Document:

FY2002 10K Exhibit 10.47

Exhibit 10.47

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

This Amendment to the Executive Employment Agreement dated December 3, 2001
between Gottschalks Inc., a Delaware corporation (Company herein) and James Famalette (Employee
herein) is entered into effective December 1, 2001.

WHEREAS, the Compensation Committee of the Board of Directors of the Company
met and have considered the performance of employee as President and Chief Executive Officer of the
Company, and as a result has agreed to changes in Employee's contract as set forth in this
Amendment; and

WHEREAS, the Compensation Committee unanimously recommended that the
Executive Employment Agreement with James Famalette be approved by the Board of Directors of the
corporation, and

WHEREAS, the Board of Directors have unanimously approved the Agreement.

NOW, THEREFORE, it is agreed as follows:

1.Article 2.2 Basic Term, is amended to reflect that the termination date
shall be July 1, 2004.

2.Pursuant to Article 3.1, the employee is receiving $560,000 per annum
as a base salary and the Committee has determined that the Base Salary shall remain at $560,000 per
annum.

3.Article 3.2 Incentive Bonus Plans, shall be amended to provide that
Employee shall have the ability to earn an annual bonus of 50% of Base Salary if specific goals and
objectives adopted by the Board are met, instead of the previous 30%.

4.Article 4.3 Change in Ownership, shall be amended to delete in its
entirety that hand printed addition denoted as part of the article by an asterisk, which reads,
"Notwithstanding the provisions in Article 4.3 above, in the event that the total capitalization of
the Company at the time that a change of control or sale occurs, is below eighty-five million
dollars, then employee will be restricted to twelve (12) months base salary instead of twenty-four
(24) as stated above if he is terminated as provided."

5.Article 3.6 Life Insurance, shall be amended to reflect that the dollar
amount of the Term Life Insurance Policy shall be a face value of one million dollars, instead of
equal to Employee's Base Salary.

6.Except as specifically set forth in this Second Amendment, the contract
of Employment dated June 25, 1999 and First Amendment dated June 26, 2001 are ratified and affirmed,
and all terms and conditions not amended by this Amendment shall remain in full force and
effect.

EXECUTION of this Agreement is evidenced by the signatures below:

 

GOTTSCHALKS INC.

 

 

By:_/s/ Joe Levy

Joe Levy, Chairman of the Board

 

 

REVIEWED AND AGREED:

 

 /s/ James Famalette

James FamaletteExhibit 4 (vi)

                           FIVE-YEAR CREDIT AGREEMENT

                         dated as of September 19, 2001

                                      among

                               TOYS "R" US, INC.,

                            THE LENDERS PARTY HERETO

                                       and

                              THE BANK OF NEW YORK,
                             as Administrative Agent

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

                                 CITIBANK, N.A.,
                                       and
                               J.P. MORGAN CHASE,
                            as Co-Syndication Agents

                           CREDIT SUISSE FIRST BOSTON,
                           FIRST UNION NATIONAL BANK,
                       THE DAI-ICHI KANGYO BANK, LTD. and
                                SOCIETE GENERALE,
                           as Co-Documentation Agents

                           BNY CAPITAL MARKETS, INC.,
                        as Lead Arranger and Book Manager

<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS.........................................................1
      Section 1.1. Defined Terms...............................................1
      Section 1.2. Classification of Loans and Borrowings.....................14
      Section 1.3. Terms Generally............................................14
      Section 1.4. Accounting Terms; GAAP.....................................14

ARTICLE 2. The Credits........................................................15
      Section 2.1. Commitments................................................15
      Section 2.2. Loans and Borrowings.......................................15
      Section 2.3. Requests for Revolving Borrowings..........................16
      Section 2.4. Termination and Reduction of Commitments...................16
      Section 2.5. Funding of Borrowings......................................17
      Section 2.6. Interest Elections.........................................17
      Section 2.7. Repayment of Loans; Evidence of Debt.......................19
      Section 2.8. Prepayment of Loans........................................19
      Section 2.9. Swingline Loans............................................20
      Section 2.10. Letters of Credit.........................................22
      Section 2.11. Fees......................................................26
      Section 2.12. Interest..................................................27
      Section 2.13. Alternate Rate of Interest................................28
      Section 2.14. Increased Costs, Illegality, Etc..........................29
      Section 2.15. Break Funding Payments....................................31
      Section 2.16. Taxes.....................................................32
      Section 2.17. Payments Generally; Pro Rata Treatment; Sharing
                      of Set-offs.............................................34
      Section 2.18. Mitigation Obligations; Replacement of Lenders............35
      Section 2.19. Increases in Commitments..................................37

ARTICLE 3. Representations and Warranties.....................................38
      Section 3.1. Organization and Powers....................................38
      Section 3.2. Authorization..............................................38
      Section 3.3. Enforceability.............................................38
      Section 3.4. Litigation.................................................38
      Section 3.5. Required Consents..........................................38
      Section 3.6. Compliance with Applicable Laws............................39
      Section 3.7. Taxes......................................................39
      Section 3.8. Governmental Regulations...................................39
      Section 3.9. Federal Reserve Regulations; Use of Loan Proceeds..........39
      Section 3.10. Financial Statements......................................39
      Section 3.11. Material Adverse Change...................................40

<PAGE>

      Section 3.12. No Conflicting Agreements.................................40
      Section 3.13. Disclosure................................................40

ARTICLE 4. Conditions Precedent...............................................40
      Section 4.1. Effective Date.............................................40
      Section 4.2. Each Credit Event..........................................41

ARTICLE 5. Affirmative Covenants..............................................42
      Section 5.1. Financial Statements.......................................42
      Section 5.2. Certificates; Other Information............................43
      Section 5.3. Legal Existence............................................43
      Section 5.4. Taxes......................................................43
      Section 5.5. Observance of Legal Requirements...........................43
      Section 5.6. Inspection of Property; Books and Records; Discussions.....44

ARTICLE 6. Negative Covenants.................................................44
      Section 6.1. Merger or Consolidation, Etc...............................44
      Section 6.2. Subsidiary Indebtedness....................................45
      Section 6.3. Liens, Etc.................................................45
      Section 6.4. Change in Nature of Business...............................46
      Section 6.5. Use of Proceeds............................................47
      Section 6.6. Fixed Charge Coverage Ratio................................47
      Section 6.7. Capitalization.............................................47

ARTICLE 7. Events of Default..................................................47

ARTICLE 8. The Administrative Agent...........................................50

ARTICLE 9. Miscellaneous......................................................52
      Section 9.1. Notices....................................................52
      Section 9.2. Waivers; Amendments........................................52
      Section 9.3. Expenses; Indemnity; Damage Waiver.........................53
      Section 9.4. Successors and Assigns.....................................55
      Section 9.5. Survival...................................................57
      Section 9.6. Counterparts; Integration; Effectiveness...................57
      Section 9.7. Severability...............................................58
      Section 9.8. Right of Setoff............................................58
      Section 9.9. Governing Law; Jurisdiction; Consent to Service
                     of Process...............................................58
      Section 9.10. WAIVER OF JURY TRIAL......................................59
      Section 9.11. Headings..................................................59
      Section 9.12. Confidentiality...........................................59
      Section 9.13. Interest Rate Limitation..................................60

                                      -2-
<PAGE>

      SCHEDULES:

      Schedule 2.1 -- Commitments
      Schedule 3.4 -- Disclosed Matters
      Schedule 6.2 -- Existing Subsidiary Indebtedness
      Schedule 6.3 -- Existing Liens

      EXHIBITS:

      Exhibit A   -- Form of Assignment and Acceptance
      Exhibit B-1 -- Form of Opinion of Borrower's Counsel
      Exhibit B-2 -- Form of Opinion of Weil, Gotshal & Manges LLP
      Exhibit C   -- Form of Guarantee Agreement
      Exhibit D   -- Form of Accession Agreement
      Exhibit E   -- Form of Borrowing Request
      Exhibit F   -- Form of Interest Election Request

                                      -3-
<PAGE>

            FIVE-YEAR  CREDIT  AGREEMENT,  dated as of September 19, 2001, among
TOYS "R" US, INC.,  the LENDERS party  hereto,  CITIBANK,  N.A. and J.P.  MORGAN
CHASE,  as  Co-Syndication  Agents,  CREDIT  SUISSE  FIRST  BOSTON,  FIRST UNION
NATIONAL  BANK,  THE  DAI-ICHI  KANGYO  BANK,  LTD.  and  SOCIETE  GENERALE,  as
Co-Documentation Agents, and THE BANK OF NEW YORK, as Administrative Agent.

            The parties hereto agree as follows:

ARTICLE 1. DEFINITIONS

      Section 1.1. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:

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

            "Accession  Agreement" means the accession agreement,  substantially
in the form of Exhibit D, to be entered into by the  Administrative  Agent and a
Prospective Lender.

            "Accountants" means Ernst & Young LLP (or any successor thereto), or
any other firm of certified public  accountants of recognized  national standing
selected by the Borrower.

            "Accumulated  Funding  Deficiency" has the meaning  assigned to such
term in Section 302 of ERISA.

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

            "Administrative  Agent" means BNY, in its capacity as administrative
agent for the Lenders hereunder, and any assigns.

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

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

            "Agreement" means this Five-Year Credit Agreement.

            "Alternate Base Rate" means,  for any day, a rate per annum equal to
the  greater  of (a) the Prime  Rate in  effect on such day and (b) the  Federal
Funds Effective Rate in effect on

<PAGE>

such day plus 1/2 of 1%. Any change in the  Alternate  Base Rate due to a change
in the Prime Rate or the Federal Funds  Effective  Rate shall be effective  from
and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

            "Applicable  Lending  Office" means,  as to any Lender,  the office,
branch or affiliate of such Lender  designated as such Lender's  lending  office
for Loans and  Letters of Credit  hereunder,  as  reported by such Lender to the
Administrative Agent and the Borrower.

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

            "Applicable Rate" means, for any day, with respect to any Eurodollar
Revolving Loan, or with respect to the facility fees or utilization fees payable
hereunder,  as the case may be, the  applicable  rate per annum set forth  below
under the caption  "Facility Fee",  "LIBOR Spread" or "Utilization  Fee", as the
case may be, based upon the ratings by Moody's and S&P, respectively, applicable
on such date to the Index Debt:

<TABLE>
<CAPTION>
============================================================================================
Category            Ratings                 Facility Fee    LIBOR Spread     Utilization Fee
                    (S&P/Moody's)
--------------------------------------------------------------------------------------------
<S>                 <C>                     <C>             <C>              <C>
Category 1          A+/A1 or higher         .085%           .265%            .100%
--------------------------------------------------------------------------------------------
Category 2          A/A2                    .100%           .300%            .100%
--------------------------------------------------------------------------------------------
Category 3          A-/A3                   .125%           .375%            .125%
--------------------------------------------------------------------------------------------
Category 4          BBB+/Baa1               .150%           .475%            .125%
--------------------------------------------------------------------------------------------
Category 5          BBB/Baa2                .175%           .575%            .150%
--------------------------------------------------------------------------------------------
Category 6          BBB-/Baa3 or lower      .250%           .875%            .150%
============================================================================================
</TABLE>

            For purposes of the foregoing, (a) if Moody's and S&P shall not have
in effect a rating for the Index Debt (other than by reason of the circumstances
referred  to in the last  sentence  of this  definition),  then each such rating
agency  shall be deemed to have  established  a rating in Category 6; (b) if the
ratings  established  or deemed to have been  established by Moody's and S&P for
the Index Debt shall fall within different Categories, the Applicable Rate shall
be based on the higher of the two  ratings,  unless the lower of the two ratings
is in Category 6, in which case the Applicable Rate shall be based on such lower
rating,  and, in each case under this clause (b),  unless one of the two ratings
is two or more  Categories  lower than the other,  in which case the  Applicable
Rate shall be  determined  by  reference  to the  Category  one level  below the
category  corresponding to the higher rating; and (c) if the ratings established
or deemed to have been  established  by Moody's and S&P for the Index Debt shall
be changed  (other than as a result of a change in the rating  system of Moody's
or S&P),  such  change  shall be  effective  as of the date on which it is first
announced by the applicable  rating agency.  Each change in the Applicable  Rate
shall apply during the period  commencing on the  effective  date of such change
and ending on the date immediately preceding the effective date of the next such
change.  If the rating system of Moody's or S&P shall change,  or if either such
rating  agency  shall  cease to be in

                                      -2-
<PAGE>

the business of rating corporate debt obligations,  the Borrower and the Lenders
shall  negotiate in good faith to amend this  definition to reflect such changed
rating  system or the  unavailability  of ratings  from such rating  agency and,
pending the  effectiveness  of any such amendment,  the Applicable Rate shall be
determined  by  reference  to the rating most  recently in effect  prior to such
change or cessation.

            "Assignment  and  Acceptance"  means an  assignment  and  acceptance
entered  into by a Lender and an  assignee  (with the consent of any party whose
consent is required by Section 9.4), and accepted by the  Administrative  Agent,
substantially  in the  form of  Exhibit  A or any  other  form  approved  by the
Administrative Agent.

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

            "BNY" means The Bank of New York and its successors.

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

            "Borrower" means Toys "R" Us, Inc., a Delaware corporation.

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

            "Borrowing  Request" means a request by the Borrower for a Revolving
Borrowing in  substantially  the form of Exhibit E or any other form approved by
the Administrative Agent.

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

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

            "Class" when used in reference to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans  comprising such Borrowing,  are Revolving Loans
or Swingline Loans, as applicable.

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

                                      -3-
<PAGE>

            "Commitment"  means, with respect to each Lender,  the commitment of
such Lender to make Revolving Loans and to acquire  participations in Letters of
Credit and  Swingline  Loans  hereunder in an aggregate  outstanding  amount not
exceeding  the  amount of such  Lender's  Revolving  Commitment  as set forth on
Schedule  2.1,  or in the  Assignment  and  Acceptance  or  Accession  Agreement
pursuant to which such Lender shall have assumed its Commitment,  as applicable,
as such commitment may be (a) reduced from time to time pursuant to Section 2.4,
(b)  increased  from time to time  pursuant  to Section  2.19 or (c)  reduced or
increased  from  time to  time  pursuant  to  assignments  by or to such  Lender
pursuant  to  Section  9.4.  The  initial   aggregate  amount  of  the  Lenders'
Commitments is $633,333,333.33.

            "Consolidated"  refers  to the  Borrower  and the  Subsidiaries  the
accounts of which are  consolidated  with those of the  Borrower  for  financial
reporting purposes.

            "Consolidated Cash Interest Expense" means, for any period, interest
expense  (net  of  interest   income)  of  the  Borrower  and  the  Consolidated
Subsidiaries  for such  period,  including,  without  duplication,  Consolidated
interest  capitalized  in such period,  minus non-cash  interest  expense of the
Borrower  and the  Consolidated  Subsidiaries  for  such  period,  in each  case
determined in accordance with GAAP.

            "Consolidated  EBITDAR"  means,  for any period,  net income (or net
loss) of the Borrower and the Consolidated Subsidiaries for such period plus (a)
the sum of (i)  interest  expense  (net of  interest  income),  (ii)  income tax
expense, (iii) depreciation expense, (iv) amortization expense, (v) Consolidated
Rent Expense,  (vi) extraordinary  losses in excess of $5,000,000 and (vii) LIFO
charges of the Borrower and the Consolidated Subsidiaries, in each case for such
period, minus (b) the sum of (i) extraordinary gains in excess of $5,000,000 and
(ii) LIFO  credits of the Borrower and the  Consolidated  Subsidiaries,  in each
case for such period, all determined in accordance with GAAP.

            "Consolidated  Rent Expense" means,  for any period,  rental expense
(net  of  rental  income)  of the  Borrower  and the  Consolidated  Subsidiaries
determined in accordance with GAAP for such period.

            "Consolidated   Tangible   Net   Worth"   means,   at  any  date  of
determination,   the  sum  of  all  amounts   which  would  be  included   under
shareholders'  equity on a  Consolidated  balance  sheet of the Borrower and the
Subsidiaries  determined in accordance with GAAP as at such date less all assets
of the Borrower and the Subsidiaries, determined on a Consolidated basis at such
date, that would be classified as intangible assets in accordance with GAAP.

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

            "Credit  Parties" means the  Administrative  Agent, the Issuing Bank
and the Lenders.

                                      -4-
<PAGE>

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

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

            "Effective Date" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 9.2).

            "Employee  Benefit  Plan" means an employee  benefit plan within the
meaning of Section 3(3) of ERISA maintained,  sponsored or contributed to by the
Borrower, any of the Subsidiaries or any ERISA Affiliate.

            "Environmental  Laws" means all applicable federal,  state, local or
foreign  statutes,  laws,  ordinances,   rules,   regulations,   codes,  orders,
judgments, decrees or judicial or agency interpretations,  policies or guidances
relating to  pollution  or  protection  of the  environment,  health,  safety or
natural resources.

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

            "ERISA" means the Employee  Retirement  Income Security Act of 1974,
as amended from time to time, and the rules and regulations  issued  thereunder,
as from time to time in effect.

            "ERISA  Affiliate"  when used with  respect to an  Employee  Benefit
Plan,  ERISA, the PBGC or a provision of the Code pertaining to employee benefit
plans,  means any Person that is a member of any group of  organizations  within
the meaning of Section 414(b), (c), (m) or (o) of the Code of which the Borrower
or any of the Subsidiaries is a member.

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

            "Event of Default" has the meaning  assigned to such term in Article
7.

            "Existing  Credit  Documents"  means (i) the  Amended  and  Restated
Credit  Agreement,  dated as of December 19, 1997, among the Borrower,  Toys "R"
Us-Delaware,  Inc., the subsidiary  borrowers  party thereto,  the lenders party
thereto and BNY, as  administrative  agent  thereunder,  (ii) the 364-Day Credit
Agreement,  dated as of December 8, 2000, among the Borrower,  the lenders party
thereto and The Chase Manhattan Bank, as administrative  agent

                                      -5-
<PAGE>

thereunder, and (iii) each agreement,  instrument and other document executed or
delivered in connection with either of the foregoing.

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

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

            "Financial  Statements"  has the  meaning  assigned  to such term in
Section 5.1.

            "Fixed Charge Coverage Ratio" means, on each date of  determination,
the ratio of  Consolidated  EBITDAR  to the sum of  Consolidated  Cash  Interest
Expense  and  Consolidated  Rent  Expense,  in each case for the  period of four
consecutive  fiscal  quarters of the Borrower ended on or  immediately  prior to
such date.

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

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

            "Governmental  Authority"  means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency,  authority,  instrumentality,  regulatory body, court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

            "Guarantee"  of  or  by  any  Person  (the  "guarantor")  means  any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of  guaranteeing  any  Indebtedness  or other  obligation of any
other  Person  (the  "primary  obligor")  in any  manner,  whether  directly  or
indirectly,  and including any obligation of the guarantor,  direct or indirect,
(a) to purchase or pay (or advance or supply  funds for the  purchase or payment
of) such  Indebtedness  or other  obligation  or to  purchase  (or to advance or
supply funds for the purchase of) any security for the payment  thereof,  (b) to
purchase or lease  property,  securities or services for the purpose of assuring
the owner of such  Indebtedness or other obligation of the payment thereof,  (c)
to maintain  working  capital,  equity capital or any other financial  statement
condition  or  liquidity  of the  primary  obligor so as to enable  the  primary
obligor to pay such

                                      -6-
<PAGE>

Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business; and provided, further,
that the amount of any such Guarantee  shall be deemed to be the lower of (i) an
amount equal to the stated or determinable  amount of the primary  obligation in
respect of which such  Guarantee  is made and (ii) the maximum  amount for which
such Person may be liable pursuant to the terms of the agreement  embodying such
Guarantee,  unless such primary obligation and the maximum amount for which such
Person may be liable are not stated or determinable, in which case the amount of
such Guarantee shall be such Person's maximum reasonably  anticipated  liability
in respect thereof as determined by such Person in good faith.

            "Guarantee  Agreement" means the guarantee agreement,  substantially
in the form of Exhibit C, to be entered into by the Administrative Agent and the
Guarantors.

            "Guarantor"  means (a) Toys "R" Us-Delaware,  Inc. and (b) any other
direct or  indirect  subsidiary  of the  Borrower  that  shall be a party to the
Guarantee Agreement from time to time.

