
time, as the case may be, shall be included.

     "First Lien Secured Obligations" means, collectively, (i) the Obligations
and (ii) all obligations of the Obligors to make payments under Hedging
Agreements relating to interest with any or all of the Administrative Agent, the
Issuing Lender, the Arranger, any Lender or any Affiliate of the Administrative
Agent, the Issuing Lender, the Arranger or any Lender, whether direct or
indirect, absolute or contingent. For purposes hereof, it is understood that any
First Lien Secured Obligations to any Person arising under an agreement entered
into at a time such Person (or an Affiliate thereof) is party hereto as the
Administrative Agent, the Issuing Lender or a Lender shall continue to
constitute First Lien Secured Obligations, notwithstanding that such Person (or
its Affiliate) has ceased to be the Administrative Agent, the Issuing Lender or
a Lender, as the case may be, party hereto (by assigning all of its Commitment,
Revolving Credit Exposure and other interests herein, or otherwise) at the time
a claim is to be made in respect of such First Lien Secured Obligations.

     "Fiscal Quarter" means a fiscal quarter of the Parent Guarantor.

     "Fiscal Year" means a fiscal year of the Parent Guarantor.

     "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 outside the United States of America.

<PAGE>
                                      -11-

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

     "Governmental Authority" means the government of the United States of
America, or of 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.

     "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 or other obligation 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 other obligation 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 or other obligation 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 other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

     "Guarantee Assumption Agreement" means a Guarantee Assumption Agreement
substantially in the form of Exhibit D by an entity that, pursuant to Section
6.10(a) is required to become a "Subsidiary Guarantor" hereunder in favor of the
Administrative Agent.

     "Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.

     "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to or with
respect to which liability is imposed under any Environmental Law.

     "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. The
amount of any Indebtedness or Other Pari Passu Obligations arising from
obligations of any Person under any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such
Person would be required to pay if such Hedging Agreement were terminated at
such time.

     "Immaterial Subsidiary" means (x) any Subsidiary of Borrower that owns
assets constituting no more than 2.5% of the book value of the assets of the
Parent Guarantor and its Consolidated Subsidiaries, taken as a whole; provided
that any Subsidiary that, when such

<PAGE>
                                      -12-

Subsidiary's assets are aggregated with those of all other Immaterial
Subsidiaries as to which (i) any event described in clause (h), (i), (j), (k),
(l) or (m) of Article VIII has occurred and is continuing or (ii) their
Guarantees are being or have been released in accordance with Section
10.02(b)(viii), would collectively own aggregate assets constituting more than
5.0% of the book value of the assets of the Parent Guarantor and its
Consolidated Subsidiaries, taken as a whole, shall not be considered an
Immaterial Subsidiary and (y) any Prohibited Subsidiary.

     "Inactive Company" means any Person that conducts no business activity
(other than any unwinding or liquidation activities), has no income and has
assets with a value that does not exceed $1,000 (or, in the case of Montana
Mills and its Subsidiaries, cash in an aggregate amount not exceeding $100,000
to the extent that such cash is to be used for costs and expenses relating to
Montana Mills or its Subsidiaries' unwinding).

     "Included Subsidiaries" means all Consolidated Subsidiaries, except that no
Consolidated Joint Venture other than Freedom Rings, LLC shall be an Included
Subsidiary.

     "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits 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
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) 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), (f) 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, (g) all Guarantees by such Person of
Indebtedness of others, giving effect to any limitations upon such Person's
liability for such Indebtedness of others as may be set forth in such Guarantee,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, (k) all Redeemable
Preferred Stock of such Person (in the event that such Person is a corporation),
(l) all obligations of such Person with respect to Hedging Agreements, (m) all
obligations which are payable prior to the Commitment Termination Date in
respect of unsecured structured settlements of Disclosed Matters or other
actions, suits, proceedings or governmental enforcement actions arising in
connection with the historical financial statements of Parent Guarantor and its
Consolidated Subsidiaries under review (as the date hereof) by the Special
Committee of the Board of Directors of the Parent Guarantor, and (n) all
obligations of such Person to purchase securities or other property prior to the
Commitment Termination Date arising out of or in connection with the sale of the
same or substantially similar securities or property. 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.

<PAGE>
                                      -13-

     "Indemnified Taxes" means Taxes imposed on or incurred by any Agent, the
Issuing Lender or any Lender with respect to any payment under any Loan Document
other than Excluded Taxes.

     "Intellectual Property" has the meaning given to such term in the Security
Agreement.

     "Intercreditor Agreement" means a Collateral Agency and Intercreditor
Agreement substantially in the form of Exhibit E among the Obligors, the
Collateral Agent, and CSFB as collateral agent under the Second Lien Loan
Documents, and CSFB, as paying agent for the Lenders under the Second Lien
Documents.

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

     "Interest Payment Date" means (a) with respect to any Syndicated ABR Loan,
each Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of
each Interest Period therefor and, in the case of any Interest Period of more
than three months' duration, each day prior to the last day of such Interest
Period that occurs at three-month intervals after the first day of such Interest
Period and (c) with respect to any Swingline Loan, the first Business Day of
each calendar month.

     "Interest Period" means, for any Eurodollar Loan or Borrowing, the period
commencing on the date of such Loan or Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as specified in the applicable Request for Loan or Interest Election
Request; 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 immediately
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 Loan initially shall be the date on which such
Loan is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Loan, and the date of a Syndicated Borrowing
comprising Loans that have been converted or continued shall be the effective
date of the most recent conversion or continuation of such Loans.

     "Investment" means any investment in any Person, whether by means of: (a)
the acquisition (whether for cash, property, services or securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of any other Person or any agreement to
make any such acquisition (including any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days

<PAGE>
                                      -14-

arising in connection with the sale of inventory or supplies by such Person in
the ordinary course of business; (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; provided that the making of any payment in
accordance with the terms of any Guarantee or other contingent obligation
permitted under this Agreement shall not be considered an Investment; (d) the
entering into of any Hedging Agreement; (e) any purchase or other acquisition of
Indebtedness or the assets of such Person or (f) any capital contribution to
such Person; (g) any other direct or indirect investment in such Person,
including any acquisition by way of a merger or consolidation, and any
arrangement pursuant to which the investor incurs Indebtedness of the type
referred to in clause (g) of the definition of "Indebtedness" in respect of such
Person. The amount of any Investment shall be the amount actually invested, less
any return of capital, without adjustment for subsequent increases or decreases
in the market value of such Investment.

     "Investment Account" means any account that the Administrative Agent
agrees, at the request of the Borrower, to designate as an "Investment Account";
provided that any such account shall be deemed to be an "Investment Account"
only if it is held in the name of the Borrower and, pursuant to the Investment
Account Control Agreement, controlled by the Shared Lien Collateral Agent. Any
such account shall cease to be an "Investment Account" if the Borrower and the
Administrative Agent shall so agree.

     "Investment Account Control Agreement" means a Control Agreement
substantially in the form of Exhibit G among the Borrower, the Shared Lien
Collateral Agent and an Investment Account Intermediary or such other form as
may be reasonably acceptable to the Shared Lien Collateral Agent.

     "Investment Account Intermediary" means a securities intermediary at which
an Investment Account is maintained.

     "Issuing Lender" means CSFB or WFF, as applicable, in their respective
capacities as the issuer of Letters of Credit hereunder, and their successors in
such capacity as provided in Section 2.05(j).

     "Joint Venture" means (i) any entity in which the Parent Guarantor, the
Borrower or any of their Subsidiaries has made any Investment that would be, in
conformity with GAAP, set forth opposite the caption "Investment in
unconsolidated joint ventures" (or any like caption) on a consolidated balance
sheet of the Financial Test Group and (ii) any Consolidated Joint Venture.

     "Kroll" means Kroll Zolfo Cooper LLC.

     "LC Disbursement" means a payment made by the Issuing Lender 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

<PAGE>
                                      -15-

time. The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

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

     "Letter of Credit Documents" means, with respect to any Letter of Credit,
collectively, any application therefor and any other agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk with respect to such Letter of
Credit or (b) any collateral security for any of such obligations, each as the
same may be modified and supplemented and in effect from time to time.

     "LIBO Rate" means, with respect to any LIBOR Borrowing for any Interest
Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of the relevant Interest Period by reference to the
British Bankers' Association Interest Settlement Rates for deposits in Dollars
(as set forth by the Bloomberg Information Service or any successor thereto or
any other service selected by the Administrative Agent which has been nominated
by the British Bankers' Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the "LIBO Rate" shall be the
interest rate per annum determined by the Administrative Agent to be the average
of the rates per annum at which deposits in Dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning 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.

     "Liquidity Trigger Event" shall be deemed to have occurred and be
continuing on any date if the Net Liquidity on such date is less than
$20,000,000.

     "Loan Documents" means, collectively, this Agreement, the Letter of Credit
Documents, the Intercreditor Agreement and the Security Documents and each other
agreement or written undertaking delivered to the Administrative Agent, the
Collateral Agent, the Issuing Lender or any other Lender, acting in such
capacities, in furtherance or pursuant to any of the foregoing.

<PAGE>
                                      -16-

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

     "Majority-Owned Joint Venture" means each Joint Venture in which the Parent
Guarantor and/or one of its Included Subsidiaries owns not less than 50% of the
capital stock, including Freedom Rings, LLC; New England Dough LLC; and Glazed
Investments, LLC.

     "Margin Stock" means "margin stock" within the meaning of Regulations T, U
and X of the Board.

     "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Financial Test Group taken as a whole, (b) the ability of any Obligor to
perform any of its obligations under this Agreement or any of the other Loan
Documents to which it is a party or (c) the rights of or benefits available to
the Lenders under this Agreement or any of the other Loan Documents.

     "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of the Borrower, the Parent Guarantor or any Subsidiary
Guarantor in an aggregate principal amount exceeding $1,000,000.

     "Median Desktop Analysis Value" means, for any Real Property listed in the
Desktop Analysis, the average of the high and low appraised values for such Real
Property set forth in such Desktop Analysis.

     "Modified Financial Statements" means, with respect to any period, the
consolidated balance sheet and related statements of operations, stockholders'
equity (if applicable) and cash flows of the Financial Test Group as of the end
of and for such period, in each case in substantially similar form, scope and
detail as the Projections.

     "Montana Mills" means Montana Mills Bread Co., Inc., a Delaware
corporation.

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

     "Mortgage" means an instrument of Mortgage or Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing or other similar instrument,
satisfactory in form and substance to the Collateral Agent and the
Administrative Agent, executed by an Obligor in favor of the Collateral Agent
for the benefit of the Claimholders (as defined in the Intercreditor Agreement),
granting a mortgage over the respective properties identified therein to secure
the obligations of such Obligor under the Loan Documents and the Second Lien
Loan Documents to which it is a party.

     "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

     "Net Available Proceeds" means:

          (a) in the case of any Disposition, the aggregate amount of all cash
     payments received by the Parent Guarantor and/or any of its Included
     Subsidiaries directly or

<PAGE>
                                      -17-

     indirectly in connection with such Disposition; provided that (i) Net
     Available Proceeds shall be net of (x) the amount of any legal, title and
     recording tax expenses, commissions and other fees and expenses paid by the
     Parent Guarantor and/or any of its Included Subsidiaries in connection with
     such Disposition, (y) any federal, state, foreign and local income or other
     taxes estimated to be payable by the Parent Guarantor and/or any of its
     Included Subsidiaries as a result of such Disposition, and (z) reserves set
     aside on its books with respect thereto in accordance with GAAP and (ii)
     Net Available Proceeds shall be net of any repayments by the Parent
     Guarantor and/or any of its Included Subsidiaries of Indebtedness
     (including interest and any premiums or penalties), other than any
     Indebtedness under the Second Lien Loan Documents (to which such netting
     shall not apply), to the extent that such Indebtedness is secured by a Lien
     on the property that is the subject of such Disposition;

          (b) in the case of any Casualty Event, the aggregate amount of
     proceeds of insurance, condemnation awards and other compensation received
     by the Parent Guarantor and/or any of its Included Subsidiaries in respect
     of such Casualty Event net of (i) reasonable expenses incurred by the
     Parent Guarantor and/or any of its Included Subsidiaries in connection
     therewith, (ii) contractually required repayments of Indebtedness
     (including interest and any premiums or penalties), other than any
     Indebtedness under the Second Lien Loan Documents (to which such netting
     shall not apply), to the extent secured by a Lien on such property and any
     income and transfer taxes payable by the Parent Guarantor and/or any of its
     Included Subsidiaries in respect of such Casualty Event and (iii) reserves
     set aside on its books with respect thereto in accordance with GAAP;

          (c) in the case of any Equity Issuance, the aggregate amount of all
     cash received by any member of the Financial Test Group (either directly or
     through a distribution by any Consolidated Joint Venture) in respect of
     such Equity Issuance net of customary fees, commissions and other expenses
     including reserves set aside on its books with respect thereto in
     accordance with GAAP incurred by the Parent Guarantor and/or any of its
     Subsidiaries in connection therewith (it being understood that proceeds of
     Equity Issuances by Consolidated Joint Ventures shall not constitute Net
     Available Proceeds except to the extent any such proceeds are distributed
     to and actually received by the Parent Guarantor or any of its Subsidiaries
     (other than Consolidated Joint Ventures)); and

          (d) in the case of any Debt Incurrence, the aggregate amount of all
     cash received by the Parent Guarantor and/or any of its Included
     Subsidiaries in respect of such Debt Incurrence net of customary fees,
     commissions and other expenses including reserves set aside on its books
     with respect thereto in accordance with GAAP incurred by the Parent
     Guarantor and/or any of its Subsidiaries in connection therewith.

     "Net Income" means, as applied to any Person for any period, the aggregate
amount of net income of such Person, after taxes, for such period, as determined
in accordance with GAAP.

     "Net Liquidity" means, on any date, the result of the following calculation
on such date: (a) an amount equal to the lesser of the Borrowing Base and the
aggregate amount of

<PAGE>
                                      -18-

the Lenders' Commitments plus (b) the aggregate amount of the "Tranche A Funding
Amounts" (as defined in the Second Lien Credit Agreement) minus (c) the
aggregate amount of the Revolving Credit Exposures of all of the Lenders minus
(d) the aggregate amount of the "Tranche A Exposures" (as defined in the Second
Lien Credit Agreement) of all of the Second Lien Lenders minus (e) the aggregate
amount of Specified Contingent Obligations (as set forth on the most recently
delivered Borrowing Base Certificate or as otherwise calculated by the
Administrative Agent as of the date such Borrowing Base Certificate should have
been delivered) plus (f) the aggregate cash balances of the Concentration
Accounts and the Depositary Account (i) determined at 1:30 p.m., New York City
time, on such date or if such date is not a Business Day, at 1:30 p.m., New York
City time, on the Business Day next occurring (in each case, after giving effect
to any prepayments that the Borrower is required to make pursuant to Section
2.10(b)(iii)) and (ii) not subject to any Lien other than (x) the Liens created
by the Loan Documents and the Second Lien Loan Documents and (y) set-off rights.

     "Obligations" means, collectively, the obligations of the Obligors to pay
the principal of and interest on the Loans, reimbursement obligations with
respect to LC Disbursements and all fees, indemnification payments and other
amounts whatsoever, whether direct or indirect, absolute or contingent, now or
hereafter from time to time owing to the Lenders, the Issuing Lender, the
Administrative Agent, the Collateral Agent or any of them under the Loan
Documents.

     "Obligors" means the Borrower and the Guarantors.

     "Other Pari Passu Obligations" means, as at any date, the aggregate
outstanding amount of all net obligations of any Obligor owing on such date to
any Lender, the Arranger, or any Affiliate of any Lender or the Arranger in
respect of any Hedging Agreement to the extent that such obligations are secured
pursuant to the Security Documents.

     "Other Taxes" means any and all present 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.

     "Parent Guarantor" has the meaning assigned to such term in the recital of
parties hereto.

     "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

     "Permitted Encumbrances" means:

          (a) Liens imposed by law for taxes, assessments or other governmental
     charges that are not yet due, payable or delinquent or are being contested
     in compliance with Section 6.04;

          (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
     landlord's and other like Liens imposed by law, arising in the ordinary
     course of business

<PAGE>
                                      -19-

     and securing obligations that are not overdue by more than 30 days or are
     being contested in compliance with Section 6.04;

          (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;

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

          (e) judgment Liens in respect of judgments that do not constitute an
     Event of Default under clause (o) of Article VIII;

          (f) easements, zoning and other restrictions, rights-of-way, covenants
     and encroachments, Liens in favor of any landlord and similar encumbrances
     on real property imposed by law or arising in the ordinary course of
     business that do not secure any monetary obligations and do not materially
     detract from the value of the affected property or interfere with the
     ordinary conduct of business of the Parent Guarantor or any of its Included
     Subsidiaries;

          (g) Liens constituting leasehold interests made by the Parent
     Guarantor or any of its Included Subsidiaries as lessor entered into in the
     ordinary course of business;

          (h) any right, title and interest of a landlord (including with
     respect to association dues, maintenance fees and other similar items)
     under any lease pursuant to which the Parent Guarantor or any of its
     Included Subsidiaries has a leasehold interest in any property or assets
     and any Liens that have been placed by such landlord on property over which
     the Parent Guarantor or any of its Included Subsidiaries has any real
     property interest; and

          (i) restrictions on pledges or transfers of capital stock imposed by
     partnership agreements, shareholders' agreements, limited liability company
     agreements, joint venture agreements and similar agreements in existence on
     the Effective Date or similar restrictions in amendments or restatements
     thereof which are no more onerous than those included in such agreements on
     the Effective Date;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

     "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;

<PAGE>
                                      -20-

          (b) marketable direct obligations issued by any State of the United
     States of America or any political subdivision of any such State or any
     public instrumentality thereof maturing within one year from the date of
     acquisition thereof and, at the time of acquisition, having one of the two
     highest ratings obtainable from either S&P or Moody's;

          (c) investments in commercial paper maturing within 270 days from the
     date of acquisition thereof and having, at such date of acquisition, the
     highest credit rating obtainable from S&P or 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 which
     has a combined capital and surplus and undivided profits of not less than
     $500,000,000;

          (e) fully collateralized repurchase agreements with a term of not more
     than 90 days for securities described in clause (a) of this definition and
     entered into with a financial institution satisfying the criteria described
     in clause (d) of this definition; and

          (f) investments in money market funds which invest substantially all
     their assets in securities of the types described in clauses (a) through
     (e) above.

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

     "Phase I" has the meaning set forth in Section 5.01(m)(ii).

     "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 Parent Guarantor, the
Borrower or any of their ERISA Affiliates 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.

     "Prime Rate" means the rate of interest per annum announced from time to
time by CSFB 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 announced as being effective.

     "Principal Facilities" means the mixing facility of the Borrower located in
Effingham, Illinois and the mixing facility and manufacturing plant of the
Borrower, each located in Winston-Salem, North Carolina.

     "Prohibited Subsidiary" means, at the time of determination, a Consolidated
Joint Venture that is prohibited by its organizational documents or any
agreement governing its Indebtedness from becoming an Obligor hereunder;
provided that Freedom Rings, LLC shall not be a Prohibited Subsidiary.

<PAGE>
                                      -21-

     "Projections" means the financial projections of the Borrower and its
Consolidated Subsidiaries dated March 31, 2005 heretofore delivered by the
Borrower to the Administrative Agent.

     "Property Designated For Sale" means real property and improvements
specifically designated as such and itemized on Schedule VII.

     "Quarterly Dates" means the last Business Day of January, April, July and
October in each year, the first of which shall be the first such day after the
date hereof.

     "Real Property" has the meaning set forth in Section 4.17.

     "Redeemable Preferred Stock" of any Person means any preferred stock issued
by such Person which is at any time prior to the date falling six months after
the Commitment Termination Date either (i) mandatorily redeemable (by sinking
fund or similar payments or otherwise) or (ii) redeemable at the option of the
holder thereof.

     "Register" has the meaning set forth in Section 10.04.

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

     "Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the movement of Hazardous Materials through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata.

     "Request for Loan" means an executed request for loan substantially in the
form of Exhibit H hereto with all blanks completed by the Borrower.

     "Required Lenders" means, at any time, two or more Lenders having Revolving
Credit Exposures and unused Commitments representing more than 50% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time,
provided that if at any point in time there is only one Lender, then such Lender
shall be deemed to be the Required Lenders.

     "Restatement Date" means the date on which the Parent Guarantor furnishes
to the Lenders (i) the audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows of the Parent Guarantor and
its Consolidated Subsidiaries as of the end of and for all Fiscal Years
currently under review by the Special Committee of the Board of Directors of the
Parent Guarantor (including without limitation its 2004 and 2005 Fiscal Years),
reported on by PriceWaterhouseCoopers 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 Parent Guarantor and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied as of the end of
and for such Fiscal Year and (ii) the unaudited consolidated balance sheet and
related statements of

<PAGE>
                                      -22-

operations, stockholders' equity and cash flows of the Parent Guarantor and its
Consolidated Subsidiaries as of the end of and for its first and second Fiscal
Quarters for its 2006 Fiscal Year.

     "Restricted Payment" means (a) any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Parent Guarantor or any of its Subsidiaries, 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 Parent Guarantor or any of its Subsidiaries or any option, warrant or other
right to acquire any such shares of capital stock of the Parent Guarantor or any
of its Subsidiaries or (b) any payment made by the Parent Guarantor or any of
its Subsidiaries to purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Subordinated Indebtedness, except for regularly
scheduled payments, prepayments or redemptions of principal and interest in
respect thereof required pursuant to the instruments evidencing such
Indebtedness.

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

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

     "Second Lien Credit Agreement" means the Second Lien Credit Agreement dated
as of the date hereof between the Obligors, the Second Lien Lenders, CSFB as
administrative agent and paying agent for the Second Lien Lenders and CSFB as
collateral agent for such "Lenders" and CSFB as fronting bank, including any
replacement thereof entered into in connection with one or more refinancings
thereof permitted by the Intercreditor Agreement.

     "Second Lien Lenders" means the Persons referred as "Lenders" in the Second
Lien Credit Agreement.

     "Second Lien Loan Documents" means the "Loan Documents" referred to in the
Second Lien Credit Agreement.

     "Security Agreement" means a Security Agreement substantially in the form
of Exhibit C among the Borrower, the Parent Guarantor, the Subsidiary Guarantors
and the Collateral Agent, as the same shall be modified and supplemented and in
effect from time to time.

     "Security Documents" means the Security Agreement, the Mortgages and all
Uniform Commercial Code financing statements permitted by the Security
Agreement, the Mortgages to be filed with respect to the security interests in
personal property and fixtures created pursuant to the Security Agreement or the
Mortgages, the Concentration Account Control Agreements, any Investment Account
Control Agreement and all other agreements entered into to confer upon the
Shared Lien Collateral Agent or the Collateral Agent control over

<PAGE>
                                      -23-

deposit accounts or securities accounts for purposes of the Uniform Commercial
Code and any other agreement, document, instrument or other writing providing
collateral for the Obligations whether now or hereafter in existence.

     "Shared Lien Collateral Agent" has the meaning assigned to such term in the
Intercreditor Agreement.

     "Specified Contingent Obligations" means the obligations listed on Schedule
IX, together with all other obligations of a similar nature binding on any
Obligor and all obligations of a similar nature that replace or supplement a
Specified Contingent Obligation in connection with a transaction that results in
a net reduction of Specified Contingent Obligations, from time to time
outstanding. The amount of any Specified Contingent Obligation shall be the
maximum amount that the Obligors upon which such Specified Contingent Obligation
is binding could be required to pay thereunder.

     "Statutory Reserve Rate" means, for the Interest Period for any Eurodollar
Borrowing, 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 arithmetic
mean, taken over each day in such Interest Period, of 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 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.

     "Subordinated Indebtedness" means Indebtedness (a) for which the Parent
Guarantor is directly and primarily liable, (b) in respect of which none of its
Subsidiaries is contingently or otherwise obligated and (c) that is subordinated
to the obligations of the Parent Guarantor hereunder (including in respect of
its Guarantee under Article III) on terms, and pursuant to documentation
containing other terms (including interest, amortization, covenants and events
of default), in form and substance satisfactory to the Required Lenders.

     "Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power 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. Unless otherwise specified,
"Subsidiary" means a Subsidiary of the Parent Guarantor. Notwithstanding
anything contained

<PAGE>
                                      -24-

herein to the contrary, neither Montana Mills nor any of its Subsidiaries shall
be deemed to be a Subsidiary of the Parent Guarantor so long as Montana Mills or
such Subsidiary, as the case may be, is an Inactive Company.

     "Subsidiary Guarantor" means each of the Subsidiaries of the Borrower
identified under the caption "GUARANTORS" on the signature pages hereto and each
Subsidiary of the Borrower that becomes a "Subsidiary Guarantor" after the date
hereof pursuant to Section 6.10(a).

     "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 WFF, in its capacity as lender of Swingline Loans
hereunder.

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

     "Syndicated", when used in reference to any Loan or Borrowing, means that
such Loan, or the Loans constituting such Borrowing, are made pursuant to
Section 2.01.

     "Synthetic Lease" means any synthetic lease, tax retention operating lease,
or off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but which is classified as an
operating lease pursuant to GAAP.

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

     "Test Period" means, on any date of determination, the period of four
consecutive Fiscal Quarters (taken as one accounting period) ending with the
latest Fiscal Quarter or the Fiscal Year for which financial statements pursuant
to Section 6.01(a) or (b) have been, or should have been, delivered, as modified
pursuant to Section 1.03.

     "Transactions" means the execution, delivery and performance by each
Obligor of this Agreement, the other Loan Documents and the Second Lien Loan
Documents to which such Obligor is intended to be a party, the borrowing of
Loans hereunder and loans under the Second Lien Loan Documents, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder and the
issuance of letters of credit thereunder.

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

     "Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital
stock or other ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the Parent Guarantor.

<PAGE>
                                      -25-

     "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.

     "WFF" means Wells Fargo Foothill, Inc., a California corporation.

     SECTION 1.02. 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. Any reference to
"Issuing Lender" shall mean any one, or all, of the Issuing Lenders, as
applicable.

     SECTION 1.03. Accounting Terms; GAAP; Historical Financial Calculations.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the Administrative
Agent notifies the Borrower that the Required Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith. Except as may be otherwise expressly set forth herein, all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared, and all calculations made
for purposes of determining compliance with Section 7.09 shall be made, as if
the Consolidated Joint Ventures were carried as equity investments by the
relevant members of the Financial Test Group. Notwithstanding anything contained
herein to the contrary: (a) (i) each calculation of a financial matter hereunder
that is otherwise to be made for any period of four Fiscal Quarters that
includes a portion of the Fiscal Year ending 2005 shall instead be made solely
by reference to the portion of such period comprised of Fiscal Quarters in the
Fiscal Year ending 2006 (the "2006 Fiscal Quarters") and (ii) for purposes of
completing such calculation, the result obtained for the 2006 Fiscal Quarters
shall be multiplied by a fraction the numerator of which is four and the
denominator of which is

<PAGE>
                                      -26-

the number of 2006 Fiscal Quarters and (b) the financial statements,
certificates, reports and calculations referred to in the preceding sentence
shall not be required to be prepared or made in accordance with GAAP, but such
deviation from GAAP shall be solely in respect of the treatment of Consolidated
Joint Ventures as equity investments as provided above.

     SECTION 1.04. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g. a "Syndicated
Loan"), by Type (e.g. an "ABR Loan") or by Class and Type (e.g. a "Syndicated
ABR Loan"). Borrowings may also be classified and referred to by Class (e.g. a
"Syndicated Borrowing"), by Type (e.g. an "ABR Borrowing") or by Class and Type
(e.g. a "Syndicated ABR Borrowing").

                                   ARTICLE II

                                   THE CREDITS

     SECTION 2.01. The Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Syndicated Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender's Revolving Credit Exposure exceeding
such Lender's Commitment or (b) the total Revolving Credit Exposures exceeding
the lesser of the total Commitments and the Borrowing Base then in effect.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Syndicated Loans.

     SECTION 2.02. Loans and Borrowings.

     (a) Obligations of Lenders. Each Syndicated Loan shall be made as part of a
Borrowing consisting of Loans of the same Type made by the Lenders ratably in
accordance with their respective Commitments. 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 2.13, each Syndicated Borrowing shall
be constituted entirely of ABR Loans or of Eurodollar Loans as the Borrower may
request in accordance herewith. 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; provided that 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. Each Eurodollar
Borrowing shall be in an aggregate amount of $1,000,000 or a larger multiple of
$1,000,000. Each Syndicated ABR Borrowing shall be in an aggregate amount equal
to $1,000,000 or a larger multiple of $1,000,000; provided that a Syndicated ABR
Borrowing may be in any lesser aggregate amount that is equal to the entire
unused then available balance of

<PAGE>
                                      -27-

the lesser of the total Commitments and the Borrowing Base then in effect. Each
Swingline Loan shall be in an amount equal to $500,000 or a larger multiple of
$250,000; provided that a Swingline ABR Borrowing may be in a lesser amount (i)
that is equal to entire unused then available balance of the lesser of the total
Commitments and the Borrowing Base then in effect, or (ii) as may be requested
by the Borrower at any time that the Borrower is required to prepay Loans
pursuant to Section 2.10(b)(iii). Borrowings of more than one Class and Type may
be outstanding at the same time; provided that there shall not at any time be
more than a total of six 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 to or continue as a Eurodollar Borrowing) any Borrowing if the Interest
Period requested therefor would end after the Commitment Termination Date.

     SECTION 2.03. Requests for Syndicated Borrowings.

          (a) Notice by the Borrower. To request a Syndicated Borrowing, the
     Borrower shall notify the Administrative Agent of such request by telephone
     (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New
     York City time, three Business Days before the date of the proposed
     Borrowing or (ii) in the case of a Syndicated ABR Borrowing, not later than
     11:00 a.m., New York City time, one Business Day before the date of the
     proposed Borrowing; provided that any such notice of a Syndicated ABR
     Borrowing to finance the reimbursement of an LC Disbursement as
     contemplated by Section 2.05(f) may be given not later than 10:00 a.m., New
     York City time, on the date of the proposed Borrowing. Each such telephonic
     request for a Loan shall be irrevocable and shall be confirmed promptly by
     hand delivery or telecopy to the Administrative Agent of a Request for Loan
     signed by the Borrower.

          (b) Content of Request for Loans. Each telephonic request for a Loan
     and written Request for Loan shall specify the following information in
     compliance with Section 2.02:

               (i) the aggregate amount of the requested Borrowing;

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

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

               (iv) in the case of a Eurodollar Borrowing, the Interest Period
          therefor, which shall be a period contemplated by the definition of
          the term "Interest Period" and permitted under Section 2.02(d); and

               (v) 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.

          (c) Notice by the Administrative Agent to the Lenders. Promptly
     following receipt of a Request for Loan 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.

          (d) Failure to Elect. If no election as to the Type of a Syndicated
     Borrowing is specified, then the requested Borrowing shall be an ABR
     Borrowing. If no Interest Period is

<PAGE>
                                      -28-

specified with respect to any requested Eurodollar Borrowing, then the Interest
Period shall be one month.

     SECTION 2.04. Swingline Loans.

     (a) Agreement to Make Swingline Loans. 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 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 $7,500,000
or (ii) the total Revolving Credit Exposures exceeding the lesser of the total
Commitments and the Borrowing Base then in effect; 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.

     (b) Notice of Swingline Loans by the Borrower. To request a Swingline Loan,
the Borrower shall notify the Swingline Lender of such request by telephone
(confirmed by telecopy of a Request for Loan to the Swingline Lender with an
information copy to the Administrative Agent), not later than 12:00 noon, 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 the amount of the requested Swingline Loan. The Swingline Lender shall
make such Swingline Loan available to the Borrower by wire transfer to a
Concentration Account designated by the Borrower (or, in the case of a Swingline
Loan made to finance the reimbursement of an LC Disbursement as provided in
Section 2.05(f), by remittance to the Issuing Lender) by 3:00 p.m. New York City
time, on the requested date of such Swingline Loan.

     (c) Participation by Lenders in Swingline Loans. 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 Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding. Such notice to the Administrative Agent shall specify the aggregate
amount of Swingline Loans in which Lenders will participate. Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to
each Lender, specifying in such notice such Lender's Applicable Percentage of
such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above in this paragraph, 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 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 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 Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall
notify the Borrower of any participations in any

<PAGE>
                                      -29-

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 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 Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.
Notwithstanding the foregoing, a Lender shall not have any obligation to acquire
a participation in a Swingline Loan pursuant to this paragraph if a Default
shall have occurred and be continuing at the time such Swingline Loan was made
and such Lender shall have notified the Swingline Lender in writing, at least
one Business Day prior to the time such Swingline Loan was made, that such
Default has occurred and that such Lender will not acquire participations in
Swingline Loans made while such Default is continuing.

     SECTION 2.05. Letters of Credit.

     (a) General. Subject to the terms and conditions set forth herein, in
addition to the Loans provided for in Section 2.01, the Borrower may request
that an Issuing Lender issue, and such Issuing Lender shall issue, at any time
and from time to time during the period commencing on the Effective Date and
ending on the date that is 30 days prior to the Commitment Termination Date,
Letters of Credit for its own account in such form as is acceptable to the
Issuing Lender in its reasonable determination (including, without limitation,
"auto-renewal" letters of credit); provided that the Issuing Lender shall not be
under any obligation to issue any Letter of Credit if the issuance of such
Letter of Credit would violate one or more policies of the Issuing Lender
generally applicable to the issuance of letters of credit. All Letters of Credit
issued hereunder by either Issuing Lender shall be issued for the account of the
Borrower as the named account party thereon, provided that Letters of Credit
may, in addition to showing the Borrower as account party, show any Guarantor as
a favoree under such Letter of Credit. Letters of Credit issued hereunder shall
constitute utilization of the Commitments.

     (b) Notice of Issuance, Amendment, Renewal or Extension. 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 such Issuing Lender) to the Issuing Lender selected by Borrower and
to the Administrative Agent (not later than 11:00 a.m. on the fourth Business
Day preceding 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 (d) 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 Issuing Lender, the Borrower also shall submit a letter of credit
application on the Issuing Lender's standard form in connection with any request
for a Letter of Credit. In the event of any inconsistency between the

<PAGE>
                                      -30-

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, the Issuing Lender relating to any Letter
of Credit, the terms and conditions of this Agreement shall control. Each
Issuing Lender shall promptly notify the Administrative Agent of any Letters of
Credit issued, amended, renewed or extended by it hereunder and shall deliver a
report (in form and substance reasonably acceptable to the Administrative Agent)
on the last Business Day of each month after the Effective Date detailing such
Issuing Lender's letter of credit activity under this Agreement; provided that
if the last Business Day of such month coincides with the end of a Fiscal
Quarter, such report shall be delivered five Business Days prior to the last day
of such Fiscal Quarter, and each Issuing Lender shall promptly provide an update
report to the Administrative Agent of any letter of credit activity under this
Agreement during such five Business Day period.

     (c) Limitations on Amounts. 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,
the total Revolving Credit Exposures shall not exceed the lesser of the total
Commitments and the Borrowing Base then in effect.

     (d) Expiration Date. Each Letter of Credit shall expire (or provide that
the Issuing Lender shall have the option to refuse to renew such Letter of
Credit) at or prior to the close of business on the earlier of (i) the date
twelve months after the date of the issuance of such Letter of Credit (or, in
the case of any renewal or extension thereof, twelve months after the
then-current expiration date of such Letter of Credit, so long as such renewal
or extension occurs within three months of such then-current expiration date)
and (ii) the date that is five Business Days prior to the Commitment Termination
Date.

     (e) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) by the Issuing Lender, and
without any further action on the part of the Issuing Lender or the Lenders, the
Issuing Lender hereby grants to each Lender, and each Lender hereby acquires
from the Issuing Lender, 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. 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.

     In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Lender, such Lender's Applicable Percentage of each
LC Disbursement made by the Issuing Lender promptly upon the request of the
Issuing Lender at any time from the time of such LC Disbursement until such LC
Disbursement is reimbursed by the Borrower or at any time after any
reimbursement payment is required to be refunded to the Borrower for any reason.
Such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each such payment shall be made 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

<PAGE>
                                      -31-

the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Lender the amounts so received by it from the
Lenders. Promptly following receipt by the Administrative Agent of any payment
from the Borrower pursuant to the next following paragraph, the Administrative
Agent shall distribute such payment to the Issuing Lender or, to the extent that
the Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Lender, then to such Lenders and the Issuing Lender as their interests
may appear. Any payment made by a Lender pursuant to this paragraph to reimburse
the Issuing Lender for any LC Disbursement shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.

     (f) Reimbursement. If the Issuing Lender shall make any LC Disbursement in
respect of a Letter of Credit, then either (x) the Borrower shall directly
reimburse the Issuing Lender in respect of such LC Disbursement by paying to the
Administrative Agent for the account of the Issuing Lender an amount equal to
such LC Disbursement no later than 1:00 p.m., New York City time, on the
Business Day following the day that the LC Disbursement is made (the "Conversion
Date") or (y) if such LC Disbursement is not directly reimbursed prior to the
applicable Conversion Date, then upon the occurrence of the applicable
Conversion Date, the Borrower shall be irrevocably deemed to have requested that
the Lenders make Syndicated ABR Loans in the amount of their respective
Applicable Percentages for the purpose of repaying such LC Disbursement,
provided that if Borrower is not eligible to request a Syndicated ABR Loan, each
Lender shall perform its participation obligations in favor of the Issuing
Lender pursuant to Section 2.05(e) of this Agreement.

     (g) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (f) of this Section shall be absolute,
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 any term or provision 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 Issuing Lender under a Letter of Credit against
presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit, and (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 the
Borrower's obligations hereunder.

     Neither the Administrative Agent, the Lenders nor the Issuing Lender, 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
by the Issuing Lender 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 the Issuing Lender; provided that the foregoing
shall not be construed to excuse the Issuing Lender 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

<PAGE>
                                      -32-

by applicable law) suffered by the Borrower that are caused by the Issuing
Lender's gross negligence or willful misconduct when determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that:

          (i) the Issuing Lender may accept documents that appear on their face
     to be in substantial compliance with the terms of a Letter of Credit
     without responsibility for further investigation, regardless of any notice
     or information to the contrary, and may make payment upon presentation of
     documents that appear on their face to be in substantial compliance with
     the terms of such Letter of Credit;

          (ii) the Issuing Lender shall have the right, in its sole discretion,
     to decline to accept such documents and to make such payment if such
     documents are not in strict compliance with the terms of such Letter of
     Credit; and

          (iii) this sentence shall establish the standard of care to be
     exercised by the Issuing Lender when determining whether drafts and other
     documents presented under a Letter of Credit comply with the terms thereof
     (and the parties hereto hereby waive, to the extent permitted by applicable
     law, any standard of care inconsistent with the foregoing).

     (h) Disbursement Procedures. The Issuing Lender shall, within a reasonable
time following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Lender
shall promptly after such examination notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Lender 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 the Issuing Lender and the
Lenders with respect to any such LC Disbursement.

     (i) Interim Interest. If the Issuing Lender shall make any LC Disbursement,
then, unless the Borrower shall reimburse (including through a Borrowing of
Syndicated ABR Loans) 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 Syndicated ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (f) of
this Section, then Section 2.12(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Lender, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Lender shall be for the
account of such Lender to the extent of such payment.

     (j) Replacement of the Issuing Lender. The Issuing Lender may be replaced
at any time by written agreement between the Borrower, the Administrative Agent,
the replaced Issuing Lender and the successor Issuing Lender. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Lender. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for account of the replaced

<PAGE>
                                      -33-

Issuing Lender pursuant to Section 2.11(b). From and after the effective date of
any such replacement, (i) the successor Issuing Lender shall have all the rights
and obligations of the replaced Issuing Lender under this Agreement with respect
to Letters of Credit to be issued thereafter and (ii) references herein to the
term "Issuing Lender" shall be deemed to refer to such successor or to any
previous Issuing Lender, or to such successor and all previous Issuing Lenders,
as the context shall require. After the replacement of an Issuing Lender
hereunder, the replaced Issuing Lender shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Lender 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.

     (k) Cash Collateralization. If either (i) an Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with LC Exposure representing more than 50% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, or (ii) the
Borrower shall be required to provide cover for LC Exposure pursuant to Section
2.10(b), the Borrower shall immediately deposit into the Collateral Account an
amount in cash equal to, in the case of an Event of Default, 105% of the LC
Exposure as of such date plus any accrued and unpaid interest thereon and, in
the case of cover pursuant to Section 2.10(b), the amount required under Section
2.10(b), as the case may be; 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 VIII. Such deposit shall be held by the
Administrative Agent in the Collateral Account as collateral in the first
instance for the LC Exposure under this Agreement and thereafter for the payment
of the other First Lien Secured Obligations.

     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
transferring by wire transfer the amounts so received, in like funds, to a
Concentration Account of the Borrower designated by the Borrower in the
applicable Request for Loan; provided that Syndicated ABR Borrowings made to
finance the reimbursement of an LC Disbursement as provided in Section 2.05(f)
shall be remitted by the Administrative Agent to the Issuing Lender.

     (b) Presumption by the Administrative Agent. 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

<PAGE>
                                      -34-

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 Federal Funds Effective Rate 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) Elections by the Borrower for Syndicated Borrowings. The Loans
     constituting each Syndicated Borrowing initially shall be of the Type
     specified in the applicable Request for Loan and, in the case of a
     Eurodollar Borrowing, shall have the Interest Period specified in such
     Request for Loan. Thereafter, the Borrower may elect to convert such
     Borrowing to a Borrowing of a different Type or to continue such Borrowing
     as a Borrowing of the same Type and, in the case of a Eurodollar Borrowing,
     may elect the Interest Period 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 constituting such
     Borrowing, and the Loans constituting 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) Notice of Elections. 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 Request for Loan would be required under
     Section 2.03 if the Borrower were requesting a Syndicated 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
     substantially in the form of Exhibit I and signed by the Borrower.

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

               (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) of this paragraph 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 therefor after giving effect to such election, which
          shall be a period contemplated by the definition of the term "Interest
          Period" and permitted under Section 2.02(d).

<PAGE>
                                      -35-

          (d) Notice by the Administrative Agent to the 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 and complete Interest Election Request with respect to a
     Eurodollar Borrowing prior to the end of the Interest Period therefor,
     then, unless such Borrowing is repaid as provided herein, at the end of
     such Interest Period such Borrowing shall be converted to a Syndicated 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 Syndicated Borrowing
     may be converted to or continued as a Eurodollar Borrowing and (ii) unless
     repaid, each Eurodollar Borrowing shall be converted to a Syndicated ABR
     Borrowing at the end of the Interest Period therefor.

     SECTION 2.08. Termination and Reduction of the Commitments.

     (a) Scheduled Termination. Unless previously terminated, the Commitments
shall terminate on the Commitment Termination Date.

     (b) Voluntary Termination or Reduction. The Borrower may at any time
terminate, or from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments pursuant to this Section shall be in an amount that
is $1,000,000 or a larger multiple of $1,000,000 (or, if less, the entire
remaining aggregate amount of Commitments) and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Syndicated Loans in accordance with Section 2.10, the total
Revolving Credit Exposures would exceed the total Commitments or, unless the
Borrower is terminating the Commitments in their entirety, the Net Liquidity
would be less than $20,000,000.

     (c) Notice of Voluntary Termination or Reduction. 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 Commitments delivered by the
Borrower may state that such notice is conditioned upon the issuance of
securities or 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.

     (d) Effect of Termination or Reduction. Any termination or reduction of the
Commitments shall be permanent. Each reduction of the Commitments shall be made
ratably among the Lenders in accordance with their respective Commitments. Upon
any reduction of the Commitments pursuant to this Section 2.08 prior to the
first anniversary of the Effective Date, the Borrower shall pay to each Lender a
redeployment fee in an amount equal to 1% of the amount of such reduction
applied to such Lender's Commitment.

<PAGE>
                                      -36-

     SECTION 2.09. Repayment of Loans; Evidence of Debt.

     (a) Repayment. The Borrower hereby unconditionally promises to pay the
Loans as follows:

     (i) to the Administrative Agent for account of the Lenders the outstanding
principal amount of the Syndicated Loans on the Commitment Termination Date, and

     (ii) to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the earlier of (a) the Commitment Termination Date or (b) the
date of demand for repayment by the Swingline Lender of such Swingline Loan;
provided that on each date that a Syndicated Borrowing is made, the Borrower
shall, to the extent of the proceeds of such Syndicated Borrowing, repay all
Swingline Loans then outstanding.

     (b) Manner of Payment. Prior to any repayment or prepayment of any
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be paid and shall notify the Swingline Lender or Administrative Agent, as
applicable, by telephone (confirmed by telecopy to the Administrative Agent and
if applicable the Swingline Lender) of such selection in accordance with Section
2.10(c); provided that each repayment of Borrowings shall be applied to repay
any outstanding ABR Borrowings before any other Borrowings. If the Borrower
fails to make a timely selection of the Borrowing or Borrowings to be repaid or
prepaid, such payment shall be applied, first, to pay any outstanding ABR
Borrowings and, second, to other Borrowings in the order of the remaining
duration of their respective Interest Periods (the Borrowing with the shortest
remaining Interest Period to be repaid first). Each payment of a Syndicated
Borrowing shall be applied ratably to the Loans included in such Borrowing.

     (c) Maintenance of Records by Lenders. Each Lender shall maintain in
accordance with its usual practice records 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.

     (d) Maintenance of Records by the Administrative Agent. The Administrative
Agent shall maintain records in which it shall record (i) the amount of each
Loan made hereunder, the Class and Type thereof and each Interest Period
therefor, (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 account of
the Lenders and each Lender's share thereof.

     (e) Effect of Entries. The entries made in the records maintained pursuant
to paragraph (c) or (d) 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 records 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.

     (f) Promissory Notes. Any Lender may request that Loans made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver

<PAGE>
                                      -37-

to such Lender a promissory note payable to such Lender (or, if requested by
such Lender, to such Lender and its registered assigns) and in substantially the
same form as Exhibit K.

     SECTION 2.10. 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. The Borrower will prepay the Loans and/or
     provide cover for LC Exposure as specified in Section 2.05(k) as follows:

               (i) Casualty Events. Upon the receipt by the Parent Guarantor or
          any of its Included Subsidiaries of the proceeds of insurance,
          condemnation award or other compensation in respect of any Casualty
          Event affecting any property of the Parent Guarantor or any of its
          Subsidiaries, the Borrower shall prepay the Loans and/or provide cover
          for LC Exposure as specified in Section 2.05(k) in an aggregate
          amount, if any, equal to 100% of the Net Available Proceeds of such
          Casualty Event, such prepayment and/or cash cover to be effected in
          each case in the manner and to the extent specified in clause (vii) of
          this paragraph.

               (ii) Equity Issuance. Upon any Equity Issuance, the Borrower
          shall prepay the Loans and/or provide cover for LC Exposure as
          specified in Section 2.05(k) in an aggregate amount equal to 50% of
          the Net Available Proceeds thereof, such prepayment and/or cash cover
          to be effected in each case in the manner and to the extent specified
          in clause (vii) of this paragraph; provided that, if after giving
          effect to such Equity Issuance, the Net Liquidity exceeds $10,000,000,
          then (x) the Borrower shall offer to apply an amount equal to 25% of
          such Net Available Proceeds under Section 2.10(b) of the Second Lien
          Credit Agreement and (y) the amount of such proceeds to be applied as
          required by this paragraph (ii) shall be equal to (I) the amount of
          such Net Available Proceeds so offered, but not accepted, under the
          Second Lien Credit Agreement plus (II) 25% of such Net Available
          Proceeds.

               (iii) Cash Sweep. On each Business Day on which a Liquidity
          Trigger Event shall have occurred and be continuing, the Borrower
          shall prepay the principal of the Loans and interest on the amount of
          such principal so prepaid to the extent required by Section 2.12(d)
          and/or provide cover for LC Exposure as specified in Section 2.05(k)
          in an aggregate amount (for both such principal and interest)
          necessary to make such payments and provide such cover but not more
          than the excess of (x) the amount of the cash balances then on deposit
          in the Depositary Account (or, prior to the Depositary Effective Date,
          the Concentration Accounts) at 1:30 p.m., New York City time, on such
          Business Day over (y) the amount of interest and fees payable by the
          Borrower under the Second Lien Credit Agreement on the next day
          scheduled for payment of such interest and fees, such prepayment
          and/or cash cover to be effected in each case in the manner and to the
          extent specified in clause (vii) of this paragraph.

<PAGE>
                                      -38-

               (iv) Sale of Assets. Without limiting the obligation of the
          Borrower to obtain the consent of the Required Lenders pursuant to
          Section 7.03 to any Disposition not otherwise permitted hereunder, in
          the event that the Net Available Proceeds of any Disposition (herein,
          the "Current Disposition"), and of all such prior Dispositions (in
          each case including, for avoidance of doubt, Properties Designated for
          Sale) as to which a prepayment has not yet been made under this
          paragraph, shall exceed $1,000,000 then, on the same day the Current
          Disposition occurs, the Borrower will deliver to the Lenders a
          statement, certified by a Financial Officer of the Borrower, in form
          and detail satisfactory to the Administrative Agent, of the amount of
          the Net Available Proceeds of the Current Disposition and of all such
          prior Dispositions and will prepay the Loans and/or provide cover for
          LC Exposure as specified in Section 2.05(k) in an aggregate amount
          equal to 100% of the Net Available Proceeds of the Current Disposition
          and such prior Dispositions, such prepayment and/or cash cover to be
          effected in each case in the manner and to the extent specified in
          clause (vii) of this paragraph.

               (v) Debt Incurrence. Upon any Debt Incurrence, the Borrower shall
          prepay the Loans and/or provide cover for LC Exposure as specified in
          Section 2.05(k) in an aggregate amount equal to 100% of the Net
          Available Proceeds thereof, such prepayment and/or cash cover to be
          effected in each case in the manner and to the extent specified in
          clause (vii) of this paragraph.

               (vi) Borrowing Base. On each Business Day on which the aggregate
          Revolving Credit Exposure of all Lenders exceeds the Borrowing Base,
          the Borrower shall prepay the principal of the Loans and/or provide
          cover for LC Exposure as specified in Section 2.05(k) in an aggregate
          amount equal to the amount of such excess, such prepayment and/or cash
          cover to be effected in each case in the manner and to the extent
          specified in clause (vii) of this paragraph.

               (vii) Application. Prepayments and/or cash cover pursuant to this
          paragraph shall be applied, first, to prepay Swingline Loans, second,
          to prepay Syndicated Loans and, third, to provide cover for LC
          Exposure as specified in Section 2.05(k). Notwithstanding the
          foregoing provisions of this Section 2.10: (x) provided that no Event
          of Default has occurred and is continuing and, if after giving effect
          to the Asset Prepayment Event, the Net Liquidity exceeds $25,000,000,
          the Borrower may, at its option, offer to apply all or any portion of
          the Net Available Proceeds from such Asset Prepayment Event under
          Section 2.10(b) of the Second Lien Credit Agreement, in which case the
          amount of such Net Available Proceeds to be applied as required by
          this Section 2.10 shall be equal to the amount of such Net Available
          Proceeds not so offered (or offered, but not accepted) and (y) after
          the prepayment in full of the Loans under this Section 2.10, the
          Borrower may, at its option, offer to apply all or any portion of the
          remaining Net Available Proceeds from the relevant event under Section
          2.10(b) of the Second Lien Credit Agreement, in which case the amount
          of such Net Available Proceeds to be applied to provide cover for LC
          Exposure as required by this Section 2.10 shall be equal to the amount
          of such Net Available Proceeds not so offered (or offered, but not
          accepted). It is acknowledged and agreed that the Commitments are not
          required to be reduced by reason of any event requiring a prepayment
          under this Section 2.10.

<PAGE>
                                      -39-

          (c) Notices, Etc. 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 11:00 a.m.,
     New York City time, three Business Days before the date of prepayment, (ii)
     in the case of prepayment of a Syndicated ABR Borrowing, not later than
     11:00 a.m., 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 12:00 noon, New York City time, on the date of prepayment;
     provided that notice of a prepayment pursuant to Section 2.10(b)(iii) shall
     be delivered substantially simultaneously with such 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 prepayment is
     given in connection with a conditional notice of termination of the
     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 relating to a
     Syndicated Borrowing, 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 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 Syndicated
     Borrowing shall be applied ratably to the Loans included in the prepaid
     Borrowing. Prepayments shall be accompanied by accrued interest to the
     extent required by Section 2.12 and shall be made in the manner specified
     in Section 2.09(b).

     SECTION 2.11. 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
Commitment of such Lender during the period from and including the date hereof
to but excluding the earlier of the date such Commitment terminates and the
Commitment Termination Date. Accrued commitment fees shall be payable on each
Quarterly Date and on the earlier of the date the Commitments terminate and the
Commitment Termination Date. 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, the Commitment of a Lender shall be deemed to be used to the
extent of the outstanding Syndicated Loans and LC Exposure of such Lender (and
the Swingline Exposure of such Lender shall be disregarded for such purpose).

