Document:

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                           LOAN AND SECURITY AGREEMENT

                            Dated as of June 12, 2001
                                      among

                        SHERWOOD BRANDS OF VIRGINIA. LLC,
                              SHERWOOD BRANDS, LLC,
                           SHERWOOD BRANDS OF RI, INC.

                                  as Borrowers,

                       SHERWOOD BRANDS, INC., as Guarantor

                                       and

                           FIRST UNION NATIONAL BANK,

                                    as Lender

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                                TABLE OF CONTENTS

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SECTION 1.   PARTIES .............................................................   1

SECTION 2.   LOANS AND LETTERS OF CREDIT .........................................   1

2.1   Revolving Loans ............................................................   1
2.2   Letters of Credit ..........................................................   4
2.3   Loans Generally ............................................................   5
2.4   Authorization ..............................................................   7

SECTION 3.   INTEREST AND FEES ...................................................   7

3.1   Interest/Termination .......................................................   7
3.2   Closing Fee ................................................................   8
3.3   Unused Line Fee ............................................................   8
3.4   Termination of Revolving Loans and Termination Fee .........................   9
3.5   Charges to Loan Account ....................................................   9
3.6   Taxes and Additional Costs .................................................   9
3.7   Evidence of Amounts Outstanding ............................................  10
3.8   Eurodollar Deposits Unavailable or Interest Rate Unascertainable ...........  10
3.9   Changes in Law Rendering Eurodollar Loans Unlawful .........................  11
3.10  Funding Indemnity ..........................................................  11
3.11  Extensions and Conversions .................................................  11

SECTION 4.   GRANT OF SECURITY INTEREST ..........................................  12

4.1   Grant of Security Interest .................................................  12
4.2   Obligations ................................................................  12
4.3   Collateral .................................................................  12
4.4   Insurance ..................................................................  14
4.5   Surety .....................................................................  14

SECTION 5.   COLLECTION AND ADMINISTRATION .......................................  14

5.1   Collections ................................................................  14
5.2   Payments ...................................................................  14
5.3   Loan Account Statement .....................................................  15
5.4   Direct Collection ..........................................................  15
5.5   Attorney-in-Fact ...........................................................  15
5.6   Liability ..................................................................  16
5.7   Administration of Accounts .................................................  16
5.8   Documents ..................................................................  16
5.9   Access .....................................................................  16
5.10  Environmental Audits .......................................................  17
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<S>                                                                                   <C>
SECTION 6.     ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS ...............   17

6.1   Incorporation, Good Standing, and Due Qualification .........................   17
6.2   Power and Authority .........................................................   18
6.3   Legally Enforceable Agreement ...............................................   18
6.4   Closing Financial Statements and Condition ..................................   18
6.5   Labor Disputes and Acts of God ..............................................   18
6.6   Other Agreements ............................................................   19
6.7   Litigation ..................................................................   19
6.8   No Defaults on Outstanding Judgments or Orders ..............................   19
6.9   Margin Stock ................................................................   19
6.10  Financial and Other Reports .................................................   19
6.11  Trade Names .................................................................   20
6.12  Notices .....................................................................   21
6.13  Books and Records/Locations .................................................   21
6.14  Title; Lien Restrictions ....................................................   21
6.15  No Corporate Change .........................................................   22
6.16  Insurance ...................................................................   23
6.17  Compliance With Laws ........................................................   23
6.18  Equipment ...................................................................   23
6.19  Financial Covenants .........................................................   23
6.20  Affiliated and Other Transactions ...........................................   24
6.21  Fees and Expenses ...........................................................   25
6.22  Further Assurances ..........................................................   25
6.23  Use of Proceeds .............................................................   26
6.24  Environmental Matters .......................................................   26
6.25  Restrictions on Additional Indebtedness .....................................   27
6.26  Issuance of Stock ...........................................................   27
6.27  Limitations .................................................................   28
6.28  Restricted Payments .........................................................   28
6.29  Tax Returns .................................................................   28
6.30  Current Compliance ..........................................................   28
6.31  Pension Plans ...............................................................   28
6.32  Intellectual Property .......................................................   28
6.33  Eligible Inventory Warranties ...............................................   29
6.34  Eligible Account Warranties .................................................   29
6.35  Payment of Principal, Interest and Other Amounts Due ........................   30
6.36  Limitation on Sale and Leaseback ............................................   30
6.37  Ownership and Disposition of Assets .........................................   30
6.38  Taxes; Claims for Labor and Materials .......................................   30
6.39  Pension Plans ...............................................................   31
6.40  Bank of Account .............................................................   31
6.41  Maintenance of Management ...................................................   31
6.42  Accounts Receivable .........................................................   31
6.43  Keyman Insurance ............................................................   32
6.44  Interrelatedness of Borrowers ...............................................   32
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6.45  Control ....................................................................   33
6.46  Commerical Tort Claims .....................................................   33

SECTION 7.   EVENTS OF DEFAULT AND REMEDIES ......................................   33

7.1   Events of Default ..........................................................   33
7.2   Remedies ...................................................................   35
7.3   Application of Proceeds ....................................................   36
7.4   Lender's Cure of Third Party Agreement .....................................   36
7.5   Set-Off ....................................................................   36
7.6   Delay or Omission Not Waiver ...............................................   37
7.7   Time is of the Essence .....................................................   37
7.8   Waivers ....................................................................   37
7.9   Forbearance ................................................................   38
7.10  Limitation on Liability ....................................................   38

SECTION 8.   JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS ...............   38

8.1   JURY TRIAL WAIVER ..........................................................   38
8.2   Counterclaims ..............................................................   38
8.3   Jurisdiction ...............................................................   38
8.4   No Waiver by Lender ........................................................   39

SECTION 9.   TERM OF AGREEMENT; MISCELLANEOUS ....................................   39

9.1   Term .......................................................................   39
9.2   Additional Cash Collateral .................................................   39
9.3   Notices ....................................................................   39
9.4   Severability ...............................................................   39
9.5   Entire Agreement; Amendments; Assignments ..................................   39
9.6   Discharge of Borrowers .....................................................   40
9.7   Usage ......................................................................   40
9.8   Governing Law ..............................................................   40
9.9   Assignment or Sale by Lender ...............................................   40
9.10  Holidays ...................................................................   40
9.11  Integration ................................................................   40
9.12  Exhibits and Schedules .....................................................   40
9.13  Headings ...................................................................   40
9.14  Counterparts ...............................................................   40
9.15  Joint Liability ............................................................   41

SECTION 10.  ADDITIONAL DEFINITIONS AND TERMS ....................................   41

10.1  Borrowing Terms ............................................................   41
10.2  Letters of Credit ..........................................................   42
10.3  Addresses ..................................................................   42
10.4  Term .......................................................................   42
10.5  Interest/Fees ..............................................................   42
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                           LOAN AND SECURITY AGREEMENT

       This Loan and Security Agreement (the "Agreement") dated as of June 12,
2001, is among the undersigned Borrowers, the undersigned Guarantor and the
undersigned Lender concerning loans and other credit accommodations to be made
by Lender to Borrowers. All capitalized terms appearing herein which are not
defined have such meaning as provided in Section 10.

SECTION 1. PARTIES

       1.1 The "Borrowers" are Sherwood Brands of Virginia, LLC, a Virginia
limited liability company ("VA"), Sherwood Brands, LLC, a Maryland limited
liability company ("MD"), and Sherwood Brands of RI, Inc., a Rhode Island
corporation ("RI"), and their respective successors and permitted assigns. All
references to Borrowers shall mean each of them, jointly and severally,
individually and collectively, and the successors and permitted assigns of each.

       1.2 Guarantor is Sherwood Brands, Inc., a North Carolina corporation, its
successors and assigns.

       1.3 The "Lender" is First Union National Bank, and its successors and
assigns.

SECTION 2. LOANS AND LETTERS OF CREDIT

       2.1 Revolving Loans. Lender shall, subject to the terms and conditions
contained herein and the satisfaction of the closing and funding conditions set
forth in Schedule A hereto, make revolving loans to Borrowers ("Revolving
Loans") during the Term in amounts requested by Borrowers from time to time,
provided that the requested Revolving Loan would not cause the outstanding
Revolving Loans and Letters of Credit to exceed the lesser of (i) the Maximum
Revolving Credit and (ii) the Borrowing Base existing immediately prior to the
making of the requested Revolving Loan. Subject to the terms and conditions
hereof, Borrowers may borrow, repay and reborrow Revolving Loans, as set forth
in this Agreement.

           (a) The "Maximum Revolving Credit" is set forth in Section 10.1(a)
hereof.

           (b) The "Borrowing Base" shall be calculated at any time as the sum
of (i) the product obtained by multiplying the outstanding amount of Eligible
Accounts, net of all sales taxes, discounts, allowances and credits given, by
the Eligible Accounts Percentage set forth in Section 10.1(b) plus (ii) the
product(s) obtained by multiplying the applicable Eligible Inventory Percentage,
set forth in Section 10.1(b), by the values (as determined by Lender in its
reasonable discretion based on the lower of cost (on a FIFO basis) or market) of
Eligible Inventory, but the amount so added shall not exceed any sublimits
applicable thereto set forth in Section 10.1(c).

           (c) "Eligible Accounts" are accounts created by a Borrower in the
ordinary course of its business which are and remain acceptable to Lender, in
its reasonable discretion, for lending purposes. General criteria for Eligible
Accounts are set forth below but may be revised from time to time by Lender, in
its sole reasonable judgment. Lender shall, in general, deem

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accounts to be Eligible Accounts if: (1) such accounts arise from bona fide
completed transactions and have not remained unpaid for more than the number of
days after the invoice date set forth in Section 10.1(d) and for more than the
number of days after the due date set forth in Section 10.1(e) (2) the amounts
of the accounts reported to Lender are absolutely owing to a Borrower and do not
arise from sales on consignment, guaranteed sales or other terms under which
payment by the account debtors may be conditional or contingent; (3) the account
debtor's chief executive office or principal place of business is located in the
United States (unless payment of any such other account debtor's accounts is
backed by a letter of credit or credit insurance acceptable to, and approved by,
Lender); (4) such accounts do not arise from progress billings, retainages or
bill and hold sales; (5) there are no contra relationships, setoffs,
counterclaims or disputes existing with respect thereto and there are no other
facts existing or threatened which would impair or delay the collectability of
all or any portion thereof; (6) the goods giving rise thereto were not at the
time of the sale subject to any liens except in favor of Lender and such
accounts are free and clear of all liens except in favor of Lender; (7) such
accounts are not accounts with respect to which the account debtor or any
officer or employee thereof is an officer, employee or agent of or is affiliated
with any Borrower, directly or indirectly, whether by virtue of family
membership, ownership, control, management or otherwise; (8) such accounts, to
the extent they exceed $100,000 in the aggregate at any time, are not accounts
with respect to which the account debtor is the United States or any state or
political subdivision thereof or any department, agency or instrumentality of
the United States, any state or political subdivision, unless there has been
compliance with the Assignment of Claims Act or any similar state or local law,
if applicable; (9) Borrowers have delivered to Lender or Lender's representative
such documents as Lender may have requested pursuant to Section 5.8 hereof in
connection with such accounts and Lender shall have received a verification of
such account, satisfactory to it, if sent to the account debtor or any other
obligor or any bailee pursuant to Section 5.4 hereof; (10) there are no facts
existing or threatened which might result in any adverse change in the account
debtor's financial condition; (11) such accounts owed by a single account debtor
or its affiliates (other than the Selected Creditors, as hereinafter defined) do
not represent more than twenty-five percent (25%) of all otherwise Eligible
Accounts (accounts excluded from Eligible Accounts solely by reason of this
subsection (11) shall nevertheless be considered Eligible Accounts to the extent
of the amount of such accounts which does not exceed such percentage of all
otherwise Eligible Accounts); (12) such accounts owed by Sam's Club, Walmart
Stores, Inc. and/or McLane Distributors (collectively the "Selected Creditors")
or their affiliates which individually or in the aggregate do not represent,
during the months of January through July, more than 40% of all otherwise
Eligible Accounts or, during the months of August through December, more than
70% of all otherwise Eligible Accounts (accounts excluded from Eligible Accounts
solely by reason of this subsection (12) shall nevertheless be considered
Eligible Accounts to the extent of the amount of such accounts which does not
exceed such applicable percentage of all otherwise Eligible Accounts); (13) such
accounts are not owed by an account debtor who is or whose affiliates are past
due upon other accounts owed to any Borrower comprising more than fifty percent
(50%) of the accounts of such account debtor or its affiliates owed to such
Borrower; (14) such accounts are owed by account debtors whose total
indebtedness to Borrowers does not exceed the amount of any customer credit
limits as established, and changed upon ten (10) days prior notice thereof from
Lender, from time to time by Lender (accounts excluded from Eligible Accounts
solely by reason of this subsection (pound)14.1 shall nevertheless be considered
Eligible Accounts to the extent the amount of such

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accounts does not exceed such customer credit limit); and (15) such accounts are
owed by account debtors deemed creditworthy at all times by Lender.

           (d) "Eligible Inventory" is inventory owned by a Borrower which is
and remains acceptable to Lender, in its reasonable discretion, for lending
purposes, and is located at one of the addresses set forth in Section 10.4(d).
General criteria for Eligible Inventory are set forth below but may be revised
from time to time by Lender, in its sole reasonable judgment. Lender shall, in
general, determine Eligible Inventory as follows: (1) the aggregate gross amount
of each item of Borrowers' inventory, valued at the lower of cost (on a FIFO
basis) or market, which (A) is owned solely by a Borrower and with respect to
which a Borrower has good, valid and marketable title, (B) is stored on property
that is either (i) owned or leased by a Borrower or (ii) owned or leased by a
warehouseman that has contracted with a Borrower to store inventory on such
warehouseman's property or by a filler, processor or packer of a Borrower
(provided, that, with respect to inventory stored on property leased by Borrower
or property owned or leased by a warehouseman, filler, processor or packer,
Borrower shall have delivered in favor of Lender a lien waiver in form and
substance satisfactory to Lender (a "Landlord Waiver") from such landlord,
warehouseman, filler, processor or packer, as applicable, in respect thereof);
(C) is subject to a valid, enforceable and first priority lien in favor of
Lender except, with respect to Eligible Inventory stored at sites described in
clause (B)(ii) above for normal and customary warehouseman, filler, packer and
processor charges); (D) is located in the United States; and (E) is not obsolete
or slow moving and for which a markdown reserve has not been made, and which
otherwise conforms to the warranties contained herein and which at all times
continues to be acceptable to Lender in its sole reasonable discretion, (2) less
inventory consisting of work-in-process, packaging or manufacturing supplies
(other than raw materials), (3) less markdown reserves, (4) less any goods
returned or rejected by a Borrower's customers for which a credit has not yet
been issued and goods in transit to third parties (other than to a Borrower's
agents, warehouses, fillers, processors or packers that comply with clause
(1)(B)(ii) above), (5) less any inventory that is slow-moving, obsolete or which
Lender determines in its commercially reasonable judgment to be a no charge or
sample item; (6) less a reserve equal to the amount of all accounts payable of
each Borrower owed or owing to any warehouseman, filler, packer or processor;
(7) less any reserves required by Lender in its sole reasonable discretion for
special order goods and market value declines; (8) less any inventory which is
held by a Borrower pursuant to consignment, sale or return, sale on approval or
similar arrangement; and (9) less any increase in inventory value representing
production variances. Inventory which satisfies all of the foregoing criteria
except that it is in transit to a site described in clause (B)(i) or (ii), may
be deemed Eligible Inventory if such inventory consists of finished goods, is
fully insured, Lender is named on such insurance as loss payee under a lender's
loss payable clause acceptable to Lender, except for the purpose of transporting
such inventory or clearing customs, Borrowers have not delivered or consigned to
any Person any documents, instruments, warehouse receipts, bills of lading or
other instruments evidencing such inventory or the right to receive such
inventory (collectively the "Title Items") and all negotiable Title Items bear a
legend evidencing Lender's security interest therein and in the inventory
covered thereby; and Borrowers satisfy all other conditions established by
Lender from time to time.

           (e) In addition to the Letter of Credit Reserves described in Section
2.2(h), Lender shall, in its sole reasonable discretion, hive a continuing right
to deduct reserves in determining the Borrowing Base (such Letter of Credit
Reserves, together with the other reserves

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established by Lender are referred to herein collectively as the "Reserves"),
and to increase and decrease such Reserves from time to time in Lender's
reasonable discretion. Lender may, at its option, implement Reserves by
designating as ineligible a sufficient amount of accounts or inventory which
would otherwise be Eligible Accounts or Eligible Inventory so as to reduce the
Borrowing Base by the amount of the intended Reserve. Without limiting the
foregoing, Lender may establish Reserves against dilution of Eligible Accounts
and Eligible Inventory and will establish the Letter of Credit Reserves.

           2.2 Letters of Credit.

               (a) Lender may, in its sole discretion, issue or cause to be
issued, from time to time at a Borrower's request and on terms and conditions
and for purposes satisfactory to Lender, commercial, merchandise letters of
credit for a Borrower's account ("Letters of Credit"). Borrowers shall execute
and perform additional agreements relating to the Letters of Credit in form and
substance acceptable to Lender and the issuer of any Letters of Credit, all of
which shall supplement the rights and remedies granted herein. Any payments made
by Lender or any affiliate of Lender in connection with the Letters of Credit
shall constitute additional Revolving Loans to Borrowers.

               (b) In addition to the fees and costs of any issuer in connection
with issuing or administering the Letters of Credit, Borrowers shall pay monthly
to Lender, on the first day of each month, a charge on open Letters of Credit at
the rate per annum set forth in Section 10.2(a) (the "Letter of Credit
Charges").

               (c) No Letter of Credit will be issued if (x) the sum of (i) the
stated amount of the Letter of Credit requested, plus fees and costs for
issuance (ii) all Revolving Loans and Letters of Credit then outstanding would
exceed the lesser of (A) the Maximum Revolving Credit and (B) the Borrowing Base
existing immediately prior to the issuance of the requested Letter of Credit or
(y) the aggregate stated amount of all outstanding Letters of Credit would
exceed, at any time, the Letter of Credit sublimit set forth in Section 10.2(b).

               (d) All indebtedness, liabilities and obligations of any sort
whatsoever, however arising, whether present or future, fixed or contingent,
secured or unsecured, due or to become due, paid or incurred, arising or
incurred in connection with any Letter of Credit shall be included in the term
"Obligations", as defined herein, and shall include, without limitation, (i) all
amounts due or which may become due under or in connection with any Letter of
Credit; (ii) all amounts charged or chargeable to a Borrower or to Lender by any
bank, other finance institution or correspondent bank which opens, issues or is
involved with any Letter of Credit; (iii) Lender's Letter of Credit Charges and
all fees, costs and other charges of any issuer of any Letter of Credit; and
(iv) all duties, freight, taxes, costs, insurance and all such other charges and
expenses which may pertain directly or indirectly to any Obligations or Letters
of Credit or to the goods or documents relating thereto.

               (e) Borrower unconditionally agrees to indemnify and hold Lender
harmless from any and all loss, claim or liability (including reasonable
attorneys' fees) arising from any transactions or occurrences relating to any
Letter of Credit established or opened for any Borrower's account, the
Collateral relating thereto and any drawings thereunder, including any

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such loss or claim due to any action taken by an issuer of any Letters of
Credit. Each Borrower further agrees to indemnify and hold Lender harmless for
any errors or omissions in connection with the Letters of Credit, whether caused
by Lender, by the issuer of any Letter of Credit or otherwise. Each Borrower's
unconditional obligation to indemnify and hold Lender harmless under this
provision shall not be modified or diminished for any reason or in any manner
whatsoever, except for Lender's willful misconduct or gross negligence.
Borrowers agree that any charges made to Lender by any issuer of any Letter of
Credit shall be conclusive on Borrowers and may be charged to any Borrower's
account.

         (f) Lender shall not be responsible for: the conformity of any goods to
the documents presented; the validity or genuineness of any documents; delay,
default, or fraud by any Borrower or shipper and/or anyone else in connection
with the Letters of Credit or any underlying transaction.

         (g) Each Borrower agrees that any action taken by Lender, if taken in
good faith, or any action taken by an issuer of any Letter of Credit, under or
in connection with any Letter of Credit, shall be binding on all Borrowers and
shall not create any resulting liability to Lender. In furtherance thereof,
Lender shall have the full right and authority to clear and resolve any
questions of non-compliance of documents; to give any instructions as to
acceptance or rejection of any documents or goods; to execute for each
Borrower's account any and all applications for steamship or airway guarantees,
indemnities or delivery orders; to grant any extensions of the maturity of time
of payment for, or time of presentation of, any drafts, acceptances, or
documents; and to agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications or Letters of Credit. All of the foregoing actions may be taken in
Lender's sole name, and the issuer thereof shall be entitled to comply with and
honor any and all such documents or instruments executed by or received solely
from Lender, all without any notice to or any consent from Borrowers. None of
the foregoing actions described in this subsection (g) may be taken by Borrowers
without Lender's express written consent nor shall Lender be liable in any way
with respect thereto.

         (h) Borrowers acknowledge and agree that Bank will deduct from the
Borrowing Base a reserve created in connection with each Letter of Credit issued
hereunder (individually a "Letter of Credit Reserve" and collectively the
"Letter of Credit Reserves") equal to (x) 100%, minus the applicable Eligible
Inventory Percentage, multiplied by (y) the cost of the goods to be purchased
with such Letter of Credit, (z) the total duty, freight and cost of transport
within the United States for the goods to be purchased with such Letter of
Credit; provided, however, that if such Letter of Credit is not for the purpose
of acquiring Eligible Inventory, and such purpose has been approved by Bank, the
Letter of Credit Reserve established for such Letter of Credit shall equal 100%
of the face amount of such Letter of Credit.

     2.3 Loans Generally.

         (a) For purposes hereof, "Loan" shall mean a Revolving Loan and shall
include any extension or conversion of an existing Loan (or portion thereof);
"Eurodollar Loan" shall mean any Revolving Loan (or portion thereof) bearing
interest at a rate determined by reference to LIBOR as defined herein; "LIBOR
Market Rate Loan" shall mean any Revolving

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Loan (or portion thereof) bearing interest at the rate of interest determined by
reference to the LIBOR Market Index Rate as defined herein; and "Base Rate Loan"
shall mean any Loan (or portion thereof) bearing interest at a rate of interest
determined by reference to the Prime Rate as defined herein.

      (b) Each Revolving Loan (or portion thereof) may be a Base Rate Loan, a
LIBOR Market Rate Loan or a Eurodollar Loan, as Borrowers may request pursuant
to the terms hereof. Revolving Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Loans. No more than five (5) Eurodollar Loans and LIBOR Market Rate
Loans shall be outstanding at any one time. Eurodollar Loans shall be made in a
minimum principal amount of $500,000.00 and integral multiples of $100,000.00 in
excess thereof.

      (c) Borrowers shall give Lender written or telecopy notice (i) in the case
of a Eurodollar Loan, not later than 10:00 a.m., Eastern Standard time, three
(3) Business Days before a proposed borrowing and (ii) in the case of a Base
Rate Loan or LIBOR Market Rate Loan, not later than 10:00 a.m., Eastern Standard
time, on the day of the proposed borrowing. Such notice shall be irrevocable and
shall in each case refer to this Agreement and specify (A) whether the Loan then
being requested is to be a Eurodollar, LIBOR Market Rate or a Base Rate Loan;
(B) the date of such borrowing (which shall be a Business Day) and the amount
thereof, and (C) if such Loan is to be a Eurodollar Loan, the Interest Period
with respect thereto, provided, however, that Borrowers shall not specify any
Interest Period which expires after the end of the Term. If no election as to
the type of Loan is specified in any such notice, then the requested Loan shall
be a Base Rate Loan. If no Interest Period with respect to any Eurodollar Loan
is specified in any such notice, then Borrowers shall be deemed to have selected
an Interest Period of one month's duration.

      (d) Lender shall make a Loan on the proposed date thereof by wire transfer
of immediately available funds to Borrowers by 3:00 p.m., Eastern Standard time,
on such date, to Borrowers' Operating Account designated in Section 10.3(g)
hereof. The principal amount of each Revolving Loan shall be repaid on the
earlier of the last day of its corresponding Interest Period, unless converted
or extended in accordance with Section 3.12, and the last day of the Term.

      (e) Lender may, in its sole discretion, make or permit Revolving Loans or
issue or permit the issuance of Letters of Credit in excess of the Maximum
Revolving Credit or the Borrowing Base or any other applicable formulas or
sublimits. If Lender makes or permits any such accommodations, all or any
portion of such excess(es) shall be immediately due and payable upon Lender's
demand. Should any such excess occur without Lender's prior written consent,
such excess shall be due and payable immediately and without demand by Lender.

      (f) Borrowers may prepay (i) Revolving Loans which are Base Rate or LIBOR
Market Rate Loans on any Business Day and (ii) subject to the provisions of
Section 31.1 hereof, upon three (3) Business Days' written notice to Lender,
Revolving Loans which are Eurodollar Loans on a day other than the last day of
the applicable Interest Period.

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          (g)  Each Revolving Loan shall be evidenced by a single promissory
note in the amount of the Maximum Revolving Credit and issued by Borrowers to
the order of Lender in substantially the form attached hereto on Schedule I
("Revolving Note" or "Promissory Note").

          (h)  Lender's agreement to extend any Loans or issue any Letters of
Credit after the date hereof is expressly subject to (i) the satisfaction of
each of the Closing Conditions described on Schedule A (ii) all representations
and warranties of Obligors contained in the Loan Documents being true and
complete as of the date of the making of such Loan or the issuance of such
Letter of Credit; and (iii) no Event of Default exists nor any event or
condition which with the passage of time or delivery of notice or otherwise
would constitute any such Event of Default.

     2.4 Authorization. Each request for a Revolving Loan or Letter of Credit
delivered to Lender by any Borrower, and each other request, notice or
communication delivered by any Borrower to Lender, shall be irrevocably binding
on each Borrower. Each Borrower hereby expressly authorizes the elected officers
or managers of each other Borrower to request Revolving Loans and/or Letters of
Credit and to deliver to Lender each other request, notice or communication
deliverable by any Borrower to Lender hereunder. Borrowers expressly authorize
and direct Lender to rely on each such request, notice or communication
delivered to Lender by any Borrower as the act of each and every Borrower.

SECTION 3.  INTEREST AND FEES

     3.1  Interest/Termination.

          (a)  Interest accruing on Base Rate Loans and LIBOR Market Rate Loans
shall be payable by Borrowers on the first day of each month, calculated upon
the closing daily balances in the loan account of Borrowers for each day during
the immediately preceding month. Interest on Base Rate Loans shall accrue at the
Revolving Adjusted Base Rate then in effect. The Revolving Adjusted Base Rate
shall increase or decrease in an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective as of the date of each such change.
Interest on LIBOR Market Rate Loans shall accrue at the Adjusted LIBOR Market
Rate then in effect. The Adjusted LIBOR Market Rate shall increase or decrease
in an amount equal to each increase or decrease, respectively, in the LIBOR
Market Rate effective as of the date of each such change. Interest on Eurodollar
Loans shall be payable by Borrowers on the last day of each Interest Period,
and, if the Interest Period exceeds three months, also at the end of three
months; all calculated upon the outstanding principal amount of such Eurodollar
Loan during the immediately preceding period at the Adjusted LIBOR Rate then in
effect. On and after any Event of Default or termination or non-renewal hereof,
interest on all unpaid Obligations shall accrue at a rate equal to three percent
(3%) per annum in excess of the maximum interest rate then payable on Base Rate
Loans (the "Default Rate") until such time as all Obligations are indefeasibly
paid in full (notwithstanding entry of any judgment against any Borrower or the
exercise of any other right or remedy by Lender), and all such interest shall be
payable on demand. In no event shall charges constituting interest exceed the
rate permitted under any applicable law or regulation, and if any provision of
this Agreement is in contravention of any such law or regulation, such provision
shall be deemed amended to conform thereto.

                                      -7-

<PAGE>

          (b)  The "Prime Rate" is the rate of interest publicly announced by
Lender, its successors and assigns, in Philadelphia, Pennsylvania, as its "prime
rate" with each change in such prime rate being effective on the date of such
change (the Prime Rate is not intended to be the lowest rate of interest charged
by Lender to its borrowers). The "Revolving Adjusted Base Rate" is the rate of
interest equal to the sum of the Prime Rate then in effect and the Applicable
Percentage for Revolving Loans which are Base Rate Loans as set forth in Section
10.5(a).

          (c)  "LIBOR" is, with respect to any Eurodollar Loan for the Interest
Period applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) - British Bankers Association Interest Settlement Rates, as the
London interbank offered rate for deposits in U.S. dollars at approximately
11:00 A.M. (London time) two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page 3750 (or any
successor page), the applicable rate shall be the arithmetic mean of all such
rates and provided, further, LIBOR shall be increased by any then applicable
Eurocurrency liability reserve requirement imposed by the Board of Governors of
the Federal Reserve. The "Adjusted LIBOR Rate" is the rate of interest equal to
the sum of LIBOR then in effect and the Applicable Percentage for Eurodollar
Loans set forth in .Section 10.5(a).

          (d)  "Interest Period" is, as to any Eurodollar Loan, the period
commencing on the date of the borrowing (including extensions and conversions
thereof) and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is
one (1), two (2) or three (3) months thereafter, as Borrowers may elect;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and provided, further, that no Interest Period shall
extend beyond the end of the Term. Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.

          (e)  "LIBOR Market Rate" is, as to any LIBOR Market Rate Loan, the
rate for one month U.S. dollar deposits as reported on Telerate Page 3750 (or
any successor page) as of 11:00 a.m. London time, on such day, or if such day is
not a London business day, then the immediately preceding London business day
(or if not so reported, then as determined by Lender from another recognized
source or interbank quotation). The "Adjusted LIBOR Market Rate" is the rate of
interest equal to the sum of the LIBOR Market Rate then in effect plus the
Applicable Percentage for LIBOR Market Rate Loans set forth in Section 10.5(a).

     3.2 Closing Fee. Borrowers shall pay Lender on the date hereof, a Closing
Fee in the amount set forth in Section 10.5(c), which fee is fully earned as of
the date hereof and is non

     3.3 Unused Line Fee. Borrowers shall pay Lenders, monthly, on the first day
of each month, in arrears, an Unused Line Fee for each month during the Term
equal to the sum of: (i) .375% per annum of the amount, if any, by which
$15,000,000.00 exceeds the average outstanding daily principal balance during
the preceding month of all Revolving Loans and any

                                      -8-

<PAGE>

Letters of Credit plus (ii) .25% of the amount, if any, by which the Maximum
Revolving Credit exceeds the greater of $15,000,000.00 or the average
outstanding daily principal balance during the preceding month of all Revolving
Loans and any Letters of Credit.

     3.4  Termination of Revolving Loans and Termination Fee. Borrowers may
terminate the Revolving Loans upon sixty (60) days' written notice to Lender. In
the event that (a) the Revolving Loans are terminated by Borrowers for any
reason, including, without limitation, refinancing of the Revolving Loans with
another lender, or (b) Borrowers default in their obligations hereunder and the
Revolving Loans are terminated, Borrowers shall pay to Lender a termination fee
calculated as follows:

          (a) If the termination date is on or prior to June 12, 2002, the
termination fee will be equal to one percent (1%) of the Maximum Revolving
Credit; and

          (b) If the termination date is after June 12, 2002, but prior to June
12, 2003, the termination fee will be equal to one-half percent (1/2 of 1%) of
the Maximum Revolving Credit.

Notwithstanding the foregoing: (i) Lender reserves the right to amend the
termination fees for subsequent periods as a condition of any extension of the
Term and (ii) Lender agrees to waive the termination fee if the Revolving Loans
are terminated and refinanced with another credit facility extended by Lender.

In the event the Revolving Loans are terminated as a result of an Event of
Default, expiration of the Term, or otherwise, the outstanding balance of each
Revolving Loan, together with any accrued and unpaid interest thereon and any of
the sums due pursuant to the terms hereof shall be due and payable immediately.

     3.5  Charges to Loan Account. At Lender's option, all payments of
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or in any other agreement now or hereafter existing between
Lender and any Borrower, may be charged on the date when due, as Revolving
Loans. Interest, fees for Letters of Credit, the Unused Line Fee and any other
amounts payable by any Borrower to Lender based on a per annum rate shall be
calculated on the basis of actual days elapsed over a 360-day year.

     3.6  Taxes and Additional Costs.

          (a) Taxes; "Netting Up." All payments under this Agreement, under the
Promissory Note (including, without limitation, payments of principal and
interest) and under any other instruments, agreements or documents relating
hereto or thereto shall be payable to Lender free and clear of any and all
future taxes, levies, imposts, duties, deductions, withholdings, fees and
similar charges (the "Taxes"). If any Taxes are required to be withheld or
deducted from any amount payable under this Agreement, the Promissory Note or
such other instruments, agreements or documents, the amount payable under the
Agreement, the Promissory Note or such other instruments, agreements or
documents will be increased to the amount which, after deduction from such
increased amount of all. Taxes required to be withheld or deducted therefrom,
will yield to Lender the amount stated to be payable under this Agreement, the
Promissory Note or such other instruments, agreements or documents. Borrowers

                                      -9-

<PAGE>

will execute and deliver to Lender at its request such further instruments as
may be necessary to give full force and effect to any such increase. If any of
the Taxes specified in this Section are paid by Lender, Borrowers will, upon
demand of Lender, immediately reimburse Lender for such payments, whether or not
such Taxes are correctly or properly asserted. Nothing contained herein shall
apply to taxes measured by the overall net income of Lender. If either party
hereto shall receive actual notice that any payment must be adjusted pursuant to
this subsection, it shall give written notice to the other party with reasonable
promptness.

          (b) Additional Costs. In the event that any applicable law or
regulation, or the interpretation thereof by any governmental authority charged
with the administration thereof, hereafter subjects Lender to any tax of any
kind whatsoever, whether foreign or domestic, with respect to this Agreement,
the Promissory Note or any other instruments, agreements or documents relating
hereto or thereto, or imposes, modifies or deems applicable any reserve
requirement against assets held by or deposits in or for the account of, or
loans by, Lender or imposes on Lender, directly or indirectly, any other charges
or conditions affecting this Agreement, the Promissory Note or any other
instruments, agreements or documents relating hereto or thereto, or in the event
Lender is subject to any change in its capital adequacy requirements with
respect to loans such as the Loans or other extensions of credit such as the
Letters of Credit, and the result of any of the foregoing is to materially
increase the cost to Lender of maintaining the Maximum Revolving Credit, the
Loans or the Letters of Credit, then Borrowers will pay to Lender the additional
amount or amounts specified in writing to Borrowers by Lender to be necessary to
compensate Lender for such additional cost.

          (c) If any withholding tax paid by Borrowers pursuant to this section
shall be reimbursed to Lender by any taxing authority, Lender shall repay such
amount with reasonable promptness to Borrowers.

     3.7  Evidence of Amounts Outstanding. Etc. Lender shall enter in its
internal records the date and amount of each Loan and Letter of Credit made or
issued by Lender to a Borrower hereunder, and the date and amount of each
repayment of principal and interest. Entries made in such internal records
reflecting said information as to the Loans and Letters of Credit shall, absent
manifest error, constitute prima facie evidence of the transactions represented
by such entries; provided, however, that the failure by Lender to make an entry
in such records shall not limit or otherwise affect the obligation of Borrowers
hereunder to repay the Obligations, including, without limitation, the principal
amount thereof and interest accrued thereon.

     3.8  Eurodollar Deposits Unavailable or Interest Rate Unascertainable. In
the event that, prior to any Interest Period of a Eurodollar Loan, Lender shall
have determined (which determination shall be conclusive and binding on the
parties hereto) that deposits of the necessary amount for the relevant Interest
Period are not available to Lender in the interbank Eurodollar market or that,
by reason of circumstances affecting such market, adequate and reasonable means
do not exist for ascertaining LIBOR applicable to such Interest Period, Lender
shall promptly give notice of such determination to Borrowers, and Lender shall
not be obligated to make, convert any Base Rate Loan or LIBOR Market Rate Loan
to, or extend, a Eurodollar Loan to Borrowers pursuant to Section 2.1 or 3.11,
as applicable.

                                      -10-

<PAGE>

     3.9  Changes in Law Rendering Eurodollar Loans Unlawful. If at any time due
to any new law, treaty or regulation, or any interpretation thereof by any
governmental or other regulatory authority charged with the administration
thereof, or for any other reason arising subsequent to the date hereof, it shall
become unlawful for Lender to fund a Eurodollar Loan, the obligation of Lender
to provide a Eurodollar Loan shall, upon the happening of such event, forthwith
be suspended for the duration of such illegality. In the event of such a change
occurring, Lender shall notify Borrowers thereof in writing stating the reasons
therefor, and Borrowers shall, on the earlier of (a) the last day of the then
current Interest Period with respect thereto or (b) if required by such law,
regulation or interpretation, on such date as shall be specified in such notice,
repay or prepay (as applicable) any outstanding Eurodollar Loan to Lender in
full.

     3.10 Funding Indemnity. Borrowers promise, jointly and severally, to
indemnify Lender and to hold Lender harmless from any loss or expense which
Lender may sustain or incur (other than through Lender's gross negligence or
willful misconduct) as a consequence of (a) default by Borrowers in making a
borrowing of, conversion into or extension of Eurodollar Loans after Borrowers
have given a notice requesting the same in accordance with the provisions of
this Agreement, (b) default by Borrowers in making any prepayment of a
Eurodollar Loan after Borrowers have given a notice thereof in accordance with
the provisions of this Agreement. and (c) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto. With respect to Eurodollar Loans, such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or extended, for the period from the date of such prepayment or of such failure
to borrow, convert or extend to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided for herein over
(ii) the amount of interest (as reasonably determined by Lender) which would
have accrued to Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank Eurodollar market. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.