            "Hazardous  Materials"  means all  materials,  substances  or wastes
regulated,  characterized or otherwise classified under any Environmental Law as
hazardous,  toxic,  pollutants,   contaminants  or  words  of  similar  meaning,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes.

            "Indebtedness"  of any Person means, at a particular time, all items
which constitute,  without  duplication,  (a) indebtedness for borrowed money or
the deferred  purchase price of Property  (other than trade payables and accrued
liabilities  incurred in the  ordinary  course of  business),  (b)  indebtedness
evidenced by notes, bonds,  debentures or similar  instruments,  (c) obligations
with  respect  to  any  conditional  sale  or  title  retention  agreement,  (d)
indebtedness arising under acceptance  facilities and the amount available to be
drawn under all letters of credit issued for the account of such Person, (e) all
drafts  drawn under  letters of credit  issued for the account of such Person to
the extent such Person  shall not have  reimbursed  the issuer in respect of the
issuer's payment of such drafts, (f) all liabilities  secured by any Lien on any
Property  owned by such  Person  even  though  such  Person  has not  assumed or
otherwise   become  liable  for  the  payment  thereof  (other  than  carriers',
warehousemen's,  mechanics',  repairmen's,  landlords'  or other like  statutory
Liens arising in the ordinary course of business), (g) obligations under capital
leases  and (h)  Guarantees  in  respect  of the  foregoing;  provided  that any
Indebtedness  owing  by  the  Borrower  to any  of  the  Subsidiaries  or by any
Subsidiary to the Borrower or by any  Subsidiary to any other  Subsidiary or any
Guarantees in respect thereof shall not constitute  Indebtedness for purposes of
this Agreement.

            "Indemnified  Tax" has the meaning  assigned to such term in Section
2.16(a).

            "Indemnitee"  has  the  meaning  assigned  to such  term in  Section
9.3(b).

                                      -7-
<PAGE>

            "Index Debt" means senior,  unsecured,  long-term  indebtedness  for
borrowed  money of the Borrower that is not guaranteed by any Person (other than
a Guarantor) or subject to any other credit enhancement.

            "Interest  Election  Request"  means a request  by the  Borrower  to
convert or continue a Revolving Borrowing,  substantially in the form of Exhibit
F.

            "Interest  Payment Date" means (a) with respect to any ABR Loan, the
last day of each March,  June,  September and December,  (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar  Borrowing with an
Interest Period of more than three months' duration,  each day prior to the last
day of such Interest  Period that occurs at intervals of three months'  duration
after the first day of such Interest Period,  (c) as to all Revolving Loans, the
Maturity  Date and (d) with  respect to any  Swingline  Loan,  the day that such
Swingline Loan is required to be repaid.

            "Interest Period" means,  with respect to any Eurodollar  Borrowing,
the  period  commencing  on  the  date  of  such  Borrowing  and  ending  on the
numerically corresponding day in the calendar month that is one, two, three, six
or, if available to all of the Lenders, nine or twelve months thereafter, as the
Borrower may elect;  provided that (a) 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 (b) any Interest  Period that commences on the
last  Business  Day of a  calendar  month  (or on a day for  which  there  is no
numerically  corresponding  day in the  last  calendar  month  of such  Interest
Period) shall end on the last  Business Day of the last  calendar  month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and  thereafter  shall be the effective
date of the most recent conversion or continuation of such Borrowing.

            "Issuing  Bank" means (a) BNY or (b) any other Lender  designated by
the Borrower and acceptable to the Administrative  Agent, in either case, in its
capacity as issuer of Letters of Credit.

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

            "LC Exposure" means, at any time, the sum, without  duplication,  of
(a) the aggregate  undrawn amount of all  outstanding  Letters of Credit at such
time plus (b) the  aggregate  amount of all LC  Disbursements  that have not yet
been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
any  Lender  at any time  shall be its  Applicable  Percentage  of the  total LC
Exposure at such time.

            "Lenders"  means the Persons  listed on  Schedule  2.1 and any other
Person  that shall have become a party  hereto from time to time  pursuant to an
Assignment  and  Acceptance or Accession  Agreement,  other than any such Person
that shall have ceased to be a party  hereto  pursuant to any  provision of this
Agreement,  including by way of an Assignment and

                                      -8-
<PAGE>

Acceptance.  Unless the context otherwise requires,  the term "Lenders" includes
the Swingline Lender.

            "Letter of Credit"  means any letter of credit  (and any  successive
renewals thereof) issued pursuant to this Agreement.

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

            "Lien" means,  with respect to any Property,  any mortgage,  deed of
trust, lien, pledge, hypothecation,  encumbrance having the effect of a security
interest, sale-leaseback arrangement or other charge or security interest in, on
or of such asset.

            "Loan Documents" means this Agreement,  the Guarantee  Agreement and
the documentation in respect of each Letter of Credit.

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

            "Material Adverse Change" means a material adverse change in (i) the
financial condition,  business or Property of the Borrower and the Subsidiaries,
taken as a whole,  or (ii) the ability of the  Borrower  and the  Guarantors  to
perform their respective obligations under the Loan Documents.

            "Material Adverse Effect" means a material adverse effect on (a) the
financial condition,  business or Property of the Borrower and the Subsidiaries,
taken as a whole,  or (b) the  ability of the  Borrower  and the  Guarantors  to
perform their respective obligations under the Loan Documents.

            "Material  Subsidiary  Group"  means  any  Subsidiary  or  group  of
Subsidiaries as to which, individually or in the aggregate, any of the following
tests are met: (a) the Borrower's and the other Subsidiaries' investments in and
advances to such  Subsidiary  or group of  Subsidiaries  exceed 10% of the total
assets of the Borrower and the  Subsidiaries  on a Consolidated  basis as of the
last day of the most recently  completed  fiscal year of the Borrower;  (b) such
Subsidiary's or

                                      -9-
<PAGE>

group  of  Subsidiaries'   proportionate   share  of  the  total  assets  (after
intercompany   eliminations)   of  the  Borrower  and  the   Subsidiaries  on  a
Consolidated  basis  exceeds  10% of the total  assets of the  Borrower  and the
Subsidiaries  on a  Consolidated  basis as of the last day of the most  recently
completed  fiscal  year of the  Borrower;  or (c) the equity in the income  from
continuing   operations  before  income  taxes,   extraordinary  items  and  the
cumulative  effect of a change in accounting  principles  of such  Subsidiary or
group  of  Subsidiaries  exceeds  10% of such  income  of the  Borrower  and the
Subsidiaries  on a  Consolidated  basis (after giving effect to the exclusion of
minority interests) for the most recently completed fiscal year of the Borrower.
In the event any new Subsidiary  shall be acquired or formed,  the status of any
one or more Subsidiaries as a Material Subsidiary Group shall be determined on a
pro forma basis, giving effect to such acquisition or formation,  as applicable,
as if it had occurred at the  beginning of the most  recently  completed  fiscal
year of the Borrower.

            "Maturity Date" means September 19, 2006.

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

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

            "Participant"  has the  meaning  assigned  to such  term in  Section
9.4(e).

            "PBGC" means the Pension Benefit  Guaranty  Corporation  established
pursuant  to  Subtitle  A of Title IV of ERISA,  or any  Governmental  Authority
succeeding to the functions thereof.

            "Pension  Plan"  means at any date of  determination,  any  Employee
Benefit Plan (including a Multiemployer Plan), the funding requirements of which
(under  Section  302 of ERISA or Section  412 of the Code)  are,  or at any time
within the six years immediately  preceding such date, were in whole or in part,
the  responsibility  of  the  Borrower,  any of the  Subsidiaries  or any  ERISA
Affiliate.

            "Permitted Encumbrances" means:

            (a) Liens imposed by law for Taxes that are not overdue by more than
90 days or are being contested in compliance with Section 5.4;

            (b)   carriers',    warehousemen's,    mechanics',    materialmen's,
repairmen's and other like Liens imposed by law,  arising in the ordinary course
of business and securing  obligations  that are not overdue by more than 90 days
or are being contested in good faith by appropriate proceedings;

            (c) pledges and deposits made in the ordinary  course of business in
compliance with workers'  compensation,  unemployment insurance and other social
security laws or regulations or to secure public or statutory obligations;

                                      -10-
<PAGE>

            (d) Liens  securing  the  performance  of, or payment in respect of,
bids, trade contracts,  leases, statutory obligations,  surety and appeal bonds,
performance  bonds and other  obligations of a like nature,  in each case in the
ordinary course of business;

            (e) judgment Liens in respect of judgments that do not constitute an
Event of Default under clause (i) of Article 7;

            (f) any  interest  or title of a lessor or  sublessor  (other than a
lessor or sublessor  under a lease or sublease that  constitutes a Capital Lease
Obligation or that is entered into as part of a sale-leaseback  arrangement) and
any  restriction or encumbrance to which the interest or title of such lessor or
sublessor may be subject that is incurred in the ordinary course of business;

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

            (h)  customary  rights of setoff  upon  deposits of cash in favor of
banks or other  depository  institutions in which such cash is maintained in the
ordinary course of business;

            (i)  Liens  on  goods  (or  related  documents  of  title)  securing
reimbursement  obligations  under trade letters of credit issued for the account
of the  Borrower  or the  Subsidiaries  in the  ordinary  course of  business in
connection with the purchase of such goods; and

            (j) easements, operating agreements,  covenants,  conditions, rights
of way, survey exceptions,  licenses, zoning restrictions and other encumbrances
on title to, or restrictions on the use of, real property that do not materially
and adversely  affect the value of such property or the use of such property for
its present purposes;

provided  that,  except as provided in clauses (d), (h) and (i) above,  the term
"Permitted Encumbrances" shall not include any Lien securing Indebtedness.

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

            "Prime Rate" means the rate of interest per annum publicly announced
from time to time by BNY as its prime  commercial  lending rate at its principal
office in New York City;  each change in the Prime Rate being effective from and
including  the date such change is publicly  announced as being  effective.  The
Prime Rate is not  intended to be the lowest rate of interest  charged by BNY in
connection with extensions of credit to borrowers.

            "Prohibited  Transaction"  means a  transaction  that is  prohibited
under  Section  4975 of the Code or Section  406 of ERISA and not  exempt  under
Section 4975 of the Code or Section 408 of ERISA.

            "Property" means all types of real, personal,  tangible,  intangible
or mixed property.

                                      -11-
<PAGE>

            "Prospective Lender" has the meaning set forth in Section 2.19.

            "Register" has the meaning set forth in Section 9.4(c).

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

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

            "Revolving  Exposure" means,  with respect to any Lender at any time
(without duplication),  the sum of the aggregate outstanding principal amount of
such Lender's  Revolving  Loans, LC Exposure and its Swingline  Exposure at such
time.

            "Revolving  Loan"  means a Loan  referred to in Section 2.1 and made
pursuant  to Section  2.3.

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

            "SEC" means United States Securities and Exchange Commission.

            "Statutory Reserve Rate" means a fraction  (expressed as a decimal),
the  numerator  of which is the number one and the  denominator  of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established  by the  Board to which  the  Administrative  Agent is  subject  for
eurocurrency  funding  (currently  referred to as "eurocurrency  liabilities" in
Regulation D of the Board) during any Interest Period.  Such reserve percentages
shall include  those imposed  pursuant to such  Regulation D.  Eurodollar  Loans
shall be deemed to  constitute  eurocurrency  funding  and to be subject to such
reserve requirements  without benefit of or credit for proration,  exemptions or
offsets  that  may be  available  from  time to time to any  Lender  under  such
Regulation D or any comparable  regulation.  The Statutory Reserve Rate shall be
adjusted  automatically  on and as of the  effective  date of any  change in any
reserve percentage.

            "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation,  limited liability company,  partnership,  association or
other  entity of which more than 50% of the Voting Stock is or, in the case of a
partnership,  more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

            "Subsidiary" means any subsidiary of the Borrower.

            "Successor  Person" shall have the meaning  assigned to such term in
Section 6.1.

                                      -12-
<PAGE>

            "Swingline  Commitment" means, with respect to the Swingline Lender,
the commitment of the Swingline  Lender to make Swingline Loans  hereunder.  The
initial amount of the Swingline Lender's Swingline Commitment is $50,000,000.

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

            "Swingline  Lender" means BNY in its capacity as lender of Swingline
Loans hereunder.

            "Swingline Loan" means a Loan made pursuant to Section 2.9.

            "Swingline  Rate" means,  with respect to each  Swingline  Loan, the
rate per annum agreed to in writing by the Borrower and the Swingline  Lender as
the interest rate that such Swingline Loan shall bear.

            "Tax on the  Income" as to any  Person,  means a Tax  imposed by the
jurisdiction  in which such  Person's  principal  office (and,  in the case of a
Lender,  its Applicable  Lending Office for Revolving  Loans) is located,  or in
which  such  Person  is  deemed  to  be  doing  business,  or by  any  political
subdivision or taxing  authority  thereof based on or measured by all or part of
the net  income,  profits  or  gains of that  Person  or any  affiliate  thereof
(whether  worldwide,  or only  insofar  as such  income,  profits  or gains  are
considered to arise in or to relate to a particular jurisdiction, or otherwise).

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

            "364-Day Credit Agreement" means the 364-Day Credit Agreement, dated
as of September 19, 2001, among the Borrower, the lenders party thereto and BNY,
as administrative agent thereunder.

            "Termination Event" means, with respect to any Pension Plan, (a) any
event set forth in Section 4043(b) (other than any such event as to which the 30
day  notice  requirement  is waived by the PBGC under  applicable  regulations),
4062(c)  or  4063(a)  of  ERISA  or the  regulations  thereunder,  (b) an  event
requiring  the  Borrower,  any of the  Subsidiaries  or any ERISA  Affiliate  to
provide security to a Pension Plan under Section 401(a)(29) of the Code, (c) any
failure to make any  payment  required  by Section  412(m) of the Code,  (d) the
termination  of a Pension Plan, or the filing of a notice of intent to terminate
a Pension Plan,  or the  treatment of a Pension Plan  amendment as a termination
under Section 4041(c) of ERISA,  (e) the institution of proceedings to terminate
a Pension Plan under Section 4042 of ERISA,  or (f) the appointment of a trustee
to administer any Pension Plan under Section 4042 of ERISA.

            "Transactions" means (a) the execution,  delivery and performance by
each of the Borrower and the  Guarantors  of each Loan Document to which it is a
party,  (b) the borrowing of the Loans and the issuance of the Letters of Credit
and (c) the use of the proceeds of the Loans and the Letters of Credit.

                                      -13-
<PAGE>

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

            "Voting  Stock"  means  capital  stock issued by a  corporation,  or
equivalent  interests in any other Person,  the holders of which are ordinarily,
in the absence of contingencies,  entitled to vote for the election of directors
(or persons performing  similar functions) of such Person,  even if the right so
to vote has been suspended by the happening of such a contingency.

      Section 1.2. Classification of Loans and Borrowings.  For purposes of this
Agreement,  Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g.,  a  "Eurodollar  Loan") or by Class and Type  (e.g.,  a
"Eurodollar Revolving Loan").  Borrowings also may be classified and referred to
by Class  (e.g.,  a  "Revolving  Borrowing")  or by Type  (e.g.,  a  "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

      Section 1.3. Terms Generally.  The definitions of terms herein shall apply
equally to the  singular  and plural  forms of the terms  defined.  Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires  otherwise (a) any definition of or reference to any
agreement,  instrument or other  document  herein,  including any Loan Document,
shall be construed as referring to such agreement,  instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any  reference  herein to any Person  shall be  construed  to  include  such
Person's  successors  and  assigns,   (c)  the  words  "herein",   "hereof"  and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same meaning and effect and to refer to any and all Property.

      Section  1.4.  Accounting  Terms;  GAAP.  Except  as  otherwise  expressly
provided  herein,  all  terms of an  accounting  or  financial  nature  shall be
construed  in  accordance  with GAAP,  as in effect from time to time;  provided
that,  if the  Borrower  notifies  the  Administrative  Agent that the  Borrower
requests an amendment  to any  provision  hereof to eliminate  the effect of any
change occurring after the date hereof in GAAP or in the application  thereof on
the operation of such  provision (or if the  Administrative  Agent  notifies the
Borrower that the Required  Lenders request an amendment to any provision hereof
for such  purpose),  regardless  of whether any such  notice is given  before or
after such change in GAAP or in the  application  thereof,  then such  provision
shall be interpreted  on the basis of GAAP as in effect and applied  immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                      -14-
<PAGE>

ARTICLE 2. The Credits

      Section 2.1.  Commitments.  Subject to the terms and  conditions set forth
herein,  each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Availability  Period in dollars in an aggregate principal amount
that will not result in (a) such  Lender's  Revolving  Exposure  exceeding  such
Lender's  Commitment or (b) the sum of the total Revolving  Exposures  exceeding
the total Commitments.  Within the foregoing limits and subject to the terms and
conditions  set forth  herein,  the  Borrower  may borrow,  prepay and  reborrow
Revolving Loans.

      Section 2.2. Loans and  Borrowings.  (a) Each Revolving Loan shall be made
as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably
in accordance with their  respective  Commitments.  The failure of any Lender to
make any Loan  required to be made by it shall not  relieve any other  Lender of
its  obligations  hereunder;  provided that the  Commitments  of the Lenders are
several and no Lender shall be  responsible  for any other  Lender's  failure to
make Loans as required.

            (b)  Subject to Section  2.13,  each  Revolving  Borrowing  shall be
comprised  entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance  herewith.  Each Lender at its option may make any Eurodollar Loan
by causing any  domestic or foreign  branch or  Affiliate of such Lender to make
such  Loan;  provided  that any  exercise  of such  option  shall not affect the
obligation  of the Borrower to repay such Loan in  accordance  with the terms of
this   Agreement  or  subject  the  Borrower  to  any  additional  or  increased
obligations under this Agreement.

            (c) At the  commencement  of each Interest Period for any Eurodollar
Revolving  Borrowing,  such Borrowing shall be in an aggregate amount that is an
integral  multiple of $500,000  and not less than  $1,000,000.  At the time that
each ABR Revolving  Borrowing is made,  such Borrowing  shall be in an aggregate
amount that is an integral  multiple of $500,000  and not less than  $1,000,000;
provided that an ABR  Borrowing  may be in an aggregate  amount that is equal to
the entire unused  balance of the total  Commitments  or in an aggregate  amount
that  is  required  to  finance  the  reimbursement  of  an LC  Disbursement  as
contemplated by Section 2.10(e).  Borrowings of more than one Type and Class may
be  outstanding  at the same time;  provided that there shall not at any time be
more than a total of ten Eurodollar Revolving Borrowings outstanding.

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

      Section 2.3.  Requests for  Revolving  Borrowings.  To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing,  not later than 11:00 a.m.,
New York  City  time,  three  Business  Days  before  the  date of the  proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New
York City time,  on the date of the  proposed  Borrowing.  Except as provided in
Section 2.14,  each such telephonic  Borrowing  Request shall be irrevocable and
shall be

                                      -15-
<PAGE>

confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written  Borrowing  Request  signed by the Borrower.  Each such  telephonic  and
written Borrowing Request shall specify the following  information in compliance
with Section 2.2 and this Section:

                  (i) the aggregate amount of the requested Borrowing;

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

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

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

                  (v) the location and number of the Borrower's account to which
            funds are to be disbursed,  which shall comply with the requirements
            of Section 2.5.

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

      Section 2.4. Termination and Reduction of Commitments.(a) The Borrower may
at any time terminate,  or from time to time reduce,  the Commitments;  provided
that (i) each  reduction  of the  Commitments  shall be in an amount  that is an
integral  multiple  of  $1,000,000  and not less  than  $1,000,000  and (ii) the
Borrower shall not terminate or reduce the  Commitments  if, after giving effect
to any concurrent  prepayment of the Revolving  Loans in accordance with Section
2.8, the sum of the  aggregate  Revolving  Exposures  would exceed the aggregate
Commitments.

            (b) The  Borrower  shall  notify  the  Administrative  Agent  of any
election to  terminate or reduce the  Commitments  under  paragraph  (a) of this
Section  at  least  three  Business  Days  prior to the  effective  date of such
termination  or  reduction,  specifying  the  effective  date of such  election.
Promptly following receipt of any such notice,  the  Administrative  Agent shall
advise  the  Lenders of the  contents  thereof.  Each  notice  delivered  by the
Borrower  pursuant to this Section shall be irrevocable;  provided that a notice
of termination of the Commitments  delivered by the Borrower may state that such
notice is conditioned  upon the  effectiveness  of other credit  facilities,  in
which  case  such  notice  may be  revoked  by the  Borrower  (by  notice to the
Administrative  Agent  on or  prior  to the  specified  effective  date) if such
condition is not  satisfied.  Any  termination  or reduction of the  Commitments
shall be  permanent.  Each  reduction of the  Commitments  shall be made ratably
among the applicable Lenders in accordance with their respective Commitments.

