
<PAGE>   1
                                                                  EXHIBIT 10.20



                                                                 EXECUTION COPY










                                  $962,250,000

                                CREDIT AGREEMENT

                                     among


                             RENTERS CHOICE, INC.,
                                  as Borrower,

                              The Several Lenders
                       from Time to Time Parties Hereto,

                                 COMERICA BANK,
                            as Documentation Agent,

                               NATIONSBANK, N.A.,
                             as Syndication Agent,

                                      and

                           THE CHASE MANHATTAN BANK,
                            as Administrative Agent


                           Dated as of August 5, 1998



<PAGE>   2


                               TABLE OF CONTENTS

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<S>      <C>                                                                                                      <C>
SECTION 1.  DEFINITIONS                                                                                           1
         1.1  Defined Terms                                                                                       1
         1.2  Other Definitional Provisions                                                                      23


SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS                                                                      23
         2.1  Term Commitments and LC/MD Commitments                                                             23
         2.2  Revolving Commitments                                                                              24
         2.3  Swingline Commitment                                                                               24
         2.4  Procedure for A/B/C Term Loan Borrowing                                                            24
         2.5  Procedure for LC/MD Term Loan and Revolving Loan Borrowing                                         25
         2.6  Procedure for Swingline Borrowing; Refunding of Swingline Loans                                    25
         2.7  Repayment of Loans; Scheduled Commitment Reductions                                                27
         2.8  Commitment Fees, etc.                                                                              28
         2.9  Termination or Reduction of Commitments                                                            28
         2.10  Optional Prepayments                                                                              29
         2.11  Mandatory Prepayments                                                                             29
         2.12  Conversion and Continuation Options                                                               30
         2.13  Limitations on Eurodollar Tranches                                                                31
         2.14  Interest Rates and Payment Dates                                                                  31
         2.15  Computation of Interest and Fees                                                                  31
         2.16  Inability to Determine Interest Rate                                                              32
         2.17  Pro Rata Treatment and Payments                                                                   32
         2.18  Requirements of Law                                                                               34
         2.19  Taxes                                                                                             35
         2.20  Indemnity                                                                                         36
         2.21  Change of Lending Office                                                                          37
         2.22  Replacement of Lenders                                                                            37

SECTION 3.  LETTERS OF CREDIT                                                                                    37
         3.1  LC Commitment                                                                                      37
         3.2  Procedure for Issuance of Letter of Credit                                                         38
         3.3  Fees and Other Charges                                                                             38
         3.4  LC Participations                                                                                  39
         3.5  Reimbursement Obligation of the Borrower                                                           40
         3.6  Obligations Absolute                                                                               40
         3.7  Letter of Credit Payments                                                                          41
         3.8  Applications                                                                                       41

SECTION 4.  REPRESENTATIONS AND WARRANTIES                                                                       41
         4.1  Financial Condition                                                                                41
         4.2  No Change                                                                                          42
         4.3  Corporate Existence; Compliance with Law                                                           42
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<S>      <C>                                                                                                   <C>
         4.4  Corporate Power; Authorization; Enforceable Obligations                                            42
         4.5  No Legal Bar                                                                                       42
         4.6  Litigation                                                                                         43
         4.7  No Default                                                                                         43
         4.8  Ownership of Property; Liens                                                                       43
         4.9  Intellectual Property                                                                              43
         4.10  Taxes                                                                                             43
         4.11  Federal Regulations                                                                               43
         4.12  Labor Matters                                                                                     43
         4.13  ERISA                                                                                             44
         4.14  Investment Company Act; Other Regulations                                                         44
         4.15  Subsidiaries                                                                                      44
         4.16  Use of Proceeds                                                                                   44
         4.17  Environmental Matters                                                                             45
         4.18  Accuracy of Information, etc                                                                      45
         4.19  Security Documents                                                                                46
         4.20  Solvency                                                                                          46
         4.21  Senior Indebtedness                                                                               46
         4.22  Year 2000 Matters                                                                                 46
         4.23  Regulation H                                                                                      47

SECTION 5.  CONDITIONS PRECEDENT                                                                                 47
         5.1  Conditions to Initial Extension of Credit                                                          47
         5.2  Conditions to Each Extension of Credit                                                             49