     3.11 Extensions and Conversions. Subject to the terms and conditions
contained herein, Borrowers shall have the option, on any Business Day, to
extend existing Eurodollar Loans into a subsequent permissible Interest Period,
to convert Base Rate Loans and LIBOR Market Rate Loans into Eurodollar Loans, or
to convert Eurodollar Loans into Base Rate Loans or LIBOR Market Rate Loans;
provided, however, that (a) except as provided in Section 3.9, Eurodollar Loans
may be converted into Base Rate Loans or LIBOR Market Rate Loans only on the
last day of the Interest Period applicable thereto, (b) Eurodollar Loans may be
extended, and Base Rate Loans and LIBOR Market Rate Loans may be converted into
Eurodollar Loans, only if no Event of Default or any event which constitutes or
would, with the giving of notice or lapse of time or both, constitute an Event
of Default, is in existence on the date of extension or conversion, (c) Loans
extended as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "Interest Period" and shall be in such minimum amounts as
provided in Section 2.4, and (d) no more than three (3) separate Eurodollar
Loans and LIBOR Market Rate Loans shall be outstanding hereunder at any one
time. Each such extension or conversion shall be effected by Borrowers by giving
a written notice (or telephone notice promptly confirmed in

                                      -11-

<PAGE>

writing) to Lender prior to 10:00 a.m., Eastern Standard time, on the Business
Day of, in the case of the conversion of a Eurodollar Loan into a Base Rate Loan
or LIBOR Market Rate Loan, and on the third Business Day prior to, in the case
of the extension of a Eurodollar Loan as, or conversion of a Base Rate Loan or
LIBOR Market Rate Loan, into a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall constitute a representation and warranty by Borrowers of the matters
specified in Section 6 hereof. In the event Borrowers fail to request extension
or conversion of any Eurodollar Loan in accordance with this Section, or any
such conversion or extension is not permitted or required by this Section, then
such Loan shall be automatically converted into a Base Rate Loan at the end of
the Interest Period applicable thereto.

SECTION 4.    GRANT OF SECURITY INTEREST

         4.1 Grant of Security Interest. To secure the payment and performance
in full of all Obligations, Guarantor and each Borrower hereby grants to Lender
a continuing security interest in and lien upon and a right of setoff against,
and Guarantor and each Borrower hereby assigns and pledges to Lender, all of the
Collateral, including any Collateral not deemed eligible for lending purposes.

         4.2 Obligations. "Obligations" shall mean any and all Revolving Loans,
reimbursement and other payment obligations under or in connection with the
Letters of Credit and all other indebtedness, liabilities and obligations of
every kind, nature and description owing by any Borrower to Lender and/or its
affiliates, including principal, interest, charges, fees and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether arising under this Agreement or otherwise whether now existing or
hereafter arising, whether arising before, during or after the Term or after the
commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended and whether
arising directly or howsoever acquired by Lender including from any other entity
outright, conditionally or as collateral security, by assignment, merger with
any other entity, participations or interests of Lender in the obligations of
any Borrower to others, assumption, operation of law, subrogation or otherwise
and shall also include any existing and future obligations under or in
connection with any swap agreements (as defined in 11 U.S.C. (S) 101) with
Lender or any affiliate of Lender, and all amounts chargeable to a Borrower
under this Agreement or in connection with any of the foregoing.

         4.3 Collateral. "Collateral" shall mean all now owned or hereafter
acquired personal property of Guarantor and each Borrower, including without
limitation, the following, together with the Pledged Interests and Insurance
Policy hereafter described in Sections 4.4 and 4.5 and any other property
hereafter pledged as security for any of the Obligations.

             (a) All now owned and hereafter acquired right, title and interest
of Guarantor and/or each Borrower in, to and in respect of all: accounts
(including health care insurance receivables), interest in goods represented by
accounts, returned, reclaimed or repossessed goods

                                      -12-

<PAGE>

with respect thereto and rights as an unpaid vendor; contract rights; chattel
paper; investment property; general intangibles (including, but not limited to
payment intangibles, tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action and other
claims, existing and future leasehold interests in equipment and fixtures,
goodwill, software and the Pledged Interests); stock and other ownership
interests in subsidiaries and other entities; documents (including bills of
lading, warehouse receipts and other documents of title); instruments; including
promissory notes, investment property and financial assets of every kind;
insurance policies (including, without limitation, the cash surrender value of
all life insurance policies); letters of credit, bankers' acceptances,
guaranties and letter of credit rights; and all supporting obligations and
rights to receive payment thereunder; cash monies, deposits, securities, bank
accounts, deposit accounts, reserves and credits; all property now or hereafter
held in any capacity by Lender, its affiliates or any entity which, at any time,
participates in Lender's financing of Guarantor or any Borrower or at any other
depository or other institution; agreements or property securing or relating to
any of the items referred to above; all commercial tort claims of Guarantor or
any Borrower based on or arising in connection with any of the matters described
on Schedule K, and all judgments, orders and awards issued in connection
therewith;

             (b) All now owned and hereafter acquired right, title and interest
of Guarantor and/or each Borrower in, to and in respect of goods, including, but
not limited to:

                 (i)  All inventory, wherever located, whether now owned or
     hereafter acquired, of whatever kind, nature or description, including all
     raw materials, work-in-process, finished goods, and materials to be used or
     consumed in any Borrower's or Guarantor's business; all returned or
     repossessed goods and all names or marks affixed to or to be affixed
     thereto for purposes of selling same by the seller, manufacturer, lessor or
     licensor thereof, and

                 (ii) All equipment and fixtures, wherever located whether now
     owned or hereafter acquired, including, without limitation, all machinery,
     equipment, motor vehicles, furniture and fixtures, and any and all
     additions, substitutions, replacements (including spare parts), and
     accessions thereof and thereto.

             (c) All now owned and hereafter acquired right, title and interests
of Guarantor and/or each Borrower in, to and in respect of any personal property
in or upon which Lender has or may hereafter have a security interest, lien or
right of setoff;

             (d) All present and future books and records relating to any of the
above including, without limitation, all computer programs, printed output and
computer readable data in the possession or control of Guarantor or any
Borrower, any computer service bureau or other third party;

             (e) All accessories, commingled goods, products and proceeds of the
foregoing in whatever form and wherever located, including, without limitation,
all insurance

                                      -13-

<PAGE>

proceeds and all claims against third parties for loss or destruction of or
damage to any of the foregoing.

         4.4 Insurance. As further security for the Obligations, Borrowers (and
all owners and beneficiaries applicable thereto) shall assign and grant to
Lender, following the issuance to any Borrower of such policy, a security
interest in a key man life insurance policy and the proceeds payable thereunder
issued by and maintained with an insurance company acceptable to Lender,
insuring the life of Uziel Frydman in an amount of not less than $1,000,000.00,
and on terms acceptable to Lender. Such insurance collateral shall be in
addition to all insurance required to be maintained under the other terms of
this Agreement.

         4.5 Surety. As further security for the Obligations, Guarantor shall
execute and deliver to Lender the absolute, unconditional, unlimited surety
agreement (the "Surety Agreement") of Guarantor in form and content satisfactory
to Lender. The Obligations and the obligations of Guarantor under its Surety
Agreement shall be secured by the assets of Guarantor described in Section 4.3,
including, without limitation, by a first and prior (except to the extent
described on Schedule 0), pledge by Guarantor of, and security interest in, all
capital stock, membership interests and other equity interests of and in each
Borrower now owned or hereafter acquired by Guarantor, and in and to all
dividends and other proceeds thereof; which stock and interests (collectively
the "Pledged Interests") shall be fully paid and non-assessable and are further
described on Schedule 0 attached hereto and made a part hereof.

SECTION 5.    COLLECTION AND ADMINISTRATION

         5.1 Collections. Each Borrower shall, at such Borrower's expense and in
the manner requested by Lender from time to time, direct that remittances and
all other proceeds of accounts and other Collateral shall be sent to a lock box
designated by and/or maintained in the name of Lender, and deposited into a bank
account now or hereafter selected by Lender and maintained in the name of Lender
under arrangements with the depository bank under which all funds deposited to
such bank account are required to be transferred solely to Lender. Borrowers
shall bear all risk of loss of any funds deposited into such accounts. In
connection therewith, Borrowers shall execute such lock box and bank account
agreements as Lender shall specify. Any collections or other proceeds received
by a Borrower shall be held in trust for Lender and immediately remitted to
Lender in kind.

         5.2 Payments. All Obligations shall be payable by 2:00 p.m., Eastern
Standard time, on the date such Obligations are due, at Lender's Office set
forth in Section l0.3(a) below or at such other place as Lender may expressly
designate from time to time for purposes of this Section. Lender shall apply all
proceeds of accounts or other Collateral received by Lender and all other
payments in respect of the Obligations to the Revolving Loans whether or not
then due or to any other Obligations then due, in whatever order or manner
Lender shall determine. For purposes of determining the Borrowing Base,
remittances and other payments with respect to the Collateral and Obligations
will be treated as credited to the loan account of Borrowers maintained by
Lender and Collateral balances to which they relate, upon the date of deposit
thereof with Lender, subject to final payment and collection. In computing
interest charges, the loan account of Borrowers maintained by Lender will be
credited with remittances and other payments the number of days set forth in
Section 10.5(b) after the day Lender has received

                                      -14-

<PAGE>

advice of receipt of remittances. For purposes of this Agreement, "Business Day"
shall mean any day other than a Saturday, Sunday or any other day on which banks
located in states where Lender has its offices, are authorized to close (or in
London, England in the case of notices and determinations in connection with
setting LIBOR).

         5.3 Loan Account Statement. Lender shall render to Borrowers monthly a
loan account statement. Each such statement shall be considered correct and
binding upon Borrowers, except to the extent that Lender receives, within sixty
(60) days after the mailing of such statement, written notice from Borrowers of
any specific exceptions by Borrowers to that statement.

         5.4 Direct Collection. Lender may, at any time, whether or not an Event
of Default has occurred (unless hereafter provided), without notice to or assent
of Borrowers, (a) notify any account debtor that the accounts and other
Collateral which includes a monetary obligation have been assigned to Lender by
Borrowers and, after the occurrence of an Event of Default, that payment thereof
is to be made to the order of and directly to Lender, (b) send, or cause to be
sent by its designee, requests (which may identify the sender by a pseudonym)
for verification of accounts and other Collateral directly to any account debtor
or any other obligor or any bailee with respect thereto, and (c) after the
occurrence of an Event of Default, demand, collect or enforce payment of any
accounts or such other Collateral, but without any duty to do so, and Lender
shall not be liable for any failure to collect or enforce payment thereof. At
Lender's request, all invoices and statements sent to any account debtor, other
obligor or bailee, shall state that the accounts and such other Collateral have
been assigned to Lender and are payable directly and only to Lender.

         5.5 Attorney-in-Fact. Guarantor and each Borrower hereby appoints
Lender and any designee of Lender as Guarantor's and such Borrower's
attorney-in-fact and authorizes Lender or such designee, at Borrowers' sole
expense, to exercise at any time in Lender's or such designee's discretion all
or any of the following powers, which powers of attorney, being coupled with an
interest, shall be irrevocable until all Obligations have been paid in full: (a)
receive, take, endorse, assign, deliver, accept and deposit, in the name of
Lender, Guarantor or such Borrower, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account debtors, other
obligors or any bailees notice of the interest of Lender in the Collateral or
request from account debtors or such other obligors or bailees at any time, in
the name of Guarantor, such Borrower or Lender or any designee of Lender,
information concerning the Collateral and any amounts owing with respect
thereto, (c) notify account debtors or other obligors to make payment directly
to Lender, or notify bailees as to the disposition of Collateral, (d) after the
occurrence of an Event of Default, take or bring, in the name of Lender,
Guarantor or any Borrower, all steps, actions, suits or proceedings deemed by
Lender necessary or desirable to effect collection of or other realization upon
the accounts and other Collateral, (e) after an Event of Default, change the
address for delivery of mail to Guarantor or such Borrower and receive and open
mail addressed to Guarantor or any Borrower, (f) after an Event of Default,
extend the time of payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or release the
account debtor or other obligor, without affecting any of the Obligations, and
(g) execute and/or deliver in the name of Guarantor or any Borrower and

                                      -15-

<PAGE>

file against Guarantor or any Borrower in favor of Lender financing statements
or amendments with respect to the Collateral.

         5.6 Liability. Each Obligor hereby releases and exculpates Lender, its
officers, employees and designees, from any liability arising from any acts
under this Agreement or in furtherance thereof, whether as attorney-in-fact or
otherwise, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact, except for willful misconduct or gross
negligence. In no event will Lender have any liability to any Obligor for lost
profits or other special or consequential damages.

         5.7 Administration of Accounts. After written notice by Lender to
Borrowers and automatically, without notice after the occurrence of an Event of
Default, Obligors shall not, without the prior written consent of Lender in each
instance, (a) grant any extension of time of payment of any of the accounts or
any other Collateral which includes a monetary obligation, (b) compromise or
settle any of the accounts or any such other Collateral for less than the full
amount thereof, (c) release in whole or in part any account debtor or other
person liable for the payment of any of the accounts or any such other
Collateral, or (d) grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any of the accounts or any such other
Collateral.

         5.8 Documents. At such times as Lender may request and in the manner
specified by Lender, each Obligor shall deliver to Lender or Lender's
representative, as Lender shall designate, copies or original invoices,
agreements, proofs of rendition of services and delivery of goods and other
documents evidencing or relating to the transactions which gave rise to accounts
or other Collateral, together with customer statements, schedules describing the
accounts or other Collateral and/or statements of account and confirmatory
assignments to Lender of the accounts or other Collateral, in form and substance
satisfactory to Lender and duly executed by such Obligor. Without limiting the
provisions of Section 5.7, each Borrower's granting of credits, discounts,
allowances, deductions, return authorizations or the like affecting any Eligible
Accounts or Eligible Inventory which credits, discounts, etc. are not in the
ordinary course of Borrowers' business and consistent with Borrowers' past
practices, will be promptly reported to Lender in writing. In no event shall any
such schedule or confirmatory assignment (or the absence thereof or omission of
any of the accounts or other Collateral therefrom) limit or in any way be
construed as a waiver, limitation or modification of the security interests or
rights of Lender or the warranties, representations and covenants of Obligors
under this Agreement. Any documents, schedules, invoices or other paper
delivered to Lender by Obligors may be destroyed or otherwise disposed of by
Lender six months after receipt by Lender, unless Borrowers request their return
in writing in advance and makes prior arrangements for their return at
Borrowers' expense.

         5.9 Access. From time to time as requested by Lender, at the sole
expense of Borrowers, Lender or its designee shall have access, prior to an
Event of Default during reasonable business hours and on or after an Event of
Default at any time, to all of the premises where Collateral is located for the
purposes of inspecting the Collateral, and all Obligors' books and records, and
Obligors shall permit Lender or its designee to make such copies of such books
and records or extracts therefrom as Lender my request. Without expense to
Lender, Lender may use such of Obligors' personnel, equipment, including
computer equipment, programs, printed

                                      -16-

<PAGE>

output and computer readable media, supplies and premises for the collection of
accounts and realization on other Collateral as Lender, in its sole discretion,
deems appropriate. Each Obligor hereby irrevocably authorizes all accountants
and third parties to disclose and deliver to Lender at such Borrower's expense
all financial information, books and records, work papers, management reports
and other information in their possession regarding such Obligor.

         5.10 Environmental Audits. From time to time, as requested by Lender,
Borrowers shall provide Lender, or its designee, complete access to all of
Borrowers' facilities for the purpose of conducting an environmental audit of
such facilities as Lender or its designees may deem necessary. Borrowers agree
to cooperate with Lender with respect to any environmental audit conducted by
Lender or its designee pursuant to this Section 5.10. Any such audit conducted
after the occurrence of an Event of Default shall be at Borrowers' cost and
expense.

SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

         Each Obligor hereby represents, warrants and covenants to Lender the
following, the truth and accuracy of which, and compliance with which, shall be
continuing conditions of the making of any Loans or issuance of any Letters of
Credit by Lender to any Borrower:

         6.1  Incorporation, Good Standing, and Due Qualification. Each Obligor
is a corporation or limited liability company as indicated on Schedules I
attached hereto, is duly incorporated or formed, as applicable, is validly
existing, and is in good standing under the laws of the jurisdiction of its
incorporation or formation as indicated on Schedule M, has the power and
authority to own its assets and transact the business in which it is now engaged
or proposed to be engaged, and is duly qualified as a foreign entity and in good
standing under the laws of each other jurisdiction in which the failure to be so
qualified could reasonably be expected to have a material adverse effect on the
business, operations or financial condition of such Obligor, on the Collateral
or on the enforceability or availability of rights and remedies of Lender
hereunder. No Obligor has any subsidiaries except as described on Schedule NI.

         6.2  Power and Authority. The execution, delivery, and performance by
each Obligor of this Agreement have been duly authorized by all necessary
corporate or other action and do not and will not (a) require any consent or
approval of any stockholders, members or other owners; (b) contravene such
Articles or Certificate of Incorporation or bylaws, Certificate of Formation or
Registration, Operating Agreement or other governing agreement; (c) violate any
provision of any law, rule, regulation (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination, or award
presently in effect having applicability to an Obligor; (d) result in a breach
of or constitute a default under any indenture, loan, or credit agreement, or
any other agreement, lease, or instrument to which an Obligor is a party or by
which any Obligor or its properties may be bound or affected; (c) result in, or
require, the creation or imposition of any lien upon or with respect to any of
the properties now owned or hereafter acquired by any Obligor; or (f) cause any
Obligor to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award or any such indenture,
agreement, lease, or instrument.

                                      -17-

<PAGE>

     6.3 Legally Enforceable Agreement. This Agreement constitutes the legal,
valid, and binding obligations of each Obligor, and is enforceable in accordance
with its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally.

     6.4 Closing Financial Statements and Condition.

         (a) The audited consolidated balance sheet of Guarantors, Borrowers and
their subsidiaries as of July 31. 2000, and the related consolidated statements
of income and the statements of operations and of cash flows for Guarantor, the
Borrowers and their subsidiaries as of and for such fiscal period, and the
quarterly internally prepared financial statements of Guarantor, Borrowers and
their subsidiaries for the quarter ending April 30, 2001, copies of all of which
annual and quarterly statements have been furnished to Lender, are complete and
correct and fairly present the financial condition of Guarantor, Borrowers and
their subsidiaries as at such dates and the results of the operations of
Guarantor, Borrowers and their subsidiaries for the periods covered by such
statements all in accordance with GAAP consistently applied, and, since April
30, 2001, there has been no material adverse change in the condition (financial
or otherwise), business, properties, operations or prospects of Guarantor,
Borrowers or any of their subsidiaries, respectively. There are no liabilities
of Guarantor, Borrowers or any of their subsidiaries, fixed or contingent, which
are material but are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business since
the date of these statements. No information, exhibit, or report furnished, or
written statement made, by Guarantor, Borrowers or any of their subsidiaries to
Lender in connection with the negotiation of this Agreement contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained herein or therein not materially
misleading. No Event of Default or event which constitutes, or would, with the
giving of notice or lapse of time or both, constitute an Event of Default has
occurred and is continuing.

         (b) As of June 5, 2001, (i) the principal balance owing to Obligors (or
any of them) to Wachovia Bank, N.A. was $765,000.00; and (ii) the total sums due
and owing by Obligors, or any of them, in connection with the Subordinated
Revenue Bonds was $239,193.00

     6.5 Labor Disputes and Acts of God. Neither the business nor the properties
of any Obligor or any of its subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance) materially and adversely affecting such
business or properties or the operation of such Obligor or any of its
subsidiaries.

     6.6 Other Agreements. No Obligor or any of its subsidiaries is a party to
any indenture, loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporate restriction which could have
a material adverse effect on the condition (financial or otherwise), business,
properties, operations or prospects of such Obligor or any of its subsidiaries,
or the ability of such Obligor to perform its obligations under this Agreement.
No Obligor or any of its subsidiaries is in default in any respect of the
performance, observance, or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party

                                      -18-

<PAGE>

     6.7  Litigation. Except as described on Schedule P., there is no pending or
threatened action or proceeding against or affecting any Obligor or any
Obligor's subsidiaries before any court, governmental agency, or arbitrator,
which may, in any one case or in the aggregate, materially and adversely affect
the condition (financial or otherwise), business, properties, operations or
prospects of such Obligor or any of its subsidiaries or the ability of such
Obligor to perform its obligations under this Agreement.

     6.8  No Defaults on Outstanding Judgments or Orders. Obligors and their
respective subsidiaries have satisfied all judgments and none of them is in
default with respect to any judgment, writ, injunction, decree, rule, or
regulation of any court, arbitrator, or federal, state, municipal, or other
governmental authority, commission, board, bureau, agency, or instrumentality,
domestic or foreign.

     6.9  Margin Stock. No Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of the Loans will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.

     6.10 Financial and Other Reports. Guarantor, Borrowers and their
subsidiaries shall keep and maintain their books and records in accordance with
generally accepted accounting principles ("GAAP"), consistently applied.

          (a) Annually, Borrowers shall deliver to Lender (i) audited
consolidated financial statements of Guarantor, Borrowers and their
subsidiaries, including balance sheet and income statement and statements of
operations and of cash flows for such year setting forth in comparative form the
corresponding figures for the preceding year accompanied by the report and
unqualified opinion thereon of independent certified public accountants
acceptable to Lender (the "Accountants"), as soon as available, but in no event
later than ninety (90) days after the end of Borrowers' fiscal year; and (ii) no
later than thirty (30) days prior to the beginning of each fiscal year, a budget
and business plan for such fiscal year of Borrowers which includes (A) a
projected consolidated balance sheet and statement of income of Borrowers for
such fiscal year and a projected consolidated statement of cash flows of
Borrowers for such fiscal year, (B) projected consolidated balance sheets,
statements of income and statements of cash flows of Borrowers on a monthly
basis for such fiscal year and (C) projected usage and excess availability of
Revolving Loans on a monthly basis for such fiscal year. All of the foregoing
shall be in such form, and shall be accompanied by, such information with
respect to the business of Guarantor, Borrowers and/or their subsidiaries as
Lender may request from time to time.

          (b) Borrowers shall, at their expense and within forty-five (45) days
following the end of each fiscal quarter, deliver to Lender:

              (i) a compliance certificate duly completed and certified by
     Borrowers' chief executive officer or chief financial officer,
     demonstrating Borrowers' compliance with the financial covenants set forth
     in Section 6.19 for the immediately preceding fiscal quarter and showing
     the calculations therefor in reasonable detail; and

                                      -19-

<PAGE>

                   (ii) Quarterly consolidated internally prepared interim
         financial statements of Guarantor, Borrowers and their subsidiaries,
         including a balance sheet and income statement and statements of
         operations and of cash flows for such quarter, all in form acceptable
         to Lender and in each case setting forth (i) in comparative form
         figures for the corresponding quarterly period and year-to-date period
         of the preceding fiscal year, (ii) year-to-date figures and (iii) in
         comparative form figures for the corresponding period set forth in the
         annual budget and business plan delivered pursuant hereto; and

                   (iii) in form acceptable to Lender, a separate internally
         prepared report of the profits, assets and net worth of each subsidiary
         of Guarantor or any Borrower which is not a Borrower under this
         Agreement.

               (c) Borrowers shall, at their expense, on or before the
twentieth (20th) day of each month (or more frequently if required by Lender),
deliver to Lender, in form acceptable to Lender: (1) true and complete monthly
agings of their respective accounts receivable and accounts payable, identifying
all Eligible Accounts; and (ii) monthly inventory reports, including an
identification of all Eligible Inventory, the location of all inventory; and
information as to all inventory in excess of a 12 months' supply and as to
out-of-season inventory.

               (d) Borrowers shall, at their own expense on each Friday of the
calendar week (or more frequently if required by Lender), deliver to Lender a
borrowing base certificate in substantially the form of Schedule C hereto duly
completed and certified by Borrowers' chief executive officer or chief financial
officer, detailing Borrowers' Eligible Accounts and Eligible Inventory and
containing, without limitation, weekly sales and cash receipt reports.

               (e) Borrowers shall cause to be delivered to Lender, within 30
days of filing, complete copies of each federal tax return filed by Guarantor
and/or any Borrower, which shall be signed and certified by the chief financial
officer of Borrowers to be a true and complete copy of such return. In the event
an extension is filed, Borrowers shall deliver a copy of the extension within 30
days of filing. Lender agrees that any positions, elections and valuations taken
by Borrowers on their tax returns solely for tax purposes, and which do not
affect the actual value of Borrowers' assets as shown on their then most recent
financial statements, shall not affect Lender's determination of the Borrowing
Base and/or the Eligibility Requirements hereunder.

               (f) Borrowers shall furnish to Lender a copy of each "management
letter" and each "comment letter" received by any Obligor from any accountants
in connection with any annual or other financial report or audit, and any such
other information, reports and statements respecting the condition or
operations, financial or otherwise, of Obligors or of any Borrower's
subsidiaries as Lender may from time to time reasonably request.

         6.11  Trade Names. Borrowers may from time to time render invoices to
account debtors under their trade names set forth in Section 10.3(e) after
Lender has received prior written notice from Borrowers of the use of such trade
names and as to which, Borrowers agree that: (a) each trade name does not refer
to another corporation or other legal entity, (b) all accounts and proceeds
thereof (including any returned merchandise) invoiced under any such trade names
are owned exclusively by a Borrower and are subject to the security interest of
Lender and the other terms of this Agreement, and (c) all schedules of accounts
and confirmatory

                                      -20-

<PAGE>

assignments including any sales made or services rendered using the trade name
shall show a Borrower's name as assignor and Lender is authorized to receive,
endorse and deposit to any loan account of each Borrower maintained by Lender
all checks or other remittances made payable to any trade name of a Borrower
representing payment with respect to such sales or services.

     6.12 Notices. Borrowers shall promptly notify Lender in writing of (a) any
loss, damage, investigation, action, suit, proceeding or claim relating to a
material portion of the Collateral or which may result in any material adverse
change in Guarantor's or any Borrower's business, assets, liabilities or
condition, financial or otherwise; (b) the occurrence of any Event of Default or
event which constitutes or would, after the giving of notice or lapse of time or
both, constitute an Event of Default; (c) any action or proceeding brought
against any Obligor wherein such action or proceeding would, if determined
adversely to any Obligor result in liability of any Obligor in excess of
$100,000.00 individually, or $100,000.00 in the aggregate; (d) the failure of
any Obligor to observe any of its undertakings under the Loan Documents; (e) any
material adverse change in the assets, business, operations or financial
condition of any Obligor; or (f) the termination or expiration of, or the
occurrence of a default under, any of the license or distributions agreements
described on Schedule N.

     6.13 Books and Records/Locations. The books and records of Guarantor,
Borrowers and their subsidiaries concerning accounts and the chief executive
office of each such entity are and shall be maintained only at the address set
forth in Section 10.3(b). The only other places of business and the only other
locations of Collateral, if any, of Guarantor and any Borrower are and shall be
the addresses set forth in Section 10.3 hereof, except Borrowers may change such
location or open a new place of business after thirty (30) days' prior written
notice from Borrowers to Lender. Prior to any change in location or opening of
any new place of business, Borrowers shall execute and deliver or cause to be
executed and delivered to Lender such financing statements, Landlord Waivers,
financing documents and security and other agreements as Lender may reasonably
require, including, without limitation, those described in Section 6.22. Without
limiting the foregoing, prior to the relocation of RI's operations and assets to
Virginia, Borrowers shall deliver to Lender a written plan or summary of such
relocation acceptable to Lender, and Obligors shall deliver to Lender, at
Obligors' cost and expense, any and all financing statements, landlord,
mortgagee and warehouse waiver agreements and other documents and agreements as
Lender may reasonably request to evidence or protect Lender's security interest
in, access to and rights and remedies with respect to the Collateral.

     6.14 Title; Lien Restrictions.

          (a) Obligors have and at all times will continue to have good and
marketable title to all of their respective properties, real and personal,
including without limitation, the Collateral, free and clear of all liens,
security interests, claims or encumbrances of any kind except in favor of Lender
and except only for the Permitted Liens, as hereafter defined. No Obligor shall
mortgage, assign, pledge, transfer or otherwise permit any lien or judgment
(whether as a result of a purchase money or title retention transaction, or
other security interest, or otherwise) to exist on any of its respective assets
or goods, whether real, personal or mixed, whether now owned or hereafter
acquired, except for the following (collectively the "Permitted Liens"): (i) the
existing liens described on Schedule B-i and (ii) future purchase money liens on

                                      -21-

<PAGE>

capital equipment provided that: (w) the property subject to any of such liens
is acquired by a Borrower in the ordinary course of such Borrower's business and
the lien is created simultaneously with such acquisition; (x) the purchase money
indebtedness so created does not exceed 100% of the cost of such equipment; (y)
the purchase money indebtedness shall only be secured by the equipment so
acquired; and (z) the purchase money indebtedness is permitted under the
provisions of Section 6.25 hereof.

         (b) No Obligor shall enter into any agreement which shall: (i) prohibit
any Obligor from granting, creating or suffering to exist, or otherwise
restricting in any way (whether by covenant, by identifying such event as a
default under such agreement or otherwise) the ability of any Obligor or any of
its subsidiaries to grant, create or suffer to exist any lien, security interest
or other charge or encumbrance upon or with respect to any of its assets in
favor of Lender; or (ii) restrict or inhibit Lender's rights or ability to sell
or otherwise dispose of any of the Collateral or any part thereof after the
occurrence of an Event of Default.

         (c) Lender agrees that upon Borrowers' request, Lender will subordinate
its security interest in the specific equipment described on Schedule B-2
attached hereto to the security interest therein of a creditor extending a loan
to Borrowers, or any of them (the "Equipment Debt") if (i) the principal amount
of the Equipment Debt does not exceed the lesser of(x) the appraised value of
such equipment or (y) $3,000,000.00, (ii) the Equipment Debt is secured solely
by a security interest in the equipment described on Schedule B-2, (iii) all
other terms and conditions of the Equipment Debt are acceptable to Lender in its
reasonable discretion and (iv) the creditor extending the Equipment Debt
executes an intercreditor agreement acceptable to Lender in its reasonable
discretion. If Lender fails to provide such subordination solely because the
conditions in (iii) or (iv) above have not been satisfied, and if (x) the
conditions of (i) and (ii) have been satisfied and (y) no Event of Default, nor
any event or condition which with the passage of time, delivery of notice or
otherwise would constitute any such Event of Default, exists, Lender agrees to
use best efforts to offer to Borrowers, within 30 days following the date of
Lender's refusal to provide the requested subordination, Equipment Debt on
substantially the same terms as offered by the original creditor. Should Lender
fail to comply with the foregoing, Borrowers may, within 120 days following such
failure, terminate the Revolving Loans and pay a termination fee equal to one
quarter of one percent less than the termination fee that would otherwise be due
under the provisions of Section 3.4.

    6.15 No Corporate Change. Each Obligor and its subsidiaries shall maintain
its separate existence and shall maintain in full force and effect all material
licenses, bonds, franchises, leases, trademarks and qualifications to do
business in the jurisdictions in which it is required to do so by the nature and
extent of its activities in such jurisdictions. No Obligor or any of its
subsidiaries shall directly or indirectly: (a) without Lender's prior written
consent, alter its corporate existence or, in one transaction or a series of
transactions, consolidate with or merge with or into any other entity, or permit
any other entity to consolidate with or merge with or into any Obligor or any of
their subsidiaries, (b) form or acquire any interest in any firm, corporation or
other entity or (c) alter or modify any Obligor's articles or certificate of
incorporation or any operating agreement, name, mailing addresses, principal
places of business, structure, status or existence or enter into or engage in
any business, operation or activity materially different from that presently
being conducted by any.

                                      -22-

<PAGE>

    6.16 Insurance. Obligors and their subsidiaries shall at all times maintain,
with financially sound and reputable insurers, insurance (including, without
limitation, at the option of Lender in its reasonable discretion, earthquake and
flood insurance) with respect to the Collateral and other assets and against all
such liability and hazards as are usually carried by entities engaged in the
same or a similar business similarly situated or as may be required by Lender
but expressly including product liability coverage. All such insurance policies
shall be in such form, substance, amounts and coverage as may be satisfactory to
Lender and shall provide for thirty (30) days' prior written notice to Lender of
cancellation or reduction of coverage. Guarantor and each Borrower hereby
irrevocably appoints Lender and any designee of Lender as attorney-in-fact for
Guarantor and such Borrower and its subsidiaries to obtain at Borrowers'
expense, any such insurance should any Obligor or any of its subsidiaries fail
to do so and, after an Event of Default, to adjust or settle any claim or other
matter under or arising pursuant to such insurance or to amend or cancel such
insurance. Obligors shall deliver to Lender evidence of all such insurance and a
lender's loss payable endorsement satisfactory to Lender as to all existing and
future insurance policies with respect to the Collateral. Obligors shall deliver
to Lender, in kind, all instruments representing proceeds of insurance received
by any Obligor. Lender may apply any insurance proceeds received at any time to
the cost of repairs to or replacement of any portion of the Collateral and/or,
at Lender's option, to payment of or as security for any of the Obligations,
whether or not due, in any order or manner as Lender determines.

    6.17 Compliance With Laws. Each Obligor and its subsidiaries is and at all
times will continue to be in compliance in all material respects with the
requirements of all laws, rules, regulations and orders of any governmental
authority relating to its business (including laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll taxes, employer and
employee contributions and similar items, securities, employee retirement and
welfare benefits, employee health and safety, or environmental matters) and all
material agreements or other instruments binding on such Obligor or any of its
subsidiaries or their respective property. All of Borrowers' inventory shall be
produced in accordance with the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto.
Each Obligor and its subsidiaries has paid and discharged and shall pay and
discharge all taxes, assessments and governmental charges against it or any
Collateral prior to the date on which penalties are imposed or liens attach with
respect thereto, unless the same are being contested in good faith and, at
Lender's option exercised in its reasonable discretion, reserves are established
for the amount contested and penalties which may accrue thereon.

    6.18 Equipment. With respect to equipment constituting Collateral, Obligors
shall keep the equipment in good order and repair, and in running and marketable
condition, ordinary wear and tear excepted.

    6.19 Financial Covenants. Borrowers shall at all times comply with the
following:

         (a) Borrowers shall maintain Tangible Net Worth of not less than (i)
$10,500,000.00 as of the date hereof and at all times hereafter through October
30, 2001; (ii) $11,500,000.00 as of October 31, 2001 and at all times thereafter
through January 30, 2002; (iii) $12,500,000.00 as of January 31, 2002 and at all
times thereafter through October 30, 2002; and (iv) $14,000,000.00 as of October
31, 2002 and at all times thereafter.

                                      -23-

<PAGE>

         (b) Borrowers shall maintain a Fixed Charge Coverage Ratio, determined
as of the end of each fiscal quarter of Borrowers for the 12-month period then
ended, of not less than: (i) 1.75 to 1.0 as of July 31, 2001 and as of the end
of each fiscal quarter thereafter through April 30, 2002; and (ii) 3.0 to 1.0 as
of July 31, 2002 and as of the end of each fiscal quarter thereafter.

         (c) Borrowers and Guarantor shall not, directly or indirectly, expend
or commit to expend, for fixed or capital assets (including capital lease
obligations) (collectively "Capital Expenditures") an aggregate amount in excess
of: (i) S 1,000,000.00 in the fiscal year ending July 31, 2001; (ii)
$2,000,000.00 in the fiscal year ending July 21, 2002; and (iii) $1,000,000.00
in the fiscal year ending July 31, 2003 and in any fiscal year thereafter.

         (d) For purposes of the foregoing:

    "Tangible Net Worth" means, as of any date, shareholders' equity or net
worth of Guarantor, Borrowers and their subsidiaries as determined in according
with GAAP, the amount of any assets classified as intangible assets under GAAP,
all determined on a consolidated basis.

    "EBITDA" means, for the applicable period, the sum of net income of
Guarantor, Borrowers and their subsidiaries (exclusive of extraordinary items of
income or loss) or amounts which, in the determination of such net income, have
been deducted for interest expense, total federal, state, local and foreign
income, value added and similar taxes, and depreciation and amortization; all as
determined in accordance with GAAP and on a consolidated basis.

    "Funded Indebtedness" means all indebtedness for borrowed money, all
indebtedness under bonds, notes or similar instruments on which interest
payments are customarily made, all indebtedness under conditional sales or title
retention documents, all indebtedness issued or assumed as the deferred purchase
price of property or services, the principal portion of obligations under
capital leases and any guaranties of any such foregoing indebtedness.

    "Fixed Charge Coverage Ratio" means, for the applicable period, the ratio of
(i) EBITDA for such period, minus total Unfunded Capital Expenditures for such
period, minus cash taxes paid, to (ii) the sum of interest expense for such
period plus scheduled payments on the Funded Indebtedness paid in cash for such
period plus total dividends and distributions paid or declared by Borrowers
during such period; all determined as to Guarantor, Borrowers and their
subsidiaries on a consolidated basis.

    "Unfunded Capital Expenditures" means Capital Expenditures which have not
been financed with financing from a third party permitted under the terms of
this Agreement.

    6.20 Affiliated and Other Transactions. No Obligor will, directly or
indirectly: (a) lend or advance money or property to, guarantee or assume
indebtedness of, or, except for existing investments in subsidiaries described
on Schedule M, invest (by capital contribution or otherwise) in any person,
firm, corporation or other entity; (b) declare, pay or make any dividend,
redemption or other distribution on account of, or purchase, any shares of any
class of stock of any Obligor now or hereafter outstanding, provided that a
Borrower's subsidiaries may declare, pay or make any dividend, redemption or
other distribution to such Borrower; (c) make

                                      -24-

<PAGE>

any payment of the principal amount of or interest on any indebtedness owing to
any officer, director, shareholder, or affiliate of any Obligor, provided that a
Borrower's subsidiaries may make any payment of the principal amount of or
interest on any indebtedness owing to such Borrower; (d) make any loans or
advances to any officer, director, employee, shareholder or affiliate of any
Obligor, provided that Borrowers may make advances and reimbursements to their
employees in reasonable amounts for travel and other business expenses incurred
in the ordinary course of Borrowers' business; or (e) enter into any sale, lease
or other transaction with any officer, director, employee, shareholder or
affiliate of an Obligor or any of its subsidiaries on terms that are less
favorable to any Obligor or any of its subsidiaries than those which might be
obtained at the time from persons who are not an officer, director, employee,
shareholder or affiliate of any Obligor.

    6.21 Fees and Expenses. Borrowers shall pay, on Lender's demand, all costs,
expenses, filing fees and taxes payable in connection with the preparation,
execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Lender's rights in the Collateral,
this Agreement and all other existing and future agreements or documents
contemplated herein or related hereto, including any amendments, waivers,
supplements or consents which may hereafter be made or entered into in respect
hereof, or in any way involving claims or defense asserted by Lender or claims
or defense against Lender asserted by any Obligor, any of its subsidiaries or
any third party directly or indirectly arising out of or related to the
relationship between Borrowers and Lender or any Obligor and Lender, including,
but not limited to the following, whether incurred before, during or after the
Term or after the commencement of any case with respect to a Borrower or any of
its subsidiaries or any Obligor under the United States Bankruptcy Code or any
similar statute: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) all title insurance and other insurance premiums, appraisal fees, fees
incurred in connection with any environmental report, audit or survey and search
fees; (c) all fees as then in effect relating to the wire transfer of loan
proceeds and other funds and fees then in effect for returned checks and credit
reports; (d) all expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field examinations of the
Collateral and Borrowers' operations provided that prior to the occurrence of an
Event of Default, such costs shall be in an amount equal to the Field
Examination Fee set forth in Section 10.5, plus such fees and disbursements
incurred as a result of litigation between the parties hereto, any third party
and in any appeals arising therefrom for Lender's examiners in the field and
office; (e) all costs, fees, penalties or other liabilities arising or incurred
in connection with any litigation, claims, judgments or suits (including,
without limitation, environmental liabilities); and (f) the costs, fees and
disbursements of outside counsel to Lender.