                                      -16-
<PAGE>

      Section 2.5.  Funding of Borrowings.  (a) Each Lender shall make each Loan
to be made by it  hereunder on the  proposed  date  thereof by wire  transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the  Administrative  Agent most  recently  designated  by it for such purpose by
notice to the Lenders,  provided that Swingline  Loans shall be made as provided
in Section 2.9(a).  The  Administrative  Agent will make such Loans available to
the Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower  designated by the Borrower in the applicable  Borrowing
Request,  provided that ABR Revolving Loans made to finance the reimbursement of
an LC  Disbursement  as  provided  in Section  2.10(e)  shall be remitted by the
Administrative Agent to the Issuing Bank, provided,  further, that ABR Revolving
Loans made to finance the  repayment of a Swingline  Loan as provided in Section
2.9(c) shall be remitted by the Administrative Agent to the Swingline Lender.

            (b) Unless the Administrative  Agent shall have received notice from
a Lender prior to the proposed date of any  Borrowing  that such Lender will not
make  available  to  the  Administrative  Agent  such  Lender's  share  of  such
Borrowing,  the  Administrative  Agent may assume that such Lender has made such
share  available on such date in accordance  with paragraph (a) of this Section,
paragraph  (c) of  Section  2.9 or  paragraph  (e) of Section  2.10 and may,  in
reliance upon such  assumption,  make available to the Borrower a  corresponding
amount.  In such  event,  if a  Lender  has not in fact  made  its  share of the
applicable Borrowing available to the Administrative  Agent, then the applicable
Lender  and the  Borrower  severally  agree to pay to the  Administrative  Agent
forthwith on demand such  corresponding  amount with interest thereon,  for each
day from and including the date such amount is made available to the Borrower to
but excluding  the date of payment to the  Administrative  Agent,  at (i) in the
case of such Lender,  the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable  to such Loans at the time.  If such  Lender  pays such amount to the
Administrative  Agent prior to the payment  thereof by the  Borrower,  then such
amount shall constitute such Lender's Loan included in such Borrowing.

      Section 2.6. Interest  Elections.  (a) Each Revolving  Borrowing initially
shall be of the Type specified in the applicable  Borrowing  Request and, in the
case of a Eurodollar Revolving Borrowing,  shall have an initial Interest Period
as specified in such Borrowing  Request.  Thereafter,  the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the  case of a  Eurodollar  Revolving  Borrowing,  may  elect  Interest  Periods
therefor,  all as provided in this  Section.  The Borrower  may elect  different
options with respect to different portions of the affected  Borrowing,  in which
case each such portion shall be allocated  ratably among the Lenders holding the
Loans  comprising  such  Borrowing,  and the Loans  comprising each such portion
shall be  considered  a  separate  Borrowing.  Swingline  Borrowings  may not be
converted or continued.

            (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing  Request  would be required  under  Section 2.3 if the  Borrower  were
requesting a Revolving  Borrowing of the Type resulting from such election to be
made on the effective date of such election. Except as provided in Section 2.14,
each such telephonic Interest Election Request shall be irrevocable and

                                      -17-
<PAGE>

shall be confirmed  promptly by hand delivery or telecopy to the  Administrative
Agent of a written Interest Election Request signed by the Borrower.

            (c) Each  telephonic  and written  Interest  Election  Request shall
specify  the  following  information  in  compliance  with  Section 2.2 and this
Section:

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

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

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

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

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

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

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

      Section 2.7. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally  promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid  principal  amount of each  Revolving Loan on the
Maturity Date and (ii) to the Swingline  Lender the then unpaid principal amount
of each  Swingline  Loan on the earlier of (A) the maturity date selected by the
Borrower for such Swingline Loan and (B) the Maturity Date.

                                      -18-
<PAGE>

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

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

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

            (e) Any Lender may request  that Loans made by it be  evidenced by a
promissory note. In such event, the Borrower shall prepare,  execute and deliver
to such  Lender a  promissory  note  payable to the order of such Lender (or, if
requested by such Lender,  to such Lender and its  registered  assigns) and in a
form  approved by the  Administrative  Agent and  reasonably  acceptable  to the
Borrower.  Thereafter,  the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment  pursuant to Section 9.4)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

      Section 2.8. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing (other than any Swingline
Borrowing,  the prepayment of which is governed  pursuant to Section  2.9(b)) in
whole or in part,  subject to prior notice in accordance  with  paragraph (b) of
this Section.

            (b) The Borrower shall notify the Administrative  Agent by telephone
(confirmed by telecopy) of any prepayment of a Revolving Borrowing hereunder not
later than 11:00 a.m.,  New York City time, two Business Days before the date of
prepayment.  Each  such  notice  shall be  irrevocable  and  shall  specify  the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional  notice of  termination  of the  Commitments  as  contemplated  by
Section  2.4,  then such notice of  prepayment  may be revoked if such notice of
termination  is revoked in  accordance  with  Section  2.4.  Promptly  following
receipt of any such notice relating to a Revolving Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof.  Each partial prepayment
of any Revolving  Borrowing shall be in an amount that would be permitted in the
case of an advance of a  Revolving  Borrowing  of the same Type as  provided  in
Section 2.2. Each  prepayment of a Revolving  Borrowing shall be applied ratably
to the Loans

                                      -19-
<PAGE>

included in the prepaid  Borrowing.  Prepayments shall be accompanied by accrued
interest  and breakage  fees to the extent  required by Section 2.12 and Section
2.15, respectively.

      Section 2.9.  Swingline  Loans (a) Subject to the terms and conditions set
forth  herein,  the  Swingline  Lender  agrees  to make  Swingline  Loans to the
Borrower in dollars from time to time on any Business Day during the period from
the Effective  Date to the tenth  Business Day preceding the Maturity Date in an
aggregate  principal  amount at any time outstanding that will not result in the
Swingline  Exposure  exceeding the Swingline  Commitment or the sum of the total
Revolving Exposures exceeding the total Commitments, provided that the Swingline
Lender  shall  not be  obligated  to  make a  Swingline  Loan  to  refinance  an
outstanding  Swingline Loan.  Notwithstanding  the foregoing,  (i) the Swingline
Lender shall not be required to make a Swingline Loan if (x) any Lender shall be
in default of its obligations  under this Agreement or (y) any Lender shall have
notified the Swingline  Lender and the Borrower in writing at least one Business
Day prior to the date of Borrowing  with respect to such Swingline Loan that the
conditions set forth in Section 4.2 have not been satisfied and such  conditions
remain unsatisfied as of the requested time of the making of such Swingline Loan
and  (ii)  the  Swingline  Lender  shall  not  make  a  Swingline  Loan  if  the
Administrative  Agent or the Required  Lenders shall have notified the Swingline
Lender and the  Borrower in writing at least one  Business Day prior to the date
of Borrowing  with respect to such  Swingline Loan that the conditions set forth
in Section 4.2 have not been satisfied and such conditions remain unsatisfied as
of the requested time of the making of such Swingline  Loan. Each Swingline Loan
shall be due and  payable on the  maturity  thereof,  provided  that in no event
shall such maturity be later than the tenth  Business Day preceding the Maturity
Date.

            (b) To request a  Swingline  Loan,  the  Borrower  shall  notify the
Administrative  Agent  and the  Swingline  Lender  by  telephone  (confirmed  by
facsimile)  no later  than  1:30  p.m.,  New York City  time,  on the day of the
relevant Swingline Loan. Each such notice shall be irrevocable and shall specify
(i) the  aggregate  principal  amount to be borrowed,  (ii) the  requested  date
(which  shall be a Business  Day) and (iii) the maturity  date of the  requested
Swingline  Loan which shall be not later than 30 Business  Days after the making
of such  Swingline  Loan.  The Swingline  Lender will make the requested  amount
available  promptly  on that  same day,  to the  Administrative  Agent  (for the
account of the  Borrower as set forth in Section  2.5(a)) who,  thereupon,  will
promptly  make such amount  available  to the Borrower in like funds as provided
therein or, in the case of a Swingline Loan made to finance the reimbursement of
an LC  Disbursement  as provided in Section 10(e),  by remittance to the Issuing
Bank.  Each Swingline  Loan shall be in an aggregate  amount that is an integral
multiple of $500,000 and not less than  $500,000.  The  Borrower  shall have the
right at any time and from time to time to prepay  any  Swingline  Borrowing  in
whole or in part,  provided  that the Borrower  shall notify the  Administrative
Agent and the  Swingline  Lender by telephone  (confirmed by facsimile) no later
than 11:00 a.m., New York City time, on the day of the proposed prepayment. Each
such notice shall be irrevocable  and shall specify (A) the principal  amount to
be prepaid, which shall be in an amount that is an integral multiple of $100,000
and not less than $500,000, or the remaining outstanding principal amount of the
Swingline Loan being prepaid,  and (B) the date of prepayment  (which shall be a
Business Day). Prepayments shall be accompanied by accrued interest and breakage
fees to the extent required by Section 2.12 and Section 2.15, respectively.

                                      -20-
<PAGE>

            (c)  The  Swingline  Lender  may  by  written  notice  given  to the
Administrative  Agent not later than  10:00  a.m.,  New York City  time,  on any
Business  Day  notify the  Administrative  Agent  that the  Swingline  Lender is
requesting  that the Lenders make an ABR Revolving  Borrowing in an amount equal
to the  outstanding  principal  balance  and accrued  interest on the  Swingline
Loans,  in which case (i) the  Administrative  Agent shall notify each Lender of
the details  thereof and of the amount of such  Lender's Loan to be made as part
of such ABR Revolving  Borrowing and (ii) each Lender shall,  whether or not any
Default shall have occurred and be continuing,  any  representation  or warranty
shall be accurate,  any condition to the making of any loan hereunder shall have
been fulfilled,  or any other matter whatsoever,  make the Loan to be made by it
under this  paragraph by wire  transfer of  immediately  available  funds to the
account of the  Administrative  Agent most  recently  designated  by it for such
purpose  by notice to the  Lenders,  (A) on such  date,  in the event  that such
Lender shall have received notice of such ABR Revolving Borrowing prior to 12:00
noon,  New York City time,  or (B) if such notice has not been  received by such
Lender prior to such time on such date,  then not later than 1:00 p.m., New York
City time,  on (1) the Business Day that such Lender  receives  such notice,  if
such notice is received  prior to 12:00 noon,  New York City time, on the day of
receipt or (2) the Business Day  immediately  following the day that such Lender
receives such notice,  if such notice is not received  prior to such time on the
day of receipt.  Such Loans shall, for all purposes  hereof,  be deemed to be an
ABR Revolving Borrowing, and the Lenders obligations to make such Loans shall be
absolute  and  unconditional.  The  Administrative  Agent  will make such  Loans
available  to  the   Swingline   Lender  by  promptly   crediting  or  otherwise
transferring the amounts so received, in like funds, to the Swingline Lender for
the  purpose of repaying in full the  Swingline  Loans and all accrued  interest
thereon.

            (d) If the  Borrower  fails to make any  payment  with  respect to a
Swingline  Loan,  or if any such  sum paid by the  Borrower  is  required  to be
refunded to the Borrower for any reason, the  Administrative  Agent shall notify
each Lender of the  applicable  Swingline  Loan,  the payment  then due from the
Borrower in respect  thereof and such Lender's  Applicable  Percentage  thereof.
Each Lender shall purchase a  participation  in such Swingline Loan by paying to
the Administrative Agent its Applicable  Percentage of the payment then due from
the  Borrower,  in the same manner as  provided  in Section 2.5 with  respect to
Loans made by such Lender (and Section 2.5 shall apply, mutatis mutandis, to the
payment obligations of the Lenders),  by wire transfer of immediately  available
funds to the account of the Administrative  Agent most recently designated by it
for such purpose by notice to the Lenders,  (i) on such date,  in the event that
such Lender shall have received  notice  thereof  prior to 12:00 noon,  New York
City time,  or (ii) if such notice has not been received by such Lender prior to
such time on such date,  then not later than 1:00 p.m.,  New York City time,  on
(A) the Business Day that such Lender  receives  such notice,  if such notice is
received  prior to 12:00 noon,  New York City time, on the day of receipt or (B)
the Business Day  immediately  following the day that such Lender  receives such
notice, if such notice is not received prior to such time on the day of receipt.
The Administrative  Agent shall promptly pay to the Swingline Lender the amounts
so  received  by  it  from  the  Lenders.  Promptly  following  receipt  by  the
Administrative  Agent of any payment in respect of such  Swingline Loan from the
Borrower,  the  Administrative  Agent  shall  distribute  such  payment  to  the
Swingline  Lender or, to the extent that Lenders have made payments  pursuant to
this paragraph to reimburse the Swingline  Lender,  then to such Lenders and the
Swingline  Lender as their interests

                                      -21-
<PAGE>

may appear.  Each Lender  acknowledges and agrees that its obligation to acquire
participations  pursuant  to this  paragraph  in respect of  Swingline  Loans is
absolute  and  unconditional  and  shall  not be  affected  by any  circumstance
whatsoever,  including  any  amendment,  renewal or  extension  of any Letter of
Credit  or  the  occurrence  and  continuance  of  a  Default  or  reduction  or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

      Section 2.10. Letters of Credit

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

            (b)  Notice of  Issuance;  Amendment;  Renewal;  Extension;  Certain
Conditions.  To request the  issuance  of a Letter of Credit (or the  amendment,
renewal or extension of an  outstanding  Letter of Credit),  the Borrower  shall
hand  deliver  or  facsimile  (or  transmit  by  electronic  communication,   if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not later than three Business Days before the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit,  or  identifying  the Letter of Credit to be
amended,  renewed or extended,  and specifying the date of issuance,  amendment,
renewal or  extension  (which shall be a Business  Day),  the date on which such
Letter of Credit is to expire  (which  shall comply with  paragraph  (c) of this
Section),  the  amount of such  Letter of  Credit,  the name and  address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend,  renew or extend such Letter of Credit. If requested by the Issuing Bank,
the  Borrower  also shall submit a letter of credit  application  on the Issuing
Bank's  standard form in connection  with any request for a Letter of Credit.  A
Letter of Credit  shall be issued,  amended,  renewed or extended  only if (and,
upon  issuance,  amendment,  renewal or extension of each Letter of Credit,  the
Borrower shall be deemed to represent and warrant that),  after giving effect to
such issuance,  amendment,  renewal or extension,  (i) the LC Exposure shall not
exceed  $150,000,000 and (ii) the total Revolving Exposures shall not exceed the
total Commitments.  Notwithstanding the foregoing,  no Letter of Credit shall be
issued, amended, renewed or extended if the Administrative Agent or the Required
Lenders  shall have  notified  the Issuing  Bank and the  Borrower in writing at
least one  Business  Day prior to the date of  issuance,  amendment,  renewal or
extension, as applicable, of such Letter of Credit that the conditions set forth
in Section 4.2 have not been satisfied and such conditions remain unsatisfied as
of  the  requested  time  of  issuance,  amendment,  renewal  or  extension,  as
applicable, of such Letter of Credit.

            (c) Expiration  Date. Each Letter of Credit shall expire at or prior
to the close of  business  on the earlier of (i) the date that is one year after
the date of the  issuance  of such

                                      -22-
<PAGE>

Letter of Credit (or, in the case of any renewal or extension thereof,  one year
after such renewal or  extension)  and (ii) the date that is ten  Business  Days
prior to the Maturity  Date,  provided that any Letter of Credit may provide for
the renewal  thereof for  additional  one-year  periods (which shall in no event
extend beyond the date that is ten Business Days prior to the Maturity Date).

            (d)  Participations.  By the  issuance  of a Letter of Credit (or an
amendment to a Letter of Credit  increasing the amount  thereof) and without any
further action on the part of the Issuing Bank or the Lenders,  the Issuing Bank
hereby  grants to each Lender,  and each such Lender  hereby  acquires  from the
Issuing  Bank, a  participation  in such Letter of Credit equal to such Lender's
Applicable  Percentage of the aggregate  amount available to be drawn under such
Letter of Credit.  In  consideration  and in furtherance of the foregoing,  each
such  Lender  hereby  absolutely  and  unconditionally  agrees  to  pay  to  the
Administrative  Agent,  for the  account  of the  Issuing  Bank,  such  Lender's
Applicable  Percentage of each LC Disbursement  made by the Issuing Bank and not
reimbursed  by the Borrower on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Borrower
for any reason.  Each such Lender acknowledges and agrees that its obligation to
acquire  participations  pursuant  to this  paragraph  in  respect of Letters of
Credit  is  absolute  and  unconditional  and  shall  not  be  affected  by  any
circumstance  whatsoever,  including any amendment,  renewal or extension of any
Letter of Credit or the occurrence and  continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement,  withholding or reduction whatsoever;  provided, however,
that no Lender  shall be  obligated  to make any  payment to the  Administrative
Agent for any wrongful LC  Disbursement  made by the Issuing Bank as a result of
acts or omissions  constituting  willful  misconduct or gross  negligence on the
part of the Issuing Bank.

            (e)   Reimbursement.   If  the  Issuing   Bank  shall  make  any  LC
Disbursement  in  respect  of a Letter of Credit,  then the  Issuing  Bank shall
either (i) notify the Borrower to reimburse the Issuing Bank therefor,  in which
case  the  Borrower  shall  reimburse  such LC  Disbursement  by  paying  to the
Administrative  Agent an amount  equal to such LC  Disbursement  and any accrued
interest thereon on (A) the Business Day that the Borrower receives such notice,
if such notice is received  prior to 12:00 noon,  New York City time, on the day
of  receipt  or (B) the  Business  Day  immediately  following  the day that the
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt,  provided  that,  if the LC  Disbursement  is equal to or
greater  than  $1,000,000,  the  Borrower  may,  subject  to the  conditions  of
borrowing  set forth herein,  request in accordance  with Section 2.3 or Section
2.9 that such payment be financed with an ABR Borrowing in an equivalent  amount
and, to the extent so financed,  the Borrower's  obligation to make such payment
shall be discharged and replaced by the resulting ABR Borrowing,  or (ii) notify
the Administrative Agent that the Issuing Bank is requesting that the applicable
Lenders  make  an  ABR  Revolving  Borrowing  in an  amount  equal  to  such  LC
Disbursement  and  any  accrued  interest   thereon,   in  which  case  (A)  the
Administrative  Agent shall notify each applicable Lender of the details thereof
and of the amount of such Lender's Loan to be made as part of such ABR Revolving
Borrowing  and (B) each  Lender  shall,  whether or not any  Default  shall have
occurred and be continuing,  any  representation  or warranty shall be accurate,
any condition to the making of any loan hereunder shall have been fulfilled,  or
any other matter whatsoever, make the Loan to be made by it under this paragraph
by  wire  transfer  of  immediately  available  funds  to  the  account  of  the
Administrative  Agent most recently

                                      -23-
<PAGE>

designated  by it for such  purpose by notice to the Lenders on (1) the Business
Day that such Lender  receives such notice,  if such notice is received prior to
12:00 noon,  New York City time,  on the day of receipt or (2) the  Business Day
immediately  following the day that such Lender  receives  such notice,  if such
notice is not  received  prior to such time on the day of  receipt.  Such  Loans
shall, for all purposes hereof, be deemed to be an ABR Revolving Borrowing,  and
the Lenders  obligations to make such Loans shall be absolute and unconditional.
The  Administrative  Agent will make such Loans available to the Issuing Bank by
promptly  crediting or otherwise  transferring the amounts so received,  in like
funds,  to the  Issuing  Bank  for  the  purpose  of  repaying  in  full  the LC
Disbursement and all accrued interest thereon.