     (b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at a rate
per annum equal to the Applicable Margin applicable to interest on Eurodollar
Loans on the average daily amount of such Lender's LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date on
which such Lender's Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, and (ii) to the Issuing Lender a fronting fee,
which shall accrue at the rate or rates per annum separately agreed upon between
the Borrower and the Issuing Lender on the

<PAGE>
                                      -40-

average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Lender'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 but
excluding each Quarterly Date shall be payable on such Quarterly Date; provided
that all such fees shall be payable on the date on which the Commitments
terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand. Any other fees payable to the Issuing
Lender 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) Administrative Agent and Collateral Agent Fees. The Borrower agrees to
pay to the Administrative Agent and the Collateral Agent, for their own
accounts, fees payable in the amounts and at the times separately agreed upon
between the Borrower and each of the Collateral Agent or the Administrative
Agent.

     (d) Payment of Fees. All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Lender, 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 2.12. Interest.

     (a) ABR Loans. The Loans constituting each ABR Borrowing (including each
Swingline Loan) shall bear interest at a rate per annum equal to the Alternate
Base Rate plus the Applicable Margin.

     (b) Eurodollar Loans. The Loans constituting each Eurodollar Borrowing
shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the
Interest Period for such Borrowing plus the Applicable Margin.

     (c) Default Interest. Notwithstanding the foregoing, if all or a portion of
(i) the principal amount of any Loan, (ii) any interest payable thereon or (iii)
any fee or other amount payable by any Obligor hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is, in the case of overdue
principal or interest, the rate that would otherwise be applicable to such Loan
plus 2% or, in the case of overdue fees or other amounts, the Alternate Base
Rate plus Applicable Margin for ABR Loans plus 2%, in each case from the date of
such non-payment until such amount is paid in full (both before and after
judgment). In addition, upon the occurrence and during the continuance of any
other Event of Default (other than an Event of Default described in the
immediately preceding sentence), the Required Lenders may elect that the
principal of and, to the extent permitted by law, due, owing and unpaid interest
on the Loans and any other amounts owing or accruing hereunder or under the
other Loan Documents shall bear interest, in each case from the date the
Required Lenders shall so elect until such Event of

<PAGE>
                                      -41-

Default has been cured or waived by the Required Lenders (provided that accrual
at the rate provided for hereunder shall commence automatically upon the
occurrence of an Event of Default of the type described in clauses (l) or (m) of
Article VIII), after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of or interest on any Loan, 2% plus the
rate otherwise applicable to such Loan as provided above or (ii) in the case of
any other amount, 2% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.

     (d) Payment of Interest. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and upon termination of the
Commitments; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of a Syndicated ABR Loan or
Swingline Loan prior to the Commitment Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Borrowing prior to the end of the Interest Period therefor, accrued
interest on such Borrowing 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 (or 365 or 366 days, as the case may be, in the case of ABR
Loans based on the Prime Rate), and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

     SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of
the Interest Period for any 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 for such Interest Period; or

          (b) the Administrative Agent is advised by the Required Lenders that
     the Adjusted LIBO Rate for such Interest Period will not adequately and
     fairly reflect the cost to such Lenders of making or maintaining their
     respective Loans 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 Syndicated Borrowing to, or
the continuation of any Syndicated Borrowing as, a Eurodollar Borrowing shall be
ineffective and such Syndicated Borrowing (unless prepaid) shall be continued
as, or converted to, a Syndicated ABR Borrowing and (ii) if any Request for Loan
requests a Eurodollar Borrowing, such Borrowing shall be made as a Syndicated
ABR Borrowing.

<PAGE>
                                      -42-

     SECTION 2.14. Increased Costs.

     (a) Increased Costs Generally. 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 account of, or
     credit extended by, any Lender (except any such reserve requirement
     reflected in the Adjusted LIBO Rate) or the Issuing Lender; or

          (ii) impose on any Lender or the Issuing Lender or the London
     interbank market any other condition 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
Lenders 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 the
Issuing Lender 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 the
Issuing Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Lender, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.

     (b) Capital Requirements. If any Lender or the Issuing Lender 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 the Issuing Lender's
capital or on the capital of such Lender's or the Issuing Lender'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 the Issuing Lender, to a level below that which such Lender or
the Issuing Lender or such Lender's or the Issuing Lender's holding company
could have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Lender's policies and the policies of such Lender's or
the Issuing Lender's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or the Issuing Lender, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding
company for any such reduction suffered.

     (c) Certificates from Lenders. A certificate of a Lender or the Issuing
Lender setting forth the amount or amounts necessary to compensate such Lender
or the Issuing Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender or
the Issuing Lender, 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 the
Issuing Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Lender's right to demand
such compensation; provided that the Borrower shall not be required to
compensate a Lender or the Issuing Lender pursuant to this Section for

<PAGE>
                                      -43-

any increased costs or reductions incurred more than six months prior to the
date that such Lender or the Issuing Lender, 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 the Issuing Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof.

     (e) Application to Taxes. Notwithstanding anything to the contrary in this
Section 2.14, this Section 2.14 shall not apply to Taxes which shall be governed
exclusively by Section 2.16 hereof.

     SECTION 2.15. 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 therefor (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay any
Syndicated Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice is permitted to be revocable under Section
2.10(c) and is revoked in accordance herewith), or (d) the assignment as a
result of a request by the Borrower pursuant to Section 2.18(b) of any
Eurodollar Loan other than on the last day of an Interest Period therefor, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, the
loss to any Lender attributable to any such event may, at the option of such
Lender, be deemed to include an amount determined by such Lender to be equal to
the excess, if any, of (i) the amount of interest that such Lender would pay for
a deposit equal to the principal amount of such Loan for the period from the
date of such payment, conversion, failure or assignment to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Interest
Period, over (ii) the amount of interest that such Lender would earn on such
principal amount for such period if such Lender were to invest such principal
amount for such period at the interest rate that would be bid by such Lender (or
an Affiliate of such Lender) for Dollar deposits from other banks in the
eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 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.

     SECTION 2.16. Taxes.

     (a) Payments Free of 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 Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) 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 Lender (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the

<PAGE>
                                      -44-

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

     (c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, the Collateral Agent, each Lender and the Issuing Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, the Collateral Agent, such Lender or the
Issuing Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority; provided that if the Borrower reasonably
believes that such Taxes or Other Taxes were not correctly or legally asserted,
the Administrative Agent, the Collateral Agent or such Lender, as the case may
be, will use reasonable efforts to cooperate with the Borrower (at the
Borrower's expense) to obtain a refund of such Taxes or Other Taxes (in cash or
as an offset against another existing tax liability), the benefit of which
refund shall be returned to the Borrower to the extent provided in Section
2.16(f). The Administrative Agent, the Collateral Agent or any Lender agree to
promptly notify the Borrower of any claim under this Section 2.16(c) of which
they become aware; provided that any failure to provide such notice shall in no
way impair the rights of such party to demand and receive compensation under
this Section 2.16(c). A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Lender, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Lender, or by the Collateral Agent, shall be conclusive absent manifest error.

     (d) Evidence of Payments. 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 any withholding tax that is an Indemnified Tax, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate. In addition, each Foreign
Lender agrees that from time to time, when a lapse in time or change in
circumstances renders the previous documentation obsolete or inaccurate in any
material respect, it will, to the extent legally able to do so (but only upon
request of the Borrower, unless such event relates solely to changed
circumstances relating solely to such Foreign Lender), deliver to the Borrower
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be continued to be made without withholding or
at a reduced rate, or notify the Borrower and the Administrative Agent that it
is unable to do so.

<PAGE>
                                      -45-

     (f) Treatment of Certain Refunds. If the Administrative Agent or a Lender
(or an assignee) determines in its sole discretion that it has actually received
the benefit of a refund (in cash or as an offset against another existing tax
liability) of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional
amounts pursuant to this Section 2.16, it shall pay over such refund to Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by Borrower under this Section 2.16 with respect to the Indemnified Taxes or the
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender (or assignee) as determined in the
Administrative Agent's or such Lender's reasonable discretion and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, however, that Borrower upon the request
of the Administrative Agent or such Lender (or assignee), agrees to repay the
amount paid over to Borrower to the Administrative Agent or such Lender (or
assignee) in the event that the Administrative Agent or such Lender (or
assignee) is required to repay such refund to such Governmental Authority.
Nothing contained in this Section 2.16(f) shall require the Administrative Agent
or any Lender (or assignee) to make available its tax returns to Borrower or any
other person. For avoidance of doubt, nothing in this Section 2.16(f) is
intended to, nor shall anything in this Section 2.16(f) be construed to, require
the Administrative Agent or any Lender to alter or supplement any policy,
procedure or system with respect to the identification, tracking and allocation
of tax refunds and neither the Administrative Agent nor any Lender shall have
any liability to the Borrower or any Guarantor by reason of its
non-identification of any such refund.

     SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) Payments by the Obligors. Each Obligor shall make each payment required
to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or under Section 2.14, 2.15 or 2.16, or
otherwise) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 12:00 noon, 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 such payments
shall be made to the Administrative Agent at its offices at 11 Madison Avenue,
New York, New York, 10010, except as otherwise expressly provided in the
relevant Loan Document and except payments to be made directly to the Issuing
Lender as expressly provided herein and payments pursuant to Sections 2.14,
2.15, 2.16 and 10.03, which shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder 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
hereunder or under any other Loan Document (except to the extent otherwise
provided therein) shall be made in Dollars.

     (b) Application of Insufficient Payments. If at any time insufficient funds
are received by and available to the Administrative Agent to pay fully all
amounts of principal,

<PAGE>
                                      -46-

unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, to pay 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, to pay 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) Pro Rata Treatment. Except to the extent otherwise provided herein: (i)
each Syndicated Borrowing shall be made from the Lenders, each payment of
commitment fee under Section 2.11 shall be made for account of the Lenders, and
each termination or reduction of the amount of the Commitments under Section
2.08 shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (ii) each Syndicated
Borrowing shall be allocated pro rata among the Lenders according to the amounts
of their respective Commitments (in the case of the making of Syndicated Loans)
or their respective Loans that are to be included in such Borrowing (in the case
of conversions and continuations of Loans); (iii) each payment or prepayment of
principal of Syndicated Loans by the Borrower shall be made for account of the
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Syndicated Loans held by them; and (iv) each payment of interest on
Syndicated Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the amounts of interest on such Loans then due and
payable to the respective Lenders.

     (d) Sharing of Payments by Lenders. 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 Syndicated 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 Syndicated Loans and
participations in LC Disbursements and Swingline Loans and accrued interest
thereon then due 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 Syndicated 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
Syndicated 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 any Obligor 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 Parent Guarantor or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply). Each Obligor
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 such Obligor rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Obligor in the amount of such participation.

<PAGE>
                                      -47-

     (e) Presumptions of Payment. 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 account of the Lenders or the Issuing Lender
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
the Issuing Lender, 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 the
Issuing Lender, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or the Issuing Lender 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 Federal Funds Effective Rate.

     (f) 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(e), 2.06(b) or 2.17(e), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.

     SECTION 2.18. Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 2.14, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.16, 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 2.14 or 2.16, as 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 2.14, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for account of any Lender pursuant to
Section 2.16, or if any Lender defaults in its obligation to fund Loans
hereunder, or any Lender does not consent to a proposed amendment, modification
or waiver of this Agreement or any other Loan Document requested by the Borrower
which requires the consent of all of the Lenders to become effective (and which
is approved by at least the Required Lenders), the Borrower may, at its sole
expense and effort (including with respect to the processing and recordation fee
referred to in Section 10.04(b)), upon notice to such Lender and the
Administrative Agent, require such Lender to transfer and assign, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all of its interests, rights and obligations under this
Agreement to an assignee reasonably acceptable to the Borrower, such acceptance
not to be unreasonably withheld or delayed, that shall assume such assigned
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior

<PAGE>
                                      -48-

written consent of the Administrative Agent (and, if a Commitment is being
assigned, the Issuing Lender and the Swingline Lender), which consent or
consents, as the case may be, 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 (including any amounts payable under Section 2.14 and Section
2.16), plus a prepayment premium, if any, that would otherwise have been payable
to such Lender assuming such Lender would have been voluntarily prepaid in full
by the Borrower pursuant to Section 2.08(d), 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), (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments and (iv) such assignment shall not conflict
with any law, rule or regulation or order of any court or other Governmental
Authority having jurisdiction. In connection with any such replacement, if the
replaced Lender does not execute and deliver to the Administrative Agent a duly
completed Assignment and Acceptance reflecting such replacement within five
Business Days of the date on which the replacement Lender executes and delivers
such Assignment and Acceptance to the replaced Lender, then such replaced Lender
shall be deemed to have executed and delivered such Assignment and Acceptance. 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

                                    GUARANTEE

     SECTION 3.01. The Guarantee. The Guarantors hereby jointly and severally
guarantee to each Lender, the Administrative Agent, the Collateral Agent and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Loans made by the Lenders to the Borrower and all other
amounts from time to time owing to the Lenders, the Administrative Agent or the
Collateral Agent by the Borrower under this Agreement and by any Obligor under
any of the other Loan Documents, and all obligations of any Obligor to the
Administrative Agent, the Arranger or any Lender (or any Affiliate of the
Administrative Agent, the Arranger or any Lender) in respect of any Hedging
Agreement, in each case strictly in accordance with the terms thereof (such
obligations being herein collectively called the "Guaranteed Obligations"). The
Guarantors hereby further jointly and severally agree that if the Borrower shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.

     For purposes hereof, it is understood that any Guaranteed Obligations to
any Person arising under an agreement entered into at a time such Person (or an
Affiliate thereof) is party hereto as the Administrative Agent or a Lender shall
continue to constitute Guaranteed

<PAGE>
                                      -49-

Obligations, notwithstanding that such Person (or its Affiliate) has ceased to
be the Administrative Agent or a Lender, as the case may be, party hereto (by
assigning all of its Commitment, Revolving Credit Exposure and other interests
herein, or otherwise) at the time a claim is to be made in respect of such
Guaranteed Obligations.

     SECTION 3.02. Obligations Unconditional. The obligations of the Guarantors
under Section 3.01 are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower under this Agreement or any other agreement
or instrument referred to herein, or any substitution, release or exchange of
any other guarantee of or security for any of the Guaranteed Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section that the obligations of the Guarantors hereunder shall be absolute and
unconditional, joint and several, under any and all circumstances. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not alter or impair the liability of the
Guarantors hereunder, which shall remain absolute and unconditional as described
above:

          (i) at any time or from time to time, without notice to the
     Guarantors, the time for any performance of or compliance with any of the
     Guaranteed Obligations shall be extended, or such performance or compliance
     shall be waived;

          (ii) any of the acts mentioned in any of the provisions of this
     Agreement or any other agreement or instrument referred to herein shall be
     done or omitted;

          (iii) the maturity of any of the Guaranteed Obligations shall be
     accelerated, or any of the Guaranteed Obligations shall be modified,
     supplemented or amended in any respect, or any right under this Agreement
     or any other agreement or instrument referred to herein shall be waived or
     any other guarantee of any of the Guaranteed Obligations or any security
     therefor shall be released or exchanged in whole or in part or otherwise
     dealt with;

          (iv) any Lien or security interest granted to, or in favor of, the
     Collateral Agent, the Administrative Agent or any Lender or Lenders as
     security for any of the Guaranteed Obligations shall fail to be perfected;
     or

          (v) any amount of Guaranteed Obligations shall not be allowed as a
     post-petition claim in any case of which the Borrower or any of its
     properties is the subject under any bankruptcy, insolvency, receivership or
     similar law.

The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent, the Collateral Agent or any Lender exhaust any right, power or remedy or
proceed against the Borrower under this Agreement or any other agreement or
instrument referred to herein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.

     SECTION 3.03. Reinstatement. The obligations of the Guarantors under this
Article shall be automatically reinstated if and to the extent that for any
reason any payment

<PAGE>
                                      -50-

by or on behalf of the Borrower in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Guarantors jointly and severally agree that
they will indemnify the Administrative Agent, the Collateral Agent and each
Lender on demand for all reasonable costs and expenses (including fees of
counsel) incurred by the Administrative Agent, the Collateral Agent or such
Lender in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.

     SECTION 3.04. Subrogation. The Guarantors hereby jointly and severally
agree that until the payment and satisfaction in full of all Guaranteed
Obligations and the expiration and termination of the Commitments of the Lenders
under this Agreement they shall not exercise any right or remedy arising by
reason of any performance by them of their guarantee in Section 3.01, whether by
subrogation or otherwise, against the Borrower or any other guarantor of any of
the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.

     SECTION 3.05. Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Lenders, the obligations of the Borrower under
this Agreement may be declared to be forthwith due and payable as provided in
Article VIII (and shall be deemed to have become automatically due and payable
in the circumstances provided in Article VIII) for purposes of Section 3.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 3.01.

     SECTION 3.06. Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Article constitutes an instrument for
the payment of money, and consents and agrees that any Lender, the Collateral
Agent or the Administrative Agent, at its sole option, in the event of a dispute
by such Guarantor in the payment of any moneys due hereunder, shall have the
right to proceed by motion for summary judgment in lieu of complaint pursuant to
N.Y. Civ. Prac. L&R ss. 3213.

     SECTION 3.07. Continuing Guarantee. The guarantee in this Article is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.

     SECTION 3.08. Rights of Contribution. The Subsidiary Guarantors hereby
agree, as between themselves, that if any Subsidiary Guarantor shall become an
Excess Funding Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
next sentence), pay to such Excess Funding Guarantor an amount equal to such
Subsidiary Guarantor's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the properties, debts and liabilities of such
Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of
such Guaranteed Obligations.

<PAGE>
                                      -51-

The payment obligation of a Subsidiary Guarantor to any Excess Funding Guarantor
under this Section shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of such Subsidiary Guarantor under the
other provisions of this Article and such Excess Funding Guarantor shall not
exercise any right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations.

     For purposes of this Section, (i) "Excess Funding Guarantor" means, in
respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid an
amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"Excess Payment" means, in respect of any Guaranteed Obligations, the amount
paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Subsidiary Guarantor hereunder and any
obligations of any other Subsidiary Guarantor that have been Guaranteed by such
Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of the Subsidiary Guarantors exceeds the amount
of all the debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Subsidiary Guarantors hereunder and under the other Loan Documents) of all
of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary
Guarantor that is a party hereto on the Effective Date, as of the Effective
Date, and (B) with respect to any other Subsidiary Guarantor, as of the date
such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.

     SECTION 3.09. General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate law, or any state or federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Administrative Agent, the
Collateral Agent or any other Person, be automatically limited and reduced to
the highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.

     SECTION 3.10. No Reliance. Each Guarantor represents and warrants that, in
executing and delivering this Agreement, such Guarantor has (a) without reliance
on any Lender or either Agent, or on any information received from any Lender or
either Agent, and based upon such documents and information it deems
appropriate, made an independent investigation of the transactions contemplated
hereby and the Borrower, the Borrower's business, assets, operations, prospects
and condition, financial or otherwise, and any circumstances which may bear upon
such transactions, the Borrower or the obligations and risks undertaken herein
with respect to the Guaranteed Obligations; (b) adequate means to obtain from
the Borrower on a continuing basis information concerning the Borrower; (c) full
and complete

<PAGE>
                                      -52-

access to the Loan Documents and any other documents executed in connection with
the Loan Documents; and (d) not relied and will not rely upon any
representations or warranties of any Lender, the Arranger or either Agent or any
acts heretofore or hereafter taken by any Lender, the Arranger or either Agent
(including but not limited to any review by any Lender, the Arranger or either
Agent of the affairs of the Borrower).

     SECTION 3.11. Release of Subsidiary Guarantors. The obligations of a
Subsidiary Guarantor under this Agreement and the other Loan Documents shall be
automatically released upon any sale or disposition of such Subsidiary Guarantor
(whether by way of sale of capital stock or assets, lease, transfer, merger,
consolidation or otherwise) to any Person other than the Parent Guarantor or a
Subsidiary in a transaction that complies with Section 7.03 and, upon request of
the Borrower, the Administrative Agent shall, at the Borrower's expense, execute
and deliver such instruments and releases as may be reasonably necessary in
order to evidence the release of such Subsidiary Guarantor under the Loan
Documents.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     Each of the Borrower and the Parent Guarantor represents and warrants to
the Lenders that:

     SECTION 4.01. Organization; Powers. Each of the Parent Guarantor and its
Included Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite
corporate or other organizational 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 4.02. Authorization; Enforceability. The Transactions are within
each Obligor's power and authority and have been duly authorized by all
necessary action. This Agreement has been duly executed and delivered by each
Obligor and constitutes, and each of the other Loan Documents to which it is a
party when executed and delivered by such Obligor will constitute, a legal,
valid and binding obligation of such Obligor, enforceable against each Obligor
in accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

     SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except for (i) such as have been
obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents,
(b) will not violate any applicable law or regulation or the

<PAGE>
                                      -53-

charter, by-laws or other organizational documents of the Parent Guarantor or
any of its 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 Parent Guarantor or any of its Subsidiaries or
assets, or give rise to a right thereunder to require any payment to be made by
any such Person, and (d) except for the Liens created pursuant to the Loan
Documents and the Second Lien Loan Documents, will not result in the creation or
imposition of any Lien on any asset of the Parent Guarantor or any of its
Subsidiaries, except, in each case, as could not reasonably be expected to
result in a Material Adverse Effect.

     SECTION 4.04. Financial Condition; No Material Adverse Change.

     (a) Financial Condition. The Projections are a good faith presentation of
the information contained therein and based on reasonable assumptions and
estimates.

     (b) No Material Adverse Change. Since January 30, 2005, except for: (i) the
Disclosed Matters; (ii) the results or outcome of the investigation by the
Special Committee of the Board of Directors of the Parent Guarantor ongoing on
the date hereof concerning certain matters described in the Parent Guarantor's
Form 8-K dated October 8, 2004; and (iii) any action, suit, proceeding, inquiry
or investigation or any action of a Governmental Authority concerning the
matters referred to in clause (ii) or the historical financial statements of the
Parent Guarantor and its Consolidated Subsidiaries, there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Parent Guarantor and its Included Subsidiaries,
taken as a whole.

     SECTION 4.05. Properties.

     (a) Property Generally. Each of the Parent Guarantor and its Included
Subsidiaries has good title to, or valid leasehold interests in (other than with
respect to the leased properties located at 3167 Peachtree Road, Atlanta, GA,
125 South Main Street, Memphis, TN and 1025A Providence Road, Charlotte, NC),
all its real and personal property material to its business, subject only to
Liens permitted by Section 7.02 and except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for their intended purposes.

     (b) Intellectual Property. Each of the Parent Guarantor and its Included
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 Parent Guarantor and its Included 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.

     SECTION 4.06. Litigation.

     (a) Actions, Suits and Proceedings. There are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority now pending against or, to the knowledge of the Borrower or the Parent
Guarantor, threatened against or affecting the Parent Guarantor or any of its
Included Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be

<PAGE>
                                      -54-

expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than any present or future actions, suits, investigations,
proceedings or governmental actions encompassed by the exceptions set forth in
Section 4.04(b)) or (ii) that involve this Agreement or the Transactions.

     (b) Disclosed Matters. Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters (other than those identified with
an "*" on Schedule IV) that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.

     SECTION 4.07. Environmental Matters.

     (a) Neither the Parent Guarantor nor any of its Subsidiaries (i) currently
has any Environmental Liability which would reasonably be expected to have a
Material Adverse Effect, (ii) has received notice that it is in non-compliance
with or has a liability or potential liability under any Environmental Laws
(except for any non-compliance or other Environmental Liabilities which would
not reasonably be expected to have a Material Adverse Effect) or (iii) or has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA, and none of the Real Property or assets of the
Parent Guarantor or any of its Subsidiaries located in the United States and
owned, leased or operated by the Parent Guarantor or any of its Subsidiaries has
been identified on the current or, to the Borrower's and the Parent Guarantor's
actual knowledge any proposed, (x) National Priorities List under 40 C.F.R.
Section 300, (y) CERCLIS list or (z) any similar list arising from a state
statute similar to CERCLA.

     (b) Except as set forth in Schedule V, no Hazardous Materials have been
arranged for disposal, generated, stored, disposed of, managed, Released or
otherwise handled at, or shipped or transported to or from any of the Real
Property of the Parent Guarantor or any of its Subsidiaries or are otherwise
present at, on, in or under any of the Real Property, or to the best of the
Borrower's and the Parent Guarantor's actual knowledge, at or from any adjacent
site or facility in a manner that would reasonably be expected to affect the
Real Property of the Parent Guarantor or any of its Subsidiaries, except for (i)
Hazardous Materials, such as cleaning chemicals, pesticides and other materials
used, produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in the ordinary course of business in
compliance with Environmental Laws or (ii) any such disposal, generation,
storage, arrangement for disposal, disposal, management, Release, handling,
shipment, transport or presence that would not reasonably be expected to have a
Material Adverse Effect.

     (c) Each of the Parent Guarantor and its Subsidiaries (i) are in compliance
with all applicable Environmental Laws in connection with the operation of its
respective facilities, businesses and other assets and properties, and there are
no unresolved notices of violation or non-compliance with respect thereto, and
(ii) have obtained and maintain in full force and effect all material permits,
licenses, certificates and approvals required for their respective facilities
and operations under any Environmental Laws and comply with all such permits,
licenses, certificates and approvals, except in the case of (i) and (ii) above
for any non-compliance or failure to obtain or maintain in full force and effect
that would not reasonably be expected to have a Material Adverse Effect.

<PAGE>
                                      -55-

     SECTION 4.08. Compliance with Laws and Agreements. Except as to matters
covered by Section 4.07 (which shall be governed by such Section), each of the
Parent Guarantor and its Included 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 (i) with respect to periodic filings required to be made by
the Parent Guarantor with the Securities and Exchange Commission on or prior to
the Restatement Date, (ii) with respect to the Disclosed Matters and (iii) 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 4.09. Investment and Holding Company Status. Neither the Parent
Guarantor nor any of its Included 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 4.10. Taxes. Each of the Parent Guarantor and its Included
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 such Person has set aside on its books
adequate reserves to the extent required by GAAP or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.

     SECTION 4.11. 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, exceed the fair
market value of the assets of such Plan by more than an amount that would have a
Material Adverse Effect, 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 the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of all such underfunded Plans by an amount that would
have a Material Adverse Effect.

     SECTION 4.12. Disclosure. As of the Effective Date, the Borrower and the
Parent Guarantor have disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which it or any of its respective Included
Subsidiaries are subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. As of the Effective Date, the written reports, financial
statements, certificates and other written information furnished by or on behalf
of the Obligors to the Lenders on or prior to the Effective Date in connection
with the negotiation of this Agreement and the other Loan Documents or delivered
hereunder or thereunder (as modified or supplemented by other information so
furnished on or prior to the Effective Date), when taken as a whole, do not
contain any material misstatement of fact or omit to state any material fact

<PAGE>
                                      -56-

necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that (a) with respect to
projected financial information, the Borrower and the Parent Guarantor represent
only that such information was prepared in good faith and based upon assumptions
believed to be reasonable at the time, (b) the Borrower and the Parent Guarantor
make no representation or warranty, as to any financial information pertaining
to dates or periods falling prior to its Fiscal Year ending 2006 and (c) the
Borrower and the Parent Guarantor make no representation or warranty as to any
financial information for any period of Fiscal Year 2006 delivered prior to the
Restatement Date except as set forth in Section 6.01.

     SECTION 4.13. Use of Credit. Neither the Parent Guarantor nor any of its
Included Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying Margin Stock, and no
part of the proceeds of any extension of credit hereunder will be used to buy or
carry any Margin Stock.

     SECTION 4.14. Material Agreements and Liens.

     (a) Material Agreements. Part A of Schedule II is a complete and correct
list of each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Parent Guarantor or any of its
Included Subsidiaries outstanding on the date hereof the aggregate principal or
face amount of which equals or exceeds (or may equal or exceed) $250,000, and
the aggregate principal or face amount outstanding or that may become
outstanding under each such arrangement is correctly described in Part A of
Schedule II.

     (b) Liens. Part B of Schedule II is a complete and correct list of each
Lien securing Indebtedness of any Person outstanding on the date hereof the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $100,000, and covering any property of the Parent Guarantor or any of
its Included Subsidiaries and the property covered by each such Lien is
correctly summarized in Part B of Schedule II.

     SECTION 4.15. Montana Mills. Montana Mills and all of its Subsidiaries are
Inactive Companies.

     SECTION 4.16. Subsidiaries and Investments.

     (a) Subsidiaries. Set forth in Part A of Schedule VI is a complete and
correct list of all of the Subsidiaries of the Parent Guarantor as of the date
hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule VI, (x) the
Parent Guarantor and each of its Subsidiaries owns, free and clear of Liens
(other than Liens created pursuant to the Security Documents or otherwise
permitted pursuant to Section 7.02), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in Part A
of

<PAGE>
                                      -57-

Schedule VI, (y) all of the issued and outstanding capital stock of each such
Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) there are no outstanding Equity Rights with respect to
such Person.

     (b) Investments. Set forth in Part B of Schedule VI is a complete and
correct list of each Investment (other than Investments disclosed in Part A of
Schedule VI and other than Investments of the types referred to in clauses (b),
(c), (d), (e), (f), (g) and (m) of Section 7.05) held by the Parent Guarantor or
any of its Included Subsidiaries in any Person on the date hereof (other than
Investments, the aggregate outstanding amount of which do not exceed $100,000)
and, for each such Investment, (x) the identity of the Person or Persons holding
such Investment and (y) the nature of such Investment. Except as disclosed in
Part B of Schedule VI, each of the Parent Guarantor and its Subsidiaries owns,
free and clear of all Liens (other than Liens created pursuant to the Security
Documents or otherwise permitted pursuant to Section 7.02), all such
Investments.

     (c) Restrictions on Included Subsidiaries. Except as disclosed on Schedule
III, none of the Included Subsidiaries of the Parent Guarantor is, on the date
hereof, subject to any indenture, agreement, instrument or other arrangement of
the type described in Section 7.08.

     SECTION 4.17. Real Property. Set forth on Schedule VII is a true, correct
and complete list, as of the date hereof, of all of the owned and leased real
property interests held by each Obligor ("Real Property"), indicating in each
case whether the respective property is owned or leased, the identity of the
owner or lessee and the location of the respective property. Except as set forth
on Schedule VII hereto, each Obligor has good, sufficient and legal title to all
of the owned Collateral (as defined in the Security Agreement) (and any other
material properties and assets, if any) indicated on such Schedule as being
owned by it and will have good, sufficient and legal title of all after-acquired
Collateral (as defined in the Security Agreement) (and any other after-acquired
material properties and assets, if any), in each case, free and clear of all
Liens except for the Permitted Encumbrances and minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for its intended purposes. Each Obligor has valid
leasehold interests in the real property and personal property leased by such
Obligor (other than with respect to the leased properties located at 3167
Peachtree Road, Atlanta, GA, 125 South Main Street, Memphis, TN and 1025A
Providence Road, Charlotte, NC), subject to Permitted Encumbrances and minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for its intended purposes.
The Collateral Agent has, as of the Effective Date, a valid, and upon the filing
or other recordation of Uniform Commercial Code financing statements and other
documents delivered by the Obligors to the Collateral Agent on the Effective
Date, perfected Liens on the Collateral, subject only to Permitted Encumbrances
(provided, (x) solely with respect to Copyrights and Patents (as such terms are
defined in the Security Agreement), of and to the extent that such priority and
perfection may be achieved by the filing of Uniform Commercial Code financing
statements and appropriate documents with the United States Copyright Office and
the United States Patent and Trademark Office, (y) solely with respect to real
property, to the extent that such priority and perfection is achieved by
delivering and recording a Mortgage in the appropriate county filing office and
(z) solely with respect to fixtures, to the extent that such fixtures are
affixed to real property covered by a duly recorded Mortgage or duly filed
Uniform Commercial Code fixture filing), securing the payment

<PAGE>
                                      -58-

of the First Lien Secured Obligations, and such Liens are entitled to all of the
rights, priorities and benefits afforded by the Uniform Commercial Code or other
applicable law as enacted in any relevant jurisdiction which relates to
perfected Liens. For avoidance of doubt, the proviso contained in the
immediately preceding sentence does not limit any representation or warranty
made in any Mortgage. No Mortgage encumbers any portion of Real Property which
is located in an area that has been identified as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, except as set forth on Schedule VII.

     SECTION 4.18. Solvency. As of the date hereof, after giving effect on a pro
forma basis to the extensions of credit hereunder and to the other transactions
contemplated hereby, (i) the aggregate value of all properties of the Parent
Guarantor and its Included Subsidiaries at their present fair saleable value
(i.e., the amount that may be realized within a reasonable time, considered to
be six to eighteen months, either through collection or sale at the regular
market value, conceiving the latter as the amount that could be obtained for the
properties in question within such period by a capable and diligent
businessperson from an interested buyer who is willing to purchase under
ordinary selling conditions), exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Parent Guarantor and its Included Subsidiaries, (ii) the
Parent Guarantor and its Included Subsidiaries will not, on a consolidated
basis, have unreasonably small capital with which to conduct their business
operations as heretofore conducted and (iii) the Parent Guarantor and its
Included Subsidiaries will have, on a consolidated basis, sufficient cash flow
to enable them to pay their debts as they mature.

     SECTION 4.19. Labor Matters. Except as set forth on Schedule VIII, (a)
neither the Parent Guarantor nor any of its Included Subsidiaries is subject to
any collective bargaining agreement, (b) no petition for certification or union
election is pending with respect to the employees of the Parent Guarantor or any
of its Included Subsidiaries and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of the
Parent Guarantor or any of its Included Subsidiaries and (c) there are no
strikes, slowdowns or work stoppages pending or, to the knowledge of the Parent
Guarantor or any of its Included Subsidiaries, threatened between the Parent
Guarantor or any of its Included Subsidiaries and its respective employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule VIII,
neither the Parent Guarantor nor any of its Included Subsidiaries is subject to
an employment contract.

                                    ARTICLE V

                                   CONDITIONS

     SECTION 5.01. Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Lender to issue Letters of Credit hereunder shall not become
effective until the date on which the Administrative Agent shall have received
each of the following documents, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in form
and substance (or such condition shall have been waived in accordance with
Section 10.02):

<PAGE>
                                      -59-

          (a) Executed Counterparts. 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 to this Agreement)
     that such party has signed a counterpart of this Agreement.

          (b) Opinions of Counsel to the Obligors. Favorable written opinions
     (addressed to the Agents and the Lenders and dated the Effective Date) of
     Cahill Gordon & Reindel LLP, special New York counsel to the Obligors;
     Frank Murphy, general counsel of the Borrower; Kilpatrick Stockton, LLP,
     special North Carolina and intellectual property counsel to the Obligors;
     Taylor Law Offices, P.C., special Illinois counsel to the Obligors; Allman
     Spry Leggett & Crumpler, P.A., special North Carolina real estate counsel
     to the Obligors; Stites & Harbison PLLC, special Kentucky counsel to the
     Obligors; and Andrews Kurth LLP, special Texas counsel to the Obligors.

          (c) Corporate Documents. Such documents and certificates as the
     Administrative Agent or its counsel may reasonably request relating to the
     organization, existence and good standing of each Obligor, the
     authorization of the Transactions and any other legal matters relating to
     the Obligors, this Agreement or the Transactions, all in form and substance
     reasonably satisfactory to the Administrative Agent and its counsel.

          (d) Officer's Certificate. A certificate, dated the Effective Date and
     signed by the President, a Vice President or a Financial Officer of the
     Borrower, (i) confirming compliance with the conditions set forth in the
     lettered clauses of the first sentence of Section 5.02 and (ii) as to the
     matters set forth in Section 4.18.

          (e) Borrowing Base Certificate. A Borrowing Base Certificate for the
     period ending on the last day of the Borrower's January fiscal month.

          (f) Security Agreement. The Security Agreement, duly executed and
     delivered by each Obligor and the Collateral Agent and the certificates
     identified under the name of such Obligor in Annex 3 thereto, in each case
     accompanied by undated stock powers executed in blank. In addition, each
     Obligor shall have taken such other action (including delivering to the
     Collateral Agent, for filing, appropriately completed copies of Uniform
     Commercial Code financing statements and taking any necessary action in
     connection therewith) as the Collateral Agent shall have reasonably
     requested in order to perfect the security interests created pursuant to
     the Security Agreement.

          (g) Control Agreements. The Concentration Account Control Agreements,
     each duly executed and delivered by the Collateral Agent and the applicable
     Concentration Account Bank with respect to a Concentration Account.

          (h) Mortgages and Title Insurance. The following documents, each of
     which shall be executed (and, where appropriate, acknowledged) by Persons
     satisfactory to the Administrative Agent:

               (i) one or more Mortgages covering the Principal Facilities, in
          each case duly executed and delivered by the Borrower in recordable
          form (in such number of copies as the Administrative Agent shall have
          reasonably requested);

<PAGE>
                                      -60-

               (ii) one or more mortgagee policies of title insurance on forms
          of and issued by one or more title companies reasonably satisfactory
          to the Administrative Agent (the "Title Companies"), insuring the
          validity and priority of the Liens created under the Mortgages
          covering the Principal Facilities for and in amounts equal to at least
          one hundred fifteen percent (115%) of the appraised value of each of
          the Principal Facilities, subject only to such exceptions as are
          reasonably satisfactory to the Administrative Agent and, to the extent
          necessary under applicable law, for filing in the appropriate county
          land offices, Uniform Commercial Code financing statements covering
          fixtures, in each case appropriately completed and duly executed;

               (iii) as-built surveys of recent date of each of the Principal
          Facilities, other than those Principal Facilities located at 1814 Ivy
          Avenue, Winston-Salem, NC and 3190 Center Park Boulevard,
          Winston-Salem, NC, showing such matters as may be required by the
          Administrative Agent, which surveys shall be in form and content
          reasonably acceptable to the Administrative Agent, shall be certified
          to the Administrative Agent, the Collateral Agent and the Title
          Companies, and shall have been prepared by a registered surveyor
          acceptable to the Administrative Agent; and

               (iv) certified copies of permanent and unconditional certificates
          of occupancy (other than for the Principal Facility located at 1814
          Ivy Avenue, Winston-Salem, NC) permitting the fully functioning
          operation and occupancy of such Principal Facility and of such other
          permits necessary for the use and operation of such Principal Facility
          issued by the respective governmental authorities having jurisdiction
          over such Principal Facility.

         In addition, the Borrower shall have paid to the Title Companies all
         expenses and premiums of the Title Companies in connection with the
         issuance of such policies and in addition shall have paid to the Title
         Companies an amount equal to the recording and stamp taxes payable in
         connection with recording the Mortgages and Uniform Commercial Code
         fixture filings, if applicable, in the appropriate county land offices.

     (i) Insurance. Certificates of insurance evidencing the existence of all
insurance required to be maintained by the Parent Guarantor pursuant to Section
6.05(a) and the designation of the Shared Lien Collateral Agent as the loss
payee or additional named insured thereunder. In addition, the Borrower shall
have delivered a certificate of the president, a vice-president, or a Financial
Officer of the Borrower stating that the insurance described in the certificates
referred to in the preceding sentence is in full force and effect and that all
premiums then due and payable thereon have been paid.

     (j) Repayment of Existing Indebtedness. Evidence that the principal of and
interest on, and all other amounts owing in respect of, the Indebtedness
(including any contingent or other amounts payable in respect of letters of
credit) outstanding under the Existing Credit Agreement shall have been (or
shall be simultaneously) paid in full, that any commitments to extend credit
under the Existing Credit Agreement shall have been canceled or terminated and
that all Guarantees in respect of, and all Liens securing, any

<PAGE>
                                      -61-

such Indebtedness shall have been released (or arrangements for such release
satisfactory to the Required Lenders shall have been made).

     (k) Intercreditor Agreement. The Intercreditor Agreement, duly executed and
delivered by each Obligor, the Administrative Agent, the Collateral Agent, the
paying agent under the Second Lien Loan Documents and the collateral agent under
the Second Lien Loan Documents.

     (l) Second Lien Loan Documents. Evidence that the Second Lien Loan
Documents shall have been executed and delivered by all of the Persons stated to
be party thereto in their respective forms then most recently delivered to the
Administrative Agent, and evidence that the "Effective Date" (as defined in the
Second Lien Credit Agreement) will occur on the Effective Date.

     (m) Due Diligence. Reports from (i) Keen & Shotenstein with respect to the
components of the Collateral, and (ii) an environmental site assessment
(commonly known as a "Phase I") of the Principal Facility located at 1814 Ivy
Avenue, Winston-Salem, NC performed by a qualified environmental assessment firm
reasonably acceptable to the Administrative Agent.

     (n) Certain Regulatory Matters. All documentation requested by either Agent
or any Lender under applicable "know your customer" and anti-money laundering
rules and regulations, including without limitation under the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001).

     (o) Lien Results. The Administrative Agent shall have received the results
of a recent lien search in each relevant jurisdiction with respect to the
Obligors, and such search shall reveal no Liens on any of the assets of any
Obligor except for Liens permitted by Section 7.02 or Liens to be discharged on
or prior to the Effective Date.

     (p) Other Documents. Such other documents as the Administrative Agent or
any Lender or special New York counsel to CSFB may reasonably request.

     The obligation of each Lender to make its initial extension of credit
hereunder is also subject to the payment by the Borrower of (i) such fees as the
Borrower shall have agreed to pay to any Lender or the Administrative Agent in
connection herewith, and (ii) the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy LLP ("MTHM"), special New York counsel to CSFB, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, the extensions of credit hereunder and
otherwise in connection with the Transactions (to the extent that statements for
such fees and expenses have been delivered to the Borrower). Borrower agrees
that any prior writings with respect to the fees and expenses of MTHM that are
the subject of this paragraph are superseded by the Borrower's Obligation under
this paragraph.

     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
Lender to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or

<PAGE>
                                      -62-

waived pursuant to Section 10.02) on or prior to 3:00 p.m., New York City time,
on April 1, 2005 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time). SECTION 5.02. Each Credit
Event. The obligation of each Lender to make any Loan, and of the Issuing Lender
to issue, amend, renew or extend any Letter of Credit, is additionally subject
to the satisfaction of the following conditions:

          (a) the representations and warranties of the Borrower and the Parent
     Guarantor set forth in this Agreement, and of each Obligor in each of the
     other Loan Documents to which it is a party, shall be true and correct in
     all material respects on and as of the date of such Loan or the date of
     issuance, amendment, renewal or extension of such Letter of Credit, as
     applicable (unless any such representation or warranty expressly relates to
     an earlier date, in which case such representation or warranty shall be
     true and correct in all material respects as of such earlier date);

          (b) at the time of and immediately after giving effect to such Loan or
     the issuance, amendment, renewal or extension of such Letter of Credit, as
     applicable, no Default shall have occurred and be continuing;

          (c) the total Revolving Credit Exposures shall not exceed the
     Borrowing Base reflected on the most recent Borrowing Base Certificate
     delivered pursuant to Section 5.01(e) or 6.01(f), as applicable;

          (d) Net Liquidity shall be at least $10,000,000; and

          (e) for each borrowing of a Loan, Borrower shall have delivered a
     completed and signed Request for Loan and for each issuance of a Letter of
     Credit, Borrower shall have provided the information required by Section
     2.05(b).

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 the preceding
sentence.

                                   ARTICLE VI

                              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, each of the Borrower and the Parent
Guarantor covenants and agrees with the Lenders that:

     SECTION 6.01. Financial Statements and Other Information. The Parent
Guarantor will furnish to the Administrative Agent for distribution to each
Lender:

          (a) within 90 days after the end of each Fiscal Year (or, in the case
     of the 2005 Fiscal Year, within 90 days after the Restatement Date), the
     audited consolidated balance

<PAGE>
                                      -63-

     sheets and related statements of operations, stockholders' equity and cash
     flows of the Parent Guarantor and its Consolidated Subsidiaries as of the
     end of and for such year, setting forth in each case in comparative form
     the figures for the previous Fiscal Year (setting forth in a footnote or in
     a financial schedule thereto consolidating balance sheets and related
     statements of operations and cash flows for the Parent Guarantor, the
     Borrower, Freedom Rings, LLC, the other Consolidated Subsidiaries that are
     Guarantors and the Consolidated Subsidiaries that are not Guarantors;
     provided that if the separate listing of Freedom Rings, LLC is not
     acceptable to PricewaterhouseCoopers LLP (or other independent public
     accountants of recognized national standing of the Borrower), then Freedom
     Rings, LLC will be included with the other Consolidated Subsidiaries that
     are Guarantors), all reported on by PricewaterhouseCoopers 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 each one of such consolidated financial statements present fairly in
     all material respects the financial condition and results of operations of
     the Parent Guarantor and its Consolidated Subsidiaries on a consolidated
     basis in accordance with GAAP consistently applied;

          (b) within 45 days after the end of each of the first three Fiscal
     Quarters of each Fiscal Year:

               (i) with respect to each such Fiscal Quarter ending prior to the
          Restatement Date, the Modified Financial Statements 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 figures for
          the corresponding date, period or periods of the Projections, all
          certified by a Financial Officer of the Parent Guarantor as being a
          good faith presentation of the information contained therein and based
          on reasonable assumptions and estimates; and

               (ii) with respect to each such Fiscal Quarter ending after the
          Restatement Date, the consolidated balance sheet and related
          statements of operations, stockholders' equity and cash flows of the
          Parent Guarantor and its Consolidated Subsidiaries as of the end of
          and for such Fiscal Quarter and the then elapsed portion of the Fiscal
          Year (setting forth in a footnote or in a financial schedule thereto
          consolidating balance sheets and related statements of operations and
          cash flows in the same presentation as for the information presented
          pursuant to Section 5.01(a)), setting forth in each case in
          comparative form the figures for (or, in the case of the balance
          sheet, as of the end of) the corresponding period or periods of the
          previous Fiscal Year, all certified by a Financial Officer of the
          Parent Guarantor as presenting fairly in all material respects the
          financial condition and results of operations of the Parent Guarantor
          and its Consolidated Subsidiaries on a consolidated basis in
          accordance with GAAP consistently applied, subject to normal year-end
          audit adjustments and the absence of footnotes;

<PAGE>
                                      -64-

          (c) within 30 days after the end of each of the first two fiscal
     months of each Fiscal Quarter (provided that in the case of February 2005
     only, within 45 days after the end of such fiscal month):

               (i) with respect to each such fiscal month ending prior to the
          Restatement Date, the Modified Financial Statements as of the end of
          and for such fiscal month and the then elapsed portion of the Fiscal
          Quarter, setting forth in each case in comparative form the figures
          for the corresponding date, period or periods of the Projections, all
          certified by a Financial Officer of the Parent Guarantor as being a
          good faith presentation of the information contained therein and based
          on reasonable assumptions and estimates; and

               (ii) with respect to each such fiscal month ending after the
          Restatement Date, the consolidated balance sheet and related
          statements of operations and cash flows of the Parent Guarantor and
          its Consolidated Subsidiaries as of the end of and for such fiscal
          month and the then elapsed portion of the Fiscal Quarter (setting
          forth in a footnote or in a financial schedule thereto consolidating
          balance sheets and related statements of operations and cash flows in
          the same presentation as for the information presented pursuant to
          Section 5.01(a)), all certified by a Financial Officer of the Parent
          Guarantor as presenting fairly in all material respects the financial
          condition and results of operations of the Parent Guarantor and its
          Consolidated Subsidiaries on a consolidated basis in accordance with
          GAAP consistently applied, subject to normal quarterly and year-end
          audit adjustments and the absence of footnotes;

          (d) concurrently with any delivery of financial statements under
     clause (a) or (b) of this Section, a certificate of a Financial Officer of
     the Parent Guarantor (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) setting
     forth reasonably detailed calculations demonstrating compliance with
     Section 7.09 and such portions of Sections 7.01, 7.02, 7.03 and 7.05
     requiring compliance with certain specified limits, and (iii) stating
     whether any material change in GAAP used in preparing such financial
     statements or in the application thereof has occurred since the date of the
     most recently delivered audited financial statements pursuant to Section
     6.01(a) 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) of this Section, a certificate of the accounting firm that
     reported on such financial statements stating whether it obtained knowledge
     during the course of its examination of such financial statements of any
     Default (which certificate may be limited to the extent required by
     accounting rules or guidelines);

          (f) as soon as available and in any event within 30 days after the end
     of each fiscal month with respect to the first two fiscal months of each
     Fiscal Quarter (provided that in the case of February 2005, within 45 days
     after the end of such fiscal month) and

<PAGE>
                                      -65-

     within 45 days after the end of the third month of each Fiscal Quarter, a
     Borrowing Base Certificate as at the last day of such fiscal month;

          (g) if requested by the Collateral Agent, up to two times in each
     Fiscal Year at the cost and expense of the Borrower, a report of an
     independent financial firm selected by the Collateral Agent (which may be,
     or be affiliated with, one of the Lenders) with respect to the calculation
     of Consolidated EBITDA, which report shall indicate that, based upon a
     review by such firm of the relevant books and records of the Borrower
     containing the information regarding Consolidated EBITDA that is set forth
     in the Borrowing Base Certificate delivered by the Borrower as at the end
     of the most recently ended fiscal month, such Consolidated EBITDA has been
     calculated in all material respects pursuant to the requirements of this
     Agreement;

          (h) not later than the first Business Day following the Friday of each
     week falling on or before June 24, 2005, and on the first Business day
     following each Friday thereafter on which a Liquidity Trigger Event has
     occurred and is continuing, a 13-week rolling cash flow projection
     (beginning with the second Monday preceding such Friday), included
     therewith, (i) notice of any variance between actual cash receipts and
     disbursements and such aforesaid projections for such month previously
     delivered and (ii) a narrative detailing the reasons for and causes of such
     variance, all of the foregoing to be in form and substance reasonably
     satisfactory to the Administrative Agent;

          (i) within 60 days after the commencement of each Fiscal Year
     commencing after the Effective Date, the annual operating plan for the
     Financial Test Group, including an annual budget for the Financial Test
     Group, forecasts of the income statement, the balance sheet and an
     operating profit and cash flow statement for the immediately succeeding
     year;

          (j) as soon as available and in any event 90 days after the end of
     each fiscal year of each Majority-Owned Joint Venture that ends after the
     Effective Date, a consolidated balance sheet for such Majority-Owned Joint
     Venture and its consolidated subsidiaries as of the end of such fiscal year
     and the related consolidated statements of income or operations,
     shareholders' equity and cash flows for such fiscal year, setting forth in
     each case in comparative form the figures for the previous fiscal year, all
     reported on by PricewaterhouseCoopers LLP or other independent public
     accountants of recognized national standing to the effect that such
     consolidated financial statements present fairly in all material respects
     the financial condition and results of operations of the such
     Majority-Owned Joint Venture and its consolidated subsidiaries on a
     consolidated basis in accordance with GAAP consistently applied;

          (k) promptly after the same become publicly available, copies of all
     periodic and other reports, proxy statements and other materials filed by
     the Parent Guarantor or any of its Subsidiaries with the Securities and
     Exchange Commission, or any Governmental Authority succeeding to any or all
     of the functions of the Securities and Exchange Commission, or with any
     national securities exchange;

<PAGE>
                                      -66-

          (l) concurrently with the dispatch or receipt of the same to or from
     Second Lien Lenders or any of their agents under the Second Lien Credit
     Agreement, copies of all communications (other than requests for extensions
     of credit or notices of prepayment) dispatched to or received from any
     Second Lien Lender or any agent therefor under or in connection with the
     Second Lien Credit Agreement;

          (m) promptly following any request therefor, such other information
     regarding the operations, business affairs and financial condition of the
     Parent Guarantor or any of its Included Subsidiaries, or compliance with
     the terms of this Agreement and the other Loan Documents, as the
     Administrative Agent or any Lender (through the Administrative Agent) may
     reasonably request; and

          (n) concurrently with the dispatch to the administrative agent, paying
     agent or collateral agent under the Second Lien Credit Agreement of each
     report relating to the status of Covered Property Value required to be
     delivered pursuant to Section 6.01 of the Second Lien Credit Agreement, a
     copy of each such report.

     Information required to be delivered pursuant to Sections 6.01(a), 6.01(b)
and 6.01(k) above shall be deemed to have been delivered on the date on which
the Parent Guarantor provides notice to the Administrative Agent that such
information has been posted on the Parent Guarantor's website on the internet or
at another website identified in such notice and accessible by the
Administrative Agent and the Lenders without charge; provided that (i) such
notice may be included in the certificate delivered pursuant to Section 6.01(d)
and (ii) the Parent Guarantor shall deliver, or cause to be delivered, paper
copies of the information referred to in Sections 6.01(a), 6.01(b) and 6.01(k)
above to the Administrative Agent upon any request for such delivery.

     SECTION 6.02. Notices of Material Events. The Borrower (for itself and on
behalf of the Parent Guarantor) will furnish to the Administrative Agent and
each Lender written notice of the following:

          (a) promptly after obtaining knowledge of any Default, the occurrence
     of such Default;

          (b) within ten (10) Business Days after discovery by Borrower, the
     filing or commencement of any action, suit or proceeding by or before any
     arbitrator or Governmental Authority against or affecting the Parent
     Guarantor or any of its Subsidiaries that, if adversely determined, could
     reasonably be expected to result in a Material Adverse Effect;

          (c) within ten (10) Business Days after discovery by Borrower, the
     occurrence of any ERISA Event that, alone or together with any other ERISA
     Events that have occurred, could reasonably be expected to result in a
     Material Adverse Effect;

          (d) within ten (10) Business Days after discovery by Borrower, the
     assertion of any Environmental Claim by any Person against, or with respect
     to the activities of, the Parent Guarantor or any of its Subsidiaries and
     any alleged violation of or non-compliance with any Environmental Laws or
     any permits, licenses or authorizations,

<PAGE>
                                      -67-

     other than any Environmental Claim or alleged violation that, if adversely
     determined, would not (either individually or in the aggregate) have a
     Material Adverse Effect;

          (e) within ten (10) Business Days after discovery by Borrower, any
     other development that results in, or could reasonably be expected to
     result in, a Material Adverse Effect; and

          (f) promptly after obtaining knowledge that the Net Liquidity is on
     any Business Day less than $20,000,000, such shortfall.