    6.22 Further Assurances. At the request of Lender, at any time and from time
to time, at Borrowers' sole expense, Obligors shall execute and deliver or cause
to be executed and delivered to Lender, such agreements, documents and
instruments, including, without limitation, waivers, consents and subordination
agreements from mortgagees or other holders of security interests or liens,
landlords or bailees and stock certificates and other securities, instruments
and chattel paper, endorsed as Lender may direct, with, as appropriate, stock or
other powers executed in blank, and do or cause to be done such further acts as
Lender, in its discretion, deems necessary or desirable to create, preserve,
perfect or validate any security interest of Lender or

                                      -25-

<PAGE>

the priority thereof in the Collateral and otherwise to effectuate the
provisions and purposes of this Agreement. Each Obligor hereby authorizes
Lender, from time to time and at Borrowers' expense, to file financing
statements or amendments against such Obligor in favor of Lender with respect to
the Collateral, without such Obligor's signature or further consent and to file
as financing statements any carbon, photographic or other reproductions of this
Agreement or any financing statements signed by Obligor. Obligor shall promptly
notify Lender in writing of any trademarks, copyrights, patents, licenses or
other intellectual property that any of them acquires following the date hereof.

     6.23   Use of Proceeds. The proceeds of the Revolving Loans shall be used
solely to refinance existing bank debt and for future working capital of
Borrowers.

     6.24   Environmental Matters.

            (a) None of Obligors' respective properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a hazardous waste or hazardous substance disposal site, or a
candidate for closure pursuant to any environmental protection statute. No lien
arising under any environmental protection statute has attached to any revenues
or to any real or personal property owned by any Borrower or any of its
subsidiaries. No Obligor has received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or state
governmental agency relating to any action or omission by any Obligor or any of
its subsidiaries resulting in the releasing, or otherwise exposing of hazardous
waste or hazardous substances into the environment. Each Obligor and its
subsidiaries is in compliance (in all material respects) with all statutes,
regulations, ordinances and other legal requirements pertaining to the
production, storage, handling, treatment, release. transportation or disposal of
any hazardous waste or hazardous substance.

            (b) In the event an Obligor becomes aware of any past, present or
future facts or circumstances which have given rise or could give rise to a
claim against any Obligor related to a failure to comply with any Environmental
Requirements, Borrowers will promptly give Lender notice thereof, together with
a written statement of the chief financial officer of Borrowers setting forth
the details thereof and the action with respect thereto taken or proposed to be
taken by Obligors.

            (c) Each Obligor agrees to indemnify, defend and hold harmless
Lender, its parents, subsidiaries, successors and assigns, and any officer,
director, shareholder, employee, Affiliate or agent of Lender, for all loss,
liability, damage, cost and expenses, including without limitation, attorney's
fees and disbursements (including the reasonable allocated costs of in-house
counsel) arising from or related to (i) the release of any Special Materials at
any facility at any time owned, leased or operated by an Obligor, (ii) the
release of any Special Materials treated, stored, transported, handled,
generated or disposed of by or on behalf of any Obligor at any third party owned
site, (iii) any claim against any Obligor that it has failed to comply with all
Environmental Requirements, and (iv) the breach by any Obligor of any
representation or covenant in this Section 6.24.

                                      -26-

<PAGE>

            (d)  The representations and covenants of Obligors contained in this
Section 6.24, including without limitation the indemnification obligation of
Obligors, shall survive the occurrence of any event whatsoever, including the
payment of the Obligations or any investigation by or knowledge of Lender.

            (e)  For purposes of the foregoing:

                 (i)  "Environmental Requirements" means any and all applicable
     federal, state or local laws, statutes, ordinances, regulations or
     standards, administrative or court orders or decrees, common law doctrines
     or private agreements, relating to (i) pollution or protection of the
     environment and natural resources, (ii) exposure of employees or other
     persons to Special Materials, (iii) protection of the public health and
     welfare from the effects of Special Materials and their products,
     by-products, wastes, emissions, discharges or releases, and (iv)
     regulation, licensing, approval or authorization of the manufacture,
     generation, use, formulation, packaging, labeling, transporting,
     distributing, handling, storing or disposing of any Special Materials.

                 (ii) "Special Materials" means any and all materials which,
     under Environmental Requirements, require special handling in use,
     generation, collection, storage, treatment or disposal, or payment of costs
     associated with responding to the lawful directives of any court or agency,
     of competent jurisdiction. Special Materials shall include, without
     limitation: (i) any flammable substance, explosive, radioactive material,
     hazardous material, hazardous waste, toxic substance, solid waste,
     pollutant, contaminant or any related material, raw material, substance,
     product or by-product of any substance specified in or regulated or
     otherwise affected by any Environmental Requirements (including but not
     limited to any "hazardous substance" as defined in the Comprehensive
     Environmental Response, Compensation and Liability Act of 1980 as amended
     or any similar state or local law), (ii) any toxic chemical or other
     substance from or related to industrial, commercial or institutional
     activities, and (iii) asbestos, gasoline, diesel fuel, motor oil, waste and
     used oil, heating oil and other petroleum products or compounds,
     polychiorinated biphenyls, radon, urea formaldehyde and lead-containing
     materials.

     6.25   Restrictions on Additional Indebtedness. No Obligor shall, nor shall
it permit its subsidiaries to, incur or create any liability or indebtedness,
including capitalized leases, other than under this Agreement and the following
indebtedness (collectively the "Permitted Indebtedness") (i) existing
indebtedness set forth on Schedule D hereto; (ii) future purchase money
indebtedness for the acquisition of equipment provided that the total aggregate
principal amount thereof shall not at any time exceed S100,000.00, and (iii) the
Equipment Debt as described in and subject to the conditions of Section 6.14(c).

     6.26   Issuance of Stock. Without Lender's prior written consent, no
Obligor shall, nor shall it permit its subsidiaries to, issue, distribute or
redeem any capital stock, membership interest or other securities for
consideration or otherwise, except, in the case of any such subsidiary, to a
Borrower. No Obligor shall permit the transfer of any shares of its capital
stock, membership interests or other equity interests, except that Guarantor may
permit such transfers of its capital stock if, as a result thereof, Uziel
Frydman and/or his immediate family would

                                      -27-

<PAGE>

continue to own, legally and beneficially, not less than 51% of the total issued
and capital stock of Guarantor and sufficient shares of Guarantor's stock to
enable Uziel Frydman and/or his immediate family to elect a majority of the
Board of Directors of Guarantor.

     6.27  Limitations. Without Lender's prior written consent, except as
contained herein, no Obligor shall create, nor will it permit any of its
subsidiaries to, directly or indirectly, create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual encumbrance
or restriction of any kind on the ability of any such person to (a) pay
dividends or make any other distribution on any of such person's capital stock,
membership interests or other equity interests, (b) pay any indebtedness owed to
an Obligor, (c) make loans or advances to an Obligor or (d) transfer any of its
property to an Obligor, except for encumbrances or restrictions existing under
or by reason of (i) customary non-assignment provisions in any lease governing a
leasehold interest, (ii) any agreement or other instrument of a person existing
at the time it becomes a subsidiary of an Obligor; provided, that such
encumbrance or restriction was not entered into in contemplation of such person
becoming a subsidiary of an Obligor and (iii) this Agreement.

     6.28  Restricted Payments. Without Lender's prior written consent, no
Obligor will pay dividends, make other distributions on account of its capital
stock or membership or other equity interests, make any payments on any sinking
fund or similar payment, make any payment to redeem, retire, purchase or obtain
the surrender of any outstanding warrants, options or other rights to acquire
any interest in an Obligor or make any payment to any affiliate of an Obligor.

     6.29  Tax Returns. Obligors have filed all tax returns which they are
required to file and have paid, or made provision for the payment of, all taxes
which have or may have become due pursuant to such returns or pursuant to any
assessment received by them, except such taxes (other than real estate taxes
which must be paid regardless of challenge), if any, as are being contested in
good faith and as to which adequate reserves have been provided. Such tax
returns are complete and accurate in all respects. No Obligor knows of any
proposed additional assessment or basis for any assessment of additional taxes.

     6.30  Current Compliance. Obligors are currently in compliance with all of
the terms

     6.31  Pension Plans. Except as disclosed on Schedule L hereto, (a) no
Obligor has any obligations with respect to any employee pension benefit plan
("Plan") (as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), (b) no events, including, without limitation,
any "Reportable Event" or "Prohibited Transaction" (as those terms are defined
under ERISA), have occurred in connection with any Plan of any Obligor which
might constitute grounds for the termination of any such Plan by the Pension
Benefit Guaranty Corporation ("PBGC") or for the appointment by any United
States District Court of a trustee to administer any such Plan, (c) all of the
Obligors' Plans meet with the minimum funding standards of Section 302 of ERISA,
and (d) No Obligor has existing liability to the PBGC. No Obligor is subject to
or bound to make contributions to any "multi-employer plan" as such term is
defined in Section 400 1(a)(3) of ERISA.

     6.32  Intellectual Property. Borrowers own or possess the irrevocable right
to use all of the patents, trademarks, service marks, trade names, copyrights,
licenses, franchises and permits

                                      -28-

<PAGE>

and rights with respect to the foregoing necessary to own and operate the
Borrowers' properties and to carry on their business as presently conducted and
presently planned to be conducted without conflict with the rights of others.
Schedule H sets forth an accurate list and description of each such patent,
trademark, service mark, trade name, copyright, license, franchise and permit
and right with respect to the foregoing, together with all registration or
application numbers or information with respect thereto.

     6.33 Eligible Inventory Warranties. With respect to Eligible Inventory from
time to time scheduled, listed or referred to in any certificate, statement or
report prepared by or for a Borrower and delivered to Lender and upon which
Borrowers are basing availability under the Borrowing Base, Borrowers warrant
and represent that (a) such inventory is located at the address or addresses
listed on Schedule E attached hereto and is not in transit; (b) a Borrower has
good, indefeasible and merchantable title to such inventory and such inventory
is not subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Lender; (c) such inventory is of good and
merchantable quality, free from any defects; (d) such inventory is not subject
to any licensing, patent, royalty, trademark, trade name or copyright agreements
with any third parties; and (e) the completion of the manufacture and sale or
other disposition of such inventory by Lender following an Event of Default
shall not require the consent of any person and shall not constitute a breach or
default under any contract or agreement to which a Borrower is a party or to
which the inventory is subject.

     6.34 Eligible Account Warranties. With respect to all Eligible Accounts
from time to time scheduled, listed or referred to in any certificate, statement
or report prepared by or for a Borrower and delivered to Lender and upon which
Borrowers are basing availability under the Borrowing Base, Borrowers warrant
and represent that (a) the accounts arose in the ordinary course of a Borrower's
business, (b) the accounts are genuine, are in all respects what they purport to
be, and are not evidenced by any chattel paper, note, instrument or judgment;
(c) a Borrower has absolute title to such accounts and the accounts represent
undisputed, bona tide transactions completed in accordance with the terms
thereof and as represented to Lender; (d) no payments have been or will be made
thereon, except payments immediately delivered to Lender pursuant to the Loan
Documents; (e) there are no setoffs, counterclaims, disputes, discounts,
credits, charge backs, freight claims; allowances or adjustments existing or
asserted with respect thereto and no Borrower has made any agreement with any
account debtor for any deduction therefrom; (f) there are no facts, events or
occurrences which impair the validity or enforcement thereof or may reduce the
amount payable thereunder as shown on any certificates, statements or reports,
prepared by or for a Borrower and delivered to Lender, Borrowers' books and
records and all invoices and statements delivered to Lender with respect
thereto; (g) to the best of Borrowers' knowledge, all account debtors have the
capacity to contract and are solvent; (h) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Lender; (i) to the best of Borrowers' knowledge, there are no proceedings or
actions which are threatened or pending against any account debtor which might
result in any material adverse change in such account debtor's financial
condition; (j) the account is not an account with respect to which the account
debtor is an affiliate of any Obligor or a director, officer of employee of any
Obligor or their affiliates; (k) the account does not arise with respect to
goods which have been returned, rejected, lost or damaged or which have not been
shipped or arise with respect to services which have not been fully performed
and accepted as satisfactory by the account debtor; (1) the account is not an
account with respect to which the account

                                      -29-

<PAGE>

debtor's obligation to pay the account is conditional upon the account debtor's
approval or is otherwise subject to any repurchase obligation or return right,
as with sales made on a consignment, bill-and-hold, guaranteed sale,
sale-and-return, or sale on approval basis; (m) the amounts shown on the
applicable certificates, statements, on Borrowers' books and records and all
invoices and statements which may be delivered to Lender with respect to such
accounts are actually and absolutely owing to a Borrower and are not in any way
contingent; (n) the accounts have not been sold, assigned or transferred to any
other person and no person except a Borrower has any claim thereto or (with the
exception of the applicable account debtor) any claims to the goods sold; and
(o) to Borrowers' knowledge, such account satisfies all criteria for eligibility
established by Lender.

         6.35 Payment of Principal, Interest and Other Amounts Due. Borrowers
will pay when due all Obligations and all other amounts payable by it hereunder
and under the Loan Documents.

         6.36 Limitation on Sale and Leaseback. Except in connection with sale
and leaseback transactions entered into in connection with the relocation of
RI's operations and assets to Virginia pursuant to a plan acceptable to Lender
as provided in Section 6.13, no Obligor will enter into any arrangement whereby
it will sell or transfer any real property or improvements thereon or other
fixed assets owned by it and then or thereafter rent or lease as lessee such
property, improvements or assets or any part thereof, or other property which
any Obligor shall intend to use for substantially the same purposes as the
property sold or transferred

         6.37 Ownership and Disposition of Assets.

              (a) All operating assets and revenues shown on the financial
statements of Borrowers and Guarantor, and all accounts and inventory described
on each Borrowing Base Certificate delivered by Borrowers to Lender, are owned
and generated, as applicable, by Borrowers. Guarantor is a holding company and
its only assets are the stock and equity interests owned by Guarantor in
Borrowers.

              (b) No Obligor will sell, lease, transfer, abandon or otherwise
dispose of all, substantially all, or any portion of its property or assets,
including, without limitation, any of the Collateral, except for sales of
inventory by Borrowers in the ordinary course for fair consideration and the
sale for fair consideration of obsolete equipment having a book value of not
more than $50,000 individually or in the aggregate.

         6.38 Taxes; Claims for Labor and Materials. Each Obligor will pay or
cause to be paid when due all taxes, assessments, governmental charges or levies
imposed upon it or its income, profits, payroll or any property belonging to it,
including without limitation all withholding taxes, and all claims for labor,
materials and supplies which, if unpaid, might become a lien or charge upon any
of its properties or assets; provided that it shall not be required to pay any
such tax (other than real estate taxes which must be paid regardless of
challenge), assessment, charge, levy or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings promptly initiated
and diligently conducted by it, and neither execution nor foreclosure sale or
similar proceedings shall have been commenced in respect thereof (or such
proceedings shall have been stayed pending the disposition of such contest of
validity), and it

                                      -30-

<PAGE>

shall have set aside on its books, or at the request of Lender deposited with
Lender adequate reserves with respect thereto. No Obligor will file or consent
to the filing of, any consolidated income tax return with any person or entity
other than a subsidiary.

         6.39 Pension Plans. Obligors will (a) keep in full force and effect any
and all Plans which are presently in existence or may, from time to time, come
into existence under ERISA, unless such Plans can be terminated without material
liability to any Obligor in connection with such termination (as distinguished
from any continuing funding obligation); (b) make contributions to all of
Obligors' Plans in a timely manner and in a sufficient amount to comply with the
requirements of ERISA; (c) comply with all material requirements of ERISA which
relate to such Plans so as to preclude the occurrence of any Reportable Event,
Prohibited Transaction or material "accumulated funding deficiency" as such term
is defined in ERISA; and (d) notify Lender immediately upon receipt by any
Obligor of any notice of the institution of any proceeding or other action which
may result in the termination of any Plan and deliver to Lender, promptly after
the filing or receipt thereof, copies of all reports or notices which any
Obligor files or receives under ERISA with or from the Internal Revenue Service,
the PBGC, or the U.S. Department of Labor.

         6.40 Bank of Account. Obligors will maintain Lender as major bank of
account, unless otherwise agreed by Lender in writing. Obligors will notify
Lender in writing and on a continuing basis, of all deposit accounts and
certificates of deposit (including the numbers thereof) maintained with or
purchased by any Obligor from any other financial institutions.

         6.41 Maintenance of Management. Obligor will cause their business to be
continuously managed by its present senior management or, in lieu thereof, such
other persons (serving in such senior management positions) as may be
satisfactory to Lender in its reasonable discretion. Borrowers will notify
Lender promptly in writing of any change in the board of directors, executive
officers, manager or other governing body of any Obligor and will provide Lender
with a copy of any proposed amendments to its Articles of Incorporation,
By-Laws, operating agreement or other governing documents, prior to adoption.

         6.42 Accounts Receivable. Unless Lender notifies Borrowers in writing
that it dispenses with any one or more of the following requirements, Borrowers
will (a) inform Lender promptly of the rejection of goods, claims made or delay
in delivery or performance in regard to any account or contract right upon which
Borrowers have based availability for advances under the Borrowing Base and will
adjust the Borrowing Base to reduce the availability for advances by the amount
of such account and will repay any out-of-formula advance resulting therefrom;
(b) make no change in any account upon which Borrowers have based availability
for advances under the Borrowing Base, unless such change is reflected in the
Borrowing Base and does not result in any out-of-formula advance under the
Borrowing Base; (c) furnish to Lender all information received by a Borrower
affecting the financial standing of any account debtor whose account or contract
right has been specifically assigned to Lender; (d) pay Lender the amount loaned
against any account or contract right if the goods are returned by purchaser or
the contract is canceled or terminated or adjust the borrowing base calculation
to reduce the availability for advances under the Borrowing Base by the amount
of such account and repay any out-of-formula advance resulting therefrom; (e)
immediately notify Lender if any of its accounts arise out of contracts with the
United States or any department, agency or instrumentality thereof, and

                                      -31-

<PAGE>

execute any instruments and take any steps required by Lender in order that all
monies due and to become due under such contract shall be assigned to Lender and
notice thereof given to the Government under the Federal Assignment of Claims
Act; and (f) deliver to Lender, with appropriate endorsement or assignment, any
instrument or chattel paper representing an account or contract right. Any
permission granted to Borrowers by Lender to omit any of the requirements of
this Section 6.42 may be revoked by Lender at any time.

         Borrowers will, if requested by Lender (a) give Lender assignments, in
form acceptable to Lender, of specific accounts or groups of accounts and monies
due and to become due under specific contracts and specific general intangibles;
(b) furnish to Lender a copy, with such duplicate copies as Lender may request,
of the invoice applicable to each account specifically assigned to Lender or
arising out of a contract right, bearing a statement that such account has been
assigned to Lender and such additional statements as Lender may require; (c)
mark its records evidencing its accounts in a manner satisfactory to Lender so
as to show which accounts have been assigned to Lender; (d) furnish to Lender
satisfactory evidence of the shipment and receipt of any goods specified by
Lender and the performance of any services or obligations covered by accounts or
contracts in which Lender has a security interest; (e) pay Lender the unpaid
portion of any account or contract right upon which Borrowers have based
availability for advances under the Borrowing Base if (i) such account is not
paid promptly after its maturity, (ii) an account debtor does not accept the
goods or services, (iii) any petition under the Bankruptcy Code or any similar
Federal or State statute is filed by or against a purchaser, or (iv) Lender
shall at any time reject the account as unsatisfactory; and until such payment
is made by Borrowers, Lender may retain any such account or contract right as
security and may charge any deposit account of any Borrower with any such
amounts; (f) join with Lender in executing a financing statement, notice,
affidavit or similar instrument, in form satisfactory to Lender, and such
continuation statements and other instruments as Lender may from time to time
request and pay the cost of filing the same in any public office deemed
advisable by Lender; (g) give Lender such financial statements, reports,
certificates, lists of purchasers (showing names, addresses, and amounts owing)
and other data concerning its accounts, contracts, collections, inventory,
general intangibles and other matters Lender may from time to time specify; (h)
segregate cash proceeds of Collateral so that they may be identified readily,
and deliver the same to the Lender at such time or times and in such manner and
form as the Lender may direct; (i) furnish such witnesses as may be necessary to
establish legal proof of the Collateral or records relating to the Collateral;
and (j) obtain from any owner, encumbrancer or other person having an interest
in the property where any Collateral is located, written consent to Lender's
removal of the Collateral therefrom, without liability on the part of Lender to
such owner, encumbrancer or other person, or from any such owner, encumbrancer
or other person such waivers of any interest in the Collateral as the Lender may
require.

         6.43 Keyman Insurance. Borrowers will cause to be maintained the keyman
life insurance coverage required under Section 4.4 and will deliver to Lender
evidence of such coverage showing all premiums paid for the subsequent 12-month
period at least thirty (30) days prior to the expiration of such insurance
policy.

         6.44 Interrelatedness of Borrowers. The business operations of
Borrowers and their subsidiaries are interrelated and complement one another and
such entities have a common business purpose, with intercompany bookkeeping and
accounting adjustments used to separate

                                      -32-

<PAGE>

their respective properties, liabilities, and transactions. To permit their
uninterrupted and continuous operations, Borrowers now require and will from
time to time hereafter require funds and credit accommodations for general
business purposes. The proceeds of Revolving Loans extended hereunder will
directly or indirectly benefit each Borrower, severally and jointly, regardless
of which Borrower requests or receives part or all of the proceeds of the
Revolving Loans.

         6.45 Control. Obligors shall execute and deliver all agreements,
assignments, instruments or other documents as reasonably requested by Lender
for the purpose of obtaining and maintaining control within the meaning of the
Uniform Commercial Code with respect to any Collateral consisting of (i) deposit
accounts, (ii) investment property, (iii) letter of credit rights and (iv)
electronic chattel paper.

         6.46 Commercial Tort Claims. Obligors shall (i) promptly forward to
Lender written notification of any and all commercial tort claims, including,
without limitation, any and all actions, suits and proceedings before any court
or governmental authority by or affecting any Obligor or any of its subsidiaries
and (ii) execute and deliver such statements, documents and notices and do and
cause to be done all such things as may be required by Lender or required by
law, including, without Imitation, all things which may from time to time be
necessary under the Uniform Commercial Code to fully create, preserve, perfect
and protect the priority of Lender's security interest in any commercial tort
claim.

SECTION 7.    EVENTS OF DEFAULT AND REMEDIES

         7.1 Events of Default. Except for Obligations arising under a swap
agreement as defined in ii U.S.C. (S) 101, if any, which shall be due at
Lender's option, all Obligations shall be immediately due and payable, without
notice or demand, and any provisions of this Agreement as to future loans and
credit accommodations by Lender shall terminate automatically, upon the
termination or non-renewal of this Agreement or upon the occurrence of an event
described in Section 7.1(h) or (I) below, or at Lender's option, upon or at any
time after the occurrence or existence of any one or more of the following
Events of Default:

             (a) Any Obligor fails to pay when due any interest or principal due
on the Obligations, whether at the stated maturity, as a result of acceleration
or otherwise, or any Obligor fails to pay within five (5) business days of when
due any fees, expenses or other sums (other than principal or interest) due on
the Obligations whether at the due date therefor, or a result of acceleration or
otherwise.

             (b) Any Obligor fails to perform, comply with or observe any of the
terms, covenants or agreements applicable to such Obligor under this Agreement
or of any of the other Loan Documents or any other existing or future financing,
security or other agreement between such Obligor and Lender or any affiliate of
Lender and such failure is not cured within thirty (30) days of receipt by
Borrowers of written notice of such failure; provided, however, that such notice
and opportunity to cure is expressly inapplicable to (i) any failure
constituting an Event of Default under any other subparagraph of this Section
7.1, (ii) any failure to comply with the provisions of Section 6.19 or (iii) any
failure which is incapable of cure or was willfully caused or permitted by an
Obligor.

                                      -33-

<PAGE>

                  (c) Any representation, warranty or statement of fact made by
any Obligor to Lender in this Agreement or any of the other Loan Documents or
any schedule, confirmatory assignment or otherwise, or to any affiliate of
Lender, shall prove inaccurate or misleading in any material respect.

                  (d) Any Obligor revokes, terminates or fails to perform any of
the terms of any guaranty, endorsement or other agreement of such party in favor
of Lender or any affiliate of Lender;

                  (e) Any judgment in excess of $250,000.00 is obtained against
any Obligor or one of its subsidiaries which remains unstayed for a period of
thirty (30) days; or any injunction or attachment is obtained against any
Obligor or any of their subsidiaries which remains unstayed for a period of
thirty (30) days or is enforced;

                  (f) Any Obligor is dissolved or terminates, fails to maintain
its separate existence or fails to remain in good standing, or the usual
business of any Obligor ceases or is suspended;

                  (g) Any change occurs in the senior management or ownership of
any Obligor not permitted by the terms of this Agreement;

                  (h) Any Obligor becomes insolvent, makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
general meeting of its creditors or principal creditors;

                  (i) Any petition or application for any relief under the
bankruptcy laws of the United States now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed by or against any Obligor or any of its
subsidiaries;

                  (j) The indictment or threatened indictment of any Obligor or
any of its subsidiaries under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against any Obligor or
any of its subsidiaries, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any of the property of any
Obligor or any of its subsidiaries;

                  (k) Any default or event of default occurs on the part of any
Obligor or any of its subsidiaries under any agreement, document or instrument
to which such Obligor or any such subsidiary is a party or by which such
Obligor, any of its subsidiaries or any of their respective property is bound,
creating or relating to any indebtedness of such Obligor or any of its
subsidiaries to any person or entity other than Lender in an amount exceeding
$100,000.00, if the effect of such default is to accelerate, or to permit the
acceleration of, the maturity of all or any part of such indebtedness, or all or
any part of any such indebtedness shall be declared to be due and payable or
required to be prepaid for any other reason, in either event prior to the stated
maturity thereof;

                                      -34-

<PAGE>

          (l) Lender in good faith believes that either (i) the prospect of
payment or performance of the Obligations is impaired or (ii) the Collateral is
not sufficient to secure fully the Obligations;

          (m) any material adverse change occurs in the nature or conduct of any
Obligor's business; or

          (n) any covenant, agreement or obligation of any Obligor contained
herein or in any of the other Loan Documents shall cease to be enforceable in
accordance with its terms, or any Obligor denies or disaffirms any of its
obligations hereunder or thereunder or this Agreement or any of the other Loan
Documents shall be canceled, terminated, revoked or rescinded without the
express prior written consent of Lender, or any action or proceeding shall have
been commenced by any person or entity (other than Lender) seeking to cancel,
revoke, rescind or disaffirm the obligations of any party to any Loan Document,
or any court or other governmental authority shall issue a judgment, order,
decree or ruling to the effect that any of the obligations of any party to this
Agreement or any of the other Loan Documents are illegal, invalid or
unenforceable.

     7.2  Remedies. Upon the occurrence of an Event of Default and at any time
thereafter, Lender shall have all rights and remedies provided in this Agreement
or any of the other Loan Documents, any other agreements between Obligors and
Lender, the Uniform Commercial Code or other applicable law, all of which rights
and remedies may be exercised without notice to Obligors, all such notices being
hereby waived, except such notice as is expressly provided for hereunder or is
not waivable under applicable law. All rights and remedies of Lender are
cumulative and not exclusive and are enforceable in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions and in
any order Lender may determine. Without limiting the foregoing, Lender may (a)
accelerate the payment of all Obligations and demand immediate payment thereof
to Lender, (b) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (c) require
Obligor, at Borrower's expense, to assemble and make available to Lender any
part or all of the Collateral at any place and time designated by Lender, (d)
collect, foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (e) extend the time of payment of, compromise or settle for cash,
credit, return of merchandise, and upon any terms or conditions any and all
accounts or other Collateral which includes a monetary obligation and discharge
or release the account debtor or other obligor, without affecting any of the
Obligations, or (f) sell, lease, transfer, assign, deliver or otherwise dispose
of any and all Collateral (including, without limitation, entering into
contracts with respect thereto, by public or private sales at any exchange,
broker's board, any office of Lender or elsewhere) at such prices or terms as
Lender may deem reasonable, for cash, upon credit or for future delivery, with
Lender having the right to purchase the whole or any part of the Collateral at
any such public sale, all of the foregoing being free from any right or equity
of redemption of any Obligor, which right or equity of redemption is hereby
expressly waived and released by Obligors. If any of the Collateral is sold or
leased by Lender upon credit terms or for future delivery, the Obligations shall
not be reduced as a result thereof until payment therefor is finally collected
by Lender. If notice of disposition of Collateral is required by law, seven
days' prior notice by Lender to Borrowers designating the time and

                                      -35-

<PAGE>

place of any public sale or the time after which any private sale or other
intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and each Obligor (and any such subsidiary, if
applicable) hereby waives any other notice. Neither Lender's compliance with any
applicable state or federal law in the conduct of any sale, nor its disclaimer
of any warranties relating to the Collateral shall be considered to adversely
affect the commercial reasonableness of such sale. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Obligors waive the posting of any bond
which might otherwise be required. Notwithstanding the foregoing to the
contrary, upon the occurrence of an Event of Default described in Section 7.1(h)
or (1), the obligation of Lender to make Loans and other extensions of credit
hereunder shall automatically terminate and, except for obligations under swap
agreements (as defined in II U.S.C. ss. 101) which shall be due at Lender's
option, the Loans and other Obligations hereunder shall become due and payable
without further act or notice.

     7.3 Application of Proceeds. Lender may apply the cash proceeds of
Collateral actually received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of any of the Obligations, in
whole or in part (including reasonable attorneys' fees and legal expenses
incurred by Lender with respect thereto or otherwise chargeable to Borrowers)
and in such order as Lender may elect, whether or not then due. Obligor shall
remain liable to Lender for the payment of any deficiency together with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including reasonable attorneys' fees and legal expenses.

     7.4 Lender's Cure of Third Party Agreement. Lender may, at its option, cure
any default by any Obligor or any of its subsidiaries under any agreement with a
third party or pay or bond on appeal any judgment entered against any Obligor or
any of its subsidiaries, discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral
and pay any amount, incur any expense or perform any act which, in Lender's sole
judgment, is necessary or appropriate to preserve, protect, insure, maintain, or
realize upon the Collateral. Lender may charge any Borrower's loan account for
any amounts so expended, such amounts to be repayable by Borrowers on demand.
Any sums not paid to Lender on demand shall bear interest at the Default Rate
until paid in full. Lender shall be under no obligation to effect such cure,
payment, bonding or discharge, and shall not, by doing so, be deemed to have
assumed any obligation or liability of Obligors.

     7.5 Set-Off. Without limiting the rights of Lender under applicable law,
Lender has and may exercise a right of set-off, a lien against and a security
interest in all property of any Borrower now or at any time in Lender's
possession in any capacity whatsoever, including but not limited to any balance
of any deposit, trust or agency account, or any other bank account with Lender,
as security for all Obligations. At any time and from time to time following the
occurrence of an Event of Default, or an event which with the giving of notice
or passage of time or both would constitute an Event of Default, Lender may
without notice or demand, 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 Lender to or for the credit of any Borrower
against any or all of the Obligations.

                                      -36-

<PAGE>

If any bank account of a Borrower with Lender is attached or otherwise liened or
levied upon by any third party, Lender need not await the running of any
applicable grace period hereunder, but Lender shall have and be deemed to have
the immediate right of set-off and may apply the funds or amount thus set-off
against the Obligations.

     7.6 Delay or Omission Not Waiver. Neither the failure nor any delay on the
part of Lender to exercise any right, remedy, power or privilege hereunder or
otherwise available to Lender upon the occurrence of any Event of Default or
otherwise shall operate as a waiver thereof or impair any such right, remedy,
power or privilege. No waiver of any Event of Default shall affect any later
Event of Default or shall impair any rights of Lender. No single, partial or
full exercise of any rights, remedies, powers and privileges by the Lender shall
preclude further or other exercise thereof. No course of dealing between Lender
and any Obligor shall operate as or be deemed to constitute a waiver of Lender's
rights or affect the duties or obligations of any Obligor.

     7.7 Time is of the Essence. Time is of the essence in Obligors' performance
of their obligations hereunder and under the other Loan Documents.

     7.8 Waivers. In connection with any proceedings hereunder or in connection
with any of the Obligations, including without limitation any action by Lender
in replevin, foreclosure or other court process or in connection with any other
action related to the Obligations or the transactions contemplated hereunder,
Obligors waive:

         (a) all procedural errors, defects and imperfections in such
proceedings;

         (b) all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered under any of the Loan Documents or in any
replevin or foreclosure proceeding, or otherwise providing for any valuation,
appraisal or exemption;

         (c) all rights to inquisition on any real estate, which real estate may
be levied upon pursuant to a judgment obtained under any of the Loan Documents
and sold upon any writ of execution issued thereon in whole or in part, in any
order desired by Lender;

         (d) presentment for payment, demand, notice of demand, notice of
nonpayment, protest and notice of protest of any of the Loan Documents,
including the Promissory Note and Surety Agreement;

         (e) any requirement for bonds, security or sureties required by
statute, court rule or otherwise;

         (f) any demand for possession of Collateral prior to commencement of
any suit; and

         (g) all rights to claim or recover attorney's fees and costs in the
event that any Obligor is successful in any action to remove, suspend or enforce
a judgment entered by confession.

                                      -37-

<PAGE>

     7.9  Forbearance. Lender may release, compromise, forbear with respect to,
waive, suspend, extend or renew any of the terms of the Loan Documents, without
notice to any Obligor.

     7.10 Limitation on Liability. Obligors shall be responsible for and Lender
is hereby released from any claim or liability in connection with:

          (a) Safekeeping any Collateral;

          (b) Any loss or damage to any Collateral;

          (c) Any diminution in value of the Collateral; or

          (d) Any act or default of another person or entity.

Lender shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Lender breaches its
required standard of conduct, Obligors agree that Lender's liability shall be
only for direct damages suffered and shall not extend to consequential or
incidental damages. In the event any Obligor brings suit against Lender in
connection with the transactions contemplated hereunder and Lender is found not
to be liable, Obligors will indemnify and hold Lender harmless from all costs
and expenses, including attorney's fees, incurred by Lender in connection with
such suit. This Agreement is not intended to obligate Lender to take any action
with respect to the Collateral or to incur expenses or perform any obligation or
duty of any Obligor.

SECTION 8.JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS

     8.1  JURY TRIAL WAIVER. OBLIGORS AND LENDER EACH WAIVE ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY ANY OF THEM AGAINST THE OTHER
WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS, THE
COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY ANY OBLIGOR OR LENDER, OR WHICH IN
ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN BORROWER AND LENDER. IN NO EVENT WILL LENDER BE LIABLE FOR LOST PROFITS
OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

     8.2  Counterclaims. Each Obligor waives all rights to interpose any claims,
deductions, setoff or counterclaims of any kind, nature or description in any
action or proceeding instituted by Lender with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating thereto,
except compulsory counterclaims.

     8.3  Jurisdiction. Each Obligor hereby irrevocably submits and consents to
the nonexclusive jurisdiction of the State and Federal Courts located in the
Commonwealth of Pennsylvania and any other State where any Collateral is located
with respect to any action or proceeding arising out of this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating thereto.
In any such action or proceeding, each Obligor waives personal service of the
summons and complaint or other process and papers therein and agrees that the
service thereof may be made by mail directed to Borrowers at its chief executive
office set forth

                                      -38-

<PAGE>

herein or other address thereof of which Lender has received notice as provided
herein, service to be deemed complete five (5) days after mailing, or as
permitted under the rules of either of said Courts. Any such action or
proceeding commenced by any Obligor against Lender will be litigated only in a
Federal Court located in the district, or a State Court in the State and County,
in which the office of Lender designated in Section 10.3(a) is located and each
Obligor waives any objection based on forum non conveniens and any objection to
venue in connection therewith.

     8.4 No Waiver by Lender. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. A waiver by Lender of any right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.

SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS

     9.1 Term. This Agreement shall only become effective upon execution and
delivery by Borrowers, Guarantor and Lender and shall continue in full force and
effect for a term set forth in Section 10.5 from the date hereof (the "Term" ),
unless extended by notice or agreement signed by Lender.

     9.2 Additional Cash Collateral. Upon termination of this Agreement by
Borrowers, as permitted herein, in addition to payment of all Obligations which
are not contingent, Borrowers shall deposit such amount of cash collateral as
Lender determines is necessary to secure Lender from loss, cost, damage or
expense, including reasonable attorneys' fees, in connection with any Letters of
Credit or remittance items or other payments provisionally credited to the
Obligations and/or to which Lender has not yet received final and indefeasible

     9.3 Notices. Except as otherwise provided, all notices, requests and
demands hereunder shall be (a) made to Lender at its address set forth in
Section 10.3(a) and to Borrowers do Guarantor at its chief executive office set
forth-in Section 10.3(b), or to such other address as either party may designate
by written notice to the other in accordance with this provision, and (b) deemed
to have been given or made: if by hand, immediately upon delivery, if by telex,
telegram or telecopy (fax), immediately upon receipt; if by overnight delivery
service, one day after dispatch; and if by first class or certified mail, three
days after mailing.

     9.4 Severability. If any provision of this Agreement is held to be invalid
or unenforceable, such provision shall not affect this Agreement as a whole, but
this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable.

     9.5 Entire Agreement; Amendments; Assignments. This Agreement and the Loan
Documents contain the entire agreement of the parties as to the subject matter
hereof, all prior commitments, proposals and negotiations concerning the subject
matter hereof being merged herein. Neither this Agreement nor any provision
hereof shall be amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an

                                      -39-

<PAGE>

authorized officer of Lender. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns, except that any obligation of Lender under this Agreement shall not be
assignable nor inure to the successors and assigns of any Obligor.

     9.6  Discharge of Borrowers. No termination of this Agreement shall relieve
or discharge Borrowers of their Obligations, grants of Collateral, duties and
covenants hereunder or otherwise until such time as all Obligations to Lender
have been indefeasibly terminated, paid and satisfied in full, including,
without limitation, the continuation and survival in full force and effect of
all security interests and liens of Lender in and upon all then existing and
thereafter arising or acquired Collateral and all warranties and waivers of
Borrower.