            (f)   Obligations   Absolute.   The  Borrower's  and  each  Lender's
obligations to reimburse LC  Disbursements  as provided in paragraph (e) of this
Section shall be absolute, unconditional and irrevocable, and shall be performed
strictly  in  accordance  with the  terms of this  Agreement  under  any and all
circumstances  whatsoever  and  irrespective  of (i)  any  lack of  validity  or
enforceability  of any  Letter  of  Credit  or this  Agreement,  or any  term or
provision therein or herein,  (ii) any draft or other document presented under a
Letter of Credit  proving to be forged,  fraudulent or invalid in any respect or
any statement  therein being untrue or inaccurate in any respect,  (iii) payment
by the Issuing Bank under a Letter of Credit against  presentation of a draft or
other  document  that does not comply with the terms of such Letter of Credit or
(iv) any other event or circumstance  whatsoever,  whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable  discharge  of, or provide a right of setoff  against,  the
Borrower's  obligations  hereunder.  Neither  any Credit  Party nor any of their
respective  Related Parties shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment  thereunder  (irrespective  of any of the
circumstances  referred to in the preceding sentence),  or any error,  omission,
interruption,  loss or delay in transmission or delivery of any draft, notice or
other  communication  under or relating to any Letter of Credit  (including  any
document required to make a drawing thereunder),  any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank;  provided that the foregoing  shall not be construed to excuse the
Issuing Bank from  liability to the Borrower to the extent of any direct damages
(as  opposed  to  consequential  damages,  claims in respect of which are hereby
waived by the Borrower to the extent  permitted by  applicable  law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining  whether  drafts  and other  documents  presented  under a Letter of
Credit comply with the terms thereof.  The parties hereto  expressly agree that,
in the  absence of gross  negligence  or willful  misconduct  on the part of the
Issuing Bank (as finally determined by a court of competent  jurisdiction),  the
Issuing Bank shall be deemed to have exercised care in each such  determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that,  with respect to documents  presented  which appear on their
face to be in substantial  compliance with the terms of a Letter of Credit,  the
Issuing Bank may, in its sole  discretion,  either  accept and make payment upon
such documents without responsibility for further  investigation,  regardless of
any notice or information to the contrary,  or refuse to accept and make payment
upon such  documents if such  documents  are not in strict  compliance  with the
terms of such Letter of Credit.

                                      -24-
<PAGE>

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

            (h)  Interim  Interest.  If  the  Issuing  Bank  shall  make  any LC
Disbursement,  then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC  Disbursement  is made, the unpaid amount thereof shall
bear interest,  for each day from and including the date such LC Disbursement is
made  to  but  excluding  the  date  that  the  Borrower   reimburses   such  LC
Disbursement,  at the rate per annum then  applicable  to ABR  Revolving  Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement  when due
pursuant to paragraph  (e) of this  Section,  then Section  2.12(d) shall apply.
Interest  accrued  pursuant  to this  paragraph  shall be for the account of the
Issuing Bank,  except that interest  accrued on and after the date of payment by
any Lender  pursuant to paragraph  (e) of this Section to reimburse  the Issuing
Bank shall be for the account of such Lender to the extent of such payment.

            (i) Cash  Collateral.  If any Event of  Default  shall  occur and be
continuing,  on the  Business  Day that the  Borrower  receives  notice from the
Administrative  Agent or the Required  Lenders (or, if the maturity of the Loans
has been accelerated,  Lenders with LC Exposure representing at least 51% of the
total LC Exposure)  demanding  the deposit of cash  collateral  pursuant to this
paragraph,  the Borrower  shall  deposit in an account  with the  Administrative
Agent, in the name of the Administrative Agent and for the benefit of the Credit
Parties,  an amount in cash  equal to the LC  Exposure  as of such date plus any
accrued and unpaid  interest  thereon;  provided that the  obligation to deposit
such cash collateral shall become effective immediately,  and such deposit shall
become immediately due and payable,  without demand or other notice of any kind,
upon the  occurrence  of any  Event of  Default  with  respect  to the  Borrower
described in clause (g) or (h) of Article 7. Such  deposit  shall be held by the
Administrative  Agent as  collateral  for the  payment  and  performance  of the
obligations of the Borrower under this Agreement. The Administrative Agent shall
have  exclusive   dominion  and  control,   including  the  exclusive  right  of
withdrawal,  over such account. Such deposit shall not bear interest,  nor shall
the Administrative Agent be under any obligation  whatsoever to invest the same,
provided,  however, that, at the request of the Borrower,  such deposit shall be
invested by the  Administrative  Agent in direct  short-term  obligations of, or
short-term   obligations   the   principal   of  and   interest   on  which  are
unconditionally  guaranteed  by,  the  United  States of  America,  in each case
maturing  no later than the expiry  date of the Letter of Credit  giving rise to
the relevant LC Exposure. Interest or profits, if any, on such investments shall
accumulate  in such  account.  Moneys in such  account  shall be  applied by the
Administrative  Agent to  reimburse  the Issuing Bank for LC  Disbursements  for
which it has not been  reimbursed  and, to the extent not so  applied,  shall be
held for the satisfaction of the  reimbursement  obligations of the Borrower for
the LC  Exposure  at such  time  or,  if the  maturity  of the  Loans  has  been
accelerated (but subject to the consent of Lenders with LC Exposure representing
at least 51% of the total LC Exposure),  be applied to satisfy other obligations
of the Borrower under this Agreement.  If the

                                      -25-
<PAGE>

Borrower  is  required to provide an amount of cash  collateral  hereunder  as a
result of the occurrence of an Event of Default,  such amount (to the extent not
applied as aforesaid)  shall be returned to the Borrower  within three  Business
Days after all Events of Default have been cured or waived.

      Section 2.11.  Fees. (a) The Borrower agrees to pay to the  Administrative
Agent  for the  account  of each  Lender  (other  than the  Swingline  Lender) a
facility fee, which shall accrue at the Applicable Rate with respect to facility
fees on the daily  amount of the  Commitment  of such  Lender  (whether  used or
unused)  during the period from and  including  the date hereof to but excluding
the date on which such  Commitment  terminates;  provided  that,  if such Lender
continues to have any Revolving Exposure after its Commitment  terminates,  then
such facility fee shall  continue to accrue on the daily amount of such Lender's
Revolving  Exposure  from  and  including  the  date  on  which  its  Commitment
terminates  to but  excluding  the date on which such Lender  ceases to have any
Revolving  Exposure.  Accrued  facility  fees shall be payable in arrears on the
last day of March,  June,  September  and December of each year, on each date on
which  the  Commitments  are  permanently  reduced,  on the  date on  which  the
Commitments  terminate and on any other date after the Commitments  terminate on
which all outstanding Loans shall be repaid or prepaid.  All facility fees shall
be  computed  on the  basis of a year of 360 days and shall be  payable  for the
actual  number of days elapsed  (including  the first day but excluding the last
day).

            (b) The Borrower agrees to pay to the  Administrative  Agent for the
account of each Lender  (other than the  Swingline  Lender) a  utilization  fee,
which shall accrue at the Applicable  Rate with respect to  utilization  fees on
the amount of such  Lender's  Revolving  Exposure for each day during the period
from and  including  the  Effective  Date to but  excluding the Maturity Date on
which  the sum of the  total  Revolving  Exposure  on such day  plus  the  total
Revolving  Exposure  (as defined in the 364-Day  Credit  Agreement)  on such day
exceeds  50% of the sum of the  total  Commitments  on such day  plus the  total
Commitments  (as defined in the 364-Day Credit  Agreement) on such day.  Accrued
utilization  fees shall be  payable  in arrears on the last day of March,  June,
September and December of each year, and on the Maturity  Date. All  utilization
fees shall be  computed  on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

            (c) The Borrower agrees to pay (i) to the  Administrative  Agent for
the  account  of  each  Lender  a   participation   fee  with   respect  to  its
participations in Letters of Credit,  which shall accrue at rate per annum equal
to the Applicable Rate with respect to Eurodollar Revolving Loans on the average
daily  amount of such  Lender's  LC  Exposure  (excluding  any  portion  thereof
attributable  to  unreimbursed  LC  Disbursements)  during the  period  from and
including  the  Effective  Date to but  excluding the later of the date on which
such Lender's Commitment  terminates and the date on which such Lender ceases to
have any LC Exposure and (ii) to the Issuing Bank for its own account a fronting
fee,  which shall accrue at the rate or rates per annum  separately  agreed upon
between the Borrower and the Issuing Bank on the average  daily amount of the LC
Exposure  (excluding  any  portion  thereof   attributable  to  unreimbursed  LC
Disbursements)  during the period from and including  the Effective  Date to but
excluding the later of the date of termination of the  Commitments  and the date
on which  there  ceases to be any LC  Exposure,  as well as the  Issuing  Bank's
standard fees with respect to the issuance,  amendment,  renewal or extension of
any Letter of Credit or processing of drawings thereunder.

                                      -26-
<PAGE>

Accrued  participation fees and fronting fees shall be payable in arrears on the
last day of March, June, September and December of each year,  commencing on the
first  such date to occur  after the date  hereof;  provided  that all such fees
shall be payable  on the date on which the  Commitments  terminate  and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable  within  ten days  after  demand.  All  participation  fees and
fronting  fees shall be computed on the basis of a year of 360 days and shall be
payable  for the  actual  number of days  elapsed  (including  the first day but
excluding the last day).  Notwithstanding anything to the contrary herein, if an
Event of Default has occurred and is continuing and the Administrative Agent, at
the request of the Required Lenders,  in the case of participation  fees, or the
Issuing Bank, in the case of fronting  fees, so notifies the Borrower,  then, so
long as such Event of Default is continuing, all participation fees and fronting
fees shall be calculated at a rate per annum equal to 2% plus the rate otherwise
applicable thereto and shall be payable on demand.

            (d) The  Borrower  agrees to pay to each Credit  Party,  for its own
account,  fees  payable in the amounts and at the times  separately  agreed upon
between the Borrower and the Administrative Agent.

            (e) All fees  payable  hereunder  shall be paid on the dates due, in
immediately  available  funds.  Fees  paid  shall  not be  refundable  under any
circumstances.

      Section 2.12. Interest.  (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate.

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

            (c) Each Swingline  Loan shall bear interest at the Swingline  Rate,
unless a  participation  is required to be made pursuant to Section  2.9(c),  in
which case such Loan shall bear interest at the Alternate Base Rate.

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

            (e)  Accrued  interest  on each Loan  shall be payable in arrears on
each  Interest  Payment Date for such Loan and, in the case of Revolving  Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (d) of this Section  shall be payable on demand,  (ii) in the event
of any  repayment or  prepayment  of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued

                                      -27-
<PAGE>

interest on the principal  amount repaid or prepaid shall be payable on the date
of such  repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar  Revolving  Loan  prior  to the end of the  current  Interest  Period
therefor,  accrued  interest on such Loan shall be payable on the effective date
of such conversion.

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

      Section 2.13. Alternate Rate of Interest.  If prior to the commencement of
any  Interest  Period for a Eurodollar  Borrowing  the  Administrative  Agent is
advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as
applicable,  for such Interest Period will not adequately and fairly reflect the
cost to such  Lenders (or Lender) of making or  maintaining  their Loans (or its
Loan)   included  in  such  Borrowing  for  such  Interest   Period,   then  the
Administrative  Agent shall give notice  thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as  practicable  thereafter  and, until the
Administrative   Agent   notifies   the   Borrower  and  the  Lenders  that  the
circumstances  giving  rise to such  notice no longer  exist,  (a) any  Interest
Election Request that requests the conversion of any Revolving  Borrowing to, or
continuation  of any  Revolving  Borrowing as, a Eurodollar  Borrowing  shall be
ineffective  and (b) if any Borrowing  Request  requests a Eurodollar  Revolving
Borrowing,  such Borrowing shall be made as an ABR Borrowing;  provided that, if
the circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

      Section 2.14. Increased Costs, Illegality,  Etc. (a) In the event that any
Credit Party with respect to clauses (ii) and (iii) below or the  Administrative
Agent  with   respect  to  clause  (i)  below  shall  have   determined   (which
determination  shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):

            (i) on the second Business Day  immediately  preceding the making of
      any requested Eurodollar Loan that, by reason of any changes arising after
      the date hereof affecting the applicable  interbank  market,  adequate and
      fair means do not exist for ascertaining  the applicable  interest rate on
      the basis provided for in the definition of the LIBO Rate; or

            (ii) at any time that such Credit Party has incurred increased costs
      or reductions in the amounts received or receivable hereunder with respect
      to any Eurodollar Loan or any Letter of Credit or  participation  therein,
      in each case by an amount such Credit Party deems to be material,  because
      of any change since the date hereof in any law, rule, regulation, order or
      guideline applicable to such Credit Party or the compliance by such Credit
      Party with any  request  (whether or not having the force of law) from any
      central bank or other  Governmental  Authority made subsequent to the date
      hereof or in the  interpretation or  administration  thereof and including
      the introduction  after the date

                                      -28-
<PAGE>

      hereof of any new law, rule, regulation, order, guideline or request, such
      as, for example, but not limited to: (A) a change in the basis of taxation
      of payment to any Credit  Party of the  principal  of or  interest on such
      Eurodollar Loan or any other amounts payable hereunder (except for changes
      in the rate of tax on,  or  determined  by  reference  to,  the Tax on the
      Income  of  such  Credit  Party),  or (B) a  change  in  official  reserve
      (including,  without limitation,  any marginal,  emergency,  supplemental,
      special or other reserve)  requirements  (except to the extent included in
      the  computation  of the  Adjusted  LIBO Rate),  or any  special  deposit,
      assessment or similar  requirement against assets of, deposits with or for
      the account of, or credit extended by, any Credit Party (or its Applicable
      Lending Office); or

            (iii) at any time that the making or  continuance  of any Eurodollar
      Loan has been made (A) unlawful by any law,  rule,  regulation or order or
      (B)  impossible  by  compliance by any Credit Party in good faith with any
      governmental  directive  or  request  (whether  or not having the force of
      law);

then,  and in any such event,  such Credit Party,  in the case of clause (ii) or
(iii) above, or the Administrative Agent, in the case of clause (i) above, shall
promptly give notice (by telephone  confirmed in writing) to the Borrower,  and,
except in the case of clause  (i)  above,  to the  Administrative  Agent of such
determination  (which notice the Administrative Agent shall promptly transmit to
each of the Credit Parties). Thereafter, (1) in the case of clause (i) above, in
the event that  Eurodollar  Loans are so  affected,  Eurodollar  Loans  shall no
longer be available  until such time as the  Administrative  Agent  notifies the
Borrower  and the Credit  Parties  that the  circumstances  giving  rise to such
notice by the Administrative Agent no longer exist, and any notices given by the
Borrower  with  respect to  Eurodollar  Loans  which have not yet been  incurred
(including by way of conversion) shall be deemed rescinded by the Borrower,  (2)
in the case of clause (ii) above,  the Borrower  shall pay to such Credit Party,
within 15 days of written demand therefor,  such additional amounts (in the form
of an  increased  rate of, or a  different  method of  calculating,  interest or
otherwise as such Credit Party in its reasonable  discretion shall determine) as
shall be required to compensate  such Credit Party for such  increased  costs or
reductions in amounts  received or receivable  hereunder (a written notice as to
the  additional  amounts  owed to such Credit  Party,  showing the basis for the
calculation  thereof,  submitted  to the  Borrower by such Credit  Party in good
faith shall,  absent  manifest error, be final and conclusive and binding on all
the parties  hereto) and (3) in the case of clause  (iii)  above,  the  Borrower
shall take one of the actions  specified  in  paragraph  (b) below.  Each of the
Administrative  Agent and the other Credit Parties agree that if it gives notice
to the Borrower of any of the events  described in clause (i) or (iii) above, it
shall  promptly  notify the  Borrower  and, in the case of any such other Credit
Party,  the  Administrative  Agent,  if such event ceases to exist.  If any such
event  described in clause (i) or (iii) above with respect to  Eurodollar  Loans
ceases to exist as to a Credit Party,  the  obligations  of such Credit Party to
make  Eurodollar  Loans and to convert Loans to or continue  Loans as Eurodollar
Loans on the terms and conditions contained herein shall be reinstated.

            (b)  At any  time  that  any  Eurodollar  Loan  is  affected  by the
circumstances  described in Section  2.14(a)(ii) or (iii), the Borrower may (and
in the case of a  Eurodollar  Loan  affected by the  circumstances  described in
Section  2.14(a)(iii)  shall) either (i) if the affected Eurodollar Loan is then
being  made  initially  or  pursuant  to a  conversion,  cancel  the  respective

                                      -29-
<PAGE>

borrowing or conversion by giving the  Administrative  Agent  telephonic  notice
(confirmed  in writing) on the same date that the  Borrower  was notified by the
affected  Credit  Party  or  the   Administrative   Agent  pursuant  to  Section
2.14(a)(ii)  or  (iii)  or  (ii)  if  the  affected   Eurodollar  Loan  is  then
outstanding,   upon  at  least  three  Business  Days'  written  notice  to  the
Administrative  Agent and the affected Credit Party, require the affected Credit
Party to  convert  such  Eurodollar  Loan  into an ABR Loan as of the end of the
Interest  Period  then  applicable  to such  Eurodollar  Loan or within the time
required by law, if earlier.

            (c) If any Credit  Party  determines  that after the date hereof the
introduction  of or any change in any applicable law, rule,  regulation,  order,
guideline,  directive  or  compliance  by such Credit  Party or any  corporation
controlling  such Credit Party with any request (whether or not having the force
of law) from any  Governmental  Authority  or central  bank  concerning  capital
adequacy,  or any  change in  interpretation  or  administration  thereof by any
Governmental Authority or central bank, in each case made subsequent to the date
hereof,  will have the  effect  of  reducing  the rate of return on the  capital
required to be  maintained by such Credit Party or any  corporation  controlling
such Credit  Party based on the  existence  of such  Credit  Party's  Commitment
hereunder or its  obligations  hereunder to a level below that which such Credit
Party or such  corporation  could  have  achieved  but for such  application  or
compliance  (taking  into  account  such  Credit  Party's or such  corporation's
policies  with respect to capital  adequacy) by an amount  deemed by such Credit
Party to be material,  the Borrower  shall pay to such Credit  Party,  within 15
days of its  written  demand  therefor,  such  additional  amounts  as  shall be
required to  compensate  such  Credit  Party or such other  corporation  for the
increased  cost to such Credit Party or such other  corporation or the reduction
in the rate of return to such Credit Party or such other corporation as a result
of such reduction.  In determining  such additional  amounts,  each Credit Party
will act  reasonably  and in good faith and will use averaging  and  attribution
methods which are reasonable;  provided that such Credit Party's reasonable good
faith  determination of compensation  owing under this paragraph  shall,  absent
manifest  error,  be final and conclusive and binding on all the parties hereto.
Each Credit Party, upon determining that any additional  amounts will be payable
pursuant to this  paragraph,  will give  prompt  written  notice  thereof to the
Borrower,  which notice shall show the basis for  calculation of such additional
amounts.

            (d) Each  Credit  Party  shall  notify  the  Borrower  of any  event
occurring  after the Effective Date entitling such Credit Party to  compensation
under this Section 2.14 as promptly as  practicable,  but in any event within 30
days after the officer having primary  responsibility for this Agreement obtains
actual knowledge thereof; provided that no such notice shall be required if such
Credit Party has determined not to seek compensation  under this Section 2.14 as
a result of such  event.  Each  Credit  Party  will  furnish  to the  Borrower a
certificate  setting  forth the basis and amount of each  request by such Credit
Party for compensation  under this Section 2.14.  Determinations and allocations
by any Credit  Party for  purposes of this  Section 2.14 on its costs or rate of
return of maintaining  Loans or Letters of Credit or  participations  therein or
its obligation to make Loans or issue Letters of Credit or participate  therein,
or on amounts  receivable by it in respect of Loans or Letters of Credit, and of
the amounts  required to  compensate  such Credit  Party under this Section 2.14
shall be prima facie evidence of such determinations and allocations.

                                      -30-
<PAGE>

            (e) Notwithstanding the foregoing, no Credit Party shall be entitled
to any  compensation  described  in this  Section  2.14  unless,  at the time it
requests such compensation,  it is the policy or general practice of such Credit
Party to request  compensation  for  comparable  costs in similar  circumstances
under comparable  provisions of other credit agreements for comparable customers
unless  specific  facts  or  circumstances  applicable  to the  Borrower  or the
transactions  contemplated  by this Agreement would alter such policy or general
practice,  provided that nothing in this paragraph shall preclude a Credit Party
from  waiving  the  collection  of  similar  costs from one or more of its other
customers.