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

     SECTION 6.03. Existence; Conduct of Business. The Parent Guarantor will,
and, subject to Section 7.03, will cause each of its Included 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 and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.03.

     SECTION 6.04. Payment of Obligations. The Parent Guarantor will, and will
cause each of its Included Subsidiaries to, pay its obligations, including tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Parent Guarantor or such Included Subsidiary has set aside on its books
adequate reserves with respect thereto if required by and in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

     SECTION 6.05. Maintenance of Properties; Insurance. (a) Except to the
extent that such obligations are express obligations of any landlord under a
lease, the Parent Guarantor will, and will cause each of its Included
Subsidiaries to, (i) keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear and
Casualty Events excepted, and (ii) maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

     (b) Compromise, Adjustment or Settlement. The Administrative Agent shall be
entitled at its option to participate in any compromise, adjustment or
settlement in connection with any claims for loss, damage or destruction under
any policy or policies of insurance, in excess of $2,000,000, and if the
Administrative Agent so shall elect to participate in such compromise,
adjustment or settlement, the Parent Guarantor shall, and shall cause each of
its Included Subsidiaries to, within five Business Days after request therefor
reimburse the Administrative Agent for all out-of-pocket expenses (including
reasonable attorneys' fees and

<PAGE>
                                      -68-

disbursements) incurred by the Administrative Agent in connection with such
participation. Neither the Parent Guarantor nor any of its Included Subsidiaries
shall make any compromise, adjustment or settlement in connection with any such
claim, in respect of which the Administrative Agent elected to participate,
without the approval of the Administrative Agent, which will not be unreasonably
withheld, delayed or conditioned.

     SECTION 6.06. Books and Records; Inspection Rights. The Parent Guarantor
will, and will cause each of its Included 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 Parent
Guarantor will, and will cause each of its Included Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender (at such
Lender's sole expense except during the continuance of an Event of Default),
upon reasonable prior notice, to visit and 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, all at
such reasonable times and as often as reasonably requested.

     SECTION 6.07. Compliance with Laws. (a) The Parent Guarantor will, and will
cause each of its Included 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.

     (b) Notification of Notices and Orders. The Borrower shall notify the
Administrative Agent and the Collateral Agent promptly of any material notice,
order, claim or demand that such party receives from any Governmental Authority
or any other Person with respect to the Borrower's compliance with or liability
under any laws or regulations (including Environmental Laws) applicable to the
Real Property and promptly take any and all actions to challenge such notice,
order, claim or demand in accordance with accepted practices and such other
actions reasonably necessary to bring its operations at such Real Property into
compliance with such laws or regulations, other than where the failure to comply
with or the liability under such laws or regulations could not reasonably be
expected to cause or result in a Material Adverse Effect. Material notice,
order, claim or demand from any Governmental Authority pursuant to an
Environmental Law means any such item that could reasonably be expected to
result in fines or penalties, exclusive of interest and costs, of $100,000 or
more.

     (c) Right to Cure Non-Compliance with Environmental Laws. After the
occurrence and during the continuance of any Event of Default with respect to a
breach of Section 4.07 or this Section 6.07, the Administrative Agent or the
Collateral Agent, at its election and in its sole discretion may, without
obligation to do so, and upon reasonable notice to the Borrower (except in an
emergency), may cure any failure on the part of the Borrower to comply with
Environmental Laws or respond to any Environmental Liability to the extent
required under any Environmental Laws.

Any partial exercise by the Administrative Agent or the Collateral Agent of the
remedies hereinafter set forth, or any partial undertaking on the part of the
Administrative Agent or the Collateral Agent to cure the Borrower's failure to
comply with any Environmental Law, shall not

<PAGE>
                                      -69-

obligate the Administrative Agent or the Collateral Agent to complete the
actions taken or require the Administrative Agent or the Collateral Agent to
expend further sums to cure the Borrower's noncompliance; nor shall the exercise
of any such remedies operate to place upon the Administrative Agent or the
Collateral Agent any responsibility for the operation, control, care, management
or repair of the Real Property, nor will the Borrower or the Parent Guarantor
assert that any such actions make the Administrative Agent or Collateral Agent
the "operator" of such Real Property under CERCLA or any other Environmental
Laws. Any amount paid or costs incurred by the Administrative Agent or the
Collateral Agent as a result of the exercise by the Administrative Agent or the
Collateral Agent of any of the rights hereinabove set forth, together with
interest thereon at the default rate specified herein, shall be immediately due
and payable by the Borrower to the Administrative Agent or the Collateral Agent,
as the case may be, and until paid shall be added to and become a part of the
Obligations; and the Administrative Agent or the Collateral Agent, by making any
such payment or incurring any such costs, shall be subrogated to any rights of
the Borrower to seek reimbursement from any third parties, including, without
limitation, a predecessor-in-interest to the Borrower's title who may be a
"responsible party" or otherwise liable under any Environmental Law.

     (d) Environmental Assessment. If after the occurrence and during the
continuance of any Event of Default with respect to a breach of Section 4.07 or
this Section 6.07, the Administrative Agent or the Collateral Agent desires that
an environmental assessment with respect to the Real Properties that are at
issue in the Event of Default be prepared, the Borrower agrees to supply such an
assessment by an environmental consultant selected by the Borrower and
reasonably satisfactory to the Administrative Agent and the Collateral Agent, in
form and detail reasonably satisfactory to the Administrative Agent and the
Collateral Agent (including, where appropriate, test borings of the ground and
chemical analyses of air, water and waste discharges), identifying alternatives
and associated costs to address the subject matter of the Event of Default to
the extent required under applicable Environmental Laws.

     (e) Indemnity. The Borrower shall indemnify and hold the Administrative
Agent, the Collateral Agent, any Issuing Lender and each Lender harmless from
and against any and all losses, liabilities, claims, damages or expenses
(including any reasonable attorney or expert fees and any Lien filed against the
Real Property in favor of any governmental entity, but excluding any loss,
liability, claim, damage or expense to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified) to the
extent arising under any Environmental Law as the result of the operations of
Borrower (or any predecessor-in-interest to the Borrower) at the Real Property,
or the condition of the Real Property, or any presence, Release or threatened
Release of any Hazardous Materials at or from the Real Property (excluding any
such Release or threatened Release that shall occur during any period when the
Administrative Agent, the Collateral Agent, any Issuing Lender or any of the
Lenders shall be in possession of the Real Property following the exercise by
the Administrative Agent or the Collateral Agent of any of its rights and
remedies hereunder, but including any such Release or threatened Release
occurring during such period that is a continuation of conditions previously in
existence, or of practices employed by the Borrower, at the Real Property).

     SECTION 6.08. Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used for working capital and other general corporate purposes,
including without limitation to pay fees, costs and other transaction expenses
incurred in connection with

<PAGE>
                                      -70-

the financings contemplated by the Loan Documents and the Second Lien Loan
Documents. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X. Letters of Credit will be issued
only to support payment obligations incurred for general corporate purposes of
the Borrower and its Included Subsidiaries.

     SECTION 6.09. Hedging Agreements. The Borrower will within 90 days of the
Effective Date enter into, and thereafter maintain in full force and effect, one
or more Hedging Agreements with one or more of the Lenders, the Arranger or
Affiliates of any Lender or the Arranger (and/or with a bank or other financial
institution having capital, surplus and undivided profits of at least
$500,000,000), that effectively enables the Borrower (in a manner reasonably
satisfactory to the Administrative Agent) to protect itself against three-month
London interbank offered rates exceeding a rate per annum reasonably acceptable
to the Administrative Agent as to a notional principal amount at least equal to
50%, but not more than 66?%, of the aggregate principal amount of term loans
from time to time outstanding under the Second Lien Credit Agreement, for a
period of at least three years measured from the Effective Date. It shall not be
a default of this Section if, following entry into Hedging Agreements that
comply with this Section when entered into, the notional principal amount of
Hedging Agreements later exceeds 66 ?% of outstanding principal of such term
loans by reason of a prepayment of the principal of such loans.

     SECTION 6.10. Certain Obligations Respecting Subsidiaries; Further
Assurances.

          (a) Subsidiary Guarantors. The Parent Guarantor will take such action,
     and will cause each of its Included Subsidiaries to take such action, from
     time to time as shall be necessary to ensure that each Domestic Subsidiary
     (other than a Domestic Subsidiary that, at the time of determination, is a
     Prohibited Subsidiary) is a "Subsidiary Guarantor" hereunder. Without
     limiting the generality of the foregoing, in the event that the Borrower or
     any of its Included Subsidiaries shall hereafter form or acquire any Person
     that shall constitute a Domestic Subsidiary (other than a Domestic
     Subsidiary that, at the time of determination, is a Prohibited Subsidiary)
     of the Borrower, the Parent Guarantor and its Included Subsidiaries will
     cause such Person to

               (i) become a "Subsidiary Guarantor" hereunder, and a "Securing
          Party" under the Security Agreement pursuant to a Guarantee Assumption
          Agreement,

               (ii) cause such Subsidiary to take such action (including
          delivering such shares of stock, delivering such Uniform Commercial
          Code financing statements and executing and delivering mortgages or
          deeds of trust covering the real property and fixtures owned or leased
          by such Subsidiary) as shall be necessary to, subject to the
          thresholds set forth in clause (c) below with respect to Real Property
          and subject to the applicable exceptions in the Security Agreement,
          create and perfect valid and enforceable first priority Liens on
          substantially all of the property of such new Subsidiary (other than
          (x) voting stock of any Foreign Subsidiary to the extent that all
          voting stock of such Foreign Subsidiary subject to such Lien would
          exceed 65% of the issued and outstanding voting stock of such Foreign
          Subsidiary and (y) without limitation of Section 6.15, equity
          interests in any

<PAGE>
                                      -71-

          Joint Venture to the extent the pledge of such equity interests under
          the Security Agreement is prohibited by its organizational documents,
          joint venture agreement, operating agreement or an agreement governing
          its Indebtedness) as collateral security for the obligations of such
          new Subsidiary hereunder and

               (iii) deliver such proof of corporate action, incumbency of
          officers, opinions of counsel and other documents with respect to such
          Subsidiary Guarantor as is consistent with those delivered by each
          Obligor pursuant to Section 5.01 on the Effective Date or as the
          Administrative Agent shall have reasonably requested.

          (b) Ownership of Subsidiaries. The Parent Guarantor will, and will
     cause each of its Included Subsidiaries to, take such action from time to
     time as shall be necessary to ensure that the Parent Guarantor and each of
     its Included Subsidiaries at all times owns (subject only to the Lien of
     the Security Agreement) the same percentage of the issued and outstanding
     shares of each class of stock of each of its respective Wholly Owned
     Subsidiaries as is owned on the date hereof. In the event that any
     additional shares of stock shall be issued by any Subsidiary to any Obligor
     (other than (x) voting stock of any Foreign Subsidiary to the extent that
     all voting stock of such Foreign Subsidiary subject to the Lien of the
     Security Agreement would exceed 65% of the issued and outstanding voting
     stock of such Foreign Subsidiary and (y) without limitation of Section
     6.15, equity interests in any Joint Venture to the extent the pledge of
     such equity interests under the Security Agreement is prohibited by its
     organizational documents, joint venture agreement, operating agreement or
     an agreement governing its Indebtedness), such Obligor agrees forthwith to
     deliver to the Collateral Agent in accordance with and subject to the terms
     of the Security Agreement the certificates, if any, evidencing such shares
     of stock, accompanied by undated stock powers executed in blank and to take
     such other action as the Collateral Agent shall request to perfect the
     security interest created therein pursuant to the Security Agreement.
     Notwithstanding the foregoing or any other provision herein to the
     contrary, the Parent Guarantor shall have no Subsidiaries other than the
     Borrower and Subsidiaries of the Borrower. Notwithstanding the foregoing,
     nothing set forth herein shall preclude Borrower or any Included Subsidiary
     from disposing of 100% of its equity interest in any Subsidiary in
     compliance with the requirements of Section 7.03 of this Agreement,
     provided that following such sale Borrower or such Included Subsidiary
     shall not have any further Guarantee liability in respect of such former
     Subsidiary.

          (c) Further Assurances. The Parent Guarantor will, and will cause each
     of its Included Subsidiaries to, take such action from time to time as
     shall reasonably be requested by the Administrative Agent to effectuate the
     purposes and objectives of this Agreement. Without limiting the generality
     of the foregoing, the Parent Guarantor will, and will cause each other
     Obligor to, take such action from time to time (including filing
     appropriate Uniform Commercial Code financing statements and executing and
     delivering such assignments, security agreements, account control
     agreements and other instruments) as shall be reasonably requested by the
     Collateral Agent to create, in favor of the Collateral Agent for the
     benefit of the Lenders (and any Affiliate of any Lender or of the Arranger
     that is a party to any Hedging Agreement entered into with the Borrower)
     and the Administrative Agent, perfected security interests and Liens in
     substantially all of the property of such Obligor (other than Excluded Real
     Property) as collateral security for its obligations hereunder; provided
     that any such security interest or Lien shall be subject to the relevant
     requirements of the Security Documents.

<PAGE>
                                      -72-

     SECTION 6.11. Ownership of the Borrower. The Parent Guarantor will at all
times cause the Borrower to be its Wholly Owned Subsidiary.

     SECTION 6.12. Collection of Accounts and Payments; Creation of Depositary
Account.

     (a) Subject to Section 6.12(b), the Borrower will, at its own cost and
expense, cause all payments received by any Obligor from any source, whether in
the form of cash, checks, notes, drafts, bills of exchange, money orders, credit
card payments, debit card payments or otherwise (referred to herein as
"Payments"), (i) to be deposited within one Business Day in the form received
(but with any endorsements of any Obligor necessary for deposit or collection)
in one or more bank accounts maintained by the Borrower and (ii) to be
transferred each Business Day from the accounts referred to in clause (i) to any
Concentration Account. If any Obligor or any other Person acting for or in
concert with any Obligor shall receive any Payments, such Obligor shall hold
such Payment in trust for Collateral Agent, and, immediately upon receipt
thereof, the Borrower shall or shall cause such Obligor or other Person to remit
the same or cause the same to be remitted, in kind, to any Concentration Account
or after the same is established, the Depositary Account referred to below.

     (b) The Borrower will, within 60 days after April 1, 2005, open at Wachovia
Bank, National Association or another bank acceptable to the Administrative
Agent a new deposit account (the "Depositary Account"), which Depositary Account
shall be made subject to a Concentration Account Control Agreement at all times
after the same is opened. Within 60 days after April 1, 2005 (i) the Borrower
will cause all Payments that would otherwise be transferred to a Concentration
Account pursuant to clause (a) above to be transferred instead into the
Depositary Account and (ii) such Payments shall cease to be deposited into a
Concentration Account except upon transfer from the Depositary Account (the date
of such event, the "Depositary Effective Date"). If no Liquidity Trigger Event
has occurred and is continuing, all Payments deposited into the Depositary
Account may be transferred by the Borrower to any of the Borrower's
Concentration Accounts in the Borrower's discretion. On any Business Day during
the continuance of a Liquidity Trigger Event, the Borrower shall not transfer
any Payments from the Depositary Account to a Concentration Account until after
it has fully complied with its obligations under Section 2.10(b)(iii). To the
extent that Borrower is eligible to request Loans during the continuance of a
Liquidity Trigger Event, the proceeds of such Loans will be deposited into a
Concentration Account designated by the Borrower.

     SECTION 6.13. Ratings. The Borrower will obtain not later than 90 days
after the Restatement Date, and will maintain at all times thereafter, ratings
for the Loans from S&P and from Moody's.

     SECTION 6.14. Separateness. The Parent Guarantor will, and will cause each
of its Included Subsidiaries to, conduct its management, business and affairs,
and maintain its books and records, in such manner so that each such Person
shall be treated as a corporate entity distinct from each other such Person.

     SECTION 6.15. Pledge of Equity Interests in Consolidated Joint Ventures.
From and after the date hereof the Parent Guarantor will, and will cause each

<PAGE>
                                      -73-

of its Included Subsidiaries to, use commercially reasonable efforts to obtain
all necessary consents to enable the equity interests in the Consolidated Joint
Ventures owned by the Obligors to be pledged to the Collateral Agent pursuant to
the Security Agreement.

     SECTION 6.16. Post Closing Appraisals. Within forty-five (45) days after
the Effective Date, Borrower shall deliver to Administrative Agent Acceptable
Appraisals with respect to all Real Property (other than that real property
located at Lakeland Drive/E. Metro Connector, Jackson, MS and other than the
Excluded Real Property) owned by Borrower or any Guarantor as of the date of
such Acceptable Appraisals, it being understood that Acceptable Appraisals with
respect to the Principal Facilities have been delivered to the Administrative
Agent prior to the date hereof.

     SECTION 6.17. Post Closing Mortgages.

     (a) Post Closing Mortgages on Owned Real Property. The Covered Property
Value shall be equal to Ninety Percent (90%) of the sum of the Median Desktop
Analysis Values for all Real Property (except Real Property that the Collateral
Agent declines a Mortgage on and the Real Properties located at 1350 West
Parkway, Euless, TX and 1200 Knox Abbot Drive, Cayce, SC) listed in the Desktop
Analysis on or before 120 days after April 1, 2005. Thereafter the Borrower
shall use commercially reasonable efforts to cause the Covered Property Value to
be equal to the sum of the Median Desktop Analysis Values for all Real Property
(except Real Property that the Collateral Agent declines a Mortgage on and the
Real Properties located at 1350 West Parkway, Euless, TX and 1200 Knox Abbot
Drive, Cayce, SC) listed in the Desktop Analysis. The Collateral Agent agrees,
with respect to each Real Property set forth on Schedule XI, that, upon request
of the applicable Tenant, it shall enter into a Subordination, Non-Disturbance
and Attornment Agreement, substantially in the form of Exhibit J.

     (b) Encumbrance of Property Designated for Sale. The Borrower shall, with
respect to the Property Designated for Sale (including improvements but
excluding the Principal Facilities and the Excluded Real Property) owned by the
Borrower on the Effective Date, not later than 180 days after April 1, 2005 (it
being understood that any Property Designated For Sale that is sold prior to
such time shall not be subject to the requirements of this paragraph) execute
and deliver in favor of the Shared Lien Collateral Agent a Mortgage appropriate
for the jurisdiction in which such respective Real Property is situated,
pursuant to which the Borrower will create a Lien upon such Real Property (and
improvements) in favor of the Shared Lien Collateral Agent for the benefit of
the Lenders (and any Affiliate of any Lender or of the Arranger that is a party
to any Hedging Agreement entered into with the Borrower) and the Administrative
Agent as collateral security for the obligations of the Borrower under this
Agreement and will deliver such certificates of occupancy (or, if it is not the
practice to issue certificates of occupancy in the jurisdiction in which such
Real Property is located, then such other evidence reasonably satisfactory to
the Administrative Agent that the fully functioning operation and occupancy of
such Real Property is permitted), opinions of counsel and title insurance
policies as the Administrative Agent shall reasonably request in connection
therewith (provided that a legal opinion substantially in the form of the legal
opinions addressing certain real estate matters delivered pursuant to Section
5.01(b) on the Effective Date, with such modifications as are necessary for the
relevant jurisdictions, shall be deemed to be satisfactory in form and substance
to the Administrative Agent), including payment for all such title insurance

<PAGE>
                                      -74-

policies and recording and stamp taxes payable in connection with recording all
Mortgages and Uniform Commercial Code fixture filings, if applicable, in the
appropriate county land offices.

     (c) After Acquired Fee Interests in Real Property. If any Obligor shall
acquire any real property interest, including improvements (but excluding
leasehold interests and improvements thereon and any real property interest
situated on land not owned in fee), after the date hereof that (i) consists of a
retail store or (ii) that is not a retail store and that has a fair market value
of $750,000 or more (or shall make improvements upon any existing real property
interest (excluding leasehold interests and improvements thereon and any real
property interest situated on land not owned in fee and the Excluded Real
Property) resulting in the fair market value of such interest together with such
improvements being equal to $750,000 or more), then the Parent Guarantor will
(or, as applicable, will cause the respective Obligor holding such real property
interest to), subject to the last sentence of this paragraph, within 10 days of
the acquisition of or improvements upon such property interest by such Obligor,
if the Administrative Agent elects to encumber such property as Collateral in
Administrative Agent's sole and absolute discretion, (A) execute and deliver in
favor of the Shared Lien Collateral Agent a Mortgage appropriate for the
jurisdiction in which such respective real property is situated, pursuant to
which such Obligor will create a Lien upon such real property (and improvements)
in favor of the Shared Lien Collateral Agent for the benefit of the Lenders (and
any Affiliate of any Lender or of the Arranger that is a party to any Hedging
Agreement entered into with the Borrower) and the Administrative Agent as
collateral security for the obligations of such Obligor under this Agreement or,
as applicable, under the respective Guarantee Assumption Agreement to which such
Obligor is a party, (B) obtain or deliver a current Phase I (with respect to a
property, a "current Phase I" means a Phase I prepared within three years of the
acquisition of such property) for such property and (C) deliver such
certificates of occupancy (or, if it is not the practice to issue certificates
of occupancy in the jurisdiction in which such real property is located, then
such other evidence reasonably satisfactory to the Administrative Agent that the
fully functioning operation and occupancy of such real property is permitted),
opinions of counsel and title insurance policies as the Administrative Agent
shall reasonably request in connection therewith, including payment for all such
title insurance policies and recording and stamp taxes payable in connection
with recording all Mortgages and Uniform Commercial Code fixture filings, if
applicable, in the appropriate county land offices. The parties hereto agree
that (i) the real property of the Obligors located at or near 3601 Concord Pike,
Wilmington, Delaware, 931 Bethlehem Pike, Montgomeryville, PA and the corner of
First Street and Green Street in Winston-Salem, NC shall be treated for all
purposes under the Loan Documents as after acquired or leased real property, as
the case may be, that was acquired or leased, as the case may be, by the
Obligors on the Effective Date and (ii) that with respect to the properties
listed in this sentence only, the Borrower shall comply with the applicable
requirements of this paragraph within 60 days after April 1, 2005.

     SECTION 6.18. Post Closing Environmental Surveys. The Borrower shall cause
to be completed and delivered to Administrative Agent not later than thirty (30)
days after April 1, 2005 a Phase I of each of the locations for which a post
closing Phase I is required as indicated on Schedule VII.

     SECTION 6.19. Issuance of Subsidiary Stock Certificate. The Borrower shall
cause to be delivered to the Collateral Agent not later than thirty (30) days
after April 1,

<PAGE>
                                      -75-

2005 the stock certificate(s) issued by Krispy Kreme International, Ltd. in
favor of Borrower as shareholder constituting 65% of the issued and outstanding
stock of Krispy Kreme International, Ltd. together with (a) an endorsement in
blank and in form acceptable to the Collateral Agent and (b) an officer's
certificate of the Borrower attaching resolutions of the Board of Directors of
Krispy Kreme International, Ltd. (i) acknowledging the terms of the Security
Agreement and the pledge of the shares of Krispy Kreme International, Ltd.
thereunder, (ii) agreeing to register the Collateral Agent as the owner of such
shares in the share register of Krispy Kreme International, Ltd. in the event
that the ownership of such shares are transferred in accordance with the
Security Agreement and (iii) agreeing that such resolutions shall not be amended
and shall remain in full force and effect.

                                   ARTICLE VII

                               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, each of the Borrower and the Parent Guarantor covenants
and agrees with the Lenders that:

     SECTION 7.01. Indebtedness. The Parent Guarantor will not, nor will it
permit any of its Included Subsidiaries to, create, incur, assume or permit to
exist any Indebtedness, except:

          (a) Indebtedness created hereunder;

          (b) Indebtedness existing on the date hereof and set forth in or
     permitted pursuant to this Agreement to be excluded from Part A of Schedule
     II (excluding, however, following the making of the initial Loans
     hereunder, the Indebtedness under the Existing Credit Agreement) and
     extensions, renewals, refinancings and replacements ("refinancing") of any
     such Indebtedness that do not increase the outstanding principal amount
     thereof (other than to cover the amount of all accrued and unpaid interest
     thereon, plus the stated amount of any premium and other payments required
     to be paid in connection with such refinancing and the amount of reasonable
     expenses incurred in connection with such refinancing);

          (c) Indebtedness under the Second Lien Credit Agreement in an
     aggregate amount (including in respect of the undrawn portion of
     outstanding letters of credit) not exceeding $150,000,000, including any
     refinancing thereof permitted by the Intercreditor Agreement, provided that
     in the case of a refinancing, the principal amount of such refinancing may
     be increased to the extent necessary to pay accrued interest, prepayment
     premiums and transactional expenses associated with such refinancing in an
     aggregate amount not to exceed 105% of the principal amount outstanding
     under the Second Lien Credit Agreement immediately prior to such
     refinancing;

          (d) owing by any Obligor to any other Obligor;

          (e) Guarantees by any Obligor of Indebtedness of any other Obligor;

<PAGE>
                                      -76-

          (f) Indebtedness of the Parent Guarantor or any of its Included
     Subsidiaries incurred to finance the acquisition, construction or
     improvement of any fixed or capital assets, including Capital Lease
     Obligations and any Indebtedness assumed in connection with the acquisition
     of any such assets or secured by a Lien on any such assets prior to the
     acquisition thereof, and refinancings of any such Indebtedness that do not
     increase the outstanding principal amount thereof beyond the amount
     necessary to capitalize accrued interest, fees, and transactional expenses
     incurred in respect of such refinancings any such Indebtedness; provided
     that (i) such Indebtedness is incurred prior to or within 90 days after
     such acquisition or the completion of such construction or improvement and
     (ii) the aggregate principal amount of Indebtedness permitted by this
     clause (f) shall not exceed $3,000,000 at any time outstanding;

          (g) Guarantees by any Obligor in respect of Indebtedness incurred by
     Joint Ventures constituting Investments permitted by Section 7.05(i) and
     7.05(k);

          (h) Indebtedness under Hedging Agreements permitted by Section
     7.05(e);

          (i) overdrafts in operating accounts at banks incurred in the ordinary
     course of business and in an aggregate amount not exceeding $500,000
     outstanding at any time, provided that no such overdraft shall remain
     outstanding for more than three Business Days;

          (j) bankers acceptances opened in the ordinary course of business for
     the importing or exporting of goods in an aggregate amount not exceeding
     $500,000 at any time;

          (k) unsecured structured settlements relating to Disclosed Matters or
     other actions, suits, proceedings or governmental enforcement actions
     relating to the historical financial statements of Parent Guarantor and its
     Consolidated Subsidiaries under review (as the date hereof) by the Special
     Committee of the Board of Directors of the Parent Guarantor; and

          (l) other unsecured Indebtedness (other than Guarantees of
     Indebtedness incurred by Joint Ventures) in an aggregate principal amount
     not exceeding $3,000,000 at any time outstanding.

     SECTION 7.02. Liens. The Parent Guarantor will not, nor will it permit any
of its Included Subsidiaries 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) Liens created pursuant to the Security Documents;

          (b) Permitted Encumbrances;

          (c) any Lien on any property or asset of the Parent Guarantor or any
     of its Included Subsidiaries existing on the date hereof and set forth in
     or permitted by this Agreement to be excluded from Part B of Schedule II
     (excluding, however, following the

<PAGE>
                                      -77-

     making of the initial Loans hereunder, Liens securing Indebtedness under
     the Existing Credit Agreement); provided that (i) no such Lien shall extend
     to any other property or asset of the Parent Guarantor or any of its
     Included Subsidiaries and (ii) any such Lien shall secure only those
     obligations which it secures on the date hereof and refinancings thereof
     that do not increase the outstanding principal amount thereof, except as
     permitted by Section 7.01(b);

          (d) Liens securing the obligations of the Obligors with respect to
     Indebtedness incurred pursuant to Section 7.01(c) to the extent permitted
     by the Intercreditor Agreement;

          (e) Liens on fixed or capital assets acquired, constructed or improved
     by the Parent Guarantor or any Included Subsidiary; provided that (i) such
     security interests secure Indebtedness permitted by clause (f) of Section
     7.01, (ii) such security interests and the Indebtedness secured thereby are
     incurred prior to or within 90 days after such acquisition or the
     completion of such construction or improvement, (iii) the Indebtedness
     secured thereby does not exceed 100% of the cost of acquiring, constructing
     or improving such fixed or capital assets and (iv) such security interests
     shall not apply to any other property or assets of the Parent Guarantor or
     any Included Subsidiary; and

          (f) Liens on cash posted as margin in an aggregate amount not
     exceeding $500,000 at any time to secure obligations of the Parent
     Guarantor or any of its Included Subsidiaries under commodity Hedging
     Agreements permitted by Section 7.05(e).

     SECTION 7.03. Fundamental Changes. The Parent Guarantor will not, nor will
it permit any of its Included Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to, acquire any
business or property from, or capital stock of, or be a party to any acquisition
of, any Person except for purchases of inventory and other property to be sold
or used in the ordinary course of business, Investments permitted under Section
7.05 and Capital Expenditures permitted under Section 7.09(c). The Parent
Guarantor will not, nor will they permit any of its Included Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, any part of its business or property, whether now owned
or hereafter acquired (including receivables and leasehold interests, but
excluding (x) obsolete or worn-out property, tools or equipment no longer used
or useful in its business and (y) any inventory or other property sold or
disposed of in the ordinary course of business and on ordinary business terms).

     Notwithstanding the foregoing provisions of this Section:

          (a) any Included Subsidiary of the Borrower may be merged or
     consolidated with or into the Borrower or any other such Included
     Subsidiary or dissolved and its affairs wound up; provided that (i) if any
     such transaction shall be between a Included Subsidiary that is not an
     Obligor and an Obligor, the Obligor shall be the continuing or surviving
     corporation and (ii) if any such transaction shall be between a Included

<PAGE>
                                      -78-

     Subsidiary that is not a Wholly Owned Subsidiary and a Wholly Owned
     Subsidiary, the Wholly Owned Subsidiary shall be the continuing or
     surviving corporation;

          (b) any Included Subsidiary of the Borrower may sell, lease, transfer
     or otherwise dispose of any or all of its property (upon voluntary
     liquidation or otherwise) to the Borrower or any Wholly Owned Subsidiary;
     provided that, if the transferor in any such transaction shall be an
     Obligor, the transferee shall be an Obligor;

          (c) the capital stock of any Included Subsidiary of the Borrower may
     be sold, transferred or otherwise disposed of to the Borrower or any Wholly
     Owned Subsidiary ; provided that, if the transferor in any such transaction
     shall be an Obligor, the transferee shall be an Obligor;

          (d) unless a Default has occurred and is continuing, the Borrower or
     any of its Included Subsidiaries may sell Property Designated For Sale for
     cash and for fair market value as determined by the Board of Directors;

          (e) the Borrower or any of its Subsidiaries may dispose of obsolete or
     surplus equipment to the extent that (i) such equipment is exchanged for
     credit against the purchase price of similar replacement equipment or (ii)
     the proceeds of such dispositions are reasonably promptly applied to the
     purchase price of such replacement equipment;

          (f) unless a Default has occurred and is continuing, the Borrower may
     sell all or any portion of its equity interests in any Joint Venture for
     cash for fair market value, subject to the conditions that (a) the amount
     of consideration to be received by the Borrower (including the amount of
     any Guarantee theretofore issued by the Borrower to be cancelled in
     connection with such sale) has been determined by the Board of Directors to
     be fair to the Borrower, (b) if the aggregate amount of such consideration
     exceeds $10,000,000, the Board of Directors shall have received a fairness
     opinion in connection with such sale rendered by a recognized institution
     with established expertise in valuing transactions of such type and (c) in
     connection with such sale, all Guarantees theretofore issued by the
     Borrower in support of obligations of such Joint Venture shall be cancelled
     or reduced at least in proportion to the percentage of interests sold;

          (g) unless a Default has occurred and is continuing, the Borrower and
     its Included Subsidiaries may sell other property for cash for fair market
     value for consideration not exceeding $3,000,000 in any Fiscal Year;

          (h) leases and subleases of property in the ordinary course of
     business;

          (i) non-exclusive licenses of Intellectual Property in the ordinary
     course of business; and

          (j) the Parent Guarantor and its Included Subsidiaries may sell assets
     to the extent permitted by Section 7.10.

     The Collateral Agent agrees to execute such UCC termination statements or
partial

<PAGE>
                                      -79-

release statements, as applicable, and other Lien release documents as the
Borrower reasonably requests to evidence the release of the Collateral Agent's
Lien in respect of property conveyed, sold, transferred or otherwise disposed of
in compliance with this Section 7.03; provided that the Borrower shall provide
to the Collateral Agent evidence of such transaction's compliance with this
Section 7.03 as the Collateral Agent may reasonably request.

     SECTION 7.04. Lines of Business. The Parent Guarantor and the Borrower will
not, nor will they permit any of their Included Subsidiaries to, engage to any
material extent in any business other than the business of manufacturing,
distributing, franchising, licensing and selling (i) doughnuts, (ii) equipment
to manufacture doughnuts and (iii) related products.

     SECTION 7.05. Investments. The Parent Guarantor and the Borrower will not,
nor will they permit any of their Included Subsidiaries to, make or permit to
remain outstanding any Investments except:

          (a) Investments outstanding on the date hereof and identified in or
     permitted pursuant to this Agreement to be excluded from Part B of Schedule
     VI;

          (b) operating deposit accounts with banks;

          (c) Permitted Investments;

          (d) Investments by the Parent Guarantor or any of its Included
     Subsidiaries in any of its Included Subsidiaries that is an Obligor or that
     becomes an Obligor contemporaneously with the making of such Investment;

          (e) Hedging Agreements entered into by the Borrower or its Included
     Subsidiaries in the ordinary course of its or their financial planning and
     not for speculative purposes;

          (f) Investments consisting of security deposits with government
     agencies, utilities and other like Persons made in the ordinary course of
     business;

          (g) Investments consisting of advances to employees for reasonable
     business and travel expenses incurred in the ordinary course of business;

          (h) Investments consisting of loans or advances to employees not
     exceeding $1,000,000 in the aggregate principal amount outstanding at any
     time, in each case made in the ordinary course of business and consistent
     with practices existing on the Effective Date;

          (i) Investments in Joint Ventures, loans or advances to Krispy Kreme
     franchisees or doughnut and bakery store operators, or Guarantee
     obligations at any of the foregoing under leases or Synthetic Leases, in
     each case made in the ordinary course of business; provided that (x) the
     aggregate amount of such Investments made in cash after the date hereof
     shall not exceed $6,000,000 at any one time outstanding and (y) the
     aggregate

<PAGE>
                                      -80-

     amount of such Investments made in any form after the date hereof shall not
     exceed $10,000,000 at any one time outstanding. After an initial $6,000,000
     in cash Investments have been made hereunder, no more than $2,000,000 in
     aggregate cash Investments may be reinvested by Borrower after return to
     Borrower of initial cash Investments. After an initial $10,000,000 in total
     Investments have been made hereunder, no more than $4,000,000 in aggregate
     Investments made in any form may be reinvested after return to Borrower, or
     in the case of guarantees, release of Borrower therefrom;

          (j) any acquisition pursuant to a collateral repurchase agreement that
     has been identified as a Specified Contingent Obligation in favor of any
     Krispy Kreme franchisee or its lenders;

          (k) Investments in Joint Ventures made after the date hereof in the
     form of Guarantees or cash issued in exchange for the cancellation or
     reduction of Guarantees by the Borrower outstanding on the date hereof of
     Indebtedness of the respective Joint Ventures, provided that the amount of
     each such Investment made after the date hereof shall not exceed the amount
     of the Guarantee so cancelled or the reduction of the Guarantee so reduced,
     as the case may be;

          (l) Investments in securities or property of trade creditors or
     customers in the ordinary course of business received upon foreclosure or
     pursuant to any plan or organization or liquidation or similar arrangement
     upon the bankruptcy or insolvency of such trade creditors or customers;

          (m) Investments (i) for utilities, security deposits, leases and
     similar prepaid expenses incurred in the ordinary course of business and
     (ii) trade accounts created, or prepaid expenses accrued, in the ordinary
     course of business; and

          (n) additional Investments (other than in Joint Ventures) up to but
     not exceeding $2,000,000 in the aggregate at any one time outstanding.

     SECTION 7.06. Restricted Payments. The Parent Guarantor will not, nor will
it permit any of its Included Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, except that (a) any
Wholly Owned Subsidiary may declare and make Restricted Payments to any other
Wholly Owned Subsidiary, (b) any other Included Subsidiary may declare and make
dividends or other distributions on its common equity interests ratably to all
of its equity holders (i) if no Event of Default has occurred and is occurring
or (ii) (in the case of any such other Included Subsidiary that is treated as a
partnership for tax purposes) to the extent necessary to enable its equity
holders to pay income taxes arising from the income of such other Included
Subsidiary, (c) the Borrower may declare and make dividends to the Parent
Guarantor at such times and in such amounts as are necessary to enable the
Parent Guarantor to pay taxes and operating expenses, (d) provided that no Event
of Default has occurred and is occurring, the Borrower may declare and make
dividends to the Parent Guarantor at such times and in such amounts as are
necessary to enable the Parent Guarantor to pay judgment or settlement costs in
connection with any action, suit,

<PAGE>
                                      -81-

proceeding, inquiry or investigations involving the Parent Guarantor (i) that is
an exception to Section 4.06 or (ii) that is based on substantially the same
underlying facts and circumstances as any action, suit, proceeding, inquiry or
investigation described in clause (i) above, or (e) provided that no Event of
Default has occurred and is occurring, the Borrower may declare and make
dividends to the Parent Guarantor at such times and in such amounts as are
necessary to enable the Parent Guarantor to pay judgment or settlement costs in
connection with any other action, suit, proceeding, inquiry or investigations
involving the Parent Guarantor not exceeding $500,000 in the aggregate in any
Fiscal Year.

     SECTION 7.07. Transactions with Affiliates. The Parent Guarantor will not,
nor will it permit any of its Included Subsidiaries to, 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 in the ordinary course of business at
prices and on terms and conditions not less favorable to the Parent Guarantor or
such Included Subsidiary, as the case may be, than could be reasonably obtained
on an arm's-length basis from unrelated third parties, (b) transactions between
or among the Parent Guarantor and/or one or more of its Wholly Owned
Subsidiaries that are Obligors, not involving any other Affiliate, (c) any
Restricted Payment permitted by Section 7.06, (d) transactions listed on
Schedule X, (e) Investments permitted by Section 7.05 (including Permitted
Investments), (f) issuances of capital stock (other than Redeemable Preferred
Stock) and Equity Rights (other than Equity Rights for Redeemable Preferred
Stock) by the Parent Guarantor and (g) a success or similar fee payable by the
Borrower or the Parent Guarantor to Kroll, provided that the amount of any
portion thereof paid in cash is acceptable to the Administrative Agent in its
reasonable discretion.

     SECTION 7.08. Restrictive Agreements. The Parent Guarantor will not, and
will not permit any of its Included Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the Parent
Guarantor or any Included Subsidiary to create, incur or permit to exist any
Lien upon any of its property or assets, or (b) the ability of any Included
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 Parent Guarantor
or any other Included Subsidiary or to Guarantee Indebtedness of the Parent
Guarantor or any other Included Subsidiary; provided that:

          (i) the foregoing shall not apply to (1) restrictions and conditions
     imposed by law or by the Loan Documents, (2) restrictions and conditions
     imposed by the Second Lien Loan Documents, (3) restrictions and conditions
     existing on the date hereof identified on Schedule III (and contained in
     any extension or renewal of, or any amendment or modification of the
     relevant documentation except to the extent expanding the scope of, any
     such restriction or condition), (4) customary restrictions and conditions
     contained in agreements relating to the sale of a Included Subsidiary
     pending such sale, provided such restrictions and conditions apply only to
     the Included Subsidiary that is to be sold and such sale is permitted
     hereunder, (5) restrictions and conditions in any agreement of an Included
     Subsidiary in effect at the time such Included Subsidiary becomes a
     Subsidiary of the Borrower, so long as such agreement was not entered into
     in connection with or in contemplation of such person becoming a Subsidiary
     of the Borrower (and contained in any extension or renewal of, or any
     amendment or modification of the relevant documentation except to the
     extent expanding the scope of, any such restriction or

<PAGE>
                                      -82-

     condition) and (6) restrictions on cash or other deposits or net worth
     imposed by suppliers or landlords under contracts entered into in the
     ordinary course of business; and

          (ii) clause (a) of the foregoing shall not apply to (x) 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, (y) customary
     provisions in leases and other contracts restricting the assignment thereof
     and (z) restrictions with respect to the capital stock of an entity imposed
     by any joint venture agreement, limited liability operating company
     agreement, partnership agreement or similar agreement governing the
     operation of such entity with respect to which no Obligor holds a
     controlling interest.

     SECTION 7.09. Certain Financial Covenants.

     (a) Consolidated Leverage Ratio. Commencing with the second Fiscal Quarter
of the 2006 Fiscal Year, the Parent Guarantor will not permit the Consolidated
Leverage Ratio to exceed the following respective ratios for any Test Period in
any of the following respective periods if a Liquidity Trigger Event shall have
occurred and be continuing:

               Period                                         Ratio

Second, Third and Fourth Fiscal                            4.50 to 1.00
  Quarters of 2006 Fiscal Year

First Fiscal Quarter of 2007 Fiscal                        4.25 to 1.00
  Year

Second Fiscal Quarter of 2007 Fiscal                       4.20 to 1.00
  Year

Third and Fourth Fiscal Quarters of                        3.95 to 1.00
  2007 Fiscal Year

First Fiscal Quarter of 2008 Fiscal                        3.70 to 1.00
  Year and Thereafter

     (b) Consolidated Interest Coverage Ratio. Commencing with the second Fiscal
Quarter of the 2006 Fiscal Year, the Parent Guarantor will not permit the
Consolidated Interest Coverage Ratio to be less than the following respective
ratios for any Test Period in any of the following respective periods if a
Liquidity Trigger Event shall have occurred and be continuing:

<PAGE>
                                      -83-

               Period                                        Ratio

Second Fiscal Quarter of 2006 Fiscal                      3.15 to 1.00
  Year through Third Fiscal Quarter
  of 2007 Fiscal Year

Fourth Fiscal Quarter of 2007 Fiscal                      3.40 to 1.00
  Year and Thereafter

     (c) Capital Expenditures. The Parent Guarantor will not permit the
aggregate amount of Capital Expenditures by the Parent Guarantor and its
Included Subsidiaries to exceed the following respective amounts for the
following respective periods:

               Period                                      Amount

2006 Fiscal Year                                        $15,000,000

2007 Fiscal Year                                        $15,000,000

2008 Fiscal Year                                        $33,000,000

     If the aggregate amount of Capital Expenditures for any Fiscal Year shall
be less than the amount permitted by the table above to be made in such Fiscal
Year, then 50% of the shortfall shall be added to the amount of Capital
Expenditures permitted for the immediately succeeding (but not any other) Fiscal
Year and, for purposes hereof, the amount of Capital Expenditures made during
any Fiscal Year shall be deemed to have been made first from the amount
permitted by the table above to be made in such Fiscal Year and last from
carryover from the preceding Fiscal Year.

     SECTION 7.10. Sale-Leasebacks; Synthetic Leases. The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to engage in any
sale-leaseback, Synthetic Lease or similar transaction involving any of its
assets; provided that the following shall be permitted: (i) a sale-leaseback of
the Real Property located at Lakeland Drive / E. Metro Connector, Jackson, MS
and (ii) a sale of real or personal property made for cash consideration in an
amount not less than the cost of such real or personal property and consummated
within 90 days after the Parent Guarantor or any Included Subsidiary acquires or
completes the construction of such property.

     SECTION 7.11. Parent Guarantor as Holding Company. Notwithstanding anything
contained herein to the contrary, the Parent Guarantor will not (a) create,
incur, assume or permit to exist any Indebtedness other than Indebtedness under
the Loan

<PAGE>
                                      -84-

Documents and the Second Lien Loan Documents, (until the Effective Date) its
Guarantee of the obligations of the Borrower under the Existing Credit Agreement
and Indebtedness permitted by Section 7.01 (b), (e), (g) and (k), (b) create,
incur, assume or permit to exist any Lien on any of its properties other than
Permitted Encumbrances and Liens created by the Loan Documents and the Second
Lien Loan Documents, (c) own any Investments or any material properties other
than shares of stock of the Borrower and of Montana Mills or (d) engage in any
business or transactions other than those ancillary to its status as a publicly
traded holding company, including issuances of capital stock and Equity Rights.

     SECTION 7.12. Limitations on Voluntary Prepayments of Certain Other
Indebtedness. The Parent Guarantor will not, nor will it permit any of its
Included Subsidiaries to, purchase, redeem, retire or otherwise acquire for
value, or set apart any money for a sinking, defeasance or other analogous fund
for the purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment (each of the foregoing actions being referred to
herein as a "Voluntary Prepayment") of the principal of or interest on, or any
other amount owing in respect of, any Indebtedness incurred as permitted by
Section 7.01(l), unless the Net Availability would exceed $10,000,000 after
giving effect thereto. In no event shall the Borrower make a Voluntary
Prepayment of the principal of or interest on, or any other amount owing in
respect of, any Indebtedness outstanding under the Second Lien Credit Agreement
with the proceeds of any Loans.

     SECTION 7.13. Modifications of Certain Documents. The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any Second Lien
Loan Document, without the prior consent of the Administrative Agent (with the
approval of the Required Lenders), to the extent such modification, supplement
or waiver is not permitted by the Intercreditor Agreement. The Parent Guarantor
will not, nor will it permit any of its Included Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any agreement or
instrument governing or evidencing Subordinated Indebtedness in any manner that
is maternally adverse to the Borrower or the Lenders without the prior consent
of the Administrative Agent (with the approval of the Required Lenders).

     SECTION 7.14. Change in Fiscal Year; Accounting Policies; Capital Stock.
The Parent Guarantor will not, nor will it permit any of its Included
Subsidiaries to, (i) change its Fiscal Year, (ii) change their accounting
policies except as required by GAAP or otherwise permitted under Section 1.03 or
(iii) change their capital structure including any revision of the terms of
their outstanding capital stock or other equity interests, from the Fiscal Year,
the accounting policies and the capital structure in existence on the date
hereof without the prior consent of the Administrative Agent; provided that the
Parent Guarantor may issue additional capital stock and Equity Rights without
such consent.

     SECTION 7.15. No New Bank Accounts Without Prior Written Notice. The Parent
Guarantor will not, nor will it permit any of its Included Subsidiaries to, open
any new bank accounts after the date hereof without at least five Business Days
prior written notice to the Administrative Agent, or attempt to amend or
terminate any Concentration Account Control Agreement without the prior consent
of the Administrative Agent.

<PAGE>
                                      -85-

                                  ARTICLE VIII

                                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 under 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 or more Business Days;

          (c) subject to the proviso set forth in Section 4.12, any
     representation or warranty made or deemed made by or on behalf of any
     Affiliated Party in or in connection with this Agreement or any other Loan
     Document or any amendment or modification hereof or thereof, or in any
     report, certificate, financial statement or other document furnished
     pursuant to or in connection with this Agreement or any other Loan Document
     or any amendment or modification hereof or thereof, shall prove to have
     been incorrect in any material respect when made or deemed made;

          (d) the Borrower or the Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.01(f) and such failure shall continue unremedied for a period of
     10 or more days, in the case of a Borrowing Base Certificate for the first
     or second month of any Fiscal Quarter, or a period of 30 or more days, in
     the case of a Borrowing Base Certificate for the final month of any Fiscal
     Quarter;

          (e) the Borrower or the Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.02, 6.03 (with respect to the Borrower's or the Parent
     Guarantor's existence), 6.08 or 6.11 or in Article VII, or any Obligor
     shall default in the performance of any of its obligations contained in
     Section 5.02 of the Security Agreement;

          (f) the Borrower or the Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.01(h) and such failure shall continue unremedied for a period of
     five or more Business Days;

          (g) [reserved];

          (h) the Borrower or its Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.01(c) and such failure shall continue unremedied for a period of
     10 or more days;

<PAGE>
                                      -86-

          (i) any Obligor shall fail to observe or perform any covenant,
     condition or agreement contained in this Agreement (other than those
     specified in this Article) or any other Loan Document and such failure
     shall continue unremedied for a period of 30 or more days after notice
     thereof from the Administrative Agent (given at the request of any Lender)
     to the Borrower;

          (j) any Affiliated Party other than an Immaterial 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;

          (k) any event or condition occurs that results in any Material
     Indebtedness incurred by any Affiliated Party other than an Immaterial
     Subsidiary becoming due prior to its scheduled maturity or that enables or
     permits (with or without the giving of notice, the lapse of time or both)
     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 its scheduled maturity; provided that this clause (k) 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;

          (l) an involuntary proceeding shall be commenced or an involuntary
     petition shall be filed seeking (i) liquidation, reorganization or other
     relief in respect of any Affiliated Party other than an Immaterial
     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 any
     Affiliated Party other than an Immaterial Subsidiary or for a substantial
     part of its assets, and, in any such case, such proceeding or petition
     shall continue undismissed for a period of 60 or more days or an order or
     decree approving or ordering any of the foregoing shall be entered;

          (m) any Affiliated Party other than an Immaterial 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, or fail to contest
     in a timely and appropriate manner, any proceeding or petition described in
     clause (l) of this Article, (iii) apply for or consent to the appointment
     of a receiver, trustee, custodian, sequestrator, conservator or similar
     official for any Affiliated Party other than an Immaterial Subsidiary or
     for a substantial part of its assets, (iv) file an answer admitting the
     material allegations of a petition filed against it in any such proceeding,
     (v) make a general assignment for the benefit of creditors or (vi) take any
     action for the purpose of effecting any of the foregoing;

          (n) any Affiliated Party other than an Immaterial Subsidiary shall
     become unable, admit in writing its inability or fail generally to pay its
     debts as they become due;

          (o) one or more judgments for the payment of money in an aggregate
     amount in excess of $1,000,0000 shall be rendered against any Affiliated
     Party other than an

<PAGE>
                                      -87-

     Immaterial Subsidiary or any combination thereof and the same shall remain
     undischarged, unsatisfied, unstayed and unbonded for a period of 30
     consecutive days, or any action shall be legally taken by a judgment
     creditor to attach or levy upon any assets of any Affiliated Party to
     enforce any such judgments;

          (p) an ERISA Event shall have occurred that, when taken together with
     all other ERISA Events that have occurred, would reasonably be expected to
     result in a Material Adverse Effect;

          (q) a reasonable basis shall exist for the assertion against the
     Parent Guarantor or any of its Included Subsidiaries, or any predecessor in
     interest of the Parent Guarantor or any of its Included Subsidiaries, of
     (or there shall have been asserted against the Parent Guarantor or any of
     its Included Subsidiaries) an Environmental Claim that, in the judgment of
     the Required Lenders, is reasonably likely to be determined adversely to
     the Parent Guarantor or any of its Included Subsidiaries, and the amount
     thereof (either individually or in the aggregate) is reasonably likely to
     have a Material Adverse Effect (insofar as such amount is payable by the
     Parent Guarantor or any of its Included Subsidiaries but after deducting
     any portion thereof that is reasonably expected to be paid by other
     creditworthy Persons jointly and severally liable therefor);

          (r) a Change in Control shall occur;

          (s) the Liens created by the Security Documents shall at any time not
     constitute a valid and perfected Lien on collateral having a fair market
     value in excess of $250,000 in the aggregate, intended to be covered
     thereby (to the extent perfection by filing, registration, recordation or
     possession is required herein or therein) in favor of the Collateral Agent
     (except as a result of the gross negligence or willful misconduct of the
     Collateral Agent in taking or failing to take any action), free and clear
     of all other Liens (other than Liens permitted under Section 7.02), or,
     except for expiration or termination in accordance with its terms, any of
     the Security Documents shall for whatever reason be terminated or cease to
     be in full force and effect, or the enforceability thereof shall be
     contested by any Obligor;

          (t) the Restatement Date shall not have occurred on or before December
     15, 2005; or

          (u) before the earlier of the Restatement Date or December 15, 2005,
     Kroll shall cease to be engaged by the Parent Guarantor to perform
     substantially the same services for the Parent Guarantor as it performs on
     the date hereof, unless on the date of determination a firm with at least
     the same capabilities and reputation, in the reasonable judgment of the
     Administrative Agent, to perform such services is engaged by the Parent
     Guarantor to perform such services;

then, and in every such event (other than an event with respect to the Borrower
described in clause (l) or (m) 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:

<PAGE>
                                      -88-

(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 Obligors 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
each Obligor; and in case of any event with respect to the Borrower described in
clause (l) or (m) 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 Obligors 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 each Obligor.

                                   ARTICLE IX

                   THE ADMINISTRATIVE AGENT, COLLATERAL AGENT,
                              LENDERS AND ARRANGER

     Each of the Lenders and the Issuing Lender hereby irrevocably appoints the
Administrative Agent as its agent hereunder and under the other Loan Documents
and the Collateral Agent as its agent under the Intercreditor Agreement and the
Security Documents and authorizes each Agent to take such actions on its behalf
and to exercise such powers as are delegated to such Agent by the applicable
Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

     Each Person serving as an Agent 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 an Agent, and such Person and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the Parent
Guarantor or any Subsidiary or other Affiliate thereof as if it were not an
Agent.