     9.7  Usage. All terms used herein which are defined in the Uniform
Commercial Code shall have the meanings given therein unless otherwise defined
in this Agreement and all references to the singular or plural herein shall also
mean the plural or singular, respectively.

     9.8  Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. References herein
to the "Uniform Commercial Code" shall, unless otherwise provided herein, refer
to the Uniform Commercial Code in effect in such Commonwealth.

     9.9  Assignment or Sale by Lender. Lender may sell, assign or participate
all or a portion of its interest in the Loans and the Loan Documents and in
connection therewith may make available to any prospective purchaser, assignee
or participant any information relative to any Obligor in its possession.

     9.10 Holidays. If the day provided herein for the payment of any amount or
the taking of any action falls on a Saturday, Sunday or public holiday at the
place for payment or action, then the due date for such payment or action will
be the next succeeding Business Day.

     9.11 Integration. This Agreement and the Loan Documents shall be construed
as integrated and complementary of each other, and as augmenting and not
restricting Lender's rights, powers, remedies and security. In the event of any
inconsistency between the terms of this Agreement and the terms of the other
Loan Documents, the terms of this Agreement shall prevail.

     9.12 Exhibits and Schedules. All exhibits and schedules attached hereto are
hereby made a part of this Agreement.

     9.13 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.

     9.14 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

                                      -40-

<PAGE>

     9.15 Joint Liability. Borrowers expressly acknowledge and agree that all
agreements, conditions, covenants, liabilities and provisions of the Loan
Documents shall be the joint and several obligation of each Borrower.

SECTION 10. ADDITIONAL DEFINITIONS AND TERMS

     10.1 Borrowing Terms.

          (a) Maximum Revolving Credit:                    $20,000,000.00

          (b) Borrowing Base Formulas:

              Eligible Accounts Percentage                      Up to 85%
              Eligible Inventory Percentages:
              Finished Goods                                   Up to 60%*
              Raw Materials and Component Inventory             Up to 30%

* Such 60% advance rate shall increase to up to 70% (as determined by Lender) at
such time as Lender has received, at Borrowers' expense, an appraisal of
Borrowers' inventory prepared by an appraiser acceptable to Lender and on terms
and conditions acceptable to Lender, and such appraisal establishes a value for
such inventory which supports, in Lender's reasonable discretion, an increased
advance rate. Maintenance of any such increased advanced rate shall be subject
to Lender's receipt, from time to time, at Borrowers' expense, of subsequent
inventory appraisals to confirm values acceptable to Lender and upon Borrowers'
agreement to deliver financial or operating reports in addition to those
required under Section 6.10 above, and/or to deliver the items required under
Section 6.10 above more frequently than currently provided in such Section.

<TABLE>
          <S> <C>                                                           <C>
          (c) Inventory Sublimits:

              (i)   Total Eligible Inventory                                $9,000,000.00

              (ii)  In-transit Eligible Inventory (which satisfies the      $2,000,000.00 during
                    criteria therefor established in Section 2.1(d))        December through July;
                                                                            $3,500,000 during August
                                                                            through November

              (iii) Component Inventory                                     $1,500,000.00

              (iv)  Non-food, non-gift, imported inventory                  $2,000,000.00

          (d) Maximum days after invoice date for Eligible Accounts:        120 for "datings"; 90 for
                                                                            all other accounts

          (e) Maximum days after due date for Eligible Accounts:            30 for "datings"; 60 for
                                                                            all other accounts
</TABLE>

                                      -41-

<PAGE>

    10.2  Letters of Credit:

          (a) Commercial Letters of Credit Charge:      1.25% per annum on daily
                                                        outstanding balance

          (b) Sublimit for Letters of Credit:           $2,000,000.00

    10.3  Addresses.

          (a) Lender's Office   1339 Chestnut Street, 4th Floor
                                Widener Building
                                Philadelphia, PA 19107
                                Attention: George Kyvernitis, Vice President
                                Fax No. (215) 973-6680

          (b) Obligors' Chief   1803 Research Blvd., Suite 201
              Executive Office: Rockville, MD 20851
                                Attention: Anat Schwartz, Vice President-Finance
                                Fax No. (301) 309-6162

          (c) Locations of Inventory Collateral: See Schedule E

          (d) Obligors' Other Offices and Locations of Collateral: See Schedule
              F

          (e) Borrowers' Trade Names for Invoicing: See Schedule G

          (f) Borrowers' Operating Account: 2040000037536

    10.4  Term: 3 Years (Terminating on June 12, 2004)

    10.5  Interest/Fees:

          (a) The Applicable Percentage for purposes of calculating the
applicable interest rate for any day for any Loan shall be determined in
accordance with the following chart and based on EBITDA (as defined in Section
6.19 and determined as of the end of the most recently ended fiscal quarter for
the 12 month period then ended) on the date the Applicable Percentage is to be
determined:

<TABLE>
<CAPTION>
                                                                                         LIBOR Market Rate
                           EBITDA                     Base Rate Loan   Eurodollar Loan          Loan
          ----------------------------------------   ----------------  ----------------  ------------------
          <S>                                        <C>                <C>               <C>
          ***$4,500,000.00                                 .25%              2.35%              2.35%
           **$4,500,000.00 and                             .25%              2.15%              2.15%
          ***$7,000,000.00
          ***$7,000,000.00                                 .25%              1.85%              1.85%
            *$7,000,000.00
</TABLE>

__________________

  * Less than.
 ** Is greater than.
*** Less than or equal to.

                                      -42-

<PAGE>

Until Lender's receipt of Borrowers' Quarterly Statements for the quarter ending
April 30, 2001, each Applicable Percentage shall be determined assuming that
EBITDA is * $4,500,000.00

                 (b)  Clearance:                 One Business Day

                 (c)  Closing Fee:               $50,000.00

                 (d)  Unused Line Fee:           .375% on the unused line up to
                                                 $15,000,000; plus .25% for the
                                                 unused line between $15,000,000
                                                 and $20,000,000 (as further
                                                 described in Section 3.3)

                 (e)  Field Examination Fee:     $650 per person per day (plus
                                                 expenses)

                 (f)  Servicing Fee              $500 per month (payable in
                                                 advance)

              10.6 "Loan Documents" means this Agreement, the Promissory Note,
the Surety Agreement and all security agreements, pledges, assignments and other
documents at any time executed or delivered by an Obligor pursuant to or in
connection with this Agreement, as any of them may be amended, modified,
restated or replaced from time to time.

              10.7 "Obligors" means, collectively, Borrowers, Guarantor and any
other person or entity which now or hereafter guarantees or becomes liable,
directly or indirectly, for any of the Obligations or which pledges, grants or
provides any Collateral for any of the Obligations, and "Obligor" means each of
them.

              IN WITNESS WHEREOF, Borrowers, Guarantor and Lender have duly
executed this Agreement as of the 12th day of June, 2001.

LENDER:                                   BORROWERS

FIRST UNION NATIONAL BANK                 SHERWOOD BRANDS OF VIRGINIA, LLC,
                                          a Virginia limited liability company

By: /s/ Marcus F. Brown                   By: SHERWOOD BRANDS, INC., Sole Member
    ----------------------------------
    Marcus F. Brown, Vice President

                                              By: /s/ Anat Schwartz
                                                  ------------------------------
                                               Anat Schwartz, Executive Vice
                                               President

________________

* Less than

                                      -43-

<PAGE>

                                          SHERWOOD BRANDS, LLC, a Maryland
                                          limited liability company

                                          By: SHERWOOD BRANDS, INC., Sole Member

                                              By: /s/ Anat Schwartz
                                                  ------------------------------
                                                Anat Schwartz, Executive Vice
                                                President

                                          SHERWOOD BRANDS OF RI, INC.

                                                By: /s/ Anat Schwartz
                                                    ----------------------------
                                                  Anat Schwartz, Executive Vice
                                                  President

                                          GUARANTOR:

                                          SHERWOOD BRANDS, INC.

                                                By: /s/ Anat Schwartz
                                                    ----------------------------
                                                  Anat Schwartz, Executive Vice
                                                  President

                                      -44-<PAGE>

                                                                  EXECUTION COPY

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

                                CREDIT AGREEMENT

                                  by and among

                                 LUIGINO'S, INC.

                                   as Borrower

                       LASALLE BANK NATIONAL ASSOCIATION,

                                    as Agent

                         U.S. BANK NATIONAL ASSOCIATION,

                              as Syndication Agent

                                       and

                                  VARIOUS BANKS

                                 as named herein

                                    as Banks

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

                            Dated September 27, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                   <C>
ARTICLE I DEFINITIONS..............................................................................   1

   Section 1.1.   DEFINITIONS......................................................................   1

ARTICLE II CREDIT FACILITIES.......................................................................  20

   Section 2.1.  Commitments as to Revolving Facility and Swingline Facility.......................  20
   Section 2.2.  Commitments as to Term Facility...................................................  21
   Section 2.3.  Procedures for Borrowing Under the Revolving Facility and the
                   Swingline Facility..............................................................  21
   Section 2.4.  Converting Floating Rate Fundings to Eurodollar Fundings;
                   Procedures......................................................................  23
   Section 2.5.  Procedures At End of an Interest Period...........................................  23
   Section 2.6.  Setting and Notice of Rates.......................................................  24
   Section 2.7.  Commitment to Issue Letters of Credit.............................................  24
   Section 2.8.  Interest On Notes.................................................................  28
   Section 2.9.  Obligation to Repay Advances; Representations.....................................  29
   Section 2.10. Notes; Amortization...............................................................  30
   Section 2.11. Interest Due Dates................................................................  31
   Section 2.12. Computation of Interest and Fees..................................................  31
   Section 2.13. Fees..............................................................................  31
   Section 2.14. Use of Proceeds...................................................................  32
   Section 2.15. Voluntary Reduction or Termination of the Commitments;
                   Prepayments.....................................................................  32
   Section 2.16. Payments..........................................................................  34
   Section 2.17. Taxes.............................................................................  35
   Section 2.18. Increased Costs; Capital Adequacy; Funding Exceptions.............................  36
   Section 2.19. Funding Losses....................................................................  40
   Section 2.20. Right of Banks to Fund Through Other Offices......................................  40
   Section 2.21. Discretion of Banks as to Manner of Funding.......................................  40
   Section 2.22. Conclusiveness of Statements; Survival of Provisions..............................  41

ARTICLE III CONDITIONS OF LENDING..................................................................  41

   Section 3.1.  Conditions Precedent to the Initial Advance.......................................  41
   Section 3.2.  Conditions Precedent to All Advances..............................................  43

ARTICLE IV REPRESENTATIONS AND WARRANTIES..........................................................  43

   Section 4.1.  Legal Existence and Power; Name; Chief Executive Office...........................  43
   Section 4.2.  Authorization for Borrowings and Letters of Credit; No Conflict
                   as to Law or Agreements.........................................................  44
   Section 4.3.  Legal Agreements..................................................................  44
   Section 4.4.  Subsidiaries......................................................................  44
   Section 4.5.  Financial Condition; No Adverse Change............................................  44
   Section 4.6.  Litigation........................................................................  44
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                <C>
   Section 4.7.  Regulation U...................................................................   45
   Section 4.8.  Taxes..........................................................................   45
   Section 4.9.  Titles and Liens...............................................................   45
   Section 4.10. Plans..........................................................................   45
   Section 4.11. Default........................................................................   46
   Section 4.12. Environmental Compliance.......................................................   46
   Section 4.13. Submissions to Banks...........................................................   46
   Section 4.14. Financial Solvency.............................................................   46
   Section 4.15. Information Regarding Real Estate..............................................   47
   Section 4.16. Intellectual Property Rights...................................................   47

ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER.................................................   48

   Section 5.1.  Reporting Requirements.........................................................   48
   Section 5.2.  Books and Records; Inspection and Examination..................................   51
   Section 5.3.  Compliance With Laws...........................................................   52
   Section 5.4.  Payment of Taxes and Other Claims..............................................   52
   Section 5.5.  Maintenance of Properties......................................................   52
   Section 5.6.  Insurance......................................................................   52
   Section 5.7.  Preservation of Legal Existence................................................   52
   Section 5.8.  Creation of New Credit Parties and Subsidiaries................................   53
   Section 5.9.  Minimum Debt Service Coverage Ratio............................................   53
   Section 5.10. Maximum Senior Leverage Ratio..................................................   53
   Section 5.11. Maximum Total Leverage Ratio...................................................   53
   Section 5.12. Minimum Tangible Net Worth.....................................................   54
   Section 5.13. Establishment and Maintenance of Lockbox and Cash
                   Management Arrangements......................................................   54
   Section 5.14. Landlord Waivers...............................................................   54

ARTICLE VI NEGATIVE COVENANTS...................................................................   54

   Section 6.1.  Liens..........................................................................   55
   Section 6.2.  Indebtedness...................................................................   56
   Section 6.3.  Guaranties.....................................................................   57
   Section 6.4.  Investments....................................................................   57
   Section 6.5.  Restricted Payments............................................................   58
   Section 6.6.  Restrictions On Sale and Issuance of Subsidiary Stock..........................   58
   Section 6.7.  Transactions With Affiliates...................................................   58
   Section 6.8.  Sale or Transfer of Assets; Suspension of Business Operations..................   58
   Section 6.9.  Consolidation and Merger; Asset Acquisitions...................................   59
   Section 6.10. Sale and Leaseback.............................................................   59
   Section 6.11. Restrictions On Nature of Business.............................................   59
   Section 6.12. Accounting.....................................................................   59
   Section 6.13. Capital Expenditures...........................................................   59
   Section 6.14. Hazardous Substances...........................................................   59
   Section 6.15. Subordinated Debt..............................................................   60
   Section 6.16. Amendment of Indenture and Consulting Agreement................................   60
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE VII EVENTS OF DEFAULT; RIGHTS AND REMEDIES ...........................................................    60

   Section 7.1.   Events of Default ..........................................................................    60
   Section 7.2.   Rights and Remedies ........................................................................    63

ARTICLE VIII AGREEMENT AMONG BANKS AND AGENT .................................................................    64

   Section 8.1.   Authorization; Powers; Agent for Collateral Purposes .......................................    64
   Section 8.2.   Application of Proceeds ....................................................................    64
   Section 8.3.   Exculpation ................................................................................    65
   Section 8.4.   Use of the Term "Agent" ....................................................................    65
   Section 8.5.   Reimbursement for Costs and Expenses .......................................................    66
   Section 8.6.   Payments Received Directly by Banks ........................................................    66
   Section 8.7.   Indemnification ............................................................................    66
   Section 8.8.   Agent and Affiliates .......................................................................    67
   Section 8.9.   Credit Investigation .......................................................................    67
   Section 8.10.  Defaults ...................................................................................    67
   Section 8.11.  Obligations Several ........................................................................    67
   Section 8.12.  Sale or Assignment; Addition of Banks ......................................................    68
   Section 8.13.  Participation ..............................................................................    69
   Section 8.14.  Withholding Tax Exemption ..................................................................    69
   Section 8.15.  Borrower not a Beneficiary or Party ........................................................    70

ARTICLE IX MISCELLANEOUS .....................................................................................    70

   Section 9.1.   No Waiver; Cumulative Remedies .............................................................    70
   Section 9.2.   Amendments, Requested Waivers, Etc .........................................................    70
   Section 9.3.   Addresses for Notices, Etc .................................................................    70
   Section 9.4.   Costs and Expenses .........................................................................    71
   Section 9.5.   Indemnity ..................................................................................    71
   Section 9.6.   Execution in Counterparts ..................................................................    72
   Section 9.7.   Governing Law; Jurisdiction; Waiver of Jury Trial ..........................................    72
   Section 9.8.   Integration; Inconsistency .................................................................    73
   Section 9.9.   Agreement Effectiveness ....................................................................    73
   Section 9.10.  Advice From Independent Counsel ............................................................    73
   Section 9.11.  Judicial Interpretation ....................................................................    73
   Section 9.12.  Binding Effect; No Assignment by Borrower ..................................................    73
   Section 9.13.  Severability of Provisions .................................................................    73
   Section 9.14.  Headings ...................................................................................    74
   Section 9.15   Counterparts ...............................................................................    74
</TABLE>

                                      iii

<PAGE>

                             Exhibits and Schedules

EXHIBIT A           Borrowing Base Certificate

EXHIBIT B           Revolving Note

EXHIBIT C           Swingline Note

EXHIBIT D           Term Note

EXHIBIT E           Notice of Borrowing under Revolving Facility

EXHIBIT F           Notice of Borrowing under Swingline Facility

EXHIBIT G           Notice of Conversion

EXHIBIT H           Notice of Rollover

EXHIBIT I           Certificate of Officer as to Annual Financial Statements

EXHIBIT J           Certificate of Officer as to Quarterly Financial Statements

EXHIBIT K           Assignment Certificate

Schedule 4.1        Doing Business Names; Business Locations

Schedule 4.4        Subsidiaries

Schedule 4.6        Litigation

Schedule 4.10       ERISA Plans

Schedule 4.12       Environmental Matters

Schedule 4.15       Information Regarding Real Estate

Schedule 4.16       Intellectual Property

Schedule 6.1        Outstanding Liens

Schedule 6.2        Outstanding Indebtedness

Schedule 6.3        Outstanding Guaranties

                                       iv

<PAGE>

                                CREDIT AGREEMENT

               This Credit Agreement ("Credit Agreement") is dated as of
September 27, 2002, by and among LUIGINO'S, INC., a Minnesota corporation (the
"Borrower"), LASALLE BANK NATIONAL ASSOCIATION, a national banking association
("LaSalle Bank"), in its capacity as administrative agent for the Banks (defined
below)(in such capacity, the "Agent") and each bank named on the execution pages
hereof and such other banks as may from time to time become a party to this
Agreement pursuant to the terms and conditions of Article VIII hereof (each a
"Bank" and collectively the "Banks").

                             BACKGROUND INFORMATION

               The Borrower has requested that the Banks extend certain
revolving and term credit facilities to the Borrower.

               The Banks are willing to extend the requested credit facilities
to the Borrower pursuant to the terms and subject to the conditions set forth in
this Agreement.

               ACCORDINGLY, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Agent and the Banks hereby agree as follows:

                                    ARTICLE I

                                   Definitions

               Section 1.1 . Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

               (a) the terms defined in the preamble have the meanings therein
          assigned to them;

               (b) the terms defined in this Article have the meanings assigned
          to them in this Article, and include the plural as well as the
          singular; and

               (c) all accounting terms not otherwise defined herein have the
          meanings assigned to them in accordance with GAAP.

               "Accounts" means the aggregate unpaid obligations of customers
and other account debtors of the Borrower arising out of the sale of goods or
the rendition of services by the Borrower on an open account or deferred payment
basis.

               "Adjustment Date" has the meaning specified in Section 8.12.

               "Advance" means a loan of funds by a Bank to the Borrower under a
Facility.

<PAGE>

               "Affiliate" or "Affiliates" means any Person controlled by,
controlling or under common control with the subject Person, including (without
limitation) any Subsidiary of the subject Person. For purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall in no event
include the Agent or any Bank.

               "Agency Fee" has the meaning specified in Section 2.13(d).

               "Agent" has the meaning specified in the preamble.

               "Agreement" means this Credit Agreement and all exhibits,
amendments and supplements hereto and modifications hereof.

               "Applicant" has the meaning specified in Section 8.12.

               "Assignment Certificate" has the meaning specified in Section
8.12.

               "Bank" or "Banks" has the meaning specified in the preamble.

               "Base Rate" means, at any time, the higher of (a) the Federal
Funds Rate plus one half of one percent (0.50%), and (b) the Prime Rate.

               "Borrower" has the meaning specified in the preamble.

               "Borrowing" means a borrowing by the Borrower under a Facility,
consisting of the aggregate of all Advances made by the Banks to the Borrower
pursuant to a request under Section 2.3.

               "Borrowing Base" means, at any time, the lesser of:

               (a) the Revolving Commitment Amount, or

               (b) the sum of:

                   (i)  80% of all Eligible Accounts less the Dilution Reserve;
                         and

                   (ii) 50% of all Eligible Inventory;

in any case, computed in accordance with the most recent Borrowing Base
Certificate submitted to, and accepted by, the Agent.

               "Borrowing Base Certificate" means a certificate in substantially
the form attached hereto as Exhibit A, duly completed and certified by the
Borrower, pursuant to which the Borrower sets forth its Accounts, Eligible
Accounts, Inventory and Eligible Inventory and the applicable Borrowing Base as
of a particular date.

                                       2

<PAGE>

               "Business Day" means any day other than a Saturday or Sunday on
which national banks are required to be open for business in Minneapolis,
Minnesota and Chicago, Illinois and, in addition, if such day relates to a
Eurodollar Funding or fixing of a Eurodollar Rate, a day on which dealings in
U.S. dollar deposits are carried on in the London interbank eurodollar market.

               "Capital Adequacy Rule" has the meaning specified in Section
2.18(b)(ii).

               "Capital Adequacy Rule Change" has the meaning specified in
Section 2.18(b)(iii).

               "Capital Expenditures" means the cost of any real property, plant
and equipment, and any other fixed asset or improvement, or replacement,
substitution or addition thereto which is required by GAAP to be included in or
reflected as property, plant and equipment or similar fixed assets on the
balance sheet of a Person, having useful life of more than one (1) year, or any
other payment which is otherwise required to be capitalized, including as a cost
the aggregate amount of expenses, charges, goods exchanged or services rendered
or payments due or arising in connection with the direct or indirect acquisition
of such assets or improvements, replacements, substitutions or additions by way
of increased product or service charges or offset items or barter exchange or in
connection with Capital Leases, and the entire principal amount of any Debt
assumed or incurred in connection therewith, in each case without duplication;
provided, however, that Capital Expenditures shall not include expenditures made
in connection with the replacement, substitution or restoration of assets to the
extent financed (i) from insurance proceeds (or other similar recoveries) paid
on account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.

               "Capital Expenditures Threshold" means $12,000,000.

               "Capital Lease" means, with respect to any Person, any lease of
(or other agreement conveying the right to use) any real or personal property of
such Person that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.

               "Capital Lease Payments" of any Person means, with respect to the
applicable Covenant Computation Period, the total expenditures by such Person in
respect of Capital Leases during such period, as determined in accordance with
GAAP.

               "Cash Interest Expense" of any Person means, with respect to the
applicable Covenant Computation Period, the total gross interest expense on all
Debt of such Person during such period and shall in any event include, without
limitation and without duplication, (a) accrued interest (whether or not paid)
on all Debt, (b) that portion of any Capital Lease Payment which would
constitute imputed interest as determined in accordance with GAAP, and (c) all
fees and charges with respect to letters of credit issued for the account of
such Person.

                                       3

<PAGE>

               "Change of Control" means any event, circumstance or occurrence
that results in (a) Jeno F. Paulucci, or his spouse, his lineal descendants
(including adopted persons), the trustee or trustees of any trust of which one
or more of the foregoing are the only beneficiaries, any partnership of which
one or more of the foregoing are the only partners or the estate or direct heirs
of any of the foregoing natural persons in the event of their death, not being
the owner of at least fifty-one percent (51%) of all issued and outstanding
capital stock of the Borrower entitled to vote or otherwise not having operating
control of the Borrower, or (b) the Borrower not being the owner of all issued
and outstanding capital stock or other equity interests entitled to vote of each
other Credit Party.

               "Closing Date" means the date of this Agreement.

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

               "Collateral" means all personal property of each Credit Party in
which the Agent, on behalf of the Banks, has been granted a security interest or
lien pursuant to any Security Document, together with all substitutions and
replacements for and products and proceeds of any of the foregoing.

               "Commitment" means, with respect to each Bank, such Bank's
Revolving Commitment, Swingline Commitment or Term Commitment, as the context
may require.

               "Commitment Amount" means the Revolving Commitment Amount,
Swingline Commitment Amount or Term Commitment Amount, as the context requires.

               "Commitment Fee" has the meaning specified in Section 2.13(b).

               "Consolidated Group " means the Borrower and its consolidated
Subsidiaries, including, without limitation, each Guarantor.

               "Consulting Agreement" means the Consulting Agreement dated as of
January 1, 1999 between the Borrower and Paulucci International as amended by
the First Amendment to Consulting Agreement dated December 30, 1999, the Second
Amendment to Consulting Agreement dated May 31, 2000, the Third Amendment to
Consulting Agreement dated December 6, 2000, and the Fourth Amendment to
Consulting Agreement dated March 7, 2002.

               "Covenant Computation Date" means the last day of each fiscal
quarter of the Borrower, commencing on October 6, 2002.

               "Covenant Computation Period" means the four (4) consecutive
fiscal quarters immediately preceding and ending on a Covenant Computation Date.

               "Credit Party" or "Credit Parties" means the Borrower or a
Guarantor, or all of them collectively, as the context may require, including
without limitation each additional Person which becomes a Guarantor after the
Closing Date pursuant to Section 5.9 hereof.

                                       4

<PAGE>

               "Debt" of any Person means, without duplication (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under Capital Leases
which have been or should be recorded as liabilities on a balance sheet of such
Person in accordance with GAAP, (e) all indebtedness secured by a lien on any
asset of such Person, whether or not such indebtedness has been assumed by such
Person, (f) all indebtedness and other obligations of others guaranteed by such
Person, (g) all obligations of such Person to pay the deferred purchase price
for goods or services, whether or not delivered or accepted (i.e., take-or-pay
and similar obligations), excluding trade accounts payable incurred in the
ordinary course of business, (h) all obligations of such Person under any
interest rate swap program or any similar agreement, arrangement or undertaking
relating to fluctuations in interest rates, (i) all obligations, contingent or
otherwise, with respect to the face amount of letters of credit (whether or not
drawn) and bankers' acceptances issued for the account of such Person, and (j)
all obligations of such Person to advance funds to, or purchase assets, property
or services from, any other Person in order to maintain the financial condition
of such Person.

               "Debt Service Coverage Ratio" of a Person means, with respect to
the applicable Covenant Computation Period, the ratio of (a) such Person's
EBITDA, less such Person's Capital Expenditures (up to the Capital Expenditures
Threshold) and Permitted Distributions, to (b) the sum of (i) all scheduled
principal payments on the Funded Debt of such Person due during such Covenant
Computation Period or on demand, and (ii) such Person's Cash Interest Expense.

               "Default" means an event that, with giving of notice or passage
of time or both, would constitute an Event of Default.

               "Default Percentage" means, as to any Bank, a fraction determined
as of the Revolving Commitment Termination Date, the numerator of which equals
the principal amount of all Obligations owed to such Bank on such date (which,
with respect to LaSalle, shall include all Permitted Rate Hedging Obligations
owing to it in respect of the termination of all Permitted Rate Hedging
Arrangements, assuming that all Permitted Rate Hedging Arrangements were
terminated on and as of the Revolving Commitment Termination Date) and the
denominator of which equals the principal amount of all Obligations owed to all
Banks on such date (which shall include all Permitted Rate Hedging Obligations
owing in respect of the termination of all Permitted Rate Hedging Arrangements,
assuming that all Permitted Rate Hedging Arrangements were terminated on and as
of the Revolving Commitment Termination Date).

               "Default Rate" shall have the meaning specified in Section
2.8(c).

               "Dilution Reserve" means, as of any date of determination, the
product of (a) the Borrower's Eligible Accounts as of such date, multiplied by
(b) a percentage determined

                                       5

<PAGE>

by the Agent in its commercially reasonable discretion from time to time based
on the results of field examinations conducted by its employees and agents (such
percentage to be communicated by the Agent to the Borrower and the Banks in
writing as and when it changes), such percentage to initially be eleven and
nine-tenths percent (11.9%).

               "EBITDA" of any Person means, with respect to the applicable
Covenant Computation Period, the sum of such Person's (a) Pre-Tax Net Income,
(b) Interest Expense and (c) depreciation, depletion, and amortization of
tangible and intangible assets, before (i) income from discontinued operations,
(ii) minority interests, and (iii) extraordinary gains and losses, in each case
for such period, computed and calculated in accordance with GAAP.

               "Eligible Accounts" means all unpaid Accounts arising from a bona
fide sale and shipment of Inventory or the rendition of services by the Borrower
in the ordinary course of business on usual and ordinary terms, evidenced by an
invoice and net of any applied or unapplied credits or other allowance (with any
such unapplied credits or other allowances being applied to the most current
Account of the Borrower); provided, however, that the following shall in no
event be deemed Eligible Accounts:

               (a) that portion of Accounts over ninety (90) days past invoice
          date or sixty (60) days past the specified due date;

               (b) Accounts owed by any unit of government, whether foreign or
          domestic, unless such Account is a U.S. Government obligation and the
          Agent's pledge and assignment of such Account has been confirmed by
          duly acknowledged and accepted documents complying with the Assignment
          of Claims Act which have been delivered to and approved by the Agent;

               (c) that portion of Accounts that are conditional, disputed or
          subject to a known claim of offset or a contra account or with respect
          to which a defense, counterclaim, right to discount or deduction has
          been asserted;

               (d) Accounts which are owed by an account debtor whose principal
          corporate office is located outside the United States or Canada;

               (e) Accounts owed by an account debtor that is the subject of
          dissolution, liquidation, bankruptcy proceedings or has gone out of
          business;

               (f) Accounts owed by an Affiliate of the Borrower (except that
          Accounts owed by Schneider Foods, Inc., a Manitoba corporation, shall
          not be considered ineligible) and Accounts with account debtors with
          whom the Borrower is obligated with respect to goods sold or services
          rendered by such account party;

               (g) Accounts not subject to a duly perfected security interest in
          favor of the Agent or which are subject to any lien, security interest
          or claim in favor of any Person other than the Agent;

                                       6

<PAGE>

               (h) that portion of Accounts that has been restructured,
          extended, amended or modified as a result of an account debtor's
          inability to pay;

               (i) that portion of Accounts constituting a finance charge,
          service charge or interest; and

               (j) Accounts owed by an account debtor, regardless of whether
          otherwise eligible, if twenty-five percent (25%) or more of the total
          amount due under Accounts from such account debtor is ineligible under
          clauses (a), (c) or (h) above.

               "Eligible Inventory" means Inventory, at the lower of cost or
market value as determined in accordance with GAAP; provided, however, that the
following shall in no event be deemed Eligible Inventory:

               (a) Inventory that is (i) in transit; (ii) located at any
          warehouse or leased premises with respect to which the Agent has not
          received an acceptable warehouseman or landlord release and waiver or
          other similar documentation acceptable to the Agent; (iii) located
          outside of the United States; (iv) covered by any negotiable or
          non-negotiable warehouse receipt, bill of lading or other document of
          title; or (v) on consignment to or from any other Person or subject to
          any bailment of any kind or description;

               (b) Inventory older than 365 days;

               (c) Inventory that, in the commercially reasonable judgment of
          the Agent, is or has become unmerchantable, unmarketable, spoiled,
          damaged, obsolete or otherwise unfit for sale;

               (d) Inventory constituting work-in-process;

               (e) Inventory located in vending machines or consigned to vending
          machine owners or operators;

               (f) Inventory which is not owned by the Borrower free and clear
          of all liens, claims and rights of others (including any rights of
          reclamation or equitable claims), is subject to a security interest in
          favor of any Person other than the Agent or in which the Agent does
          not have a valid and perfected first priority security interest;

               (g) Inventory which constitutes "bill and hold" goods, except to
          the extent the Account arising from such "bill and hold" sale is not
          otherwise included as an Eligible Account; and

               (h) Otherwise Eligible Inventory for which a
          landlord/warehouseman lien waiver has not been delivered as required
          in Section 5.14.

               "Environmental Laws" has the meaning specified in Section 4.12.

                                        7

<PAGE>

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

               "ERISA Affiliate" means, with respect to a Credit Party, any
trade or business (whether or not incorporated) that is, along with such Credit
Party, a member of a controlled group of corporations or a controlled group of
trades or businesses, as described in sections 414(b) and 414(c), respectively,
of the Code.

               "Eurodollar Advance" means any Advance which bears interest at a
rate determined by reference to a Eurodollar Rate.

               "Eurodollar Base Rate" means, with respect to an Interest Period,
the LIBOR Index Rate or if the LIBOR Index Rate cannot be determined, the rate
per annum equal to the rate (rounded up if necessary to the nearest one
one-hundredth of one percent (1/100%)) determined by the Agent in accordance
with Section 2.6 to be a rate at which U.S. dollar deposits are offered to major
banks in the London interbank eurodollar market for funds to be made available
on the first day of such Interest Period and maturing at the end of such
Interest Period.

               "Eurodollar Funding" means any Funding which bears interest at a
rate determined by reference to a Eurodollar Rate, including Eurodollar
Advances.

               "Eurodollar Rate" means, with respect to an Interest Period, the
rate obtained by adding (a) the applicable Margin to (b) the rate obtained by
dividing (i) the applicable Eurodollar Base Rate by (ii) a percentage equal to
one (1.00) minus the applicable percentage (expressed as a decimal) prescribed
by the Board of Governors of the Federal Reserve System (or any successor
thereto) for determining the maximum reserve requirements applicable to
Eurodollar fundings (currently referred to as "Eurocurrency Liabilities" in
Regulation D) or any other maximum reserve requirements applicable to a member
bank of the Federal Reserve System with respect to such eurodollar fundings.

               "Event of Default" has the meaning specified in Section 7.1.

               "Excess Cash Flow" of any Person means, with respect to the
applicable Covenant Computation Period, such Person's EBITDA minus such Person's
(a) Capital Expenditures, (b) Permitted Distributions, (c) principal of Funded
Debt due on demand or during such Covenant Computation Period, and (d) Interest
Expense.

               "Facility" means the Revolving Facility, the Swingline Facility
or Term Facility, as the context requires.

               "Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate

                                       8

<PAGE>

for such day will be the arithmetic mean as determined by the Agent of the rates
for the last transaction in overnight federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of the three leading brokers of federal
funds transactions in New York City, as selected by the Agent in its discretion.

               "Fee Letter" means that certain fee letter by and between the
Agent and the Borrower dated as of July 9, 2002.

               "Financial Covenants" means the covenants contained in Sections
5.9 through 5.12 and 6.13.

               "Floating Rate" means an annual rate at all times equal to the
sum of (a) the Base Rate and (b) the applicable Margin, which Floating Rate
shall change when and as the Base Rate changes.

               "Floating Rate Advance" means any Advance which bears interest at
a rate determined by reference to the Floating Rate.

               "Floating Rate Funding" means any Funding which bears interest at
a rate determined by reference to the Floating Rate, including Floating Rate
Advances.

               "Funded Debt" of any Person means all interest bearing Debt of
such Person.

               "Funding" means a designated portion of outstanding principal
indebtedness evidenced by a Note which bears interest at a rate determined by
reference to a particular Eurodollar Rate or Floating Rate, as the case may be.

               "GAAP" means generally accepted accounting principles as in
effect from time to time applied on a basis consistent with the accounting
practices applied in the financial statements referred to in Section 4.5.

               "Guarantor" or "Guarantors" means, as the context shall require,
The All American Gourmet Company, a Delaware corporation, together with each and
every additional Person which shall execute and deliver a Guaranty for the
benefit of the Banks pursuant to Section 5.9 hereof.

               "Guaranty" or "Guaranties" means a guaranty of a Guarantor made
in favor of the Agent guarantying payment of all Obligations, or all of them
collectively, as the context may require, and all amendments and supplements
thereto and modifications thereof.

               "Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls, nuclear fuel or material, chemical waste, radioactive
material, explosives, known carcinogens, petroleum products and by-products and
other dangerous, toxic or hazardous pollutants, contaminants, chemicals,
materials or substances listed or identified in, or regulated by, any
Environmental Laws.

               "Indemnitees" has the meaning specified in Section 9.5.

                                       9

<PAGE>

               "Indenture" means the Indenture dated as of February 4, 1999
relating to the Borrower's Series A and Series B 10% Senior Subordinated Notes
due 2006 with U.S. Bank Trust National Association as trustee thereunder, along
with all amendments, supplements and other modifications from time to time made
thereto.

               "Intellectual Property Rights" means all actual or prospective
rights arising in connection with any intellectual property or other proprietary
rights, including all rights arising in connection with copyrights, patents,
service marks, trade dress, trade secrets, trademarks, trade names or mask
works.

               "Interest Expense" of any Person means, with respect to the
applicable Covenant Computation Period, the total gross interest expense on all
Debt of such Person during such period and shall in any event include, without
limitation and without duplication, (a) accrued interest (whether or not paid)
on all Debt, (b) the amortization of Debt discounts, (c) the amortization of all
fees payable in connection with the incurrence of Debt to the extent included in
interest expense, (d) that portion of any Capital Lease Payment which would
constitute imputed interest as determined in accordance with GAAP and (e) all
fees and charges with respect to letters of credit issued for the account of
such Person.

               "Interest Period" means, relative to any Eurodollar Funding, the
period beginning on (and including) the date on which such Eurodollar Funding is
made, or continued as, or converted into, a Eurodollar Funding pursuant to
Sections 2.3, 2.4 or 2.5 and shall end on (but exclude) the day which
numerically corresponds to such date one (1), two (2), three (3) or six (6)
months thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month), as the Borrower may select in its relevant
notice pursuant to Sections 2.3, 2.4, or 2.5; provided, however, that:

               (a) no more than five (5) different Interest Periods may be
          outstanding at any one time with respect to the Term Facility and no
          more than five (5) different Interest Periods may be outstanding at
          any one time with respect to the Revolving Facility;

               (b) if an Interest Period would otherwise end on a day which is
          not a Business Day, such Interest Period shall end on the next
          following Business Day (unless such next following Business Day is the
          first Business Day of a month, in which case such Interest Period
          shall end on the next preceding Business Day);

               (c) no Interest Period applicable to a Funding for a Facility may
          end later than the applicable Maturity Date for such Facility; and

               (d) in no event shall the Borrower select Interest Periods with
          respect to Fundings under the Term Facility which, in the aggregate,
          would require payment of funding losses under Section 2.19 in order to
          make payments of regularly scheduled installments of principal
          thereunder.

                                       10

<PAGE>

               "Inventory" means all inventory of the Borrower, as that term is
defined in the UCC, whether now owned or hereafter acquired, whether consisting
of finished or unfinished goods, processed or unprocessed products, inputs,
parts or components, supplies or materials, whether acquired, held or furnished
for sale, for lease or under service contracts or for manufacture or processing,
and wherever located.

               "LaSalle Bank" has the meaning specified in the preamble.

               "Letter of Credit" has the meaning specified in Section 2.7.

               "Letter of Credit Amount" means the sum of (a) the aggregate
remaining available amount of all issued and outstanding Letters of Credit, and
(b) amounts drawn under Letters of Credit for which the Letter of Credit Bank
has not been reimbursed with proceeds of a Borrowing or otherwise.