            (f) If any  Credit  Party  fails to give  the  notice  described  in
paragraph (d) above within 30 days after it obtains such actual knowledge of the
event  required to be described in such  notice,  such Credit Party shall,  with
respect to any  compensation  that would otherwise be owing to such Credit Party
under this  Section  2.14,  only be  entitled  to payment  for  increased  costs
incurred from and after the date that such Credit Party does give such notice.

      Section 2.15. Break Funding  Payments.  In the event of (a) the payment of
any principal of any  Eurodollar  Loan other than on the last day of an Interest
Period  applicable  thereto or any  Swingline  Loan  other than on the  maturity
thereof  (other than a Swingline  Loan, the Swingline Rate with respect to which
is based on the  Alternate  Base  Rate)  (including  as a result  of an Event of
Default),  (b) the conversion of any Eurodollar  Loan other than on the last day
of the Interest Period applicable thereto,  (c) the failure to borrow,  convert,
continue or prepay any Revolving Loan or Swingline Loan on the date specified in
any notice delivered  pursuant hereto  (regardless of whether such notice may be
revoked under Section 2.8(b) and is revoked in accordance therewith), or (d) the
assignment  of any  Eurodollar  Loan other than on the last day of the  Interest
Period  applicable  thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each Lender
for the loss,  cost and expense  attributable  to such  event.  In the case of a
Eurodollar  Loan,  such loss,  cost or expense to any Lender  shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate or LIBO Rate, as the case
may be, that would have been  applicable  to such Loan,  for the period from the
date of such event to the last day of the then current  Interest Period therefor
(or,  in the case of a failure to borrow,  convert or  continue,  for the period
that would have been the Interest Period for such Loan), over (ii) the amount of
interest  which  would  accrue on such  principal  amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period,  for dollar  deposits of a comparable  amount and period from other
banks in the London interbank  market. A certificate of any Lender setting forth
any amount or amounts  that such Lender is entitled to receive  pursuant to this
Section  shall be  delivered  to the  Borrower  and shall be  conclusive  absent
manifest  error.  The Borrower  shall pay such Lender the amount shown as due on
any such certificate within 15 days after receipt thereof.

      Section 2.16.  Taxes.  (a) Provided that all  documentation,  if any, then
required to be delivered by any Credit Party pursuant to paragraph (c) below has
been  delivered,  all sums  payable to each Credit  Party by the Borrower or any
Guarantor under any Loan Document shall be paid free and clear of and (except to
the extent  required by law) without any deduction or  withholding on account of
any Taxes (other than a Tax on the Income of any Credit Party (for

                                      -31-
<PAGE>

which payment need not be free and clear but no deduction or  withholding  shall
be made unless then required by applicable  law))  imposed,  levied,  collected,
withheld or assessed by or within the United States or any political subdivision
of the United  States or any other  jurisdiction  within or  without  the United
States  from  which a payment  is made by or on behalf  of the  Borrower  or any
Guarantor or in which the  Borrower or an Affiliate  thereof has an office or is
deemed to be doing business (each an "Indemnified Tax").

            (b) If the Borrower or any  Guarantor or any other Person  acting as
agent or intermediary  for the Borrower or any Guarantor is required by any law,
rule, regulation, order, directive, treaty or guideline to make any deduction or
withholding  on account of any  Indemnified  Tax from any sum paid or payable by
the Borrower or any Guarantor to any Credit Party under any Loan Document:

                        (i) the Borrower,  the Guarantors and such Credit Party,
            as  applicable,  will cooperate with each other to notify each other
            of any such  requirement  or any change in any such  requirement  as
            soon as it becomes aware of such  requirement and the  applicability
            of such requirement to any Loan Document;

                        (ii) the Borrower,  such Guarantor or such other Person,
            as applicable, shall pay any such Indemnified Tax before the date on
            which  penalties  attach  thereto,  such  payment to be made (if the
            liability to pay is imposed on the Borrower,  such Guarantor or such
            other  Person,  as  applicable)  for  its  own  account  or (if  the
            liability  is imposed on such Credit  Party) on behalf of and in the
            name of such Credit Party;

                        (iii) the sum payable by the Borrower, such Guarantor or
            such other Person, as applicable,  to the Credit Party in respect of
            which the  relevant  deduction,  withholding  or payment is required
            shall be increased to the extent necessary to ensure that, after the
            making of that deduction,  withholding or payment, such Credit Party
            receives  on the due date  therefor a net sum equal to what it would
            have  received had no such  deduction,  withholding  or payment been
            required; and

                        (iv)  within the later of (A) 30 days  after  paying any
            sum  from  which it is  required  by law to make  any  deduction  or
            withholding,  and (B) 30 days  after the due date of  payment of any
            Tax which it is required by this clause (b) to pay,  the Borrower or
            such Guarantor,  as applicable,  shall deliver to the Administrative
            Agent and the  applicable  other  Credit Party  evidence  reasonably
            satisfactory to the Administrative Agent and such other Credit Party
            of  the  remittance  of  such  Tax  to  the  relevant   Governmental
            Authority;

provided  that no such  additional  amount  shall be  required to be paid to any
Credit Party under this Section 2.16 with respect to an  Indemnified  Tax to the
extent that (1) such  additional  amount  would have been  required to have been
paid under any law, rule, regulation,  order, directive,  treaty or guideline in
effect  on the date  hereof  (in the case of each  Credit  Party  listed  on the
signature  pages  hereof)  or on  the  effective  date  of  the  Assignment  and
Acceptance  pursuant  to which it  became  a Lender  (in the case of each  other
Credit Party) or (2) the obligation to deduct,

                                      -32-
<PAGE>

withhold or pay such  additional  amount would not have arisen but for a failure
by the  Administrative  Agent or such Credit Party to comply with subsection (c)
below.

            (c) Each Foreign  Lender shall deliver to the  Administrative  Agent
and to the Borrower,  (i) on or prior to the Effective Date (in the case of each
Lender  listed on the signature  pages  hereto) or on the effective  date of the
Assignment and Acceptance  pursuant to which it becomes a Lender (in the case of
each other Lender), (ii) on or before the date, if any, such Lender designates a
new Applicable  Lending Office and (iii) at such other times as may be necessary
in the  determination of the Borrower or the  Administrative  Agent (each in the
reasonable  exercise of its discretion),  such certificates,  documents or other
evidence,  properly  completed  and duly  executed  by such  Lender  (including,
without limitation, Internal Revenue Service Form W-8 BEN or Form W-8 ECI or any
other certificate or statement of exemption (or any successor  thereto) required
by  applicable  Treasury  Regulations)  to establish  that such Lender is wholly
exempt from any deduction or  withholding  of United States  federal  income tax
under  Section  1441,  1442 or  3406 of the  Code or  otherwise  (or  under  any
comparable  provisions of any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under any Loan
Document.  Neither the Borrower nor any  Guarantor  shall be required to pay any
additional  amount to any such Lender under this Section 2.16 with respect to an
Indemnified Tax imposed,  levied,  collected,  withheld or assessed by or within
the United States or any political subdivision thereof if such Lender shall have
failed to  satisfy  the  requirements  of the  immediately  preceding  sentence;
provided that if such Lender shall have  satisfied such  requirements  (A) on or
prior to the Effective  Date (in the case of each Lender listed on the signature
pages hereto) or on the effective date of the Assignment and Acceptance pursuant
to which it became a Lender  (in the case of each  other  Lender)  or (B) on the
date such Lender  designates a new Applicable  Lending  Office,  nothing in this
subsection  shall  relieve the Borrower and each  Guarantor of their  respective
obligations to pay any additional  amounts  pursuant to this Section 2.16 in the
event that,  as a result of any change in  applicable  law  (including,  without
limitation,  any change in the interpretation thereof), such Lender is no longer
properly  entitled to deliver  certificates,  documents  or other  evidence at a
subsequent  date  establishing  the fact that  such  Lender  is not  subject  to
withholding as described in the immediately preceding sentence.

      Section 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each of the Borrower and the Guarantors  shall make each payment required to
be made by it hereunder or under any other Loan Document  (whether of principal,
LC  Disbursements,  interest,  fees,  or of amounts  payable under Section 2.14,
2.15, 2.16 or 9.3, or otherwise) prior to 12:00 noon, New York City time, on the
date when due, in immediately  available funds, without set-off or counterclaim.
Any amounts  received  after such time on any date may, in the discretion of the
Administrative  Agent,  be deemed to have been  received on the next  succeeding
Business Day for purposes of  calculating  interest  thereon.  All such payments
shall be made to the Administrative Agent at its offices at One Wall Street, New
York, New York or such other office specified by the  Administrative  Agent from
time to time,  except  payments to be made to the Issuing Bank or the  Swingline
Lender as  expressly  provided  herein  and except  that  payments  pursuant  to
Sections 2.14, 2.15, 2.16 and 9.3 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other  Person to the  appropriate  recipient  promptly
following  receipt thereof.  If any payment

                                      -33-
<PAGE>

hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next  succeeding  Business Day, and, in the case of any
payment accruing  interest,  interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

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

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

            (d) Unless the Administrative  Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the  account  of the  applicable  Credit  Parties  hereunder  that the
Borrower or such  Guarantor,  as  applicable,  will not make such  payment,  the
Administrative  Agent  may  assume  that  the  Borrower  or such  Guarantor,  as
applicable,  has made such payment on such date in accordance  herewith and may,
in reliance upon such  assumption,  distribute to such Credit Parties the amount
due. In such event, if the Borrower or such Guarantor, as applicable, has not in
fact made such payment,

                                      -34-
<PAGE>

then each such  Credit  Party  severally  agrees to repay to the  Administrative
Agent  forthwith on demand the amount so  distributed  to such Credit Party with
interest  thereon,  for each day from and  including  the date  such  amount  is
distributed  to it to but  excluding  the date of payment to the  Administrative
Agent,  at the greater of the Federal Funds Effective Rate and a rate determined
by the  Administrative  Agent  in  accordance  with  banking  industry  rules on
interbank compensation.

            (e) If any Credit  Party shall fail to make any payment  required to
be made by it pursuant to Section 2.5(b),  2.9(c),  2.10(e) or 2.17(d), then the
Administrative  Agent  may,  in its  discretion  (notwithstanding  any  contrary
provision hereof),  apply any amounts thereafter  received by the Administrative
Agent for the  account of such  Credit  Party to  satisfy  such  Credit  Party's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

      Section 2.18. Mitigation  Obligations;  Replacement of Lenders. (a) If any
Lender requests  compensation under Section 2.14, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender  pursuant  to Section  2.16,  then such  Lender  shall use
reasonable  efforts to  designate  a  different  Applicable  Lending  Office for
funding or booking its Loans or Letters of Credit (or any participation therein)
hereunder  or to assign its rights and  obligations  hereunder to another of its
offices,  branches  or  affiliates,  if, in the  judgment of such  Lender,  such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to  Section  2.14 or 2.16,  as the case may be, in the future and (ii) would not
subject such Lender to any material  unreimbursed  cost or expense and would not
otherwise be  materially  disadvantageous  to such Lender.  The Borrower  hereby
agrees  to pay all  reasonable  costs and  expenses  incurred  by any  Lender in
connection with any such designation or assignment.

            (b) If at any  time  (i)  any  Lender  requests  compensation  under
Section 2.14, or if the Borrower is required to pay any additional amount to any
Lender or any  Governmental  Authority for the account of any Lender pursuant to
Section  2.16,  (ii)  any  Lender  defaults  in its  obligation  to  fund  Loans
hereunder, (iii) any Lender becomes insolvent and its assets become subject to a
receiver,  liquidator,  trustee, custodian or other Person having similar powers
or (iv) any Lender becomes a  "Non-Consenting  Lender" (as defined below),  then
the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative  Agent, require such Lender to (and such Lender shall) assign
and  delegate,   without  recourse  (in  accordance  with  and  subject  to  the
restrictions   contained  in  Section  9.4),  all  its  interests,   rights  and
obligations under this Agreement to an assignee  (selected by the Borrower) that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative  Agent, the Swingline Lender and the
Issuing Bank, which consents shall not  unreasonably be withheld,  and (ii) such
Lender  shall  have  received  payment  of an  amount  equal to the  outstanding
principal of its Loans,  accrued  interest  thereon,  accrued fees and all other
amounts payable to it under the Loan Documents, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts).  A Lender shall not be required to make any such
assignment and  delegation  if, prior  thereto,  as a result of a waiver by such
Lender or otherwise,  the  circumstances  entitling the Borrower to require such
assignment and delegation  cease to apply. In the event that (x) the Borrower or
the Agent has  requested  the Lenders to consent to a departure or waiver of any
provisions of the Loan Documents or to agree

                                      -35-
<PAGE>

to any  amendment  thereto,  (y) the  consent,  waiver or  amendment in question
requires the  agreement of all Lenders in  accordance  with the terms of Section
9.2 and (z) the  Required  Lenders  have  agreed  to  such  consent,  waiver  or
amendment,  then any  Lender  who does not  agree  to such  consent,  waiver  or
amendment within three Business Days after the condition set forth in clause (z)
above has been  satisfied  and a request  therefor  has been made to such Lender
shall be deemed a "Non-Consenting Lender".

            (c) In lieu of replacing a Lender  pursuant to paragraph  (b) above,
provided  that no Event of Default  shall  exist,  the  Borrower may direct in a
writing delivered to the  Administrative  Agent and such Lender that such Lender
be terminated as a Lender and that the aggregate  amount of the  Commitments  be
reduced by the amount of the  Commitment  of such Lender;  provided that (x) the
Borrower shall not reduce the  Commitments  pursuant to this paragraph if, after
giving  effect to the  payments  to be made  pursuant  to the next  sentence  in
connection with such  reduction,  the sum of the aggregate  Revolving  Exposures
would exceed the aggregate  Commitments and (y) no more than five Lenders in the
aggregate  may be  terminated  pursuant  to this  paragraph.  In such case,  the
Borrower  shall pay to such  Lender an amount  equal to the sum of (i) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
such Lender,  (ii) an amount equal to all accrued,  but theretofore unpaid, fees
owing to such Lender,  and (iii) all other  obligations  of the Borrower and the
Guarantors owing to such Lender  concurrently with such  termination.  Upon such
notice  and  payment,  (A)  such  Lender  shall  cease  to  constitute  a Lender
hereunder,   except  with  respect  to  indemnification  provisions  under  this
Agreement,  which shall survive as to such Lender,  and (B) the aggregate amount
of  Commitments  shall be reduced by the amount of such Lender's  Commitment and
the  Applicable   Percentages  of  the  remaining   Lenders  shall  be  adjusted
accordingly.

      Section  2.19.  Increases in  Commitments.  The  Borrower  may, by written
notice to the  Administrative  Agent,  executed by the  Borrower and one or more
financial  institutions,  which may include one or more  existing  Lenders (each
such  financial  institution  being  called  a  "Prospective   Lender"),   cause
Commitments to be extended by the Prospective  Lenders (or cause the Commitments
of the  Prospective  Lenders to be increased,  as the case may be), in an amount
for each Prospective Lender set forth in such notice,  provided,  however,  that
(a)  each  such  extension  or  increase  shall  be  effected   ratably  with  a
corresponding  extension  or  increase  in the  Commitments  (as  defined in the
364-Day  Credit  Agreement),  (b)  immediately  after giving effect to each such
extension or increase,  the sum of the aggregate  amount of all such  extensions
and increases  plus the aggregate  amount of all  corresponding  extensions  and
increases  under  the  364-Day  Credit   Agreement  shall  in  no  event  exceed
$50,000,000, (c) each such extension or increase shall be in an aggregate amount
that is an integral  multiple of $5,000,000 and not less than  $10,000,000,  (d)
the Commitments shall in no event be extended or increased under this Section on
more than four (4)  occasions,  (e) each  Prospective  Lender,  if not already a
Lender hereunder,  shall be subject to the approval of the Administrative  Agent
(which  approval shall not be  unreasonably  withheld) and (f) each  Prospective
Lender,  if not  already  a  Lender  hereunder,  shall  become  a party  to this
Agreement  by  completing  and  delivering  to the  Administrative  Agent a duly
executed  Accession  Agreement.  New  Commitments  and increases in  Commitments
pursuant to this Section shall become effective (i) in the case of a Prospective
Lender  not  already  party  hereto,  on the  effective  date of the  applicable
Accession  Agreement and (ii) in the case of a Prospective  Lender already party
hereto, on the date specified in the notice delivered  pursuant to

                                      -36-
<PAGE>

this Section.  Upon the  effectiveness  of any Accession  Agreement to which any
Prospective  Lender  not  already a party  hereto  becomes  a  Lender,  (A) such
Prospective  Lender shall  thereafter be deemed to be a party to this  Agreement
and shall be entitled to all rights,  benefits and privileges  accorded a Lender
hereunder and subject to all obligations of a Lender  hereunder and (B) Schedule
2.1 shall be deemed  to have been  amended  to  reflect  the  Commitment  of the
additional   Lender  as  provided  in  such   Accession   Agreement.   Upon  the
effectiveness  of any extension or increase under this Section in the Commitment
of a Lender already a party hereunder, Schedule 2.1 shall be deemed to have been
amended  to  reflect  the  extended  or  increased  Commitment  of such  Lender.
Notwithstanding the foregoing, no extension or increase in the total Commitments
(or in the Commitment of any Lender) shall become  effective  under this Section
unless the Administrative Agent shall have received a certificate dated the date
of such  increase  and duly  executed by a Financial  Officer  stating  that the
conditions  set forth in  paragraphs  (a),  (b) and (c) of Section 4.2 have been
satisfied as of the date of such  extension or increase  (with all references in
such  paragraphs to a Borrowing  being deemed to be references to such extension
or increase).  If Revolving Loans would be outstanding  immediately after giving
effect to any  extension or increase of a Commitment  under this  Section,  then
simultaneously with such extension or increase,  (1) each applicable Prospective
Lender  and each  other  Lender  shall be deemed to have  entered  into a master
assignment and acceptance agreement, in form and substance substantially similar
to Exhibit A,  pursuant to which each such other Lender  shall have  assigned to
each such  Prospective  Lender a portion of its  Revolving  Loans  necessary  to
reflect  proportionately  the  Commitments  as adjusted in accordance  with this
Section and (2) in connection with such assignment, each such Prospective Lender
shall pay to the  Administrative  Agent,  for the account of the other  Lenders,
such amount as shall be necessary to appropriately  reflect the assignment to it
of Revolving  Loans,  and in connection  with such master  assignment  each such
other Lender may treat the  assignment of Eurodollar  Borrowings as a prepayment
of such Eurodollar Borrowings for purposes of Section 2.15.

ARTICLE 3. Representations and Warranties

            In order to induce the Credit Parties to enter into this  Agreement,
the  Issuing  Bank to issue the  Letters of Credit  and the  Lenders to make the
Loans and participate in the Letters of Credit, the Borrower makes the following
representations and warranties to the Credit Parties:

      Section 3.1. Organization and Powers. Each of the Borrower, the Guarantors
and the other  Subsidiaries is duly organized or formed and validly  existing in
good  standing  under  the  laws of the  jurisdiction  of its  incorporation  or
formation and has all  requisite  power and authority to own its Property and to
carry on its  business  as now  conducted,  except in the case of  non-Guarantor
Subsidiaries  where the failure to be so  organized  or formed,  or to have such
power and authority, or to own such Property, or to carry on such business could
not reasonably be expected to have a Material Adverse Effect.

      Section 3.2.  Authorization.  Each of the Borrower and the  Guarantors has
full legal power and authority to enter into,  execute,  deliver and perform the
terms of each Loan  Document  to which it is a party,  to incur the  obligations
provided  for herein or therein  and, in the case of the  Borrower,  to make the
borrowings  contemplated  hereby,  all of which have been duly authorized

                                      -37-
<PAGE>

by all proper and necessary  corporate or other applicable  action,  and each of
the Borrower and the Guarantors is in full  compliance  with its  certificate of
incorporation, by-laws or other organizational documents.

      Section 3.3.  Enforceability.  Each Loan Document  constitutes a valid and
legally  binding  obligation  of each of the Borrower and the  Guarantors to the
extent it is a party thereto,  enforceable in accordance with its terms,  except
as such  enforceability  may be limited by  applicable  bankruptcy,  insolvency,
reorganization  or other similar laws  affecting the  enforcement  of creditors'
rights generally.

      Section 3.4.  Litigation.  Except as set forth in the Financial Statements
or Schedule 3.4, there are no actions,  suits or proceedings at law or in equity
or by or before any Governmental Authority (whether purportedly on behalf of the
Borrower  or  any of the  Subsidiaries)  pending  or,  to the  knowledge  of the
Borrower,  threatened  against the Borrower or any of the Subsidiaries or any of
their  respective  Properties or rights,  which could  reasonably be expected to
have a Material Adverse Effect and result in a violation of Section 6.7.