     Neither Agent shall have any duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, (a) neither Agent shall be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) neither Agent shall have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that such
Agent is required to exercise in writing by the Required Lenders, and (c) except
as expressly set forth herein and in the other Loan Documents, neither Agent
shall have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Parent Guarantor or any of its
Subsidiaries that is communicated to or obtained by the Person serving as Agent
or any of their Affiliates in any capacity. Neither Agent shall be liable for
any action taken or not taken by it with the consent or at the request of the
Required Lenders or in the absence of its own gross negligence or willful
misconduct. Neither Agent shall be deemed to have knowledge of any Default
unless and until written notice thereof is given to such Agent by the Borrower
or a Lender, and the Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or

<PAGE>
                                      -89-

in connection with this Agreement or any other Loan Document, (ii) the contents
of any certificate, report or other document delivered hereunder or thereunder
or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article V or
elsewhere herein or therein, other than to confirm receipt of items expressly
required to be delivered to such Agent.

     Each 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. Each 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. Each Agent may consult with legal counsel (who may be counsel for an
Obligor), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

     Each 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 such Agent. Each
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 the Agents 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 Agent.

     Each Agent may resign at any time by notifying the Lenders, the Issuing
Lender, the Borrower and the Parent Guarantor. 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 for the
retiring Administrative Agent by the Required Lenders and shall have accepted
such appointment within 30 days after such retiring Agent gives notice of its
resignation, then such retiring Agent's resignation shall nonetheless become
effective and (1) such retiring Agent shall be discharged from its duties and
obligations hereunder and (2) the Required Lenders shall perform the duties of
such Agent (and all payments and communications provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender
directly) until such time as the Required Lenders appoint a successor agent as
provided for above in this paragraph. The Collateral Agent's resignation shall
not be effective until a successor Collateral Agent shall have been appointed by
the Required Lenders and shall have accepted such appointment. Upon the
acceptance of its appointment as an Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring (or retired) Agent, and the retiring
Agent, shall be discharged from its duties and obligations hereunder (if not
already discharged therefrom as provided above in this paragraph). The fees
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After an Agent's resignation hereunder, the provisions of this
Article and Section 10.03 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as Agent.

<PAGE>
                                      -90-

     Each Lender acknowledges that it has, independently and without reliance
upon either Agent, any Credited Institution 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 either Agent,
any Credited Institution 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 any related agreement or any document furnished
hereunder or thereunder.

     Each Lender acknowledges that (a) CSFB has no obligation, responsibility or
liability to such Lender by reason of any of CSFB's roles as sole bookrunner and
sole lead arranger for the financing contemplated, (b) WFF has no obligation,
responsibility or liability to such Lender by reason of its role as syndication
agent for the financing contemplated hereby, (c) Silver Point Finance, LLC has
no obligation, responsibility or liability to such Lender by reason of either of
Silver Point Finance, LLC's roles as co-arranger and documentation agent for the
financing contemplated hereby and (d) no Credited Institution is an agent or
fiduciary for such Lender by reason of any of such roles.

                                   ARTICLE X

                                  MISCELLANEOUS

     SECTION 10.01. Notices; Electronic Communications.

     (a) 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:

          (i) if to the Borrower or any Guarantor, to it at 370 Knollwood St.,
     Suite 500, Winston Salem, NC 27103, Attention of Michael Phalen (Telecopy
     No. 336-733-3791, Telephone No. 336-733-3707); with a copy to Cahill Gordon
     & Reindel LLP, 80 Pine Street, New York, NY 10005, Attention of Gerald S.
     Tanenbaum, Esq. (Telecopy No. 212-269-5420, Telephone No. 212-701-3000);

          (ii) if to the Administrative Agent, to Credit Suisse First Boston, 11
     Madison Avenue, New York, New York 10010, Attention of Yvette McQueen,
     (Telecopy No. (212) 325-8304; Telephone No. (212) 325-9934);

          (iii) if to the Collateral Agent, to Wells Fargo Foothill, Inc., at
     2450 Colorado Avenue, Suite 3000 West, Santa Monica, CA 90404, Attention of
     Specialty Finance Credit Officer, (Telecopy No. (310) 453-7442 ; Telephone
     No (310) 453-7300 ;

          (iv) if to the Issuing Lender, to it at Credit Suisse First Boston, 11
     Madison Avenue, New York, New York 10010, Attention of Yvette McQueen,
     (Telecopy No. (212) 325-8304; Telephone No. (212) 325-9934);

<PAGE>
                                      -91-

          (v) if to the Swingline Lender, to Wells Fargo Foothill, Inc., at 2450
     Colorado Avenue, Suite 3000 West, Santa Monica, CA 90404, Attention of
     Specialty Finance Credit Officer, (Telecopy No. (310) 453-7442 ; Telephone
     No (310) 453-7300 ; and

          (vi) if to a 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 (or, in the case
of any such change by a Lender, by notice to the Borrower and the Administrative
Agent). All notices and other 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. Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall be effective
as provided in said paragraph (b).

     (b) Electronic Communications. Notices and other communications to the
Lenders and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant
to Section 2.05 if such Lender or the Issuing Bank, as applicable, has notified
the Administrative Agent that it is incapable of receiving notices under such
Section by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

     Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

     SECTION 10.02. Waivers; Amendments.

     (a) No Deemed Waivers; Remedies Cumulative. No failure or delay by either
Agent, the Issuing Lender or any Lender in exercising any right or power under
any 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 Agents, the Issuing Lender and the Lenders under the Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by

<PAGE>
                                      -92-

any Obligor 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 either Agent, any Lender or the Issuing Lender
may have had notice or knowledge of such Default at the time.

     (b) Amendments. Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall

               (i) increase the Commitment of any Lender, increase the amount of
          the Borrowing Base or allow the aggregate amount of the Revolving
          Credit Exposures of all of the Lenders to exceed the amount of the
          Borrowing Base without the written consent of all of the Lenders
          (provided that any modification of the definition of "Consolidated
          EBITDA" shall require approval only of the Required Lenders),

               (ii) reduce the principal amount of any Loan or LC Disbursement
          or reduce the 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 2.17(d) without the consent of each Lender
          adversely affected thereby,

               (v) change any of the provisions of this Section or the
          percentage in the definition of the term "Required Lenders" or any
          other provision hereof specifying the number or percentage of Lenders
          required to waive, amend or modify any rights hereunder or make any
          determination or grant any consent hereunder, without the written
          consent of each Lender,

               (vii) release all or substantially all of the Collateral; or

               (viii) release any Guarantor that is not an Immaterial Subsidiary
          from its guarantee obligations under Article III without the written
          consent of each Lender;

         and provided further that (x) no such agreement shall amend, modify or
         otherwise affect the rights or duties of the Administrative Agent, the
         Collateral Agent, the Issuing Lender or the Swingline Lender hereunder
         without the prior written consent of the Administrative Agent, the
         Collateral Agent, the Issuing Lender or the Swingline Lender, as the
         case may be, and (y) that any modification or supplement of Article III
         shall require the consent of each Guarantor.

<PAGE>
                                      -93-

     Except as otherwise provided in this Section 10.02(b) with respect to this
Agreement, the Administrative Agent or the Collateral Agent may, with the prior
consent of the Required Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Loan Documents, provided
that, without the prior consent of each Lender, the Collateral Agent shall not
(except as permitted herein or in the Security Documents) release all or
substantially all of the collateral or otherwise terminate all or substantially
all of the Liens under any Security Document providing for collateral security,
agree to additional obligations (other than obligations under the Second Lien
Loan Documents) being secured by all or substantially all of such collateral
security (unless the Lien for such additional obligations shall be junior to the
Lien in favor of the other obligations secured by such Security Document, in
which event the Collateral Agent may consent to such junior Lien provided that
it obtains the consent of the Required Lenders thereto), alter the relative
priorities of the obligations entitled to the benefits of the Liens created
under the Security Documents with respect to all or substantially all of such
collateral, except that no such consent shall be required, and the Collateral
Agent is hereby authorized, to release any Lien covering property that is the
subject of either a disposition of property permitted hereunder or a disposition
to which the Required Lenders have consented.

     SECTION 10.03. Expenses; Indemnity; Damage Waiver.

     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Shared Lien
Collateral Agent (to the extent and under the circumstances provided in Section
8.2(a)(iv) of the Intercreditor Agreement), the Collateral Agent and their
Affiliates, including the reasonable fees, charges and disbursements of one
special counsel for the Administrative Agent, the Collateral Agent and the
Credited Institutions in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all out-of-pocket
expenses incurred by the Issuing Lender 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, the Shared Lien Collateral Agent (to the extent and under
the circumstances provided in Section 8.2(a)(iv) of the Intercreditor
Agreement), the Collateral Agent, the Issuing Lender, any Credited Institution
or any Lender, including the fees, charges and disbursements of any counsel for
the Administrative Agent, the Shared Lien Collateral Agent (to the extent and
under the circumstances provided in Section 8.2(a)(iv) of the Intercreditor
Agreement), the Collateral Agent, the Issuing Lender or any Lender in connection
with the enforcement or protection of its rights (x) in connection with this
Agreement and the other Loan Documents, including its rights under this Section,
or (y) in connection with the Loans made or Letters of Credit issued hereunder,
including in connection with any workout or restructuring or negotiations in
respect of any workout or restructuring and (iv) and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording, perfection or release of any security interest
contemplated by any Security Document or any other document referred to therein.

     (b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, the Collateral Agent, the Issuing Lender, the Shared Lien
Collateral Agent (to the extent and under the circumstances provided in Section
8.2(a)(iv) of the Intercreditor

<PAGE>
                                      -94-

Agreement), each Credited Institution 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 fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee by any third party, the Parent Guarantor or any of its
Subsidiaries arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder, or in connection herewith, or the consummation of the
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
the Issuing Lender 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), any payments that the Collateral Agent is
required to make under any indemnity issued to any bank referred to in the
Security Agreement to which remittances in respect of Accounts, as defined
therein, are to be made, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Parent
Guarantor or any of its Subsidiaries, or any Environmental Liability related in
any way to the Parent Guarantor or any of its Subsidiaries, 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, whether
brought by any third party or the Parent Guarantor or any of its Subsidiaries,
and 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 are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
its Related Parties.

     (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, the Shared
Lien Collateral Agent (to the extent and under the circumstances provided in
Section 8.2(a)(iv) of the Intercreditor Agreement), the Collateral Agent, the
Issuing Lender or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Collateral Agent, the Issuing Lender or the Swingline Lender, as the case may
be, 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, the Collateral Agent, the Issuing
Lender or the Swingline Lender in its capacity as such.

     (d) Waiver of Consequential Damages, Etc. To the extent permitted by
applicable law, no Obligor shall assert, and each Obligor 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 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.

<PAGE>
                                      -95-

     SECTION 10.04. 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, except that no Obligor
     may 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 any Obligor 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 and, to the extent
     expressly contemplated hereby, the Related Parties of each of the
     Administrative Agent, the Collateral Agent, the Issuing Lender 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 who are in the business of making revolving loans 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);
     provided that

               (i) each Issuing Lender and, except in the case of an assignment
          to a Lender or an Affiliate of a Lender, the Administrative Agent (and
          (A) in the case of an assignment of all or a portion of a Commitment
          or any Lender's obligations in respect of its Swingline Exposure, the
          Swingline Lender and (B) unless a Default shall have occurred and be
          continuing, the Borrower) must give its prior written consent to such
          assignment (which consents shall not be unreasonably withheld or
          delayed),

               (ii) except in the case of an assignment to a Lender or an
          Affiliate of a Lender or an assignment of the entire remaining amount
          of the assigning Lender's Commitment, the amount of the Commitment 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
          $1,000,000 unless the Administrative Agent otherwise consents,

               (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,

               (iv) the parties to each such assignment shall execute and
          deliver to the Administrative Agent an Assignment and Acceptance (such
          Assignment and Acceptance to be (A) electronically executed and
          delivered to the Administrative Agent via an electronic settlement
          system then acceptable to the Administrative Agent, which shall
          initially be the settlement system of ClearPar, LLC, or (B) manually
          executed and delivered 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 any
          applicable tax forms as may be requested by the Administrative Agent.

Upon acceptance and recording 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

<PAGE>
                                      -96-

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,
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 2.14, 2.15, 2.16 and 10.03 and shall continue to be
obligated pursuant to Section 10.12). 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.

     (c) Maintenance of Register by the Administrative Agent. The Administrative
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices in New York City 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 Lender and the Lenders shall
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, the Issuing Lender 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 and applicable tax forms, if
any, requested by the Administrative Agent (unless the assignee shall already be
a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section (if required) and any written consents 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, the Issuing Lender 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 and
the other Loan Documents (including all or a portion of its Commitment and the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement and the other Loan Documents 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, the
Collateral Agent, the Issuing Lender 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 and the other Loan Documents. 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 this
Agreement and the other Loan Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document; provided that such agreement or instrument may provide that such

<PAGE>
                                      -97-

Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.02(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 2.14,
2.15 and 2.16 (subject to the requirements of those sections) to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.

     (f) Limitations on Rights of Participants. A Participant shall not be
entitled to receive any greater payment under Section 2.14 or 2.16 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.16
unless the Borrower consents to the participation sold to such Participant and
such Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(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 such pledge or assignment 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 assignee for such Lender as a party hereto.

     (h) No Assignments to the Obligors or Affiliates. Anything in this Section
to the contrary notwithstanding, no Lender may assign or participate any
interest in any Loan or LC Exposure held by it hereunder to the Parent Guarantor
or any of its Affiliates or Subsidiaries without the prior consent of each
Lender.

     SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Obligors herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement 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 Collateral Agent, the Issuing Lender 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 2.14, 2.15, 2.16,
3.03 and 10.03 and Article IX 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 10.06. 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 and any
separate letter agreements with

<PAGE>
                                      -98-

respect to fees payable to the Administrative Agent or the Collateral Agent
constitute the entire contract between and 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 Section 5.01, 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 which, 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
to this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

     SECTION 10.07. 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 10.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Obligor against any of and all the obligations of
any Obligor 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) which such Lender may have.

     SECTION 10.09. Governing Law; Jurisdiction; Etc.

     (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. Each party hereto 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 this Agreement, 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 shall affect any right that the
Administrative Agent, the Collateral Agent, the Issuing Lender or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against any Obligor or its properties in the courts of any jurisdiction.

<PAGE>
                                      -99-

     (c) Waiver of Venue. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which 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 in
any court referred to in the first sentence of 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 10.01.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.

     SECTION 10.10. 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 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 10.11. 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 10.12. Treatment of Certain Information; Confidentiality.

     (a) Treatment of Certain Information. Each of the Borrower and the Parent
Guarantor acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower, the
Parent Guarantor or one or more of their Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
Affiliates of such Lender and each of the Borrower and the Parent Guarantor
hereby authorizes each Lender to share any information delivered to such Lender
by the Borrower, the Parent Guarantor and their Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such subsidiary or Affiliate, it being understood that any
such subsidiary or Affiliate receiving such information shall be bound by the
provisions of paragraph (b) of this Section as if it were a Lender hereunder.
Such authorization shall survive 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.

<PAGE>
                                     -100-

     (b) Confidentiality. Each of the Administrative Agent, the Collateral
Agent, the Issuing Lender and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(i) to its and its Affiliates' directors, officers, 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), (ii) to the extent requested by any regulatory authority having
jurisdiction over such Person, (iii) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process; provided that the
Administrative Agent or such Lender, unless prohibited by applicable law, shall
use reasonable efforts to notify the Borrower in advance of any disclosure
pursuant to this clause (iii) but only to the extent reasonably practicable
under the circumstances and on the understanding that neither the Administrative
Agent nor any Lender shall incur any liability for failure to give such notice,
(iv) to any other party to this Agreement, (v) in connection with the exercise
of any remedies hereunder or under any other Loan Document or any suit, action
or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this paragraph, to (A)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (B) any actual or
prospective counterparty (or its advisors) to any Hedging Agreement relating to
the Borrower and its obligations, (vii) with the consent of the Borrower or the
Parent Guarantor or (viii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this paragraph or (B) becomes
available to the Administrative Agent, the Collateral Agent, the Issuing Lender
or any Lender on a nonconfidential basis from a source other than an Obligor.
For the purposes of this paragraph, "Information" means all information received
from any Obligor relating to any Obligor or its business, other than any such
information that is available to the Administrative Agent, the Collateral Agent,
the Issuing Lender or any Lender on a nonconfidential basis prior to disclosure
by an Obligor; including all information provided pursuant to Section
6.01(c)(i), (f), (g), (h) and (i) and all Projections, the Desktop Analysis,
appraisals and the due diligence report from Keen & Shotenstein (the "Specified
Information"); provided that, in the case of information received from an
Obligor after the date hereof (other than any Specified Information), 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 10.13. USA PATRIOT Act. Each Lender hereby notifies the Borrower
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with said Act.

<PAGE>

     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.

                           [SIGNATURE PAGES TO FOLLOW]

<PAGE>

                                            KRISPY KREME DOUGHNUT CORPORATION

                                            By: /s/ Steven G. Panagos
                                                -------------------------------
                                                  Name: Steven G. Panagos
                                                  Title: President and
                                                         Chief Operating Officer

                                            GUARANTORS:

                                            KRISPY KREME DOUGHNUTS, INC.

                                            KRISPY KREME DISTRIBUTING COMPANY,
                                            INCORPORATED

                                            KRISPY KREME MOBILE STORE COMPANY

                                            KRISPY KREME CANADA, INC.

                                            HD CAPITAL CORPORATION

                                            HDN DEVELOPMENT CORPORATION

                                            KRISPY KREME COFFEE COMPANY, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            GOLDEN GATE DOUGHNUTS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            PANHANDLE DOUGHNUTS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            FREEDOM RINGS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            NORTH TEXAS DOUGHNUTS, L.P.

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            By: /s/ Michael C. Phalen
                                                -------------------------------
                                                  Name: Michael C. Phalen
                                                  Title: Authorized Officer

<PAGE>

                                            LENDERS

                                            CREDIT SUISSE FIRST BOSTON,
                                            CAYMAN ISLANDS BRANCH,
                                            as Administrative Agent,
                                            Lender and Issuing Lender

                                            By: /s/ Paul L.Colon
                                                -------------------------------
                                            Name: Paul L. Colon
                                            Title: Director

                                            By: /s/ David Dodd
                                                -------------------------------
                                            Name: David Dodd
                                            Title: Vice President

<PAGE>

                                            WELLS FARGO FOOTHILL, INC.,
                                            as Collateral Agent, Lender,
                                            Issuing Lender and Swingline Lender

                                            By: /s/ Katy Brooks
                                                -------------------------------
                                            Name: Katy Brooks
                                            Title: Vice President

<PAGE>

                                            Field Point I, LTD.

                                            By: /s/ Jeffrey A. Gelfand
                                                -------------------------------
                                            Name: Jeffrey A. Gelfand
                                            Title: Authorized Signatory

<PAGE>

                                            SPCP Group III LLC

                                            By: /s/ Jeffrey A. Gelfand
                                                -------------------------------
                                            Name: Jeffrey A. Gelfand
                                            Title: Authorized Signatory

<PAGE>

                                            SPCP Group LLC

                                            By: /s/ Jeffrey A. Gelfand
                                                -------------------------------
                                            Name: Jeffrey A. Gelfand
                                            Title: Authorized Signatory

`Exhibit 10.2

                                                                  EXECUTION COPY

                                   SECOND LIEN
                                CREDIT AGREEMENT

                                   dated as of

                                  April 1, 2005

                                      among

                        KRISPY KREME DOUGHNUT CORPORATION

                          KRISPY KREME DOUGHNUTS, INC.

                     The SUBSIDIARY GUARANTORS Party Hereto

                            The LENDERS Party Hereto

                                       and

                           CREDIT SUISSE FIRST BOSTON
    as Administrative Agent, Paying Agent, Fronting Bank and Collateral Agent

                                   Arranged by
                           CREDIT SUISSE FIRST BOSTON
          as Sole Bookrunner, Sole Lead Arranger and Syndication Agent

                                       and

                            SILVER POINT FINANCE, LLC
                     as Co-Arranger and Documentation Agent

                                 ______________

                                  $150,000,000
                                 ______________

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

                           ARTICLE I

                          DEFINITIONS

SECTION 1.01.         Defined Terms..........................................1
SECTION 1.02.         Terms Generally.......................................26
SECTION 1.03.         Accounting Terms; GAAP; Historical Financial
                        Calculations........................................27
SECTION 1.04.         Classification of Loans and Borrowings................27

                          ARTICLE II

                          THE CREDITS

SECTION 2.01.         Tranche A Credit-Linked Deposit Accounts..............28
SECTION 2.02.         The Commitments.......................................32
SECTION 2.03.         Loans and Borrowings..................................32
SECTION 2.04.         Requests for Borrowings...............................33
SECTION 2.05.         Letters of Credit.....................................34
SECTION 2.06.         Funding of Borrowings.................................38
SECTION 2.07.         Interest Elections....................................39
SECTION 2.08.         Termination and Reduction of the Committed Amounts....40
SECTION 2.09.         Repayment of Loans; Evidence of Debt..................41
SECTION 2.10.         Prepayment of Loans...................................43
SECTION 2.11.         Fees..................................................46
SECTION 2.12.         Interest..............................................47
SECTION 2.13.         Alternate Rate of Interest............................49
SECTION 2.14.         Increased Costs.......................................49
SECTION 2.15.         Break Funding Payments................................50
SECTION 2.16.         Taxes.................................................51
SECTION 2.17.         Payments Generally; Pro Rata Treatment; Sharing of
                        Set-offs............................................53
SECTION 2.18.         Mitigation Obligations; Replacement of Lenders........55

                          ARTICLE III

                           GUARANTEE

SECTION 3.01.         The Guarantee.........................................57
SECTION 3.02.         Obligations Unconditional.............................57
SECTION 3.03.         Reinstatement.........................................58
SECTION 3.04.         Subrogation...........................................58
SECTION 3.05.         Remedies..............................................58
SECTION 3.06.         Instrument for the Payment of Money...................59

<PAGE>

SECTION 3.07.         Continuing Guarantee..................................59
SECTION 3.08.         Rights of Contribution................................59
SECTION 3.09.         General Limitation on Guarantee Obligations...........60
SECTION 3.10.         No Reliance...........................................60
SECTION 3.11.         Release of Subsidiary Guarantors......................60

                          ARTICLE IV

                REPRESENTATIONS AND WARRANTIES

SECTION 4.01.         Organization; Powers..................................61
SECTION 4.02.         Authorization; Enforceability.........................61
SECTION 4.03.         Governmental Approvals; No Conflicts..................61
SECTION 4.04.         Financial Condition; No Material Adverse Change.......61
SECTION 4.05.         Properties............................................62
SECTION 4.06.         Litigation............................................62
SECTION 4.07.         Environmental Matters.................................62
SECTION 4.08.         Compliance with Laws and Agreements...................63
SECTION 4.09.         Investment and Holding Company Status.................63
SECTION 4.10.         Taxes.................................................63
SECTION 4.11.         ERISA.................................................64
SECTION 4.12.         Disclosure............................................64
SECTION 4.13.         Use of Credit.........................................64
SECTION 4.14.         Material Agreements and Liens.........................64
SECTION 4.15.         Montana Mills.........................................65
SECTION 4.16.         Subsidiaries and Investments..........................65
SECTION 4.17.         Real Property.........................................65
SECTION 4.18.         Solvency..............................................66
SECTION 4.19.         Labor Matters.........................................67

                           ARTICLE V

                          CONDITIONS

SECTION 5.01.         Effective Date........................................67
SECTION 5.02.         Each Credit Event.....................................70

                          ARTICLE VI

                     AFFIRMATIVE COVENANTS

SECTION 6.01.         Financial Statements and Other Information............71
SECTION 6.02.         Notices of Material Events............................74
SECTION 6.03.         Existence; Conduct of Business........................75
SECTION 6.04.         Payment of Obligations................................75
SECTION 6.05.         Maintenance of Properties; Insurance..................75
SECTION 6.06.         Books and Records; Inspection Rights..................76

<PAGE>

SECTION 6.07.         Compliance with Laws..................................76
SECTION 6.08.         Use of Proceeds and Letters of Credit.................77
SECTION 6.09.         Hedging Agreements....................................78
SECTION 6.10.         Certain Obligations Respecting Subsidiaries;
                        Further Assurances..................................78
SECTION 6.11.         Ownership of the Borrower.............................80
SECTION 6.12.         Collection of Accounts and Payments; Creation of
                        Depositary Account..................................80
SECTION 6.13.         Ratings...............................................80
SECTION 6.14.         Separateness..........................................80
SECTION 6.15.         Pledge of Equity Interests in Consolidated Joint
                        Ventures............................................80
SECTION 6.16.         Post Closing Appraisals...............................80
SECTION 6.17.         Post Closing Mortgages................................81
SECTION 6.18.         Post Closing Environmental Surveys....................82
SECTION 6.19.         Issuance of Subsidiary Stock Certificate..............82

                          ARTICLE VII

                      NEGATIVE COVENANTS

SECTION 7.01.         Indebtedness..........................................83
SECTION 7.02.         Liens.................................................84
SECTION 7.03.         Fundamental Changes...................................85
SECTION 7.04.         Lines of Business.....................................86
SECTION 7.05.         Investments...........................................87
SECTION 7.06.         Restricted Payments...................................88
SECTION 7.07.         Transactions with Affiliates..........................89
SECTION 7.08.         Restrictive Agreements................................89
SECTION 7.09.         Certain Financial Covenants...........................90
SECTION 7.10.         Sale-Leasebacks; Synthetic Leases.....................91
SECTION 7.11.         Parent Guarantor as Holding Company...................92
SECTION 7.12.         Limitations on Voluntary Prepayments of Certain\
                        Other Indebtedness..................................92
SECTION 7.13.         Modifications of Certain Documents....................92
SECTION 7.14.         Change in Fiscal Year; Accounting Policies; Capital
                        Stock...............................................93
SECTION 7.15.         No New Bank Accounts Without Prior Written Notice.....93

                         ARTICLE VIII

                       EVENTS OF DEFAULT

                          ARTICLE IX

              AGENTS, LENDER PARTIES AND ARRANGER

                           ARTICLE X

                         MISCELLANEOUS

<PAGE>

SECTION 10.01.        Notices................................................98
SECTION 10.02.        Waivers; Amendments...................................100
SECTION 10.03.        Expenses; Indemnity; Damage Waiver....................101
SECTION 10.04.        Successors and Assigns................................103
SECTION 10.05.        Survival..............................................106
SECTION 10.06.        Counterparts; Integration; Effectiveness..............106
SECTION 10.07.        Severability..........................................107
SECTION 10.08.        Right of Setoff.......................................107
SECTION 10.09.        Governing Law; Jurisdiction; Etc......................107
SECTION 10.10.        WAIVER OF JURY TRIAL..................................108
SECTION 10.11.        Headings..............................................108
SECTION 10.12.        Treatment of Certain Information; Confidentiality.....108
SECTION 10.13.        USA PATRIOT Act.......................................109

SCHEDULE I      -     Commitments
SCHEDULE II     -     Material Agreements and Liens
SCHEDULE III    -     Restrictive Agreements
SCHEDULE IV     -     Litigation
SCHEDULE V      -     Environmental Matters
SCHEDULE VI     -     Subsidiaries and Investments
SCHEDULE VII    -     Real Property
SCHEDULE VIII   -     Labor Matters
SCHEDULE IX     -     Specified Contingent Obligations
SCHEDULE X      -     Transactions with Affiliates
SCHEDULE XI     -     Certain Real Property
SCHEDULE XII          Certain Analysis Value

EXHIBIT A       -     Form of Assignment and Acceptance
EXHIBIT B       -     Form of Security Agreement
EXHIBIT C       -     Form of Guarantee Assumption Agreement
EXHIBIT D       -     Form of Intercreditor Agreement
EXHIBIT E       -     Form of Concentration Account Control Agreement
EXHIBIT F       -     Form of Investment Account Control Agreement
EXHIBIT G       -     Form of Request for Loan
EXHIBIT H       -     Form of  Interest Election Request
EXHIBIT I       -     Form of  Subordination, Non-Disturbance and
                        Attornment Agreement
EXHIBIT J       -     Form of Promissory Note

<PAGE>

     SECOND LIEN CREDIT AGREEMENT dated as of April 1, 2005, among KRISPY KREME
DOUGHNUT CORPORATION, a North Carolina corporation (the "Borrower"), KRISPY
KREME DOUGHNUTS, INC., a North Carolina corporation (the "Parent Guarantor"),
the SUBSIDIARY GUARANTORS (as defined below), the LENDERS (as defined below),
CREDIT SUISSE FIRST BOSTON, as Administrative Agent, Paying Agent, Fronting
Bank, and Collateral Agent.

     Each of the Parent Guarantor and the Borrower has requested that the
Lenders extend credit to the Borrower, under the guarantee of the Guarantors (as
defined below), in an aggregate principal or face amount not exceeding
$150,000,000, to finance the operations of the Borrower and the Guarantors and
for other purposes. The Lenders are prepared to extend such credit upon the
terms and conditions hereof, and, accordingly, 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, means that such
Loan, or the Loans constituting such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

     "Acceptable Appraisal" means with respect to any land, buildings,
improvements, fixtures and other equipment, an appraisal of the value thereof
(as determined on any reasonable basis) performed by an MAI-designated member of
the Appraisal Institute according to MAI standards.

     "Adjusted LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, an interest rate per annum equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest
Period.

     "Administrative Agent" means CSFB, in its capacity as administrative agent
for the Lenders hereunder.

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

     "Affiliated Parties" means the Parent Guarantor and its Subsidiaries.

     "Agents" means the Administrative Agent, the Paying Agent and the
Collateral Agent.

<PAGE>
                                      -2-

     "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate for such day plus 1/2 of 1%; provided that the Alternate Base
Rate shall be deemed to mean the Federal Funds Effective Rate in connection with
any Tranche A Loan or Tranche B Borrowing. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, as the case may be.

     "Applicable Adjustment" means, on any date, (i) if one Mortgaged Property
Requirement is outstanding on such date, 0.75% and (ii) if two or more Mortgaged
Property Requirements are outstanding on such date, 1.00%.

     "Applicable Margin" means: (a) with respect to each Tranche A Loan, zero,
(b) with respect to any Tranche B ABR Loan, 4.875% per annum or (c) with respect
to any Tranche B Eurodollar Loan, 5.875% per annum; provided that: (i) the
Applicable Margin with respect to any principal of any Tranche A Loan of any
Class not paid when due resulting in a withdrawal from the Tranche A
Credit-Linked Deposit Account shall be equal to the Applicable Margin for
Tranche B Loans of the same Class and (ii) for each date falling on or after May
2, 2005, the Applicable Margin for each Tranche B Loan shall be increased by the
Applicable Adjustment, if any, on such date.

     "Applicable Percentage" means (a) with respect to any Tranche A Lender for
purposes of Section 2.01, 2.02(a), 2.05, 2.09, 2.12, or 2.15 or the calculation
of the Tranche A LC Exposure or the Tranche A Exposure, or in respect of any
indemnity claim under Section 10.03(c) arising out of an action or omission of
the Fronting Bank under this Agreement, the percentage of the total Tranche A
Funding Amounts represented by such Tranche A Lender's Tranche A Funding Amount,
and (b) with respect to any Lender in respect of any indemnity claim under
Section 10.03(c) arising out of an action or omission of the Paying Agent under
this Agreement, the percentage of the total of the Tranche A Funding Amounts and
the Tranche B Commitments (or, if the Tranche B Loans have been made, the
aggregate principal amount of the Tranche B Loans) represented by the respective
aggregate amounts thereof held by such Lender. If the Tranche A Funding Amounts
have been reduced to zero, the Applicable Percentages shall be determined based
upon the Tranche A Funding Amounts most recently in effect, giving effect to any
assignments. If the Tranche B Loans have been paid in full and the Tranche B
Commitments have terminated, the Applicable Percentages shall be determined
based upon the principal amounts of the Tranche B Loans outstanding immediately
before their payment in full, giving effect to any assignments.

     "Approved Fund" means, with respect to any Lender that is a fund that
invests in commercial loans in the ordinary course, any other fund that invests
in commercial loans in the ordinary course and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

     "Arranger" means CSFB.

     "Asset Prepayment Event" means a Disposition or a Casualty Event.

<PAGE>
                                      -3-

     "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 10.04), and accepted by the Paying Agent, in the form of
Exhibit A or any other form approved by the Paying Agent.

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

     "Borrower" has the meaning assigned to such term in the recital of parties
hereto.

     "Borrowing" means (a) all ABR Loans of the same Class made, converted or
continued on the same date or (b) all Eurodollar Loans of the same Class that
have the same Interest Period.

     "Business Day" means any day (a) 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 and (b) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurodollar Borrowing, or to a notice by the
Borrower with respect to any such borrowing, payment, prepayment, continuation,
conversion, or Interest Period, that is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.

     "Capital Expenditures" means, for any period, expenditures (including the
aggregate amount of Capital Lease Obligations incurred during such period) made
by any member of the Financial Test Group to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements, but
excluding repairs) during such period computed in accordance with GAAP.

     "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

     "Casualty Event" means, with respect to any property of any Person, any
loss of or damage to, or any condemnation or other taking of, such property for
which such Person or any of its Included Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.

     "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 USC ss. 9601 et seq.), as amended from time to time,
and any regulations promulgated with respect thereto and any state or local
counterparts thereto.

     "Change in Control" means (a) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of the voting stock of the
Parent Guarantor; or (b) as of any date a

<PAGE>
                                      -4-

majority of the Board of Directors of the Parent Guarantor consists of
individuals who were not either (i) directors of the Parent Guarantor as of the
corresponding date of the previous year, (ii) selected or nominated to become
directors by the Board of Directors of the Parent Guarantor of which a majority
consisted of individuals described in clause (i), or (iii) selected or nominated
to become directors by the Board of Directors of the Parent Guarantor of which a
majority consisted of individuals described in clause (i) and individuals
described in clause (ii).

     "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 the Fronting Bank
(or, for purposes of Section 2.14(b), by any lending office of such Lender or by
such Lender's or the Fronting 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.

     "Class", when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans constituting such Borrowing, are Tranche A Loans or Tranche B
Loans and, when used in reference to any Committed Amount, means that such
Committed Amount is a Tranche A Funding Amount or Tranche B Loan Commitment.

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

     "Collateral" has the meaning assigned to such term in the Intercreditor
Agreement.

     "Collateral Account" has the meaning assigned to such term in Section 4.01
of the Security Agreement.

     "Collateral Agent" means CSFB, in its capacity as collateral agent for the
Administrative Agent, the Paying Agent, the Fronting Bank and the Lenders under
the Security Documents.

     "Committed Amount" means a Tranche A Funding Amount, a Tranche B Loan
Commitment or any combination thereof (as the context requires).

     "Concentration Account Bank" means each bank at which a Concentration
Account or a Depositary Account is maintained.

     "Concentration Account Control Agreement" means a Control Agreement
substantially in the form of Exhibit E among the Borrower, the Shared Lien
Collateral Agent, and a Concentration Account Bank or such other form as may be
reasonably acceptable to the Shared Lien Collateral Agent.

     "Concentration Accounts" means (a) account number 2000014820290 maintained
at Wachovia Bank, National Association, (b) account number 5118565578 and
account number 5199249934 maintained at Branch Banking & Trust and (c) any other
account that the Paying Agent agrees, at the request of the Borrower, to
designate as a "Concentration Account"; provided that any such account shall be
deemed to be a "Concentration Account" only if it is

<PAGE>
                                      -5-

held in the name of the Borrower and, pursuant to a Concentration Account
Control Agreement, controlled by the Shared Lien Collateral Agent. Any such
account shall cease to be a "Concentration Account" if the Borrower and the
Paying Agent shall so agree.

     "Consolidated EBITDA" means the sum of the following, calculated on a
consolidated basis in accordance with GAAP for the Financial Test Group, for the
relevant fiscal period: Consolidated Net Income plus, (i) to the extent deducted
in determining Consolidated Net Income, (a) Depreciation and Amortization, (b)
Consolidated Interest Expense less Consolidated Interest Income, (c) income tax
expense, (d) extraordinary (it being understood that for the purposes of this
clause (d), "extraordinary" shall not mean extraordinary as determined in
accordance with GAAP) professional fees and expenses (including legal fees and
Kroll fees (including any success fee, the cash portion of which was permitted
by Section 7.07(g))), (e) store closure costs, and (f) costs, fees and expenses
incurred in connection with the shareholder litigations, SEC investigation and
the other Disclosed Matters (including settlement and judgment costs), (g) the
aggregate amount of all other non-cash charges reducing Consolidated Net Income
(excluding any non-cash charge that results in an accrual of a reserve for cash
charges in any future period) for such period and (h) fees and expenses incurred
in connection with the Transactions (including (x) in connection with the
delivery of the Mortgages and environmental reports following the Effective Date
and the termination of the Hedging Agreement with Wachovia Bank, National
Association and (y) the fees and expenses of Wachovia Bank National Association
and the fees of the lenders party to the Existing Credit Agreement in connection
with the waivers and consents obtained from such parties) less (ii) the
aggregate amount of all non-cash items increasing Consolidated Net Income (other
than the accrual of revenue or recording of receivables in the ordinary course
of business) for such period.

     "Consolidated Interest Coverage Ratio" means, for any Test Period, the
ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated
Interest Expense less Consolidated Interest Income for such Test Period.

     "Consolidated Interest Expense" means, for any period, interest, whether
expensed or capitalized, in respect of Indebtedness of any member of the
Financial Test Group outstanding during such period; provided that Consolidated
Interest Expense shall (i) exclude the write-off of deferred financing charges
as a result of the Transactions and the amortization of deferred financing
charges arising from the Transactions and (ii) be calculated after giving effect
to Hedging Agreements (including associated costs), but excluding unrealized
gains and losses with respect to Hedging Agreements.

     "Consolidated Interest Income" means, for any period, interest income of
any member of the Financial Test Group during such period.

     "Consolidated Joint Venture" means any Consolidated Subsidiary that is (a)
not a Wholly Owned Subsidiary and (b) engaged in Krispy Kreme franchisee or
doughnut and bakery store operations. On the date hereof Freedom Rings, LLC; New
England Dough LLC; KremeKo Inc. and Glazed Investments, LLC constitute all of
the Consolidated Joint Ventures.

<PAGE>
                                      -6-

     "Consolidated Leverage Ratio" means, for any Test Period, the ratio of (a)
Consolidated Total Debt on the last day of such Test Period to (b) Consolidated
EBITDA for such Test Period.

     "Consolidated Net Income" means, for any period, the Net Income of the
Financial Test Group determined on a consolidated basis in accordance with GAAP,
but (without duplication), excluding, but only to the extent otherwise included
in the calculation of Net Income, (i) the income (or deficit) of any Person
accrued prior to the date it became a Subsidiary of the Parent Guarantor or is
merged into or consolidated with the Parent Guarantor or any of its
Subsidiaries, (ii) the income (or deficit) of any Person (other than members of
the Financial Test Group that are Obligors) in which the Parent Guarantor or any
of its Subsidiaries has an ownership interest, except to the extent that any
such income is actually received by a member of the Financial Test Group in the
form of cash dividends or cash distributions, (iii) the undistributed positive
earnings of any Subsidiary of the Parent Guarantor to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contract or agreement binding
on such Subsidiary (other than under any Loan Document), any constitutive
document of such Subsidiary or any law, regulation or other legal restriction
applicable to such Subsidiary, (iv) unrealized gains and losses with respect to
obligations under Hedging Agreements for such period and (v) gains and losses
from the early extinguishment of Indebtedness.

     "Consolidated Subsidiary" means a Subsidiary, the accounts of which are
customarily consolidated with those of the Parent Guarantor in accordance with
GAAP for the purpose of reporting to stockholders of the Parent Guarantor or, in
the case of a Subsidiary acquired after the Effective Date, the accounts of
which would, in accordance with GAAP, be so consolidated for that purpose.

     "Consolidated Total Debt" means at any date the aggregate principal amount
of all Indebtedness of the Financial Test Group (excluding obligations of the
Financial Test Group with respect to Hedging Agreements), determined on a
consolidated basis in accordance with GAAP as of such date.

     "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.
"Controlling" and "Controlled" have meanings correlative thereto.

     "Covered Property Value" means, on any date, the sum of the Median Desktop
Analysis Values for all Real Property listed in the Desktop Analysis where both
(a) such Real Property is covered by Mortgages that have been duly recorded and
in respect of each of which the Agents and the Lenders have received a legal
opinion satisfactory in form and substance to the Paying Agent in its reasonable
judgment (provided that a legal opinion substantially in the form of the legal
opinions addressing certain real estate matters delivered pursuant to Section
5.01(b) on the Effective Date, with such modifications as are necessary for the
relevant jurisdictions, shall be deemed to be satisfactory in form and substance
to the Paying Agent) and (b) the Shared Lien Collateral Agent has received title
insurance commitments for such Real Property and Mortgages, for 115% of the
Median Desktop Analysis Value of such Real Property,

<PAGE>
                                      -7-

satisfactory in form and substance to the Paying Agent in its reasonable
judgment, and the Borrower has caused the removal of any Liens on such Real
Property identified in such title insurance commitments to the extent that such
Liens are not permitted by Section 7.02, unless such Liens are otherwise
acceptable to the Paying Agent, in its sole discretion. In the event that any
such title insurance commitment contains a legal description of any Real
Property that is different from the legal description set forth in a recorded
Mortgage for such property, clause (a) of this definition shall not be deemed
satisfied with respect to such property unless and until a new Mortgage or
amendment to the applicable recorded Mortgage has been duly recorded reflecting
the legal description contained in such title insurance commitment.

     "Credited Institutions" means (a) CSFB in its capacities as sole
bookrunner, sole lead arranger and syndication agent for the financing
contemplated hereby and (b) Silver Point Finance, LLC in its capacities as
co-arranger and documentation agent for the financing contemplated hereby.

     "CSFB" means Credit Suisse First Boston, acting through one or more of its
branches, and any Affiliate thereof.

     "Debt Incurrence" means the incurrence by any member of the Financial Test
Group after the Effective Date of any Indebtedness, other than Indebtedness
incurred as permitted by any of paragraphs (a) through (l) of Section 7.01.

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

     "Depositary Account" has the meaning assigned to such term in Section
6.12(b).

     "Depositary Effective Date" has the meaning assigned to such term in
Section 6.12(b).

     "Depreciation and Amortization" means for any period the sum of all
depreciation and amortization expense of the Financial Test Group for such
period, as determined in accordance with GAAP.

     "Desktop Analysis" means that certain Desktop Analysis of Real Properties
performed by Keen Consultants, LLC dated March 18, 2005 and furnished to the
Lenders prior to the date hereof.

     "Disclosed Matters" means the actions, suits, investigations and
proceedings disclosed in Schedule IV and the environmental matters disclosed in
Schedule V.

     "Disposition" means any sale, assignment, transfer or other disposition of
any property (whether now owned or hereafter acquired) by any member of the
Financial Test Group to any other Person excluding any sale, assignment,
transfer or other disposition of any property permitted by Section 7.03 (other
than pursuant to clauses (d), (f) or (g) thereof).

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

<PAGE>
                                      -8-

     "Domestic Subsidiaries" means all Subsidiaries other than Foreign
Subsidiaries.

     "Effective Date" means the date on which the conditions specified in
Section 5.01 are satisfied (or waived in accordance with Section 10.02).

     "Environmental Claim" means any claim, action, suit or notice by or from
any Person as a result of or in connection with any violation of or liability
under any Environmental Law.

     "Environmental Laws" means all laws (including all common law), rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices
or binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to pollution, the environment, health and safety
(as relating to exposure to Hazardous Materials), and the preservation or
reclamation of natural resources, including without limitation any of the
foregoing relating to the management, use, disposal, arrangement for disposal,
Release or threatened Release of any Hazardous Materials.

     "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities, and including any Lien filed against any property
covered by the Mortgages thereunder in favor of any governmental entity),
resulting from or based upon (a) a violation of any Environmental Law, (b)
arising under any Environmental Law with respect to (i) the generation, use,
handling, transportation, storage, treatment, arrangement for disposal or
disposal of any Hazardous Materials, (ii) exposure to any Hazardous Materials,
or (iii) the Release or threatened Release of any Hazardous Materials or (c) any
contract, agreement or other consensual arrangement pursuant to which liability
under any Environmental Law is assumed or imposed with respect to any of the
foregoing.

     "Equity Issuance" means (a) any issuance or sale by the Parent Guarantor or
any of its Subsidiaries after the Effective Date of (i) any of its capital
stock, (ii) any warrants or options (other than convertible Indebtedness)
exercisable in respect of its capital stock (other than any warrants or options
issued to directors, officers or employees of the Parent Guarantor or any of its
Subsidiaries pursuant to employee benefit plans established in the ordinary
course of business and any capital stock of the Parent Guarantor or any of its
Subsidiaries issued upon the exercise of such warrants or options) or (iii) any
other security or instrument representing an equity interest (or the right to
obtain any equity interest) in the Parent Guarantor or any of is Subsidiaries or
(b) the receipt by the Parent Guarantor or any of its Subsidiaries after the
Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution). The term "Equity
Issuance" shall not include any such issuance or sale to the Parent Guarantor or
any of its Subsidiaries or the receipt of any capital contribution from the
Parent Guarantor or any of its Subsidiaries.

     "Equity Rights" means, with respect to any Person, any subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including any shareholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of
any type in, such Person.

<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 and/or the Parent Guarantor, 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 Parent Guarantor 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 Parent Guarantor or any its ERISA Affiliates 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 Parent Guarantor, the Borrower or any of their 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 Parent Guarantor,
the Borrower or any their ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Parent Guarantor, the Borrower or any their ERISA
Affiliates 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, means that
such Loan, or the Loans constituting 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 VIII.

     "Excluded Real Property" means real property interests of the Obligors in
the property identified in Schedule VII as Excluded Real Property.

     "Excluded Taxes" means, with respect to the Administrative Agent, the
Paying Agent, the Collateral Agent, the Fronting Bank, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower (or for purposes of Section 2.16(b), any payment by the Paying Agent
with respect to interest on the Tranche A Credit-Linked Deposits) hereunder, (a)
taxes measured by net income, net profits or overall gross receipts, capital or
net worth (including, without limitation, branch profits or similar taxes) by
the United States of America, or by any jurisdiction, that are imposed as a
result of the Administrative Agent, the Collateral Agent, the Fronting Bank or
any Lender (as the case may be) being or having been organized or resident in,
having or having had an office in, or doing or having done business in such
jurisdiction (other than a business that is or was deemed to arise solely by
reason of both (I) the Transactions and (II) the Borrower being organized or
resident, maintaining an office or conducting business in such jurisdiction),
(b) (i) in the case of a Foreign

<PAGE>
                                      -10-

Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.18(b)), any withholding tax and (ii) for purposes of Section 2.16(b),
any Indemnified Tax or Other Tax with respect to any Lender that, in each case,
is imposed pursuant to a law in effect at the time such Lender becomes a party
to this Agreement except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such tax pursuant to Section 2.16(a) or 2.16(b) (as the
case may be) or is attributable to such Lender's failure or inability (other
than as a result of a Change in Law after such Lender becomes a party to this
Agreement) to comply with Section 2.16(e) and (c) for purposes of Section
2.16(b), any Indemnified Taxes or Other Taxes that are attributable to any
underlying obligation or security in which the Tranche A Credit-Linked Deposits
are invested by the Paying Agent unless such Indemnified Taxes or Other Taxes
result from a Change in Law occurring after the date on which such underlying
obligation or security is acquired.

     "Existing Credit Agreement" means the Credit Agreement dated as of October
31, 2003, as amended, among the Borrower, the lenders party thereto, Wachovia
Bank, National Association, as administrative agent, and the syndication agent
and the co-documentation agents referred to therein.

     "Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published 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 Paying Agent from three federal
funds brokers of recognized standing selected by it.

     "Financial Officer" means, with respect to any Obligor, the chief financial
officer, principal accounting officer, treasurer or controller of such Obligor.

     "Financial Test Group" means the Parent Guarantor and the Consolidated
Subsidiaries, but excluding the Consolidated Joint Ventures. In determining the
Financial Test Group for any date or period of time, only entities that are
members of the Financial Test Group as of such date or during such period of
time, as the case may be, shall be included.

     "First Lien Credit Agreement" means the First Lien Credit Agreement dated
as of the date hereof between the Obligors, the First Lien Lenders, CSFB, as
administrative agent for the First Lien Lenders and as issuing lender, and WFF
as collateral agent for the First Lien Lenders and as swingline lender,
including any replacement thereof entered into in connection with one or more
refinancings thereof permitted by the Intercreditor Agreement.

     "First Lien Lenders" means the Persons referred as "Lenders" in the First
Lien Credit Agreement.

     "First Lien Loan Documents" means the "Loan Documents" referred to in the
First Lien Credit Agreement.

     "Fiscal Quarter" means a fiscal quarter of the Parent Guarantor.

<PAGE>
                                      -11-

     "Fiscal Year" means a fiscal year of the Parent Guarantor.

     "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 outside the United States of America.

     "Fronting Bank" means CSFB, in its capacities as the lender of Tranche A
Loans and the issuer of Letters of Credit hereunder, and its successors in such
capacities.

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

     "Governmental Authority" means the government of the United States of
America, or of 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.

     "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 or other obligation 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 other obligation 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 or other obligation 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 other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

     "Guarantee Assumption Agreement" means a Guarantee Assumption Agreement
substantially in the form of Exhibit C by an entity that, pursuant to Section
6.10(a) is required to become a "Subsidiary Guarantor" hereunder in favor of the
Administrative Agent.

     "Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.

     "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to or with
respect to which liability is imposed under any Environmental Law.

<PAGE>
                                      -12-

     "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. The
amount of any Indebtedness arising from obligations of any Person under any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that such Person would be required to pay if
such Hedging Agreement were terminated at such time.

     "Immaterial Subsidiary" means (x) any Subsidiary of Borrower that owns
assets constituting no more than 2.5% of the book value of the assets of the
Parent Guarantor and its Consolidated Subsidiaries, taken as a whole; provided
that any Subsidiary that, when such Subsidiary's assets are aggregated with
those of all other Immaterial Subsidiaries as to which (i) any event described
in clause (h), (i), (j), (k), (l) or (m) of Article VIII has occurred and is
continuing or (ii) their Guarantees are being or have been released in
accordance with Section 10.02(b)(viii), would collectively own aggregate assets
constituting more than 5.0% of the book value of the assets of the Parent
Guarantor and its Consolidated Subsidiaries, taken as a whole, shall not be
considered an Immaterial Subsidiary and (y) any Prohibited Subsidiary.

     "Inactive Company" means any Person that conducts no business activity
(other than any unwinding or liquidation activities), has no income and has
assets with a value that does not exceed $1,000 (or, in the case of Montana
Mills and its Subsidiaries, cash in an aggregate amount not exceeding $100,000
to the extent that such cash is to be used for costs and expenses relating to
Montana Mills or its Subsidiaries' unwinding).

     "Included Subsidiaries" means all Consolidated Subsidiaries, except that no
Consolidated Joint Venture other than Freedom Rings, LLC shall be an Included
Subsidiary.

     "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits 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
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) 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), (f) 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, (g) all Guarantees by such Person of
Indebtedness of others, giving effect to any limitations upon such Person's
liability for such Indebtedness of others as may be set forth in such Guarantee,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, (k) all Redeemable
Preferred Stock of such Person (in the event that such Person is a corporation),
(l) all obligations of such Person with respect to Hedging Agreements, (m) all
obligations which are payable prior to the Tranche A Maturity Date and the
Tranche B Maturity Date in respect of unsecured structured settlements of
Disclosed Matters or other actions, suits, proceedings or governmental
enforcement actions arising in connection with the historical financial
statements of Parent Guarantor and its Consolidated Subsidiaries under review
(as the

<PAGE>
                                      -13-

date hereof) by the Special Committee of the Board of Directors of the Parent
Guarantor, and (n) all obligations of such Person to purchase securities or
other property prior to the Tranche A Maturity Date and the Tranche B Maturity
Date, arising out of or in connection with the sale of the same or substantially
similar securities or property. 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. The Tranche A Credit-Linked Deposits shall in no event
constitute Indebtedness of the Borrower.

     "Indemnified Taxes" means Taxes imposed on or incurred by any Agent, the
Fronting Bank or any Lender with respect to (i) any payment made by or on
account of any obligation of the Borrower under any Loan Document and (ii)
solely for purposes of Section 2.16(b), any payment of interest by the Paying
Agent with respect to the Tranche A Credit-Linked Deposits, other than, in each
case, Excluded Taxes.

     "Intellectual Property" has the meaning given to such term in the Security
Agreement.

     "Intercreditor Agreement" means a Collateral Agency and Intercreditor
Agreement substantially in the form of Exhibit D among the Obligors, the
Collateral Agent, the Paying Agent, WFF, as collateral agent under the First
Lien Loan Documents, and CSFB, as administrative agent under the First Lien Loan
Documents.

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

     "Interest Payment Date" means (a) with respect to any ABR Loan, each
Quarterly Date and (b) with respect to any Eurodollar Loan, the last day of each
Interest Period therefor and, in the case of any Interest Period of more than
three months' duration, each day prior to the last day of such Interest Period
that occurs at three-month intervals after the first day of such Interest
Period.