               "Letter of Credit Bank" means LaSalle Bank (or, as applicable,
one of its affiliates), in its separate capacity as issuer of Letters of Credit
for the account of the Borrower pursuant to Section 2.7.

               "Letter of Credit Fee" has the meaning specified in Section
2.7(b).

               "Letter of Credit Sublimit" means five million dollars
($5,000,000).

               "Level I Status" means a period of time during which the Senior
Leverage Ratio of the Consolidated Group is greater than 1.50 to 1.00.

               "Level II Status" means a period of time during which the Senior
Leverage Ratio of the Consolidated Group is greater than 1.00 to 1.00, but less
than or equal to 1.50 to 1.00.

               "Level III Status" means a period of time during which the Senior
Leverage Ratio of the Consolidated Group is equal to or less than 1.00 to 1.00.

               "LIBOR Index Rate" means relative to any Interest Period, the
rate per annum determined by the Agent as of approximately 11:00 a.m. London
time on the date two (2) Business Days before the commencement of such Interest
Period by reference to the British Bankers' Association Interest Settlement
Rates for deposits in dollars offered on the London interbank dollar market for
a period corresponding to the term of such Interest Period and in an amount
comparable to the aggregate amount of the relevant Funding (as set forth by the
Bloomberg Information Service or any successor thereto or any other service
selected by the Agent that has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of displaying
such rates).

               "Licensed Intellectual Property" has the meaning specified in
Section 4.16(c).

                                       11

<PAGE>

               "Loan Documents" means this Agreement, the Notes, the Guaranties,
each and every application or other agreement pursuant to which a Letter of
Credit is issued and the Security Documents.

               "Local Time" means the local time of day in Minneapolis,
Minnesota.

               "Margin" means, with respect to computation of the applicable
interest rate on Fundings under a Facility, or the applicable Letter of Credit
Fee or Commitment Fee, as the case may be, the applicable increment set forth
and described in the table below, established as of the last day of each fiscal
quarter according to the then applicable Status; provided, however, that any
adjustment in the applicable Margin shall not become effective until the first
calendar day of the first month immediately following receipt by the Agent of
financial statements relating to the last day of such fiscal quarter pursuant to
Section 5.1 hereof. If financial statements of the Consolidated Group necessary
to establish the appropriate Margin hereunder are not received by the Agent on
or prior to the date required pursuant to Section 5.1 hereof, the applicable
Margin shall be determined as if Level I Status were in effect and such Level I
Status shall remain in effect until such time as the required financial
statements are received:

STATUS          EURODOLLAR        BASE RATE     COMMITMENT        LETTER OF
                RATE MARGIN        MARGIN       FEE MARGIN        CREDIT FEE
                                                                    MARGIN

Level I            2.25%            0.50%         0.50%              2.25%
Status

Level II           2.00%            0.25%        0.375%              2.00%
Status

Level III          1.75%            0.00%         0.25%              1.75%
Status

provided, however, that for the period commencing on the Closing Date and
continuing to the date the Agent receives the Consolidated Group's financial
statements and related officer's certificates specified in Section 5.1(b)
demonstrating the financial performance of the Consolidated Group for the fiscal
quarter ending October 6, 2002, the applicable Margins shall be determined as if
Level II Status were in effect, regardless of the Senior Leverage Ratio of the
Consolidated Group for such period.

               "Master Letter of Credit Agreement" shall have the meaning
specified in Section 2.7(a).

               "Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:

               (a) the business, financial condition, operations or prospects of
          the Credit Parties, taken as a whole;

                                       12

<PAGE>

               (b) the ability of a Credit Party to perform its obligations
          under any Loan Document to which it is a party;

               (c) the validity, enforceability or collectibility of any Loan
          Document; or

               (d) the status, existence, perfection, priority or enforceability
          of any lien or security interest granted pursuant to any Security
          Document.

               "Maturity Date" means January 4, 2006.

               "Multiemployer Plan" means a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) to which any Credit Party or any ERISA Affiliate
contributes or is obligated to contribute.

               "Note" or "Notes" means a Revolving Note, Swingline Note or a
Term Note, or all such Notes collectively, as the context may require.

               "Obligations" means each and every Debt, liability and other
obligation of every type and description arising under or in connection with any
of the Loan Documents which any Credit Party may now or at any time hereafter
owe to the Agent, one or more Banks or the Agent and one or more Banks, whether
such debt, liability or obligation now exists or is hereafter created or
incurred, whether it is direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or sole, joint,
several or joint and several, and including specifically, but not limited to,
the Letter of Credit Amount, any Permitted Rate Hedging Obligations and all
indebtedness, liabilities and obligations of the Borrower arising under or
evidenced by the Notes.

               "Off-the-shelf Software" has the meaning specified in Section
4.16(c).

               "Origination and Structuring Fees" has the meaning specified in
Section 2.13(a).

               "Outstanding Obligations" means, as of the date of determination,
the outstanding principal amount of all Obligations.

               "Owned Intellectual Property" has the meaning specified in
Section 4.16(a).

               "Paulucci International" means Paulucci International Ltd., Inc.,
a Florida corporation.

               "Payee" has the meaning specified in Section 2.17.

               "Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) maintained for employees of any Credit Party or any ERISA Affiliate
and covered by Title IV of ERISA.

                                       13

<PAGE>

               "Percentage" means, with respect to a Facility and as to any
Bank, the percentage set forth opposite such Bank's signature on the execution
pages hereof, or below such Bank's signature on any Assignment Certificate
executed by such Bank, in relation to such Facility, representing the ratio of
such Bank's Revolving Commitment, Swingline Commitment or Term Commitment, as
the case may be, to the Revolving Commitment Amount, Swingline Commitment Amount
or Term Commitment Amount, respectively.

               "Permitted Acquisition" means an acquisition (whether by merger,
consolidation or asset purchase) by the Borrower complying with each of the
following:

               (a) such acquisition is completed with the unanimous approval and
          recommendation of the board of directors of the Person to be acquired;

               (b) the Borrower or a wholly-owned Subsidiary of the Borrower is
          the survivor of the merger or consolidation (or transaction similar in
          effect to a merger or consolidation);

               (c) the Person to be acquired is in a similar line of business to
          the Borrower;

               (d) the Person to be acquired is profitable on a pro-forma basis
          (taking into consideration any immediate cost takeouts);

               (e) no Event of Default or Default has occurred on and as of the
          date such acquisition is consummated or would result therefrom;

               (f) the purchase price for such acquisition (including all
          assumed indebtedness and the market value of any non-cash
          consideration) does not exceed seven million five-hundred thousand
          dollars ($7,500,000) and such purchase price, when added to the
          purchase price of all Permitted Acquisitions completed in the same
          calendar year as the subject acquisition would not exceed ten million
          dollars ($10,000,000) in the aggregate;

               (g) the Borrower, has provided the Agent with a certification
          which, after giving effect to such acquisition, demonstrates pro-forma
          compliance with all Financial Covenants; and

               (h) the Borrowing Base, after giving effect to such acquisition,
          exceeds the sum of the Revolving Facility Outstanding Amount and the
          Swingline Facility Outstanding Amount by not less than ten million
          dollars ($10,000,000).

               "Permitted Distributions" means Permitted Tax Distributions and
Permitted Excess Cash Flow Distributions.

               "Permitted Excess Cash Flow Distributions" means:

                                       14

<PAGE>

               (a) With respect to the Consolidated Group's fiscal year ending
          December 29, 2002:

                   (i)  If the Consolidated Group's EBITDA for such period is
               greater than or equal to forty-nine million two-hundred thousand
               dollars ($49,200,000), a one time payment of four million dollars
               ($4,000,000), distributable in a single distribution not less
               than thirty (30) Business Days after the Consolidated Group's
               audited financial statements for such fiscal year demonstrating
               compliance with this subsection (a)(i) have been delivered to the
               Agent in accordance with Section 5.1(a) hereof; or

                   (ii) If the Consolidated Group's EBITDA for such period is
               less than forty-nine million two-hundred thousand dollars
               ($49,200,000), 50% of the Consolidated Group's Excess Cash Flow
               for such fiscal year, distributable in a single distribution not
               less than thirty (30) Business Days after the Consolidated
               Group's audited financial statements for such fiscal year have
               been delivered to the Agent in accordance with Section 5.1(a)
               hereof; and

               (b) With respect to each fiscal year of the Consolidated Group
          ending on or after January 1, 2004, 50% of the Consolidated Group's
          Excess Cash Flow for the immediately preceding fiscal year,
          distributable in a single distribution not less than thirty (30)
          Business Days after the Consolidated Group's audited financial
          statements for the applicable fiscal year have been delivered to the
          Agent in accordance with Section 5.1(a) hereof.

               "Permitted Liens" has the meaning specified in Section 6.1.

               "Permitted Management Fee Payments" means payments by the
Borrower of the management fees and out-of-pocket expenses payable by one or
more of the Credit Parties to Paulucci International pursuant to the terms of
the Consulting Agreement.

               "Permitted Rate Hedging Arrangements" means any arrangement of a
Credit Party with LaSalle or any affiliate of LaSalle for the hedging of
interest rate or foreign exchange rate exposure, including, but not limited to,
the hedging arrangements between the Borrower and Bank One, N.A. assumed by
LaSalle in connection with the execution and delivery of this Agreement.

               "Permitted Rate Hedging Obligations" means any debt, liability or
other obligation of any Credit Party owing to LaSalle or an affiliate of LaSalle
with respect to any Permitted Rate Hedging Arrangements.

               "Permitted Tax Distributions" means distributions declared and
paid by the Borrower to its shareholders, or which could have been declared and
paid by the Borrower, in an amount not to exceed Subchapter S Tax Liabilities.

                                       15

<PAGE>

               "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

               "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) maintained for employees of any Credit Party or ERISA Affiliate.

               "Pre-Tax Net Income" of a Person means, with respect to the
applicable Covenant Computation Period, such Person's pre-tax net income, as
determined in accordance with GAAP, before any extraordinary or non-recurring
items.

               "Prime Rate" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by the Agent as its "prime
rate" (whether or not such rate is actually charged by the Agent), or if the
Agent ceases to announce such a rate so designated, any similar successor rate
designated by the Agent in its reasonable discretion. Any change in the Prime
Rate announced by the Agent shall take effect at the opening of business on the
day specified in the public announcement of such change.

               "Reportable Event" means a reportable event (as defined in
Section 4043 of ERISA), other than an event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the Pension
Benefit Guaranty Corporation.

               "Required Banks" means, at any time, one or more of the Banks
holding at least sixty-six and two thirds percent (66.67%) of the Commitments,
or, if the Commitments have been terminated or have expired, one or more of the
Banks having at least sixty-six and two thirds percent (66.67%) of the
Outstanding Obligations.

               "Required Payment" has the meaning specified in Section 2.16(c).

               "Return" has the meaning specified in Section 2.18(b)(i).

               "Revolving Advance" means a loan of funds by a Bank to the
Borrower under the Revolving Facility, including both Floating Rate Advances and
Eurodollar Advances made thereunder.

               "Revolving Commitment" means, with respect to each Bank, the
amount of the Revolving Commitment set forth opposite such Bank's name on the
execution pages hereof, or below such Bank's signature on an Assignment
Certificate executed by such Bank, unless such amount is adjusted pursuant to
Section 2.15(a), in which event it means the amount to which said amount is
adjusted pursuant thereto, or as the context may require, the obligation of such
Bank to make Revolving Advances and provide for issuance of Letters of Credit,
as contemplated in Section 2.1(a).

               "Revolving Commitment Amount" shall mean thirty-two million
five-hundred thousand dollars ($32,500,000), being the maximum amount of the
Revolving Commitments of all Banks, in the aggregate, to make Revolving Advances
and provide for the issuance of

                                       16

<PAGE>

Letters of Credit pursuant to Section 2.1(a), subject to adjustment in
accordance with Section 2.15(a).

               "Revolving Commitment Termination Date" means the earlier of (a)
the Maturity Date with respect to the Revolving Facility or (b) the date on
which the Revolving Commitments are terminated pursuant to Section 7.2 or
reduced to zero pursuant to Section 2.15(a).

               "Revolving Facility" means the revolving credit facility being
made available to the Borrower by the Banks pursuant to Section 2.1(a).

               "Revolving Facility Outstanding Amount" means, as of the date of
determination, the sum of (a) the aggregate principal amount of all outstanding
Revolving Advances, and (b) the Letter of Credit Amount.

               "Revolving Note" means a promissory note of the Borrower payable
to a Bank in the amount of such Bank's Revolving Commitment, in substantially
the form of Exhibit B (as such promissory note may be amended, extended or
otherwise modified from time to time), evidencing the aggregate indebtedness of
the Borrower to such Bank resulting from such Bank's Percentage of each
Borrowing under the Revolving Facility, and also means each promissory note
accepted by such Bank from time to time in substitution therefor or in renewal
thereof.

               "Security Agreement" or "Security Agreements" means the security
agreement of a Credit Party in favor of the Agent for the benefit of the Banks
pursuant to which such Credit Party grants the Agent a security interest in
substantially all the personal property of such Credit Party to secure payment
of the Obligations, or all of them collectively, as the context may require, and
all amendments and supplements thereto and modifications thereof.

               "Security Documents" means each Security Agreement, Trademark
Security Agreement and each and every additional agreement entered into by any
Credit Party for the benefit of the Banks to secure payment of the Obligations
or otherwise relating to any Collateral.

               "Senior Funded Debt" of a Person means all Funded Debt of such
Person not constituting Subordinated Debt.

               "Senior Leverage Ratio" of a Person means, with respect to any
Covenant Computation Date, the ratio of (a) such Person's Senior Funded Debt, to
(b) such Person's EBITDA.

               "Status" means the financial condition of the Consolidated Group
determined in accordance with the definitions of "Level I Status," "Level II
Status," and "Level III Status."

                                       17

<PAGE>

               "Subchapter S Tax Liabilities" means an amount equal to the
product of (a) the Pre-Tax Net Income of the Borrower for the period of
determination and (b) forty percent (40%).

               "Subordinated Debt" means all indebtedness, if any (including
principal, interest and fees thereon), subordinated to payment of the
Obligations pursuant to a Subordination Agreement.

               "Subordination Agreement" or "Subordination Agreements" means one
or more of (a) the subordination provisions and all related provisions of the
Indenture (including, without limitation, all provisions of Article 10 and
Section 4.09 thereof), and (b) any agreement (in form and substance satisfactory
to the Agent) executed and delivered by a holder of Subordinated Debt in favor
of the Agent for the benefit of the Banks pursuant to which such holder
subordinates payment of the Subordinated Debt held by it to payment of the
Obligations, or all of them collectively, as the context may require, and all
amendments and supplements thereto and modifications thereof.

               "Subsidiary" of a Person means any corporation, partnership or
limited liability company of which more than fifty percent (50%) of the
outstanding equity or membership interests or shares of capital stock having
general voting power under ordinary circumstances to elect a majority of the
board of directors (or other governing body) of such entity, (irrespective of
whether or not at the time stock or membership interests of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person.

               "Supplemental Fee Letter" means that certain fee letter by and
between the Agent and the Borrower dated as of September 27, 2002.

               "Swingline Advance" means an Advance by the Swingline Bank to the
Borrower under the Swingline Facility.

               "Swingline Bank" means LaSalle Bank.

               "Swingline Commitment" means, with respect to the Swingline Bank,
the amount of the Swingline Commitment set forth opposite such Bank's name on
the execution pages hereof, or below such Bank's signature on an Assignment
Certificate executed by such Bank, unless such amount is reduced pursuant to
Section 2.15(b), in which event it means the amount to which such amount is
reduced pursuant thereto, or as the context may require, the obligation of such
Bank to make Swingline Advances as contemplated in Section 2.1(b).

               "Swingline Commitment Amount" shall mean five million dollars
($5,000,000), being the maximum amount of the Swingline Commitment of the
Swingline Bank to make Swingline Advances pursuant to Section 2.1(b) , subject
to reduction in accordance with Section 2.15(b), which commitment constitutes a
part of the Revolving Commitment of the Swingline Bank.

                                       18

<PAGE>

               "Swingline Facility" means the revolving credit facility being
made available to the Borrower by the Swingline Bank pursuant to Section 2.1(b).

               "Swingline Facility Outstanding Amount" means, as of the date of
determination, the aggregate principal amount of all outstanding Swingline
Advances.

               "Swingline Note" means a promissory note of the Borrower payable
to the Swingline Bank in the amount of the Swingline Commitment, in
substantially the form of Exhibit C (as such promissory note may be amended,
extended or otherwise modified from time to time), evidencing the aggregate
indebtedness of the Borrower to the Swingline Bank resulting from each Borrowing
under the Swingline Facility, and also means each promissory note accepted by
the Swingline Bank from time to time in substitution therefor or in renewal
thereof.

               "Tangible Net Worth" of a Person means, on the applicable
Covenant Computation Date, the difference between (a) the sum of (i) the
tangible assets of such Person, calculated in accordance with GAAP after
deducting adequate reserves in such case where, in accordance with GAAP, a
reserve is proper, plus (ii) such Person's Subordinated Debt, and (b) the total
liabilities of such Person; provided, however, that in no event shall there be
included as tangible assets, patents, trademarks, trade names, copyrights,
licenses, goodwill, receivables due from, or investments in, Affiliates of said
Person, deposits, deferred charges or treasury stock or any securities or debt
instruments of such Person, or any other securities unless such securities are
readily marketable on a public exchange in the United States of America or are
entitled to be used as a credit against federal income tax liabilities, and any
other assets designated from time to time by the Agent, in its reasonable
discretion, as intangible assets.

               "Taxes" has the meaning specified in Section 2.17.

               "Term Advance" means a loan of funds by a Bank to the Borrower
under the Term Facility, including both Floating Rate Advances and Eurodollar
Advances thereunder.

               "Term Commitment" means, with respect to each Bank, the amount of
the Term Commitment set forth opposite such Bank's name on the execution pages
hereof, or below such Bank's signature on an Assignment Certificate, or as the
context may require, the obligation of such Bank to make Term Advances to the
Borrower under Section 2.2.

               "Term Commitment Amount" means forty-two million five-hundred
thousand dollars ($42,500,000), being the maximum amount of the Term Commitments
of all Banks, in the aggregate, to make Term Advances to the Borrower pursuant
to Section 2.2.

               "Term Facility" means the term loan facility being made available
to the Borrower by the Banks pursuant to Section 2.2.

               "Term Note" means a promissory note of the Borrower payable to a
Bank in the amount of such Bank's Term Commitment, in substantially the form of
Exhibit D (as

                                       19

<PAGE>

such promissory note may be amended, extended or otherwise modified from time to
time), evidencing the aggregate indebtedness of the Borrower to such Bank
resulting from such Bank's Percentage of the Term Facility, and also means each
other promissory note accepted from time to time in substitution therefor or in
renewal thereof.

               "Total Leverage Ratio" of any Person means, with respect to any
Covenant Computation Date, the ratio of (a) the Funded Debt of such Person to
(b) the EBITDA of such Person.

               "Trademark Security Agreement" or "Trademark Security Agreements"
means a separate security agreement of a Credit Party in favor of the Agent for
the benefit of the Banks pursuant to which such Credit Party grants the Agent a
security interest in all trademarks now or hereafter held by such Credit Party
to secure payment of the Obligations, or all of them collectively, as the
context may require, and all amendments and supplements thereto and
modifications thereof.

               "UCC" means the Uniform Commercial Code as in effect from time to
time in the state designated in Section 9.7(a) as the state whose laws shall
govern this Agreement, or in any other state whose laws are held to govern this
Agreement or any portion hereof.

                                   ARTICLE II

                                CREDIT FACILITIES

               Section 2.1 Commitments as to Revolving Facility and Swingline
Facility.

               (a) Revolving Facility. Each Bank hereby agrees, on the terms and
          subject to the conditions herein set forth, including specifically
          satisfaction of all conditions set forth in Section 3.2 hereof, to
          make Revolving Advances to the Borrower from time to time during the
          period from the date hereof to and including the Revolving Commitment
          Termination Date, in an aggregate amount at any time outstanding not
          to exceed such Bank's Percentage of each Borrowing from time to time
          requested by the Borrower under the Revolving Facility; provided,
          however, that no Bank shall be required to fund its Percentage of any
          such Borrowing if, after giving effect to such Borrowing, either (i)
          the sum of the Revolving Facility Outstanding Amount and the Swingline
          Facility Outstanding Amount would exceed the Borrowing Base, or (ii)
          with respect to each Bank, the sum of such Bank's Percentage of the
          Revolving Facility Outstanding Amount, and its Percentage, if any, of
          the Swingline Facility Outstanding Amount would exceed such Bank's
          Revolving Commitment. Within the above limits, the Borrower may obtain
          Revolving Advances, prepay Revolving Advances in accordance with the
          terms hereof and reborrow Revolving Advances in accordance with the
          applicable terms and conditions of this Article II.

               (b) Swingline Facility. The Swingline Bank hereby agrees, on the
          terms and subject to the conditions herein set forth, including
          specifically satisfaction of all conditions set forth in Section 3.2
          hereof, to make Swingline Advances to the

                                       20

<PAGE>

          Borrower from time to time during the period from the date hereof to
          and including the Revolving Commitment Termination Date, in an
          aggregate amount at any time outstanding not to exceed the Swingline
          Commitment Amount, notwithstanding that, after making the requested
          Swingline Advances, the sum of the Swingline Bank's Percentage of the
          Revolving Facility Outstanding Amount and its Percentage of the
          Swingline Facility Outstanding Amount may exceed the Swingline Bank's
          Revolving Commitment; provided, however, that the Swingline Bank shall
          have no obligation to make a Swingline Advance if, after giving effect
          to the requested Swingline Advance, the sum of the Revolving Facility
          Outstanding Amount and the Swingline Facility Outstanding Amount would
          exceed the Borrowing Base. Within the above limits, the Borrower may
          obtain Swingline Advances, repay Swingline Advances in accordance with
          the terms hereof and reborrow Swingline Advances in accordance with
          the applicable terms and conditions of this Article II.

               Section 2.2 Commitments as to Term Facility. Each Bank hereby
agrees, on the terms and subject to the conditions herein set forth, to make a
single Term Advance to the Borrower on the Closing Date in an amount equal to
such Bank's Term Commitment. Initially, the Term Advances shall be funded as
Floating Rate Fundings, subject to conversion pursuant to Section 2.4. The Term
Facility is not a revolving facility and, once the initial Term Advance is made
by a Bank, such Bank shall have no further obligation to make any additional
Term Advances to the Borrower under the Term Facility, whether or not any
amounts are repaid thereunder.

               Section 2.3 Procedures for Borrowing Under the Revolving Facility
and the Swingline Facility.

               (a) Borrowing Under Revolving Facility. Each Borrowing under the
          Revolving Facility shall be funded by the Banks as either Floating
          Rate Advances or Eurodollar Advances, as the Borrower shall specify in
          the related notice of proposed Borrowing. Floating Rate Advances and
          Eurodollar Advances may be outstanding at the same time. It is
          understood, however, that the principal amount of any Borrowing under
          the Revolving Facility shall be in an amount equal to or greater than
          $1,000,000 or a higher integral multiple of $100,000. The Borrower
          shall give notice to the Agent of each proposed Borrowing under the
          Revolving Facility not later than 11:00 a.m., Local Time, on a
          Business Day which, in the case of a Borrowing that is to bear
          interest initially at a Floating Rate, is the proposed date of such
          Borrowing or, in the case of a Borrowing that is to bear interest
          initially at a Eurodollar Rate, is at least three (3) Business Days
          prior to the proposed date of such Borrowing. Each such notice shall
          be effective upon receipt by the Agent, shall be in writing or by
          telephone or telecopy transmission, to be confirmed in writing by the
          Borrower if so requested by the Agent (in the form of Exhibit E), and
          shall specify whether the Borrowing is to bear interest initially at a
          Floating Rate or a Eurodollar Rate, and in the case of a Borrowing
          that is to bear interest initially at a Eurodollar Rate, shall specify
          the Interest Period to be applicable thereto. Promptly upon receipt of
          such notice (but in no event later than 12:00 p.m., Local Time, with
          respect to a Floating Rate Advance,

                                       21

<PAGE>

          and the close of business, with respect to a Eurodollar Advance, in
          each case on the Business Day of receipt of such notice), the Agent
          shall advise each Bank of the proposed Borrowing. At or before 1:00
          p.m., Local Time, on the date of the requested Borrowing, each Bank
          shall provide the Agent at the principal office of the Agent in
          Chicago, Illinois, with immediately available funds covering such
          Bank's Percentage of such Borrowing. Subject to satisfaction of the
          conditions precedent set forth in Article III with respect to such
          Borrowing, the Agent shall pay over proceeds of such Borrowing to the
          Borrower, in immediately available funds, prior to the close of
          business, Local Time, on the date of the requested Borrowing.

               (b) Borrowing Under Swingline Facility. Each Borrowing under the
          Swingline Facility shall be funded by the Swingline Bank as a Floating
          Rate Advance. It is understood, however, that the principal amount of
          any Borrowing under the Swingline Facility shall be in an amount equal
          to $100,000 or a higher integral multiple of $100,000. The Borrower
          shall give notice to the Swingline Bank of each proposed Borrowing
          under the Swingline Facility not later than 1:00 p.m., Local Time, on
          the proposed date of any such Borrowing. Each such notice shall be
          effective upon receipt by the Swingline Bank, shall be in writing or
          by telephone or telecopy transmission, to be confirmed in writing by
          the Borrower if so requested by the Swingline Bank (in the form of
          Exhibit F). Subject to satisfaction of the conditions precedent set
          forth in Article III with respect to such Borrowing, the Swingline
          Bank shall pay over the proceeds of such Borrowing to the Borrower, in
          immediately available funds, prior to close of business, Local Time,
          on the date of the requested Borrowing.

               (c) Refunding of Swingline Advances. The Swingline Bank may, at
          any time and from time to time (and, in any event, shall do so no less
          frequently than weekly), in its sole and absolute discretion and
          otherwise at the Borrower's request, on behalf of the Borrower (and
          the Borrower hereby irrevocably authorizes the Swingline Bank to so
          act on its behalf), request a Borrowing under the Revolving Facility
          pursuant to Section 2.3(a) above (which initially shall be a Floating
          Rate Advance, but may be converted to a Eurodollar Advance pursuant to
          Section 2.4) in an amount equal to the Swingline Facility Outstanding
          Amount on the date such request is made. Unless any of the events
          described in Sections 7.1(f) or (g) shall have occurred (in which
          event the procedures of Section 2.3(d) below shall apply) and
          regardless of whether the conditions precedent set forth in this
          Agreement to the making of a Revolving Advance are then satisfied,
          each Bank shall provide the Agent at the principal office of the Agent
          in Chicago, Illinois, with immediately available funds covering such
          Bank's Percentage of such requested Borrowing not later than 1:00
          p.m., Local Time, on the date of such Borrowing. The proceeds of any
          such Borrowing shall be immediately applied by the Agent to all
          Swingline Advances then outstanding.

               (d) Participation in Swingline Advances. If, prior to repayment
          of outstanding Swingline Advances with a Borrowing under the Revolving
          Facility

                                       22

<PAGE>

          pursuant to Section 2.3(c), one of the events described in Sections
          7.1(f) or (g) shall have occurred with respect to the Borrower, each
          Bank will, on the date such Borrowing under the Revolving Facility was
          to have been made to the Borrower, purchase from the Swingline Bank an
          undivided participation interest in all outstanding Swingline Advances
          in an amount equal to the product of its Revolving Facility Percentage
          multiplied by such outstanding Swingline Advances. Upon request, each
          Bank will promptly transfer to the Swingline Bank, in immediately
          available funds, the amount of its participation and upon receipt
          thereof the Swingline Bank will deliver to such participating Bank a
          certificate of participation evidencing such participation interest,
          in form and content acceptable to the Swingline Bank and such
          participating Bank, dated the date of receipt of such funds and in
          such amount.

               (e) Obligations Relating to Swingline Facility Unconditional.
          Each Bank's obligation to make Revolving Advances in accordance with
          Section 2.3(c) and to purchase participating interests in accordance
          with Section 2.3(d) shall be absolute and unconditional and shall not
          be affected by any of the following: (i) any setoff, counterclaim,
          recoupment, defense or other right which such Bank may have against
          the Swingline Bank, any Credit Party or any other Person for any
          reason whatsoever; (ii) the occurrence or continuance of a Default or
          Event of Default; (iii) any inability of the Borrower or any other
          Credit Party to satisfy the conditions precedent to a Borrowing as set
          forth in this Agreement on the date upon which such participating
          interest is to be purchased; and (iv) any other circumstance,
          happening or event whatsoever, whether or not similar to any of the
          foregoing. If any Bank does not make available to the Swingline Bank
          the amount required pursuant to Section 2.3(c) or (d), as the case may
          be, the Swingline Bank shall be entitled to recover such amount on
          demand from such Bank, together with interest for each day from the
          date of non-payment until such amount is paid in full at the Federal
          Funds Rate then in effect.

               Section 2.4. Converting Floating Rate Fundings to Eurodollar
Fundings; Procedures. So long as no Default or Event of Default shall exist, the
Borrower may convert all or any part of any outstanding Floating Rate Funding
under the Revolving Facility or the Term Facility into a Eurodollar Funding by
giving notice to the Agent of such conversion not later than 11:00 a.m., Local
Time, on a Business Day which is at least three (3) Business Days prior to the
date of the requested conversion. Each such notice shall be irrevocable, shall
be effective upon receipt by the Agent, shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by the Borrower if so
requested by the Agent (in the form of Exhibit G), shall specify the date and
amount of such conversion, the total amount of the Funding to be so converted
and the Interest Period therefor. Each conversion of a Funding shall be on a
Business Day, and the aggregate amount of each such conversion of a Floating
Rate Funding to a Eurodollar Funding shall be in an amount equal to $1,000,000
or a higher integral multiple of $1,000,000.

               Section 2.5. Procedures at End of an Interest Period. Unless the
Borrower requests a new Eurodollar Funding in accordance with the procedures set
forth below, or

                                       23

<PAGE>

prepays the principal of an outstanding Eurodollar Funding at the expiration of
an Interest Period, each Bank shall automatically and without request of the
Borrower convert each Eurodollar Funding to a Floating Rate Funding on the last
day of the relevant Interest Period. So long as no Default or Event of Default
shall exist, the Borrower may cause all or any part of any outstanding
Eurodollar Funding to continue to bear interest at a Eurodollar Rate after the
end of the then applicable Interest Period by notifying the Agent not later than
11:00 a.m., Local Time, on a Business Day which is at least three (3) Business
Days prior to the first day of the new Interest Period. Each such notice shall
be in writing or by telephone or telecopy transmission, to be confirmed in
writing by the Borrower if so requested by the Agent (in the form of Exhibit H),
shall be irrevocable, effective when received by the Agent, and shall specify
the first day of the applicable Interest Period, the amount of the expiring
Eurodollar Funding to be continued and the Interest Period therefor. Each new
Interest Period shall begin on a Business Day and the amount of each Funding
bearing a new Eurodollar Rate shall be in an amount equal to $1,000,000 or a
higher integral multiple of $1,000,000.

               Section 2.6. Setting and Notice of Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent on the
second Business Day prior to the beginning of such Interest Period, whereupon
notice thereof (which may be by telephone) shall be given by the Agent to the
Borrower and each Bank. Each such determination of the applicable Eurodollar
Rate shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Agent, upon written request of the Borrower or any Bank,
shall deliver to the Borrower or such requesting Bank a statement showing the
computations used by the Agent in determining the applicable Eurodollar Rate
hereunder.

               Section 2.7. Commitment to Issue Letters of Credit. The Letter of
Credit Bank agrees, from the date hereof to and including the Revolving
Commitment Termination Date, to issue one or more letters of credit for the
account of the Borrower, and the Banks agree to participate in the risk of such
letters of credit issued for the account of the Borrower hereunder, on the terms
and subject to the conditions set forth below:

               (a) Each letter of credit issued pursuant to this Section 2.7,
          shall be referred to herein as a "Letter of Credit." No Letter of
          Credit shall be issued by the Letter of Credit Bank if, after giving
          effect to the issuance of such Letter of Credit (i) the Letter of
          Credit Amount would exceed the Letter of Credit Sublimit or (ii) the
          sum of the Revolving Facility Outstanding Amount and the Swingline
          Facility Outstanding Amount would exceed the Borrowing Base. The
          expiration date of any Letter of Credit shall not be later than the
          earlier of (A) one year after the date of issuance of such Letter of
          Credit, or (B) twenty-five (25) days prior to the Revolving Commitment
          Termination Date. The Borrower may renew any Letter of Credit with a
          one year tenor for additional one year periods upon five (5) days
          prior written notice to the Letter of Credit Bank, so long as the
          expiry date thereof complies with the preceding sentence upon such
          renewal. Each Letter of Credit will be issued under and pursuant to
          the terms and conditions of a Master Letter of Credit Agreement by and
          between the Borrower and the Letter of Credit Bank (the "Master Letter
          of Credit

                                       24

<PAGE>

          Agreement") governing all Letters of Credit to be issued hereunder,
          and upon no less than five (5) Business Days' prior written
          application from the Borrower to the Letter of Credit Bank as
          contemplated therein. The application requesting issuance of a Letter
          of Credit shall be on the Letter of Credit Bank's standard form or
          such other form as may be agreed to by the Letter of Credit Bank and
          the Borrower. In the event that any of the terms of such application
          are inconsistent with the terms and provisions of this Agreement, the
          terms and provisions of this Agreement shall govern. The Letter of
          Credit Bank shall not be obligated to issue a Letter of Credit unless
          on the date of issuance all of the conditions precedent specified in
          Section 3.2 shall have been satisfied as fully as if the issuance of
          such Letter of Credit were a Revolving Advance. Promptly after
          issuance of a Letter of Credit pursuant hereto, the Agent shall so
          advise each Bank of all relevant information with respect thereto.

               (b)  The Borrower agrees to pay to the Agent for the pro rata
          account of all Banks, a commission with respect to each Letter of
          Credit (herein, the "Letter of Credit Fee") computed as the product of
          (i) an annual rate equal to the applicable Margin for Letters of
          Credit in effect on the date payment of the Letter of Credit Fee
          becomes due and payable hereunder, and (ii) the face amount of the
          applicable Letter of Credit outstanding from time to time. The Letter
          of Credit Fee shall be payable quarterly in arrears on the last day of
          each calendar quarter, or upon such other terms as may be agreed upon
          by the Borrower and the Required Banks at the time of issuance of any
          such Letter of Credit; provided, however, that from and after the
          occurrence of an Event of Default and continuing thereafter until such
          Event of Default shall be remedied to the written satisfaction of the
          Required Banks, the applicable Letter of Credit Fee payable hereunder
          with respect to each Letter of Credit shall be equal to the sum of the
          product of (i) the sum of (1) the Margin otherwise in effect with
          respect to such Letter of Credit, and (2) two percent (2%), and (ii)
          the face amount of the applicable Letter of Credit outstanding from
          time to time. If any Letter of Credit Fee so paid is greater than the
          amount that actually accrues (as a result of cancellation of the
          Letter of Credit prior to the end of its stated term), the Borrower
          shall be entitled to a credit for the amount of any such Letter of
          Credit Fee not earned. Letter of Credit Fees payable by the Borrower
          to the Banks in accordance with this subsection (b) shall be shared
          among the Banks pro rata in accordance with their respective
          Percentages of the Revolving Facility.

               (c)  Upon issuance of a Letter of Credit hereunder, and without
          any further notice to any Bank, each Bank shall be deemed to, and
          hereby irrevocably and unconditionally agrees to, purchase from the
          Letter of Credit Bank an undivided participating interest in the
          Letter of Credit Bank's risk and obligation under such Letter of
          Credit and in the obligation of the Letter of Credit Bank to honor
          drafts thereunder, and in the amount of any drawing thereunder, and in
          all rights of the Letter of Credit Bank to obtain reimbursement from
          the Borrower in the amount of such drawing, and all other rights of
          the Letter of Credit Bank with respect thereto, in an amount equal to
          the product of (i) the maximum amount available to be drawn under such
          Letter of Credit and the amount of any drawing thereunder,
          respectively

                                       25

<PAGE>

          and (ii) the Percentage of the Revolving Facility of such Bank.
          Whenever a draft submitted under a Letter of Credit is paid by the
          Letter of Credit Bank, the Letter of Credit Bank shall so notify the
          Agent, the Agent shall so notify each Bank and shall request immediate
          reimbursement from the Borrower for the amount of the draft. If
          sufficient funds are not immediately paid to the Agent by the
          Borrower, the Borrower shall be deemed to have requested a Borrowing
          under the Revolving Facility pursuant to Section 2.3(a) and the Banks
          shall be notified of such request in accordance with Section 2.3(a)
          and shall fund such request for a Borrowing as Floating Rate Advances
          (in accordance with their respective Percentages) for purposes of
          reimbursing the Letter of Credit Bank for the amount of such draft so
          paid by the Letter of Credit Bank (less any amounts realized by the
          Letter of Credit Bank pursuant to the second sentence of this Section
          2.7(c)). If for any reason or under any circumstance (including,
          without limitation, the occurrence of a Default or Event of Default or
          the failure to satisfy any of the conditions set forth in Section 3.2)
          the Banks do not make such Revolving Advances as contemplated above
          and the Borrower does not otherwise reimburse the Letter of Credit
          Bank for the amount of the draft so paid by the Letter of Credit Bank,
          the Borrower shall nonetheless be obligated to reimburse the amount of
          the draft to the Letter of Credit Bank, with interest upon such amount
          at the Default Rate from and after the date such draft is paid by the
          Letter of Credit Bank until the amount thereof is repaid to the Letter
          of Credit Bank in full. If the Letter of Credit Bank shall not have
          obtained reimbursement for any drawing under a Letter of Credit
          (whether from the Borrower or as proceeds of a Borrowing), upon demand
          of the Agent each Bank shall immediately advance the amount of its
          participation in such drawing to the Letter of Credit Bank and shall
          be entitled to interest on such participating interest at the Default
          Rate until reimbursed in full by the Borrower.

               (d)  Each Bank and the Borrower agree that, in paying any drawing
          under a Letter of Credit, the Letter of Credit Bank shall not have any
          responsibility to obtain any document (other than any sight draft and
          certificates expressly required by the Letter of Credit) or to
          ascertain or inquire as to the validity or accuracy of any such
          document or the authority of the Person executing or delivering any
          such document. The Letter of Credit Bank shall not be liable to any
          Bank for: (i) any action taken or omitted in connection herewith at
          the request or with the approval of the Banks (including the Required
          Banks, as applicable); (ii) any action taken or omitted in the absence
          of gross negligence or willful misconduct; or (iii) the due execution,
          effectiveness, validity or enforceability of any document executed in
          connection with a Letter of Credit.