      Section 3.5. Required Consents. Except for information and similar filings
required to be made in the ordinary course of business which are not a condition
to the  Borrower's  or any  Guarantor's  performance  under any Loan Document to
which it is a party,  no consent,  authorization  or approval  of,  filing with,
notice to, or exemption by, any Governmental Authority is required to authorize,
or is required in connection with the execution, delivery and performance by the
Borrower or any Guarantor  of, any Loan  Document to which it is a party,  or is
required as a condition to the validity or  enforceability  of any Loan Document
to which it is a party, except for consents, authorizations, approvals, filings,
notices or  exemptions  which were not  required to be obtained on or before the
Effective  Date and either have been obtained or the failure to obtain could not
reasonably be expected to have a Material Adverse Effect.

      Section 3.6. Compliance with Applicable Laws. Neither the Borrower nor any
of the  Subsidiaries  is in default with respect to any judgment,  order,  writ,
injunction, decree or decision of any Governmental Authority which default could
reasonably be expected to have a Material  Adverse Effect.  Each of the Borrower
and the  Subsidiaries  is complying in all material  respects with all statutes,
regulations,  rules and orders applicable to it of all Governmental Authorities,
a violation  of which could  reasonably  be expected to have a Material  Adverse
Effect.

      Section 3.7. Taxes. Each of the Borrower and the Subsidiaries has filed or
caused to be filed all tax  returns  required  to be filed and has paid,  or has
made  adequate  provision  for the  payment  of,  all taxes  shown to be due and
payable on said returns or in any  assessments  made against it,  except (a) any
Taxes that are being contested in good faith by appropriate  proceedings and for
which the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate  reserves as shall be required by the  Accountants  in accordance  with
GAAP or (b) to the  extent  that the  failure to do so could not  reasonably  be
expected to result in a Material Adverse Effect.

      Section  3.8.  Governmental  Regulations.  Neither  the  Borrower  nor any
Guarantor is subject to regulation  under the Public Utility Holding Company Act
of 1935,  as amended,  the Federal  Power Act or the  Investment  Company Act of
1940,  as amended,  and neither the

                                      -38-
<PAGE>

Borrower  nor any  Guarantor  is subject  to any  statute  or  regulation  which
prohibits the incurrence of indebtedness  under any Loan Document to which it is
a party,  including  statutes  or  regulations  relative  to common or  contract
carriers or to the sale of electricity, gas, steam, water, telephone,  telegraph
or other public utility services.

      Section 3.9. Federal Reserve Regulations; Use of Loan Proceeds. No part of
the  proceeds  of the Loans or any Letter of Credit  will be used,  directly  or
indirectly, for a purpose which violates the provisions of Regulations T, U or X
of the Board, as amended.  The execution,  delivery and performance of each Loan
Document by each of the Borrower and the Guarantors, to the extent it is a party
thereto,  will  not  violate  any  material  law,  rule  or  regulation  of  any
Governmental Authority.

      Section 3.10. Financial Statements.  The Borrower has heretofore furnished
to the Credit Parties its  Consolidated  balance sheet and statements of income,
stockholders  equity  and cash  flows (i) as of and for the  fiscal  year  ended
February  3,  2001,  reported  on by  Ernst  &  Young  LLP,  independent  public
accountants,  and (ii) as of and for the fiscal  quarter  and the portion of the
fiscal year ended May 5, 2001,  certified by its chief financial  officer.  Such
financial  statements  present fairly, in all material  respects,  the financial
position  and  results  of  operations  and cash flows of the  Borrower  and the
Consolidated  Subsidiaries  as of such dates and for such periods in  accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the statements referred to in clause (ii) above.

      Section 3.11.  Material Adverse Change.  Since May 5, 2001, there has been
no Material Adverse Change.

      Section 3.12.  No  Conflicting  Agreements.  The  execution,  delivery and
performance  by each of the Borrower and the Guarantors of each Loan Document to
which it is a party will not constitute a default  under,  or result in a breach
of the terms of, any mortgage, indenture, contract or agreement to which it is a
party or by which it or any of its Property is bound which could  reasonably  be
expected to have a Material  Adverse  Effect or to be materially  adverse to the
rights or interests of the Credit Parties.

      Section 3.13. Disclosure. The Borrower has disclosed to the Credit Parties
all agreements,  instruments and corporate or other  restrictions to which it or
any of the  Subsidiaries  is subject,  and all other  matters known to it, that,
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material  Adverse Effect.  The reports,  financial  statements,  certificates or
other written or formally  presented  information  (other than projected and pro
forma  financial  information  and  opinions)  furnished  by or on behalf of the
Borrower to any Credit  Party in  connection  with the  negotiation  of the Loan
Documents  or  delivered  thereunder  (as  modified  or  supplemented  by  other
information so furnished),  considered as a whole, does not contain any material
misstatement  of fact or omit to state any material  fact  necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not  misleading.  The projected and pro forma  financial  information  and
opinions  furnished  by or on  behalf of the  Borrower  to any  Credit  Party in
connection  with the  negotiation of the Loan Documents or delivered  thereunder
were prepared in good faith based upon assumptions  believed to be reasonable at
the time.

                                      -39-
<PAGE>

ARTICLE 4. Conditions Precedent

      Section 4.1.  Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue  Letters of Credit  hereunder  shall not become
effective  until the date on which each of the following  conditions  shall have
been satisfied (or waived in accordance with Section 9.2):

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

            (b) The  Administrative  Agent (or its counsel)  shall have received
the Guarantee Agreement signed on behalf of each Guarantor.

            (c) The Administrative Agent shall have received a favorable written
opinion  (addressed  to the  Credit  Parties  and dated the  Effective  Date) of
Michael L. Tumolo,  Vice President - Counsel of the Borrower,  substantially  in
the form of  Exhibit  B-1,  and Weil,  Gotshal  & Manges  LLP,  counsel  for the
Borrower and the Guarantors, substantially in the form of Exhibit B-2.

            (d) The  Administrative  Agent  shall have  received a  certificate,
dated the Effective Date, of the Secretary or an Assistant  Secretary of each of
the Borrower and the  Guarantors,  (i) attaching a true and complete copy of the
resolutions (or excerpts thereof) of its Board of Directors and of all documents
evidencing other necessary  corporate  action (in form and substance  reasonably
satisfactory  to the  Administrative  Agent) taken by it to authorize  each Loan
Document to which it is a party,  (ii) attaching a true and complete copy of its
certificate  of  incorporation,  by-laws or other  organizational  documents and
(iii) attesting as to the incumbency of each of its officers executing each Loan
Document to which it is a party,  including therein a signature specimen of each
such officer.

            (e) The  Administrative  Agent  shall have  received a  certificate,
dated  the  Effective  Date  and  signed  by  a  Financial  Officer,  confirming
compliance  with the  conditions  set forth in  paragraphs  (a),  (b) and (c) of
Section 4.2.

            (f) The Existing Credit Documents shall have been terminated and all
amounts due thereunder shall have been paid, and the Administrative  Agent shall
have received  evidence,  in form and substance  reasonably  satisfactory to it,
thereof.

            (g) The Administrative  Agent shall have received all fees and other
amounts due and payable on or prior to the  Effective  Date,  including,  to the
extent  invoiced,  reimbursement  or  payment  of all  reasonable  out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.

The  Administrative  Agent  shall  notify the  Borrower  and the  Lenders of the
Effective Date, and such notice shall be conclusive and binding.

                                      -40-
<PAGE>

      Section 4.2.  Each Credit Event.  The  obligation of each Lender to make a
Loan on the occasion of any Borrowing,  and of the Issuing Bank to issue, amend,
renew or extend a Letter of Credit,  shall be subject to the satisfaction of the
following conditions:

            (a) The  representations and warranties of the Borrower set forth in
this  Agreement  (other than those  contained in Sections 3.4 and 3.11) shall be
true  and  correct  in all  material  respects  on and as of the  date  of  such
Borrowing or the date of such  issuance,  amendment,  renewal or  extension,  as
applicable.

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

            (c) At the  time of and  immediately  after  giving  effect  to such
Borrowing or such issuance,  amendment,  renewal or extension, as applicable, no
default shall have occurred with respect to any  obligations  of the Borrower or
any of the Subsidiaries  representing a Material  Subsidiary  Group,  whether as
principal,  guarantor,  surety or otherwise,  for the payment of Indebtedness as
defined in clause (a), (b),  (c), (e) or (g) of the  definition of such term, in
an aggregate  Consolidated  principal amount  exceeding  $25,000,000 that would,
immediately  or with the lapse of time,  permit  the  holder or  holders of such
obligations or any representative  acting on its or their behalf to declare such
obligations to be due and payable prior to the expressed maturity thereof.

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

ARTICLE 5. Affirmative Covenants

            The Borrower  agrees that,  so long as this  Agreement is in effect,
any Loan  remains  outstanding  and unpaid,  any Letter of Credit shall not have
expired,  any LC Disbursements  remain unreimbursed or any other amount is owing
under any Loan Document to any Credit Party, the Borrower will:

      Section  5.1.  Financial   Statements.   Maintain  a  standard  system  of
accounting in accordance  with GAAP, and furnish or cause to be furnished to the
Administrative Agent and each Lender:

            (a) Form 10-K.  As soon as  available,  but in any event  within 105
days after the end of each  fiscal  year of the  Borrower,  a copy of the annual
audited  Consolidated  financial statements of the Borrower and the Subsidiaries
prepared  in  conformity  with GAAP and as filed with the SEC in the  Borrower's
Annual Report on Form 10-K for such fiscal year. Such financial statements shall
be certified by the Accountants,  which  certification  shall (i) state that the
examination by the Accountants in connection with such financial  statements has
been made in accordance  with  generally  accepted  auditing  standards and (ii)
include the opinion of the Accountants that such financial  statements have been
prepared in accordance with GAAP.

                                      -41-
<PAGE>

            (b) Form 10-Q. As soon as available, but in any event within 50 days
after the end of each fiscal  quarter  (except the last fiscal  quarter) of each
fiscal  year  of  the  Borrower,  copies  of  unaudited  Consolidated  financial
statements  of the  Borrower and the  Subsidiaries  as filed with the SEC in the
Borrower's Quarterly Report on Form 10-Q for such fiscal quarter.

            (c)  Ratings.  As soon as  available,  but in any event  within  two
Business  Days after any downgrade or withdrawal by either S&P or Moody's of any
debt rating  assigned to the Index Debt,  written  notice to the  Administrative
Agent thereof,  and of the effective  date thereof,  in each case certified by a
Financial Officer.

            (d) Compliance Certificate. The financial statements to be delivered
pursuant to paragraphs (a) and (b) above (the "Financial  Statements")  shall be
accompanied by a certificate  of a Financial  Officer,  (i)  certifying  that no
Default  has  occurred  and was  continuing  as of the end of the fiscal  period
covered  by  such  statements,  or,  if  such a  Default  has  occurred  and was
continuing at the end of such fiscal period, the action the Borrower proposes to
take  with  respect   thereto  and  (ii)  setting  forth   reasonably   detailed
calculations demonstrating compliance with Sections 6.6 and 6.7.

            (e) Other Information. Such other information regarding the Borrower
or any  Subsidiary as any Credit Party may,  through the  Administrative  Agent,
reasonably and in good faith request in writing.

      Section   5.2.   Certificates;   Other   Information.   Furnish   to   the
Administrative Agent and each Lender:

            (a) prompt  written  notice if there shall occur and be continuing a
Default; and

            (b) promptly upon their becoming available,  copies of all (i) 10-K,
10-Q, 8-K or other material, regular, periodic or special reports, schedules and
other  documents  which  the  Borrower  or any of the  Subsidiaries  may  now or
hereafter be required to file with or deliver to any securities  exchange or the
SEC and (ii) material news releases and annual reports  relating to the Borrower
or any of the Subsidiaries.

      Section  5.3.  Legal  Existence.  Except as  permitted in Section 6.1, the
Borrower  shall  maintain  its (i)  legal  existence  and good  standing  in the
jurisdiction  of  its  incorporation  and  (ii)  good  standing  in  each  other
jurisdiction in which the failure so to do could  reasonably be expected to have
a Material Adverse Effect, and except as a result of any transaction involving a
Subsidiary  that is not prohibited by this  Agreement,  the Borrower shall cause
each of the  Subsidiaries  (other than  Subsidiaries  that do not  constitute  a
Material Subsidiary Group) to maintain its (a) legal existence and good standing
in the  jurisdiction of its  incorporation or formation and (b) good standing in
each  other  jurisdiction  in which the  failure  so to do could  reasonably  be
expected to have a Material Adverse Effect.

      Section  5.4.  Taxes.  Pay and  discharge  when due, and cause each of the
Subsidiaries so to do, all Taxes,  assessments and governmental charges, license
fees and levies  which,  if  unpaid,  could  reasonably  be  expected  to have a
Material Adverse Effect, except such Taxes,  assessments,

                                      -42-
<PAGE>

charges,  license  fees and levies that shall be  contested in good faith and by
appropriate  proceedings diligently conducted by the Borrower or such Subsidiary
and provided that the Borrower shall give the Administrative Agent prompt notice
of such contest and that such reserve or other appropriate provision as shall be
required  by the  Accountants  in  accordance  with  GAAP  shall  have been made
therefor.

      Section 5.5. Observance of Legal  Requirements.  Observe and comply in all
respects,  and  cause  each  of  the  Subsidiaries  so to  do,  with  all  laws,
ordinances,  orders,  judgments,  rules,  regulations  and  requirements  of all
Governmental  Authorities,  which now or at any time hereafter may be applicable
to it, a  violation  of which  could  reasonably  be expected to have a Material
Adverse  Effect,  except such thereof as shall be contested in good faith and by
appropriate  proceedings  diligently conducted by it, provided that the Borrower
shall give the Administrative  Agent prompt notice of such contest and that such
reserve or other  appropriate  provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.

      Section 5.6. Inspection of Property; Books and Records;  Discussions. Keep
proper  books of record and account in which full,  true and correct  entries in
conformity  with GAAP and all  requirements of law shall be made of all dealings
and  transactions  in relation to its business  and  activities  and,  after the
occurrence  and  during  the   continuance  of  an  Event  of  Default,   permit
representatives  of any Credit  Party,  upon at least two  Business  Days' prior
written  notice,  to  visit  its  corporate  headquarters,  and to  discuss  the
business,  operations,  prospects, licenses, Property and financial condition of
the Borrower and the Subsidiaries with the respective officers thereof.

ARTICLE 6. Negative Covenants

            Until the  Commitments  have expired or terminated and the principal
of and interest on each Loan and all fees payable under the Loan  Documents have
been  paid  in  full  and  all  Letters  of  Credit  have  expired  and  all  LC
Disbursements  have been reimbursed,  the Borrower covenants and agrees with the
Credit Parties that it will not:

      Section 6.1.  Merger or  Consolidation,  Etc.  (a)  Consolidate  with,  be
acquired by, or merge into or with any Person,  or convey or otherwise  transfer
all  or  substantially  all  of its  Property,  except  that  the  Borrower  may
consolidate  with or merge with  another  Person,  or convey or transfer  all or
substantially  all of its  Property  to another  Person,  provided  that (i) the
Borrower shall have given the  Administrative  Agent prior notice thereof,  (ii)
the Person formed by such consolidation or into which the Borrower is merged, or
the Person which acquires by conveyance or transfer all or substantially  all of
such Property, or any Person owning beneficially 100 percent of the Voting Stock
of such Person (in each case, the "Successor  Person") shall expressly assume by
an  instrument  executed and  delivered  to the  Administrative  Agent,  in form
reasonably  satisfactory  to the  Administrative  Agent,  the obligations of the
Borrower under the Loan Documents (at which time the Borrower shall be deemed to
be released from the Loan Documents), (iii) no Default or Event of Default shall
exist before or after giving effect  thereto and (iv) the  Administrative  Agent
shall  have  received  such   documents,   opinions  and   certificates  as  the
Administrative Agent shall have reasonably requested in connection therewith.

                                      -43-
<PAGE>

            (b) Upon any  consolidation or merger, or any conveyance or transfer
of all or  substantially  all of the Property of the Borrower in accordance with
Section 6.1(a),  the Successor  Person shall succeed to, and be substituted for,
and may  exercise  every  right  and  power  of,  and  shall be  subject  to all
obligations  and  liabilities of, the Borrower under the Loan Documents with the
same effect as if such Successor  Person had been named as the Borrower  herein.
In  the  event  of  any  such  conveyance  or  transfer,  the  Borrower,  as the
predecessor  Person,  may be  dissolved,  wound  up or  liquidated  at any  time
thereafter.

      Section 6.2.  Subsidiary  Indebtedness.  (a) Permit any Subsidiary that is
not a Guarantor  to create,  incur,  assume or permit to exist any  Indebtedness
described in clause (a),  (b),  (c), (e) or (g) of the  definition of such term,
other than:

            (i) any such Indebtedness  existing on the date hereof and set forth
      in Schedule  6.2 and  extensions,  renewals and  replacements  of any such
      Indebtedness that do not increase the outstanding principal amount thereof
      (unless such increase is otherwise permitted by this Section);

            (ii) any such  Indebtedness to the Borrower or any other Subsidiary;
      and

            (iii)  other  such  Indebtedness;  provided  that the sum of (i) the
      aggregate  outstanding  principal  amount of such  Indebtedness,  (ii) the
      aggregate outstanding principal amount of any increase of any Indebtedness
      permitted  by  paragraph  (a)(i) of this  Section  and (ii) the  aggregate
      outstanding principal amount of the obligations secured by Liens permitted
      under  Section  6.3(h)  does not at any time  exceed  10% of  Consolidated
      Tangible Net Worth.

            (b) Permit any Subsidiary to enter into, assume or be a party to any
Guarantee of  Indebtedness of the Borrower,  unless such  Subsidiary  shall be a
Guarantor.

      Section 6.3.  Liens,  Etc.  Create,  assume,  incur or suffer to exist, or
permit any Subsidiary to create,  assume,  incur or suffer to exist, any Lien on
any  Property now owned or  hereafter  acquired by it, or assign,  or permit any
Subsidiary to assign, any income or right with respect thereto, other than:

            (a) Permitted Encumbrances;

            (b) any  Lien on any  Property  of the  Borrower  or any  Subsidiary
existing on the date hereof and set forth in Schedule 6.3, and any other Lien on
any Property of the Borrower or any Subsidiary  existing on the date hereof that
was  incurred  in the  ordinary  course  of  business  and does not  secure  (i)
Indebtedness  to Persons  other than the Borrower or any  Subsidiary of the type
described  in clauses  (a),  (b) or (g) of the  definition  of such term or (ii)
Guarantees in respect of any such  Indebtedness;  provided that (i) no such Lien
shall apply to any other Property of the Borrower or any Subsidiary  (other than
after  acquired  title in or on such  property  and proceeds and products of the
existing  collateral in accordance  with the instrument  creating such Lien) and
(ii) any such Lien shall secure only those  obligations  which it secures on the
date  hereof and any  increase  in such  obligations  not  otherwise  prohibited
hereunder;

                                      -44-
<PAGE>

            (c) any Lien  existing  on any  Property  prior  to the  acquisition
thereof by the Borrower or any Subsidiary, and any Lien existing on any Property
of any Person (other than a Subsidiary) that is merged into or consolidated with
the Borrower or a Subsidiary,  or that otherwise becomes a Subsidiary,  prior to
the time  such  Person is so merged or  consolidated  or  becomes a  Subsidiary;
provided that (i) such Lien is not created in contemplation of such acquisition,
merger or  consolidation  or such Person becoming a Subsidiary,  as the case may
be, (ii) such Lien shall not apply to any other  Property of the Borrower or any
Subsidiary  (other than after acquired title in or on such property and proceeds
and  products of the  existing  collateral  in  accordance  with the  instrument
creating  such  Lien) and (iii) such Lien shall  secure  only those  obligations
which it secures on the date of such acquisition, merger or consolidation or the
date such Person  becomes a Subsidiary,  as the case may be, and any increase in
such obligations not otherwise prohibited hereunder;

            (d)  Liens on fixed  or  capital  assets  acquired,  constructed  or
improved by the Borrower or any  Subsidiary  securing the purchase price of such
fixed or capital assets or Indebtedness (including Capital Lease Obligations) of
the Borrower or any  Subsidiary  incurred  and used to finance the  acquisition,
construction or improvement of such fixed or capital  assets;  provided that (i)
such Liens and the Indebtedness  secured thereby are incurred prior to or within
one year  after such  acquisition  or the  completion  of such  construction  or
improvement  and (ii) such Liens  shall not apply to any other  Property  of the
Borrower  or any  Subsidiary  (other  than  after  acquired  title in or on such
property and proceeds and products of the existing collateral in accordance with
the instrument creating such Lien);

            (e) Liens arising in connection  with Capital Lease  Obligations  of
non-Guarantor  Subsidiaries not prohibited  under Section 6.2;  provided that no
such Lien shall extend to or cover any Property other than the Property  subject
to such Capital Lease Obligations;

            (f) Liens on Property of any Subsidiary  securing  obligations owing
to the Borrower or any other Subsidiary;

            (g)  Liens  securing  any   extension,   renewal  or  refunding  (or
successive  extensions,  renewals  or  refundings)  in  whole  or in part of any
obligations secured by Liens referred to in the foregoing paragraphs (a) through
(f);  provided that the principal amount of the obligations  secured by any such
Lien shall not exceed the principal amount outstanding immediately prior to such
extension,  renewal or refunding and any increase in such  prinicpal  amount not
otherwise prohibited  hereunder,  and that any such Lien shall be limited to the
Property  which,  immediately  prior to such  extension,  renewal or  refunding,
secured such obligations; and

            (h) Liens not expressly  permitted by clauses (a) through (g) above;
provided that the sum,  without  duplication,  of (i) the aggregate  outstanding
principal  amount of the  Indebtedness  permitted by clause  (a)(iii) of Section
6.2,  (ii) the  aggregate  outstanding  principal  amount of any increase of any
obligations  permitted by  paragraph  (b), (c) and (g) of this Section and (iii)
the  aggregate  principal  amount of  outstanding  obligations  secured by Liens
(which amount, in the case of any sale of accounts  receivable,  shall be deemed
to equal the lesser of the aggregate uncollected balance of the accounts so sold
and the maximum claim of the purchaser

                                      -45-
<PAGE>

with respect  thereto)  permitted by this clause (h) does not at any time exceed
10% of Consolidated Tangible Net Worth.