     "Interest Period" means: (a) with respect to any Eurodollar Loan or
Borrowing, the period commencing on the date of such Loan or Borrowing and
ending on the numerically corresponding day in the calendar month that is one,
two, three or six months thereafter, as specified in the applicable Request for
Loan or Interest Election Request and (b) with respect to the Tranche A Credit
Linked Deposits, initially, the period commencing on the Effective Date and
ending on the last Business Day of April 2005, and thereafter, each period
commencing on the last day of the preceding Interest Period applicable thereto
and ending on the last Business Day in the third calendar month thereafter;
provided, that (i) a single Interest Period shall at all times apply to all the
Tranche A Credit-Linked Deposits, (ii) 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
immediately preceding Business Day, and (iii) any Interest Period that commences
on the last Business Day of a calendar month (or on a

<PAGE>
                                      -14-

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 Loan
initially shall be the date on which such Loan is made and thereafter shall be
the effective date of the most recent conversion or continuation of such Loan,
and the date of a Borrowing comprising Loans that have been converted or
continued shall be the effective date of the most recent conversion or
continuation of such Loans.

     "Investment" means any investment in any Person, whether by means of: (a)
the acquisition (whether for cash, property, services or securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of any other Person or any agreement to
make any such acquisition (including any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days arising
in connection with the sale of inventory or supplies by such Person in the
ordinary course of business; (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person; provided that the making of any payment in
accordance with the terms of any Guarantee or other contingent obligation
permitted under this Agreement shall not be considered an Investment; (d) the
entering into of any Hedging Agreement; (e) any purchase or other acquisition of
Indebtedness or the assets of such Person or (f) any capital contribution to
such Person; (g) any other direct or indirect investment in such Person,
including any acquisition by way of a merger or consolidation, and any
arrangement pursuant to which the investor incurs Indebtedness of the type
referred to in clause (g) of the definition of "Indebtedness" in respect of such
Person. The amount of any Investment shall be the amount actually invested, less
any return of capital, without adjustment for subsequent increases or decreases
in the market value of such Investment.

     "Investment Account" means any account that the Paying Agent agrees, at the
request of the Borrower, to designate as an "Investment Account"; provided that
any such account shall be deemed to be an "Investment Account" only if it is
held in the name of the Borrower and, pursuant to the Investment Account Control
Agreement, controlled by the Shared Lien Collateral Agent. Any such account
shall cease to be an "Investment Account" if the Borrower and the Paying Agent
shall so agree.

     "Investment Account Control Agreement" means a Control Agreement
substantially in the form of Exhibit F among the Borrower, the Shared Lien
Collateral Agent, and an Investment Account Intermediary or such other form as
may be reasonably acceptable to the Shared Lien Collateral Agent.

     "Investment Account Intermediary" means a securities intermediary at which
an Investment Account is maintained.

     "Joint Venture" means (i) any entity in which the Parent Guarantor, the
Borrower or any of their Subsidiaries has made any Investment that would be, in
conformity with GAAP, set forth opposite the caption "Investment in
unconsolidated joint ventures" (or any like caption)

<PAGE>
                                      -15-

on a consolidated balance sheet of the Financial Test Group and (ii) any
Consolidated Joint Venture.

     "Kroll" means Kroll Zolfo Cooper LLC.

     "LC Disbursement" means a payment made by the Fronting Bank pursuant to a
Letter of Credit.

     "Lender Parties" means the Lenders and the Fronting Bank.

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

     "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

     "Letter of Credit Documents" means, with respect to any Letter of Credit,
collectively, any application therefor and any other agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk with respect to such Letter of
Credit or (b) any collateral security for any of such obligations, each as the
same may be modified and supplemented and in effect from time to time.

     "LIBO Rate" means, with respect to any LIBOR Borrowing for any Interest
Period, the rate per annum determined by the Paying Agent at approximately 11:00
a.m. (London time) on the date that is two Business Days prior to the beginning
of the relevant Interest Period by reference to the British Bankers' Association
Interest Settlement Rates for deposits in Dollars (as set forth by the Bloomberg
Information Service or any successor thereto or any other service selected by
the Paying Agent which has been nominated by the British Bankers' Association as
an authorized information vendor for the purpose of displaying such rates) for a
period equal to such Interest Period; provided that, to the extent that an
interest rate is not ascertainable pursuant to the foregoing provisions of this
definition, the "LIBO Rate" shall be the interest rate per annum determined by
the Paying Agent to be the average of the rates per annum at which deposits in
Dollars are offered for such relevant Interest Period to major banks in the
London interbank market in London, England by the Paying Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
beginning 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, collectively, this Agreement, the Letter of Credit
Documents, the Intercreditor Agreement and the Security Documents and each other
agreement or written undertaking delivered to the Administrative Agent, the
Paying Agent, the Collateral

<PAGE>
                                      -16-

Agent, the Fronting Bank or any other Lender, acting in such capacities, in
furtherance or pursuant to any of the foregoing.

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

     "Majority-Owned Joint Venture" means each Joint Venture in which the Parent
Guarantor and/or one of its Included Subsidiaries owns not less than 50% of the
capital stock, including Freedom Rings, LLC; New England Dough LLC; and Glazed
Investments, LLC.

     "Margin Stock" means "margin stock" within the meaning of Regulations T, U
and X of the Board.

     "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Financial Test Group taken as a whole, (b) the ability of any Obligor to
perform any of its obligations under this Agreement or any of the other Loan
Documents to which it is a party or (c) the rights of or benefits available to
the Lenders under this Agreement or any of the other Loan Documents.

     "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of the Borrower, the Parent Guarantor or any Subsidiary
Guarantor in an aggregate principal amount exceeding $1,000,000.

     "Median Desktop Analysis Value" means, for any Real Property listed in the
Desktop Analysis, the average of the high and low appraised values for such Real
Property set forth in such Desktop Analysis.

     "Modified Financial Statements" means, with respect to any period, the
consolidated balance sheet and related statements of operations, stockholders'
equity (if applicable) and cash flows of the Financial Test Group as of the end
of and for such period, in each case in substantially similar form, scope and
detail as the Projections.

     "Montana Mills" means Montana Mills Bread Co., Inc., a Delaware
corporation.

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

     "Mortgage" means an instrument of Mortgage or Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing or other similar instrument,
satisfactory in form and substance to the Collateral Agent and the Paying Agent,
executed by an Obligor in favor of the Shared Lien Collateral Agent for the
benefit of the Claimholders (as defined in the Intercreditor Agreement),
granting a mortgage over the respective properties identified therein to secure
the obligations of such Obligor under the Loan Documents and the First Lien Loan
Documents to which it is a party.

     "Mortgaged Property Requirements" means, for any date: (i) if such date
falls at any time on or after May 2, 2005, the Mortgaged Property Value shall be
at least 70% of the Total Desktop Analysis Value, (ii) if such date falls at any
time on or after May 31, 2005, the Mortgaged Property Value shall be at least
90% of the Total Desktop Analysis Value, (iii) if

<PAGE>
                                      -17-

such date falls at any time on or after May 31, 2005, the Covered Property Value
shall be at least 70% of the Total Desktop Analysis Value and (iv) if such date
falls at any time on or after June 30, 2005, the Covered Property Value shall be
at least 90% of the Total Desktop Analysis Value. A Mortgaged Property
Requirement shall be deemed to be outstanding on any date if such Mortgaged
Property Requirement has not been satisfied on such date. Once a Mortgaged
Property Requirement has been satisfied, it shall no longer be required or
tested hereunder except as set forth in the definitions of Mortgaged Property
Value or Covered Property Value.

     "Mortgaged Property Value" means, on any date, the sum of the Median
Desktop Appraisals for all real property listed in the Desktop Appraisal where
such real property is covered by Mortgages that have been duly recorded and in
respect of each of which the Collateral Agent has received a legal opinion
satisfactory to it in form and substance in its reasonable judgment (provided
that a legal opinion substantially in the form of the legal opinions addressing
certain real estate matters delivered pursuant to Section 5.01(b) on the
Effective Date, with such modifications as are necessary for the relevant
jurisdictions, shall be deemed to be satisfactory in form and substance to the
Collateral Agent) . In the event that any title insurance commitment obtained
for any such real property after the Mortgage covering such property has been
recorded contains a legal description of such real property that is different
from the legal description set forth in a recorded Mortgage for such property,
such real property shall cease to be included in the calculation of Mortgaged
Property Value unless and until a new Mortgage or amendment to the applicable
recorded Mortgage has been duly recorded reflecting the legal description
contained in such title insurance commitment.

     "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

     "Net Available Proceeds" means:

          (a) in the case of any Disposition, the aggregate amount of all cash
     payments received by the Parent Guarantor and/or any of its Included
     Subsidiaries directly or indirectly in connection with such Disposition;
     provided that (i) Net Available Proceeds shall be net of (x) the amount of
     any legal, title and recording tax expenses, commissions and other fees and
     expenses paid by the Parent Guarantor and/or any of its Included
     Subsidiaries in connection with such Disposition, (y) any federal, state,
     foreign and local income or other taxes estimated to be payable by the
     Parent Guarantor and/or any of its Included Subsidiaries as a result of
     such Disposition, and (z) reserves set aside on its books with respect
     thereto in accordance with GAAP and (ii) Net Available Proceeds shall be
     net of any repayments by the Parent Guarantor and/or any of its Included
     Subsidiaries of Indebtedness (including interest and any premiums or
     penalties), other than any Indebtedness under the First Lien Credit
     Agreement (to which such netting shall not apply), to the extent that such
     Indebtedness is secured by a Lien on the property that is the subject of
     such Disposition;

          (b) in the case of any Casualty Event, the aggregate amount of
     proceeds of insurance, condemnation awards and other compensation received
     by the Parent Guarantor and/or any of its Included Subsidiaries in respect
     of such Casualty Event net of (i) reasonable expenses incurred by the
     Parent Guarantor and/or any of its Included

<PAGE>
                                      -18-

     Subsidiaries in connection therewith, (ii) contractually required
     repayments of Indebtedness (including interest and any premiums or
     penalties), other than any Indebtedness under the First Lien Credit
     Agreement (to which such netting shall not apply), to the extent secured by
     a Lien on such property and any income and transfer taxes payable by the
     Parent Guarantor and/or any of its Included Subsidiaries in respect of such
     Casualty Event and (iii) reserves set aside on its books with respect
     thereto in accordance with GAAP;

          (c) in the case of any Equity Issuance, the aggregate amount of all
     cash received by any member of the Financial Test Group (either directly or
     through a distribution by any Consolidated Joint Venture) in respect of
     such Equity Issuance net of customary fees, commissions and other expenses
     including reserves set aside on its books with respect thereto in
     accordance with GAAP incurred by the Parent Guarantor and/or any of its
     Subsidiaries in connection therewith (it being understood that proceeds of
     Equity Issuances by Consolidated Joint Ventures shall not constitute Net
     Available Proceeds except to the extent any such proceeds are distributed
     to and actually received by the Parent Guarantor or any of its Subsidiaries
     (other than Consolidated Joint Ventures)); and

          (d) in the case of any Debt Incurrence, the aggregate amount of all
     cash received by the Parent Guarantor and/or any of its Included
     Subsidiaries in respect of such Debt Incurrence net of customary fees,
     commissions and other expenses including reserves set aside on its books
     with respect thereto in accordance with GAAP incurred by the Parent
     Guarantor and/or any of its Subsidiaries in connection therewith.

     "Net Income" means, as applied to any Person for any period, the aggregate
amount of net income of such Person, after taxes, for such period, as determined
in accordance with GAAP.

     "Obligations" means, collectively, the obligations of the Obligors to pay
the principal of and interest on the Loans, reimbursement obligations with
respect to LC Disbursements and all fees, indemnification payments and other
amounts whatsoever, whether direct or indirect, absolute or contingent, now or
hereafter from time to time owing to the Lenders, the Fronting Bank, the
Administrative Agent, the Paying Agent, the Collateral Agent or any of them
under the Loan Documents.

     "Obligors" means the Borrower and the Guarantors.

     "Other Taxes" means any and all present 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.

     "Parent Guarantor" has the meaning assigned to such term in the recital of
parties hereto.

     "Paying Agent" means CSFB, in its capacity as paying agent for the Lenders
hereunder.

<PAGE>
                                      -19-

     "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

     "Permitted Encumbrances" means:

          (a) Liens imposed by law for taxes, assessments or other governmental
     charges that are not yet due, payable or delinquent or are being contested
     in compliance with Section 6.04;

          (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
     landlord'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 6.04;

          (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;

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

          (e) judgment Liens in respect of judgments that do not constitute an
     Event of Default under clause (o) of Article VIII;

          (f) easements, zoning and other restrictions, rights-of-way, covenants
     and encroachments, Liens in favor of any landlord and similar encumbrances
     on real property imposed by law or arising in the ordinary course of
     business that do not secure any monetary obligations and do not materially
     detract from the value of the affected property or interfere with the
     ordinary conduct of business of the Parent Guarantor or any of its Included
     Subsidiaries;

          (g) Liens constituting leasehold interests made by the Parent
     Guarantor or any of its Included Subsidiaries as lessor entered into in the
     ordinary course of business;

          (h) any right, title and interest of a landlord (including with
     respect to association dues, maintenance fees and other similar items)
     under any lease pursuant to which the Parent Guarantor or any of its
     Included Subsidiaries has a leasehold interest in any property or assets
     and any Liens that have been placed by such landlord on property over which
     the Parent Guarantor or any of its Included Subsidiaries has any real
     property interest; and

          (i) restrictions on pledges or transfers of capital stock imposed by
     partnership agreements, shareholders' agreements, limited liability company
     agreements, joint venture agreements and similar agreements in existence on
     the Effective Date or similar restrictions in amendments or restatements
     thereof which are no more onerous than those included in such agreements on
     the Effective Date;

<PAGE>
                                      -20-

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

     "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) marketable direct obligations issued by any State of the United
     States of America or any political subdivision of any such State or any
     public instrumentality thereof maturing within one year from the date of
     acquisition thereof and, at the time of acquisition, having one of the two
     highest ratings obtainable from either S&P or Moody's;

          (c) investments in commercial paper maturing within 270 days from the
     date of acquisition thereof and having, at such date of acquisition, the
     highest credit rating obtainable from S&P or 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 which
     has a combined capital and surplus and undivided profits of not less than
     $500,000,000;

          (e) fully collateralized repurchase agreements with a term of not more
     than 90 days for securities described in clause (a) of this definition and
     entered into with a financial institution satisfying the criteria described
     in clause (d) of this definition; and

          (f) investments in money market funds which invest substantially all
     their assets in securities of the types described in clauses (a) through
     (e) above.

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

     "Phase I" has the meaning set forth in Section 5.01(l)(ii).

     "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 Parent Guarantor, the
Borrower or any of their ERISA Affiliates 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.

     "Prime Rate" means the rate of interest per annum announced from time to
time by the Paying Agent as its prime rate in effect at its principal office in
New York City; each

<PAGE>
                                      -21-

change in the Prime Rate shall be effective from and including the date such
change is announced as being effective.

     "Principal Facilities" means the mixing facility of the Borrower located in
Effingham, Illinois and the mixing facility and manufacturing plant of the
Borrower, each located in Winston-Salem, North Carolina.

     "Prohibited Subsidiary" means, at the time of determination, a Consolidated
Joint Venture that is prohibited by its organizational documents or any
agreement governing its Indebtedness from becoming an Obligor hereunder;
provided that Freedom Rings, LLC shall not be a Prohibited Subsidiary.

     "Projections" means the financial projections of the Borrower and its
Consolidated Subsidiaries dated March 31, 2005 heretofore delivered by the
Borrower to the Paying Agent.

     "Property Designated For Sale" means real property and improvements
specifically designated as such and itemized on Schedule VII.

     "Quarterly Dates" means the last Business Day of January, April, July and
October in each year, the first of which shall be the first such day after the
date hereof.

     "Real Property" has the meaning set forth in Section 4.17.

     "Redeemable Preferred Stock" of any Person means any preferred stock issued
by such Person which is at any time prior to the date falling six months after
the later to occur of the Tranche A Maturity Date and the Trance B Maturity Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.

     "Register" has the meaning set forth in Section 10.04.

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

     "Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the movement of Hazardous Materials through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata.

     "Request for Loan" means an executed request for loan substantially in the
form of Exhibit G hereto with all blanks completed by the Borrower.

     "Required Lenders" means, at any time, Lenders having Tranche A Funding
Amounts (or, if the Tranche A Funding Amounts have been reduced to zero, Tranche
A Exposures) and Tranche B Commitments (or, if the Tranche B Loans have been
made, outstanding Tranche B Loans) representing more than 50% of the sum of the
total Tranche A

<PAGE>
                                      -22-

Funding Amounts (or, if the Tranche A Funding Amounts have been reduced to zero,
Tranche A Exposures) and Tranche B Commitments (or, if the Tranche B Loans have
been made, outstanding Tranche B Loans) at such time. The "Required Lenders" of
a particular Class of Loans or Committed Amounts means (i) in the case of
Tranche A Lenders, Tranche A Lenders having Tranche A Funding Amounts (or, if
the Tranche A Funding Amounts have been reduced to zero, Tranche A Exposures)
representing more than 50% of the total Tranche A Funding Amounts (or, if the
Tranche A Funding Amounts have been reduced to zero, Tranche A Exposures) at
such time and (ii) in the case of Tranche B Lenders, Tranche B Lenders having
Tranche B Commitments (or, if the Tranche B Loans have been made, outstanding
Tranche B Loans) representing more than 50% of the total Tranche B Commitments
(or, if the Tranche B Loans have been made, outstanding Tranche B Loans) at such
time.

     "Restatement Date" means the date on which the Parent Guarantor furnishes
to the Lenders (i) the audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows of the Parent Guarantor and
its Consolidated Subsidiaries as of the end of and for all Fiscal Years
currently under review by the Special Committee of the Board of Directors of the
Parent Guarantor (including without limitation its 2004 and 2005 Fiscal Years),
reported on by PriceWaterhouseCoopers 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 Parent Guarantor and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied as of the end of
and for such Fiscal Year and (ii) the unaudited consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows of the
Parent Guarantor and its Consolidated Subsidiaries as of the end of and for its
first and second Fiscal Quarters for its 2006 Fiscal Year.

     "Restricted Payment" means (a) any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Parent Guarantor or any of its Subsidiaries, 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 Parent Guarantor or any of its Subsidiaries or any option, warrant or other
right to acquire any such shares of capital stock of the Parent Guarantor or any
of its Subsidiaries or (b) any payment made by the Parent Guarantor or any of
its Subsidiaries to purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Subordinated Indebtedness, except for regularly
scheduled payments, prepayments or redemptions of principal and interest in
respect thereof required pursuant to the instruments evidencing such
Indebtedness.

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

     "Second Lien Secured Obligations" means, collectively, (i) the Obligations
and (ii) all obligations of the Obligors to make payments under Hedging
Agreements relating to

<PAGE>
                                      -23-

commodities with any or all of the Administrative Agent, the Paying Agent, the
Fronting Bank, the Arranger, any Lender or any Affiliate of the Administrative
Agent, the Paying Agent, the Fronting Bank, the Arranger or any Lender, whether
direct or indirect, absolute or contingent. For purposes hereof, it is
understood that any Second Lien Secured Obligations to any Person arising under
an agreement entered into at a time such Person (or an Affiliate thereof) is
party hereto as the Administrative Agent, the Paying Agent, the Fronting Bank or
a Lender shall continue to constitute Second Lien Secured Obligations,
notwithstanding that such Person (or its Affiliate) has ceased to be the
Administrative Agent, the Paying Agent, the Fronting Bank or Lender, as the case
may be, party hereto (by assigning all of its Committed Amount, Tranche A LC
Exposure, Tranche B Loans, Tranche A Credit-Linked Sub-Account and other
interests herein, or otherwise) at the time a claim is to be made in respect of
such Second Lien Secured Obligations.

     "Security Agreement" means a Security Agreement substantially in the form
of Exhibit B among the Borrower, the Parent Guarantor, the Subsidiary Guarantors
and the Collateral Agent, as the same shall be modified and supplemented and in
effect from time to time.

     "Security Documents" means the Security Agreement, the Mortgages and all
Uniform Commercial Code financing statements permitted by the Security
Agreement, the Mortgages to be filed with respect to the security interests in
personal property and fixtures created pursuant to the Security Agreement or the
Mortgages, the Concentration Account Control Agreements, any Investment Account
Control Agreement and all other agreements entered into to confer upon the
Shared Lien Collateral Agent or the Collateral Agent control over deposit
accounts or securities accounts for purposes of the Uniform Commercial Code and
any other agreement, document, instrument or other writing providing collateral
for the Obligations whether now or hereafter in existence.

     "Shared Lien Collateral Agent" has the meaning assigned to such term in the
Intercreditor Agreement.

     "Specified Contingent Obligations" means the obligations listed on Schedule
IX, together with all other obligations of a similar nature binding on any
Obligor and all obligations of a similar nature that replace or supplement a
Specified Contingent Obligation in connection with a transaction that results in
a net reduction of Specified Contingent Obligations, from time to time
outstanding. The amount of any Specified Contingent Obligation shall be the
maximum amount that the Obligors upon which such Specified Contingent Obligation
is binding could be required to pay thereunder.

     "Statutory Reserve Rate" means, for the Interest Period for any Eurodollar
Borrowing, 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 arithmetic
mean, taken over each day in such Interest Period, of 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 Paying Agent is subject 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

<PAGE>
                                      -24-

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.

     "Subordinated Indebtedness" means Indebtedness (a) for which the Parent
Guarantor is directly and primarily liable, (b) in respect of which none of its
Subsidiaries is contingently or otherwise obligated and (c) that is subordinated
to the obligations of the Parent Guarantor hereunder (including in respect of
its Guarantee under Article III) on terms, and pursuant to documentation
containing other terms (including interest, amortization, covenants and events
of default), in form and substance satisfactory to the Required Lenders.

     "Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power 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. Unless otherwise specified,
"Subsidiary" means a Subsidiary of the Parent Guarantor. Notwithstanding
anything contained herein to the contrary, neither Montana Mills nor any of its
Subsidiaries shall be deemed to be a Subsidiary of the Parent Guarantor so long
as Montana Mills or such Subsidiary, as the case may be, is an Inactive Company.

     "Subsidiary Guarantor" means each of the Subsidiaries of the Borrower
identified under the caption "GUARANTORS" on the signature pages hereto and each
Subsidiary of the Borrower that becomes a "Subsidiary Guarantor" after the date
hereof pursuant to Section 6.10(a).

     "Synthetic Lease" means any synthetic lease, tax retention operating lease,
or off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but which is classified as an
operating lease pursuant to GAAP.

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

     "Test Period" means, on any date of determination, the period of four
consecutive Fiscal Quarters (taken as one accounting period) ending with the
latest Fiscal Quarter or the Fiscal Year for which financial statements pursuant
to Section 6.01(a) or (b) have been, or should have been, delivered, as modified
pursuant to Section 1.03.

     "Total Desktop Analysis Value" means the amount set forth on Schedule XII
minus the aggregate amount of the Median Desktop Analysis Value for Real
Property, if any, listed in the Desktop Analysis over which the Collateral Agent
has elected not to require a

<PAGE>
                                      -25-

Mortgage and for the Real Properties located at 1350 West Parkway, Euless, TX
and 1200 Knox Abbot Drive, Cayee, SC.

     "Tranche A", when used in reference to any Loan or Borrowing, means that
such Loan, or the Loans constituting such Borrowing, are made pursuant to
Section 2.02(a).

     "Tranche A Availability Period" means the period from and including the
Business Day next succeeding the Effective Date to but excluding the earlier of
the Tranche A Maturity Date and the date of termination of the Tranche A Funding
Amounts.

     "Tranche A Credit-Linked Deposit" means, with respect to each Tranche A
Lender at any time, amounts actually on deposit in the Tranche A Credit-Linked
Deposit Account to the credit of such Lender's Tranche A Credit-Linked
Sub-Account at such time.

     "Tranche A Credit-Linked Deposit Account" means the "Tranche A Lenders
(KKD) Credit-Linked Deposit Account" established by the Paying Agent at CSFB
pursuant to Section 2.01(a).

     "Tranche A Credit-Linked Sub-Account" has the meaning set forth in Section
2.01(a).

     "Tranche A Exposure" means, with respect to any Tranche A Lender at any
time, the sum of its Applicable Percentage of the outstanding principal amount
of the Tranche A Loans and its Tranche A LC Exposure at such time.

     "Tranche A Funding Amount" means, with respect to each Tranche A Lender,
the amount that such Tranche A Lender is required hereby to maintain as its
Tranche A Credit-Linked Deposit, as such amount may be (a) reduced or terminated
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
10.04. The initial amount of each Tranche A Lender's Tranche A Funding Amount is
set forth on Schedule I, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Tranche A Funding Amount, as applicable. The
initial aggregate amount of the Tranche A Lenders' Tranche A Funding Amounts is
$30,000,000.

     "Tranche A 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 Tranche A LC Exposure of any Tranche
A Lender at any time shall be its Applicable Percentage of the total Tranche A
LC Exposure at such time.

     "Tranche A Lender" means a Lender with a Tranche A Funding Amount or, if
the Tranche A Funding Amounts have terminated or expired, a Lender with Tranche
A Exposure.

     "Tranche A Maturity Date" means the fifth anniversary of the date hereof.

     "Tranche B", when used in reference to any Loan or Borrowing, means that
such Loan, or the Loans constituting such Borrowing, are made pursuant to
Section 2.02(b).

<PAGE>
                                      -26-

     "Tranche B Loan Commitment" means, with respect to each Tranche B Loan
Lender, the commitment, if any, of such Lender to make one or more Tranche B
Loans hereunder on the Effective Date, expressed as an amount representing the
maximum aggregate principal amount of the Tranche B Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced or terminated 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 10.04. The
initial amount of each Tranche B Loan Lender's Tranche B Loan Commitment is set
forth on Schedule I, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche B Loan Commitment, as applicable. The
initial aggregate amount of the Tranche B Loan Lenders' Tranche B Loan
Commitments is $120,000,000.

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

     "Tranche B Maturity Date" means the fifth anniversary of the date hereof.

     "Tranche B Principal Payment Dates" means (i) each Quarterly Date,
commencing on the Quarterly Date falling on or nearest to July 31, 2005 through
and including the Quarterly Date falling on or nearest to January 31, 2010, and
(iii) the Tranche B Maturity Date.

     "Transactions" means the execution, delivery and performance by each
Obligor of this Agreement, the other Loan Documents and the First Lien Loan
Documents to which such Obligor is intended to be a party, the borrowing of
Loans hereunder and loans under the F Lien Loan Documents, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder and the
issuance of letters of credit thereunder.

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

     "Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital
stock or other ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the Parent Guarantor.

     "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.

     "WFF" means Wells Fargo Foothill, Inc., a California corporation.

     SECTION 1.02. 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

<PAGE>
                                      -27-

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 1.03. Accounting Terms; GAAP; Historical Financial Calculations.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Paying Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Paying Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. Except as may be
otherwise expressly set forth herein, all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, and all calculations made for purposes of
determining compliance with Section 7.09 shall be made, as if the Consolidated
Joint Ventures were carried as equity investments by the relevant members of the
Financial Test Group. Notwithstanding anything contained herein to the contrary:
(a) (i) each calculation of a financial matter hereunder that is otherwise to be
made for any period of four Fiscal Quarters that includes a portion of the
Fiscal Year ending 2005 shall instead be made solely by reference to the portion
of such period comprised of Fiscal Quarters in the Fiscal Year ending 2006 (the
"2006 Fiscal Quarters") and (ii) for purposes of completing such calculation,
the result obtained for the 2006 Fiscal Quarters shall be multiplied by a
fraction the numerator of which is four and the denominator of which is the
number of 2006 Fiscal Quarters and (b) the financial statements, certificates,
reports and calculations referred to in the preceding sentence shall not be
required to be prepared or made in accordance with GAAP, but such deviation from
GAAP shall be solely in respect of the treatment of Consolidated Joint Ventures
as equity investments as provided above.

     SECTION 1.04. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g. a "Tranche A
Loan"), by Type (e.g. an "ABR Loan") or by Class and Type (e.g. a "Tranche A ABR
Loan"). Borrowings may also be classified and referred to by Class (e.g. a
"Tranche A Borrowing"), by Type (e.g. an "ABR Borrowing") or by Class and Type
(e.g. a "Tranche A ABR Borrowing").

<PAGE>
                                      -28-

                                   ARTICLE II

                                   THE CREDITS

     SECTION 2.01. Tranche A Credit-Linked Deposit Accounts.

          (a) Establishment of Tranche A Credit-Linked Deposit Account and
     Tranche A Credit-Linked Sub-Accounts. On or prior to the Effective Date,
     the Paying Agent shall establish a Tranche A Credit-Linked Deposit Account
     at CSFB with the title "Tranche A Lenders (KKD) Credit-Linked Deposit
     Account". The Paying Agent shall maintain records enabling it to determine
     at any time the amount of the interest of each Tranche A Lender in the
     Tranche A Credit-Linked Deposit Account (the interest of each Tranche A
     Lender in the Tranche A Credit-Linked Deposit Account, as evidenced by such
     records, being referred to as such Lender's "Tranche A Credit-Linked
     Sub-Account"). The Paying Agent shall establish such additional Tranche A
     Credit-Linked Sub-Accounts for assignee Lenders as shall be required
     pursuant to Section 10.04(b). No Person (other than the Paying Agent) shall
     have the right to make any withdrawal from the Tranche A Credit-Linked
     Deposit Account or to exercise any other right or power with respect
     thereto. Without limiting the generality of the foregoing, each party
     hereto acknowledges and agrees that the Tranche A Credit-Linked Deposits
     are and (subject to the last paragraph of Article VIII) will at all times
     be solely the property of the Tranche A Lenders, that the Tranche A
     Credit-Linked Deposits shall be used solely in accordance with this
     Agreement and that no amount on deposit at any time in the Tranche A
     Credit-Linked Deposit Account shall be the property of any of the Obligors,
     constitute collateral for any Obligations of the Obligors under the Loan
     Documents or otherwise be available in any manner to satisfy any
     Obligations of any of the Obligors under the Loan Documents. Each Tranche A
     Lender agrees that its right, title and interest in and to the Tranche A
     Credit-Linked Deposit Account shall be limited to the right to require
     amounts in its Tranche A Credit-Linked Sub-Account to be applied as
     provided in paragraph (c) below and that it will have no right to require
     the return of its Tranche A Credit-Linked Deposit other than as expressly
     provided in such paragraph (c) (each Tranche A Lender hereby acknowledging
     that its Tranche A Credit-Linked Deposit constitutes payment for its
     participations in Tranche A Loans made or to be made hereunder and Letters
     of Credit issued or to be issued hereunder and that the Fronting Bank will
     be making Tranche A Loans and issuing, amending, renewing and extending
     Letters of Credit in reliance on the availability of such Lender's Tranche
     A Credit-Linked Deposit to discharge such Lender's obligations in
     accordance with Sections 2.05(f) and 2.09(h)). The funding of the Tranche A
     Credit-Linked Deposits and the agreements with respect thereto set forth in
     this Agreement constitute arrangements solely among the Paying Agent, the
     Fronting Bank and the Tranche A Lenders with respect to the funding and
     reimbursement obligations of the Tranche A Lenders under this Agreement,
     and do not constitute loans, extensions of credit or other financial
     accommodations to any Obligor. No Obligor shall have any responsibility or
     liability to the Tranche A Lenders, the Paying Agent or any other Person in
     respect of the establishment, maintenance, administration or
     misappropriation of the Tranche A Credit-Linked Deposit Account (or any
     Tranche A Credit-Linked Sub-Account) or with respect to the investment of
     amounts held therein, including pursuant to paragraph (d) below, or the
     duties and responsibilities of the Paying Agent with respect to the
     foregoing contemplated by paragraph (e) below.

<PAGE>
                                      -29-

          (b) Deposits in Tranche A Credit-Linked Deposit Account. The following
     amounts will be deposited in the Tranche A Credit-Linked Deposit Account at
     the following times:

               (i) On the Effective Date, each Tranche A Lender shall deposit in
          the Tranche A Credit-Linked Deposit Account an amount in Dollars equal
          to such Lender's Tranche A Funding Amount. Thereafter, the Tranche A
          Credit-Linked Deposits shall be available, on the terms and subject to
          the conditions set forth herein, for application pursuant to Section
          2.05(f) to reimburse such Lender's Applicable Percentage of LC
          Disbursements that are not reimbursed by the Borrower and for
          application pursuant to Section 2.09(h) to pay such Lender's
          Applicable Percentage of the principal of Tranche A Loans that are not
          paid when due (at stated maturity, by acceleration or otherwise).

               (ii) On any date prior to the Tranche A Maturity Date on which
          the Paying Agent or the Fronting Bank receives any reimbursement
          payment from the Borrower in respect of an LC Disbursement, or any
          payment of principal of Tranche A Loans, with respect to which amounts
          were withdrawn from the Tranche A Credit-Linked Deposit Account to
          reimburse or pay the Fronting Bank, subject to clause (iii) below, the
          Paying Agent shall deposit in the Tranche A Credit-Linked Deposit
          Account, and credit to the Tranche A Credit-Linked Sub-Accounts of the
          Tranche A Lenders, the portion of such reimbursement or other payment
          to be deposited therein, in accordance with Section 2.05(f) or
          2.09(h), as the case may be.

               (iii) If at any time when any amount is required to be deposited
          in the Tranche A Credit-Linked Deposit Account under clause (ii) above
          the sum of such amount and the aggregate amount of the Tranche A
          Credit-Linked Deposits at such time would exceed the higher of the
          total aggregate Tranche A Funding Amounts and the Tranche A Exposure,
          then such excess shall not be deposited in the Tranche A Credit-Linked
          Deposit Account and the Paying Agent shall instead pay to each Tranche
          A Lender its Applicable Percentage of such excess.

               (iv) Concurrently with the effectiveness of any assignment by any
          Tranche A Lender of all or any portion of its Tranche A Funding
          Amount, the Paying Agent shall transfer into the Tranche A
          Credit-Linked Sub-Account of the assignee the corresponding portion of
          the amount on deposit in the assignor's Tranche A Credit-Linked
          Sub-Account in accordance with Section 10.04(b)(vi).

          (c) Withdrawals From and Closing of Tranche A Credit-Linked Deposit
     Account. Amounts on deposit in the Tranche A Credit-Linked Deposit Account
     shall be withdrawn and distributed (or transferred, in the case of clause
     (v) below) as follows:

               (i) On each date on which the Fronting Bank is to be reimbursed
          by the Lenders pursuant to Section 2.05(f) for any LC Disbursement,
          the Paying Agent shall withdraw from the Tranche A Credit-Linked
          Deposit Account the amount of such unreimbursed LC Disbursement (and
          debit the Tranche A Credit-Linked Sub-Account of each Tranche A Lender
          in the amount of such Lender's Applicable Percentage of such
          unreimbursed LC

<PAGE>
                                      -30-

          Disbursement) and make such amount available to the Fronting Bank in
          accordance with Section 2.05(f).

               (ii) On each date on which the Fronting Bank is to be paid by the
          Tranche A Lenders pursuant to Section 2.09(h) for any defaulted
          principal of any Tranche A Loan, the Paying Agent shall withdraw from
          the Tranche A Credit-Linked Deposit Account the amount of such payment
          (and debit the Tranche A Credit-Linked Sub-Account of each Tranche A
          Lender in the amount of such Lender's Applicable Percentage of such
          payment) and make such amount available to the Fronting Bank in
          accordance with Section 2.09(h) (and for the avoidance of doubt, the
          payment obligation of a Tranche A Lender under Section 2.09(h) shall
          be satisfied in full by the Paying Agent's debiting the Tranche A
          Credit-Linked Sub-Account of such Tranche A Lender).

               (iii) Concurrently with each voluntary reduction of the Tranche A
          Funding Amounts pursuant to and in accordance with Section 2.08(b),
          the Paying Agent shall withdraw from the Tranche A Credit-Linked
          Deposit Account and pay to each Tranche A Lender such Lender's
          Applicable Percentage of the amount of such reduction (provided that,
          after giving effect thereto, the aggregate amount of the Tranche A
          Credit-Linked Deposits is not less than the greater of the Tranche A
          Exposure or Tranche A Funding Amounts).

               (iv) Concurrently with any reduction of the total aggregate
          Tranche A Funding Amounts to zero pursuant to and in accordance with
          Section 2.08(b) or Article VIII, the Paying Agent shall withdraw from
          the Tranche A Credit-Linked Deposit Account and pay to each Tranche A
          Lender such Lender's Applicable Percentage of the excess at such time
          of the aggregate amount of the Tranche A Credit-Linked Deposits over
          the Tranche A LC Exposure.

               (v) Concurrently with the effectiveness of any assignment by any
          Tranche A Lender of all or any portion of its Tranche A Funding
          Amount, the corresponding portion of the assignor's Tranche A
          Credit-Linked Sub-Account shall be transferred from the assignor's
          Tranche A Credit-Linked Sub-Account to the assignee's Tranche A
          Credit-Linked Sub-Account in accordance with Section 10.04(b) and, if
          required by Section 10.04(b), the Paying Agent shall close such
          assignor's Tranche A Credit-Linked Sub-Account.

               (vi) Upon the reduction of each of the Tranche A Funding Amounts
          and the Tranche A LC Exposure to zero, the Paying Agent shall withdraw
          from the Tranche A Credit-Linked Deposit Account and pay to each
          Tranche A Lender the entire remaining amount of such Lender's Tranche
          A Credit-Linked Deposit, and shall close the Tranche A Credit-Linked
          Deposit Account.

Each Tranche A Lender irrevocably and unconditionally agrees that its Tranche A
Credit-Linked Deposit may be applied or withdrawn from time to time as set forth
in this paragraph (c).

     (d) Deposit Earnings. Each of the Paying Agent, the Fronting Bank and each
Tranche A Lender hereby acknowledges and agrees that each Tranche A Lender is
funding its

<PAGE>
                                      -31-

Tranche A Credit-Linked Deposit to the Paying Agent for application in the
manner contemplated by Sections 2.05(f) and 2.09(h) and that the Paying Agent
has agreed to invest the Tranche A Credit-Linked Deposits so as to earn a return
(except during periods when such Tranche A Credit-Linked Deposits are used to
cover unreimbursed LC Disbursements or Tranche A Loans that have not been repaid
when due (at stated maturity, by acceleration or otherwise), and subject to
Section 2.13) for the Tranche A Lenders equal at any time to (i) the LIBO Rate
for the Interest Period in effect for the Tranche A Credit-Linked Deposits at
such time minus (ii) 10 basis points; provided that, in the event that the
Borrower shall revoke any notice of prepayment pursuant to Section 2.10(c), the
Paying Agent shall use commercially reasonable efforts to invest the Tranche A
Credit-Linked Deposits that are affected thereby in a manner that is consistent
with its policies relating to such deposits. Such interest will be paid to the
Tranche A Lenders by the Paying Agent in arrears on each day on which fees are
due and payable to the Tranche A Lenders under Section 2.11(a).

     (e) Sufficiency of Deposits to Provide for Tranche A Exposure.
Notwithstanding any other provision of this Agreement, including Sections 2.01,
2.02 and 2.05(a), no Tranche A Loan shall be made, and no Letter of Credit shall
be issued, if after giving effect thereto the aggregate amount of the Tranche A
Exposures would exceed the aggregate amount of the Tranche A Credit-Linked
Deposits.

     (f) Satisfaction of Lender Funding Obligations. The Borrower and the
Fronting Bank acknowledge and agree that, notwithstanding any other provision
contained herein (but without limiting the obligations of any Tranche A Lender
under Section 10.03(c)), the deposit by each Tranche A Lender in the Tranche A
Credit-Linked Deposit Account on the Effective Date of funds equal to its
Tranche A Funding Amount will fully discharge the obligation of such Lender to
fund Loans by such Lender pursuant to Section 2.02(a) and to reimburse such
Lender's Applicable Percentage of LC Disbursements that are not reimbursed by
the Borrower pursuant to Section 2.05(f), and that no other or further payments
shall be required to be made by any Tranche A Lender in respect of any such
funding or reimbursement obligations.

     (g) Security. Each Tranche A Lender hereby grants to the Fronting Bank a
security interest in such Tranche A Lender's Tranche A Credit-Linked Deposit to
secure the obligations of such Tranche A Lender under Sections 2.05(f) and
2.09(h).

     (h) Fronting Bank Insecure. If the Fronting Bank is enjoined from taking
any action referred to in paragraph (i) or (ii) of Section 2.01(c), or if the
Fronting Bank reasonably determines that, by operation of law, it may reasonably
be precluded from taking any such action, or if any Obligor or Tranche A Lender
challenges in any legal proceeding any of the acknowledgements, agreements or
characterizations set forth in any of the fifth, sixth or seventh sentences of
Section 2.01(a), then, in any such case (and so long as such event or condition
shall be continuing), and notwithstanding anything contained herein to the
contrary, the Fronting Bank shall not be required to make any Tranche A Loan or
to issue, renew or extend any Letter of Credit.

<PAGE>
                                      -32-

     SECTION 2.02. The Commitments.

     (a) Tranche A Loans. Subject to the terms and conditions set forth herein,
the Fronting Bank shall, from time to time during the Tranche A Availability
Period at the request of the Borrower, make one or more Tranche A Loans to the
Borrower in an aggregate principal amount that will not result in the total
Tranche A Exposures exceeding the lesser of the balance of the Tranche A
Credit-Linked Deposit Account (excluding any portion of the Tranche A
Credit-Linked Deposit Account attributable to interest) or the total Tranche A
Funding Amounts. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Tranche A Loans. Tranche A Loans shall constitute utilization of the Tranche A
Funding Amounts.

     By the making of a Tranche A Loan, and without any further action on the
part of the Fronting Bank or the Lenders, the Fronting Bank hereby grants to
each Tranche A Lender, and each Tranche A Lender hereby acquires from the
Fronting Bank, a participation in such Loan equal to such Lender's Applicable
Percentage of the principal amount thereof. Each Tranche A Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Tranche A Loans is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or, subject to Section 2.01(f), reduction or
termination of the Tranche A Funding Amounts.

     In consideration and in furtherance of the foregoing, each Tranche A Lender
hereby absolutely and unconditionally authorizes and directs the Paying Agent to
withdraw from the Tranche A Credit-Linked Deposit Account (and debit such
Lender's Tranche A Credit-Linked Sub-Account in the amount of) such Lender's
Applicable Percentage of the principal amount of each Tranche A Loan not paid
when due (whether at stated maturity, acceleration or otherwise), or of any
payment of principal of any Tranche A Loan required to be refunded to the
Borrower for any reason (it being understood and agreed that each Tranche A
Lender's obligations in respect of participations in Tranche A Loans shall be
payable solely from, and limited to, such Lender's Tranche A Credit-Linked
Deposit).

     (b) Tranche B Loans. Subject to the terms and conditions set forth herein,
each Tranche B Loan Lender agrees to make one or more Tranche B Loans to the
Borrower on the Effective Date in a principal amount not exceeding its Tranche B
Loan Commitment. Amounts prepaid or repaid in respect of Tranche B Loans may not
be reborrowed.

     SECTION 2.03. Loans and Borrowings.

     (a) Obligations of Lenders. Each Loan shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made (in the case of Tranche B
Loans) by the Tranche B Lenders ratably in accordance with their respective
Tranche B Commitments. The failure of any Lender Party to make any Loan required
to be made by it shall not relieve any other Lender Party of its obligations
hereunder; provided that the obligations of the Lenders hereunder with respect
to their Committed Amounts are several and no Lender Party shall be responsible
for any other Lender Party's failure to fund its Tranche A Credit-Linked
Sub-Account or to make Loans, as the case may be, as required.

<PAGE>
                                      -33-

     (b) Type of Loans. Subject to Section 2.13, each Borrowing shall be
constituted entirely of ABR Loans or of Eurodollar Loans as the Borrower may
request in accordance herewith. The Fronting Bank and each Tranche B Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender Party to make such Loan; provided that 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. Each Borrowing
shall be in an aggregate amount of $1,000,000 or a larger multiple of
$1,000,000; provided that (i) an ABR Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Committed Amounts of the
applicable Class and (ii) a Tranche A Borrowing may be in an aggregate amount
that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(f). Borrowings of more than one Class and Type may
be outstanding at the same time; provided that there shall not at any time be
more than a total of 10 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 to or continue as a Eurodollar Borrowing): (i) any Tranche A Borrowing
if the Interest Period requested therefor would end after the Tranche A Maturity
Date; (ii) any Tranche B Borrowing if the Interest Period requested therefor
would end after the Tranche B Maturity Date; or (iii) any Tranche B Borrowing if
the Interest Period requested therefor would commence before and end after any
Tranche B Principal Payment Date unless, after giving effect thereto, the
aggregate principal amount of the Tranche B Loans having Interest Periods that
end after such Tranche B Principal Payment Date shall be equal to or less than
the aggregate principal amount of the Tranche B Loans permitted to be
outstanding after giving effect to the payments of principal required to be made
on such Tranche B Principal Payment Date.

     SECTION 2.04. Requests for Borrowings.

          (a) Notice by the Borrower. To request a Borrowing, the Borrower shall
     notify the Paying Agent of such request by telephone (i) in the case of a
     Tranche A Eurodollar Borrowing or a Tranche A ABR Borrowing, not later than
     12:00 noon, New York City time, on the day of the proposed Borrowing, (ii)
     in the case of a Tranche B Eurodollar Borrowing, not later than 12:00 noon,
     New York City time, three Business Days before the date of the proposed
     Borrowing or (iii) in the case of an Tranche B ABR Borrowing, not later
     than 12:00 noon, New York City time, one Business Day before the date of
     the proposed Borrowing. Each such telephonic request for a Loan shall be
     irrevocable and shall be confirmed promptly by hand delivery or telecopy to
     the Paying Agent of a Request for Loan signed by the Borrower. In
     connection with the Borrower's obligation under Section 2.04(f) to
     reimburse the Fronting Bank for each LC Disbursement on the date thereof,
     the Borrower shall be deemed to have furnished a timely, duly completed
     Request for Loan for a Tranche A ABR Borrowing to be made on such date, in
     an amount equal to the amount of such LC Disbursement, the proceeds of
     which shall be applied directly to such obligation.

<PAGE>
                                      -34-

          (b) Content of Request for Loans. Each telephonic request for a Loan
     and written Request for Loan shall specify the following information in
     compliance with Section 2.03:

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

               (ii) the aggregate amount of the requested 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 Interest Period
          therefor, which shall be a period contemplated by the definition of
          the term "Interest Period" and permitted under Section 2.03(d); 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.

          (c) Notice by the Paying Agent to the Lenders. Promptly following
     receipt of a Request for Loan in accordance with this Section, the Paying
     Agent shall advise each affected Lender Party of the details thereof and of
     the amount of such Lender's Loan to be made as part of the requested
     Borrowing.

          (d) Failure to Elect. If no election as to the Type of a Borrowing is
     specified, then the requested Borrowing shall be an ABR Borrowing. If no
     Interest Period is specified with respect to any requested Eurodollar
     Borrowing, then the Interest Period shall be one month.

     SECTION 2.05. Letters of Credit.

     (a) General. Subject to the terms and conditions set forth herein, in
addition to the Loans provided for in Section 2.02, the Borrower may request the
Fronting Bank to issue, and the Fronting Bank shall issue, at any time and from
time to time during the period commencing on the Effective Date and ending on
the date that is 30 days prior to the Tranche A Maturity Date, Letters of Credit
for its own account in such form as is acceptable to each of the Paying Agent
and the Fronting Bank in its reasonable determination (including, without
limitation, "auto-renewal" letters of credit); provided that the Fronting Bank
shall not be under any obligation to issue any Letter of Credit if the issuance
of such Letter of Credit would violate one or more policies of the Fronting Bank
generally applicable to the issuance of letters of credit. All Letters of Credit
issued hereunder by the Fronting Bank shall be issued for the account of the
Borrower as the named account party thereon, provided that Letters of Credit
may, in addition to showing the Borrower as account party, show any Guarantor as
a favoree under such Letter of Credit. Letters of Credit issued hereunder shall
constitute utilization of the Tranche A Funding Amounts.

     (b) Notice of Issuance, Amendment, Renewal or Extension. To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter

<PAGE>
                                      -35-

of Credit), the Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Fronting Bank) to the Fronting Bank and the Paying Agent (other than the Letters
of Credit requested prior to the date hereof, not later than 11:00 a.m. on the
fourth Business Day preceding 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 (d) 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 Fronting Bank, the Borrower also shall submit a
letter of credit application on the Fronting Bank's standard form in connection
with any request for a Letter of Credit. 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, the Fronting Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
The Fronting Bank shall promptly notify the Paying Agent of any Letters of
Credit issued, amended, renewed or extended by it hereunder and shall deliver a
report (in form and substance reasonably acceptable to the Administrative Agent)
on the last Business Day of each month after the Effective Date detailing its
letter of credit activity under this Agreement; provided that if the last
Business Day of such month coincides with the end of a Fiscal Quarter, such
report shall be delivered five Business Days prior to the last day of such
Fiscal Quarter, and the Fronting Bank shall promptly provide an update report to
the Paying Agent of any letter of credit activity under this Agreement during
such five Business Day period.

     (c) Limitations on Amounts. 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 the
total Tranche A Exposures shall not exceed the total Tranche A Funding Amounts.

     (d) Expiration Date. Each Letter of Credit shall expire (or provide that
the Fronting Bank shall have the option to refuse to renew such Letter of
Credit) at or prior to the close of business on the earlier of (i) the date
twelve months after the date of the issuance of such Letter of Credit (or, in
the case of any renewal or extension thereof, twelve months after the
then-current expiration date of such Letter of Credit, so long as such renewal
or extension occurs within three months of such then-current expiration date)
and (ii) the date that is five Business Days prior to the Tranche A Maturity
Date.

     (e) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) by the Fronting Bank, and
without any further action on the part of the Fronting Bank or the Lenders, the
Fronting Bank hereby grants to each Tranche A Lender, and each Tranche A Lender
hereby acquires from the Fronting 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. Each Tranche A 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

<PAGE>
                                      -36-

circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or, subject to
Section 2.01(f), reduction or termination of the Tranche A Funding Amounts.

     In consideration and in furtherance of the foregoing, each Tranche A Lender
hereby absolutely and unconditionally authorizes and directs the Paying Agent to
withdraw from the Tranche A Credit-Linked Deposit Account (and debit such
Lender's Tranche A Credit-Linked Sub-Account in the amount of) such Lender's
Applicable Percentage of each LC Disbursement made by the Fronting Bank and not
reimbursed by the Borrower on the date due as provided in paragraph (f) of this
Section, or of any reimbursement payment required to be refunded to the Borrower
for any reason (it being understood and agreed that each Tranche A Lender's
obligations in respect of participations in Letters of Credit shall be payable
solely from, and limited to, such Lender's Tranche A Credit-Linked Deposit).

     (f) Reimbursement. If the Fronting Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse the Fronting Bank in
respect of such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement on the date of such disbursement.

     If the Borrower fails to make such payment when due and the Borrower is not
entitled to make a Borrowing in the amount of such payment, the Paying Agent
shall notify each Tranche A Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof, and the Paying Agent shall withdraw from the
Tranche A Credit-Linked Deposit Account (and debit such Lender's Tranche A
Credit-Linked Sub-Account in the amount of) such Lender's Applicable Percentage
of such LC Disbursement and promptly apply such amount to make payment to the
Fronting Bank. Promptly following receipt by the Paying Agent of any payment
from the Borrower pursuant to this subsection (f), the Paying Agent shall
distribute such payment to the Fronting Bank or, to the extent that amounts have
been withdrawn (and credited to each Tranche A Lender's Tranche A Credit-Linked
Sub-Account in the amount of such Lender's Applicable Percentage of such
deposit) from the Tranche A Credit-Linked Deposit Account to make any payment
pursuant to this paragraph to reimburse the Fronting Bank, then such payment
shall be deposited in the Tranche A Credit-Linked Deposit Account. Any payment
made with amounts withdrawn from the Tranche A Credit-Linked Deposit Account to
reimburse the Fronting Bank for any LC Disbursement constitute the funding by
the respective Tranche A Lender of its participation in the related Letter of
Credit and shall not constitute a Loan or relieve the Borrower of its obligation
to reimburse such LC Disbursement.

     If any unreimbursed LC Disbursement resulting in a withdrawal from the
Tranche A Credit-Linked Deposits Accounts as provided in the preceding paragraph
shall be subsequently reimbursed other than on the last day of an Interest
Period for Tranche A Credit-Linked Deposits, the Paying Agent shall invest the
amount so reimbursed in overnight or short-term cash equivalent investments
until the end of the Interest Period at the time in effect for Tranche A
Credit-Linked Deposits and the Borrower shall pay to the Paying Agent, upon the
Paying Agent's request therefor, the amount, if any, by which the interest
accrued on a like amount of the Tranche A Credit-Linked Deposits at the LIBO
Rate for such Interest Period shall exceed the interest earned through the
investment of the amount so reimbursed for the period

<PAGE>
                                      -37-

from the date of such reimbursement through the end of such Interest Period, as
determined by the Paying Agent (such determination to be conclusive absent
manifest error) and set forth in the request for payment delivered to the
Borrower. In the event the Borrower shall fail to pay any amount due under this
paragraph, the interest payable by the Paying Agent to the Tranche A Lenders on
their Tranche A Credit-Linked Deposits under Section 2.01(d) shall be
correspondingly reduced and the Tranche A Lenders shall without further act
succeed, ratably in accordance with their Applicable Percentages, to the rights
of the Paying Agent with respect to such amount.