SECTION 6.  AFFIRMATIVE COVENANTS                                                                                50
         6.1  Financial Statements                                                                               50
         6.2  Certificates; Other Information                                                                    50
         6.3  Payment of Obligations                                                                             51
         6.4  Maintenance of Existence; Compliance.                                                              52
         6.5  Maintenance of Property; Insurance                                                                 52
         6.6  Inspection of Property; Books and Records; Discussions                                             52
         6.7  Notices                                                                                            52
         6.8  Environmental Laws                                                                                 53
         6.9  Interest Rate Protection                                                                           53
         6.10  Additional Collateral, etc                                                                        53
         6.11  Permitted Acquisitions                                                                            54
         6.12  Real Estate Matters                                                                               55

SECTION 7.  NEGATIVE COVENANTS                                                                                   56
         7.1  Financial Condition Covenants                                                                      56
         7.2  Indebtedness                                                                                       57
         7.3  Liens                                                                                              58
         7.4  Fundamental Changes                                                                                59
         7.5  Disposition of Property                                                                            59
         7.6  Restricted Payments                                                                                60
</TABLE>

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<S>      <C>                                                                                                     <C>
         7.7  Capital Expenditures                                                                               60
         7.8  Investments                                                                                        61
         7.9  Payments and Modifications of Certain Debt Instruments and Preferred Stock.                        61
         7.10  Transactions with Affiliates                                                                      62
         7.11  Sales/Leaseback Transactions                                                                      62
         7.12  Changes in Fiscal Periods                                                                         62
         7.13  Negative Pledge Clauses                                                                           62
         7.14  Clauses Restricting Subsidiary Distributions                                                      62
         7.15  Lines of Business                                                                                 62
         7.16  Amendments to Acquisition Documents                                                               62

SECTION 8.  EVENTS OF DEFAULT                                                                                    63

SECTION 9.  THE AGENTS                                                                                           66
         9.1  Appointment                                                                                        66
         9.2  Delegation of Duties                                                                               66
         9.3  Exculpatory Provisions                                                                             66
         9.4  Reliance by Administrative Agent                                                                   66
         9.5  Notice of Default                                                                                  67
         9.6  Non-Reliance on Agents and Other Lenders                                                           67
         9.7  Indemnification                                                                                    67
         9.8  Agent in Its Individual Capacity                                                                   68
         9.9  Successor Administrative Agent                                                                     68
         9.10  Authorization to Release Guarantees and Liens                                                     68
         9.11  Documentation Agent and Syndication Agent                                                         68

SECTION 10.  MISCELLANEOUS                                                                                       68
         10.1  Amendments and Waivers                                                                            68
         10.2  Notices                                                                                           69
         10.3  No Waiver; Cumulative Remedies                                                                    70
         10.4  Survival of Representations and Warranties                                                        70
         10.5  Payment of Expenses and Taxes                                                                     70
         10.6  Successors and Assigns; Participations and Assignments                                            71
         10.7  Adjustments; Setoff                                                                               73
         10.8  Counterparts                                                                                      73
         10.9  Severability                                                                                      74
         10.10  Integration                                                                                      74
         10.11  GOVERNING LAW                                                                                    74
         10.12  Submission To Jurisdiction; Waivers                                                              74
         10.13  Acknowledgements                                                                                 74
         10.14  Confidentiality                                                                                  75
         10.15  WAIVERS OF JURY TRIAL                                                                            76
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<S>                   <C>                                                                                      <C>
ANNEX:

A                     Pricing Grid


SCHEDULES:

1.1A                  Commitments
1.1B                  Mortgaged Property
4.4                   Consents, Authorizations, Filings and Notices
4.6                   Litigation
4.15                  Subsidiaries
4.19(a)               UCC and Other Filings / Jurisdictions and Offices
4.19(b)               Mortgage Filing Jurisdictions
7.2(d)                Existing Indebtedness
7.3(f)                Existing Liens
7.14                  Existing Restrictions


EXHIBITS:

A                     Form of Guarantee and Collateral Agreement
B                     Form of Compliance Certificate
C                     Form of Closing Certificate
D                     Form of Mortgage
E                     Form of Assignment and Acceptance
F-1                   Form of Legal Opinion of Winstead Sechrest & Minick P.C.
F-2                   Form of Legal Opinion of Arnold & Porter
F-3                   Form of Legal Opinion of Stinson, Mag & Fizzell, P.C.
G                     Form of Addendum
H                     Form of Prepayment Option Notice
I                     Form of Exemption Certificate
</TABLE>



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<PAGE>   6


         CREDIT AGREEMENT, dated as of August 5, 1998, among RENTERS CHOICE,
INC., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), COMERICA BANK, as documentation agent (in such capacity, the
"Documentation Agent"), NATIONSBANK, N.A., as syndication agent (in such
capacity, the "Syndication Agent"), and THE CHASE MANHATTAN BANK ("Chase"), as
administrative agent.