      Section  6.4.  Change in Nature of  Business.  Make,  or permit any of the
Subsidiaries  (other  than  Subsidiaries  that  do  not  constitute  a  Material
Subsidiary  Group) to make, any material change in the nature of its business as
carried out at the date hereof, other than reasonable extensions thereof.

      Section 6.5.  Use of  Proceeds.  (a) Use the proceeds of the Loans and the
Letters of Credit  other than for working  capital and other  general  corporate
purposes,  not  inconsistent  with the  terms  hereof or (b) use any part of the
proceeds  of the Loans or any Letter of Credit,  directly or  indirectly,  for a
purpose which violates the provisions of Regulations T, U or X of the Board,  as
amended.

      Section 6.6. Fixed Charge  Coverage  Ratio.  Permit,  as of the end of any
fiscal quarter of the Borrower,  the Fixed Charge Coverage Ratio to be less than
1.80 to 1.00.

      Section 6.7. Capitalization.  Permit, at any time, the aggregate amount of
all Indebtedness for borrowed money and Indebtedness under capital leases of the
Borrower and the Consolidated Subsidiaries determined in accordance with GAAP at
such time to be greater than 58% of the sum of (i) the  aggregate of all amounts
which would be included under  shareholders'  equity on a  Consolidated  balance
sheet of the Borrower and the Subsidiaries determined in accordance with GAAP at
such time plus (ii) the aggregate  amount of all Indebtedness for borrowed money
and  Indebtedness  under  capital  leases of the Borrower  and the  Consolidated
Subsidiaries determined in accordance with GAAP at such time.

ARTICLE 7. Events of Default

            If any of the following events ("Events of Default") shall occur:

            (a) Any  installment  of principal on any Loan or any  reimbursement
obligation in respect of any LC Disbursement  shall not be paid on the date when
due and payable; or

            (b)  Any  (i)  installment  of  interest  on  any  Loan  or  on  any
reimbursement obligation in respect of any LC Disbursement or any fees shall not
be paid  within  five  Business  Days of the date when due and  payable  or (ii)
expenses or other  amounts  payable  under any Loan Document or otherwise to any
Credit  Party shall not be paid within 30 days of the date when due and payable;
or

            (c) The failure of the  Borrower to observe or perform any  covenant
or agreement contained in Section 5.2(a), Section 5.3(a) or in Article 6; or

            (d) The  failure of the  Borrower  to  observe or perform  any other
term,  covenant,  or agreement  contained in any Loan  Document and such failure
shall have continued unremedied for a period of 30 days after the Administrative
Agent  shall  have  notified  the  Borrower  in  writing  thereof;  or

                                      -46-
<PAGE>

            (e) Any  representation  or warranty made in any Loan Document or in
any  certificate,  report,  opinion  (other than an opinion of counsel) or other
document  delivered  pursuant  thereto shall prove to have been incorrect in any
material respect when made or deemed made; or

            (f)  Any  obligation  of the  Borrower  or  any of the  Subsidiaries
representing a Material  Subsidiary Group (other than its obligations in respect
of the Loans and the Letters of Credit), whether as principal, guarantor, surety
or  other  obligor,  for  the  payment  of  any  Indebtedness  in  an  aggregate
Consolidated  principal amount exceeding $25,000,000 (i) shall be declared to be
due and  payable,  or shall be required to be prepaid  other than  pursuant to a
regularly  scheduled  prepayment  or required  prepayment  (unless such required
prepayment results from a default or event of default thereunder),  prior to the
expressed  maturity  thereof,  or (ii)  shall not be paid when due or within any
grace period for the payment thereof; or

            (g) The Borrower or any of the Subsidiaries  representing a Material
Subsidiary Group shall (i) make an assignment for the benefit of creditors, (ii)
file a  voluntary  petition  in  bankruptcy,  (iii) file any  petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment of
debt,  liquidation  or dissolution or similar relief under any present or future
statute,  law or regulation of any  jurisdiction,  (iv) petition or apply to any
tribunal for any receiver,  custodian or any trustee for any substantial part of
its Property, (v) be the subject of any bankruptcy,  reorganization,  insolvency
or similar proceeding filed against it which remains undismissed for a period of
60 days,  (vi) file any answer  admitting the material  allegations  of any such
petition filed against it in any such proceeding,  (vii) seek, approve,  consent
to, or acquiesce in any such  proceeding,  or in the appointment of any trustee,
receiver, sequestrator,  custodian or liquidator for it, or any substantial part
of its Property, or any order is entered appointing any such trustee,  receiver,
custodian or liquidator  and such order remains in effect for 60 days, or (viii)
take any formal action for the purpose of effecting any of the foregoing; or

            (h)  An  order  for  relief  is  entered  under  the  bankruptcy  or
insolvency  laws of any  jurisdiction  (i)  adjudging the Borrower or any of the
Subsidiaries  representing  a Material  Subsidiary  Group bankrupt or insolvent,
(ii) approving as properly filed a petition seeking reorganization, liquidation,
arrangement,  adjustment or  composition of or in respect of the Borrower or any
of  the  Subsidiaries   representing  a  Material  Subsidiary  Group  under  the
bankruptcy or insolvency laws of any jurisdiction,  (iii) appointing a receiver,
liquidator,  assignee,  trustee,  custodian,   sequestrator  (or  other  similar
official) of the  Borrower or any of the  Subsidiaries  representing  a Material
Subsidiary  Group or of any  substantial  part of the  Property  thereof or (iv)
ordering the winding up or  liquidation of the affairs of the Borrower or any of
the Subsidiaries  representing a Material  Subsidiary Group, and any such decree
or order continues unstayed and in effect for a period of 60 days; or

            (i) Judgments or decrees  against one or more of the Borrower or any
of the  Subsidiaries  representing a Material  Subsidiary  Group in an aggregate
Consolidated  amount  exceeding  $25,000,000  shall  be  rendered  by a court of
competent  jurisdiction  and remain  unpaid,  unstayed on appeal,  undischarged,
unbonded  or  undismissed  for a  period  of 30  days;  provided  that  any such
judgments  or  orders  shall  not give rise to an Event of  Default  under  this
paragraph

                                      -47-
<PAGE>

(i) if and to the  extent  that (i) the  aggregate  Consolidated  amount of such
judgments or orders,  to the extent exceeding  $25,000,000,  is fully covered by
one or more valid and binding  policies of  insurance  and (ii) each  applicable
insurer has been  notified,  and has not disputed its  applicable  share of such
coverage; or

            (j) any  Termination  Event  shall  occur with  respect to which the
Borrower or any of the Subsidiaries shall have been assessed any liability in an
aggregate  Consolidated  amount exceeding  $25,000,000 which amount shall remain
unpaid for a period of 30 days,  (ii) any Accumulated  Funding  Deficiency in an
aggregate  Consolidated amount exceeding $25,000,000 shall exist with respect to
any Pension Plan and such  Accumulated  Funding  Deficiency  shall not have been
eliminated within a period of 30 days after it shall have been determined, (iii)
any Person shall engage in any  Prohibited  Transaction  involving  any Employee
Benefit Plan and, as a result thereof,  the Borrower or any of the  Subsidiaries
shall have been  assessed  an excise tax  penalty in an  aggregate  Consolidated
amount exceeding $25,000,000 which amount shall remain unpaid for a period of 30
days;  unless and to the extent only that such  Termination  Event,  Accumulated
Funding  Deficiency or Prohibited  Transaction is being contested by appropriate
proceedings in good faith by the Borrower or such Subsidiary or Subsidiaries; or

            (k) (i) Any Person or two or more  Persons  acting in concert  shall
have  acquired  beneficial  ownership  (within  the meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934), directly or indirectly, of Voting Stock of
the Borrower representing 20% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24 consecutive months,
commencing after the date of this Agreement, individuals who at the beginning of
such 24-month  period were directors of the Borrower shall cease to constitute a
majority of the board of directors of the Borrower and the replacements  thereof
shall not have been  approved by a vote of at least a majority of the members of
the board of directors then still in office who either were members of the board
of directors at the beginning of such period or whose election as members of the
board of directors was previously so approved; or

            (l) the  Guarantee  Agreement  shall be  determined  by a final  and
non-appealable decision of a court having jurisdiction over the matter, or shall
be claimed in writing by a Guarantor, not to be in full force and effect;

then,  and in every such event (other than an event with respect to the Borrower
described  in clause  (g) or (h) of this  Article),  and at any time  thereafter
during the continuance of such event, the  Administrative  Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then  outstanding  to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable),  and thereupon the principal of the Loans so
declared to be due and payable,  together with accrued  interest thereon and all
fees and other obligations of the Borrower accrued  hereunder,  shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind,  all of which are hereby  waived by the  Borrower;  and in case of any
event  with  respect  to the  Borrower  described  in clause  (g) or (h) of this
Article, the Commitments

                                      -48-
<PAGE>

shall  automatically  terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder,  shall automatically become due and payable, without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by the Borrower.

ARTICLE 8. The Administrative Agent

            Each of the Credit Parties hereby appoints the Administrative  Agent
as its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative  Agent
by the terms  hereof,  together  with such actions and powers as are  reasonably
incidental thereto.

            The bank serving as the  Administrative  Agent  hereunder shall have
the same rights and powers in its  capacity as a Lender as any other  Lender and
may exercise the same as though it were not the  Administrative  Agent, and such
bank and its  Affiliates may accept  deposits from,  lend money to and generally
engage in any kind of  business  with the  Borrower or any  Subsidiary  or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

            The  Administrative  Agent shall not have any duties or  obligations
except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other  implied  duties,  regardless  of whether a Default  has  occurred  and is
continuing,  (b) the  Administrative  Agent  shall not have any duty to take any
discretionary action or exercise any discretionary  powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Credit Parties as shall be necessary  under the  circumstances
as provided in Section 9.2) and (c) except as expressly  set forth  herein,  the
Administrative  Agent  shall  not have any duty to  disclose,  and  shall not be
liable for the failure to disclose,  any information relating to the Borrower or
any of the Subsidiaries  that is communicated to or obtained by the bank serving
as  Administrative  Agent  or  any  of  its  Affiliates  in  any  capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or  percentage  of  the  Credit   Parties  as  shall  be  necessary   under  the
circumstances  as  provided  in Section  9.2) or in the absence of its own gross
negligence or willful misconduct.  The Administrative  Agent shall be deemed not
to have  knowledge of any Default  unless and until  written  notice  thereof is
given to the  Administrative  Agent by the Borrower or a Credit  Party,  and the
Administrative  Agent shall not be responsible for or have any duty to ascertain
or inquire  into (i) any  statement,  warranty or  representation  made in or in
connection with any Loan Document, (ii) the contents of any certificate,  report
or other  document  delivered  hereunder or in connection  therewith,  (iii) the
performance or observance of any of the covenants,  agreements or other terms or
conditions set forth therein, (iv) the validity,  enforceability,  effectiveness
or  genuineness  of any Loan  Document  or any other  agreement,  instrument  or
document  or (v) the  satisfaction  of any  condition  set forth in Article 4 or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.

                                      -49-
<PAGE>

            The  Administrative  Agent shall be entitled to rely upon, and shall
not incur any  liability  for relying upon,  any notice,  request,  certificate,
consent, statement,  instrument,  document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any  statement  made to it orally or by  telephone  and
believed  by it to be made  by the  proper  Person,  and  shall  not  incur  any
liability for relying thereon.  The Administrative  Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts  selected  by it, and shall not be liable  for any  action  taken or not
taken by it in accordance  with the advice of any such counsel,  accountants  or
experts.

            The  Administrative  Agent may  perform  any and all its  duties and
exercise  its  rights  and  powers  by or  through  any one or  more  sub-agents
appointed by the  Administrative  Agent. The  Administrative  Agent and any such
sub-agent  may perform any and all its duties and exercise its rights and powers
through their  respective  Related  Parties.  The exculpatory  provisions of the
preceding  paragraphs  shall  apply to any  such  sub-agent  and to the  Related
Parties of the Administrative  Agent and any such sub-agent,  and shall apply to
their  respective  activities in connection  with the  syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

            Subject  to  the   appointment   and   acceptance   of  a  successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Credit  Parties and the  Borrower.  Upon any
such resignation, the Required Lenders shall have the right, with the consent of
the  Borrower  so long  as no  Event  of  Default  shall  have  occurred  and be
continuing  (such  consent  not  to be  unreasonably  withheld),  to  appoint  a
successor.  If no successor shall have been so appointed by the Required Lenders
and shall have  accepted  such  appointment  within 30 days  after the  retiring
Administrative  Agent  gives  notice  of  its  resignation,  then  the  retiring
Administrative  Agent may, on behalf of the Credit Parties,  appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank.  Upon the  acceptance  of its  appointment  as
Administrative  Agent hereunder by a successor,  such successor shall succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
retiring  Administrative  Agent, and the retiring  Administrative Agent shall be
discharged from its duties and obligations hereunder.

            The  Administrative  Agent  may be  removed  at any time by a notice
executed by the Required  Lenders and delivered to the other Credit  Parties and
the Borrower.  Upon any such removal, the Required Lenders shall have the right,
with the  consent  of the  Borrower  so long as no Event of  Default  shall have
occurred and be continuing  (such consent not to be unreasonably  withheld),  to
appoint  a  successor.  If no  successor  shall  have been so  appointed  by the
Required Lenders and shall have accepted such  appointment  within 30 days after
the  removal  of the  Administrative  Agent,  then the  Borrower  may  appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New  York,  or an  Affiliate  of any  such  bank.  Upon  the  acceptance  of its
appointment as  Administrative  Agent  hereunder by a successor,  such successor
shall succeed to and become vested with all the rights,  powers,  privileges and
duties of the removed  Administrative  Agent. The removed  Administrative  Agent
shall be discharged from its duties and obligations  hereunder  effective at the
time of its removal.

                                      -50-
<PAGE>

            The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor  unless  otherwise  agreed
between  the  Borrower  and such  successor.  After the  Administrative  Agent's
resignation or removal hereunder, the provisions of this Article and Section 9.3
shall   continue  in  effect  for  the  benefit  of  such  retiring  or  removed
Administrative  Agent,  its sub-agents and their  respective  Related Parties in
respect of any actions  taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

            Each  Credit  Party  acknowledges  that  it has,  independently  and
without  reliance  upon the  Administrative  Agent or any other Credit Party and
based on such documents and information as it has deemed  appropriate,  made its
own credit analysis and decision to enter into this Agreement. Each Credit Party
also  acknowledges  that it will,  independently  and without  reliance upon the
Administrative  Agent or any other Credit Party and based on such  documents and
information as it shall from time to time deem appropriate, continue to make its
own  decisions  in  taking or not  taking  action  under or based  upon any Loan
Document,   any  related  agreement  or  any  document  furnished  hereunder  or
thereunder.

ARTICLE 9. Miscellaneous

      Section   9.1.   Notices.   Except  in  the  case  of  notices  and  other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy, as follows:

            (a) if to the Borrower,  to it at 225 Summit Avenue,  Montvale,  New
Jersey 07645-1523,  Attention of Jon W. Kimmins, Senior Vice President-Treasurer
(Telecopy No. (201) 802-5877);

            (b) if to the Administrative Agent, or BNY as Issuing Bank, to it at
One Wall Street,  18th Floor,  New York,  New York 10286,  Attention of Susan E.
Baratta  (Telecopy No. (212) 635-4659),  with a copy to The Bank of New York, at
One Wall  Street,  New York,  New York  10286,  Attention  of:  Howard F. Bascom
(Telecopy No. (212) 635-1483); and

            (c) if to any other Credit Party,  to it at its address (or telecopy
number)  set forth in its  Administrative  Questionnaire,  a copy of  which,  if
requested by the Borrower, shall have been delivered to the Borrower.

Any party hereto may change its address or telecopy number for notices and other
communications  hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

      Section 9.2.  Waivers;  Amendments.  (a) No failure or delay by any Credit
Party in exercising  any right or power under any Loan Document shall operate as
a waiver thereof,  nor shall any single or partial exercise of any such right or
power, or any abandonment or  discontinuance of steps to enforce such a right or
power,  preclude  any other or further  exercise  thereof or the exercise of any
other right or power.  The rights and remedies of the Credit  Parties

                                      -51-
<PAGE>

under the Loan  Documents are  cumulative and are not exclusive of any rights or
remedies that they would  otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by the Borrower or any Guarantor  therefrom
shall in any event be effective  unless the same shall be permitted by paragraph
(b) of this Section,  and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.  Without limiting the
generality  of  the  foregoing,  the  making  of a  Loan  and/or  the  issuance,
amendment,  extension or renewal of a Letter of Credit shall not be construed as
a waiver of any  Default,  regardless  of whether any Credit  Party may have had
notice or knowledge of such Default at the time.

            (b)  Neither  any Loan  Document  nor any  provision  thereof may be
waived,  amended or modified  except  pursuant to an agreement or  agreements in
writing entered into by the Borrower or the Guarantors,  as applicable,  and the
Required  Lenders or by the Borrower or the Guarantors,  as applicable,  and the
Administrative Agent with the consent of the Required Lenders;  provided that no
such  agreement  shall (i) increase  the  Commitment  of any Lender  without the
written consent of such Lender,  (ii) reduce the principal amount of any Loan or
any reimbursement  obligation with respect to an LC Disbursement,  or reduce the
rate of interest thereon (other than under Section 2.12(d)),  or reduce any fees
payable  hereunder,  without the written  consent of each Credit Party  affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder,  or reduce the
amount of, waive or excuse any such payment,  or postpone the scheduled  date of
expiration of any  Commitment,  without the written consent of each Credit Party
affected  thereby,  (iv)  change  Section  2.17(b) or (c) in a manner that would
alter the pro rata  sharing of  payments  required  thereby  without the written
consent of each Credit Party or (v) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision hereof specifying
the number or  percentage  of  Lenders  required  to waive,  amend or modify any
rights  hereunder  or make any  determination  or grant any  consent  hereunder,
without the written  consent of each  Lender;  provided,  further,  that no such
agreement  shall amend,  modify or otherwise  affect the rights or duties of the
Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without
the prior written consent of the  Administrative  Agent, the Issuing Bank or the
Swingline Lender, as applicable. Notwithstanding the foregoing, any provision of
any Loan Document may be amended by an agreement in writing  entered into by the
Borrower  or the  Guarantors,  as  applicable,  the  Required  Lenders  and  the
Administrative  Agent if (A) by the terms of such  agreement  the  Commitment of
each Lender not consenting to the amendment provided for therein shall terminate
upon or simultaneously  with the effectiveness of such amendment and (B) upon or
simultaneously  with  the  effectiveness  of such  amendment,  each  Lender  not
consenting  thereto  receives  payment in full of the  principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued for
its account under the Loan Documents.