               (e)  The Borrower hereby assumes all risks of the acts or
          omissions of any beneficiary or transferee with respect to its use of
          any Letter of Credit; provided that this assumption is not intended
          to, and shall not, preclude the Borrower's pursuing such rights and
          remedies as it may have against the beneficiary or transferee at law
          or under any other agreement. The Letter of Credit Bank shall not be
          liable or responsible for any of the matters described in clauses (i)
          through (vii) of

                                       26

<PAGE>

          subsection (f) below. In furtherance and not in limitation of the
          foregoing: (i) the Letter of Credit Bank may accept documents that
          appear on their face to be in order, without responsibility for
          further investigation, regardless of any notice or information to the
          contrary; and (ii) the Letter of Credit Bank shall not be responsible
          for the validity or sufficiency of any instrument transferring or
          assigning or purporting to transfer or assign a Letter of Credit or
          the rights or benefits thereunder or proceeds thereof, in whole or in
          part, which may prove to be invalid or ineffective for any reason.

               (f)  The obligation of the Borrower under this Agreement to
          reimburse the Letter of Credit Bank for a drawing under a Letter of
          Credit shall be unconditional and irrevocable, and shall be paid
          strictly in accordance with the terms of this Agreement under all
          circumstances, including the following:

                    (i)    any lack of validity or enforceability of this
               Agreement, the Master Letter of Credit Agreement or any letter of
               credit application;

                    (ii)   any change in the time, manner or place of payment
               of, or in any other term of, all or any of the obligations of the
               Borrower in respect of any Letter of Credit or any other
               amendment or waiver of or any consent to departure from any
               letter of credit application;

                    (iii)  the existence of any claim, set-off, defense or other
               right that the Borrower may have at any time against any
               beneficiary or any transferee of any Letter of Credit (or any
               Person for whom any such beneficiary or any such transferee may
               be acting), the Letter of Credit Bank or any other Person,
               whether in connection with this Agreement, the transactions
               contemplated hereby or any unrelated transaction;

                    (iv)   any draft, demand, certificate or other document
               presented under any Letter of Credit proving to be forged,
               fraudulent, invalid or insufficient in any respect or any
               statement therein being untrue or inaccurate in any respect; or
               any loss or delay in the transmission or otherwise of any
               document required in order to make a drawing under any Letter of
               Credit;

                    (v)    any payment by the Letter of Credit Bank under any
               Letter of Credit against presentation of a draft or certificate
               that does not strictly comply with the terms of any Letter of
               Credit; or any payment made by the Letter of Credit Bank under
               any Letter of Credit to any Person purporting to be a trustee in
               bankruptcy, debtor-in-possession, assignee for the benefit of
               creditors, liquidator, receiver or other representative of or
               successor to any beneficiary or any transferee of any Letter of
               Credit, including any arising in connection with any insolvency
               proceeding;

                    (vi)   any exchange, release or non-perfection of any
               collateral, or any release or amendment or waiver of or consent
               to departure from any other

                                       27

<PAGE>

          guarantee, for all or any of the obligations of the Borrower in
          respect of any Letter of Credit; or

               (vii)  any other circumstance or happening whatsoever, whether or
          not similar to any of the foregoing, including any other circumstance
          that might otherwise constitute a defense available to, or a discharge
          of, the Borrower or a guarantor.

          (g)  Notwithstanding anything in this Section 2.7 to the contrary,
     including particularly subsections (e) and (f) above, the Borrower may have
     a claim against the Letter of Credit Bank and the Letter of Credit Bank may
     be liable to the Borrower, to the extent, but only to the extent, of any
     direct, as opposed to consequential or exemplary, damages suffered by the
     Borrower which the Borrower proves were caused by the Letter of Credit
     Bank's willful misconduct or gross negligence or the willful failure to pay
     under any Letter of Credit after the presentation to the Letter of Credit
     Bank by the beneficiary of a sight draft and certificate strictly complying
     with the terms and conditions of a Letter of Credit.

          (h)  The Borrower shall indemnify, protect, defend and hold harmless
     each Indemnitee from and against all losses, liabilities, claims, damages,
     judgments, costs and expenses, including but not limited to all reasonable
     attorneys' fees and legal expenses, incurred by the Indemnitees or imposed
     upon the Indemnitees at any time by reason of the issuance, demand for
     honor or honor of any Letter of Credit or the enforcement, protection or
     collection of the Letter of Credit Bank's claims against the Borrower under
     this Section 2.7 or by reason of any act or omission of any Indemnitee in
     connection with any of the foregoing; provided, however, that such
     indemnification shall not extend to losses, liabilities, claims, damages,
     judgments, costs and expenses to the extent arising from any act or
     omission of an Indemnitee which constitutes gross negligence or willful
     misconduct.

          (i)  The Borrower hereby agrees to pay to the Letter of Credit Bank,
     on demand, all administrative fees charged by the Letter of Credit Bank in
     the ordinary course of business in connection with the issuance of letters
     of credit, honoring of drafts under letters of credit, amendments thereto,
     transfers thereof and all other activity with respect to letters of credit,
     at the then current rates established by the Letter of Credit Bank from
     time to time for such services rendered on behalf of customers of the
     Letter of Credit Bank generally.

          Section 2.8. Interest on Notes. The Borrower hereby agrees to pay
interest on the unpaid principal amount of each Note for the period commencing
on the date of this Agreement until the unpaid principal amount thereof is paid
in full, in accordance with the following:

          (a)  Floating Rate Fundings. Subject to subsection (c) below, while
     any outstanding principal of a Note constitutes a Floating Rate Funding,
     the outstanding

                                       28

<PAGE>

     principal balance thereof shall bear interest at an annual rate at all
     times equal to the Floating Rate applicable to such Floating Rate Funding.

          (b)  Eurodollar Fundings. Subject to subsection (c) below, while any
     outstanding principal of a Note constitutes a Eurodollar Funding, the
     outstanding principal balance thereof shall bear interest for the
     applicable Interest Period at an annual rate equal to the Eurodollar Rate
     established with respect such Eurodollar Funding in accordance with Section
     2.3, 2.4 or 2.5 hereof.

          (c)  Default Rate. From and after the occurrence of an Event of
     Default and continuing thereafter until such Event of Default shall be
     remedied to the written satisfaction of the Required Banks, the outstanding
     principal balance of each Note shall bear interest, until paid in full, at
     a rate equal to the sum of (i) the interest rate otherwise in effect with
     respect to such outstanding principal and (ii) two percent (2%). In
     addition, any unreimbursed amounts payable under Section 2.7 and all fees,
     indemnification obligations and other Obligations not paid when due
     hereunder shall bear interest, until paid in full, at an annual rate equal
     to the sum of (i) the Floating Rate (with the then applicable Revolving
     Facility Margin) and (ii) two percent (2%) (each rate described in this
     subsection (c) herein a "Default Rate").

          (d)  Savings Clause. Notwithstanding anything in this Section 2.8 to
     the contrary, at no time shall the Borrower be obligated or required to pay
     interest on any Obligation at a rate which could subject any Bank to either
     civil or criminal liability as a result of being in excess of the maximum
     interest rate which the Borrower is permitted by applicable law. If, under
     the terms of this Agreement or any other Loan Document, the Borrower is at
     any time required or obligated to pay interest on any Obligation at a rate
     in excess of such maximum rate, the Floating Rate, Eurodollar Rate or
     Default Rate, as the case may be, shall be deemed to be immediately reduced
     to such maximum rate and all previous payments in excess of the maximum
     rate shall be deemed to have been payments in reduction of principal and
     not on account of any interest thereon due hereunder. All sums paid or
     agreed to be paid to a Bank for the use, forbearance or detention of any
     Obligation, shall, to the extent permitted by applicable law, be amortized,
     prorated, allocated and spread throughout the full stated term of the
     Obligation to which such payment applies until payment in full so that the
     rate or amount of interest on account of any such Obligation does not
     exceed the maximum lawful rate of interest from time to time in effect and
     applicable to such Obligation for so long as the Obligation is outstanding.

          Section 2.9. Obligation to Repay Advances; Representations. The
Borrower shall be obligated to repay all Advances under this Article II
notwithstanding the failure of the Agent or the Swingline Bank to receive any
written request therefor or written confirmation thereof and notwithstanding the
fact that the person requesting the same was not in fact authorized to do so.
Any request for a Borrowing under the Revolving Facility or the Swingline
Facility, whether written, telephonic, telecopy or otherwise, shall be deemed to
be a representation by the Borrower that (a) the amount of the requested
Borrowing, when

                                       29

<PAGE>

added to the Revolving Facility Outstanding Amount or the Swingline Facility
Outstanding Amount, as applicable, would not cause the sum of the Revolving
Facility Outstanding Amount and the Swingline Facility Outstanding Amount to
exceed the Borrowing Base, and (b) the statements set forth in Section 3.2 are
correct as of the time of the request.

          Section 2.10. Notes; Amortization.

          (a)  Revolving Facility. All Revolving Advances made by a Bank
     hereunder shall be evidenced by and repayable in accordance with a
     Revolving Note issued by the Borrower to such Bank. The aggregate unpaid
     principal amount of each Revolving Note shall bear interest at the
     applicable Floating Rate unless a Eurodollar Rate shall become applicable
     thereto pursuant to Sections 2.3, 2.4 or 2.5, and shall be payable on the
     Maturity Date with respect thereto or earlier in accordance with Section
     7.2.

          (b)  Swingline Facility. All Swingline Advances made by the Swingline
     Bank hereunder shall be evidenced by and repayable in accordance with a
     Swingline Note issued by the Borrower to the Swingline Bank. The aggregate
     unpaid principal amount of the Swingline Note shall bear interest at the
     Floating Rate and shall be payable on the Maturity Date with respect
     thereto or earlier in accordance with Section 7.2.

          (c)  Term Facility. All Term Advances made by a Bank hereunder shall
     be evidenced by and repayable with interest in accordance with a Term Note
     issued by the Borrower to such Bank. The aggregate unpaid principal amount
     of each Term Note shall bear interest at the applicable Floating Rate
     unless a Eurodollar Rate shall become applicable thereto pursuant to
     Sections 2.4 or 2.5.

          (d)  Amortization of Term Facility. The Term Facility shall be payable
     on the dates and in the amounts set forth below:

                                       30

<PAGE>

               Due Date                           Amount of Installment
               --------                           ---------------------

          September 30, 2002                            $2,500,000
           December 29, 2002                            $2,500,000
            March 31, 2003                              $2,500,000
             June 30, 2003                              $2,500,000
          September 30, 2003                            $2,500,000
            January 1, 2004                             $2,500,000
            March 31, 2004                              $3,125,000
             June 30, 2004                              $3,125,000
          September 30, 2004                            $3,125,000
           December 31, 2004                            $3,125,000
            March 31, 2005                              $3,750,000
             June 30, 2005                              $3,750,000
          September 30, 2005                            $3,750,000
             Maturity Date                        Entire unpaid balance

          Section 2.11. Interest Due Dates. Accrued interest on each Eurodollar
Funding shall be payable on the last day of the Interest Period relating to such
Eurodollar Funding; provided, however, that if any Interest Period is longer
than three (3) months, interest shall be payable in arrears (3) three months, or
a whole multiple thereof, after the first day of such Interest Period and on the
last day of the Interest Period. Accrued interest on each Floating Rate Funding
shall be payable monthly in arrears on the last day of each month and at
maturity.

          Section 2.12. Computation of Interest and Fees. Interest accruing on
the Notes and on the unreimbursed portion of any Letter of Credit Amount, all
Letter of Credit Fees, Commitment Fees and other fees described in Section 2.13
shall be computed on the basis of the actual number of days elapsed in a year of
three hundred sixty (360) days.

          Section 2.13. Fees. The Borrower hereby agrees to pay the following
fees to the Agent and the Banks in accordance with the following:

          (a)  Origination and Structuring Fees. The Borrower agrees to pay (i)
     to the Agent, for the sole and exclusive account of the Agent, the one-time
     arrangement and origination fees payable to the Agent as provided in the
     Fee Letter, (ii) to each Bank (other than LaSalle Bank), a one-time
     origination fee calculated as three-eighths of one percent of such Bank's
     aggregate Commitments, and (iii) to U.S. Bank National Association, a
     one-time arrangement fee payable to it as provided in the Supplemental Fee
     Letter (collectively, (i), (ii) and (iii) being the "Origination and
     Structuring Fees").

          (b)  Commitment Fee. The Borrower agrees to pay to the Agent, for the
     pro rata account of the Banks, an ongoing commitment fee (the "Commitment
     Fee") computed as the product of an annual rate equal to (i) the applicable
     Margin relating

                                       31

<PAGE>

     to the Commitment Fee and (b) the daily average amount by which (A) the sum
     of the Revolving Commitment Amount exceeds (B) the Revolving Facility
     Outstanding Amount from the Closing Date to and including the Revolving
     Commitment Termination Date, payable quarterly in arrears on the last
     Business Day of each calendar quarter. The Swingline Facility Outstanding
     Amount shall not in any event constitute a portion of the Revolving
     Facility Outstanding Amount for purposes of determining the Commitment Fee.
     Any such Commitment Fee remaining unpaid on the Revolving Commitment
     Termination Date shall be due and payable on such date. The Commitment Fee
     shall be shared by the Banks on the basis of their respective Percentages
     of the Revolving Facility.

          (c)  Audit Fees. The Borrower agrees to pay to the Agent, on written
     demand, reasonable fees charged by the Agent in connection with any audits
     or inspections by the Agent (or by the employees, agents, consultants or
     auditors of the Agent) of any Collateral or the operations or businesses of
     any Credit Party, together with actual out-of-pocket costs and expenses
     incurred in conducting any such audit or inspection; provided, however,
     that until the occurrence of an Event of Default the Borrower shall not be
     obligated to reimburse the Agent for more than two (2) such audits or
     inspections conducted by the Agent during any fiscal year of the Borrower.

          (d)  Agency Fees. The Borrower agrees to pay to the Agent, for the
     sole and exclusive account of the Agent, the agency fee provided in the Fee
     Letter (the "Agency Fee") in accordance with the payment terms thereof.

          Section 2.14. Use of Proceeds. Proceeds of the Term Facility shall be
used to refinance and retire all existing term indebtedness owing from the
Borrower to Bank One, N.A. Proceeds of the initial Borrowing under the Revolving
Facility shall be used to refinance and retire all existing revolving
indebtedness owing from the Borrower to Bank One, N.A. Proceeds of each
additional Borrowing under the Revolving Facility and each Borrowing under the
Swingline Facility shall be used by the Borrower for Permitted Acquisitions and
its working capital purposes and general corporate purposes.

          Section 2.15. Voluntary Reduction or Termination of the Commitments;
Prepayments.

          (a)  Reduction or Termination of Revolving Commitments. The Borrower,
     from time to time upon not less than thirty (30) Business Days' prior
     written notice to the Agent, may permanently reduce the Revolving
     Commitment Amount; provided, however, that no such reduction shall reduce
     the Revolving Commitment Amount to an amount less than the greater of (i)
     the Swingline Commitment Amount or (ii) the Revolving Facility Outstanding
     Amount. Any such voluntary reduction shall be pro rata as to all Revolving
     Commitments according to each Bank's Percentage of the Revolving Facility
     and shall be in an aggregate amount equal to $2,000,000 or a higher
     integral multiple of $1,000,000. The Borrower at any time prior to the
     Revolving Commitment Termination Date may terminate the Revolving

                                       32

<PAGE>

          Commitments by (i) providing to the Agent not less than thirty (30)
          Business Days' prior written notice of its intention to so terminate
          the Revolving Commitments and (ii) making payment in full of all Notes
          and all other monetary Obligations and terminating, or making a cash
          deposit with respect to, all outstanding Letters of Credit.

               (b) Reduction or Termination of Swingline Commitment. The
          Borrower, from time to time upon not less than thirty (30) Business
          Day's prior written notice to the Swingline Bank, may permanently
          reduce the Swingline Commitment Amount; provided, however, that no
          such reduction shall reduce the Swingline Commitment Amount to an
          amount less than the Swingline Facility Outstanding Amount. Any such
          voluntary reduction shall be an aggregate amount equal to $1,000,000
          or a higher integral multiple of $500,000. The Borrower at any time
          prior to the Revolving Commitment Termination Date may terminate the
          Swingline Commitment by (y) providing to the Swingline Bank not less
          than thirty (30) Business Days' prior written notice of its intention
          to so terminate the Swingline Commitment and (z) making payment in
          full of the Swingline Note.

               (c) Prepayments. If the sum of the Revolving Facility Outstanding
          Amount and the Swingline Facility Outstanding Amount shall at any time
          exceed the Borrowing Base, the Borrower shall immediately prepay the
          Revolving Advances and Swingline Advances in an amount equal to such
          excess, without notice or demand by the Agent, the Swingline Bank or
          any Bank. The Borrower from time to time may voluntarily prepay the
          Notes in whole or in part. In the event of either mandatory prepayment
          or voluntary prepayment hereunder (i) any prepayment of a Facility
          shall be applied against outstanding Advances of each Bank under that
          Facility pro rata according to each Bank's Percentage of that
          Facility, (ii) each prepayment of the Notes shall be made to the Agent
          not later than 2:00 p.m. Local Time, on a Business Day, and funds
          received after that hour shall be deemed to have been received by the
          Agent on the next following Business Day, (iii) each partial
          prepayment of Fundings which, at the time of such prepayment, bear
          interest at a Eurodollar Rate shall be accompanied by accrued interest
          on such partial prepayment through the date of prepayment and
          additional compensation calculated in accordance with Section 2.19,
          (iv) each partial prepayment of Fundings with respect to a Facility
          which, at the time of such prepayment, bear interest at a Eurodollar
          Rate, shall be in an aggregate amount equal to the applicable minimum
          Funding amount specified in Section 2.5 for such Facility and, after
          application of any such prepayment, shall not result in a Eurodollar
          Funding remaining outstanding in an amount less than such minimum
          Funding amount, (v) each partial prepayment of Fundings with respect
          to the Revolving Facility or the Term Facility which, at the time of
          such prepayment, bear interest at a Floating Rate, shall be in an
          aggregate amount equal to $2,000,000 or a higher integral multiple of
          $1,000,000, unless (in either case) the aggregate outstanding balance
          of all Notes under the Facility being prepaid is less than such
          minimum Funding amount, in which event any such prepayment may be in
          such lesser amount, (vi) unless notified by the Borrower in writing to
          the contrary, the

                                       33

<PAGE>

          Agent shall apply all partial prepayments first, to Swingline
          Advances, second, to Revolving Advances and, third, to Term Advances
          and (vii) each partial prepayment of the Term Facility shall be
          applied to principal installments becoming due under Section 2.10 in
          inverse order of their respective maturities.

               Section 2.16. Payments.

               (a) Making of Payments. All payments of principal of and interest
          due with respect to a Facility shall be made to the Agent for the
          account of the Banks pro rata according to their respective
          Percentages of such Facility; provided, that any such payments so
          received by the Agent after the occurrence of an Event of Default
          hereunder shall be allocated among the Banks pro rata according to
          their Default Percentages. All payments of fees pursuant to Section
          2.13 shall be made to the Agent for the account of the Agent or the
          Banks, as specified in Section 2.13. All payments on account of a
          Facility shall be made to the Agent at its office in Chicago, Illinois
          not later than 2:00 p.m. Local Time, on the date due, in immediately
          available funds, and funds received after that hour shall be deemed to
          have been received on the next following Business Day. The Borrower
          hereby authorizes the Agent to charge the Borrower's demand deposit
          account maintained with the Agent (or with any other Bank) for the
          amount of any Obligation on its due date, but the Agent's failure to
          so charge any such account shall in no way affect the obligation of
          the Borrower to make any such payment. The Agent shall remit to each
          Bank in immediately available funds on the same Business Day as
          received by the Agent its share of all such payments received by the
          Agent for the account of such Bank. All payments under Section 2.17,
          2.18 or 2.19 shall be made by the Borrower directly to the Bank
          entitled thereto.

               (b) Effect of Payments. Each payment by the Borrower to the Agent
          for the account of any Bank pursuant to Section 2.16(a) shall be
          deemed to constitute payment by the Borrower directly to such Bank,
          provided, however, that in the event any such payment by the Borrower
          to the Agent is required to be returned to the Borrower for any reason
          whatsoever, then the Borrower's obligation to such Bank with respect
          to such payment shall be deemed to be automatically reinstated.

               (c) Distributions by Agent. Unless the Agent shall have been
          notified by a Bank or the Borrower prior to the date on which such
          Bank or the Borrower is scheduled to make payment to the Agent of (in
          the case of a Bank) the proceeds of an Advance to be made by it
          hereunder or (in the case of the Borrower) a payment to the Agent for
          the account of one or more of the Banks hereunder (such payment by a
          Bank or the Borrower (as the case may be) being herein called a
          "Required Payment"), which notice shall be effective upon receipt,
          that it does not intend to make the Required Payment to the Agent, the
          Agent may assume that the Required Payment has been made and may, in
          reliance upon such assumption (but shall not be required to), make the
          amount thereof available to the intended recipient(s) on such date
          and, if such Bank or the Borrower (as the case may be) has not in fact
          made the

                                       34

<PAGE>

          Required Payment to the Agent, the recipient(s) of such payment shall,
          on demand, repay to the Agent the amount so made available together
          with interest thereon for each day during the period commencing on the
          date such amount was so made available by the Agent until the date the
          Agent recovers such amount at a rate (i) equal to the Federal Funds
          Rate for such day, in the case of a Required Payment owing by a Bank,
          or (ii) equal to the applicable rate of interest as provided in this
          Agreement, in the case of a Required Payment owing by the Borrower.

               (d) Setoff. The Borrower agrees that each Bank, subject to such
          Bank's sharing obligations set forth in Section 8.6, shall have all
          rights of setoff and bankers' lien provided by applicable law, and in
          addition thereto, the Borrower agrees that if at any time any
          Obligation is due and owing by the Borrower under this Agreement to
          any Bank at a time when an Event of Default has occurred and is
          continuing hereunder, any Bank may apply any and all balances,
          credits, and deposits, accounts or moneys of the Borrower then or
          thereafter in the possession of such Bank (excluding, however, any
          trust or escrow accounts held by the Borrower for the benefit of any
          third party) to the payment thereof.

               (e) Due Date Extension. Subject to subsection (b) of the
          definition of "Interest Period" with respect to Eurodollar Fundings,
          if any payment of principal of or interest on any Funding or any fees
          payable hereunder falls due on a day which is not a Business Day, then
          such due date shall be extended to the next following Business Day,
          and (in the case of principal) additional interest shall accrue and be
          payable for the period of such extension.

               (f) Application of Payments. Except as otherwise provided herein,
          so long as no Default or Event of Default has occurred and is
          continuing hereunder, each payment received from the Borrower shall be
          applied to such Obligation as the Borrower shall specify by notice to
          be received by the Agent on or before the date of such payment, or in
          the absence of such notice, as the Agent shall determine in its
          discretion. Concurrently with each remittance to any Bank of its
          appropriate share of any such payment (based upon such Bank's
          Percentage of the Facility to which such payment relates), the Agent
          shall advise such Bank as to the application of such payment. Except
          as otherwise provided in Article VIII, after the occurrence of a
          Default or Event of Default, all payments received by the Agent or any
          Bank from the Borrower shall be shared on the basis of each Bank's
          Default Percentage thereof.

               Section 2.17. Taxes. All payments made by the Borrower to the
Agent or any Bank (herein any "Payee") under or in connection with this
Agreement or the Notes shall be made without any setoff or other counterclaim,
and shall be free and clear of and without deduction for or on account of any
present or future taxes now or hereafter imposed by any governmental or other
authority, except to the extent that any such deduction or withholding is
compelled by law. As used herein, the term "Taxes" shall include all income,
excise and other taxes of whatever nature (other than taxes generally assessed
on the overall net income of a Payee by the government or other authority of the
country, state or political subdivision

                                       35

<PAGE>

in which such Payee is incorporated or in which the office through which such
Payee is acting is located) as well as all levies, imposts, duties, charges, or
fees of whatever nature. "Taxes" shall not include, however, any foreign
withholding taxes or similar deductions imposed solely as a result of a Bank's
election to fund an Advance through a foreign office of such Bank. If the
Borrower is notified that it is compelled by law to make any deductions or
withholdings on account of any Taxes (including any foreign withholding) it
will:

               (a) pay to the relevant authorities the full amount required to
          be so withheld or deducted;

               (b) pay such additional amounts (including, without limitation,
          any penalties, interest or expenses) as may be necessary in order that
          the net amount received by the Payee after such deductions or
          withholdings (including any required deduction or withholding on such
          additional amounts) shall equal the amount the Payee would have
          received had no such deductions or withholdings been made; and

               (c) promptly forward to the Agent (for delivery to the
          appropriate Payee) an official receipt or other documentation
          satisfactory to the Agent evidencing such payment to such authorities.

The amount that the Borrower shall be required to pay to any Payee pursuant to
the foregoing clause (b) shall be reduced, to the extent permitted by applicable
law, by the amount of any offsetting tax benefit which such Payee receives as
the result of the Borrower's payment to the relevant authorities as reasonably
determined by such Payee; provided, however, that if such Payee shall
subsequently determine that it has lost the benefit of all or a portion of such
tax benefit, the Borrower shall promptly remit to such Payee the amount
certified by such Payee to be the amount necessary to restore such Payee to the
position it would have been in if no payment had been made pursuant to this
sentence. If any Taxes otherwise payable by the Borrower pursuant to the
foregoing are directly asserted against a Payee, such Payee may pay such taxes
and the Borrower promptly shall reimburse such Payee to the full extent
otherwise required under this Section 2.17. The obligations of the Borrower
under this Section 2.17 shall survive any termination of this Agreement.

               Section 2.18. Increased Costs; Capital Adequacy; Funding
Exceptions.

               (a) Increased Costs on Eurodollar Advances. If Regulation D of
          the Board of Governors of the Federal Reserve System or after the date
          of this Agreement the adoption of any applicable law, rule or
          regulation, or any change in any existing law, or any change in the
          interpretation or administration thereof by any governmental
          authority, central bank or comparable agency charged with the
          interpretation or administration thereof, or compliance by a Bank with
          any request or directive (whether or not having the force of law) of
          any such authority, central bank or comparable agency, shall:

                   (i) subject a Bank to or cause the withdrawal or termination
               of any exemption previously granted to a Bank with respect to,
               any tax, duty or other

                                       36

<PAGE>

               charge with respect to its Eurodollar Fundings or its obligation
               to make Eurodollar Fundings, or shall change the basis of
               taxation of payments to a Bank of the principal of or interest
               under this Agreement in respect of its Eurodollar Fundings or its
               obligation to make Eurodollar Fundings (except for changes in the
               rate of tax on the overall net income of a Bank imposed by the
               jurisdictions in which a Bank's principal executive office is
               located); or

                   (ii)  impose, modify or deem applicable any reserve
               (including, without limitation, any reserve imposed by the Board
               of Governors of the Federal Reserve System, but excluding any
               reserve included in the determination of interest rates pursuant
               to Section 2.6), special deposit or similar requirement against
               assets of, deposits with or for the account of, or credit
               extended by, a Bank; or

                   (iii) impose on a Bank any other condition affecting its
               making, maintaining or funding of its Eurodollar Fundings or its
               obligation to make Eurodollar Fundings;

          and the result of any of the foregoing is to increase the cost to an
          affected Bank of making or maintaining any Eurodollar Funding, or to
          reduce the amount of any sum received or receivable by such Bank under
          this Agreement or under its Notes with respect to a Eurodollar
          Funding, then the affected Bank will notify the Borrower and the Agent
          of such increased cost and within fifteen (15) days after demand by
          such Bank (which demand shall be accompanied by a statement setting
          forth the basis of such demand) the Borrower shall pay to such Bank
          such additional amount or amounts as will compensate the Bank for such
          increased cost or such reduction; provided, however, that no such
          increased cost or such reduction shall be payable by the Borrower for
          any period longer than ninety (90) days prior to the date on which
          notice thereof is delivered to the Borrower. Each Bank will promptly
          notify the Borrower of any event of which it has knowledge, occurring
          after the date hereof, which will entitle such Bank to compensation
          pursuant to this Section 2.18. If the Borrower receives notice from a
          Bank of any event which will entitle such Bank to compensation
          pursuant to this Section 2.18, the Borrower may prepay any then
          outstanding Eurodollar Fundings or notify the affected Bank that any
          pending request for a Eurodollar Funding shall be deemed to be a
          request for a Floating Rate Funding, in each case subject to the
          provisions of Section 2.19.

               (b) Capital Adequacy. If a Bank determines at any time that such
          Bank's Return has been reduced as a result of any Capital Adequacy
          Rule Change, such Bank may require the Borrower to pay to such Bank
          the amount necessary to restore such Bank's Return to what it would
          have been had there been no Capital Adequacy Rule Change. For purposes
          of this Section 2.18(b), the following definitions shall apply:

                   (i)   "Return", for any calendar quarter or shorter period,
               means the percentage determined by dividing (A) the sum of
               interest and ongoing fees

                                       37

<PAGE>

               earned by a Bank under this Agreement during such period by (B)
               the average capital such Bank is required to maintain during such
               period as a result of its being a party to this Agreement, as
               determined by such Bank based upon its total capital requirements
               and a reasonable attribution formula that takes account of the
               Capital Adequacy Rules then in effect. Return may be calculated
               for a Bank for each calendar quarter and for the shorter period
               between the end of a calendar quarter and the date of termination
               in whole of this Agreement.

                   (ii)  "Capital Adequacy Rule" means any generally applicable
               law, rule, regulation or guideline regarding capital adequacy
               that applies to a Bank, or the interpretation thereof by any
               governmental or regulatory authority. Capital Adequacy Rules
               include rules requiring financial institutions to maintain total
               capital in amounts based upon percentages of outstanding loans,
               binding loan commitments and letters of credit.

                   (iii) "Capital Adequacy Rule Change" means any generally
               applicable change in any Capital Adequacy Rule occurring after
               the date of this Agreement, but does not include any changes in
               applicable requirements that at the date hereof are scheduled to
               take place under the existing Capital Adequacy Rules or any
               increases in the capital that a Bank is required to maintain to
               the extent that the increases are required due to a regulatory
               authority's assessment of such Bank's financial condition.

          The initial notice sent by a Bank shall be sent as promptly as
          practicable after such Bank learns that its Return has been reduced,
          shall include a demand for payment of the amount necessary to restore
          such Bank's Return for the quarter in which the notice is sent, and
          shall state in reasonable detail the cause for the reduction in such
          Bank's Return and such Bank's calculation of the amount of such
          reduction. Thereafter, a Bank may send a new notice during each
          calendar quarter setting forth the calculation of the reduced Return
          for that quarter and including a demand for payment of the amount
          necessary to restore such Bank's Return for that quarter. A Bank's
          calculation in any such notice shall be conclusive and binding absent
          demonstrable error.

               (c) Basis for Determining Interest Rate Inadequate or Unfair. If
          with respect to any Interest Period:

                   (i)   the Agent determines that, or the Required Banks
               determine and advise the Agent that, deposits in U.S. dollars (in
               the applicable amounts) are not being offered in the London
               interbank eurodollar market for such Interest Period; or

                   (ii)  the Agent otherwise determines, or the Required Banks
               determine and advise the Agent (which determination shall be
               binding and conclusive on all parties), that by reason of
               circumstances affecting the

                                       38

<PAGE>

               London interbank eurodollar market adequate and reasonable means
               do not exist for ascertaining the applicable Eurodollar Rate; or

                   (iii) the Agent determines, or the Required Banks determine
               and advise the Agent, that the Eurodollar Rate as determined by
               the Agent will not adequately and fairly reflect the cost to the
               Banks of maintaining or funding a Eurodollar Funding for such
               Interest Period, or that the making or funding of Eurodollar
               Fundings has become impracticable as a result of an event
               occurring after the date of this Agreement which in the opinion
               of such Banks materially affects such Eurodollar Fundings;

          then the Agent shall promptly notify the affected parties and (A) in
          the event of any occurrence described in the foregoing clause (i) the
          Borrower shall enter into good faith negotiations with each affected
          Bank in order to determine an alternate method to determine the
          Eurodollar Rate for such Bank, and during the pendancy of such
          negotiations with any Bank, such Bank shall be under no obligation to
          make any new Eurodollar Fundings, and (B) in the event of any
          occurrence described in the foregoing clauses (ii) or (iii), for so
          long as such circumstances shall continue, no Bank shall be under any
          obligation to make any new Eurodollar Fundings.

               (d) Illegality. In the event that any change in (including the
          adoption of any new) applicable laws or regulations, or any change in
          the interpretation of applicable laws or regulations by any
          governmental authority, central bank, comparable agency or any other
          regulatory body charged with the interpretation, implementation or
          administration thereof, or compliance by a Bank with any request or
          directive (whether or not having the force of law) of any such
          authority, central bank, comparable agency or other regulatory body,
          should make it or, in the good faith judgment of the affected Bank,
          shall raise a substantial question as to whether it is unlawful for
          such Bank to make, maintain or fund Eurodollar Fundings, then (i) the
          affected Bank shall promptly notify the Borrower and the Agent, (ii)
          the obligation of the affected Bank to make, maintain or convert into
          Eurodollar Fundings shall, upon the effectiveness of such event, be
          suspended for the duration of such unlawfulness, and (iii) for the
          duration of such unlawfulness, any notice by the Borrower pursuant to
          Sections 2.3, 2.4 or 2.5 requesting the affected Bank to make or
          convert into Eurodollar Fundings shall be construed as a request to
          make or to continue making Floating Rate Fundings.

               (e) Procedures to Mitigate. If circumstances arise in respect of
          any Bank which would or would upon the giving of notice result in any
          liability of the Borrower under this Section 2.18 then, without in any
          way limiting, reducing or otherwise qualifying the Borrower's
          obligations under this Section 2.18, such Bank shall promptly, upon
          becoming aware of the same, notify the Agent and the Borrower thereof
          and shall, in consultation with the Agent and the Borrower and to the
          extent that it can do so without, in its reasonable judgment,
          disadvantaging itself, take such reasonable steps as may be available
          to it to mitigate the effects of such circumstances

                                       39

<PAGE>

          (including, without limitation, the designation of an alternate office
          or the transfer of its Eurodollar Fundings to another office). If and
          so long as a Bank has been unable to take, or has not taken, steps
          reasonably acceptable to the Borrower to mitigate the effect of the
          circumstances in question, such Bank shall be obliged, at the request
          of the Borrower, to assign all its rights and obligations hereunder to
          another Person designated by the Borrower with the approval of the
          Agent (which shall not be unreasonably withheld) and willing to
          participate in the Facilities in place of such Bank; provided that
          such Person satisfies all of the requirements of this Agreement,
          including, but not limited to, providing the forms and documents
          required by Section 8.15 and any such Person shall cover all costs
          incurred in connection with effecting such replacement.

               Section 2.19. Funding Losses. The Borrower hereby agrees that
upon demand by any Bank (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed) the
Borrower will indemnify such Bank against any loss or expense which such Bank
may have sustained or incurred (including, without limitation, any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain Eurodollar Fundings) or
which such Bank may be deemed to have sustained or incurred, as reasonably
determined by such Bank, (i) as a consequence of any failure by the Borrower to
make any payment when due of any amount due hereunder in connection with any
Eurodollar Fundings, (ii) due to any failure of the Borrower to borrow or
convert any Eurodollar Fundings on a date specified therefor in a notice thereof
or (iii) due to any payment or prepayment of any Eurodollar Funding on a date
other than the last day of the applicable Interest Period for such Eurodollar
Funding. For this purpose, all notices under Sections 2.3, 2.4 and 2.5 shall be
deemed to be irrevocable.

               Section 2.20. Right of Banks to Fund through Other Offices. Each
Bank, if it so elects, may fulfill its agreements hereunder with respect to any
Eurodollar Funding by causing a foreign branch or affiliate of such Bank to make
such Eurodollar Funding; provided, that in such event the obligation of the
Borrower to repay such Eurodollar Funding shall nevertheless be to such Bank and
such Eurodollar Funding shall be deemed held by such Bank for the account of
such branch or affiliate.

               Section 2.21. Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain all or any part of its Eurodollar Fundings in
any manner it deems fit, it being understood, however, that for the purposes of
this Agreement (specifically including, without limitation, Section 2.19 hereof)
all determinations hereunder shall be made as if each Bank had actually funded
and maintained each Eurodollar Funding during each Interest Period for such
Eurodollar Funding through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
appropriate Eurodollar Rate for such Interest Period.

                                       40

<PAGE>

               Section 2.22. Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of a Bank pursuant to Section 2.17,
2.18, or 2.19 shall be conclusive absent demonstrable error. Each Bank may use
reasonable averaging and attribution methods in determining compensation
pursuant to such Sections 2.17, 2.18 or 2.19 and the provisions of Sections
2.17, 2.18 and 2.19 shall survive termination of this Agreement.

                                   ARTICLE III

                              CONDITIONS OF LENDING

               Section 3.1. Conditions Precedent to the Initial Advance. The
obligation of the Banks to fund the initial Advances or issue any Letter of
Credit is subject to the condition precedent that the Agent shall have received
the following, each in form and substance satisfactory to the Required Banks:

               (a)  The Notes, properly executed on behalf of the Borrower.

               (b)  The Guaranties, properly executed on behalf of the
          appropriate Guarantor.

               (c)  The Security Documents, properly executed on behalf of the
          appropriate Credit Party, together with:

                    (i)  financing statements with respect to each Credit Party
               to be filed in all jurisdictions which, in the opinion of the
               Agent, are reasonably necessary to perfect the security interests
               created by the Security Documents, to the extent such security
               interests can be perfected by filing; and

                    (ii) current searches of appropriate filing offices in each
               state (and county, to the extent relevant) in which a Credit
               Party has an office or otherwise conducts business (including,
               without limitation, patent and trademark offices, secretaries of
               state and county recorders) showing that no state or federal tax
               liens have been filed and remain in effect against any Credit
               Party, and that no financing statements or other notifications or
               filings have been filed and remain in effect against any Credit
               Party, other than those for which the Agent has received an
               appropriate release, termination or satisfaction or those
               permitted in accordance with Section 6.1.

               (d)  Evidence of all insurance required by the terms of any Loan
          Document, together with appropriate certificates and loss payable
          endorsements showing the Agent as additional insured and loss payee
          thereunder.

               (e)  A certified copy of the executed Indenture, certified by an
          appropriate officer of the Borrower.

                                       41

<PAGE>

               (f)  Evidence that all actions which, in the opinion of the
          Agent, are reasonably necessary to perfect and protect the security
          interests created by the Security Documents have been taken.