         The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS


              1.1  Defined Terms. As used in this Agreement, the terms listed in
                   this Section 1.1 shall have the respective meanings set forth
                   in this Section 1.1.

         "A/B/C Term Loans": the collective reference to the Tranche A Term
Loans, the Tranche B Term Loans and the Tranche C Term Loans.

         "ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Reference Lender as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by the Reference Lender in connection with
extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the C/D
Reserve Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary
CD Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Reference Lender from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.

         "ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.

<PAGE>   7


         "Acquired Company": Thorn Americas, Inc., a Delaware corporation.

         "Acquired Vehicles": the vehicles acquired by the Borrower pursuant to
the Acquisition.

         "Acquisition": as defined in Section 5.1(b)(i).

         "Acquisition Agreement": the Stock Purchase Agreement, dated as of June
16, 1998, among the Borrower, the Seller and Thorn plc, in each case as amended,
supplemented or otherwise modified from time to time in accordance with Section
7.16.

         "Acquisition Documentation": collectively, the Acquisition Agreement
and all schedules, exhibits and annexes thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith,
in each case as amended, supplemented or otherwise modified from time to time in
accordance with Section 7.16.

         "Addendum": an Addendum, substantially in the form of Exhibit G,
pursuant to which each Lender becomes a party to this Agreement effective as of
the Closing Date.

         "Adjustment Date": as defined in the Pricing Grid.

         "Administrative Agent": The Chase Manhattan Bank, together with its
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.

         "Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

         "Agents": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.

         "Aggregate Exposure": with respect to any Lender at any time, an amount
equal to (a) until the Closing Date, the aggregate amount of such Lender's
Commitments at such time and (b) thereafter, the sum of (i) the aggregate then
unpaid principal amount of such Lender's A/B/C Term Loans, (ii) the amount of
such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding and (iii) the amount of such Lender's
LC/MD Commitment then in effect or, if the LC/MD Commitments have been
terminated, the amount of such Lender's LC/MD Extensions of Credit then
outstanding.



                                      -2-
<PAGE>   8

         "Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.

         "Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.

         "Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading in the Pricing Grid.

         "Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.

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

         "Asset Sale": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c), (d) or (f) of Section 7.5 and any Disposition of Cash
Equivalents) that yields gross proceeds to the Borrower or any of its
Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $500,000.

         "Assignee": as defined in Section 10.6(c).

         "Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit E.

         "Assignor": as defined in Section 10.6(c).

         "Assumed Indebtedness": Indebtedness assumed in connection with a
Permitted Acquisition, provided that (a) such Indebtedness is outstanding at the
time of such acquisition and was not incurred in connection therewith or in
contemplation thereof and (b) in the event that such Permitted Acquisition
constitutes an acquisition of property other than Capital Stock, such
Indebtedness was incurred in order to acquire or improve such property.

         "Available Revolving Commitment": as to any Revolving Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
then outstanding; provided, that in calculating any Lender's Revolving
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Commitment pursuant to Section 2.8(a), the aggregate principal amount
of Swingline Loans then outstanding shall be deemed to be zero.



                                      -3-
<PAGE>   9

         "Benefitted Lender": as defined in Section 10.7(a).

         "Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).

         "Borrower": as defined in the preamble hereto.

         "Borrowing Date": any Business Day specified by the Borrower as a date
on which the Borrower requests the relevant Lenders to make Loans hereunder.

         "Business": as defined in Section 4.17(b).

         "Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.

         "Capital Expenditures": for any period, with respect to any Person, the
aggregate of all expenditures (other than those made pursuant to Permitted
Acquisitions) by such Person and its Subsidiaries for the acquisition or leasing
(pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period but excluding merchandise inventory acquired during such period)
that should be capitalized under GAAP on a consolidated balance sheet of such
Person and its Subsidiaries.

         "Capital Expenditures (Expansion)": for any period, with respect to any
Person, any Capital Expenditures made by such Person in connection with the
opening of new stores to be operated by such Person.