     (g) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (f) of this Section shall be absolute,
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 any term or provision 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 Fronting Bank under a Letter of Credit against
presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit, and (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 the
Borrower's obligations hereunder.

     Neither the Paying Agent, the Tranche A Lenders nor the Fronting 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
by the Fronting Bank 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 the Fronting Bank; provided that the foregoing
shall not be construed to excuse the Fronting 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
the Fronting Bank's gross negligence or willful misconduct when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that:

          (i) the Fronting Bank may accept documents that appear on their face
     to be in substantial compliance with the terms of a Letter of Credit
     without responsibility for further investigation, regardless of any notice
     or information to the contrary, and may make payment upon presentation of
     documents that appear on their face to be in substantial compliance with
     the terms of such Letter of Credit;

          (ii) the Fronting Bank shall have the right, in its sole discretion,
     to decline to accept such documents and to make such payment if such
     documents are not in strict compliance with the terms of such Letter of
     Credit; and

<PAGE>
                                      -38-

          (iii) this sentence shall establish the standard of care to be
     exercised by the Fronting Bank when determining whether drafts and other
     documents presented under a Letter of Credit comply with the terms thereof
     (and the parties hereto hereby waive, to the extent permitted by applicable
     law, any standard of care inconsistent with the foregoing).

     (h) Disbursement Procedures. The Fronting Bank shall, within a reasonable
time following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Fronting Bank shall
promptly after such examination notify the Paying Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Fronting 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 the Fronting Bank and the Tranche A
Lenders with respect to any such LC Disbursement.

     (i) Interim Interest. If the Fronting Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse (including through a Borrowing of ABR
Loans) 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, as provided in Section 2.12(c).
Interest accrued pursuant to this paragraph shall be for the account of the
Fronting Bank, except that interest accrued on and after the date of payment
from the Tranche A Credit-Linked Deposit of any Tranche A Lender to reimburse
the Fronting Bank shall be for the account of such Tranche A Lender to the
extent of such payment.

     (j) Cash Collateralization. If either (i) an Event of Default shall occur
and be continuing and the Borrower receives notice from the Paying Agent or
Tranche A Lenders holding more than 50% of the Tranche A Credit-Linked Deposits
(or, if the Tranche A Lenders with Tranche A LC Exposure representing more than
50% of the total Tranche A LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, or (ii) the Borrower shall be required to provide
cover for Tranche A LC Exposure pursuant to Section 2.10(b), the Borrower shall
immediately deposit into the Collateral Account an amount in cash equal to, in
the case of an Event of Default, the Tranche A LC Exposure as of such date plus
any accrued and unpaid interest thereon and, in the case of cover pursuant to
Section 2.10(b), the amount required under Section 2.10(b); 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 VIII. Such
deposit shall be held by the Paying Agent in the Collateral Account as
collateral in the first instance for the Tranche A LC Exposure under this
Agreement and thereafter for the payment of the other Second Lien Secured
Obligations.

     SECTION 2.06. Funding of Borrowings.

     (a) Funding by Lenders. The Fronting Bank shall make each Tranche A Loan to
be made by it hereunder on the date requested in the applicable Request for Loan
by wire transfer of immediately available funds by 12:00 noon, New York City
time, to the account of

<PAGE>
                                      -39-

the Paying Agent most recently designated by it for such purpose by notice to
the Fronting Bank. Each Tranche B Loan Lender shall make each Tranche B Loan to
be made by it hereunder on the Effective Date by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the Paying
Agent most recently designated by it for such purpose by notice to the Lenders.
The Paying Agent will make Loans available to the Borrower by promptly
transferring by wire transfer the amounts so received (which, in the case of
Tranche A Loans, shall be by 3:00 p.m. New York City time, on the requested date
of such Loan), in like funds, to a Concentration Account of the Borrower
designated by the Borrower in the applicable Request for Loan; provided that
Tranche A Borrowings made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(f) shall be remitted by the Paying Agent to the
Fronting Bank.

     (b) Presumption by the Paying Agent. Unless the Paying Agent shall have
received notice from a Tranche B Lender prior to the proposed date of any
Tranche B Borrowing that such Lender will not make available to the Paying Agent
such Lender's share of such Borrowing, the Paying 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 Tranche B Lender has
not in fact made its share of the applicable Tranche B Borrowing available to
the Paying Agent, then the applicable Lender and the Borrower severally agree to
pay to the Paying 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 Paying
Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If
such Lender pays such amount to the Paying Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.

     SECTION 2.07. Interest Elections.

          (a) Elections by the Borrower. The Loans constituting each Borrowing
     initially shall be of the Type specified in the applicable Request for Loan
     and, in the case of a Eurodollar Borrowing, shall have the Interest Period
     specified in such Request for Loan. Thereafter, the Borrower may elect to
     convert such Borrowing to a Borrowing of a different Type or to continue
     such Borrowing as a Borrowing of the same Type and, in the case of a
     Eurodollar Borrowing, may elect the Interest Period 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 in
     the case of Tranche B Loans, each such portion shall be allocated ratably
     among the Lenders), and the Loans constituting each such portion shall be
     considered a separate Borrowing.

          (b) Notice of Elections. To make an election pursuant to this Section,
     the Borrower shall notify the Paying Agent of such election by telephone by
     the time that a Request for Loan would be required under Section 2.04 if
     the Borrower were requesting a 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 Paying Agent of a
     written Interest Election Request substantially in the form of Exhibit H
     hereto and signed by the Borrower.

<PAGE>
                                      -40-

          (c) Content of Interest Election Requests. Each telephonic and written
     Interest Election Request shall specify the following information in
     compliance with Section 2.03:

               (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) of this paragraph 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 therefor after giving effect to such election, which
          shall be a period contemplated by the definition of the term "Interest
          Period" and permitted under Section 2.03(d).

          (d) Notice by the Paying Agent to the Lenders. Promptly following
     receipt of an Interest Election Request, the Paying Agent shall advise each
     affected Lender Party of the details thereof and of such Lender Party's
     portion of each resulting Borrowing.

          (e) Failure to Elect; Events of Default. If the Borrower fails to
     deliver a timely and complete Interest Election Request with respect to a
     Eurodollar Borrowing prior to the end of the Interest Period therefor,
     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 Paying 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 therefor.

     SECTION 2.08. Termination and Reduction of the Committed Amounts.

     (a) Scheduled Termination. Unless previously terminated: (i) the Tranche A
Funding Amounts shall be reduced to zero on the Tranche A Maturity Date and (ii)
the Tranche B Loan Commitments shall terminate at 5:00 p.m., New York City time,
on the Effective Date.

     (b) Voluntary Termination or Reduction. The Borrower may at any time
terminate, or from time to time reduce, the Committed Amounts of any Class;
provided that (i) each reduction of the Committed Amounts of any Class pursuant
to this Section shall be in an amount that is $1,000,000 or a larger multiple of
$1,000,000 (or, if less, the entire remaining aggregate amount of any Class of
the Committed Amounts) and (ii) the Borrower shall not terminate or reduce the
Tranche A Funding Amounts before the first anniversary of the Effective Date or
if, after giving effect to any concurrent prepayment of the Tranche A Loans in

<PAGE>
                                      -41-

accordance with Section 2.10, the total Tranche A Exposures of all of the
Tranche A Lenders would exceed the total Tranche A Funding Amounts.

     (c) Notice of Voluntary Termination or Reduction. The Borrower shall notify
the Paying Agent of any election to terminate or reduce the Committed Amounts of
any Class 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
Paying Agent shall advise the affected Lender Parties 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 Committed Amounts
delivered by the Borrower may state that such notice is conditioned upon the
issuance of securities or the effectiveness of other credit facilities, in which
case such notice may be revoked by the Borrower (by notice to the Paying Agent
on or prior to the specified effective date) if such condition is not satisfied.

     (d) Effect of Termination or Reduction. Any termination or reduction of the
Committed Amounts of either Class shall be permanent. Each reduction of the
Committed Amounts of either Class shall be made ratably among the Lenders in
accordance with their respective Committed Amounts of such Class. Upon any
termination, expiration, cancellation or reduction of the Tranche A Funding
Amounts, the Borrower shall pay to each Tranche A Lender a redeployment fee in
an amount equal to the percentage set forth below opposite the period during
which such event occurs of the amount of the reduction of such Tranche A
Lender's Tranche A Funding Amount resulting from such event:

Period                                                               Fee

On or prior to the second anniversary
of the Effective Date                                                 3%

After the second anniversary of the Effective Date and on or before
the third anniversary of the Effective Date                           2%

After the third anniversary of the Effective Date and on or before
the fourth anniversary of the Effective Date                          1%

Thereafter                                                           zero

     SECTION 2.09. Repayment of Loans; Evidence of Debt.

          (a) Repayment. The Borrower hereby unconditionally promises to pay the
     Loans as follows:

               (i) to the Paying Agent for account of the Fronting Bank the
          outstanding principal amount of the Tranche A Loans on the Tranche A
          Maturity Date, and

               (ii) to the Paying Agent for account of the Tranche B Loan
          Lenders the outstanding principal amount of the Tranche B Loans on on
          each Tranche B Principal

<PAGE>
                                      -42-

          Payment Date in the aggregate principal amount equal to (x) for each
          of the first nineteen Tranche B Principal Payment Dates, 0.25% of the
          aggregate principal amount of the Tranche B Loans made on the
          Effective Date and (y) for the last Tranche B Principal Payment Date,
          the outstanding principal balance of the Tranche B Loans made on the
          Effective Date.

          (b) Adjustment of Amortization Schedule. Any prepayment of a Tranche B
     Borrowing shall be applied to reduce the subsequent scheduled repayments of
     the Tranche B Borrowings to be made pursuant to Section 2.09(a)(ii)
     ratably. To the extent not previously paid, all Tranche B Term Loans shall
     be due and payable on the Tranche B Maturity Date.

          (c) Manner of Payment. Prior to any repayment or prepayment of any
     Borrowings of either Class hereunder (including, without limitation,
     prepayments pursuant to Section 2.10), the Borrower shall select the
     Borrowing or Borrowings of the applicable Class to be paid and shall notify
     the Paying Agent by telephone (confirmed by telecopy) of such selection in
     accordance with Section 2.10(c). If the Borrower fails to make a timely
     selection of the Borrowing or Borrowings of any Class to be repaid or
     prepaid, such payment shall be applied, first, to pay any outstanding ABR
     Borrowings of such Class and, second, to Eurodollar Borrowings of such
     Class in the order of the remaining duration of their respective Interest
     Periods (the Eurodollar Borrowing with the shortest remaining Interest
     Period to be repaid first); provided that if any Tranche B Lender elects to
     decline any prepayment made pursuant to Section 2.10(b) as provided in
     Section 2.10(b)(vi), the total amount of such prepayment made by the
     Borrower in accordance with Section 2.10(b)(vi), net of the amount so
     declined, shall be applied ratably to all of the Loans (of both Types) of
     all of the Tranche B Lenders that did not make such election. Each payment
     of a Borrowing shall be applied ratably to the Loans included in such
     Borrowing.

          (d) Maintenance of Records by Lenders. The Fronting Bank and each
     Tranche B Lender shall maintain in accordance with its usual practice
     records evidencing the indebtedness of the Borrower to such Lender Party
     resulting from each Loan made by such Lender Party, including the amounts
     of principal and interest payable and paid to such Lender Party from time
     to time hereunder.

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

          (f) Effect of Entries. The entries made in the records maintained
     pursuant to paragraph (d) or (e) 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 Party or the Paying Agent to
     maintain such records 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.

<PAGE>
                                      -43-

          (g) Promissory Notes. Any Lender Party may request that Loans of
     either Class made by it be evidenced by a promissory note. In such event,
     the Borrower shall prepare, execute and deliver to such Lender Party a
     promissory note payable to such Lender Party (or, if requested by such
     Lender Party, to such Lender Party and its registered assigns) and in
     substantially the same form as Exhibit J.

          (h) Funding Participations in Tranche A Loans. If the Borrower fails
     to pay when due (at stated maturity, by acceleration or otherwise) any
     principal of any Tranche A Loan, the Paying Agent shall withdraw from the
     Tranche A Credit-Linked Deposit Account (and debit each Tranche A Lender's
     Tranche A Credit-Linked Sub-Account in the amount of) such Lender's
     Applicable Percentage of the amount of such principal not paid when due.
     Promptly following receipt by the Paying Agent of any payment from the
     Borrower of principal of Tranche A Loans, the Paying Agent shall distribute
     such payment to the Fronting Bank or, to the extent that amounts have been
     withdrawn from the Tranche A Credit-Linked Deposit Account to make any
     payment pursuant to this paragraph to the Fronting Bank, then such payment
     shall be deposited in the Tranche A Credit-Linked Deposit Account (and
     credited to each Tranche A Lender's Tranche A Credit-Linked Sub-Account in
     the amount of such Lender's Applicable Percentage of such deposit). Any
     payment made with amounts withdrawn from the Tranche A Credit-Linked
     Deposit Account to pay the Fronting Bank for any defaulted principal
     payment shall constitute the funding by the respective Tranche A Lender of
     its participation in the related Tranche A Loan and shall not constitute a
     new Loan or relieve the Borrower of its obligation to pay such principal.

     SECTION 2.10. 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 2.10, provided that no such prepayment of any
Tranche B Loan may be made before the first anniversary of the Effective Date.
In the case of the prepayment to any Tranche B Lender of any Tranche B Loan, the
Borrower shall pay to such Tranche B Lender at the time of such prepayment, in
addition to the principal amount so prepaid, interest thereon and all other
amounts payable hereunder in connection therewith, a prepayment fee in an amount
equal to the percentage set forth below opposite the period during which such
prepayment occurs of the amount of such prepayment:

Period                                                                     Fee

At any time on or prior to the second anniversary of the Effective
Date                                                                        3%

After the second anniversary of the Effective Date and on or before
the third anniversary of the Effective Date                                 2%

After the third anniversary of the Effective Date and on or before
the fourth anniversary of the Effective Date                                1%

Thereafter                                                                 zero

<PAGE>
                                      -44-

          (b) Mandatory Prepayments. The Borrower will prepay the Tranche B
     Loans as follows:

               (i) Casualty Events. Upon the date 180 days following the receipt
          by the Parent Guarantor or any of its Included Subsidiaries of the
          proceeds of insurance, condemnation award or other compensation in
          respect of any Casualty Event affecting any property of the Parent
          Guarantor or any of its Subsidiaries (or upon such earlier date as the
          Parent Guarantor or such Subsidiary, as the case may be, shall have
          determined not to repair or replace the property affected by such
          Casualty Event), the Borrower shall prepay the Tranche B Loans in an
          aggregate amount, if any, equal to 100% of the Net Available Proceeds
          of such Casualty Event not theretofore applied to the repair or
          replacement of such property, such prepayment to be effected in each
          case in the manner and to the extent specified in clauses (vi) and
          (vii) of this paragraph; provided that, notwithstanding the foregoing,
          the Borrower shall not be required to make a prepayment under this
          clause (i) if

                    (A) such insurance, condemnation award or other compensation
               result from a Casualty Event affecting any of the Principal
               Facilities, and

                    (B) the Borrower has commenced and is continuing the repair
               or replacement of such manufacturing plant on the date falling
               360 days after receipt of such insurance, condemnation award or
               other compensation.

               (ii) Equity Issuance. Upon any Equity Issuance, the Borrower
          shall prepay the Tranche B Loans in an aggregate amount equal to 25%
          of the Net Available Proceeds thereof, such prepayment to be effected
          in each case in the manner and to the extent specified in clauses (vi)
          and (vii) of this paragraph.

               (iii) Sale of Assets. Without limiting the obligation of the
          Borrower to obtain the consent of the Required Lenders pursuant to
          Section 7.03 to any Disposition not otherwise permitted hereunder, in
          the event that the Net Available Proceeds of any Disposition (herein,
          the "Current Disposition"), and of all such prior Dispositions (in
          each case including, for avoidance of doubt, Properties Designated for
          Sale) as to which a prepayment has not yet been made under this
          paragraph, shall exceed $1,000,000 then, on the same day the Current
          Disposition occurs, the Borrower will deliver to the Lenders a
          statement, certified by a Financial Officer of the Borrower, in form
          and detail satisfactory to the Paying Agent, of the amount of the Net
          Available Proceeds of the Current Disposition and of all such prior
          Dispositions and will prepay the Tranche B Loans in an aggregate
          amount equal to 100% of the Net Available Proceeds of the Current
          Disposition and such prior Dispositions, such prepayment to be
          effected in each case in the manner and to the extent specified in
          clauses (vi) and (vii) of this paragraph, provided that,
          notwithstanding the foregoing, (x) the Borrower shall not be required
          to make a prepayment under this clause (iv) in any Fiscal Year except
          to the extent that the aggregate amount of such required prepayments
          exceeds $500,000 in such Fiscal Year and (y) the Borrower shall not be
          required to make a prepayment under this clause (iii) to the extent
          that

<PAGE>
                                      -45-

                    (A) the Borrower advises the Paying Agent at the time of the
               relevant Disposition that it intends to use such Net Available
               Proceeds to reinvest the proceeds thereof into the business of
               the Parent Guarantor or any of its Subsidiaries,

                    (B) such Net Available Proceeds are in fact so applied to
               such reinvestment within 180 days of such Disposition (it being
               understood that Net Available Proceeds shall be deemed to be
               utilized in the same order in which such Dispositions occurred
               and, accordingly, any such Net Available Proceeds not so applied
               to such reinvestment for more than 180 days shall be forthwith
               applied to the prepayment of Tranche B Loans as provided above),
               and

                    (C) the amount of such Net Proceeds applied to such
               reinvestments does not exceed $10,000,000 in any Fiscal Year.

               (iv) Debt Incurrence. Upon any Debt Incurrence, the Borrower
          shall prepay the Tranche B Loans in an aggregate amount equal to 100%
          of the Net Available Proceeds thereof, such prepayment to be effected
          in each case in the manner and to the extent specified in clauses (vi)
          and (vii) of this paragraph.

               (v) Change in Control. Upon any Change in Control, the Borrower
          shall prepay the Tranche B Loans in full, such prepayment to be
          effected in each case in the manner and to the extent specified in
          clause (vi) of this paragraph.

               (vi) Application. Prepayments made pursuant to this paragraph (b)
          shall be applied ratably to the Tranche B Loans, provided that 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 relevant prepayment date, to decline all (but not less than all)
          of any such mandatory prepayment of its Tranche B Loans pursuant to
          this paragraph, in which case the aggregate amount of the prepayment
          that would have been applied to prepay Tranche B Loans but was so
          declined may, subject to the First Lien Credit Agreement, be used by
          the Borrower for any purpose not prohibited hereby.

               (vii) Prepayments Subject to First Lien Credit Agreement.
          Notwithstanding anything to the contrary contained in this Section
          2.10(b), the amount of any prepayment required under this Section
          2.10(b) by reason of any Casualty Event, Equity Issuance, Disposition
          or Debt Incurrence shall be reduced by the aggregate principal amount
          of the loans prepaid, and the aggregate amount of cash cover provided
          for letters of credit, under Section 2.01(b) of the First Lien Credit
          Agreement by reason of such event except to the extent that (i) at any
          time after such prepayment or providing of cash cover under the First
          Lien Credit Agreement, the Borrower is or was entitled to borrow loans
          under the First Lien Credit Agreement or obtain the release of such
          cash cover in an aggregate amount of at least $3,000,000 (or, if less,
          the Accumulated Shortfall (as defined below)), (ii) in the case of an
          Equity Issuance, the Borrower is or was entitled under Section
          2.10(b)(ii) of the First Lien Credit Agreement to offer (but did not
          offer) Net Available Proceeds thereof for application under Section
          2.10(b)(ii) hereof or (iii) in the case of a Casualty Event or
          Disposition, the Borrower is or was entitled under Section
          2.10(b)(vii)

<PAGE>
                                      -46-

          of the First Lien Credit Agreement to offer (but did not offer) Net
          Available Proceeds thereof for application under Section 2.10(b)(i) or
          2.10(b)(iii) hereof. The accumulated amount that the Borrower would
          have been required to apply to the prepayment of the Tranche B Loans
          under this Section 2.10(b) but for this paragraph (vii) is referred to
          herein as the "Accumulated Shortfall". The amount of the Accumulated
          Shortfall shall be reduced from time to time by the amount of each
          such prepayment subsequently made (including, solely for purposes of
          such calculation, any portion of any such prepayment that the Tranche
          B Lenders decline to accept pursuant to Section 2.10(b)(vi)). The
          Borrower shall not borrow under the First Lien Credit Agreement at any
          time the Accumulated Shortfall is greater than zero unless the
          proceeds of such borrowing are applied to reduce the Accumulated
          Shortfall.

          (c) Notices, Etc. The Borrower shall notify the Paying Agent by
     telephone (confirmed by telecopy) of any prepayment hereunder (i) in the
     case of prepayment of a Eurodollar Borrowing, under Section 2.10(a), not
     later than 11:00 a.m. New York City time, three Business Days before the
     date of prepayment, (ii) in the case of prepayment of any Borrowing under
     Section 2.10(b), not later than 11:00 a.m., New York City time, five
     Business Days before the date of prepayment or (ii) in the case of
     prepayment of an ABR Borrowing under Section 2.10(a), not later than 11:00
     a.m., New York City time, one Business Day before 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
     prepayment is given in connection with a conditional notice of termination
     of the Committed Amounts 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
     relating to a Borrowing, the Paying Agent shall advise the relevant Lender
     Parties of the contents thereof. Each partial prepayment of any Borrowing
     shall be in an amount that would be permitted in the case of a Borrowing of
     the same Type as provided in Section 2.03, 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 the prepaid
     Borrowing. Prepayments shall be accompanied by accrued interest to the
     extent required by Section 2.12 and shall be made in the manner specified
     in Section 2.09(b).

     SECTION 2.11. Fees.

     (a) The Borrower agrees to pay to the Paying Agent for the account of each
Tranche A Lender a fee, accruing (subject to Section 2.12(c)) at the rate of
5.875% (plus, for any day falling on or after May 2, 2005, the Applicable
Adjustment, if any, for such day) per annum, on the daily amount of the Tranche
A Credit-Linked Deposit of such Tranche A Lender during the period from and
including the date hereof to but excluding the date on which each of the Tranche
A Funding Amounts of all of the Tranche A Lenders and the Tranche A LC

<PAGE>
                                      -47-

Exposure have been reduced to zero. In addition, the Borrower agrees to pay to
the Paying Agent for the account of each Tranche A Lender an additional amount,
accruing at the rate of 0.10% per annum, on the daily amount of the Tranche A
Credit-Linked Deposit of such Tranche A Lender during the period from and
including the date hereof to but excluding the date on which each of the Tranche
A Funding Amounts of all of the Tranche A Lenders and the Tranche A LC Exposure
have been reduced to zero. Fees and other amounts under this paragraph accrued
to but excluding each Quarterly Date shall be payable on such Quarterly Date,
and on the date on which each of the Tranche A Funding Amounts of all of the
Tranche A Lenders and the Tranche A LC Exposure have been reduced to zero. All
fees payable under this paragraph 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).

     (b) The Borrower agrees to pay to the Fronting Bank a fronting fee, which
shall accrue at the rate or rates per annum separately agreed upon between the
Borrower and the Fronting Bank, on the average daily amount of the Tranche A LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the date on which each of the Tranche A Funding Amounts of all of the
Tranche A Lenders and the Tranche A LC Exposure have been reduced to zero, as
well as the Fronting Bank's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Fronting fees accrued to but excluding each Quarterly Date
shall be payable on such Quarterly Date; provided that all such accrued fees
shall be payable on the date on which the Tranche A Funding Amounts of all of
the Lenders are reduced to zero and any such fees accruing after the such date
shall be payable on demand. Any other fees payable to the Fronting Bank pursuant
to this paragraph shall be payable within 10 days after demand. All 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) The Borrower agrees to pay to the Administrative Agent, the Collateral
Agent and the Paying Agent, for their own respective accounts, fees payable in
the amounts and at the times separately agreed upon between the Borrower and
each of the Administrative Agent, the Collateral Agent and the Paying Agent.

     (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Paying Agent (or to the Fronting Bank, in
the case of fees payable to it) for distribution, in the case of fees payable
under Section 2.11(a), to the Lenders entitled thereto. Fees paid shall not be
refundable under any circumstances.

     SECTION 2.12. Interest.

     (a) ABR Loans. The Loans constituting each ABR Borrowing shall bear
interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.

     (b) Eurodollar Loans. The Loans constituting each Eurodollar Borrowing
shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the
Interest Period for such Borrowing plus the Applicable Margin.

     (c) Default Interest. Notwithstanding the foregoing, if all or a portion of
(i) the principal amount of any Loan, (ii) any interest payable thereon or (iii)
any fee or other amount payable by any Obligor hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), (x) in the
case of a Tranche B Loan, such overdue amount shall bear interest at a rate per
annum which is, in the case of overdue principal or interest, the rate that

<PAGE>
                                      -48-

would otherwise be applicable to such Loan plus 2% or, in the case of overdue
fees or other amounts, the Alternate Base Rate plus Applicable Margin for
Tranche B ABR Loans plus 2% and (y) in the case of a Tranche A Loan, the rate of
the fees payable by the Borrower to the Tranche A Lenders pursuant to the first
sentence of Section 2.11 shall be increased to 7.875% per annum, in each case
from the date of such non-payment until such amount is paid in full (both before
and after judgment). In addition, upon the occurrence and during the continuance
of any other Event of Default (other than an Event of Default described in the
immediately preceding sentence), the Required Lenders may elect that (1) in the
case of a Tranche B Loan, the principal of and, to the extent permitted by law,
due, owing and unpaid interest on such Loans and any other amounts owing or
accruing hereunder (other than the fees referred to in clause (2) below) or
under the other Loan Documents shall bear interest, in the case of overdue
principal of or interest on any Loan, at a rate per annum equal to 2% plus the
rate otherwise applicable to such Loan as provided above or, in the case of any
other amount, 2% plus the rate applicable to Tranche B ABR Loans as provided in
paragraph (a) of this Section and (2) in the case of a Tranche A Loan, the rate
of the fees payable by the Borrower to the Tranche A Lenders pursuant to the
first sentence of Section 2.11 shall be increased to 7.875%, in each case from
the date the Required Lenders shall so elect until such Event of Default has
been cured or waived by the Required Lenders (provided that accrual at the rate
provided for hereunder shall commence automatically upon the occurrence of an
Event of Default of the type described in clauses (l) or (m) of Article VIII),
after as well as before judgment. In the event the Borrower shall fail to pay
any fees due to the Fronting Bank under this Section in respect of Tranche A
Loans, the interest payable by the Paying Agent to the Tranche A Lenders on
their Tranche A Credit-Linked Deposits under Section 2.01(d) shall be
correspondingly reduced and the Tranche A Lenders shall without further act
succeed, ratably in accordance with their Applicable Percentages, to the rights
of the Fronting Bank with respect to such unpaid interest.

     (d) Payment of Interest. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and, in the case of Tranche
A Loans, upon termination of the Tranche A Funding Amounts; provided that (i)
interest accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other than
a prepayment of a Tranche A Loan that is an ABR Loan prior to the Tranche A
Maturity Date), accrued interest on the principal amount repaid or prepaid shall
be payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Borrowing prior to the end of the Interest
Period therefor, accrued interest on such Borrowing shall be payable on the
effective date of such conversion. Interest on Tranche A Loans accrued pursuant
to this Section shall be for the account of the Fronting Bank, except that
interest accrued on and after the date of payment from the Tranche A
Credit-Linked Deposit of any Tranche A Lender to fund such Tranche A Lender's
participation in Tranche A Loans pursuant to Section 2.09(h) shall be for the
account of such Tranche A Lender to the extent such interest relates to the
defaulted principal of the Tranche A Loans resulting in such payment.

     (e) Computation. All interest hereunder shall be computed on the basis of a
year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR
Loans based on the Prime Rate) and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate or Adjusted LIBO Rate shall be

<PAGE>
                                      -49-

determined by the Paying Agent, and such determination shall be conclusive
absent manifest error.

     SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of
the Interest Period for any Eurodollar Borrowing or the Tranche A Credit-Linked
Deposits:

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

          (b) if such Borrowing is of a particular Class of Loans, the Paying
     Agent is advised by the Required Lenders of such Class or (in the case of
     Tranche A Loans) the Fronting Bank that the Adjusted LIBO Rate for such
     Interest Period will not adequately and fairly reflect the cost to such
     Lenders or (in the case of Tranche A Loans) the Fronting Bank of making or
     maintaining their respective Loans included in such Borrowing or the
     Tranche A Credit-Linked Deposits, as the case may be, for such Interest
     Period;

then the Paying Agent shall give notice thereof to the Borrower and the Lender
Parties by telephone or telecopy as promptly as practicable thereafter and,
until the Paying Agent notifies the Borrower and the Lender Parties 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 the
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and such Borrowing (unless prepaid) shall be continued as, or converted to, an
ABR Borrowing (ii) if any Request for Loan requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing, and (iii) the Tranche A
Credit-Linked Deposits shall be invested so as to earn a return equal to the
greater of the Federal Funds Effective Rate and a rate determined by the Paying
Agent in accordance with banking industry rules and practices on interbank
compensation.

          SECTION 2.14. Increased Costs.

          (a) Increased Costs Generally. 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 account of, or
     credit extended by, any Lender (except any such reserve requirement
     reflected in the Adjusted LIBO Rate), the Paying Agent or the Fronting Bank
     or any Tranche A Credit-Linked Deposit, the Tranche A Credit-Linked Deposit
     Account or any Tranche A Credit-Linked Sub-Account, or

          (ii) impose on any Lender, the Paying Agent or the Fronting Bank or
     the London interbank market any other condition affecting this Agreement or
     Eurodollar Loans made by such Lender or any Letter of Credit or
     participation therein or any Tranche A Credit-Linked Deposit, the Tranche A
     Credit-Linked Deposit Account or any Tranche A Credit-Linked Sub-Account;

and the result of any of the foregoing shall be to increase the cost to any
Lender or the Fronting Bank of making or maintaining its Tranche A Credit-Linked
Deposit or any Eurodollar Loan (or

<PAGE>
                                      -50-

of maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, the Paying Agent or the Fronting 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, the Paying Agent or the Fronting Bank hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to
such Lender, the Paying Agent or the Fronting Bank, as the case may be, such
additional amount or amounts as will compensate such Lender, the Paying Agent or
the Fronting Bank, as the case may be, for such additional costs incurred or
reduction suffered.

     (b) Capital Requirements. If any Lender or the Fronting 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 the Fronting Bank's
capital or on the capital of such Lender's or the Fronting 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 Tranche A
Credit-Linked Deposit or the Tranche A Credit-Linked Sub-Account of such Lender,
or the Letters of Credit issued or Loans made by the Fronting Bank, to a level
below that which such Lender or the Fronting Bank or such Lender's or the
Fronting Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Fronting Bank's policies and the
policies of such Lender's or the Fronting Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Fronting Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or the Fronting Bank or such Lender's or the
Fronting Bank's holding company for any such reduction suffered.

     (c) Certificates from Lenders. A certificate of a Lender or the Fronting
Bank setting forth the amount or amounts necessary to compensate such Lender or
the Fronting Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender or
the Fronting 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 the
Fronting Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Fronting Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender or the Fronting Bank pursuant to this Section for any increased costs or
reductions incurred more than six months prior to the date that such Lender or
the Fronting 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
the Fronting Bank's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the six-month period referred to above shall be extended to
include the period of retroactive effect thereof.

     (e) Application to Taxes. Notwithstanding anything to the contrary in this
Section 2.14, this Section 2.14 shall not apply to Taxes which shall be governed
exclusively by Section 2.16 hereof.

     SECTION 2.15. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan or the reduction of any Tranche A
Credit-Linked Deposit

<PAGE>
                                      -51-

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 Loan on the date specified in
any notice delivered pursuant hereto, (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 2.18 or (e) the revocation of
any notice of prepayment pursuant to Section 2.10(c), then, in any such event,
the Borrower shall compensate each applicable Lender, the Fronting Bank, or the
Paying Agent, as applicable, for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan or a Tranche A Credit-Linked Deposit,
such loss, cost or expense to any applicable Lender, the Fronting Bank or the
Paying Agent may, at the option of such party, be deemed to include an amount
determined by such Lender, the Fronting Bank or the Paying Agent, as the case
may be, to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan or on such Tranche A Credit-Linked
Deposit had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan or such Tranche A Credit-Linked Deposit, 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 which would accrue on such principal amount for such
period at the interest rate which such Lender Party or the Fronting Bank, as the
case may be, 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 Party setting forth any amount or
amounts that such Lender Party is entitled to receive pursuant to this Section
shall be delivered to the Borrower and shall be conclusive absent manifest
error. In the event the Borrower shall fail to pay any amount due to the
Fronting Bank under this Section, the interest payable by the Paying Agent to
the Tranche A Lenders on their Tranche A Credit-Linked Deposits under Section
2.01(d) shall be correspondingly reduced and the Tranche A Lenders shall without
further act succeed, ratably in accordance with their Applicable Percentages, to
the rights of the Fronting Bank respect to such amount.

     SECTION 2.16. Taxes.

     (a) Payments Free of 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 Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) 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 Paying
Agent, Lender or Fronting 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. In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

     (b) Tranche A Credit-Linked Deposits. The Borrower shall indemnify each
Tranche A Lender, within 10 days after written demand therefor, for the full
amount of any

<PAGE>
                                      -52-

Indemnified Taxes or Other Taxes withheld by the Paying Agent with respect to
any and all payments of interest on the Tranche A Credit-Linked Deposits to the
Tranche A Lenders (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section), whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority; provided that if the Borrower
reasonably believes that such Taxes or Other Taxes were not correctly or legally
asserted, the Administrative Agent, the Paying Agent, the Collateral Agent, such
Lender or the Fronting Bank, as the case may be, will use reasonable efforts to
cooperate with the Borrower (at the Borrower's expense) to obtain a refund of
such Taxes or Other Taxes (in cash or as an offset against another existing tax
liability), the benefit of which refund shall be returned to the Borrower to the
extent provided in Section 2.16(f). The Paying Agent agrees to promptly notify
the Borrower of any claim under this Section 2.16(b) of which it becomes aware;
provided that any failure to provide such notice shall in no way impair the
rights of such party to demand and receive compensation under this Section
2.16(b). A certificate as to the amount of such payment or liability delivered
to the Borrower by a Tranche A Lender, or by the Paying Agent on behalf of the
applicable Lender, shall be conclusive absent manifest error.

     (c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, the Paying Agent, the Collateral Agent, each Lender and
the Fronting Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Administrative Agent, the Paying Agent, the Collateral
Agent, such Lender or the Fronting Bank, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided that if the
Borrower reasonably believes that such Taxes or Other Taxes were not correctly
or legally asserted, the Administrative Agent, the Paying Agent, the Collateral
Agent, such Lender or the Fronting Bank, as the case may be, will use reasonable
efforts to cooperate with the Borrower (at the Borrower's expense) to obtain a
refund of such Taxes or Other Taxes (in cash or as an offset against another
existing tax liability), the benefit of which refund shall be returned to the
Borrower to the extent provided in Section 2.16(f). The Administrative Agent,
the Paying Agent, the Collateral Agent, each Lender and the Fronting Bank agree
to promptly notify the Borrower of any claim under this Section 2.16(c) of which
they become aware; provided that any failure to provide such notice shall in no
way impair the rights of such party to demand and receive compensation under
this Section 2.16(c). A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Fronting Bank, or by the
Paying Agent on its own behalf or on behalf of a Lender or the Fronting Bank, or
by the Collateral Agent, shall be conclusive absent manifest error.

     (d) Evidence of Payments. 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 Paying 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 Paying Agent.

<PAGE>
                                      -53-

     (e) Foreign Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of any withholding tax that is an Indemnified Tax, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Paying Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate. In addition, each Foreign Lender
agrees that from time to time, when a lapse in time or change in circumstances
renders the previous documentation obsolete or inaccurate in any material
respect, it will, to the extent legally able to do so (but only upon request of
the Borrower, unless such event relates solely to changed circumstances relating
solely to such Foreign Lender), deliver to the Borrower such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be continued to be made without withholding or at a reduced rate, or
notify the Borrower and the Paying Agent that it is unable to do so. The
foregoing obligations under this Section 2.16(e) shall also apply to any Tranche
A Lender with respect to Section 2.16(b) as if the Paying Agent were the
Borrower for such purpose.

     (f) Treatment of Certain Refunds. If the Paying Agent or a Lender (or an
assignee) determines in its sole discretion that it has actually received the
benefit of a refund (in cash or as an offset against another existing tax
liability) of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional
amounts pursuant to this Section 2.16, it shall pay over such refund to Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by Borrower under this Section 2.16 with respect to the Indemnified Taxes or the
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Paying Agent or such Lender (or assignee) as determined in the Paying
Agent's or such Lender's reasonable discretion and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that Borrower upon the request of the Paying Agent
or such Lender (or assignee), agrees to repay the amount paid over to Borrower
to the Paying Agent or such Lender (or assignee) in the event that the Paying
Agent or such Lender (or assignee) is required to repay such refund to such
Governmental Authority. Nothing contained in this Section 2.16(f) shall require
the Paying Agent or any Lender (or assignee) to make available its tax returns
to Borrower or any other person. For avoidance of doubt, nothing in this Section
2.16(f) is intended to, nor shall anything in this Section 2.16(f) be construed
to, require the Paying Agent or any Lender to alter or supplement any policy,
procedure or system with respect to the identification, tracking and allocation
of tax refunds and neither the Paying Agent nor any Lender shall have any
liability to the Borrower or any Guarantor by reason of its non-identification
of any such refund.

     SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) Payments by the Obligors. Each Obligor shall make each payment required
to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or under Section 2.14, 2.15 or 2.16, or
otherwise) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 12:00 noon, 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 Paying Agent,
be deemed to have been received on the next succeeding Business Day for purposes
of calculating

<PAGE>
                                      -54-

interest thereon. All such payments shall be made to the Paying Agent at its
offices at 11 Madison Avenue, New York, New York, 10010 except as otherwise
expressly provided in the relevant Loan Document and except payments to be made
directly to the Fronting Bank as expressly provided herein and payments pursuant
to Sections 2.14, 2.15, 2.16 and 10.03, which shall be made directly to the
Persons entitled thereto. The Paying Agent shall distribute any such payments
received by it for account of any other Person to the appropriate recipient (or
will deposit such payments in the Tranche A Credit-Linked Deposit Account, as
applicable) promptly following receipt thereof. If any payment hereunder 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 hereunder or under any other Loan Document (except to
the extent otherwise provided therein) shall be made in Dollars.

     (b) Application of Insufficient Payments. If at any time insufficient funds
are received by and available to the Paying Agent to pay fully all amounts of
principal, unreimbursed LC Disbursements, interest and fees then due hereunder,
such funds shall be applied (i) first, to pay 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, to pay
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) Pro Rata Treatment. Except to the extent otherwise provided herein: (i)
each Tranche B Borrowing shall be made from the Tranche B Lenders, each payment
of fees under Section 2.11(a) shall be made for account of the Tranche B
Lenders, and each termination or reduction of the amount of the Tranche A
Funding Amounts or Tranche B Commitments under Section 2.08 shall be applied to
the respective Tranche A Funding Amounts or Tranche B Loan Commitments of the
relevant Lenders, pro rata according to the amounts of their respective
Committed Amounts or Tranche A Credit-Linked Deposits, as applicable; (ii) each
Tranche B Borrowing shall be allocated pro rata among the Tranche B Lenders
according to the amounts of their respective Tranche B Loan Commitments (in the
case of the making of Loans) or their respective Tranche B Loans that are to be
included in such Borrowing (in the case of conversions and continuations of
Tranche B Loans); (iii) each payment or prepayment of principal of Tranche B
Loans by the Borrower shall be made for account of the Tranche B Lenders pro
rata in accordance with the respective unpaid principal amounts of the Tranche B
Loans held by them; and (iv) each payment of interest on Tranche B Loans by the
Borrower shall be made for account of the Tranche B Lenders pro rata in
accordance with the amounts of interest on such Tranche B Loans then due and
payable to the Tranche B Lenders.

     (d) Sharing of Payments by Lenders. If any Lender Party 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 Loans or participations in
LC Disbursements resulting in such Lender Party receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon then due than the proportion received
by any other Lender Party, then the Lender Party receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lender Parties to the extent
necessary so that the benefit of all such payments shall be shared by

<PAGE>
                                      -55-

the Lender Parties ratably in accordance with the aggregate amount of principal
of and accrued interest on their respective Loans and participations in LC
Disbursements; 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 any Obligor 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 Parent Guarantor or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
Each Obligor consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender Party acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Obligor rights of set-off and counterclaim with respect to such participation as
fully as if such Lender Party were a direct creditor of such Obligor in the
amount of such participation.

     (e) Presumptions of Payment. Unless the Paying Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Paying Agent for account of the Lenders or the Fronting Bank hereunder that the
Borrower will not make such payment, the Paying 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 the Fronting Bank,
as the case may be (or, to the extent provided herein, deposit in the Tranche A
Credit-Linked Deposit Account) the amount due. In such event, if the Borrower
has not in fact made such payment, then each of the Lenders or the Fronting
Bank, as the case may be, severally agrees to repay to the Paying Agent
forthwith on demand the amount so distributed to such Lender or the Fronting
Bank (or, if such amount shall have been deposited in the Tranche A
Credit-Linked Deposit Account, each Tranche A Lender authorizes the Paying Agent
to withdraw such amount from the Tranche A Credit-Linked Deposit Account), and
to pay interest thereon, for each day from and including the date such amount is
distributed to it or deposited in the Tranche A Credit-Linked Deposit Account
and credited to its Tranche A Credit-Linked Sub-Account to but excluding the
date of payment to or recovery by the Paying Agent, at the Federal Funds
Effective Rate.

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

     SECTION 2.18. Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender Party requests
compensation under Section 2.14, or if the Borrower is required to pay any
additional amount to any Lender Party or any Governmental Authority for account
of any Lender Party pursuant to Section 2.16, then such Lender Party 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 (or, in the case of Section
2.16(b),

<PAGE>
                                      -56-

change the composition of the underlying obligations or securities in which the
Tranche A Credit-Linked Deposits are invested), if, in the judgment of such
Lender Party, such designation, assignment or change (i) would eliminate or
reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in
the future and (ii) would not subject such Lender Party to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender Party. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender Party in connection with any such designation or assignment.

     (b) Replacement of Lenders. If any Lender requests compensation under
Section 2.14, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for account of any Lender pursuant to
Section 2.16, or if any Lender defaults in its obligation to fund Loans
hereunder, or if any Lender does not consent to a proposed amendment,
modification or waiver of this Agreement or any other Loan Document requested by
the Borrower which requires the consent of all of the Lenders, all of the
Tranche A Lenders or all of the Tranche B Lenders to become effective (and which
is approved by at least the Required Lenders or the Required Lenders of the
applicable Class, as the case may be), then the Borrower may, at its sole
expense and effort (including with respect to the processing and recordation fee
referred to in Section 10.04(b)), upon notice to such Lender and the Paying
Agent, require such Lender to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 10.04), all
of its interests, rights and obligations under this Agreement to an assignee
reasonably acceptable to the Borrower, such acceptance not to be unreasonably
withheld or delayed, that shall assume such assigned 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 Paying Agent
(and, if a Tranche A Funding Amount is being assigned, the Fronting Bank), which
consent or consents, as the case may be, shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, unreimbursed LC Disbursements owing to it
and its Tranche A Credit-Linked Deposit, 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), (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments and (iv) such assignment shall not conflict
with any law, rule, or regulation or order of any court or other Governmental
Authority having jurisdiction. In connection with any such replacement, if the
replaced Lender does not execute and deliver to the Paying Agent a duly
completed Assignment and Acceptance reflecting such replacement within five
Business Days of the date on which the replacement Lender executes and delivers
such Assignment and Acceptance to the replaced Lender, then such replaced Lender
shall be deemed to have executed and delivered such Assignment and Acceptance. 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.

<PAGE>
                                      -57-

                                   ARTICLE III

                                    GUARANTEE

     SECTION 3.01. The Guarantee. The Guarantors hereby jointly and severally
guarantee to each Lender Party, the Administrative Agent, the Paying Agent, the
Collateral Agent and their respective successors and assigns the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the principal of and interest on the Loans made by the Lender Parties to the
Borrower and all other amounts from time to time owing to the Lender Parties,
the Administrative Agent, the Paying Agent, or the Collateral Agent by the
Borrower under this Agreement and by any Obligor under any of the other Loan
Documents, and all obligations of any Obligor to any Agent, any Lender Party or
the Arranger (or any Affiliate of any Agent, any Lender Party or the Arranger)
in respect of any Hedging Agreement, in each case strictly in accordance with
the terms thereof (such obligations being herein collectively called the
"Guaranteed Obligations"). The Guarantors hereby further jointly and severally
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.

     For purposes hereof, it is understood that any Guaranteed Obligations to
any Person arising under an agreement entered into at a time such Person (or an
Affiliate thereof) is party hereto as a Lender Party or Agent shall continue to
constitute Guaranteed Obligations, notwithstanding that such Person (or its
Affiliate) has ceased to be a Lender Party or Agent hereto (by assigning all of
its Committed Amounts, Tranche A Exposure, Tranche B Loans and other interests
herein or otherwise) at the time a claim is to be made in respect of such
Guaranteed Obligations.

     SECTION 3.02. Obligations Unconditional. The obligations of the Guarantors
under Section 3.01 are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower under this Agreement or any other agreement
or instrument referred to herein, or any substitution, release or exchange of
any other guarantee of or security for any of the Guaranteed Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section that the obligations of the Guarantors hereunder shall be absolute and
unconditional, joint and several, under any and all circumstances. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not alter or impair the liability of the
Guarantors hereunder, which shall remain absolute and unconditional as described
above:

          (i) at any time or from time to time, without notice to the
     Guarantors, the time for any performance of or compliance with any of the
     Guaranteed Obligations shall be extended, or such performance or compliance
     shall be waived;

<PAGE>
                                      -58-

          (ii) any of the acts mentioned in any of the provisions of this
     Agreement or any other agreement or instrument referred to herein shall be
     done or omitted;

          (iii) the maturity of any of the Guaranteed Obligations shall be
     accelerated, or any of the Guaranteed Obligations shall be modified,
     supplemented or amended in any respect, or any right under this Agreement
     or any other agreement or instrument referred to herein shall be waived or
     any other guarantee of any of the Guaranteed Obligations or any security
     therefor shall be released or exchanged in whole or in part or otherwise
     dealt with;

          (iv) any Lien or security interest granted to, or in favor of, the
     Collateral Agent, the Administrative Agent, the Paying Agent or any Lender
     Party or Lender Parties as security for any of the Guaranteed Obligations
     shall fail to be perfected; or

          (v) any amount of Guaranteed Obligations shall not be allowed as a
     post-petition claim in any case of which the Borrower or any of its
     properties is the subject under any bankruptcy, insolvency, receivership or
     similar law.

The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent, the Paying Agent, the Collateral Agent or any Lender Party exhaust any
right, power or remedy or proceed against the Borrower under this Agreement or
any other agreement or instrument referred to herein, or against any other
Person under any other guarantee of, or security for, any of the Guaranteed
Obligations.

     SECTION 3.03. Reinstatement. The obligations of the Guarantors under this
Article shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and the Guarantors jointly and severally agree
that they will indemnify the Administrative Agent, the Paying Agent, the
Collateral Agent and each Lender Party on demand for all reasonable costs and
expenses (including fees of counsel) incurred by the Administrative Agent, the
Paying Agent, the Collateral Agent or such Lender Party in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

     SECTION 3.04. Subrogation. The Guarantors hereby jointly and severally
agree that until the payment and satisfaction in full of all Guaranteed
Obligations and termination of the Committed Amounts of the Lenders under this
Agreement they shall not exercise any right or remedy arising by reason of any
performance by them of their guarantee in Section 3.01, whether by subrogation
or otherwise, against the Borrower or any other guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed Obligations.

     SECTION 3.05. Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Lender Parties, the obligations of the Borrower
under this

<PAGE>
                                      -59-

Agreement may be declared to be forthwith due and payable as provided in Article
VIII (and shall be deemed to have become automatically due and payable in the
circumstances provided in Article VIII) for purposes of Section 3.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 3.01.

     SECTION 3.06. Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Article constitutes an instrument for
the payment of money, and consents and agrees that any Lender Party, the
Collateral Agent, the Paying Agent or the Administrative Agent, at its sole
option, in the event of a dispute by such Guarantor in the payment of any moneys
due hereunder, shall have the right to proceed by motion for summary judgment in
lieu of complaint pursuant to N.Y. Civ. Prac. L&R ss. 3213.

     SECTION 3.07. Continuing Guarantee. The guarantee in this Article is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.

     SECTION 3.08. Rights of Contribution. The Subsidiary Guarantors hereby
agree, as between themselves, that if any Subsidiary Guarantor shall become an
Excess Funding Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
next sentence), pay to such Excess Funding Guarantor an amount equal to such
Subsidiary Guarantor's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the properties, debts and liabilities of such
Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of
such Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to
any Excess Funding Guarantor under this Section shall be subordinate and subject
in right of payment to the prior payment in full of the obligations of such
Subsidiary Guarantor under the other provisions of this Article and such Excess
Funding Guarantor shall not exercise any right or remedy with respect to such
excess until payment and satisfaction in full of all of such obligations.

     For purposes of this Section, (i) "Excess Funding Guarantor" means, in
respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid an
amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"Excess Payment" means, in respect of any Guaranteed Obligations, the amount
paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of

<PAGE>
                                      -60-

such Subsidiary Guarantor hereunder and any obligations of any other Subsidiary
Guarantor that have been Guaranteed by such Subsidiary Guarantor) to (y) the
amount by which the aggregate fair saleable value of all properties of all of
the Subsidiary Guarantors exceeds the amount of all the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of the Borrower and the Subsidiary Guarantors
hereunder and under the other Loan Documents) of all of the Subsidiary
Guarantors, determined (A) with respect to any Subsidiary Guarantor that is a
party hereto on the Effective Date, as of the Effective Date, and (B) with
respect to any other Subsidiary Guarantor, as of the date such Subsidiary
Guarantor becomes a Subsidiary Guarantor hereunder.

     SECTION 3.09. General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate law, or any state or federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender Party, the Administrative Agent,
the Paying Agent, the Collateral Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

     SECTION 3.10. No Reliance. Each Guarantor represents and warrants that, in
executing and delivering this Agreement, such Guarantor has (a) without reliance
on any Lender or any Agent, or on any information received from any Lender or
any Agent, and based upon such documents and information it deems appropriate,
made an independent investigation of the transactions contemplated hereby and
the Borrower, the Borrower's business, assets, operations, prospects and
condition, financial or otherwise, and any circumstances which may bear upon
such transactions, the Borrower or the obligations and risks undertaken herein
with respect to the Guaranteed Obligations; (b) adequate means to obtain from
the Borrower on a continuing basis information concerning the Borrower; (c) full
and complete access to the Loan Documents and any other documents executed in
connection with the Loan Documents; and (d) not relied and will not rely upon
any representations or warranties of any Lender, the Arranger or any Agent or
any acts heretofore or hereafter taken by any Lender, the Arranger or any Agent
(including but not limited to any review by any Lender, the Arranger or any
Agent of the affairs of the Borrower).

     SECTION 3.11. Release of Subsidiary Guarantors. The obligations of a
Subsidiary Guarantor under this Agreement and the other Loan Documents shall be
automatically released upon any sale or disposition of such Subsidiary Guarantor
(whether by way of sale of capital stock or assets, lease, transfer, merger,
consolidation or otherwise) to any Person other than the Parent Guarantor or a
Subsidiary in a transaction that complies with Section 7.03 and, upon request of
the Borrower, the Paying Agent shall, at the Borrower's expense, execute and
deliver such instruments and releases as may be reasonably necessary in order to
evidence the release of such Subsidiary Guarantor under the Loan Documents.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

<PAGE>
                                      -61-

     Each of the Borrower and the Parent Guarantor represents and warrants to
the Lenders that:

     SECTION 4.01. Organization; Powers. Each of the Parent Guarantor and its
Included Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite
corporate or other organizational 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 4.02. Authorization; Enforceability. The Transactions are within
each Obligor's power and authority and have been duly authorized by all
necessary action. This Agreement has been duly executed and delivered by each
Obligor and constitutes, and each of the other Loan Documents to which it is a
party when executed and delivered by such Obligor will constitute, a legal,
valid and binding obligation of such Obligor, enforceable against each Obligor
in accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

     SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except for (i) such as have been
obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents,
(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Parent Guarantor or any of its
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 Parent Guarantor or any of its Subsidiaries or assets, or give rise to
a right thereunder to require any payment to be made by any such Person, and (d)
except for the Liens created pursuant to the Loan Documents and the First Lien
Loan Documents, will not result in the creation or imposition of any Lien on any
asset of the Parent Guarantor or any of its Subsidiaries, except, in each case,
as could not reasonably be expected to result in a Material Adverse Effect.

     SECTION 4.04. Financial Condition; No Material Adverse Change.