      Section 9.3.  Expenses;  Indemnity;  Damage Waiver. (a) The Borrower shall
pay (i) all reasonable  out-of-pocket  expenses  incurred by the  Administrative
Agent  and  its  Affiliates,   including  the  reasonable   fees,   charges  and
disbursements  of counsel for the  Administrative  Agent, in connection with the
syndication of the credit  facilities  provided for herein,  the preparation and
administration of each Loan Document or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions  contemplated thereby
shall be  consummated),  (ii) all  reasonable  out-of-pocket  costs and expenses
incurred by the Issuing Bank

                                      -52-
<PAGE>

in connection with the issuance,  amendment,  renewal or extension of any Letter
of  Credit or any  demand  for  payment  thereunder  and  (iii)  all  reasonable
out-of-pocket expenses incurred by any Credit Party, including the fees, charges
and  disbursements  of any counsel for any Credit Party,  in connection with the
enforcement or protection of its rights in connection  with the Loan  Documents,
including  its  rights  under this  Section,  including  all such  out-of-pocket
expenses  incurred during any workout,  restructuring or negotiations in respect
of such Loans or Letters of Credit.

            (b) The Borrower shall indemnify each Credit Party, and each Related
Party  of any of the  foregoing  Persons  (each  such  Person  being  called  an
"Indemnitee")  against,  and hold each  Indemnitee  harmless  from,  any and all
losses,  claims,  damages,  liabilities  and  related  expenses,  including  the
reasonable  fees,  charges and  disbursements of any counsel for any Indemnitee,
incurred by or asserted  against any  Indemnitee  arising out of, in  connection
with,  or as a result of (i) the  execution or delivery of any Loan  Document or
any agreement or instrument contemplated thereby, the performance by the parties
thereto of their  respective  obligations  thereunder or the consummation of the
Transactions or any other transactions  contemplated  thereby,  (ii) any Loan or
Letter of Credit or the use of the proceeds  thereof,  including  any refusal of
the Issuing  Bank to honor a demand for payment  under a Letter of Credit if the
documents  presented in connection  with such demand do not strictly comply with
the terms of such Letter of Credit, (iii) any Environmental Liability related in
any way to the  Borrower  or any of the  Subsidiaries,  or (iv)  any  actual  or
prospective claim,  litigation,  investigation or proceeding  relating to any of
the  foregoing,  whether  based  on  contract,  tort  or any  other  theory  and
regardless  of whether any  Indemnitee  is a party  thereto;  provided that such
indemnity shall not, as to any Indemnitee,  be available to the extent that such
losses, claims, damages,  liabilities or related expenses have resulted from (A)
the gross  negligence  or willful  misconduct  of such  Indemnitee or any of its
Related Parties or (B) any material breach by such Indemnitee of its obligations
as set forth in this Agreement.

            (c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative  Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section,  each Lender severally agrees
to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as
applicable,  such Lender's Applicable Percentage (determined as of the time that
the  applicable  unreimbursed  expense or  indemnity  payment is sought) of such
unpaid  amount;  provided that the  unreimbursed  expense or  indemnified  loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative  Agent, the Issuing Bank or the Swingline
Lender, as applicable, in its capacity as such.

            (d) To the extent  permitted by applicable  law, the Borrower  shall
not assert, and hereby waives,  any claim against any Indemnitee,  on any theory
of liability, for any special,  indirect,  consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of this Agreement or any agreement or instrument contemplated hereby, the
Transactions,  any  Loan or any  Letter  of  Credit  or the use of the  proceeds
thereof.

                                      -53-
<PAGE>

            (e) All amounts  due under this  Section  shall be payable  promptly
after written demand therefor.

      Section 9.4. Successors and Assigns.  (a) The provisions of this Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or  otherwise  transfer  any of its rights or  obligations  hereunder
without the prior written consent of each Credit Party unless such assignment or
transfer is made by the Borrower in  accordance  with Section 6.1 (and any other
attempted  assignment or transfer by the Borrower  without such consent shall be
null and void).  Nothing  in this  Agreement,  expressed  or  implied,  shall be
construed  to confer  upon any Person  (other  than the  parties  hereto,  their
respective  successors and assigns permitted hereby and, to the extent expressly
contemplated  hereby,  the Related  Parties of each  Credit  Party) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

            (b) Any Lender may assign to one or more  assignees all or a portion
of its rights and obligations  under this Agreement  (including all or a portion
of its  Commitment  or  obligations  in respect of its LC Exposure or  Swingline
Exposure and the Loans at the time owing to it); provided that (i) except in the
case of an  assignment  to a Lender or an  Affiliate  of a  Lender,  each of the
Borrower and the Administrative  Agent (and, in the case of an assignment of all
or any portion of its Commitment or obligations in respect of its LC Exposure or
Swingline  Exposure,  the Issuing Bank and/or the Swingline  Lender, as the case
may be) must give their prior written consent to such assignment  (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender or an  assignment  of the entire  remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment  (determined as of the date the
Assignment  and Acceptance  with respect to such  assignment is delivered to the
Administrative  Agent)  shall not be less  than  $5,000,000  unless  each of the
Borrower and the  Administrative  Agent  otherwise  consent,  (iii) each partial
assignment  shall be made as an  assignment of a  proportionate  part of all the
assigning Lender's rights and obligations under this Agreement, (iv) the parties
to each  assignment  shall  execute and deliver to the  Administrative  Agent an
Assignment  and  Acceptance,  together  with,  unless  otherwise  agreed  by the
Administrative  Agent,  a processing and  recordation  fee of $3,500 and (v) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an  Administrative  Questionnaire,  a copy of which  shall,  if requested by the
Borrower, be delivered to the Borrower; and provided further that any consent of
the Borrower otherwise required under this paragraph shall not be required if an
Event of Default under clause (a), (b), (g) or (h) of Article 7 has occurred and
is continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this  Section,  from and  after  the  effective  date  specified  in each
Assignment and Acceptance the assignee  thereunder  shall be a party hereto and,
to the extent of the interest  assigned by such Assignment and Acceptance,  have
the  rights  and  obligations  of a Lender  under  the Loan  Documents,  and the
assigning  Lender  thereunder  shall, to the extent of the interest  assigned by
such Assignment and Acceptance,  be released from its obligations under the Loan
Documents (and, in the case of an Assignment and Acceptance  covering all of the
assigning  Lender's  rights and obligations  under this  Agreement,  such Lender
shall  cease to be a party  hereto  but shall  continue  to be  entitled  to the
benefits of Sections 2.14,  2.15, 2.16 and 9.3). Any assignment or transfer by a
Lender of rights or  obligations  under this Agreement that does not comply with
this

                                      -54-
<PAGE>

paragraph  shall be treated  for  purposes of this  Agreement  as a sale by such
Lender of a  participation  in such rights and  obligations  in accordance  with
paragraph (e) of this Section.

            (c) The Administrative Agent, acting for this purpose as an agent of
the  Borrower,  shall  maintain  at one of its offices in The City of New York a
copy of each  Assignment and  Acceptance  delivered to it and a register for the
recordation  of the names and addresses of the Lenders,  and the  Commitment of,
and  principal  amount of the Loans owing to, each Lender  pursuant to the terms
hereof from time to time (the "Register").  The entries in the Register shall be
conclusive,  and the Borrower and the Credit Parties may treat each Person whose
name is  recorded  in the  Register  pursuant  to the  terms  hereof as a Lender
hereunder  for all  purposes of this  Agreement,  notwithstanding  notice to the
contrary. The Register shall be available for inspection by the Borrower and any
Credit Party, at any reasonable time and from time to time upon reasonable prior
notice.

            (d) Upon its receipt of a duly  completed  Assignment and Acceptance
executed  by an  assigning  Lender and an  assignee,  the  assignee's  completed
Administrative  Questionnaire  (unless the  assignee  shall  already be a Lender
hereunder),  the processing and  recordation fee referred to in paragraph (b) of
this Section and any written  consent to such  assignment  required by paragraph
(b) of this Section,  the Administrative  Agent shall accept such Assignment and
Acceptance  and record the  information  contained  therein in the Register.  No
assignment  shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

            (e) Any Lender  may,  without  the  consent of the  Borrower  or the
Administrative Agent, sell participations to one or more banks or other entities
(a  "Participant")  in all or a portion of such Lender's  rights and obligations
under this Agreement (including all or a portion of its Commitment, LC Exposure,
Swingline  Exposure  and Loans  owing to it);  provided  that (i) such  Lender's
obligations  under the Loan Documents shall remain  unchanged,  (ii) such Lender
shall remain solely  responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower and the Credit Parties shall continue
to deal solely and directly  with such Lender in  connection  with such Lender's
rights and  obligations  under the Loan  Documents.  Any agreement or instrument
pursuant to which a Lender sells such a  participation  shall  provide that such
Lender shall retain the sole right to enforce the Loan  Documents and to approve
any  amendment,  modification  or waiver of any provision of any Loan  document;
provided  that such  agreement or  instrument  may provide that such Lender will
not,  without  the  consent  of  the   Participant,   agree  to  any  amendment,
modification  or waiver  described in the first  proviso to Section  9.2(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same  extent as if it were a Lender  and had  acquired  its
interest by assignment  pursuant to paragraph (b) of this Section. To the extent
permitted  by law,  each  Participant  also shall be entitled to the benefits of
Section 9.8 as though it were a Lender,  provided such Participant  agrees to be
subject to Section 2.17(c) as though it were a Lender.

            (f) A  Participant  shall not be  entitled  to receive  any  greater
payment  under Section 2.14 or 2.16 than the  applicable  Lender would have been
entitled to receive with respect to the participation  sold to such Participant.
A  Participant  that would be a Foreign  Lender if it

                                      -55-
<PAGE>

were a Lender  shall not be entitled to the  benefits of Section 2.16 unless the
Borrower is  notified of the  participation  sold to such  Participant  and such
Participant  agrees,  for the benefit of the  Borrower,  to comply with  Section
2.16(c) as though it were a Lender.

            (g) Any Lender may at any time pledge or assign a security  interest
in all or any  portion  of  its  rights  under  the  Loan  Documents  to  secure
obligations  of such  Lender,  including  any  pledge  or  assignment  to secure
obligations  to a Federal  Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security  interest;  provided that no such pledge
or  assignment  of a security  interest  shall  release a Lender from any of its
obligations  under the Loan Documents or substitute any such pledgee or assignee
for such Lender as a party  hereto and any  foreclosure  by any such  pledgee or
assignee (other than a Federal Reserve Bank) shall be subject to Section 9.4(b).

      Section 9.5.  Survival.  All covenants,  agreements,  representations  and
warranties  made  by  the  Borrower  herein  and in the  certificates  or  other
instruments  delivered in connection with or pursuant to this Agreement shall be
considered  to have been  relied  upon by the  other  parties  hereto  and shall
survive the  execution  and delivery of each Loan Document and the making of any
Loans and the issuance of any Letter of Credit,  regardless of any investigation
made by any such  other  party or on its  behalf  and  notwithstanding  that any
Credit  Party may have had  notice or  knowledge  of any  Default  or  incorrect
representation  or warranty at the time any credit is  extended  hereunder,  and
shall  continue  in full  force and  effect as long as the  principal  of or any
accrued  interest  on any Loan or any LC  Disbursement  or any fee or any  other
amount payable under any Loan Document is  outstanding  and unpaid or any Letter
of Credit is  outstanding  and so long as the  Commitments  have not  expired or
terminated.  The provisions of Sections 2.14,  2.15,  2.16 and 9.3 and Article 8
shall survive and remain in full force and effect regardless of the consummation
of the transactions  contemplated  hereby, the repayment of the Loans and the LC
Disbursements,  the  expiration or  termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

      Section 9.6. Counterparts;  Integration; Effectiveness. This Agreement may
be  executed in  counterparts  (and by  different  parties  hereto on  different
counterparts), each of which shall constitute an original, but all of which when
taken  together  shall  constitute a single  contract.  This  Agreement  and any
separate  letter  agreements  with  respect to fees  payable to any Credit Party
constitute the entire contract among the parties  relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written,  relating to the subject matter  hereof.  Except as provided in Section
4.1, this Agreement  shall become  effective when it shall have been executed by
the Administrative  Agent and when the Administrative  Agent shall have received
counterparts  hereof which, when taken together,  bear the signatures of each of
the other parties hereto,  and thereafter shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns.
Delivery of an executed  counterpart  of a signature  page of this  Agreement by
telecopy  shall be effective as delivery of a manually  executed  counterpart of
this Agreement.

      Section 9.7. Severability.  In the event any one or more of the provisions
contained  in this  Agreement  or in any  other  Loan  Document  should  be held
invalid,  illegal or  unenforceable in any respect,  the validity,  legality and
enforceability  of the remaining  provisions  contained

                                      -56-
<PAGE>

herein and therein  shall not in any way be  affected  or  impaired  thereby (it
being  understood that the invalidity of a particular  provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction).  The parties shall endeavor in good-faith  negotiations
to  replace  the  invalid,   illegal  or  unenforceable  provisions  with  valid
provisions  the  economic  effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

      Section  9.8.  Right of Setoff.  In addition to any rights and remedies of
the Lenders  provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations  owing in connection with this Agreement,  or at
any time upon the occurrence and during the  continuance of an Event of Default,
under  clause  (a),  (b),  (g) or (h) of Article 7, each  Lender  shall have the
right,  without  prior notice to the Borrower,  any such notice being  expressly
waived by the Borrower to the extent not prohibited by applicable law, to setoff
and apply  against  any  indebtedness,  whether  matured  or  unmatured,  of the
Borrower to such Lender, any amount owing from such Lender to the Borrower,  at,
or at any time after, the happening of any of the above-mentioned events. To the
extent not  prohibited by applicable  law, the aforesaid  right of setoff may be
exercised  by such  Lender  against  the  Borrower  or  against  any  trustee in
bankruptcy,  custodian,  debtor  in  possession,  assignee  for the  benefit  of
creditors,  receiver,  or  execution,  judgment  or  attachment  creditor of the
Borrower,  or against  anyone else  claiming  through or against the Borrower or
such trustee in bankruptcy,  custodian,  debtor in possession,  assignee for the
benefit of creditors,  receiver, or execution,  judgment or attachment creditor,
notwithstanding the fact that such right of setoff shall not have been exercised
by such Lender  prior to the making,  filing or  issuance,  or service upon such
Lender of, or of notice of, any such  petition,  assignment  for the  benefit of
creditors,  appointment or  application  for the  appointment of a receiver,  or
issuance of execution,  subpoena,  order or warrant. Each Lender agrees promptly
to notify the  Borrower and the  Administrative  Agent after any such setoff and
application  made by such Lender,  provided that the failure to give such notice
shall not affect the validity of such setoff and application.

      Section 9.9. Governing Law;  Jurisdiction;  Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

            (b) Each of the Borrower and the Credit Parties  hereby  irrevocably
and unconditionally  submits,  for itself and its property,  to the nonexclusive
jurisdiction  of the Supreme  Court of the State of New York sitting in New York
County and of the United States  District Court of the Southern  District of New
York,  and any  appellate  court from any thereof,  in any action or  proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition  or  enforcement  of any  judgment,  and each of the parties  hereto
hereby irrevocably and unconditionally  agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent  permitted  by law,  in such  Federal  court.  Each of the parties
hereto agrees that a final  judgment in any such action or  proceeding  shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement shall affect any
right that any Credit Party may otherwise have to bring any action or proceeding
relating to this

                                      -57-
<PAGE>

Agreement or the other Loan Documents against the Borrower or its properties, in
the courts of any jurisdiction.

            (c) Each of the Borrower and the Credit Parties  hereby  irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection  which it may now or hereafter  have to the laying of venue
of any suit,  action or proceeding  arising out of or relating to this Agreement
or the other Loan  Documents in any court  referred to in paragraph  (b) of this
Section.  Each of the parties hereto hereby  irrevocably  waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

            (d) Each party to this Agreement  irrevocably consents to service of
process in the manner  provided  for  notices  in Section  9.1.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

      Section 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,  TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY  IN ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR
RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

      Section  9.11.  Headings.  Article and Section  headings  and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the   construction  of,  or  be  taken  into
consideration in interpreting, this Agreement.

      Section  9.12.  Confidentiality.  Each Credit Party agrees to maintain the
confidentiality  of the Information (as defined below),  except that Information
may be disclosed (a) to its and its Affiliates' directors,  officers,  employees
and agents,  including  accountants,  legal counsel and other advisors (it being
understood  that the Persons to whom such disclosure is made will be informed of
the  confidential  nature  of such  Information  and  instructed  to  keep  such
Information  confidential),  (b)  to the  extent  requested  by  any  regulatory
authority,  (c) to the extent  required by applicable  laws or regulations or by
any  subpoena  or  similar  legal  process,  (d) to any other  party to any Loan
Document,  (e) in  connection  with the exercise of any remedies  under any Loan
Document or any suit, action or proceeding  relating to any Loan Document or the
enforcement  of  rights  thereunder,  (f)  subject  to an  agreement  containing
provisions  substantially the same as those of this Section,  to any assignee of
or Participant in, or any prospective  assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly  available other than
as a result of a breach of this Section or (ii) becomes  available to any Credit
Party on a

                                      -58-
<PAGE>

nonconfidential  basis  from a  source  other  than the  Borrower  or any of its
Affiliates.   For  the  purposes  of  this  Section,   "Information"  means  all
confidential  information received from the Borrower relating to the Borrower or
its business,  other than any such  information  that is available to any Credit
Party on a nonconfidential basis prior to disclosure by the Borrower. Any Person
required to maintain  the  confidentiality  of  Information  as provided in this
Section shall be  considered  to have  complied with its  obligation to do so if
such  Person  has   exercised   the  same   degree  of  care  to  maintain   the
confidentiality  of such  Information  as such  Person  would  accord to its own
confidential information.

      Section 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary,  if at any time the interest rate applicable to any Loan, together
with all fees,  charges and other  amounts which are treated as interest on such
Loan under applicable law (collectively the "charges"), shall exceed the maximum
lawful rate (the "maximum  rate") which may be contracted for,  charged,  taken,
received  or  reserved  by the  Lender  holding  such  Loan in  accordance  with
applicable law, the rate of interest  payable in respect of such Loan hereunder,
together with all charges  payable in respect  thereof,  shall be limited to the
maximum rate and, to the extent lawful, the interest and charges that would have
been  payable in  respect  of such Loan but were not  payable as a result of the
operation  of this  Section  shall be  cumulated  and the  interest  and charges
payable to such Lender in respect of other Loans or periods  shall be  increased
(but not above the maximum rate therefor) until such cumulated amount,  together
with  interest  thereon  at the  Federal  Funds  Effective  Rate to the  date of
repayment, shall have been received by such Lender.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

                                      -59-
<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

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

                                    TOYS "R" US INC.

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    THE  BANK  OF  NEW  YORK,  individually,  as
                                    Issuing  Bank,  as  Swingline  Lender and as
                                    Administrative Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    CITIBANK,    N.A.,   individually   and   as
                                    Co-Syndication Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    J.P.  MORGAN  CHASE,   individually  and  as
                                    Co-Syndication Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    CREDIT SUISSE FIRST BOSTON, individually and
                                    as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    FIRST UNION NATIONAL BANK,  individually and
                                    as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    THE DAI-ICHI KANGYO BANK, LTD., individually
                                    and as Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    SOCIETE   GENERALE,   individually   and  as
                                    Co-Documentation Agent

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    FIRSTAR BANK, NA

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    BANK ONE, NA (MAIN OFFICE CHICAGO)

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    FLEET NATIONAL BANK

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

<PAGE>

                                TOYS "R" US, INC.
                           FIVE-YEAR CREDIT AGREEMENT

                                    THE FIFTH THIRD BANK

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

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