         "Capital Expenditures (Maintenance)": for any period, with respect to
any Person, any Capital Expenditures which do not constitute Capital
Expenditures (Expansion) of such Person.

         "Capital Lease Obligations": as to any Person, 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, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.

         "Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.



                                      -4-
<PAGE>   10

         "Cash/Debt Consideration": with respect to any Permitted Acquisition,
the portion of the Purchase Price with respect thereto that is payable in the
forms referred to in clauses (a) and (d) of the definition of "Purchase Price"
set forth in Section 1.1.

         "Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

         "C/D Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC's (or such successor's) insuring time deposits at offices of such
institution in the United States.

         "C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board as in effect
from time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.

         "Closing Date": the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied, which date is August 5, 1998.



                                      -5-
<PAGE>   11

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

         "Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.

         "Commitment": as to any Lender, the sum of the Tranche A Term
Commitment, the Tranche B Term Commitment, the Tranche C Term Commitment, the
LC/MD Commitment and the Revolving Commitment of such Lender.

         "Commitment Fee Rate": the rate per annum set forth under the relevant
column heading in the Pricing Grid.

         "Commonly Controlled Entity": an entity, whether or not incorporated,
that is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group that includes the Borrower and that is
treated as a single employer under Section 414 of the Code.

         "Compliance Certificate": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.

         "Confidential Information Memorandum": the Confidential Information
Memorandum regarding the Borrower dated July 1998 and furnished to the Lenders.

         "Consolidated Current Assets": at any date, (a) all amounts (other than
cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date and
(b) without duplication of clause (a) above, the book value of all rental
merchandise inventory of the Borrower and its Subsidiaries at such date.

         "Consolidated Current Liabilities": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
or Swingline Loans to the extent otherwise included therein.

         "Consolidated EBITDA": for any period, Consolidated Net Income for such
period plus, without duplication and to the extent reflected as a charge or
reduction in the statement of such Consolidated Net Income for such period, the
sum of (a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation (excluding
depreciation of rental merchandise) and amortization expense, including, without
limitation, amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (d) any 



                                      -6-
<PAGE>   12

extraordinary, unusual or non-recurring non-cash expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, non-cash losses on sales of assets
outside of the ordinary course of business) and (e) any other non-cash charges,
and minus, to the extent included in the statement of such Consolidated Net
Income for such period, the sum of (a) interest income, (b) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income earned outside the ordinary course
of business, all as determined on a consolidated basis; provided that, (i) in
determining Consolidated EBITDA for the fiscal quarters ending December 31,
1998, March 31, 1999, June 30, 1999 and September 30, 1999, $16,800,000,
$12,275,000, $7,750,000 and $3,875,000, respectively, shall be added to the
amounts otherwise determined as set forth above, in order to take into account
certain quantifiable synergies with respect to the Acquisition and the
acquisition of Central Rents, Inc., and (ii) in determining Consolidated EBITDA,
the portion thereof attributable to the operations of the Acquired Company and
its Subsidiaries prior to the Closing Date shall include only the rent-to-own
businesses of the Acquired Company and its Subsidiaries. For the purposes of
calculating Consolidated EBITDA for any Reference Period pursuant to any
determination of the Consolidated Leverage Ratio, if during such Reference
Period the Borrower or any Subsidiary shall have made a Material Disposition or
Material Acquisition, Consolidated EBITDA for such Reference Period shall be
calculated after giving pro forma effect thereto as if such Material Disposition
or Material Acquisition occurred on the first day of such Reference Period. As
used in this definition, "Material Acquisition" means any acquisition of
property or series of related acquisitions of property that (a) constitutes
assets comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
involves the payment of consideration by the Borrower and its Subsidiaries in
excess of $15,000,000 (or such lesser amount as the Borrower may determine in
its discretion); and "Material Disposition" means any Disposition of property or
series of related Dispositions of property that yields gross proceeds to the
Borrower or any of its Subsidiaries in excess of $15,000,000 (or such lesser
amount as the Borrower may determine in its discretion).

         "Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
of (a) the sum of Consolidated EBITDA for such period and, to the extent
reducing Consolidated Net Income for such period, Consolidated Lease Expense for
such period, less the aggregate amount actually paid by the Borrower and its
Subsidiaries during such period on account of Capital Expenditures (Maintenance)
to (b) Consolidated Fixed Charges for such period.