     (a) Financial Condition. The Projections are a good faith presentation of
the information contained therein and based on reasonable assumptions and
estimates.

     (b) No Material Adverse Change. Since January 30, 2005, except for: (i) the
Disclosed Matters; (ii) the results or outcome of the investigation by the
Special Committee of the Board of Directors of the Parent Guarantor ongoing on
the date hereof concerning certain matters described in the Parent Guarantor's
Form 8-K dated October 8, 2004; and (iii) any action, suit, proceeding, inquiry
or investigation or any action of a Governmental Authority concerning the
matters referred to in clause (ii) or the historical financial statements of the
Parent

<PAGE>
                                      -62-

Guarantor and its Consolidated Subsidiaries, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Parent Guarantor and its Included Subsidiaries, taken as a
whole.

     SECTION 4.05. Properties.

     (a) Property Generally. Each of the Parent Guarantor and its Included
Subsidiaries has good title to, or valid leasehold interests in (other than with
respect to the leased properties located at 3167 Peachtree Road, Atlanta, GA,
125 South Main Street, Memphis, TN and 1025A Providence Road, Charlotte, NC),
all its real and personal property material to its business, subject only to
Liens permitted by Section 7.02 and except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for their intended purposes.

     (b) Intellectual Property. Each of the Parent Guarantor and its Included
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 Parent Guarantor and its Included 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.

     SECTION 4.06. Litigation.

     (a) Actions, Suits and Proceedings. There are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority now pending against or, to the knowledge of the Borrower or the Parent
Guarantor, threatened against or affecting the Parent Guarantor or any of its
Included Subsidiaries (i) 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 any present or future actions, suits, investigations,
proceedings or governmental actions encompassed by the exceptions set forth in
Section 4.04(b)) or (ii) that involve this Agreement or the Transactions.

     (b) Disclosed Matters. Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters (other than those identified with
an "*" on Schedule IV) that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.

     SECTION 4.07. Environmental Matters.

     (a) Neither the Parent Guarantor nor any of its Subsidiaries (i) currently
has any Environmental Liability which would reasonably be expected to have a
Material Adverse Effect, (ii) has received notice that it is in non-compliance
with or has a liability or potential liability under any Environmental Laws
(except for any non-compliance or other Environmental Liabilities which would
not reasonably be expected to have a Material Adverse Effect) or (iii) or has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA, and none of the Real Property or assets of the
Parent Guarantor or any of its Subsidiaries located in the United States and
owned, leased or operated by the Parent Guarantor

<PAGE>
                                      -63-

or any of its Subsidiaries has been identified on the current or, to the
Borrower's and the Parent Guarantor's actual knowledge any proposed, (x)
National Priorities List under 40 C.F.R. Section 300, (y) CERCLIS list or (z)
any similar list arising from a state statute similar to CERCLA.

     (b) Except as set forth in Schedule V, no Hazardous Materials have been
arranged for disposal, generated, stored, disposed of, managed, Released or
otherwise handled at, or shipped or transported to or from any of the Real
Property of the Parent Guarantor or any of its Subsidiaries or are otherwise
present at, on, in or under any of the Real Property, or to the best of the
Borrower's and the Parent Guarantor's actual knowledge, at or from any adjacent
site or facility in a manner that would reasonably be expected to affect the
Real Property of the Parent Guarantor or any of its Subsidiaries, except for (i)
Hazardous Materials, such as cleaning chemicals, pesticides and other materials
used, produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in the ordinary course of business in
compliance with Environmental Laws or (ii) any such disposal, generation,
storage, arrangement for disposal, disposal, management, Release, handling,
shipment, transport or presence that would not reasonably be expected to have a
Material Adverse Effect.

     (c) Each of the Parent Guarantor and its Subsidiaries (i) are in compliance
with all applicable Environmental Laws in connection with the operation of its
respective facilities, businesses and other assets and properties, and there are
no unresolved notices of violation or non-compliance with respect thereto, and
(ii) have obtained and maintain in full force and effect all material permits,
licenses, certificates and approvals required for their respective facilities
and operations under any Environmental Laws and comply with all such permits,
licenses, certificates and approvals, except in the case of (i) and (ii) above
for any non-compliance or failure to obtain or maintain in full force and effect
that would not reasonably be expected to have a Material Adverse Effect.

     SECTION 4.08. Compliance with Laws and Agreements. Except as to matters
covered by Section 4.07 (which shall be governed by such Section), each of the
Parent Guarantor and its Included 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 (i) with respect to periodic filings required to be made by
the Parent Guarantor with the Securities and Exchange Commission on or prior to
the Restatement Date, (ii) with respect to the Disclosed Matters and (iii) 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 4.09. Investment and Holding Company Status. Neither the Parent
Guarantor nor any of its Included 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 4.10. Taxes. Each of the Parent Guarantor and its Included
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 such Person has set aside on its books
adequate reserves to the extent required by GAAP or (b) to the

<PAGE>
                                      -64-

extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

     SECTION 4.11. 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, exceed the fair
market value of the assets of such Plan by more than an amount that would have a
Material Adverse Effect, 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 the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of all such underfunded Plans by an amount that would
have a Material Adverse Effect.

     SECTION 4.12. Disclosure. As of the Effective Date, the Borrower and the
Parent Guarantor have disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which it or any of its respective Included
Subsidiaries are subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. As of the Effective Date, the written reports, financial
statements, certificates and other written information furnished by or on behalf
of the Obligors to the Lenders on or prior to the Effective Date in connection
with the negotiation of this Agreement and the other Loan Documents or delivered
hereunder or thereunder (as modified or supplemented by other information so
furnished on or prior to the Effective Date), when taken as a whole, do not
contain any material misstatement of fact or omit 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 (a) with respect to
projected financial information, the Borrower and the Parent Guarantor represent
only that such information was prepared in good faith and based upon assumptions
believed to be reasonable at the time, (b) the Borrower and the Parent Guarantor
make no representation or warranty, as to any financial information pertaining
to dates or periods falling prior to its Fiscal Year ending 2006 and (c) the
Borrower and the Parent Guarantor make no representation or warranty as to any
financial information for any period of Fiscal Year 2006 delivered prior to the
Restatement Date except as set forth in Section 6.01.

     SECTION 4.13. Use of Credit. Neither the Parent Guarantor nor any of its
Included Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying Margin Stock, and no
part of the proceeds of any extension of credit hereunder will be used to buy or
carry any Margin Stock.

     SECTION 4.14. Material Agreements and Liens.

     (a) Material Agreements. Part A of Schedule II is a complete and correct
list of each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of

<PAGE>
                                      -65-

credit (or commitment for any extension of credit) to, or guarantee by, the
Parent Guarantor or any of its Included Subsidiaries outstanding on the date
hereof the aggregate principal or face amount of which equals or exceeds (or may
equal or exceed) $250,000, and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of Schedule II.

     (b) Liens. Part B of Schedule II is a complete and correct list of each
Lien securing Indebtedness of any Person outstanding on the date hereof the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $100,000, and covering any property of the Parent Guarantor or any of
its Included Subsidiaries and the property covered by each such Lien is
correctly summarized in Part B of Schedule II.

     SECTION 4.15. Montana Mills. Montana Mills and all of its Subsidiaries are
Inactive Companies.

     SECTION 4.16. Subsidiaries and Investments.

     (a) Subsidiaries. Set forth in Part A of Schedule VI is a complete and
correct list of all of the Subsidiaries of the Parent Guarantor as of the date
hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule VI, (x) the
Parent Guarantor and each of its Subsidiaries owns, free and clear of Liens
(other than Liens created pursuant to the Security Documents or otherwise
permitted pursuant to Section 7.02), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in Part A
of Schedule VI, (y) all of the issued and outstanding capital stock of each such
Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) there are no outstanding Equity Rights with respect to
such Person.

     (b) Investments. Set forth in Part B of Schedule VI is a complete and
correct list of each Investments (other than Investments disclosed in Part A of
Schedule VI and other than Investments of the types referred to in clauses (b),
(c), (d), (e), (f), (g) and (m) of Section 7.05) held by the Parent Guarantor or
any of its Included Subsidiaries in any Person on the date hereof (other than
Investments, the aggregate outstanding amount of which do not exceed $100,000)
and, for each such Investment, (x) the identity of the Person or Persons holding
such Investment and (y) the nature of such Investment. Except as disclosed in
Part B of Schedule VI, each of the Parent Guarantor and its Subsidiaries owns,
free and clear of all Liens (other than Liens created pursuant to the Security
Documents or otherwise permitted pursuant to Section 7.02), all such
Investments.

     (c) Restrictions on Included Subsidiaries. Except as disclosed on Schedule
III, none of the Included Subsidiaries of the Parent Guarantor is, on the date
hereof, subject to any indenture, agreement, instrument or other arrangement of
the type described in Section 7.08.

     SECTION 4.17. Real Property. Set forth on Schedule VII is a true, correct
and complete list, as of the date hereof, of all of the owned and leased real
property interests held by

<PAGE>
                                      -66-

each Obligor ("Real Property"), indicating in each case whether the respective
property is owned or leased, the identity of the owner or lessee and the
location of the respective property. Except as set forth on Schedule VII hereto,
each Obligor has good, sufficient and legal title to all of the owned Collateral
(as defined in the Security Agreement) (and any other material properties and
assets, if any) indicated on such Schedule as being owned by it and will have
good, sufficient and legal title of all after-acquired Collateral (as defined in
the Security Agreement) (and any other after-acquired material properties and
assets, if any), in each case, free and clear of all Liens except for the
Permitted Encumbrances and minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for its intended purposes. Each Obligor has valid leasehold interests
in the real property and personal property leased by such Obligor (other than
with respect to the leased properties located at 3167 Peachtree Road, Atlanta,
GA, 125 South Main Street, Memphis, TN and 1025A Providence Road, Charlotte,
NC), subject to Permitted Encumbrances and minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for its intended purposes. The Collateral Agent has, as
of the Effective Date, a valid, and upon the filing or other recordation of
Uniform Commercial Code financing statements and other documents delivered by
the Obligors to the Collateral Agent on the Effective Date, perfected Liens on
the Collateral, subject only to Permitted Encumbrances (provided, (x) solely
with respect to Copyrights and Patents (as such terms are defined in the
Security Agreement), of and to the extent that such priority and perfection may
be achieved by the filing of Uniform Commercial Code financing statements and
appropriate documents with the United States Copyright Office and the United
States Patent and Trademark Office, (y) solely with respect to real property, to
the extent that such priority and perfection is achieved by delivering and
recording a Mortgage in the appropriate county filing office and (z) solely with
respect to fixtures, to the extent that such fixtures are affixed to real
property covered by a duly recorded Mortgage or duly filed Uniform Commercial
Code fixture filing), securing the payment of the Second Lien Secured
Obligations, and such Liens are entitled to all of the rights, priorities and
benefits afforded by the Uniform Commercial Code or other applicable law as
enacted in any relevant jurisdiction which relates to perfected Liens. For
avoidance of doubt, the proviso contained in the immediately preceding sentence
does not limit any representation or warranty made in any Mortgage. No Mortgage
encumbers any portion of Real Property which is located in an area that has been
identified as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968, except
as set forth on Schedule VII.

     SECTION 4.18. Solvency. As of the date hereof, after giving effect on a pro
forma basis to the extensions of credit hereunder and to the other transactions
contemplated hereby, (i) the aggregate value of all properties of the Parent
Guarantor and its Included Subsidiaries at their present fair saleable value
(i.e., the amount that may be realized within a reasonable time, considered to
be six to eighteen months, either through collection or sale at the regular
market value, conceiving the latter as the amount that could be obtained for the
properties in question within such period by a capable and diligent
businessperson from an interested buyer who is willing to purchase under
ordinary selling conditions), exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Parent Guarantor and its Included Subsidiaries, (ii) the
Parent Guarantor and its Included Subsidiaries will not, on a consolidated
basis, have unreasonably small capital with which to conduct their business
operations as heretofore conducted and (iii) the Parent Guarantor and its

<PAGE>
                                      -67-

Included Subsidiaries will have, on a consolidated basis, sufficient cash flow
to enable them to pay their debts as they mature.

     SECTION 4.19. Labor Matters. Except as set forth on Schedule VIII, (a)
neither the Parent Guarantor nor any of its Included Subsidiaries is subject to
any collective bargaining agreement, (b) no petition for certification or union
election is pending with respect to the employees of the Parent Guarantor or any
of its Included Subsidiaries and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of the
Parent Guarantor or any of its Included Subsidiaries and (c) there are no
strikes, slowdowns or work stoppages pending or, to the knowledge of the Parent
Guarantor or any of its Included Subsidiaries, threatened between the Parent
Guarantor or any of its Included Subsidiaries and its respective employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule VIII,
neither the Parent Guarantor nor any of its Included Subsidiaries is subject to
an employment contract.

                                    ARTICLE V

                                   CONDITIONS

     SECTION 5.01. Effective Date. The obligations of the Lenders to make Loans
and of the Fronting Bank to issue Letters of Credit hereunder shall not become
effective until the date on which the Paying Agent shall have received each of
the following documents, each of which shall be satisfactory to the Paying Agent
(and to the extent specified below, to each Lender) in form and substance (or
such condition shall have been waived in accordance with Section 10.02):

          (a) Executed Counterparts. From each party hereto either (i) a
     counterpart of this Agreement signed on behalf of such party or (ii)
     written evidence satisfactory to the Paying Agent (which may include
     telecopy transmission of a signed signature page to this Agreement) that
     such party has signed a counterpart of this Agreement.

          (b) Opinions of Counsel to the Obligors. Favorable written opinions
     (addressed to the Agents and the Lenders and dated the Effective Date) of
     Cahill Gordon & Reindel LLP, special New York counsel to the Obligors;
     Frank Murphy, general counsel of the Borrower; Kilpatrick Stockton, LLP,
     special North Carolina and intellectual property counsel to the Obligors;
     Taylor Law Offices, P.C., special Illinois counsel to the Obligors; Allman
     Spry Leggett & Crumpler, P.A., special North Carolina real estate counsel
     to the Obligors; Stites & Harbison PLLC, special Kentucky counsel to the
     Obligors; and Andrews Kurth LLP, special Texas counsel to the Obligors.

          (c) Corporate Documents. Such documents and certificates as the Paying
     Agent or its counsel may reasonably request relating to the organization,
     existence and good standing of each Obligor, the authorization of the
     Transactions and any other legal matters relating to the Obligors, this
     Agreement or the Transactions, all in form and substance reasonably
     satisfactory to the Paying Agent and its counsel.

<PAGE>
                                      -68-

          (d) Officer's Certificate. A certificate, dated the Effective Date and
     signed by the President, a Vice President or a Financial Officer of the
     Borrower, (i) confirming compliance with the conditions set forth in the
     lettered clauses of the first sentence of Section 5.02 and (ii) as to the
     matters set forth in Section 4.18.

          (e) Security Agreement. The Security Agreement, duly executed and
     delivered by each Obligor and the Collateral Agent and the certificates
     identified under the name of such Obligor in Annex 3 thereto, in each case
     accompanied by undated stock powers executed in blank. In addition, each
     Obligor shall have taken such other action (including delivering to the
     Collateral Agent, for filing, appropriately completed copies of Uniform
     Commercial Code financing statements and taking any necessary action in
     connection therewith) as the Collateral Agent shall have reasonably
     requested in order to perfect the security interests created pursuant to
     the Security Agreement.

          (f) Control Agreements. The Concentration Account Control Agreements,
     each duly executed and delivered by the Shared Lien Collateral Agent and
     the applicable Concentration Account Bank with respect to a Concentration
     Account.

          (g) Mortgages and Title Insurance. The following documents, each of
     which shall be executed (and, where appropriate, acknowledged) by Persons
     satisfactory to the Paying Agent:

               (i) one or more Mortgages covering the Principal Facilities, in
          each case duly executed and delivered by the Borrower in recordable
          form (in such number of copies as the Paying Agent shall have
          reasonably requested);

               (ii) one or more mortgagee policies of title insurance on forms
          of and issued by one or more title companies reasonably satisfactory
          to the Paying Agent (the "Title Companies"), insuring the validity and
          priority of the Liens created under the Mortgages covering the
          Principal Facilities for and in amounts equal to at least one hundred
          fifteen percent (115%) of the appraised value of each of the Principal
          Facilities, subject only to such exceptions as are reasonably
          satisfactory to the Paying Agent and, to the extent necessary under
          applicable law, for filing in the appropriate county land offices,
          Uniform Commercial Code financing statements covering fixtures, in
          each case appropriately completed and duly executed;

               (iii) as-built surveys of recent date of each of the Principal
          Facilities, other than those Principal Facilities located at 1814 Ivy
          Avenue, Winston-Salem, NC and 3190 Center Park Boulevard,
          Winston-Salem, NC, showing such matters as may be required by the
          Paying Agent, which surveys shall be in form and content reasonably
          acceptable to the Paying Agent, shall be certified to the Paying
          Agent, the Collateral Agent and the Title Companies, and shall have
          been prepared by a registered surveyor acceptable to the Paying Agent;
          and

               (iv) certified copies of permanent and unconditional certificates
          of occupancy (other than for the Principal Facility located at 1814
          Ivy Avenue,

<PAGE>
                                      -69-

          Winston-Salem, NC) permitting the fully functioning operation and
          occupancy of such Principal Facility and of such other permits
          necessary for the use and operation of such Principal Facility issued
          by the respective governmental authorities having jurisdiction over
          such Principal Facility.

         In addition, the Borrower shall have paid to the Title Companies all
         expenses and premiums of the Title Companies in connection with the
         issuance of such policies and in addition shall have paid to the Title
         Companies an amount equal to the recording and stamp taxes payable in
         connection with recording the Mortgages and Uniform Commercial Code
         fixture filings, if applicable, in the appropriate county land offices.

          (h) Insurance. Certificates of insurance evidencing the existence of
     all insurance required to be maintained by the Parent Guarantor pursuant to
     Section 6.05(a) and the designation of the Shared Lien Collateral Agent as
     the loss payee or additional named insured thereunder. In addition, the
     Borrower shall have delivered a certificate of the president, a
     vice-president, or a Financial Officer of the Borrower stating that the
     insurance described in the certificates referred to in the preceding
     sentence is in full force and effect and that all premiums then due and
     payable thereon have been paid. (i) Repayment of Existing Indebtedness.
     Evidence that the principal of and interest on, and all other amounts owing
     in respect of, the Indebtedness (including any contingent or other amounts
     payable in respect of letters of credit) outstanding under the Existing
     Credit Agreement shall have been (or shall be simultaneously) paid in full,
     that any commitments to extend credit under the Existing Credit Agreement
     shall have been canceled or terminated and that all Guarantees in respect
     of, and all Liens securing, any such Indebtedness shall have been released
     (or arrangements for such release satisfactory to the Required Lenders
     shall have been made).

          (j) Intercreditor Agreement. The Intercreditor Agreement, duly
     executed and delivered by each Obligor, the Paying Agent, the Collateral
     Agent, the Paying Agent, WFF, as collateral agent under the First Lien Loan
     Documents, and CSFB, as administrative agent under the First Lien Loan
     Documents.

          (k) First Lien Loan Documents. Evidence that the First Lien Loan
     Documents shall have been executed and delivered by all of the Persons
     stated to be party thereto in their respective forms then most recently
     delivered to the Paying Agent, and evidence that the "Effective Date" (as
     defined in the First Lien Credit Agreement) will occur on the Effective
     Date.

          (l) Due Diligence. Reports from (i) Keen & Shotenstein with respect to
     the components of the Collateral, and (ii) an environmental site assessment
     (commonly known as a "Phase I") of the Principal Facility located at 1814
     Ivy Avenue, Winston-Salem, NC performed by a qualified environmental
     assessment firm reasonably acceptable to the Paying Agent.

          (m) Certain Regulatory Matters. All documentation requested by either
     Agent or any Lender under applicable "know your customer" and anti-money
     laundering rules and

<PAGE>
                                      -70-

     regulations, including without limitation under the USA PATRIOT Act (Title
     III of Pub. L. 107-56 (signed into law October 26, 2001).

          (n) Lien Results. The Paying Agent shall have received the results of
     a recent lien search in each relevant jurisdiction with respect to the
     Obligors, and such search shall reveal no Liens on any of the assets of any
     Obligor except for Liens permitted by Section 7.02 or Liens to be
     discharged on or prior to the Effective Date.

          (o) Other Documents. Such other documents as the Paying Agent or any
     Lender or special New York counsel to CSFB may reasonably request.

     The obligation of each Lender to make its initial extension of credit
hereunder is also subject to the payment by the Borrower of (i) such fees as the
Borrower shall have agreed to pay to any Lender or any Agent in connection
herewith, and (ii) the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy LLP ("MTHM"), special New York counsel to CSFB, in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
Loan Documents, the extensions of credit hereunder and otherwise in connection
with the Transactions (to the extent that statements for such fees and expenses
have been delivered to the Borrower). Borrower agrees that any prior writings
with respect to the fees and expenses of MTHM that are the subject of this
paragraph are superseded by the Borrower's Obligation under this paragraph.

     The Paying 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 Fronting Bank
to issue Letters of Credit hereunder shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 10.02) on
or prior to 3:00 p.m., New York City time, on April 1, 2005 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).

     SECTION 5.02. Each Credit Event. The obligation of each Lender to make any
Loan, and of the Fronting Bank to issue, amend, renew or extend any Letter of
Credit, is additionally subject to the satisfaction of the following conditions:

          (a) the representations and warranties of the Borrower and the Parent
     Guarantor set forth in this Agreement, and of each Obligor in each of the
     other Loan Documents to which it is a party, shall be true and correct in
     all material respects on and as of the date of such Loan or the date of
     issuance, amendment, renewal or extension of such Letter of Credit, as
     applicable (unless any such representation or warranty expressly relates to
     an earlier date, in which case such representation or warranty shall be
     true and correct in all material respects as of such earlier date);

          (b) at the time of and immediately after giving effect to such Loan or
     the issuance, amendment, renewal or extension of such Letter of Credit, as
     applicable, no Default shall have occurred and be continuing;

          (c) the total Tranche A Exposures shall not exceed the total Tranche A
     Funding Amounts; and

<PAGE>
                                      -71-

          (d) for each borrowing of a Loan, Borrower shall have delivered a
     completed and signed Request for Loan and for each issuance of a Letter of
     Credit, Borrower shall have provided the information required by Section
     2.05(b).

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 the preceding
sentence.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

     Until the Tranche A Funding Amounts 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, each of the Borrower and the
Parent Guarantor covenants and agrees with the Lenders that:

     SECTION 6.01. Financial Statements and Other Information. The Parent
Guarantor will furnish to the Paying Agent for distribution to each Lender:

          (a) within 90 days after the end of each Fiscal Year (or, in the case
     of the 2005 Fiscal Year, within 90 days after the Restatement Date), the
     audited consolidated balance sheets and related statements of operations,
     stockholders' equity and cash flows of the Parent Guarantor and its
     Consolidated Subsidiaries as of the end of and for such year, setting forth
     in each case in comparative form the figures for the previous Fiscal Year
     (setting forth in a footnote or in a financial schedule thereto
     consolidating balance sheets and related statements of operations and cash
     flows for the Parent Guarantor, the Borrower, Freedom Rings, LLC, the other
     Consolidated Subsidiaries that are Guarantors and the Consolidated
     Subsidiaries that are not Guarantors; provided that if the separate listing
     of Freedom Rings, LLC is not acceptable to PricewaterhouseCoopers LLP (or
     other independent public accountants of recognized national standing of the
     Borrower), then Freedom Rings, LLC will be included with the other
     Consolidated Subsidiaries that are Guarantors), all reported on by
     PricewaterhouseCoopers 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 each one of such consolidated
     financial statements present fairly in all material respects the financial
     condition and results of operations of the Parent Guarantor and its
     Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
     consistently applied;

          (b) within 45 days after the end of each of the first three Fiscal
     Quarters of each Fiscal Year:

               (i) with respect to each such Fiscal Quarter ending prior to the
          Restatement Date, the Modified Financial Statements as of the end of
          and for such Fiscal Quarter and the then elapsed portion of the Fiscal
          Year, setting forth in

<PAGE>
                                      -72-

          each case in comparative form the figures for the corresponding date,
          period or periods of the Projections, all certified by a Financial
          Officer of the Parent Guarantor as being a good faith presentation of
          the information contained therein and based on reasonable assumptions
          and estimates; and

               (ii) with respect to each such Fiscal Quarter ending after the
          Restatement Date, the consolidated balance sheet and related
          statements of operations, stockholders' equity and cash flows of the
          Parent Guarantor and its Consolidated Subsidiaries as of the end of
          and for such Fiscal Quarter and the then elapsed portion of the Fiscal
          Year (setting forth in a footnote or in a financial schedule thereto
          consolidating balance sheets and related statements of operations and
          cash flows in the same presentation as for the information presented
          pursuant to Section 5.01(a)), setting forth in each case in
          comparative form the figures for (or, in the case of the balance
          sheet, as of the end of) the corresponding period or periods of the
          previous Fiscal Year, all certified by a Financial Officer of the
          Parent Guarantor as presenting fairly in all material respects the
          financial condition and results of operations of the Parent Guarantor
          and its Consolidated Subsidiaries on a consolidated basis in
          accordance with GAAP consistently applied, subject to normal year-end
          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 (provided that in the case of February 2005
     only, within 45 days after the end of such fiscal month):

               (i) with respect to each such fiscal month ending prior to the
          Restatement Date, the Modified Financial Statements as of the end of
          and for such fiscal month and the then elapsed portion of the Fiscal
          Quarter, setting forth in each case in comparative form the figures
          for the corresponding date, period or periods of the Projections, all
          certified by a Financial Officer of the Parent Guarantor as being a
          good faith presentation of the information contained therein and based
          on reasonable assumptions and estimates; and

               (ii) with respect to each such fiscal month ending after the
          Restatement Date, the consolidated balance sheet and related
          statements of operations and cash flows of the Parent Guarantor and
          its Consolidated Subsidiaries as of the end of and for such fiscal
          month and the then elapsed portion of the Fiscal Quarter (setting
          forth in a footnote or in a financial schedule thereto consolidating
          balance sheets and related statements of operations and cash flows in
          the same presentation as for the information presented pursuant to
          Section 5.01(a)), all certified by a Financial Officer of the Parent
          Guarantor as presenting fairly in all material respects the financial
          condition and results of operations of the Parent Guarantor and its
          Consolidated Subsidiaries on a consolidated basis in accordance with
          GAAP consistently applied, subject to normal quarterly and year-end
          audit adjustments and the absence of footnotes;

<PAGE>
                                      -73-

          (d) concurrently with any delivery of financial statements under
     clause (a) or (b) of this Section, a certificate of a Financial Officer of
     the Parent Guarantor (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) setting
     forth reasonably detailed calculations demonstrating compliance with
     Section 7.09 and such portions of Sections 7.01, 7.02, 7.03 and 7.05
     requiring compliance with certain specified limits, and (iii) stating
     whether any material change in GAAP used in preparing such financial
     statements or in the application thereof has occurred since the date of the
     most recently delivered audited financial statements pursuant to Section
     6.01(a) 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) of this Section, a certificate of the accounting firm that
     reported on such financial statements stating whether it obtained knowledge
     during the course of its examination of such financial statements of any
     Default (which certificate may be limited to the extent required by
     accounting rules or guidelines);

          (f) [reserved];

          (g) [reserved];

          (h) not later than the first Business Day following the Friday of each
     week falling on or before June 24, 2005, a 13-week rolling cash flow
     projection (beginning with the second Monday preceding such Friday),
     included therewith, (i) notice of any variance between actual cash receipts
     and disbursements and such aforesaid projections for such month previously
     delivered and (ii) a narrative detailing the reasons for and causes of such
     variance, all of the foregoing to be in form and substance reasonably
     satisfactory to the Paying Agent;

          (i) within 60 days after the commencement of each Fiscal Year
     commencing after the Effective Date, the annual operating plan for the
     Financial Test Group, including an annual budget for the Financial Test
     Group, forecasts of the income statement, the balance sheet and an
     operating profit and cash flow statement for the immediately succeeding
     year;

          (j) as soon as available and in any event 90 days after the end of
     each fiscal year of each Majority-Owned Joint Venture that ends after the
     Effective Date, a consolidated balance sheet for such Majority-Owned Joint
     Venture and its consolidated subsidiaries as of the end of such fiscal year
     and the related consolidated statements of income or operations,
     shareholders' equity and cash flows for such fiscal year, setting forth in
     each case in comparative form the figures for the previous fiscal year, all
     reported on by PricewaterhouseCoopers LLP or other independent public
     accountants of recognized national standing to the effect that such
     consolidated financial statements present fairly in all material respects
     the financial condition and results of operations of the such
     Majority-Owned Joint Venture and its consolidated subsidiaries on a
     consolidated basis in accordance with GAAP consistently applied;

<PAGE>
                                      -74-

          (k) promptly after the same become publicly available, copies of all
     periodic and other reports, proxy statements and other materials filed by
     the Parent Guarantor or any of its Subsidiaries with the Securities and
     Exchange Commission, or any Governmental Authority succeeding to any or all
     of the functions of the Securities and Exchange Commission, or with any
     national securities exchange;

          (l) concurrently with the dispatch or receipt of the same to or from
     First Lien Lenders or any of their agents under the First Lien Credit
     Agreement, copies of all communications (other than requests for extensions
     of credit or notices of prepayment) dispatched to or received from any
     First Lien Lender or any agent therefor under or in connection with the
     First Lien Credit Agreement;

          (m) promptly following any request therefor, such other information
     regarding the operations, business affairs and financial condition of the
     Parent Guarantor or any of its Included Subsidiaries, or compliance with
     the terms of this Agreement and the other Loan Documents, as the Paying
     Agent or any Lender (through the Paying Agent) may reasonably request; and

          (n) within five Business Days after May 2, 2005, May 31, 2005, and
     June 30, 2005, a report providing the status of Covered Property Value and
     Mortgage Property Value as of each such date relative to the applicable
     Mortgaged Property Requirements for such date.

     Information required to be delivered pursuant to Sections 6.01(a), 6.01(b)
and 6.01(k) above shall be deemed to have been delivered on the date on which
the Parent Guarantor provides notice to the Paying Agent that such information
has been posted on the Parent Guarantor's website on the internet or at another
website identified in such notice and accessible by the Paying Agent and the
Lenders without charge; provided that (i) such notice may be included in the
certificate delivered pursuant to Section 6.01(d) and (ii) the Parent Guarantor
shall deliver, or cause to be delivered, paper copies of the information
referred to in Sections 6.01(a), 6.01(b) and 6.01(k) above to the Paying Agent
upon any request for such delivery.

     SECTION 6.02. Notices of Material Events. The Borrower (for itself and on
behalf of the Parent Guarantor) will furnish to the Paying Agent and each Lender
written notice of the following:

          (a) promptly after obtaining knowledge of any Default, the occurrence
     of such Default;

          (b) within ten (10) Business Days after discovery by Borrower, the
     filing or commencement of any action, suit or proceeding by or before any
     arbitrator or Governmental Authority against or affecting the Parent
     Guarantor or any of its Subsidiaries that, if adversely determined, could
     reasonably be expected to result in a Material Adverse Effect;

          (c) within ten (10) Business Days after discovery by Borrower, the
     occurrence of any ERISA Event that, alone or together with any other ERISA
     Events that have occurred, could reasonably be expected to result in a
     Material Adverse Effect;

<PAGE>
                                      -75-

          (d) within ten (10) Business Days after discovery by Borrower, the
     assertion of any Environmental Claim by any Person against, or with respect
     to the activities of, the Parent Guarantor or any of its Subsidiaries and
     any alleged violation of or non-compliance with any Environmental Laws or
     any permits, licenses or authorizations, other than any Environmental Claim
     or alleged violation that, if adversely determined, would not (either
     individually or in the aggregate) have a Material Adverse Effect; and

          (e) within ten (10) Business Days after discovery by Borrower, 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 or the Parent
Guarantor setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken by the Borrower or the
Parent Guarantor, as the case may be, with respect thereto.

     SECTION 6.03. Existence; Conduct of Business. The Parent Guarantor will,
and, subject to Section 7.03, will cause each of its Included 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 and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.03.

     SECTION 6.04. Payment of Obligations. The Parent Guarantor will, and will
cause each of its Included Subsidiaries to, pay its obligations, including tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Parent Guarantor or such Included Subsidiary has set aside on its books
adequate reserves with respect thereto if required by and in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

     SECTION 6.05. Maintenance of Properties; Insurance. (a) Except to the
extent that such obligations are express obligations of any landlord under a
lease, the Parent Guarantor will, and will cause each of its Included
Subsidiaries to, (i) keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear and
Casualty Events excepted, and (ii) maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

     (b) Compromise, Adjustment or Settlement. After the Obligors have
discharged all of their obligations under the First Lien Loan Documents in full,
the Paying Agent shall be entitled at its option to participate in any
compromise, adjustment or settlement in connection with any claims for loss,
damage or destruction under any policy or policies of insurance, in excess of
$2,000,000, and if the Paying Agent so shall elect to participate in such
compromise, adjustment or settlement, the Parent Guarantor shall, and shall
cause each of its Included

<PAGE>
                                      -76-

Subsidiaries to, within five Business Days after request therefor reimburse the
Paying Agent for all out-of-pocket expenses (including reasonable attorneys'
fees and disbursements) incurred by the Paying Agent in connection with such
participation. Neither the Parent Guarantor nor any of its Included Subsidiaries
shall make any compromise, adjustment or settlement in connection with any such
claim, in respect of which the Paying Agent elected to participate, without the
approval of the Paying Agent, which will not be unreasonably withheld, delayed
or conditioned.

     SECTION 6.06. Books and Records; Inspection Rights. The Parent Guarantor
will, and will cause each of its Included 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 Parent
Guarantor will, and will cause each of its Included Subsidiaries to, permit any
representatives designated by the Paying Agent or any Lender Party (at such
Lender Party's sole expense except during the continuance of an Event of
Default), upon reasonable prior notice, to visit and 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,
all at such reasonable times and as often as reasonably requested.

     SECTION 6.07. Compliance with Laws. (a) The Parent Guarantor will, and will
cause each of its Included 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.

     (b) Notification of Notices and Orders. The Borrower shall notify the
Paying Agent and the Collateral Agent promptly of any material notice, order,
claim or demand that such party receives from any Governmental Authority or any
other Person with respect to the Borrower's compliance with or liability under
any laws or regulations (including Environmental Laws) applicable to the Real
Property and promptly take any and all actions to challenge such notice, order,
claim or demand in accordance with accepted practices and such other actions
reasonably necessary to bring its operations at such Real Property into
compliance with such laws or regulations, other than where the failure to comply
with or the liability under such laws or regulations could not reasonably be
expected to cause or result in a Material Adverse Effect. . Material notice,
order, claim or demand from any Governmental Authority pursuant to an
Environmental Law means any such item that could reasonably be expected to
result in fines or penalties, exclusive of interest and costs, of $100,000 or
more.

     (c) Right to Cure Non-Compliance with Environmental Laws. After the
occurrence and during the continuance of any Event of Default with respect to a
breach of Section 4.07 or this Section 6.07, the Paying Agent or the Collateral
Agent, at its election and in its sole discretion may, without obligation to do
so, and upon reasonable notice to the Borrower (except in an emergency), may
cure any failure on the part of the Borrower to comply with Environmental Laws
or respond to any Environmental Liability to the extent required under any
Environmental Laws.

Any partial exercise by the Paying Agent or the Collateral Agent of the remedies
hereinafter set forth, or any partial undertaking on the part of the Paying
Agent or the Collateral Agent to cure the Borrower's failure to comply with any
Environmental Law, shall not obligate the Paying

<PAGE>
                                      -77-

Agent or the Collateral Agent to complete the actions taken or require the
Paying Agent or the Collateral Agent to expend further sums to cure the
Borrower's noncompliance; nor shall the exercise of any such remedies operate to
place upon the Paying Agent or the Collateral Agent any responsibility for the
operation, control, care, management or repair of the Real Property, nor will
the Borrower or the Parent Guarantor assert that any such actions make the
Paying Agent or Collateral Agent the "operator" of such Real Property under
CERCLA or any other Environmental Laws. Any amount paid or costs incurred by the
Paying Agent or the Collateral Agent as a result of the exercise by the Paying
Agent or the Collateral Agent of any of the rights hereinabove set forth,
together with interest thereon at the default rate specified herein, shall be
immediately due and payable by the Borrower to the Paying Agent or the
Collateral Agent, as the case may be, and until paid shall be added to and
become a part of the Obligations; and the Paying Agent or the Collateral Agent,
by making any such payment or incurring any such costs, shall be subrogated to
any rights of the Borrower to seek reimbursement from any third parties,
including, without limitation, a predecessor-in-interest to the Borrower's title
who may be a "responsible party" or otherwise liable under any Environmental
Law.

     (d) Environmental Assessment. If after the occurrence and during the
continuance of any Event of Default with respect to a breach of Section 4.07 or
this Section 6.07, the Paying Agent or the Collateral Agent desires that an
environmental assessment with respect to the Real Properties that are at issue
in the Event of Default be prepared, the Borrower agrees to supply such an
assessment by an environmental consultant selected by the Borrower and
reasonably satisfactory to the Paying Agent and the Collateral Agent, in form
and detail reasonably satisfactory to the Paying Agent and the Collateral Agent
(including, where appropriate, test borings of the ground and chemical analyses
of air, water and waste discharges), identifying alternatives and associated
costs to address the subject matter of the Event of Default to the extent
required under applicable Environmental Laws.

     (e) Indemnity. The Borrower shall indemnify and hold the Administrative
Agent, the Paying Agent, the Collateral Agent, the Fronting Bank and each Lender
harmless from and against any and all losses, liabilities, claims, damages or
expenses (including any reasonable attorney or expert fees and any Lien filed
against the Real Property in favor of any governmental entity, but excluding any
loss, liability, claim, damage or expense to the extent incurred by reason of
the gross negligence or willful misconduct of the Person to be indemnified) to
the extent arising under any Environmental Law as the result of the operations
of Borrower (or any predecessor-in-interest to the Borrower) at the Real
Property, or the condition of the Real Property, or any presence, Release or
threatened Release of any Hazardous Materials at or from the Real Property
(excluding any such Release or threatened Release that shall occur during any
period when the Administrative Agent, the Paying Agent, the Collateral Agent,
the Fronting Bank or any of the Lenders shall be in possession of the Real
Property following the exercise by the Paying Agent or the Collateral Agent of
any of its rights and remedies hereunder, but including any such Release or
threatened Release occurring during such period that is a continuation of
conditions previously in existence, or of practices employed by the Borrower, at
the Real Property).

     SECTION 6.08. Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used for refinancing the Existing Credit Agreement and for working
capital and other general corporate purposes, including without limitation to
pay fees, costs and other

<PAGE>
                                      -78-

transaction expenses incurred in connection with the financings contemplated by
the Loan Documents and the First Lien Loan Documents. No part of the proceeds of
any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations U and X. Letters of Credit will be issued only to support payment
obligations incurred for general corporate purposes of the Borrower and its
Included Subsidiaries.

     SECTION 6.09. Hedging Agreements. The Borrower will within 90 days of the
Effective Date enter into, and thereafter maintain in full force and effect, one
or more Hedging Agreements with one or more of the Lender Parties, the Arranger
or Affiliates of any Lender Party or the Arranger (and/or with a bank or other
financial institution having capital, surplus and undivided profits of at least
$500,000,000), that effectively enables the Borrower (in a manner reasonably
satisfactory to the Paying Agent) to protect itself against three-month London
interbank offered rates exceeding a rate per annum reasonably acceptable to the
Paying Agent as to a notional principal amount at least equal to 50%, but not
more than 66?%, of the aggregate principal amount of Tranche B Loans from time
to time outstanding, for a period of at least three years measured from the
Effective Date. It shall not be a default of this Section if, following entry
into Hedging Agreements that comply with this Section when entered into, the
notional principal amount of Hedging Agreements later exceeds 66 ?% of
outstanding principal of Tranche B Loans by reason of a prepayment of the
principal of such loans.

     SECTION 6.10. Certain Obligations Respecting Subsidiaries; Further
Assurances.

          (a) Subsidiary Guarantors. The Parent Guarantor will take such action,
     and will cause each of its Included Subsidiaries to take such action, from
     time to time as shall be necessary to ensure that each Domestic Subsidiary
     (other than a Domestic Subsidiary that, at the time of determination, is a
     Prohibited Subsidiary) is a "Subsidiary Guarantor" hereunder. Without
     limiting the generality of the foregoing, in the event that the Borrower or
     any of its Included Subsidiaries shall hereafter form or acquire any Person
     that shall constitute a Domestic Subsidiary (other than a Domestic
     Subsidiary that, at the time of determination, is a Prohibited Subsidiary)
     of the Borrower, the Parent Guarantor and its Included Subsidiaries will
     cause such Person to

               (i) become a "Subsidiary Guarantor" hereunder, and a "Securing
          Party" under the Security Agreement pursuant to a Guarantee Assumption
          Agreement,

               (ii) cause such Subsidiary to take such action (including
          delivering such shares of stock, delivering such Uniform Commercial
          Code financing statements and executing and delivering mortgages or
          deeds of trust covering the real property and fixtures owned or leased
          by such Subsidiary) as shall be necessary to, subject to the
          thresholds set forth in clause (c) below with respect to Real Property
          and subject to the applicable exceptions in the Security Agreement,
          create and perfect valid and enforceable first priority Liens on
          substantially all of the property of such new Subsidiary (other than
          (x) voting stock of any Foreign Subsidiary to the extent that all
          voting stock of such Foreign Subsidiary subject to such Lien would
          exceed 65% of the issued and outstanding voting stock of such Foreign
          Subsidiary and (y) without limitation of Section 6.15, equity
          interests in any

<PAGE>
                                      -79-

          Joint Venture to the extent the pledge of such equity interests under
          the Security Agreement is prohibited by its organizational documents,
          joint venture agreement, operating agreement or an agreement governing
          its Indebtedness) as collateral security for the obligations of such
          new Subsidiary hereunder and

               (iii) deliver such proof of corporate action, incumbency of
          officers, opinions of counsel and other documents with respect to such
          Subsidiary Guarantor as is consistent with those delivered by each
          Obligor pursuant to Section 5.01 on the Effective Date or as the
          Paying Agent shall have reasonably requested.

          (b) Ownership of Subsidiaries. The Parent Guarantor will, and will
     cause each of its Included Subsidiaries to, take such action from time to
     time as shall be necessary to ensure that the Parent Guarantor and each of
     its Included Subsidiaries at all times owns (subject only to the Lien of
     the Security Agreement) the same percentage of the issued and outstanding
     shares of each class of stock of each of its respective Wholly Owned
     Subsidiaries as is owned on the date hereof. In the event that any
     additional shares of stock shall be issued by any Subsidiary to any Obligor
     (other than (x) voting stock of any Foreign Subsidiary to the extent that
     all voting stock of such Foreign Subsidiary subject to the Lien of the
     Security Agreement would exceed 65% of the issued and outstanding voting
     stock of such Foreign Subsidiary and (y) without limitation of Section
     6.15, equity interests in any Joint Venture to the extent the pledge of
     such equity interests under the Security Agreement is prohibited by its
     organizational documents, joint venture agreement, operating agreement or
     an agreement governing its Indebtedness), such Obligor agrees forthwith to
     deliver to the Collateral Agent in accordance with and subject to the terms
     of the Security Agreement the certificates, if any, evidencing such shares
     of stock, accompanied by undated stock powers executed in blank and to take
     such other action as the Collateral Agent shall request to perfect the
     security interest created therein pursuant to the Security Agreement.
     Notwithstanding the foregoing or any other provision herein to the
     contrary, the Parent Guarantor shall have no Subsidiaries other than the
     Borrower and Subsidiaries of the Borrower. Notwithstanding the foregoing,
     nothing set forth herein shall preclude Borrower or any Included Subsidiary
     from disposing of 100% of its equity interest in any Subsidiary in
     compliance with the requirements of Section 7.03 of this Agreement,
     provided that following such sale Borrower or such Included Subsidiary
     shall not have any further Guarantee liability in respect of such former
     Subsidiary.

          (c) Further Assurances. The Parent Guarantor will, and will cause each
     of its Included Subsidiaries to, take such action from time to time as
     shall reasonably be requested by the Paying Agent to effectuate the
     purposes and objectives of this Agreement. Without limiting the generality
     of the foregoing, the Parent Guarantor will, and will cause each other
     Obligor to, take such action from time to time (including filing
     appropriate Uniform Commercial Code financing statements and executing and
     delivering such assignments, security agreements, account control
     agreements and other instruments) as shall be reasonably requested by the
     Collateral Agent to create, in favor of the Collateral Agent for the
     benefit of the Lenders (and any Affiliate of any Lender or of the Arranger
     that is a party to any Hedging Agreement entered into with the Borrower)
     and the Paying Agent, perfected security interests and Liens in
     substantially all of the property of such Obligor (other than Excluded Real
     Property) as collateral security for its obligations hereunder; provided
     that any such security interest or Lien shall be subject to the relevant
     requirements of the Security Documents.

<PAGE>
                                      -80-

     SECTION 6.11. Ownership of the Borrower. The Parent Guarantor will at all
times cause the Borrower to be its Wholly Owned Subsidiary.

     SECTION 6.12. Collection of Accounts and Payments; Creation of Depositary
Account. (a) Subject to Section 6.12(b), the Borrower will, at its own cost and
expense, cause all payments received by any Obligor from any source, whether in
the form of cash, checks, notes, drafts, bills of exchange, money orders, credit
card payments, debit card payments or otherwise (referred to herein as
"Payments"), (i) to be deposited within one Business Day in the form received
(but with any endorsements of any Obligor necessary for deposit or collection)
in one or more bank accounts maintained by the Borrower and (ii) to be
transferred each Business Day from the accounts referred to in clause (i) to any
Concentration Account. If any Obligor or any other Person acting for or in
concert with any Obligor shall receive any Payments, such Obligor shall hold
such Payment in trust for Collateral Agent, and, immediately upon receipt
thereof, the Borrower shall or shall cause such Obligor or other Person to remit
the same or cause the same to be remitted, in kind, to any Concentration Account
or after the same is established, the Depositary Account referred to below.

     (b) The Borrower will, within 60 days after April 1, 2005, open at Wachovia
Bank, National Association or another bank acceptable to the Administrative
Agent a new deposit account (the "Depositary Account"), which Depositary Account
shall be made subject to a Concentration Account Control Agreement at all times
after the same is opened. Within 60 days after April 1, 2005 (i) the Borrower
will cause all Payments that would otherwise be transferred to a Concentration
Account pursuant to clause (a) above to be transferred instead into the
Depositary Account and (ii) such Payments shall cease to be deposited into a
Concentration Account except upon transfer from the Depositary Account (the date
of such event, the "Depositary Effective Date").

     SECTION 6.13. Ratings. The Borrower will obtain not later than 90 days
after the Restatement Date, and will maintain at all times thereafter, ratings
for the Loans from S&P and from Moody's.

     SECTION 6.14. Separateness. The Parent Guarantor will, and will cause each
of its Included Subsidiaries to, conduct its management, business and affairs,
and maintain its books and records, in such manner so that each such Person
shall be treated as a corporate entity distinct from each other such Person.

     SECTION 6.15. Pledge of Equity Interests in Consolidated Joint Ventures.
From and after the date hereof the Parent Guarantor will, and will cause each of
its Included Subsidiaries to, use commercially reasonable efforts to obtain all
necessary consents to enable the equity interests in the Consolidated Joint
Ventures owned by the Obligors to be pledged to the Collateral Agent pursuant to
the Security Agreement.

     SECTION 6.16. Post Closing Appraisals. Within forty-five (45) days after
the Effective Date, Borrower shall deliver to Paying Agent Acceptable Appraisals
with respect to all Real Property (other than that real property located at
Lakeland Drive/E. Metro Connector, Jackson, MS and other than the Excluded Real
Property) owned by Borrower or any Guarantor

<PAGE>
                                      -81-

as of the date of such Acceptable Appraisals, it being understood that
Acceptable Appraisals with respect to the Principal Facilities have been
delivered to the Paying Agent prior to the date hereof.

     SECTION 6.17. Post Closing Mortgages.

     (a) Post Closing Mortgages on Owned Real Property. The Mortgaged Property
Value shall be equal to (i) seventy percent (70%) of the Total Desktop Analysis
Value on or before May 2, 2005 and (ii) ninety percent (90%) of the Total
Desktop Analysis Value on or before May 31, 2005. The Covered Property Value
shall be equal to (i) seventy percent (70%) of the Total Desktop Analysis Value
on or before May 31, 2005 and (ii) ninety percent (90%) of the Total Desktop
Analysis Value on or before June 30, 2005. Thereafter the Borrower shall use
commercially reasonable efforts to cause the Mortgaged Property Value and the
Covered Property Value to be equal to the sum of the Total Desktop Analysis
Value. The Collateral Agent agrees, with respect to each Real Property set forth
on Schedule XI, that, upon request of the applicable Tenant, it shall enter into
a Subordination, Non-Disturbance and Attornment Agreement, substantially in the
form of Exhibit I.

     (b) Encumbrance of Property Designated for Sale. The Borrower shall, with
respect to the Property Designated for Sale (including improvements but
excluding the Principal Facilities and the Excluded Real Property) owned by the
Borrower on the Effective Date, not later than 180 days after April 1, 2005 (it
being understood that any Property Designated For Sale that is sold prior to
such time shall not be subject to the requirements of this paragraph) execute
and deliver in favor of the Shared Lien Collateral Agent a Mortgage appropriate
for the jurisdiction in which such respective Real Property is situated,
pursuant to which the Borrower will create a Lien upon such Real Property (and
improvements) in favor of the Shared Lien Collateral Agent for the benefit of
the Lenders (and any Affiliate of any Lender or of the Arranger that is a party
to any Hedging Agreement entered into with the Borrower) and the Paying Agent as
collateral security for the obligations of the Borrower under this Agreement and
will deliver such certificates of occupancy (or, if it is not the practice to
issue certificates of occupancy in the jurisdiction in which such Real Property
is located, then such other evidence reasonably satisfactory to the Paying Agent
that the fully functioning operation and occupancy of such Real Property is
permitted), opinions of counsel and title insurance policies as the Paying Agent
shall reasonably request in connection therewith (provided that a legal opinion
substantially in the form of the legal opinions addressing certain real estate
matters delivered pursuant to Section 5.01(b) on the Effective Date, with such
modifications as are necessary for the relevant jurisdictions, shall be deemed
to be satisfactory in form and substance to the Paying Agent), including payment
for all such title insurance policies and recording and stamp taxes payable in
connection with recording all Mortgages and Uniform Commercial Code fixture
filings, if applicable, in the appropriate county land offices.

     (c) After Acquired Fee Interests in Real Property. If any Obligor shall
acquire any real property interest, including improvements (but excluding
leasehold interests and improvements thereon and any real property interest
situated on land not owned in fee), after the date hereof that (i) consists of a
retail store or (ii) that is not a retail store and that has a fair market value
of $750,000 or more (or shall make improvements upon any existing real property
interest (excluding leasehold interests and improvements thereon and any real
property interest

<PAGE>
                                      -82-

situated on land not owned in fee and the Excluded Real Property) resulting in
the fair market value of such interest together with such improvements being
equal to $750,000 or more), then the Parent Guarantor will (or, as applicable,
will cause the respective Obligor holding such real property interest to),
subject to the last sentence of this paragraph, within 10 days of the
acquisition of or improvements upon such property interest by such Obligor, if
the Paying Agent elects to encumber such property as Collateral in Paying
Agent's sole and absolute discretion, (A) execute and deliver in favor of the
Shared Lien Collateral Agent a Mortgage appropriate for the jurisdiction in
which such respective real property is situated, pursuant to which such Obligor
will create a Lien upon such real property (and improvements) in favor of the
Shared Lien Collateral Agent for the benefit of the Lenders (and any Affiliate
of any Lender or of the Arranger that is a party to any Hedging Agreement
entered into with the Borrower) and the Paying Agent as collateral security for
the obligations of such Obligor under this Agreement or, as applicable, under
the respective Guarantee Assumption Agreement to which such Obligor is a party,
(B) obtain or deliver a current Phase I (with respect to a property, a "current
Phase I" means a Phase I prepared within three years of the acquisition of such
property) for such property and (C) deliver such certificates of occupancy (or,
if it is not the practice to issue certificates of occupancy in the jurisdiction
in which such real property is located, then such other evidence reasonably
satisfactory to the Paying Agent that the fully functioning operation and
occupancy of such real property is permitted), opinions of counsel and title
insurance policies as the Paying Agent shall reasonably request in connection
therewith, including payment for all such title insurance policies and recording
and stamp taxes payable in connection with recording all Mortgages and Uniform
Commercial Code fixture filings, if applicable, in the appropriate county land
offices. The parties hereto agree that (i) the real property of the Obligors
located at or near 3601 Concord Pike, Wilmington, Delaware, 931 Bethlehem Pike,
Montgomeryville, PA and the corner of First Street and Green Street in
Winston-Salem, NC shall be treated for all purposes under the Loan Documents as
after acquired or leased real property, as the case may be, that was acquired or
leased, as the case may be, by the Obligors on the Effective Date and (ii) that
with respect to the properties listed in this sentence only, the Borrower shall
comply with the applicable requirements of this paragraph within 60 days after
April 1, 2005.