               (g)  Copies of the Articles of Incorporation and Bylaws (or other
          comparable organizational documents) of each Credit Party, certified
          by the Secretary or Assistant Secretary of such Credit Party as being
          true and correct copies thereof.

               (h)  A certificate of good standing for each Credit Party, dated
          not more than thirty (30) days prior to the date hereof, and evidence
          satisfactory to the Agent that each Credit Party is qualified to
          conduct its business in each state where it presently conducts such
          business if failure to obtain any such qualification or licensing
          would have a Material Adverse Effect.

               (i)  A signed copy of a certificate of the Secretary or an
          Assistant Secretary of each Credit Party which shall certify the names
          of the officers of such Credit Party authorized to sign the Loan
          Documents to which such Credit Party is a party and the other
          documents or certificates to be delivered pursuant to this Agreement,
          including (as to the Borrower) requests for Advances and Eurodollar
          Fundings, together with the true signatures of such officers. The
          Agent and each Bank may conclusively rely on such certificates until
          they shall receive a further certificate of the Secretary of an
          Assistant Secretary of a Credit Party canceling or amending the prior
          certificate and submitting the signatures of the officers named in
          such further certificate.

               (j)  A Borrowing Base Certificate as of a date not more than ten
          (10) days prior to the Closing Date.

               (k)  Collateral audit reports in all respects satisfactory to the
          Agent.

               (l)  The following financial information: (i) audited financial
          statements for the period ended December 30, 2001 for the Consolidated
          Group (as of such date), (ii) interim financial statements of the
          Consolidated Group for the period from December 30, 2001 through and
          including July 14, 2002; and (iii) a business plan for the Borrower's
          2002 fiscal year, including a written analysis of the business and
          prospects for the Consolidated Group for such year and for each year
          thereafter through the Borrower's fiscal year end, 2005, together with
          financial projections for the period commencing December 31, 2001, and
          ending on January 1, 2006, prepared by management of the Borrower,
          together with a summary of key assumptions utilized by management in
          the preparation of such projections.

               (m)  Documentation acceptable to the Banks demonstrating that the
          Obligations qualify as "Senior Debt" for all purposes of the
          Indenture.

               (n)  A signed copy of an opinion of counsel for each Credit Party
          addressed to the Agent on behalf of the Banks.

                                       42

<PAGE>

               (o)  The Fee Letter and the Supplemental Fee Letter, each
                    executed on behalf of the Borrower.

               (p)  An ISDA Master Agreement with all appropriate Schedules and
          Confirmations (as each term is defined in such ISDA Master Agreement)
          with respect to the Permitted Rate Hedging Arrangements, executed on
          behalf of the Borrower.

               (q)  Payment of all fees and expenses then due and payable
          pursuant to Sections 2.13 and 9.4 hereof.

               Section 3.2. Conditions Precedent to All Advances. The obligation
of the Banks to make each Advance or issue a Letter of Credit shall be subject
to the further conditions precedent that on such date:

               (a)  the representations and warranties contained in Article IV
          hereof are correct in all material respects on and as of the date of
          such Advance or Letter of Credit as though made on and as of such
          date;

               (b)  no event has occurred and is continuing, or would result
          from such Advance or Letter of Credit, which constitutes a Default or
          an Event of Default; and

               (c)  there has been no material adverse change in the financial
          condition or prospects of any Credit Party since the date of the
          financial statements described in Section 4.5.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

               The Borrower represents and warrants to the Banks as follows:

               Section 4.1. Legal Existence and Power; Name; Chief Executive
Office. Each Credit Party is a legal entity duly organized, validly existing and
in good standing under the laws of its respective state of organization, and is
duly licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary and where
failure to obtain such licensing or qualification would have a Material Adverse
Effect. Each Credit Party has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under, the Loan Documents to
which it is a party. Within the last twelve (12) months, each Credit Party has
done business solely under the names set forth in Schedule 4.1. The state of
organization and the chief executive office and principal place of business of
each Credit Party are designated as such in Schedule 4.1, each other place of
business of each Credit Party is located at the address set forth in Schedule
4.1 and all records relating to their respective businesses are kept at those
locations.

                                       43

<PAGE>

               Section 4.2. Authorization for Borrowings and Letters of Credit;
No Conflict as to Law or Agreements. The execution, delivery and performance by
each Credit Party of the Loan Documents to which it is a party, and the Letters
of Credit and Advances from time to time obtained hereunder, have been duly
authorized by all necessary corporate action and do not and will not (a) require
any consent or approval which has not been obtained prior to the date hereof,
(b) require any authorization, consent or approval by, or registration,
declaration or filing (other than filing of financing statements as contemplated
hereunder) with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorization, consent, approval, registration, declaration, filing
or notice as has been obtained, accomplished or given prior to the date hereof,
(c) violate any provision of any law, rule or regulation (including, without
limitation, Regulations T, U or X of the Board of Governors of the Federal
Reserve System) or of any order, writ, injunction or decree presently in effect
having applicability to a Credit Party or of the articles of incorporation,
bylaws or other organizational documents of a Credit Party, (d) result in a
breach of or constitute a default under any indenture (including, without
limitation, the Indenture) or loan or credit agreement or any other material
agreement, lease or instrument to which any Credit Party is a party or by which
it or its properties may be bound or affected, or (e) result in, or require, the
creation or imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature upon or with respect to
any of the properties now owned or hereafter acquired by an Credit Party (other
than as required hereunder in favor of the Banks).

               Section 4.3. Legal Agreements. Each of the Loan Documents
constitutes the legal, valid and binding obligations and agreements of the
Credit Party which is a party thereto, enforceable against such Credit Party in
accordance its terms, except to the extent that enforcement thereof may be
limited by an applicable bankruptcy, insolvency or similar laws now or hereafter
in effect affecting creditors' rights generally and by general principles of
equity.

               Section 4.4. Subsidiaries. All Subsidiaries of each Credit Party
(both direct and indirect) are set forth and described in the organizational
chart in Schedule 4.4.

               Section 4.5. Financial Condition; No Adverse Change. The Borrower
has heretofore furnished to the Agent audited financial statements of the
Consolidated Group for its fiscal year ended December 30, 2001 and unaudited
financial statements of the Consolidated Group for the twenty-eight week period
ended July 14, 2002 and those financial statements fairly present the financial
condition of the Consolidated Group on the dates thereof and the results of
operations and cash flows for the periods then ended (subject to year-end audit
adjustments) and were prepared in accordance with GAAP. Since the date of the
financial statements described above, there has not occurred any event or
circumstance that would have a Material Adverse Effect.

               Section 4.6. Litigation. There are no actions, suits or
proceedings pending or, to the respective knowledge of the Credit Parties,
threatened against or affecting any Credit

                                       44

<PAGE>

Party or the properties of any Credit Party before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to such Person, could reasonably be
expected to have a Material Adverse Effect, except as set forth and described in
Schedule 4.6.

               Section 4.7.  Regulation U. No Credit Party has engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.

               Section 4.8.  Taxes. To their respective knowledge, each Credit
Party has paid or caused to be paid to the proper authorities when due all
federal, state and local taxes required to be withheld by it. Each Credit Party
has filed all federal, state and local tax returns which to the knowledge of the
officers of such Credit Party, are required to be filed, and each Credit Party
has paid or caused to be paid to the respective taxing authorities all taxes as
shown on said returns or on any assessment received by it to the extent such
taxes have become due, except for any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested by an Credit Party in
good faith and by proper proceedings and for which such Credit Party shall have
set aside adequate reserves.

               Section 4.9.  Titles and Liens. A Credit Party has good and
absolute title to all properties and assets reflected in the latest balance
sheet referred to in Section 4.5, free and clear of all mortgages, security
interests, liens and encumbrances, except for (a) mortgages, security interests
and liens permitted by Section 6.1, and (b) covenants, restrictions, rights,
easements and minor irregularities in title which do not (i) materially
interfere with the business or operations of any Credit Party as presently
conducted and (ii) materially impair the value of the property to which they
attach. In addition, no financing statement naming any Credit Party as debtor is
on file in any office except to perfect only security interests permitted by
Section 6.1.

               Section 4.10. Plans. Except as disclosed on Schedule 4.10, none
of the Borrower, any other Credit Party or any of their respective ERISA
Affiliates (i) maintains or has maintained any Pension Plan, (ii) contributes or
has contributed to any Multiemployer Plan or (iii) provides or has provided
post-retirement medical or insurance benefits with respect to employees or
former employees (other than benefits required under Section 601 of ERISA,
Section 4980B of the Code or applicable state law). None of the Borrower, any
other Credit Party or any of their respective ERISA Affiliates has received any
notice or has any knowledge to the effect that it is not in full compliance with
any of the requirements of ERISA, the Code or applicable state law with respect
to any Plan. No Reportable Event exists in connection with any Pension Plan.
Each Plan which is intended to qualify under the Code is so qualified, and no
fact or circumstance exists which may have an adverse effect on the Plan's
tax-qualified status. None of the Borrower, any other Credit Party or any of
their respective ERISA Affiliates has (i) any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code) under any Plan,
whether or not waived,

                                        45

<PAGE>

(ii) any liability under Section 4201 or 4243 of ERISA for any withdrawal,
partial withdrawal, reorganization or other event under any Multiemployer Plan
or (iii) any liability or knowledge of any facts or circumstances which could
result in any liability to the Pension Benefit Guaranty Corporation, the
Internal Revenue Service, the Department of Labor or any participant in
connection with any Plan (other than routine claims for benefits under the
Plan).

               Section 4.11. Default. Each Credit Party is in compliance with
all provisions of all agreements, instruments, decrees and orders to which it is
a party or by which it or its property is bound or affected, the breach or
default of which could reasonably be expected to have a Material Adverse Effect.

               Section 4.12. Environmental Compliance. Each Credit Party has
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws and regulations relating to emissions, discharges,
releases of pollutants, contaminants, hazardous or toxic materials, or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") at their respective facilities or in
connection with the operation of its facilities. Except as disclosed in Schedule
4.12, each Credit Party and all activities of each Credit Party, at its
facilities comply with all material Environmental Laws and with all terms and
conditions of any required permits, licenses and authorizations applicable to
such Person with respect thereto. Except as disclosed in Schedule 4.12, each
Credit Party is in compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in Environmental Laws or contained in any plan, order, decree,
judgment or notice of which such Credit Party is aware and with respect to which
noncompliance would have a Material Adverse Effect. Except as disclosed in
Schedule 4.12, no Credit Party is aware of, nor has any Credit Party received
notice of, any events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance with, or which may give rise to any liability under, any
Environmental Laws.

               Section 4.13. Submissions to Banks. All financial and other
information provided to the Agent or any Bank by or on behalf of any Credit
Party in connection with the Borrower's request for the credit facilities
contemplated hereby is true and correct in all material respects and, as to
projections, valuations or pro forma financial statements, present a good faith
opinion as of the date made as to such projections, valuations and pro forma
condition and results.

               Section 4.14. Financial Solvency. Both before and after giving
effect to all of the loans, guaranties and other financial accommodations
contemplated herein, each Credit Party:

                                       46

<PAGE>

               (a)  was not and will not be insolvent, as that term is used and
          defined in Section 101(32) of the United States Bankruptcy Code and
          Section 2 of the Uniform Fraudulent Transfer Act;

               (b)  does not have unreasonably small capital and is not engaged
          or about to engage in a business or a transaction for which any
          remaining assets of such Credit Party are unreasonably small;

               (c)  does not, by executing, delivering or performing its
          obligations under the Loan Documents or by taking any action with
          respect thereto, intend to, nor believe that it will, incur debts
          beyond its ability to pay them as they mature;

               (d)  does not, by executing, delivering or performing its
          obligations under the Loan Documents to which it is a party or by
          taking any action with respect thereto, intend to hinder, delay or
          defraud either its present or future creditors; and

               (e)  does not contemplate filing a petition in bankruptcy or for
          an arrangement or reorganization or similar proceeding under any law
          any jurisdiction or country, and, to the best knowledge of such Credit
          Party, is not the subject of any bankruptcy or insolvency proceedings
          or similar proceedings under any law of any jurisdiction or country
          threatened or pending against such Credit Party;

provided, however, that for purposes of the foregoing representation relating to
a Guarantor, no Guaranty executed by a Guarantor shall be deemed a liability of
such Guarantor.

               Section 4.15 Information Regarding Real Estate. Set forth and
described in Schedule 4.15 is a true and accurate description of each parcel of
real estate owned or leased by a Credit Party, together with true and accurate
information with respect to such parcel of real estate as set forth therein.

               Section 4.16 Intellectual Property Rights.

               (a)  Owned Intellectual Property. Schedule 4.16 is a complete
          list of all patents, applications for patents, trademarks,
          applications for trademarks, service marks, applications for service
          marks, mask works, trade dress and copyrights for which any Credit
          Party is the registered owner (the "Owned Intellectual Property").
          Except as disclosed on Schedule 4.16, (i) a Credit Party owns the
          Owned Intellectual Property free and clear of all restrictions
          (including covenants not to sue a third party), court orders,
          injunctions, decrees, writs or liens, whether by written agreement or
          otherwise, (ii) no Person other than a Credit Party owns or has been
          granted any right in the Owned Intellectual Property, (iii) all Owned
          Intellectual Property is valid, subsisting and enforceable and (iv)
          each Credit Party has taken all commercially reasonable action
          necessary to maintain and protect the Owned Intellectual Property
          owned by it.

                                       47

<PAGE>

               (b)  Agreements with Employees and Contractors. Each Credit Party
          has entered into a legally enforceable agreement with each of its
          employees and subcontractors obligating each such Person to assign to
          such Credit Party, without any additional compensation, any
          Intellectual Property Rights created, discovered or invented by such
          Person in the course of such Person's employment or engagement with
          such Credit Party (except to the extent prohibited by law), and
          further requiring such Person to cooperate with such Credit Party,
          without any additional compensation, in connection with securing and
          enforcing any Intellectual Property Rights therein; provided, however,
          that the foregoing shall not apply with respect to employees and
          subcontractors whose job descriptions are of the type such that no
          such assignments are reasonably foreseeable.

               (c)  Intellectual Property Rights Licensed from Others. Schedule
          4.16 is a complete list of all agreements under which any Credit Party
          has licensed Intellectual Property Rights from another Person
          ("Licensed Intellectual Property") other than readily available,
          non-negotiated licenses of computer software and other intellectual
          property used solely for performing accounting, word processing and
          similar administrative tasks ("Off-the-shelf Software") and a summary
          of any ongoing payments the applicable Credit Party is obligated to
          make with respect thereto. Except as disclosed on Schedule 4.16 and in
          written agreements copies of which have been given to the Agent, each
          Credit Party's licenses to use the Licensed Intellectual Property are
          free and clear of all restrictions, liens, court orders, injunctions,
          decrees, or writs, whether by written agreement or otherwise. Except
          as disclosed on Schedule 4.16, no Credit Party is obligated or under
          any liability whatsoever to make any payments of a material nature by
          way of royalties, fees or otherwise to any owner of, licensor of, or
          other claimant to, any Intellectual Property Rights.

               (d)  Infringement. Except as disclosed on Schedule 4.16, no
          Credit Party has any knowledge of, and has not received any written
          claim or notice alleging, any infringement of another Person's
          Intellectual Property Rights (including any written claim that a
          Credit Party must license or refrain from using the Intellectual
          Property Rights of any third party) nor, to the knowledge of any
          Credit Party, is there any threatened claim or any reasonable basis
          for any such claim.

                                    ARTICLE V

                      AFFIRMATIVE COVENANTS OF THE BORROWER

               So long as any Note or Letter of Credit shall remain unpaid or
outstanding or any Commitment shall be outstanding, the Borrower will comply
with the following requirements, unless the Required Banks shall otherwise
consent in writing:

               Section 5.1. Reporting Requirements. The Borrower will deliver,
or cause to be delivered, to each Bank each of the following, which shall be in
form and detail reasonably acceptable to the Required Banks:

                                       48

<PAGE>

               (a)  as soon as available, and in any event within one hundred
          twenty (120) days after the end of each fiscal year of the Borrower,
          audited annual financial statements of the Consolidated Group with the
          unqualified opinion of independent certified public accountants
          selected by the Consolidated Group and acceptable to the Agent, which
          annual financial statements shall include the balance sheets of the
          Consolidated Group as at the end of such fiscal year and the related
          statements of income, retained earnings and cash flows of the
          Consolidated Group for the fiscal year then ended, prepared on a
          consolidating and consolidated basis, all in reasonable detail and
          prepared in accordance with GAAP, together with (i) a report signed by
          such accountants stating that in making the investigations necessary
          for said opinion they obtained no knowledge, except as specifically
          stated, of any Default or Event of Default hereunder and all relevant
          facts in reasonable detail to evidence, and the computations as to,
          whether or not the Borrower is in compliance with the Financial
          Covenants; and (ii) a certificate of the chief financial officer of
          the Borrower, substantially in the form of Exhibit I, stating that
          such financial statements have been prepared in accordance with GAAP
          and whether or not such officer has knowledge of the occurrence of any
          Default or Event of Default hereunder and, if so, stating in
          reasonable detail the facts with respect thereto, and a budget for the
          current fiscal year and financial projections for the current fiscal
          year and for the immediately succeeding fiscal year;

               (b)  as soon as available and in any event within forty-five (45)
          days after the end of each fiscal quarter of the Borrower, an
          unaudited/interim balance sheet and statement of income, cash flow and
          retained earnings of the Consolidated Group as at the end of and for
          such fiscal quarter and for the year-to-date period then ended,
          prepared on a consolidating and consolidated basis, in reasonable
          detail and stating in comparative form the budget of the Consolidated
          Group for such fiscal quarter and for the year-to-date period then
          ended and the figures for the corresponding date and periods in the
          previous year, all prepared in accordance with GAAP, subject to
          year-end audit adjustments; and accompanied by a certificate of the
          chief financial officer of the Borrower, substantially in the form of
          Exhibit J, stating (i) that such financial statements have been
          prepared in accordance with GAAP, subject to year-end audit
          adjustments, (ii) whether or not such officer has knowledge of the
          occurrence of any Default or Event of Default hereunder not
          theretofore reported and remedied and, if so, stating in reasonable
          detail the facts with respect thereto, and (iii) all relevant facts in
          reasonable detail to evidence, and the computations as to (A) the
          applicable Status for purposes of establishing the appropriate Margins
          and (B) whether or not the Borrower is in compliance with the
          Financial Covenants;

               (c)  within fifteen (15) days after the end of each month, a
          properly completed and executed Borrowing Base Certificate as at the
          end of such month;

               (d)  not later than January 31 of each fiscal year of the
          Borrower, the projected balance sheets, income statements, Capital
          Expenditures budget, and cash flow statements for the Consolidated
          Group for each month of such year, each in

                                       49

<PAGE>

          reasonable detail, representing the good faith projections of the
          Borrower for each such month, and certified by the Borrower's chief
          financial officer as being the most accurate projections available and
          identical to the projections used by the Borrower for internal
          planning purposes, together with such supporting schedules and
          information as the Agent or the Required Banks from time to time may
          reasonably request;

               (e)  from time to time, with reasonable promptness, any and all
          receivables schedules, collection reports, deposit records, agings of
          accounts receivable and accounts payable and such other material
          reports, records or information as the Agent or the Required Banks
          from time to time may reasonably request;

               (f)  immediately after the commencement thereof, notice in
          writing of all uninsured litigation and of all proceedings before any
          governmental or regulatory agency affecting any Credit Party of the
          type described in Section 4.6 or which (i) seek a monetary recovery
          against any Credit Party in excess of $250,000 or (ii) if determined
          adversely to any Credit Party, could reasonably be expected to have a
          Material Adverse Effect;

               (g)  as promptly as practicable (but in any event not later than
          five (5) Business Days) after an officer of the Borrower obtains
          knowledge of the occurrence of a Default or Event of Default
          hereunder, notice of such occurrence, together with a detailed
          statement by a responsible officer of the Borrower setting forth the
          steps being taken by the Borrower to cure the effect of such Default
          or Event of Default;

               (h)  as promptly as practicable, and in any event within thirty
          (30) days after the Borrower knows or has reason to know that any
          Reportable Event with respect to any Pension Plan has occurred, the
          Borrower will deliver to the Agent a statement of the Borrower's (or,
          as applicable, other Credit Party's) chief financial officer setting
          forth details as to such Reportable Event and the action which the
          Borrower (or, as applicable, other Credit Party) proposes to take with
          respect thereto, together with a copy of the notice of such Reportable
          Event to the Pension Benefit Guaranty Corporation;

               (i)  as promptly as practicable, and in any event within ten (10)
          days after any Credit Party fails to make any quarterly contribution
          required with respect to any Pension Plan under Section 412(m) of the
          Code, the Borrower will deliver to the Agent a statement of the
          Borrower's (or, as applicable, other Credit Party's) chief financial
          officer setting forth details as to such failure and the action which
          the Borrower (or, as applicable, other Credit Party) proposes to take
          with respect thereto, together with a copy of any notice of such
          failure required to be provided to the Pension Benefit Guaranty
          Corporation;

               (j)  as promptly as practicable, and in any event with ten (10)
          days after the Borrower knows or has reason to know that the Borrower
          or any other Credit Party has or is reasonably expected to have any
          liability under Section 4201 or 4243 of

                                       50

<PAGE>

          ERISA for any withdrawal, partial withdrawal, reorganization or other
          event under any Multiemployer Plan, the Borrower will deliver to the
          Agent a statement of the Borrower's (or, as applicable, other Credit
          Party's) chief financial officer setting forth details as to such
          liability and the action which Borrower (or, as applicable, other
          Credit Party) proposes to take with respect thereto;

               (k)  promptly upon obtaining knowledge thereof, notice of the
          violation by any Credit Party of any law, rule or regulation, the
          non-compliance with which could reasonably be expected to have a
          Material Adverse Effect;

               (l)  promptly upon their distribution, copies of all financial
          statements, reports, proxy statements and other communications which
          the Borrower shall have sent to its stockholders;

               (m)  promptly after the sending or filing thereof, copies of all
          regular and periodic financial reports which the Borrower shall file
          with the Securities and Exchange Commission or any national securities
          exchange;

               (n)  not later than December 1 of each year, with respect to
          property insurance and May 1 of each year with respect to casualty
          insurance, updated certificates of insurance in each case
          demonstrating coverage for all tangible Collateral and showing the
          Agent, on behalf of all Banks, as additional insured, loss payee and
          otherwise satisfying all requirements specified in any Loan Document;

               (o)  promptly upon the execution and/or delivery of any
          amendment, supplement or other modification to the Indenture or the
          Consulting Agreement, a copy of such amendment, supplement or other
          modification;

               (p)  promptly upon the delivery or other communication thereof,
          any assertion that the Obligations do not constitute "Senior Debt"
          under the Indenture; and

               (q)  at least ten (10) days prior to the consummation of a
          Permitted Acquisition, such information as the Agent or the Required
          Banks shall reasonably require to demonstrate that the proposed
          acquisition constitutes a Permitted Acquisition for all purposes of
          this Agreement.

               Section 5.2. Books and Records; Inspection and Examination. The
Borrower will keep, and will cause each other Credit Party to keep, accurate
books of record and account for itself pertaining to its business and financial
condition and such other matters as the Agent may from time to time request in
which true and complete entries will be made in accordance with GAAP
consistently applied and, upon request of and reasonable notice by the Agent,
will permit any officer, employee, attorney or accountant for any Bank to audit,
review, make extracts from or copy any and all corporate and financial books and
records of any Credit Party at all reasonable times during ordinary business
hours, to send and discuss with account debtors and other obligors requests for
verification of amounts owed to any

                                       51

<PAGE>

Credit Party, and to discuss the affairs of any Credit Party with any of its
directors, officers, employees or agents. The Borrower will permit any Bank or
its employees, accountants, attorneys or agents, to examine and inspect any
property of any Credit Party at any time during ordinary business hours;
provided, that each Bank will use reasonable efforts to conduct (or have
conducted) any such examination or inspection so as to minimize disruptions to
the operations of such Credit Party.

               Section 5.3. Compliance with Laws. The Borrower will, and will
cause each Credit Party to, (a) comply with the requirements of all applicable
laws and regulations including (but not limited to) all Environmental Laws and
(b) use and keep its assets, and will require that others use and keep its
assets, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance.

               Section 5.4. Payment of Taxes and Other Claims. The Borrower will
pay or discharge, and will cause each other Credit Party to pay or discharge,
when due, (a) all taxes, assessments and governmental charges levied or imposed
upon it or upon its income or profits, upon any properties belonging to it prior
to the date on which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon any properties of a Credit Party; provided, that no Credit Party shall be
required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which such Credit Party has set aside adequate reserves in
accordance with GAAP.

               Section 5.5. Maintenance of Properties. The Borrower will keep
and maintain, and will cause each other Credit Party to keep and maintain, all
of its properties necessary or useful in its business in good condition, repair
and working order (normal wear and tear excepted); provided, however, that
nothing in this Section 5.5 shall prevent a Credit Party from discontinuing the
operation and maintenance of any of its properties if such discontinuance is, in
the reasonable judgment of such Credit Party, desirable in the conduct of such
Credit Party's business and not disadvantageous in any material respect to the
Banks. The Borrower will and will cause each other Credit Party to take all
commercially reasonable steps necessary to protect and maintain its Intellectual
Property Rights. The Borrower will and will cause each other Credit Party to
take all commercially reasonable steps necessary to prosecute any Person
infringing its Intellectual Property Rights and to defend itself against any
Person accusing it of infringing any Person's Intellectual Property Rights.

               Section 5.6. Insurance. The Borrower will obtain and at all times
maintain, and will cause each other Credit Party to obtain and at all times
maintain, insurance with insurers believed by it to be responsible and reputable
in such amounts and against such risks as is usually carried by companies
engaged in similar business and owning similar properties in the same general
areas in which it operates.

               Section 5.7. Preservation of Legal Existence. The Borrower will
preserve and maintain, and will cause each other Credit Party to preserve and
maintain, its legal existence

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<PAGE>

and all of its rights, privileges and franchises necessary or desirable in the
normal conduct of its business and shall conduct its business in an orderly,
efficient and regular manner.

          Section 5.8  Creation of New Credit Parties and Subsidiaries. Except
as required to facilitate a Permitted Acquisition, the Borrower will not create
any Subsidiary, nor will it acquire any business which would constitute a
Subsidiary, without first obtaining the prior written approval of the Required
Banks. The Borrower will cause each new Subsidiary (whether created in
connection with a Permitted Acquisition or otherwise created with the approval
of the Required Banks) to execute and deliver to the Agent, for the benefit of
the Banks, a Guaranty, a Security Agreement and a Trademark Security Agreement,
each in form and content acceptable to the Agent, whereupon such Subsidiary
shall constitute a Credit Party hereunder. In the event that any such Subsidiary
is organized under a jurisdiction other than the United States of America or a
state thereof, the Agent and the Banks will negotiate in good faith with the
Borrower and such Subsidiary to include provisions in such Subsidiary's Guaranty
designed to prevent deemed distributions to the Borrower under Section 956 of
the Code; provided, however, that such provisions shall preserve the maximum
security in such Subsidiary and its assets for the Agent and the Banks possible
in connection with such considerations; provided, further, that neither the
Agent nor any Bank shall be responsible to the Borrower, any Credit Party, any
such Subsidiary or any other Person for the sufficiency of such provisions to
accomplish their stated purpose.

          Section 5.9  Minimum Debt Service Coverage Ratio. As of each Covenant
Computation Date occurring during the period specified in the table below, the
Borrower will maintain the Debt Service Coverage Ratio of the Consolidated Group
at not less than the ratio set forth opposite the applicable period below:

                        Period                                Ratio
                        ------                                -----

          Closing Date through and including              1.05 to 1.00
          January 4, 2004

          January 5, 2004 and thereafter                  1.25 to 1.00

          Section 5.10 Maximum Senior Leverage Ratio. As of each Covenant
Computation Date, the Borrower will maintain the Senior Leverage Ratio of the
Consolidated Group at not more than 2.00 to 1.00.

          Section 5.11 Maximum Total Leverage Ratio. As of each Covenant
Computation Date occurring during the period specified in the table below, the
Borrower will maintain the Total Leverage Ratio of the Consolidated Group at not
more than the ratio set forth opposite the applicable period below:

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<PAGE>

                   Period                                      Ratio
                   ------                                      -----

     Closing Date through and including July               3.25 to 1.00
     13, 2003

     July 14, 2003 and thereafter                          3.00 to 1.00

          Section 5.12. Minimum Tangible Net Worth. As of each Covenant
Computation Date occurring during the period specified in the table below, the
Borrower will maintain the Tangible Net Worth of the Consolidated Group at not
less than the amount set forth opposite the applicable period below:

                   Period                                      Amount
                   ------                                      ------

     Closing Date through and including July                $35,000,000
     13, 2003

     July 14, 2003 through and including                    $40,000,000
     January 4, 2004

     January 5, 2004 through and including                  $50,000,000
     January 2, 2005

     January 3, 2005 and thereafter                         $60,000,000

          Section 5.13  Establishment and Maintenance of Lockbox and Cash
Management Arrangements. Not later than ninety (90) days following the Closing
Date, the Borrower shall have established and thereafter shall maintain lockbox
and cash management arrangements satisfactory to the Agent with one or more
financial institutions satisfactory to the Agent and shall, concurrently with
the establishment thereof, provide documentation satisfactory to the Agent
evidencing such arrangements.

          Section 5.14  Landlord Waivers. Not later than ninety (90) days
following the Closing Date, the Borrower will have obtained and delivered to the
Agent landlord and/or warehouseman lien waivers, as appropriate, for each
location where any Collateral is located that is not owned by a Credit Party,
such waivers to be in form and substance satisfactory to the Agent. After the
expiration of such ninety (90) day period, all otherwise Eligible Inventory
located at any such non-owned location for which an appropriate waiver has not
been obtained will no longer constitute Eligible Inventory and will continue not
to constitute Eligible Inventory unless and until such waiver is obtained.

                                   ARTICLE VI

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<PAGE>

                               NEGATIVE COVENANTS

          So long as any Note or any Letter of Credit shall remain unpaid or
outstanding or any Commitment shall be outstanding, the Borrower will comply
with the following requirements, unless the Required Banks shall otherwise
consent in writing:

          Section 6.1. Liens. The Borrower will not, and will not permit any
other Credit Party to, create, incur or suffer to exist any mortgage, deed of
trust, pledge, lien, security interest, assignment or transfer upon or of any
assets of any Credit Party, now owned or hereafter acquired, to secure any
indebtedness; excluding from the operation of the foregoing (herein "Permitted
Liens"):

          (a)  mortgages, deeds of trust, pledges, liens, security interests and
     assignments in existence on the date hereof and listed in Schedule 6.1
     (including any subsequent extension or renewal of such mortgages, deeds of
     trust, pledges, liens, security interests and assignments to the extent (i)
     the related extension or renewal of the Debt secured thereby is otherwise
     permitted under this Agreement, (ii) the principal amount secured thereby
     is not increased above the amount outstanding immediately prior to such
     extension or renewal, and (iii) the property subject thereto is not
     increased);

          (b)  liens for taxes or assessments or other governmental charges to
     the extent not required to be paid by Section 5.4;

          (c)  materialmen's, merchants', carriers', worker's, repairer's, or
     other like liens arising in the ordinary course of business to the extent
     not required to be paid by Section 5.4;

          (d)  pledges or deposits to secure obligations under worker's
     compensation laws, unemployment insurance and social security laws, or to
     secure the performance of bids, tenders, contracts (other than for the
     repayment of borrowed money) or leases or to secure statutory obligations
     or surety or appeal bonds, or to secure indemnity, performance or other
     similar bonds in the ordinary course of business;

          (e)  zoning restrictions, easements, licenses, restrictions on the use
     of real property or minor irregularities in title thereto, which do not
     materially impair the use of such property in the operation of the business
     of any Credit Party or the value of such property for the purpose of such
     business;

          (f)  liens and security interests granted to the Banks pursuant to any
     of the Security Documents;

          (g)  purchase money mortgages, liens or security interests, including
     conditional sale agreements, capital lease liabilities or other title
     retention agreements and leases which are in the nature of title retention
     agreements, upon or in property

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<PAGE>

     acquired after the date hereof by a Credit Party, or mortgages, liens or
     security interests existing in such property at the time of the acquisition
     thereof, provided that:

               (i)  no such mortgage, lien or security interest extends or shall
          extend to or cover any property of a Credit Party other than the
          property then being acquired; and

               (ii) the aggregate principal amount of the indebtedness secured
          by any such mortgage, lien or security interest shall not exceed the
          cost of such property so acquired in connection therewith;

          (h)  bankers' liens, rights of set off or similar rights as to
     accounts maintained with a financial institution;

          (i)  licenses, leases or subleases granted to other Persons if and to
     the extent such licenses, leases and subleases do not interfere in any
     material respect with the business of any Credit Party or any of their
     respective Subsidiaries and does not diminish the value of, or impair any
     right of the Agent or the Banks in or to any Collateral (as such term is
     defined in the applicable Security Agreement); and

          (j)  liens in addition to those described in Section 6.1(a) through
     (i) securing an aggregate principal Debt amount not at any time exceeding
     $250,000.

          Section 6.2. Indebtedness. The Borrower will not, and will not permit
any other Credit Party to, incur, create, assume, permit or suffer to exist, any
indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money, or any other indebtedness or liability evidenced by notes,
bonds, debentures or similar obligations, except:

          (a)  Obligations arising hereunder;

          (b)  Subordinated Debt; together with any extension, renewal or
     replacement thereof (so long as such indebtedness is not increased above
     the amount outstanding immediately prior to giving effect to any such
     extension, renewal or replacement);

          (c)  indebtedness in existence on the date hereof and listed in
     Schedule 6.2; together with any extension, renewal or replacement thereof
     (so long as such indebtedness is not increased above the amount outstanding
     immediately prior to giving effect to any such extension, renewal or
     replacement);

          (d)  Capital Leases and indebtedness of a Credit Party secured by
     security interests permitted by Section 6.1(g), not to exceed $5,000,000 in
     the aggregate at any time outstanding;

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<PAGE>

          (e)  other indebtedness which, when added to the outstanding principal
     balance of the indebtedness described in subsection (c) above does not
     exceed $2,000,000 in the aggregate at any time outstanding;

          (f)  intercompany loans by and between the Credit Parties; and

          (g)  Permitted Rate Hedging Obligations (whether contingent or
     otherwise).

          Section 6.3. Guaranties. The Borrower will not, and will not permit
any other Credit Party to, assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligations of any other
Person, except:

          (a)  the Guaranties;

          (b)  the endorsement of negotiable instruments for deposit or
     collection or similar transactions in the ordinary course of business; and

          (c)  guaranties, endorsements and other direct or contingent
     liabilities in connection with the obligations of other Persons in
     existence on the date hereof and listed in Schedule 6.3; together with any
     extension, renewal or replacement thereof (so long as such indebtedness is
     not increased above the amount outstanding immediately prior to giving
     effect to any such extension, renewal or replacement).

          Section 6.4. Investments. The Borrower will not, and will not permit
any other Credit Party to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances to, or create or acquire any Subsidiary or make any investment or
acquire any interest whatsoever in, any other Person, except:

          (a)  investments in direct obligations of the United States of America
     or any agency or instrumentality thereof whose obligations constitute the
     full faith and credit obligations of the United States of America having a
     maturity of one (1) year or less, commercial paper issued by a U.S.
     corporation rated "A-1" or "A-2" by Standard & Poors Rating Group or "P-1"
     or "P-2" by Moody's Investors Service, investments in money market mutual
     funds whose underlying assets are exclusively investments which would
     otherwise be permitted investments under this Section 6.4(a), or repurchase
     agreements, certificates of deposit or bankers' acceptances having a
     maturity of one (1) year or less issued by members of the Federal Reserve
     System having deposits in excess of $500,000,000 (which certificates of
     deposit or bankers' acceptances are fully insured by the Federal Deposit
     Insurance Corporation);

          (b)  travel advances or loans to officers and employees of any Credit
     Party not exceeding at any one time an aggregate for all members of the
     Consolidated Group of $100,000;

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<PAGE>

          (c)  advances in the form of progress payments, prepaid rent or
     security deposits;

          (d)  investments by any Credit Party in another Credit Party,
     including intercompany transfers, advances, loans, guarantees or other
     financial accommodations; and

          (e)  investments constituting Permitted Acquisitions.

          Section 6.5. Restricted Payments. The Borrower will not declare or pay
any dividends on any shares of any class of its stock, or directly or indirectly
apply any assets to the redemption, retirement, purchase or other acquisition of
any shares of any class of stock of the Borrower or make any payments or
distributions for any reason to or for the account or benefit of any Affiliate,
except (a) Permitted Distributions, (b) Permitted Management Fee Payments, and
(c) payments owing under transactions with affiliates otherwise permitted by
Section 6.7 hereof.

          Section 6.6 Restrictions on Sale and Issuance of Subsidiary Stock. The
Borrower will not:

          (a)  permit any of its Subsidiaries to issue or sell any shares of any
     class of such Subsidiary's stock to any other Person (other than to the
     Borrower or a wholly-owned Subsidiary of the Borrower); or

          (b)  sell, transfer or otherwise dispose of any shares of any class of
     stock of any of its Subsidiaries to any other Person (except to a wholly
     owned Subsidiary of the Borrower); or

          (c)  permit any of its Subsidiaries to sell, transfer or otherwise
     dispose of any shares of any class of stock of any other Subsidiary of the
     Borrower to any other Person (other than to the Borrower or a wholly-owned
     Subsidiary of the Borrower);

provided, however, that the foregoing shall not otherwise prohibit a Permitted
Acquisition.

          Section 6.7 Transactions With Affiliates. The Borrower will not, and
will not permit any other Credit Party to enter into or be a party to any
transaction with any Affiliate of the Borrower or any such Credit Party that is
not also a Credit Party except in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arms-length transaction with a Person not an Affiliate
of such Credit Party; provided, however, that the foregoing restrictions shall
not prevent any Permitted Distributions or Permitted Management Fee Payments.

          Section 6.8. Sale or Transfer of Assets; Suspension of Business
Operations. The Borrower will not, and will not permit any other Credit Party
to, sell, lease, assign, transfer or otherwise dispose of all or a substantial
part of the assets of the Consolidated

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<PAGE>

Group (other than the sale of Inventory in the ordinary course of business),
whether in one transaction or in a series of transactions, to any other Person
and will not liquidate, dissolve or suspend its business operations. For
purposes of the foregoing, a "substantial part" of the Consolidated Group's
assets shall mean assets in excess of 10% of the book value of the Consolidated
Group's assets, determined in accordance with GAAP.