         "Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
Consolidated Lease Expense for such period and (c) regular, scheduled payments
made during such period on account of principal of Indebtedness of the Borrower
or any of its Subsidiaries (including scheduled principal payments in respect of
the Term Loans but excluding prepayments thereof); provided, that for the
purposes of determining the Consolidated Fixed Charge Coverage Ratio for the
fiscal quarters of the Borrower ending December 31, 1998, March 31, 1999 and
June 30, 1999, Consolidated Interest Expense for the relevant period 



                                      -7-
<PAGE>   13

shall be deemed to equal Consolidated Interest Expense for such fiscal quarter
(and, in the case of the latter two such determinations, each previous fiscal
quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3,
respectively.

         "Consolidated Funded Debt": at any date, the aggregate principal amount
of all Funded Debt (which, for purposes of the calculation of Consolidated
Funded Debt, shall be deemed to include any unfunded portion of the NJ Letter of
Credit (but not other Letters of Credit)) of the Borrower and its Subsidiaries
at such date, determined on a consolidated basis in accordance with GAAP.

         "Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

         "Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations), net of cash
interest income, of the Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, commitment fees
payable pursuant to Section 2.8(a) and net costs under Hedge Agreements in
respect of such Indebtedness to the extent such net costs are allocable to such
period in accordance with GAAP); provided, that for the purposes of determining
the Consolidated Interest Coverage Ratio for the fiscal quarters of the Borrower
ending December 31, 1998, March 31, 1999 and June 30, 1999, Consolidated
Interest Expense for the relevant period shall be deemed to equal Consolidated
Interest Expense for such fiscal quarter (and, in the case of the latter two
such determinations, each previous fiscal quarter commencing after the Closing
Date) multiplied by 4, 2 and 4/3, respectively.

         "Consolidated Lease Expense": for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrower and its Subsidiaries for
such period with respect to leases of real and personal property (other than
certain properties associated with operations to be discontinued in connection
with the restructuring related to the Acquisition), determined on a consolidated
basis in accordance with GAAP.

         "Consolidated Leverage Ratio": as at the last day of any period, the
ratio of (a) Consolidated Funded Debt on such day to (b) Consolidated EBITDA for
such period.

         "Consolidated Net Income": for any period, the consolidated net income
(or loss) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the 



                                      -8-
<PAGE>   14

Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.

         "Consolidated Net Worth": at any date, all amounts that would, in
conformity with GAAP, be included on a consolidated balance sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.

         "Consolidated Working Capital": at any date, the excess of Consolidated
Current Assets on such date over Consolidated Current Liabilities on such date.

         "Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Control Investment Affiliate": as to any Person, any other Person that
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

         "Default": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied (including, in any event, a "Default" under and as defined in the
Senior Subordinated Note Indenture).

         "Disposition": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.

         "Documentation Agent": as defined in the preamble hereto.

         "Dollars" and "$": dollars in lawful currency of the United States.

         "Domestic Subsidiary": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.

         "Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.



                                      -9-
<PAGE>   15
         "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

         "Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" shall be determined by reference to
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.

         "Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.

         "Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

                              Eurodollar Base Rate
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

         "Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).

         "Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied (including, in any event, an "Event of Default" under and as
defined in the Senior Subordinated Note Indenture).



                                      -10-
<PAGE>   16


         "Excess Cash Flow": for any fiscal year of the Borrower, the excess, if
any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) an amount equal to the amount of all non-cash charges
(including depreciation (other than depreciation of rental merchandise) and
amortization) deducted in arriving at such Consolidated Net Income, (iii)
decreases in Consolidated Working Capital for such fiscal year, and (iv) an
amount equal to the aggregate net non-cash loss on the Disposition of property
by the Borrower and its Subsidiaries during such fiscal year (other than sales
of inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income, over (b) the sum, without duplication,
of (i) an amount equal to the amount of all non-cash credits included in
arriving at such Consolidated Net Income, (ii) the aggregate amount actually
paid by the Borrower and its Subsidiaries in cash during such fiscal year on
account of Capital Expenditures (excluding the principal amount of Indebtedness
incurred in connection with such expenditures and any such expenditures financed
with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate
amount actually paid by the Borrower in cash during such fiscal year on account
of Permitted Acquisitions, (iv) the aggregate amount of all prepayments of
Revolving Loans and Swingline Loans during such fiscal year to the extent
accompanying permanent optional reductions of the Revolving Commitments and all
optional prepayments of the Term Loans during such fiscal year, (v) the
aggregate amount of all regularly scheduled principal payments of Funded Debt
(including the Term Loans) of the Borrower and its Subsidiaries made during such
fiscal year, (vi) increases in Consolidated Working Capital for such fiscal
year, and (vii) an amount equal to the aggregate net non-cash gain on the
Disposition of property by the Borrower and its Subsidiaries during such fiscal
year (other than sales of inventory in the ordinary course of business), to the
extent included in arriving at such Consolidated Net Income.