     SECTION 6.18. Post Closing Environmental Surveys. The Borrower shall cause
to be completed and delivered to Paying Agent not later than thirty (30) days
after April 1, 2005 a Phase I of each of the locations for which a post closing
Phase I is required as indicated on Schedule VII.

     SECTION 6.19. Issuance of Subsidiary Stock Certificate. The Borrower shall
cause to be delivered to the Shared Lien Collateral Agent not later than thirty
(30) days after April 1, 2005 the stock certificate(s) issued by Krispy Kreme
International, Ltd. in favor of Borrower as shareholder constituting 65% of the
issued and outstanding stock of Krispy Kreme International, Ltd. together with
(a) an endorsement in blank and in form acceptable to the collateral agent under
the First Lien Loan Documents and (b) an officer's certificate of the Borrower
attaching resolutions of the Board of Directors of Krispy Kreme International,
Ltd. (i) acknowledging the terms of the Security Agreement and the pledge of the
shares of Krispy Kreme International, Ltd. thereunder, (ii) agreeing to register
the collateral agent under the First Lien Loan Documents as the owner of such
shares in the share register of Krispy Kreme International, Ltd. in the event
that such shares are transferred in accordance with the Security Agreement and
(iii) agreeing that such resolutions shall not be amended and shall remain in
full

<PAGE>
                                      -83-

force and effect.

                                   ARTICLE VII

                               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, each of the Borrower and the Parent Guarantor covenants
and agrees with the Lenders that:

     SECTION 7.01. Indebtedness. The Parent Guarantor will not, nor will it
permit any of its Included Subsidiaries to, create, incur, assume or permit to
exist any Indebtedness, except:

          (a) Indebtedness created hereunder;

          (b) Indebtedness existing on the date hereof and set forth in or
     permitted pursuant to this Agreement to be excluded from Part A of Schedule
     II (excluding, however, following the making of the initial Loans
     hereunder, the Indebtedness under the Existing Credit Agreement) and
     extensions, renewals, refinancings and replacements ("refinancing") of any
     such Indebtedness that do not increase the outstanding principal amount
     thereof (other than to cover the amount of all accrued and unpaid interest
     thereon, plus the stated amount of any premium and other payments required
     to be paid in connection with such refinancing and the amount of reasonable
     expenses incurred in connection with such refinancing);

          (c) Indebtedness under the First Lien Credit Agreement in an aggregate
     amount (including in respect of the undrawn portion of outstanding letters
     of credit) not exceeding $75,000,000, including any refinancing thereof
     permitted by the Intercreditor Agreement, provided that in the case of a
     refinancing, the principal amount of such refinancing may be increased to
     the extent necessary to pay accrued interest, prepayment premiums and
     transactional expenses associated with such refinancing in an aggregate
     amount not to exceed 105% of the principal amount outstanding under the
     First Lien Credit Agreement immediately prior to such refinancing;

          (d) owing by any Obligor to any other Obligor;

          (e) Guarantees by any Obligor of Indebtedness of any other Obligor;

          (f) Indebtedness of the Parent Guarantor or any of its Included
     Subsidiaries incurred to finance the acquisition, construction or
     improvement of any fixed or capital assets, including Capital Lease
     Obligations and any Indebtedness assumed in connection with the acquisition
     of any such assets or secured by a Lien on any such assets prior to the
     acquisition thereof, and refinancings of any such Indebtedness that do not
     increase the outstanding principal amount thereof beyond the amount
     necessary to capitalize accrued interest, fees, and transactional expenses
     incurred in respect of such refinancings any such Indebtedness; provided
     that (i) such Indebtedness is incurred prior to or within 90

<PAGE>
                                      -84-

     days after such acquisition or the completion of such construction or
     improvement and (ii) the aggregate principal amount of Indebtedness
     permitted by this clause (f) shall not exceed $3,000,000 at any time
     outstanding;

          (g) Guarantees any Obligor in respect of Indebtedness incurred by
     Joint Ventures constituting Investments permitted by Section 7.05(i) and
     7.05(k);

          (h) Indebtedness under Hedging Agreements permitted by Section
     7.05(e);

          (i) overdrafts in operating accounts at banks incurred in the ordinary
     course of business and in an aggregate amount not exceeding $500,000
     outstanding at any time, provided that no such overdraft shall remain
     outstanding for more than three Business Days;

          (j) bankers acceptances opened in the ordinary course of business for
     the importing or exporting of goods in an aggregate amount not exceeding
     $500,000 at any time;

          (k) unsecured structured settlements relating to Disclosed Matters or
     other actions, suits, proceedings or governmental enforcement actions
     relating to the historical financial statements of Parent Guarantor and its
     Consolidated Subsidiaries under review (as the date hereof) by the Special
     Committee of the Board of Directors of the Parent Guarantor; and

          (l) other unsecured Indebtedness (other than Guarantees of
     Indebtedness incurred by Joint Ventures) in an aggregate principal amount
     not exceeding $3,000,000 at any time outstanding.

     SECTION 7.02. Liens. The Parent Guarantor will not, nor will it permit any
of its Included Subsidiaries 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) Liens created pursuant to the Security Documents;

          (b) Permitted Encumbrances;

          (c) any Lien on any property or asset of the Parent Guarantor or any
     of its Included Subsidiaries existing on the date hereof and set forth in
     or permitted by this Agreement to be excluded from Part B of Schedule II
     (excluding, however, following the making of the initial Loans hereunder,
     Liens securing Indebtedness under the Existing Credit Agreement); provided
     that (i) no such Lien shall extend to any other property or asset of the
     Parent Guarantor or any of its Included Subsidiaries and (ii) any such Lien
     shall secure only those obligations which it secures on the date hereof and
     refinancings thereof that do not increase the outstanding principal amount
     thereof, except as permitted by Section 7.01(b);

<PAGE>
                                      -85-

          (d) Liens securing the obligations of the Obligors with respect to
     Indebtedness incurred pursuant to Section 7.01(c) to the extent permitted
     by the Intercreditor Agreement;

          (e) Liens on fixed or capital assets acquired, constructed or improved
     by the Parent Guarantor or any Included Subsidiary; provided that (i) such
     security interests secure Indebtedness permitted by clause (f) of Section
     7.01, (ii) such security interests and the Indebtedness secured thereby are
     incurred prior to or within 90 days after such acquisition or the
     completion of such construction or improvement, (iii) the Indebtedness
     secured thereby does not exceed 100% of the cost of acquiring, constructing
     or improving such fixed or capital assets and (iv) such security interests
     shall not apply to any other property or assets of the Parent Guarantor or
     any Included Subsidiary; and

          (f) Liens on cash posted as margin in an aggregate amount not
     exceeding $500,000 at any time to secure obligations of the Parent
     Guarantor or any of its Included Subsidiaries under commodity Hedging
     Agreements permitted by Section 7.05(e).

     SECTION 7.03. Fundamental Changes. The Parent Guarantor will not, nor will
it permit any of its Included Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to, acquire any
business or property from, or capital stock of, or be a party to any acquisition
of, any Person except for purchases of inventory and other property to be sold
or used in the ordinary course of business, Investments permitted under Section
7.05 and Capital Expenditures permitted under Section 7.09(c). The Parent
Guarantor will not, nor will they permit any of its Included Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, any part of its business or property, whether now owned
or hereafter acquired (including receivables and leasehold interests, but
excluding (x) obsolete or worn-out property, tools or equipment no longer used
or useful in its business and (y) any inventory or other property sold or
disposed of in the ordinary course of business and on ordinary business terms).

     Notwithstanding the foregoing provisions of this Section:

          (a) any Included Subsidiary of the Borrower may be merged or
     consolidated with or into the Borrower or any other such Included
     Subsidiary or dissolved and its affairs wound up; provided that (i) if any
     such transaction shall be between a Included Subsidiary that is not an
     Obligor and an Obligor, the Obligor shall be the continuing or surviving
     corporation and (ii) if any such transaction shall be between a Included
     Subsidiary that is not a Wholly Owned Subsidiary and a Wholly Owned
     Subsidiary, the Wholly Owned Subsidiary shall be the continuing or
     surviving corporation;

          (b) any Included Subsidiary of the Borrower may sell, lease, transfer
     or otherwise dispose of any or all of its property (upon voluntary
     liquidation or otherwise) to the Borrower or any Wholly Owned Subsidiary;
     provided that, if the transferor in any such transaction shall be an
     Obligor, the transferee shall be an Obligor;

<PAGE>
                                      -86-

          (c) the capital stock of any Included Subsidiary of the Borrower may
     be sold, transferred or otherwise disposed of to the Borrower or any Wholly
     Owned Subsidiary ; provided that, if the transferor in any such transaction
     shall be an Obligor, the transferee shall be an Obligor;

          (d) unless a Default has occurred and is continuing, the Borrower or
     any of its Included Subsidiaries may sell Property Designated For Sale for
     cash and for fair market value as determined by the Board of Directors;

          (e) the Borrower or any of its Subsidiaries may dispose of obsolete or
     surplus equipment to the extent that (i) such equipment is exchanged for
     credit against the purchase price of similar replacement equipment or (ii)
     the proceeds of such dispositions are reasonably promptly applied to the
     purchase price of such replacement equipment;

          (f) unless a Default has occurred and is continuing, the Borrower may
     sell all or any portion of its equity interests in any Joint Venture for
     cash for fair market value, subject to the conditions that (a) the amount
     of consideration to be received by the Borrower (including the amount of
     any Guarantee theretofore issued by the Borrower to be cancelled in
     connection with such sale) has been determined by the Board of Directors to
     be fair to the Borrower, (b) if the aggregate amount of such consideration
     exceeds $10,000,000, the Board of Directors shall have received a fairness
     opinion in connection with such sale rendered by a recognized institution
     with established expertise in valuing transactions of such type and (c) in
     connection with such sale, all Guarantees theretofore issued by the
     Borrower in support of obligations of such Joint Venture shall be cancelled
     or reduced at least in proportion to the percentage of interests sold;

          (g) unless a Default has occurred and is continuing, the Borrower and
     its Included Subsidiaries may sell other property for cash for fair market
     value for consideration not exceeding $10,000,000 in any Fiscal Year;

          (h) leases and subleases of property in the ordinary course of
     business;

          (i) non-exclusive licenses of Intellectual Property in the ordinary
     course of business; and

          (j) the Parent Guarantor and its Included Subsidiaries may sell assets
     to the extent permitted by Section 7.10.

     The Collateral Agent agrees to execute such UCC termination statements or
partial release statements, as applicable, and other Lien release documents as
the Borrower reasonably requests to evidence the release of the Collateral
Agent's Lien in respect of property conveyed, sold, transferred or otherwise
disposed of in compliance with this Section 7.03; provided that the Borrower
shall provide to the Collateral Agent evidence of such transaction's compliance
with this Section 7.03 as the Collateral Agent may reasonably request.

     SECTION 7.04. Lines of Business. The Parent Guarantor and the Borrower will
not, nor will they permit any of their Included Subsidiaries to, engage to any
material extent

<PAGE>
                                      -87-

in any business other than the business of manufacturing, distributing,
franchising, licensing and selling (i) doughnuts, (ii) equipment to manufacture
doughnuts and (iii) related products.

     SECTION 7.05. Investments. The Parent Guarantor and the Borrower will not,
nor will they permit any of their Included Subsidiaries to, make or permit to
remain outstanding any Investments except:

          (a) Investments outstanding on the date hereof and identified in or
     permitted pursuant to this Agreement to be excluded from Part B of Schedule
     VI;

          (b) operating deposit accounts with banks;

          (c) Permitted Investments;

          (d) Investments by the Parent Guarantor or any of its Included
     Subsidiaries in any of its Included Subsidiaries that is an Obligor or that
     becomes an Obligor contemporaneously with the making of such Investment;

          (e) Hedging Agreements entered into by the Borrower or its Included
     Subsidiaries in the ordinary course of its or their financial planning and
     not for speculative purposes;

          (f) Investments consisting of security deposits with government
     agencies, utilities and other like Persons made in the ordinary course of
     business;

          (g) Investments consisting of advances to employees for reasonable
     business and travel expenses incurred in the ordinary course of business;

          (h) Investments consisting of loans or advances to employees not
     exceeding $1,000,000 in the aggregate principal amount outstanding at any
     time, in each case made in the ordinary course of business and consistent
     with practices existing on the Effective Date;

          (i) Investments in Joint Ventures, loans or advances to Krispy Kreme
     franchisees or doughnut and bakery store operators, or Guarantee
     obligations at any of the foregoing under leases or Synthetic Leases, in
     each case made in the ordinary course of business; provided that (x) the
     aggregate amount of such Investments made in cash after the date hereof
     shall not exceed $6,000,000 at any one time outstanding and (y) the
     aggregate amount of such Investments made in any form after the date hereof
     shall not exceed $14,000,000 at any one time outstanding. After an initial
     $6,000,000 in cash Investments have been made hereunder, no more than
     $2,000,000 in aggregate cash Investments may be reinvested by Borrower
     after return to Borrower of initial cash Investments. After an initial
     $14,000,000 in total Investments have been made hereunder, no more than
     $4,000,000 in aggregate Investments made in any form may be reinvested
     after return to Borrower, or in the case of guarantees, release of Borrower
     therefrom;

<PAGE>
                                      -88-

          (j) any acquisition pursuant to a collateral repurchase agreement that
     has been identified as a Specified Contingent Obligation in favor of any
     Krispy Kreme franchisee or its lenders;

          (k) Investments in Joint Ventures made after the date hereof in the
     form of Guarantees or cash issued in exchange for the cancellation or
     reduction of Guarantees by the Borrower outstanding on the date hereof of
     Indebtedness of the respective Joint Ventures, provided that the amount of
     each such Investment made after the date hereof shall not exceed the amount
     of the Guarantee so cancelled or the reduction of the Guarantee so reduced,
     as the case may be;

          (l) Investments in securities or property of trade creditors or
     customers in the ordinary course of business received upon foreclosure or
     pursuant to any plan or organization or liquidation or similar arrangement
     upon the bankruptcy or insolvency of such trade creditors or customers;

          (m) Investments (i) for utilities, security deposits, leases and
     similar prepaid expenses incurred in the ordinary course of business and
     (ii) trade accounts created, or prepaid expenses accrued, in the ordinary
     course of business; and

          (n) additional Investments (other than in Joint Ventures) up to but
     not exceeding $2,000,000 in the aggregate at any one time outstanding.

     SECTION 7.06. Restricted Payments. The Parent Guarantor will not, nor will
it permit any of its Included Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, except that (a) any
Wholly Owned Subsidiary may declare and make Restricted Payments to any other
Wholly Owned Subsidiary, (b) any other Included Subsidiary may declare and make
dividends or other distributions on its common equity interests ratably to all
of its equity holders (i) if no Event of Default has occurred and is occurring
or (ii) (in the case of any such other Included Subsidiary that is treated as a
partnership for tax purposes) to the extent necessary to enable its equity
holders to pay income taxes arising from the income of such other Included
Subsidiary, (c) the Borrower may declare and make dividends to the Parent
Guarantor at such times and in such amounts as are necessary to enable the
Parent Guarantor to pay taxes and operating expenses, (d) provided that no Event
of Default has occurred and is occurring, the Borrower may declare and make
dividends to the Parent Guarantor at such times and in such amounts as are
necessary to enable the Parent Guarantor to pay judgment or settlement costs in
connection with any action, suit, proceeding, inquiry or investigations
involving the Parent Guarantor (i) that is an exception to Section 4.06 or (ii)
that is based on substantially the same underlying facts and circumstances as
any action, suit, proceeding, inquiry or investigation described in clause (i)
above, or (e) provided that no Event of Default has occurred and is occurring,
the Borrower may declare and make dividends to the Parent Guarantor at such
times and in such amounts as are necessary to enable the Parent Guarantor to pay
judgment or settlement costs in connection with any other action, suit,
proceeding, inquiry or investigations involving the Parent Guarantor not
exceeding $500,000 in the aggregate in any Fiscal Year.

<PAGE>
                                      -89-

     SECTION 7.07. Transactions with Affiliates. The Parent Guarantor will not,
nor will it permit any of its Included Subsidiaries to, 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 in the ordinary course of business at
prices and on terms and conditions not less favorable to the Parent Guarantor or
such Included Subsidiary, as the case may be, than could be reasonably obtained
on an arm's-length basis from unrelated third parties, (b) transactions between
or among the Parent Guarantor and/or one or more of its Wholly Owned
Subsidiaries that are Obligors, not involving any other Affiliate, (c) any
Restricted Payment permitted by Section 7.06, (d) transactions listed on
Schedule X, (e) Investments permitted by Section 7.05 (including Permitted
Investments), (f) issuances of capital stock (other than Redeemable Preferred
Stock) and Equity Rights (other than Equity Rights for Redeemable Preferred
Stock) by the Parent Guarantor and (g) a success or similar fee payable by the
Borrower or the Parent Guarantor to Kroll, provided that the amount of any
portion thereof paid in cash is acceptable to the Paying Agent in its reasonable
discretion.

     SECTION 7.08. Restrictive Agreements. The Parent Guarantor will not, and
will not permit any of its Included Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the Parent
Guarantor or any Included Subsidiary to create, incur or permit to exist any
Lien upon any of its property or assets, or (b) the ability of any Included
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 Parent Guarantor
or any other Included Subsidiary or to Guarantee Indebtedness of the Parent
Guarantor or any other Included Subsidiary; provided that:

          (i) the foregoing shall not apply to (1) restrictions and conditions
     imposed by law or by the Loan Documents, (2) restrictions and conditions
     imposed by the Second Lien Loan Documents, (3) restrictions and conditions
     existing on the date hereof identified on Schedule III (and contained in
     any extension or renewal of, or any amendment or modification of the
     relevant documentation except to the extent expanding the scope of, any
     such restriction or condition), (4) customary restrictions and conditions
     contained in agreements relating to the sale of a Included Subsidiary
     pending such sale, provided such restrictions and conditions apply only to
     the Included Subsidiary that is to be sold and such sale is permitted
     hereunder, (5) restrictions and conditions in any agreement of an Included
     Subsidiary in effect at the time such Included Subsidiary becomes a
     Subsidiary of the Borrower, so long as such agreement was not entered into
     in connection with or in contemplation of such person becoming a Subsidiary
     of the Borrower (and contained in any extension or renewal of, or any
     amendment or modification of the relevant documentation except to the
     extent expanding the scope of, any such restriction or condition) and (6)
     restrictions on cash or other deposits or net worth imposed by suppliers or
     landlords under contracts entered into in the ordinary course of business;
     and

          (ii) clause (a) of the foregoing shall not apply to (x) 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, (y) customary
     provisions in leases and other contracts restricting the assignment thereof
     and (z) restrictions with respect to the capital stock of an entity

<PAGE>
                                      -90-

     imposed by any joint venture agreement, limited liability operating company
     agreement, partnership agreement or similar agreement governing the
     operation of such entity with respect to which no Obligor holds a
     controlling interest.

     SECTION 7.09. Certain Financial Covenants.

     (a) Consolidated Leverage Ratio. Commencing with the second Fiscal Quarter
of the 2006 Fiscal Year, the Parent Guarantor will not permit the Consolidated
Leverage Ratio to exceed the following respective ratios for any Test Period in
any of the following respective periods:

               Period                                          Ratio

Second, Third and Fourth Fiscal                             4.50 to 1.00
  Quarters of 2006 Fiscal Year

First Fiscal Quarter of 2007 Fiscal                         4.25 to 1.00
  Year

Second Fiscal Quarter of 2007 Fiscal                        4.20 to 1.00
  Year

Third and Fourth Fiscal Quarters of                         3.95 to 1.00
  2007 Fiscal Year
2008 Fiscal Year                                            3.70 to 1.00

First Fiscal Quarter of 2009 Fiscal                         3.50 to 1.00
  Year and Thereafter

     (b) Consolidated Interest Coverage Ratio. Commencing with the second Fiscal
Quarter of the 2006 Fiscal Year, the Parent Guarantor will not permit the
Consolidated Interest Coverage Ratio to be less than the following respective
ratios for any Test Period in any of the following respective periods:

<PAGE>
                                      -91-

               Period                                        Ratio

Second Fiscal Quarter of 2006 Fiscal                      3.15 to 1.00
  Year through Third Fiscal Quarter
  of 2007 Fiscal Year

Fourth Fiscal Quarter of 2007 Fiscal                      3.40 to 1.00
  Year through Fourth Fiscal Quarter
  of 2008 Fiscal Year

First Fiscal Quarter of 2009 and                          3.50 to 1.00
  Thereafter

     (c) Capital Expenditures. The Parent Guarantor will not permit the
aggregate amount of Capital Expenditures by the Parent Guarantor and its
Included Subsidiaries to exceed the following respective amounts for the
following respective periods:

               Period                                   Amount

2006 Fiscal Year                                     $15,000,000

2007 Fiscal Year                                     $15,000,000

2008 Fiscal Year                                     $33,000,000

2009 Fiscal Year                                     $40,000,000

2010 Fiscal Year                                     $50,000,000

     If the aggregate amount of Capital Expenditures for any Fiscal Year shall
be less than the amount permitted by the table above to be made in such Fiscal
Year, then 50% of the shortfall shall be added to the amount of Capital
Expenditures permitted for the immediately succeeding (but not any other) Fiscal
Year and, for purposes hereof, the amount of Capital Expenditures made during
any Fiscal Year shall be deemed to have been made first from the amount
permitted by the table above to be made in such Fiscal Year and last from
carryover from the preceding Fiscal Year.

     SECTION 7.10. Sale-Leasebacks; Synthetic Leases. The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to engage in any
sale-leaseback, Synthetic

<PAGE>
                                      -92-

Lease or similar transaction involving any of its assets; provided that the
following shall be permitted: (i) a sale-leaseback of the Real Property located
at Lakeland Drive / E. Metro Connector, Jackson, MS and (ii) a sale of real or
personal property made for cash consideration in an amount not less than the
cost of such real or personal property and consummated within 90 days after the
Parent Guarantor or any Included Subsidiary acquires or completes the
construction of such property.

     SECTION 7.11. Parent Guarantor as Holding Company. Notwithstanding anything
contained herein to the contrary, the Parent Guarantor will not (a) create,
incur, assume or permit to exist any Indebtedness other than Indebtedness under
the Loan Documents and the Second Lien Loan Documents, (until the Effective
Date) its Guarantee of the obligations of the Borrower under the Existing Credit
Agreement and Indebtedness permitted by Section 7.01 (b), (e), (g) and (k), (b)
create, incur, assume or permit to exist any Lien on any of its properties other
than Permitted Encumbrances and Liens created by the Loan Documents and the
Second Lien Loan Documents, (c) own any Investments or any material properties
other than shares of stock of the Borrower and of Montana Mills or (d) engage in
any business or transactions other than those ancillary to its status as a
publicly traded holding company, including issuances of capital stock and Equity
Rights.

     SECTION 7.12. Limitations on Voluntary Prepayments of Certain Other
Indebtedness. The Parent Guarantor will not, nor will it permit any of its
Included Subsidiaries to, purchase, redeem, retire or otherwise acquire for
value, or set apart any money for a sinking, defeasance or other analogous fund
for the purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment (each of the foregoing actions being referred to
herein as a "Voluntary Prepayment") of the principal of or interest on, or any
other amount owing in respect of, any Indebtedness incurred as permitted by
Section 7.01(l), unless the Net Availability would exceed $10,000,000 after
giving effect thereto. In no event shall the Borrower make a Voluntary
Prepayment of the principal of or interest on, or any other amount owing in
respect of, any Indebtedness outstanding under the Second Lien Credit Agreement
with the proceeds of any Loans.

     SECTION 7.13. Modifications of Certain Documents. The Parent Guarantor will
not, nor will it permit any of its Included Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any Second Lien
Loan Document, without the prior consent of the Paying Agent (with the approval
of the Required Lenders), to the extent such modification, supplement or waiver
is not permitted by the Intercreditor Agreement. The Parent Guarantor will not,
nor will it permit any of its Included Subsidiaries to, consent to any
modification, supplement or waiver of any of the provisions of any agreement or
instrument governing or evidencing Subordinated Indebtedness in any manner that
is maternally adverse to the Borrower or the Lenders without the prior consent
of the Paying Agent (with the approval of the Required Lenders).

<PAGE>
                                      -93-

     SECTION 7.14. Change in Fiscal Year; Accounting Policies; Capital Stock.
The Parent Guarantor will not, nor will it permit any of its Included
Subsidiaries to, (i) change its Fiscal Year, (ii) change their accounting
policies except as required by GAAP or otherwise permitted under Section 1.03 or
(iii) change their capital structure including any revision of the terms of
their outstanding capital stock or other equity interests, from the Fiscal Year,
the accounting policies and the capital structure in existence on the date
hereof without the prior consent of the Paying Agent; provided that the Parent
Guarantor may issue additional capital stock and Equity Rights without such
consent.

     SECTION 7.15. No New Bank Accounts Without Prior Written Notice. The Parent
Guarantor will not, nor will it permit any of its Included Subsidiaries to, open
any new bank accounts after the date hereof without at least five Business Days
prior written notice to the Paying Agent, or attempt to amend or terminate any
Concentration Account Control Agreement without the prior consent of the Paying
Agent.

                                  ARTICLE VIII

                                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 under 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 or more Business Days;

          (c) subject to the proviso set forth in Section 4.12, any
     representation or warranty made or deemed made by or on behalf of any
     Affiliated Party in or in connection with this Agreement or any other Loan
     Document or any amendment or modification hereof or thereof, or in any
     report, certificate, financial statement or other document furnished
     pursuant to or in connection with this Agreement or any other Loan Document
     or any amendment or modification hereof or thereof, shall prove to have
     been incorrect in any material respect when made or deemed made;

          (d) [reserved];

          (e) the Borrower or the Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.02, 6.03 (with respect to the Borrower's or the Parent
     Guarantor's existence), 6.08 or 6.11 or in Article VII, or any Obligor
     shall default in the performance of any of its obligations contained in
     Section 5.02 of the Security Agreement;

<PAGE>
                                      -94-

          (f) the Borrower or the Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.01(h) and such failure shall continue unremedied for a period of
     five or more Business Days;

          (g) [reserved];

          (h) the Borrower or its Parent Guarantor (as applicable) shall fail to
     observe or perform any covenant, condition or agreement contained in
     Section 6.01(c) and such failure shall continue unremedied for a period of
     10 or more days;

          (i) any Obligor shall fail to observe or perform any covenant,
     condition or agreement contained in this Agreement (other than those
     specified in this Article) or any other Loan Document and such failure
     shall continue unremedied for a period of 30 or more days after notice
     thereof from the Administrative Agent (given at the request of any Lender)
     to the Borrower;

          (j) any Affiliated Party other than an Immaterial 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;

          (k) any event or condition occurs that results in any Material
     Indebtedness incurred by any Affiliated Party other than an Immaterial
     Subsidiary becoming due prior to its scheduled maturity or that enables or
     permits (with or without the giving of notice, the lapse of time or both)
     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 its scheduled maturity; provided that this clause (k) 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;

          (l) an involuntary proceeding shall be commenced or an involuntary
     petition shall be filed seeking (i) liquidation, reorganization or other
     relief in respect of any Affiliated Party other than an Immaterial
     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 any
     Affiliated Party other than an Immaterial Subsidiary or for a substantial
     part of its assets, and, in any such case, such proceeding or petition
     shall continue undismissed for a period of 60 or more days or an order or
     decree approving or ordering any of the foregoing shall be entered;

          (m) any Affiliated Party other than an Immaterial 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, or fail to contest
     in a timely and appropriate manner, any proceeding or petition described in
     clause (l) of this Article, (iii) apply for or consent to the appointment
     of a receiver, trustee, custodian, sequestrator, conservator or similar
     official for any Affiliated Party other than an

<PAGE>
                                      -95-

     Immaterial Subsidiary or for a substantial part of its assets, (iv) file an
     answer admitting the material allegations of a petition filed against it in
     any such proceeding, (v) make a general assignment for the benefit of
     creditors or (vi) take any action for the purpose of effecting any of the
     foregoing;

          (n) any Affiliated Party other than an Immaterial Subsidiary shall
     become unable, admit in writing its inability or fail generally to pay its
     debts as they become due;

          (o) one or more judgments for the payment of money in an aggregate
     amount in excess of $1,000,0000 shall be rendered against any Affiliated
     Party other than an Immaterial Subsidiary or any combination thereof and
     the same shall remain undischarged, unsatisfied, unstayed and unbonded for
     a period of 30 consecutive days, or any action shall be legally taken by a
     judgment creditor to attach or levy upon any assets of any Affiliated Party
     to enforce any such judgments;

          (p) an ERISA Event shall have occurred that, when taken together with
     all other ERISA Events that have occurred, would reasonably be expected to
     result in a Material Adverse Effect;

          (q) a reasonable basis shall exist for the assertion against the
     Parent Guarantor or any of its Included Subsidiaries, or any predecessor in
     interest of the Parent Guarantor or any of its Included Subsidiaries, of
     (or there shall have been asserted against the Parent Guarantor or any of
     its Included Subsidiaries) an Environmental Claim that, in the judgment of
     the Required Lenders, is reasonably likely to be determined adversely to
     the Parent Guarantor or any of its Included Subsidiaries, and the amount
     thereof (either individually or in the aggregate) is reasonably likely to
     have a Material Adverse Effect (insofar as such amount is payable by the
     Parent Guarantor or any of its Included Subsidiaries but after deducting
     any portion thereof that is reasonably expected to be paid by other
     creditworthy Persons jointly and severally liable therefor);

          (r) a Change in Control shall occur;

          (s) the Liens created by the Security Documents shall at any time not
     constitute a valid and perfected Lien on collateral having a fair market
     value in excess of $250,000 in the aggregate, intended to be covered
     thereby (to the extent perfection by filing, registration, recordation or
     possession is required herein or therein) in favor of the Collateral Agent
     (except as a result of the gross negligence or willful misconduct of the
     Collateral Agent in taking or failing to take any action), free and clear
     of all other Liens (other than Liens permitted under Section 7.02), or,
     except for expiration or termination in accordance with its terms, any of
     the Security Documents shall for whatever reason be terminated or cease to
     be in full force and effect, or the enforceability thereof shall be
     contested by any Obligor;

          (t) the Restatement Date shall not have occurred on or before December
     15, 2005; or

          (u) before the earlier of the Restatement Date or December 15, 2005,
     Kroll shall cease to be engaged by the Parent Guarantor to perform
     substantially the same services

<PAGE>
                                      -96-

     for the Parent Guarantor as it performs on the date hereof, unless on the
     date of determination a firm with at least the same capabilities and
     reputation, in the reasonable judgment of the Administrative Agent, to
     perform such services is engaged by the Parent Guarantor to perform such
     services;

then, and in every such event (other than an event with respect to the Borrower
described in clause (l) or (m) 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 Obligors 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 each Obligor; and in case of any
event with respect to the Borrower described in clause (l) or (m) 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 Obligors 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 each Obligor.

                                   ARTICLE IX

                       AGENTS, LENDER PARTIES AND ARRANGER

     Each of the Lenders and the Fronting Bank hereby irrevocably appoints each
of the Administrative Agent and the Paying Agent as its agent hereunder and
under the other Loan Documents and the Collateral Agent as its agent under the
other Loan Documents and the Security Documents and authorizes each Agent to
take such actions on its behalf and to exercise such powers as are delegated to
such Agent by the applicable Loan Documents, together with such actions and
powers as are reasonably incidental thereto.

     Each Person serving as an Agent 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 an Agent, and such Person and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the Parent
Guarantor or any Subsidiary or other Affiliate thereof as if it were not an
Agent.

     No Agent shall have any duties or obligations except those expressly set
forth herein and in the other Loan Documents. Without limiting the generality of
the foregoing, (a) no Agent shall be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) no
Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly

<PAGE>
                                      -97-

contemplated hereby or by the other Loan Documents that such Agent is required
to exercise in writing by the Required Lenders, and (c) except as expressly set
forth herein and in the other Loan Documents, no Agent shall have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Parent Guarantor or any of its Subsidiaries that is communicated
to or obtained by the Person serving as Agent or any of their Affiliates in any
capacity. No Agent shall be liable for any action taken or not taken by it with
the consent or at the request of the Required Lenders or in the absence of its
own gross negligence or willful misconduct. No Agent shall be deemed to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by the Borrower or a Lender, and the Agent shall be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth herein or therein, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article V or elsewhere herein or therein, other than to
confirm receipt of items expressly required to be delivered to such Agent.

     Each 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. Each 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. Each Agent may consult with legal counsel (who may be counsel for an
Obligor), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

     Each 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 such Agent. Each
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 the Agents 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 Agent.

     Each Agent may resign at any time by notifying the Lender Parties, the
Borrower and the Parent Guarantor. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor. If no successor of the retiring Administrative Agent or Paying Agent,
as the case may be, shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after such retiring Agent
gives notice of its resignation, then such retiring Agent's resignation shall
nonetheless become effective and (1) such retiring Agent shall be discharged
from its duties and obligations hereunder and (2) the Required Lenders shall
perform the duties of such Agent (and all payments and communications provided
to be made by, to or through the Administrative Agent or the Paying Agent, as
the case may be, shall instead be made by or to each Lender Party directly)
until such time as the Required Lenders appoint a successor agent as provided
for above in this

<PAGE>
                                      -98-

paragraph. The Collateral Agent's resignation shall not be effective until a
successor Collateral Agent shall have been appointed by the Required Lenders and
shall have accepted such appointment. Upon the acceptance of its appointment as
an Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring (or
retired) Agent, and the retiring Agent, shall be discharged from its duties and
obligations hereunder (if not already discharged therefrom as provided above in
this paragraph). The fees payable by the Borrower to a successor Agent shall be
the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After an Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.

     Each Lender Party acknowledges that it has, independently and without
reliance upon any Agent, any Credited Institution or any Lender Party 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 Party
also acknowledges that it will, independently and without reliance upon any
Agent, any Credited Institution or any Lender Party 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 any related agreement or any document
furnished hereunder or thereunder.

     Each Lender Party acknowledges that (a) CSFB has no obligation,
responsibility or liability to such Lender by reason of any of CSFB's roles as
sole bookrunner, sole lead arranger and syndication agent for the financing
contemplated, (b) Silver Point Finance, LLC has no obligation, responsibility or
liability to such Lender Party by reason of either of Silver Point Finance,
LLC's roles as co-arranger and documentation agent for the financing
contemplated hereby and (c) neither Credited Institution is an agent or
fiduciary for such Lender Party by reason of any of such roles.

                                   ARTICLE X

                                  MISCELLANEOUS

     SECTION 10.01. 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 or any Guarantor, to it at 370 Knollwood St.,
     Suite 500, Winston Salem, NC 27103, Attention of Michael Phalen (Telecopy
     No. 336-733-3791, Telephone No. 336-733-3707); with a copy to Cahill Gordon
     & Reindel LLP, 80 Pine Street, New York, NY 10005, Attention of Gerald S.
     Tanenbaum, Esq. (Telecopy No. 212-269-5420, Telephone No. 212-701-3000);

<PAGE>
                                      -99-

          (b) if to the Administrative Agent, to Credit Suisse First Boston, 11
     Madison Avenue, New York, New York 10010, Attention of Yvette McQueen,
     (Telecopy No. (212) 325-8304; Telephone No. (212) 325-9934);

          (c) if to the Paying Agent, to Credit Suisse First Boston, 11 Madison
     Avenue, New York, New York 10010, Attention of Yvette McQueen, (Telecopy
     No. (212) 325-8304; Telephone No. (212) 325-9934);

          (d) if to the Fronting Bank, to Credit Suisse First Boston, 11 Madison
     Avenue, New York, New York 10010, Attention of Yvette McQueen, (Telecopy
     No. (212) 325-8304; Telephone No. (212) 325-9934);

          (e) if to the Collateral Agent, to Credit Suisse First Boston, 11
     Madison Avenue, New York, New York 10010, Attention of Yvette McQueen,
     (Telecopy No. (212) 325-8304; Telephone No. (212) 325-9934); and

          (f) if to a 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 (or, in the case
of any such change by a Lender, by notice to the Borrower, the Paying Agent and
the Administrative Agent). All notices and other 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. Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall be effective
as provided in said paragraph (b).

     (b) Electronic Communications. Notices and other communications to the
Lender Parties hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Paying Agent, provided that the foregoing shall not
apply to notices to any Lender Party pursuant to Section 2.05 if such Lender
Party has notified the Paying Agent that it is incapable of receiving notices
under such Section by electronic communication. The Paying Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

     Unless the Paying Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

<PAGE>
                                     -100-

     SECTION 10.02. Waivers; Amendments.

          (a) No Deemed Waivers; Remedies Cumulative. No failure or delay by any
     Agent, the Fronting Bank or any Lender in exercising any right or power
     under any 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 Agents, the Fronting Bank and the
     Lenders under the Loan Documents are cumulative and are not exclusive of
     any rights or remedies that they would otherwise have. No waiver of any
     provision of this Agreement or consent to any departure by any Obligor
     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 any Agent, any Lender or the
     Fronting Bank may have had notice or knowledge of such Default at the time.

          (b) Amendments. Neither this Agreement nor any provision hereof may be
     waived, amended or modified except pursuant to an agreement or agreements
     in writing entered into by the Borrower and the Required Lenders or by the
     Borrower and the Paying Agent with the consent of the Required Lenders;
     provided that no such agreement shall

               (i) increase any Committed Amount of any Lender without the
          written consent of such Lender,

               (ii) reduce the principal amount of any Loan or LC Disbursement
          or reduce the rate of interest thereon, or reduce any fees payable
          hereunder, without the written consent of each Lender affected
          thereby,

               (iii) provide for the release of, or reduce the interest on, any
          Tranche A Credit-Linked Deposit (other than as provided in this
          Agreement), without the written consent of each Tranche A Lender,

               (iv) 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
          Committed Amount, without the written consent of each Lender affected
          thereby,

               (v) change Section 2.17(d) without the consent of each Lender
          adversely affected thereby,

               (vi) change any of the provisions of this Section or the
          percentage in the definition of the term "Required Lenders" or any
          other provision hereof specifying the number or percentage of Lenders
          required to waive, amend or modify any rights hereunder or make any
          determination or grant any consent hereunder, without the written
          consent of each affected Lender,

<PAGE>
                                     -101-

               (vii) release all or substantially all of the Collateral; or

               (viii) release any Guarantor that is not an Immaterial Subsidiary
          from its guarantee obligations under Article III without the written
          consent of each Lender;

         and provided further that (x) no such agreement shall amend, modify or
         otherwise affect the rights or duties of the Administrative Agent, the
         Paying Agent, the Collateral Agent or the Fronting Bank hereunder
         without the prior written consent of the Administrative Agent, the
         Paying Agent, the Collateral Agent or the Fronting Bank, as the case
         may be, and (y) that any modification or supplement of Article III
         shall require the consent of each Guarantor.

     Except as otherwise provided in this Section 10.02(b) with respect to this
Agreement, the Paying Agent or the Collateral Agent may, with the prior consent
of the Required Lenders (but not otherwise), consent to any modification,
supplement or waiver under any of the Loan Documents, provided that, without the
prior consent of each Lender, the Collateral Agent shall not (except as
permitted herein or in the Security Documents) release all or substantially all
of the collateral or otherwise terminate all or substantially all of the Liens
under any Security Document providing for collateral security, agree to
additional obligations (other than obligations under the First Lien Loan
Documents) being secured by all or substantially all of such collateral security
(unless the Lien for such additional obligations shall be junior to the Lien in
favor of the other obligations secured by such Security Document, in which event
the Collateral Agent may consent to such junior Lien provided that it obtains
the consent of the Required Lenders thereto), alter the relative priorities of
the obligations entitled to the benefits of the Liens created under the Security
Documents with respect to all or substantially all of such collateral, except
that no such consent shall be required, and the Collateral Agent is hereby
authorized, to release any Lien covering property that is the subject of either
a disposition of property permitted hereunder or a disposition to which the
Required Lenders have consented.

     SECTION 10.03. Expenses; Indemnity; Damage Waiver.

     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Paying Agent,
the Collateral Agent and their Affiliates, including the reasonable fees,
charges and disbursements of one special counsel for the Administrative Agent,
the Paying Agent, the Collateral Agent and the Credited Institutions in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all out-of-pocket expenses incurred by the Fronting 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, the Paying Agent, the Collateral Agent,
the Shared Lien Collateral Agent, the Fronting Bank, either Credited Institution
or any Lender, including the fees, charges and disbursements of any counsel for
the Administrative Agent, the Paying Agent, the Collateral Agent, the Shared
Lien Collateral Agent, the Fronting Bank or any Lender, in connection with the
enforcement or protection of its rights (x) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (y) in
connection with the Loans

<PAGE>
                                     -102-

made or Letters of Credit issued hereunder, including in connection with any
workout or restructuring or negotiations in respect of any workout or
restructuring and (iv) and all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording,
perfection or release of any security interest contemplated by any Security
Document or any other document referred to therein.

     (b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, the Paying Agent, the Collateral Agent, the Shared Lien
Collateral Agent, the Fronting Bank, each Credited Institution 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
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee by any third party, the Parent Guarantor or
any of its Subsidiaries arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder, or in connection herewith, or the consummation of the
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
the Fronting 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), any payments that the Collateral Agent is
required to make under any indemnity issued to any bank referred to in the
Security Agreement to which remittances in respect of Accounts, as defined
therein, are to be made, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Parent
Guarantor or any of its Subsidiaries, or any Environmental Liability related in
any way to the Parent Guarantor or any of its Subsidiaries, 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, whether
brought by any third party or the Parent Guarantor or any of its Subsidiaries,
and 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 are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
its Related Parties.

     (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, the Paying
Agent, the Collateral Agent, the Shared Lien Collateral Agent, or the Fronting
Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to
pay to the Administrative Agent, the Paying Agent, the Collateral Agent, the
Shared Lien Collateral Agent, or the Fronting Bank, as the case may be, 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, the Paying Agent, the Collateral Agent, the
Shared Lien Collateral Agent, or the Fronting Bank in its capacity as such. If
any payment by or on behalf of the Borrower in respect of the principal of,
interest on or any other amount in respect of the Tranche A Loans is rescinded
or must be otherwise restored by the Fronting Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, each

<PAGE>
                                     -103-

Tranche A Lender agrees that it shall pay to the Fronting Bank its Applicable
Percentage of the amount of such payment so rescinded or restored and will
indemnify the Fronting Bank on demand for its Applicable Percentage of all
reasonable costs and expenses (including fees of counsel) connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

     (d) Waiver of Consequential Damages, Etc. To the extent permitted by
applicable law, no Obligor shall assert, and each Obligor 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 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.

     (f) Third Party Beneficiary. The parties hereto agree that the Shared Lien
Collateral Agent shall be a third party beneficiary to this Section 10.03 to the
extent provided herein.

     SECTION 10.04. 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, except that no Obligor
     may 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 any Obligor 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 and, to the extent
     expressly contemplated hereby, the Related Parties of each of the
     Administrative Agent, the Paying Agent, the Collateral Agent, the Fronting
     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 Committed Amounts and the
     Loans and its Tranche A Credit-Linked Deposit at the time owing to it);
     provided that

               (i) except in the case of an assignment to a Lender or an
          Affiliate (or Approved Fund) of a Lender, the Paying Agent (and, in
          the case of an assignment of all or a portion of a Committed Amount or
          any Lender's obligations in respect of its Tranche A LC Exposure, the
          Fronting Bank) must give their prior written consents to such
          assignment (which consents shall not be unreasonably withheld or
          delayed),

               (ii) except in the case of an assignment to a Lender or an
          Affiliate (or Approved Fund) of a Lender or an assignment of the
          entire remaining amount of the assigning

<PAGE>
                                     -104-

          Lender's Committed Amount(s), the amount of the Committed Amount(s) 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 Paying Agent) shall not be less than $1,000,000
          unless the Paying Agent otherwise consents,

               (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,

               (iv) the parties to each such assignment shall execute and
          deliver to the Paying Agent an Assignment and Acceptance (such
          Assignment and Acceptance to be (A) electronically executed and
          delivered to the Paying Agent via an electronic settlement system then
          acceptable to the Paying Agent, which shall initially be the
          settlement system of ClearPar, LLC, or (B) manually executed and
          delivered together with a processing and recordation fee of $3,500),

               (v) the assignee, if it shall not be a Lender, shall deliver to
          the Paying Agent an Administrative Questionnaire and any applicable
          tax forms as may be requested by the Paying Agent, and

               (vi) in connection with each assignment of Tranche A Funding
          Amounts, the Tranche A Credit-Linked Deposit of the assignor Lender
          shall not be released, but shall instead be purchased by the relevant
          assignee and continue to be held for application (to the extent not
          already applied) in accordance with Article II to satisfy such
          assignee's obligations in respect of Tranche A Loans and the Tranche A
          LC Exposure. Each Tranche A Lender agrees that immediately prior to
          each assignment by a Tranche A Lender (i) the Paying Agent shall
          establish a new Tranche A Credit-Linked Sub-Account in the name of the
          assignee, (ii) unless otherwise consented to by the Paying Agent, a
          corresponding portion of the Tranche A Credit-Linked Deposit credited
          to the Tranche A Credit-Linked Sub-Account of the assignor Lender
          shall be purchased by the assignee and shall be transferred from the
          assignor's Tranche A Credit-Linked Sub-Account to the assignee's
          Tranche A Credit-Linked Sub-Account and (iii) if after giving effect
          to such assignment the Tranche A Funding Amount of the assignor Lender
          shall be zero, the Paying Agent shall close the Tranche A
          Credit-Linked Sub-Account of such assignor Lender.

Upon acceptance and recording 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, 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 2.14, 2.15, 2.16 and 10.03 and shall
continue to be obligated pursuant to Section 10.12). 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.

<PAGE>
                                     -105-

     (c) Maintenance of Register by the Paying Agent. The Paying Agent, acting
for this purpose as an agent of the Borrower, shall maintain at one of its
offices in New York City 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 Commitments 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 Paying Agent, the Fronting Bank 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, the
Fronting 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 and applicable tax forms, if
any, requested by the Paying Agent (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section (if required) and any written consents to such assignment
required by paragraph (b) of this Section, the Paying 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 Paying Agent or the Fronting Bank, 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 and the other Loan Documents (including all
or a portion of its Committed Amounts and the Loans and Tranche A Credit-Linked
Deposit owing to it); provided that (i) such Lender's obligations under this
Agreement and the other Loan Documents 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, the Paying
Agent, the Collateral Agent, the Fronting 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 and the other Loan
Documents. 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 this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or any
other Loan Document; 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
10.02(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 2.14, 2.15 and 2.16 (subject to the requirements of those
sections) to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section.

     (f) Limitations on Rights of Participants. A Participant shall not be
entitled to receive any greater payment under Section 2.14 or 2.16 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of

<PAGE>
                                     -106-

Section 2.16 unless the Borrower consents to the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.16(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 such pledge or assignment 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 assignee for such Lender as a party hereto.

     (h) No Assignments to the Obligors or Affiliates. Anything in this Section
to the contrary notwithstanding, no Lender may assign or participate any
interest in any Loan or Tranche A LC Exposure held by it hereunder to the Parent
Guarantor or any of its Affiliates or Subsidiaries without the prior consent of
each Lender.

     SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Obligors herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement 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 Paying Agent, the Collateral Agent, the Fronting 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 Committed Amounts have not expired or terminated. The provisions
of Sections 2.14, 2.15, 2.16, 3.03 and 10.03 and Article IX 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 Committed Amounts or the
termination of this Agreement or any provision hereof.

     SECTION 10.06. 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 and any
separate letter agreements with respect to fees payable to the Administrative
Agent, the Paying Agent, or the Collateral Agent constitute the entire contract
between and 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 Section 5.01, this
Agreement shall become effective when it shall have been executed by the Paying
Agent and when the Paying Agent shall have received counterparts hereof which,
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 to this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

<PAGE>
                                     -107-

     SECTION 10.07. 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 10.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Obligor against any of and all the obligations of
any Obligor 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) which such Lender may have.

     SECTION 10.09. Governing Law; Jurisdiction; Etc.

     (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. Each party hereto 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 this Agreement, 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 shall affect any right that the
Administrative Agent, the Paying Agent, the Collateral Agent, the Fronting Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Obligor or its properties in the courts of any
jurisdiction.

     (c) Waiver of Venue. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which 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 in
any court referred to in the first sentence of 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 10.01.
Nothing in this

<PAGE>
                                     -108-

Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

     SECTION 10.10. 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 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 10.11. 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 10.12. Treatment of Certain Information; Confidentiality.

     (a) Treatment of Certain Information. Each of the Borrower and the Parent
Guarantor acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower, the
Parent Guarantor or one or more of their Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
Affiliates of such Lender and each of the Borrower and the Parent Guarantor
hereby authorizes each Lender to share any information delivered to such Lender
by the Borrower, the Parent Guarantor and their Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such subsidiary or Affiliate, it being understood that any
such subsidiary or Affiliate receiving such information shall be bound by the
provisions of paragraph (b) of this Section as if it were a Lender hereunder.
Such authorization shall survive the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Committed Amounts or the
termination of this Agreement or any provision hereof.

     (b) Confidentiality. Each of the Administrative Agent, the Paying Agent,
the Collateral Agent, the Fronting Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (i) to its and its Affiliates' directors, officers, 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), (ii) to the extent requested by any regulatory
authority having jurisdiction over such Person, (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process;
provided that such Agent or such Lender Party, unless prohibited by applicable
law, shall use reasonable efforts to notify the Borrower in advance of any
disclosure pursuant to this clause (iii) but only to the extent reasonably
practicable under the circumstances

<PAGE>
                                     -109-

and on the understanding that neither such Agent nor any such Lender Party shall
incur any liability for failure to give such notice, (iv) to any other party to
this Agreement, (v) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (vi) subject to an agreement containing provisions substantially the
same as those of this paragraph, to (A) any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (B) any actual or prospective counterparty (or its
advisors) to any Hedging Agreement relating to the Borrower and its obligations,
(vii) with the consent of the Borrower or the Parent Guarantor or (viii) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this paragraph or (B) becomes available to the Administrative Agent,
the Paying Agent, the Collateral Agent, the Fronting Bank or any Lender on a
nonconfidential basis from a source other than an Obligor. For the purposes of
this paragraph, "Information" means all information received from any Obligor
relating to any Obligor or its business, other than any such information that is
available to the Administrative Agent, the Paying Agent, the Collateral Agent,
the Fronting Bank or any Lender on a nonconfidential basis prior to disclosure
by an Obligor; including all information provided pursuant to Section
6.01(c)(i), (f), (g), (h) and (i) and all Projections, the Desktop Analysis,
appraisals and the due diligence report from Keen & Shotenstein (the "Specified
Information"); provided that, in the case of information received from an
Obligor after the date hereof (other than any Specified Information), 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 10.13. USA PATRIOT Act. Each Lender hereby notifies the Borrower
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with said Act.

<PAGE>

     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.

                           [SIGNATURE PAGES TO FOLLOW]

<PAGE>

                                            KRISPY KREME DOUGHNUT CORPORATION

                                            By: /s/ Steven G. Panagos
                                                -------------------------------
                                                  Name: Steven G. Panagos
                                                  Title: President and
                                                         Chief Operating Officer

                                            GUARANTORS:

                                            KRISPY KREME DOUGHNUTS, INC.

                                            KRISPY KREME DISTRIBUTING COMPANY,
                                            INCORPORATED

                                            KRISPY KREME MOBILE STORE COMPANY

                                            KRISPY KREME CANADA, INC.

                                            HD CAPITAL CORPORATION

                                            HDN DEVELOPMENT CORPORATION

                                            KRISPY KREME COFFEE COMPANY, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            GOLDEN GATE DOUGHNUTS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            PANHANDLE DOUGHNUTS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            FREEDOM RINGS, LLC

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            NORTH TEXAS DOUGHNUTS, L.P.

                                               By:   KRISPY KREME DOUGHNUT
                                                     CORPORATION,
                                                     an authorized Member

                                            By: /s/ Michael C. Phalen
                                                -------------------------------
                                                  Name: Michael C. Phalen
                                                  Title: Authorized Officer

<PAGE>

                                            LENDERS

                                            CREDIT SUISSE FIRST BOSTON,
                                            CAYMAN ISLANDS BRANCH,
                                            as Lender, Administrative Agent,
                                            Paying Agent, Fronting Bank and
                                            Collateral Agent

                                            By: /s/ Paul L. Colon
                                                -------------------------------
                                            Name: Paul L. Colon
                                            Title: Director

                                            By: /s/ David Dodd
                                                -------------------------------
                                            Name: David Dodd
                                            Title: Vice President

<PAGE>

                                            Banc of America Securities LLC as
                                               agent for Bank of America, N.A.

                                            By: /s/ Toby Gilbert
                                                -------------------------------
                                            Name: Toby Gilbert
                                            Title:   Associate

<PAGE>

                                            Field Point I, LTD.

                                            By: /s/ Jeffrey A. Gelfand
                                                -------------------------------
                                            Name: Jeffrey A. Gelfand
                                            Title: Authorized Signatory

<PAGE>

                                            Sea Pines Funding LLC

                                            By: /s/ Ann E. Morris
                                                -------------------------------
                                            Name: Ann E. Morris
                                            Title: Assistant Vice President

<PAGE>

                                            SPF CDO I, LLC

                                            By: /s/ Jeffrey A. Gelfand
                                                -------------------------------
                                            Name: Jeffrey A. Gelfand
                                            Title: Authorized Signatory

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