          Section 6.9.  Consolidation and Merger; Asset Acquisitions. The
Borrower will not, and will not permit any other Credit Party to, consolidate
with or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other Person, except for the
merger of any Credit Party into another Credit Party or any Subsidiary into a
Credit Party; provided that such Credit Party survives as the sole remaining
entity.

          Section 6.10. Sale and Leaseback. The Borrower will not, and will not
permit any other Credit Party to, enter into any arrangement, directly or
indirectly, with any other Person whereby any Credit Party shall sell or
transfer any real or personal property, whether now owned or hereafter acquired,
and then or thereafter rent or lease as lessee such property or any part thereof
or any other property which a Credit Party intends to use for substantially the
same purpose or purposes as the property being sold or transferred; provided,
however, that, the foregoing shall not prohibit the Borrower's sale and
leaseback of certain real and personal property located in Parkersburg, Ohio
with an aggregate fair market value of not more than two million dollars
($2,000,000).

          Section 6.11. Restrictions on Nature of Business. The Borrower will
not, and will not permit any other Credit Party to, engage in any line of
business materially different from that presently engaged in by the Borrower or
any such Credit Party and will not purchase, lease or otherwise acquire assets
not related to its business.

          Section 6.12. Accounting. The Borrower will not, and will not permit
any other Credit Party to, adopt any material change in accounting principles,
other than as required by GAAP, and will not adopt, permit or consent to any
change in its fiscal year.

          Section 6.13. Capital Expenditures. The Borrower will not, and will
not permit any other Credit Party to, make Capital Expenditures during any
fiscal year of the Borrower in an aggregate amount (for the entire Consolidated
Group) in excess of the Capital Expenditures Threshold; provided, however, that
no such Capital Expenditures shall be permitted to the extent they would result
in a failure of the Borrower to comply with any Financial Covenant or any other
covenant or agreement of the Borrower hereunder.

          Section 6.14. Hazardous Substances. The Borrower will not cause or
permit, and will not permit any other Credit Party to cause or permit, any
Hazardous Substances to be disposed of in any manner which might result in any
material liability to any Credit Party on, under or at any real property which
is operated by any Credit Party or in which any Credit Party has any interest.

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<PAGE>

           Section 6.15. Subordinated Debt. The Borrower will not, and will not
permit any other Credit Party to, issue any Subordinated Debt without first
obtaining the prior written consent of the Required Banks (it being understood
that any Subordinated Debt for which a Subordination Agreement has been
delivered on and as of the Closing Date shall be deemed permitted by the
Required Banks without further action of the Required Banks) and, if obtained,
shall not (i) make any payment of any principal, interest or fees due under or
acquire any Subordinated Debt in violation of the Subordination Agreement
related thereto, (ii) give security for all or any part of any Subordinated
Debt, (iii) take any action whereby the subordination of any Subordinated Debt
or any part thereof to the Obligations might be terminated, impaired or
adversely affected, (iv) omit to give the Agent prompt written notice of any
default under any Subordinated Debt by reason whereof any Subordinated Debt
might become or be declared to be immediately due and payable, (v) make any
payment in respect of Subordinated Debt other than regularly scheduled principal
or interest payments, (vi) make any payment of any kind in respect of
Subordinated Debt if, after giving effect thereto, such payment would violate
the terms of the Credit Agreement or the Indenture, or (vii) purchase or
otherwise acquire any Subordinated Debt (including, without limitation, any
acquisition of Subordinated Debt pursuant to a Change of Control Offer (as
defined in the Indenture)).

           Section 6.16 Amendment of Indenture and Consulting Agreement. The
Borrower will not and will not permit any other Credit Party or any Subsidiary
of the Borrower or any other Credit Party to:

           (a)  amend, supplement or otherwise modify the Indenture such that
      (i) the Obligations fail to constitute Senior Debt (as defined in the
      Indenture) for all purposes of the Indenture, or (ii) the subordination
      provisions contained therein are otherwise amended to the detriment of the
      Agent or any Bank; or

           (b)  amend, supplement or otherwise modify the Consulting Agreement
      if a Default or Event of Default has occurred and is then continuing or,
      at any time, amend, supplement or otherwise modify the Consulting
      Agreement such that amounts payable by any one or more of the Credit
      Parties thereunder increases by more than 10% per annum.

                                   ARTICLE VII

                     EVENTS OF DEFAULT; RIGHTS AND REMEDIES

           Section 7.1. Events of Default. "Event of Default", wherever used
herein, means any one of the following events:

           (a)  default in the payment of any principal of any Note when it
      becomes due and payable, including, without limitation, any such payment
      becoming due and payable under Section 2.15(c); or

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<PAGE>

               (b)  default in the payment of any interest on any Note or in the
          payment of any fees, costs or expenses required to be paid by the
          Borrower under any Loan Document and the continuation of such default
          for more than three (3) Business Days; or

               (c)  default in the performance, or breach, of Section 5.1, any
          Financial Covenant or any covenant or agreement on the part of the
          Borrower contained in Article VI; or

               (d)  the Obligations or any portion thereof shall cease to
          constitute "Senior Debt" for all purposes of the Indenture or shall
          otherwise cease to have the benefit of the subordination provisions in
          Article 10 of the Indenture; or

               (e)  default in the performance, or breach, of any covenant or
          agreement of the Borrower in this Agreement (other than a covenant or
          agreement a default in whose performance or whose breach is elsewhere
          in this Section 7.1 specifically dealt with) or default in the
          performance, or breach, of any covenant or agreement of any Credit
          Party in any other Loan Document and the continuance of such default
          or breach for a period of thirty (30) calendar days after the Borrower
          or any such Credit Party has or should reasonably have had notice
          thereof; or

               (f)  any Credit Party shall be or become insolvent, or admit in
          writing its inability to pay its debts as they mature, or make an
          assignment for the benefit of creditors; or any Credit Party shall
          apply for or consent to the appointment of any receiver, trustee, or
          similar officer for it or for all or any substantial part of its
          property; or such receiver, trustee or similar officer shall be
          appointed without the application or consent of such Credit Party; or
          any Credit Party shall institute (by petition, application, answer,
          consent or otherwise) any insolvency, reorganization, arrangement,
          readjustment of debt, dissolution, liquidation or similar proceeding
          relating to it under the laws of any jurisdiction; or any such
          proceeding shall be instituted (by petition, application or otherwise)
          against such Credit Party; or any judgment, writ, warrant of
          attachment or execution or similar process shall be issued or levied
          against a substantial part of the property of an Credit Party and such
          judgment, writ, or similar process shall not be released, vacated or
          fully bonded within sixty (60) calendar days after its issue or levy;
          or

               (g)  a petition naming any Credit Party as debtor shall be filed
          under the United States Bankruptcy Code; or

               (h)  any representation or warranty made by any Credit Party in
          any Loan Document or by the Borrower (or any of its officers) in any
          request for a Borrowing, or in any other certificate, instrument, or
          statement contemplated by or made or delivered pursuant to or in
          connection with any Loan Document, shall prove to have been incorrect
          in any material respect when made; or

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<PAGE>

               (i)  the rendering against any Credit Party of a final judgment,
          decree or order for the payment of money in excess of $2,000,000
          (unless the payment of such judgment is fully insured) and the
          continuance of such judgment, decree or order unsatisfied and in
          effect for any period of thirty (30) consecutive calendar days without
          a stay of execution; or

               (j)  a writ of attachment, garnishment, levy or similar process
          shall be issued against or served on the Agent or any Bank with
          respect to (i) any property of any Credit Party in the possession of
          the Agent or any such Bank, or (ii) any indebtedness of the Agent or
          any such Bank to any Credit Party; or

               (k)  a default shall occur under the Indenture and any applicable
          period of grace, if any, specified therein shall expire; or

               (l)  a default under any material credit agreement, security
          agreement, mortgage or deed of trust, bond, debenture, note,
          securitization agreement or other evidence of indebtedness or similar
          obligation of any Credit Party or under any indenture or other
          instrument under which any such evidence of indebtedness or similar
          obligation has been issued or by which it is governed (other than one
          for which a default in the performance thereof or whose breach is
          elsewhere in this Section 7.1 specifically dealt with) and the
          expiration of the applicable period of grace, if any, specified in
          such evidence of indebtedness, indenture or other instrument; or

               (m)  any Guarantor shall attempt to reject, terminate or rescind
          its Guaranty or shall contest in any manner the validity, binding
          nature or enforceability of its Guaranty; or

               (n)  any Reportable Event, which the Agent or the Required Banks
          determine in good faith may constitute grounds for the termination of
          any Pension Plan or for the appointment by the appropriate United
          States District Court of a trustee to administer any Pension Plan,
          shall have occurred and be continuing thirty (30) days after written
          notice to such effect shall have been given to the Borrower by the
          Agent; or a trustee shall have been appointed by an appropriate United
          States District Court to administer any Pension Plan; or the Pension
          Benefit Guaranty Corporation shall have instituted proceedings to
          terminate any Pension Plan or to appoint a trustee to administer any
          Pension Plan; or the Borrower, any other Credit Party or any of their
          respective ERISA Affiliates shall have filed for a distress
          termination of any Pension Plan under Title IV of ERISA; or the
          Borrower, any other Credit Party or any of their respective ERISA
          Affiliates shall have failed to make any quarterly contribution
          required with respect to any Pension Plan under Section 412(m) of the
          Code, which the Agent or the Required Banks determine in good faith
          may by itself, or in combination with any such failures that the Agent
          or the Required Banks may determine are likely to occur in the future,
          result in the imposition of a lien on the Borrower's or any other
          Credit Party's assets in favor of the Pension Plan;

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<PAGE>

          or any withdrawal, partial withdrawal, reorganization or other event
          occurs with respect to a Multiemployer Plan which results or could
          reasonably be expected to result in a material liability of the
          Borrower or any other Credit Party to the Multiemployer Plan under
          Title IV of ERISA; or

               (o)  any Credit Party shall liquidate, dissolve, terminate or
          suspend its business operations or otherwise fail to operate its
          business in the ordinary course, or shall sell all or substantially
          all of its assets, unless such Credit Party is merged into, or its
          business becomes part of, another Credit Party; or

               (p)  any Change of Control shall occur.

               Section 7.2. Rights and Remedies. Upon the occurrence of an Event
of Default or at any time thereafter until such Event of Default is cured or
waived to the written satisfaction of the Required Banks, the Agent or the
Required Banks may (and, upon written request of the Required Banks the Agent
shall) exercise any or all of the following rights and remedies:

               (a)  by notice to the Borrower, declare the Commitments to be
          terminated, whereupon the same shall forthwith terminate;

               (b)  by notice to the Borrower, declare the entire unpaid
          principal amount of the Notes, all interest accrued and unpaid
          thereon, and all other amounts payable under this Agreement to be
          forthwith due and payable, whereupon the Notes, all such accrued
          interest and all such amounts shall become and be forthwith due and
          payable, without presentment, demand, protest or further notice of any
          kind, all of which are hereby expressly waived by the Borrower;

               (c)  by notice to the Borrower, demand payment by the Borrower of
          funds with respect to each outstanding Letter of Credit in an amount
          sufficient to fund a cash escrow equal to the Letter of Credit Amount,
          which cash escrow will be held by the Agent (or its designee), without
          interest, as a pledged cash collateral account and applied to
          reimbursement of all drafts submitted under outstanding Letters of
          Credit;

               (d)  without notice to the Borrower and without further action,
          apply any and all monies owing by any Bank to any Credit Party to the
          payment of the Notes, including interest accrued thereon, and of all
          other Obligations then owing by the Borrower hereunder;

               (e)  exercise and enforce the rights and remedies available to
          the Banks under any Loan Document;

               (f)  exercise any other rights and remedies available to any Bank
          by law or agreement.

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Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(f), (g) or (j) the entire unpaid principal amount of
the Notes, all interest accrued and unpaid thereon, and all other amounts
payable under this Agreement shall be immediately due and payable without
presentment, demand, protest or notice of any kind.

                                  ARTICLE VIII

                         AGREEMENT AMONG BANKS AND AGENT

               Section 8.1. Authorization; Powers; Agent for Collateral
Purposes. Each Bank irrevocably appoints and authorizes the Agent to act as
administrative agent for and on behalf of such Bank to the extent provided
herein, in any Loan Documents or in any other document or instrument delivered
hereunder or in connection herewith, and to take such other actions as may be
reasonably incidental thereto. The Agent agrees to act as administrative agent
for each Bank upon the express conditions contained in this Article VIII, but in
no event shall the Agent constitute a fiduciary of any Bank, nor shall the Agent
have any fiduciary responsibilities in respect of any Bank. In furtherance of
the foregoing, and not in limitation thereof, each Bank irrevocably (a)
authorizes the Agent to execute and deliver and perform those obligations under
each of the Loan Documents to which the Agent is a party as are specifically
delegated to the Agent, and to exercise all rights, powers and remedies as may
be specifically delegated hereunder or thereunder, together with such additional
powers as may be reasonably incidental thereto, (b) appoints the Agent as
nominal beneficiary or nominal secured party, as the case may be, under the Loan
Documents and all related UCC financing statements, and (c) authorizes the Agent
to act as collateral agent of and for such Bank for purposes of holding,
perfecting and disposing of Collateral under the Loan Documents. As to any
matters not expressly provided for by the Loan Documents, the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Banks or, if so
required pursuant to Section 9.2, upon the instructions of all Banks; provided,
however, that except for action expressly required of the Agent hereunder, the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action, and the Agent shall not in any
event be required to take any action which is contrary to the Loan Documents or
applicable law.

               Section 8.2. Application of Proceeds. The Agent, after deduction
of any costs of collection, as provided in Section 8.5, shall remit to each Bank
(to the extent a Bank is to share therein) that Bank's pro rata share of all
payments of principal, interest and fees payable hereunder in accordance with
such Bank's appropriate Percentage with respect to the Facility under which such
payments are received; provided, however, that all payments received after the
occurrence of an Event of Default, after application to the costs and expenses
incurred by the Agent or any Bank in collection thereof (as contemplated in
Section 8.5), shall be allocated to the Banks in accordance with their Default
Percentages. Notwithstanding anything to the contrary in this Agreement or any
other Loan Document (i)

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all payments received by the Agent or any Bank prior to the occurrence of an
Event of Default in respect of Permitted Rate Hedging Obligations shall be
remitted directly to LaSalle and no other Bank shall be entitled to any portion
thereof, and (ii) all payments received by the Agent or any Bank on and after
the occurrence of an Event of Default shall constitute payment on the
Obligations, with each Bank entitled to their respective Default Percentage
thereof. Each Bank's interest under the Loan Documents shall be payable solely
from payments, collections and proceeds actually received by the Agent under the
Loan Documents; and the Agent's only liability to a Bank with respect to any
such payments, collections and proceeds shall be to account for such Bank's
Percentage (or Default Percentage, as the case may be) of such payments,
collections and proceeds in accordance with this Agreement. If the Agent is
required for any reason to refund any such payments, collections or proceeds,
each Bank will refund to the Agent, upon demand, its Percentage (or Default
Percentage, as the case may be) of such payments, collections or proceeds,
together with its Percentage (or Default Percentage, as the case may be) of
interest or penalties, if any, payable by the Agent in connection with such
refund. If any Bank has wrongfully refused to fund its Percentage of any
Borrowing, or if the outstanding principal balance of the Advances made by any
Bank under a Facility is for any other reason less than its respective
Percentage of the aggregate principal balance of all Advances under that
Facility, the Agent may remit payments received by it to the other Banks until
such payments have reduced the aggregate amounts owed by the Borrower to the
extent that the aggregate amount of the Advances owing to such Bank hereunder
are equal to its Percentage of the aggregate amounts of the Advances owing under
the applicable Facility to all of the Banks hereunder. The foregoing provision
is intended only to set forth certain rules for the application of payments,
proceeds and collections in the event that a Bank has breached its obligations
hereunder and shall not be deemed to excuse any Bank from such obligations.

               Section 8.3. Exculpation. The Agent shall not be liable for any
action taken or omitted to be taken by the Agent in connection with the Loan
Documents, except for its own gross negligence or willful misconduct. The Agent
shall be entitled to rely upon advice of counsel concerning legal matters, the
advice of independent public accountants with respect to accounting matters and
advice of other experts as to any other matters and upon any Loan Document and
any schedule, certificate, statement, report, notice or other writing which it
reasonably believes to be genuine or to have been presented by a proper Person.
Neither the Agent nor any of its directors, officers, employees or agents shall
be responsible or in any way liable for (a) any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of any Loan Document, or any other instrument or
document delivered hereunder or in connection herewith, (b) the validity,
genuineness, perfection, effectiveness, enforceability, existence, value or
enforcement of any Collateral or (c) any action taken or omitted by it. The
designation of LaSalle Bank as administrative agent hereunder shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, LaSalle Bank in its individual capacity as a Bank hereunder.

               Section 8.4. Use of the Term "Agent". The term "Agent" is used
herein in reference to the Agent merely as a matter of custom. It is intended to
reflect only an

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administrative relationship between the Agent and the Banks as an independent
contracting party. However, the obligations of the Agent shall be limited to
those expressly set forth herein and in no event shall the use of such term
create or imply any fiduciary relationship or any other obligation arising under
the general law of agency.

               Section 8.5. Reimbursement for Costs and Expenses. All payments,
collections and proceeds received or effected by the Agent may be applied first
to pay or reimburse the Agent for all reasonable costs and expenses at any time
incurred by or imposed upon the Agent in connection with this Agreement or any
other Loan Document (including but not limited to all reasonable attorney's fees
(including allocated costs of in-house counsel), foreclosure expenses and
advances made to protect the security of any Collateral, but excluding any
costs, expenses, damages or liabilities arising from the gross negligence or
willful misconduct of the Agent. If the Agent does not receive payments,
collections or proceeds sufficient to cover any such costs and expenses within
five (5) days after their incurrence or imposition, each Bank shall, upon
demand, remit to the Agent such Bank's Default Percentage of the difference
between (i) such costs and expenses and (ii) such payments, collections and
proceeds, together with interest on such amount for each day following the
thirtieth day after demand therefor until so remitted at a rate equal to the
Federal Funds Rate for each such day.

               Section 8.6. Payments Received Directly by Banks. If any Bank
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of any Facility or on account of
any fees under this Agreement (other than through distributions made in
accordance with Section 8.2 hereof) in excess of such Bank's applicable
Percentage with respect to such Facility (or such Bank's Default Percentage, if
applicable), such Bank shall promptly give notice of such fact to the Agent and
shall promptly remit to the Agent such amount as shall be necessary to cause the
remitting Bank to share such excess payment or other recovery ratably with each
of the Banks in accordance with their respective Percentages, (or Default
Percentages, as the case may be) together with interest for each day on such
amount until so remitted at a rate equal to the Federal Funds Rate for each such
day; provided, however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such remitting Bank or holder, the
remittance shall be restored to the extent of such recovery.

               Section 8.7. Indemnification. Each Bank severally (but not
jointly) hereby agrees to indemnify and hold harmless the Agent, as well as the
Agent's employees, officers and directors, ratably according to their respective
Default Percentages from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgment, demands, damages, costs,
disbursements, or expenses (including attorneys' fees and expenses) (including
allocated costs of in-house counsel)) of any kind or nature whatsoever, which
are imposed on, incurred by, or asserted against the Agent's employees, officers
or directors in any way relating to or arising out of the Loan Documents, or as
a result of any action taken or omitted to be taken by the Agent; provided,
however, that no Bank shall be liable for any portion of any such losses,
liabilities (including liabilities for penalties), actions, suits, judgments,
demands, damages, costs disbursements, or expenses resulting

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from the gross negligence or willful misconduct of the Agent. Notwithstanding
any other provision of the Loan Documents, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall be indemnified
to its satisfaction by the Banks against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.

               Section 8.8.  Agent and Affiliates. LaSalle Bank shall have the
same rights and powers in its capacity as Bank hereunder as any other Bank, and
may exercise or refrain from exercising the same as though it were not the Agent
hereunder and LaSalle Bank and its affiliates may accept deposits from and
generally engage in any kind of business with any Credit Party or any Affiliate
of any Credit Party as fully as if LaSalle Bank were not the Agent hereunder.

               Section 8.9.  Credit Investigation. Each Bank acknowledges that
it has made such inquiries and taken such care on its own behalf as would have
been the case had its Commitments been granted and its Advances made directly by
such Bank to the Borrower without the intervention of the Agent or any other
Bank. Each Bank agrees and acknowledges that neither the Agent nor any other
Bank makes any representations or warranties about the creditworthiness of any
Credit Party or any other party to this Agreement or with respect to the
legality, validity, sufficiency or enforceability of this Agreement, any Loan
Document, any Collateral or any other instrument or document delivered hereunder
or in connection herewith.

               Section 8.10. Defaults. The Agent shall have no duty to inquire
into any performance or failure to perform by the Borrower and shall not be
deemed to have knowledge of the occurrence of a Default or an Event of Default
(other than under Sections 7.1(a) or 7.1(b)) hereof unless the Agent has
received notice from a Bank or the Borrower specifying the occurrence of such
Default or Event of Default. In the event that the Agent receives such a notice
of the occurrence of a Default or an Event of Default, the Agent shall give
prompt notice thereof to the Banks. In the event of any Default, the Agent shall
(subject to Section 8.7 hereof) (a) in the case of a Default that constitutes an
Event of Default, not take any the actions referred to in Section 7.2(b) hereof
unless so directed by the Required Banks, and (b) in the case of any Default,
take such actions with respect to such Default as shall be directed by the
Required Banks; provided that, unless and until the Agent shall have received
such directions, the Agent may take any action, or refrain from taking any
action, with respect to such Default of Event of Default as it shall deem
advisable in the best interest of the Banks.

               Section 8.11. Obligations Several. The obligations of each Bank
hereunder are the several obligations of such Bank, and neither any Bank nor the
Agent shall be responsible for the obligations of any other Bank hereunder, nor
will the failure by the Agent or any Bank to perform any of its obligations
hereunder relieve the Agent or any other Bank from the performance of its
respective obligations hereunder. Nothing contained in this Agreement, and no
action taken by any Bank or the Agent pursuant hereto or in connection herewith
or pursuant to or in connection with the Loan Documents shall be deemed to

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constitute the Banks, together or with or without the Agent, as a partnership,
association, joint venture, or other entity.

               Section 8.12. Sale or Assignment; Addition of Banks. Except as
permitted under the terms and conditions of this Section 8.12 or, with respect
to participations, under Section 8.13, no Bank may sell, assign or transfer its
rights or obligations under this Agreement or its interest in any Note. Any
Bank, with the prior written consent of the Agent and, so long as no Event of
Default shall then have occurred and be continuing, the Borrower (which consent
neither the Agent nor the Borrower will unreasonably withhold), may assign all
or a portion (provided such portion is not less than $5,000,000) of such Bank's
Notes, Advances, and Commitments to a domestic or foreign bank (having a branch
office in the United States), an insurance company or other financial
institution (an "Applicant") on any date (the "Adjustment Date") selected by
such Bank. Upon receipt of such approval and to confirm the status of each
additional Bank as a party to this Agreement and to evidence the assignment in
accordance herewith:

               (a)  the Agent, the Borrower, the assigning Bank and such
          Applicant shall, on or before the Adjustment Date, execute and deliver
          to the Agent an Assignment Certificate in substantially the form of
          Exhibit K (an "Assignment Certificate");

               (b)  the Borrower will execute and deliver to the Agent, for
          delivery by the Agent in accordance with the terms of the Assignment
          Certificate, (i) new Notes payable to the order of the Applicant in
          amounts corresponding to the applicable Commitments acquired by such
          Applicant and (ii) new Notes payable to the order of the assigning
          Bank in amounts corresponding to the retained Commitments. Such new
          Notes shall be in an aggregate principal amount equal to the aggregate
          principal amount of the Notes to be replaced by such new Notes, shall
          be dated the effective date of such assignment and shall otherwise be
          in the form of the Notes to be replaced thereby. Such new Notes shall
          be issued in substitution for, but not in satisfaction or payment of,
          the Notes being replaced thereby and such new Notes shall be treated
          as Notes for purposes of this Agreement; and

               (c)  the assigning Bank shall pay to the Agent an administrative
          fee of $3,500.

Upon the execution and delivery of such Assignment Certificate and such new
Notes, and effective as of the effective date thereof (i) this Agreement shall
be deemed to be amended to the extent, and only to the extent, necessary to
reflect the addition of such additional Bank and the resulting adjustment of the
Percentages arising therefrom, (ii) the assigning Bank shall be relieved of all
obligations hereunder to the extent of the reduction of the assigning Bank's
Percentages, and (iii) the Applicant shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other Loan Document or other document or instrument executed pursuant
hereto and subject to all obligations of a Bank hereunder, including, without
limitation, the right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the

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Required Banks or all Banks. In order to facilitate the addition of additional
Banks hereto, the Borrower (with respect to itself and with respect to each
other Credit Party) and the Banks shall cooperate fully with the Agent in
connection therewith and shall provide all reasonable assistance requested by
the Agent relating thereto, including, without limitation, the furnishing of
such written materials and financial information regarding the Credit Parties as
the Agent may reasonably request, the execution of such documents as the Agent
may reasonably request with respect thereto, and the participation by officers
of the Borrower and the Banks in a meeting or teleconference call with any
Applicant upon the request of the Agent.

               Section 8.13. Participation. In addition to the rights granted in
Section 8.12, each Bank may grant participations in all or a portion of its
Notes, Advances and Commitments to any domestic or foreign commercial bank
(having a branch office in the United States), insurance company, financial
institution or an affiliate of such Bank. No holder of any such participation
shall be entitled to require any Bank to take or omit to take any action
hereunder. The Banks shall not, as among the Borrower, the Agent and the Banks,
be relieved of any of their respective obligations hereunder as a result of any
such granting of a participation. The Borrower hereby acknowledges and agrees
that any participant described in this Section 8.13 may rely upon, and possess
all rights under, any opinions, certificates, or other instruments or documents
delivered under or in connection with any Loan Document. Except as set forth in
this Section 8.13, no Bank may grant any participation in the Notes, Advances or
Commitments.

               Section 8.14. Withholding Tax Exemption. At least five (5)
Business Days prior to the first date on which interest or fees are payable
hereunder for the account of any Bank, each Bank that is not incorporated under
the laws of the United States of America, or a state thereof, agrees that it
will deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form W8ECI or W8BEN, certifying in either
case that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form W8ECI or W8BEN further undertakes to
deliver to each of the Borrower and the Agent two additional copies of such form
(or a successor form) on or before the date that such form expires (currently,
three successive calendar years for Form W8ECI and one calendar year for Form
W8BEN) or becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Agent, in each case certifying that such Bank is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank advises the
Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.

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<PAGE>

               Section 8.15. Borrower not a Beneficiary or Party. Except with
respect to the limitation of liability applicable to the Banks under Section
8.11, and the Borrower's duties and obligations owing to the Agent and the Banks
under Sections 8.12 and 8.13, the provisions and agreements in this Article VIII
are solely among the Banks and the Agent and the Borrower shall not be
considered a party thereto or a beneficiary thereof.

                                   ARTICLE IX

                                  MISCELLANEOUS

               Section 9.1.  No Waiver; Cumulative Remedies. No failure or delay
on the part of the Agent or any Bank in exercising any right, power or remedy
under the Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.

               Section 9.2.  Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be effective unless the
same shall be in writing and signed by the Required Banks and, if the rights or
duties of the Agent, the Swingline Bank or Letter of Credit Bank are affected
thereby, by the Agent, the Swingline Bank or the Letter of Credit Bank, as the
case may be; provided, however, that no amendment, modification, termination,
waiver or consent shall do any of the following unless the same shall be in
writing and signed by the Agent and each Bank affected thereby (and, as to
clauses (e), (f), (g) and (h) hereof, all Banks shall be deemed affected): (a)
change the amount of any Commitment (except as permitted in accordance with
Section 8.12), (b) increase any Commitment Amount, (c) reduce the amount of any
principal of or interest due on any Advances, the Commitment Fees or any Letter
of Credit Fees payable to a Bank hereunder, (d) postpone any date fixed for any
payment of principal of or interest on any outstanding Advances or the
Commitment Fees or Letter of Credit Fees payable to a Bank hereunder, (e) change
the definition of "Required Banks," (f) amend this Section 9.2 or any other
provision of this Agreement requiring the consent or other action of the
Required Banks or any particular Bank, (g) release any Guaranty or (h) release,
subordinate or terminate any security interest in or mortgage lien on any
Collateral if the fair market value of all Collateral so affected during any
calendar year exceeds $1,000,000 in the aggregate. Any waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.

               Section 9.3.  Addresses for Notices, Etc. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
mailed or delivered to the applicable parties at their respective addresses set
forth on the execution pages hereto, or as to each party, at such

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<PAGE>

other address as shall be designated by such party in a written notice to the
other party complying as to delivery with the terms of this Section 9.3. All
such notices, requests, demands and other communications, when delivered, shall
be effective upon actual delivery and when mailed, shall be effective one
Business Day after the date sent by nationally recognized overnight mail courier
or delivery service, addressed as aforesaid, except that notices or requests to
the Agent or any Bank pursuant to any of the provisions of Article II shall not
be effective until received by the Agent or such Bank.

               Section 9.4.  Costs and Expenses. The Borrower will reimburse the
Agent for (a) any and all reasonable out-of-pocket costs and expenses, including
without limitation attorneys' fees and expenses (including allocated costs of
in-house counsel), lien and UCC searches, title and recording expenses and other
similar expenses, environmental audit, appraisal and other underwriting related
expenses, paid or incurred by the Agent in connection with the preparation,
filing or recording of the Loan Documents, the syndication of loans under this
Agreement and any other document or agreement related hereto or thereto, and the
transactions contemplated hereby (which amount shall be paid on the Closing Date
or as soon thereafter as demand is made therefor) and the negotiation of any
amendments, modifications or extensions to or of any of the foregoing documents,
instruments or agreements and the preparation of any and all documents necessary
or desirable to effect such amendments, modifications or extensions, (b)
customary transaction fees of the Agent incurred in connection with the loans
contemplated hereby, (c) reasonable fees in connection with any audits or
inspections by the Agent of any Collateral or the operations or business of the
Borrower or any other Credit Party, whether conducted at the Borrower's
premises, any other Credit Party's premises or at the Agent's premises (subject
to the limitations imposed in Section 2.13(c)), and (d) any and all other
reasonable out-of-pocket costs and expenses incurred by the Agent in connection
with any of the transactions contemplated hereby. In addition to the foregoing,
the Borrower will reimburse the Agent and each Bank for any and all costs and
expenses incurred by the Agent or any Bank in connection with the enforcement of
any of the rights or remedies of the Agent or the Banks under any of the Loan
Documents or under applicable law, whether or not suit is filed with respect
thereto.

               Section 9.5.  Indemnity. In addition to the payment of expenses
pursuant to Section 9.4, the Borrower agrees to indemnify, defend and hold
harmless the Agent, each Bank and each of their respective participants, parent
corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees and
Agent (the "Indemnitees"), from and against (i) any claim, loss or damage to
which any Indemnitee may be subjected as a result of any past, present or future
existence, use, handling, storage, transportation or disposal of any Hazardous
Substance by any Credit Party or with respect to any property owned, leased or
controlled by any Credit Party, (ii) any and all transfer taxes, documentary
taxes, assessments or charges made by any governmental authority (excluding
income or gross receipts taxes) by reason of the execution and delivery of this
Agreement and the other Loan Documents or the making of any Advances and (iii)
any and all liabilities, losses, damages, penalties, judgments, suits, claims,
costs and expenses of any kind or nature whatsoever (including, without
limitation, the reasonable fees

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<PAGE>

and disbursements of counsel) in connection with any investigative,
administrative or judicial proceedings, whether or not such Indemnitee shall be
designated a party thereto, which may be imposed on, incurred by or asserted
against such Indemnitee, in any manner relating to or arising out of or in
connection with, the making of any Advances or entering into this Agreement or
any other Loan Documents or the use or intended use of the proceeds of the
Advances, excepting, however, from the foregoing any such liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses resulting from
the willful misconduct or gross negligence of any Indemnitee. If any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon request of such Indemnitee,
the Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrower's sole cost and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrower shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities contemplated hereby which is permissible under applicable law. The
obligations of the Borrower under this Section 9.5 shall survive termination of
this Agreement and the discharge of the Obligations.

               Section 9.6.  Execution in Counterparts. This Agreement and other
Loan Documents may be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.

               Section 9.7.  Governing Law; Jurisdiction; Waiver of Jury Trial.

               (a)  Governing Law. The Loan Documents shall be governed by, and
          construed in accordance with, the laws of the State of Minnesota
          (other than its conflicts of laws rules), except to the extent the law
          of any other jurisdiction applies as to the perfection or enforcement
          of the Banks' security interest in or lien on any Collateral and
          except to the extent expressly provided to the contrary in any Loan
          Document.

               (b)  Jurisdiction. The Borrower hereby irrevocably submits to the
          jurisdiction of any state or federal court sitting in Minneapolis or
          St. Paul, Minnesota in any action or proceeding arising out of or
          relating to this Agreement or any of the other Loan Documents, and the
          Borrower hereby irrevocably agrees that all claims in respect of such
          action or proceeding may be heard and determined in such state or
          federal court. The Borrower hereby irrevocably waives, to the fullest
          extent it may effectively do so, the defense of an inconvenient forum
          to the maintenance of such action or proceeding. The Borrower
          irrevocably consents to the service of copies of the summons and
          complaint and any other process which may be served in any such action
          or proceeding by the mailing of copies of such process to the Borrower
          at its addresses specified in Section 9.3 above. The Borrower agrees
          that a final judgment

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          in any such action or proceeding may be enforced in other
          jurisdictions by suit on the judgment or in any other manner provided
          by law. Nothing in this Section 9.7(b) shall affect the right of the
          Agent or any Bank to serve legal process in any other manner permitted
          by law or affect the right of the Agent or any Bank to bring any
          action or proceeding against the Borrower or their property in the
          courts of other jurisdictions.

               (c)  WAIVER OF JURY TRIAL. THE BORROWER AND THE BANKS HEREBY
          IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
          OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY
          INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

               Section 9.8.  Integration; Inconsistency. This Agreement,
together with the Loan Documents, comprise the final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to such subject matter, superseding all prior oral or written
understandings. If any provision of a Loan Document is inconsistent with or
conflicts with a comparable or similar provision appearing in this Agreement,
the comparable or similar provision in this Agreement shall govern.

               Section 9.9.  Agreement Effectiveness. This Agreement shall
become effective upon delivery of fully executed counterparts hereof to each of
the parties hereto.

               Section 9.10. Advice from Independent Counsel. The parties hereto
understand that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and that it is satisfied with its legal counsel
and the advice received from it.

               Section 9.11. Judicial Interpretation. Should any provision of
this Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any person by reason of the rule
of construction that a document is to be construed more strictly against the
person who itself through its agent prepared the same, it being agreed that all
parties hereto have participated in the preparation of this Agreement.

               Section 9.12. Binding Effect; No Assignment by Borrower. This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Banks, the Agent and their respective successors and assigns; provided, except
that the Borrower may not assign any or all of its rights or obligations
hereunder or any of its interest herein without the prior written consent of all
Banks.

               Section 9.13. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

                                       73

<PAGE>

               Section 9.14. Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

               Section 9.15  Counterparts. This Agreement and the other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts of this Agreement or such other Loan Document, as the case may be,
taken together, shall constitute but one and the same instrument.

                            [Signature Pages Follow]

                                       74

<PAGE>

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

Address:                                       LUIGINO'S, INC.

525 Lake Avenue South                          By /s/ Thomas W. Knuesel
Duluth, Minnesota 55802                          -------------------------------
Attn: Thomas W. Knuesel, Chief Financial         Name  Thomas W. Knuesel
Officer                                               --------------------------
Telecopy No. (218) 723-5434                      Title  Chief Financial Officer
                                                      --------------------------

                   [Signature Page 1 of 5 to Credit Agreement]

<PAGE>

Address:                                  LASALLE BANK NATIONAL
50 South Sixth Street                     ASSOCIATION, as Bank, Letter of Credit
Suite 1400                                Bank, Swingline Bank and Agent
Minneapolis, Minnesota 55402
Attn: Division Manager                    By /s/ John D. Gatzlaff
     -------------------------              ----------------------------------
Telecopy No. (612) 752-9881                 Name  John D. Gatzlaff
                                                 -----------------------------
                                            Title Senior Vice President
                                                 -----------------------------

Revolving Commitment:                     $10,833,333.33
Revolving Percentage:                       33.333333333%
Swingline Commitment:                     $5,000,000
Swingline Percentage:                      100%
Term Commitment:                          $14,166,666.67
Term Percentage:                            33.333333333%

                   [Signature Page 2 of 5 to Credit Agreement]

<PAGE>

Address:                                   U.S. BANK NATIONAL ASSOCIATION
BC-MN-H03P
800 Nicollet Mall
Minneapolis, Minnesota 55402-7020
Attn: Brent D. Krambeck, Commercial        By /s/ Brent D. Krambeck
           Banking Officer                   ---------------------------------
Telecopy No. 612-303-3788                     Name  Brent D. Krambeck
                                                   ---------------------------
                                              Title Commercial Banking Officer
                                                   ---------------------------

Revolving Commitment:                      $9,750,000
Revolving Percentage:                      30%
Term Commitment:                           $12,750,000
Term Percentage:                           30%

                   [Signature Page 3 of 5 to Credit Agreement]

<PAGE>

Address:                                    NATIONAL CITY BANK OF
One North Franklin                          MICHIGAN/ILLINOIS
Suite 3600
Chicago, Illinois 60606
Attn: Steve Green                           By /s/ Stephen E. Green
     ---------------------                     ------------------------------
Telecopy No. (312)240-0301                    Name Stephen E. Green
                                                   --------------------------
                                              Title Vice President
                                                   --------------------------

Revolving Commitment:                       $6,500,000
Revolving Percentage:                       20%
Term Commitment:                            $8,500,000
Term Percentage:                            20%

                   [Signature Page 4 of 5 to Credit Agreement]

<PAGE>

Address:                                     THE NORTHERN TRUST COMPANY
50 S. LaSalle Street
Chicago, Illinois 60675
Attn: J. Clark                               By /s/ Jeffrey B. Clark
     -----------------------                   --------------------------------
Telecopy No. 312-444-7172                      Name Jeffrey B. Clark
                                                    ---------------------------
                                               Title Vice President
                                                    ---------------------------

Revolving Commitment:                        $5,416,666.67
Revolving Percentage:                         16.666666667%
Term Commitment:                             $7,083,333.33
Term Percentage:                              16.666666667%

                   [Signature Page 5 of 5 to Credit Agreement]

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