         "Excess Cash Flow Application Date": as defined in Section 2.11(d).

         "Excess Senior Subordinated Note Amount": as defined in Section
2.11(b)(ii).

         "Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.

         "Existing Credit Agreement": that certain Credit Agreement, dated as of
November 27, 1996, as amended, among the Borrower, Comerica Bank, as
administrative agent, and others.

         "Facility": each of (a) the Tranche A Term Commitments and the Tranche
A Term Loans made thereunder (the "Tranche A Term Facility"), (b) the Tranche B
Term Commitments and the Tranche B Term Loans made thereunder (the "Tranche B
Term Facility"), (c) the Tranche C Term Commitments and the Tranche C Term Loans
made thereunder (the "Tranche C Term Facility"), (d) the Revolving Commitments
and the extensions of credit made thereunder (the "Revolving Facility") and (e)
the LC/MD Commitments and the extensions of credit thereunder (the "LC/MD
Facility").



                                      -11-
<PAGE>   17

         "Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.

         "Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.

         "Funded Debt": as to any Person, on any date, (a) all Indebtedness of
such Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date,
including all current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower, Indebtedness in respect
of the Loans and the Reimbursement Obligations (but excluding, in the case of
the Borrower, any Guarantee Obligations of the Borrower in respect of
Indebtedness of franchisees, to the extent permitted by Section 7.2(h)), minus
(b) (i) for purposes of calculating the Consolidated Leverage Ratio in order to
determine the Applicable Margin or the Commitment Fee Rate as set forth on the
Pricing Grid, the sum of (x) the $30,000,000 of cash on the consolidated balance
sheet of the Borrower and its Subsidiaries on the Closing Date, to the extent
remaining on the balance sheet on such date (plus any interest earned thereon,
to the extent remaining on the balance sheet on such date), and (y) 50% of the
Net Cash Proceeds of any Excess Senior Subordinated Note Amount received by the
Borrower since the Closing Date, to the extent remaining on the balance sheet on
such date (plus any interest earned thereon, to the extent remaining on the
balance sheet on such date), and (ii) otherwise, the aggregate amount of cash
and Cash Equivalents on the consolidated balance sheet of the Borrower and its
Subsidiaries on such date, but in no event exceeding the sum of (x) $30,000,000
and (y) 50% of the Net Cash Proceeds of any Excess Senior Subordinated Note
Amount received by the Borrower since the Closing Date.

         "Funding Office": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.

         "GAAP": generally accepted accounting principles in the United States
as in effect from time to time, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements delivered pursuant to Section 4.1(b). In the event that any
"Accounting Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Borrower and the Administrative Agent agree to enter
into negotiations in order to amend such 



                                      -12-
<PAGE>   18

provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the SEC.

         "Governmental Authority": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

         "Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.

         "Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.



                                      -13-
<PAGE>   19

         "Hedge Agreements": all swaps, caps, collars or similar arrangements
providing for protection against fluctuations in interest rates, currency
exchange rates or commodities prices or the exchange of nominal interest
obligations, either generally or under specific contingencies.

         "Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar facilities, (g) the
liquidation value of all redeemable preferred Capital Stock of such Person
(other than any such preferred Capital Stock that is not redeemable until a date
that is no earlier than one year and one day after the final maturity of the
Loans and the Preferred Stock), (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (g) above;
(i) all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation; and (j) for the
purposes of Section 8(e) only, all obligations of such Person in respect of
Hedge Agreements.

         "Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

         "Insolvent": pertaining to a condition of Insolvency.

         "Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

         "Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period and
(d) as to any Loan (other than any Revolving Loan



                                      -14-
<PAGE>   20


that is an ABR Loan and any Swingline Loan), the date of any repayment or
prepayment made in respect thereof.

         "Interest Period": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing provisions
relating to Interest Periods are subject to the following:

               (i) if any Interest Period would otherwise end on a day that is
                   not a Business Day, such Interest Period shall be extended to
                   the next succeeding Business Day unless the result of such
                   extension would be to carry such Interest Period into another
                   calendar month in which event such Interest Period shall end
                   on the immediately preceding Business Day;

              (ii) the Borrower may not select an Interest Period for a
                   particular Facility that would extend beyond the final
                   maturity date applicable thereto;

             (iii) any Interest Period that begins on the last Business Day of
                   a calendar month (or on a day for which there is no
                   numerically corresponding day in the calendar month at the
                   end of such Interest Period) shall end on the last Business
                   Day of a calendar month; and

              (iv) the Borrower shall select Interest Periods so as not to
                   require a payment or prepayment of any Eurodollar Loan during
                   an Interest Period for such Loan.

         "Investments": as defined in Section 7.8.

         "Issuing Lender": The Chase Manhattan Bank (or any of its Affiliates,
including, without limitation, Chase Manhattan Bank of Delaware), in its
capacity as issuer of any Letter of Credit.

         "LC Fee Payment Date": the last day of each March, June, September and
December and the last day of the Revolving Commitment Period.



                                      -15-
<PAGE>   21

         "LC/MD Commitment": as to any Lender, the collective reference to such
Lender's LC/MD LC Commitment and LC/MD Term Commitment.

         "LC/MD Extensions of Credit": as to any LC/MD Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all LC/MD Loans
held by such Lender then outstanding and (b) such Lender's LC/MD Percentage of
the LC/MD LC Obligations then outstanding.

         "LC/MD LC Commitment": as to any Lender, the obligation of such Lender,
if any, to participate in the NJ Letter of Credit in an aggregate face amount
not to exceed the amount set forth under the heading "LC/MD LC Commitment"
opposite such Lender's name on Schedule 1.1A or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto, as the same may be changed
from time to time pursuant to the terms hereof. The original aggregate amount of
the LC/MD LC Commitments is $122,250,000.

         "LC/MD LC Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the NJ Letter of Credit and
(b) the aggregate amount of drawings under the NJ Letter of Credit that have not
then been reimbursed by the Borrower or pursuant to Section 3.5 (but only, in
the case of this clause (b), until the refunding procedure contemplated by
Section 3.5 has been completed).

         "LC/MD Lender": each Lender that has a LC/MD Commitment or that holds
LC/MD Loans.

         "LC/MD Loans": the collective reference to LC/MD Reimbursement Loans
and LC/MD Term Loans.

         "LC/MD Percentage": as to any LC/MD Lender at any time, the percentage
which such Lender's LC/MD Commitment then constitutes of the Total LC/MD
Commitments (or, at any time after the LC/MD Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
LC/MD Loans then outstanding constitutes of the aggregate principal amount of
the LC/MD Loans then outstanding).

         "LC/MD Reimbursement Loans": any participating interest in any
unreimbursed payment under the NJ Letter of Credit funded by an LC/MD Lender, it
being understood that LC/MD Reimbursement Loans are referred to as "Loans"
hereunder for convenience of reference only, and such references shall not be
construed to imply that any proceeds of LC/MD Reimbursement Loans are to be
received by the Borrower.

         "LC/MD Scheduled Termination Date": as defined in Section 2.1(b).

         "LC/MD Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make LC/MD Term Loans in an aggregate principal amount not to
exceed the amount set forth



                                      -16-
<PAGE>   22


under the heading "LC/MD Term Commitment" opposite such Lender's name on
Schedule 1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof. The original aggregate amount of the LC/MD Term Commitments
is $85,000,000.

         "LC/MD Term Commitment Period": the period from and including the NJ LC
Termination Date to the LC/MD Scheduled Termination Date.

         "LC/MD Term Loans": as defined in Section 2.1(b).

         "LC Participants": (a) in the case of the Revolving Letters of Credit,
the collective reference to all Revolving Lenders (including the Issuing Lender)
and (b) in the case of the NJ Letter of Credit, the collective reference to all
LC/MD Lenders (including the Issuing Lender).

         "Lenders": as defined in the preamble hereto.

         "Letters of Credit": the collective reference to the NJ Letter of
Credit and the Revolving Letters of Credit.

         "Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).

         "Loan": any loan made by any Lender pursuant to this Agreement.

         "Loan Documents": this Agreement, the Security Documents and the Notes.

         "Loan Parties": the Borrower and each Subsidiary of the Borrower that
is a party to a Loan Document.

         "Majority Facility Lenders": with respect to any Facility, the holders
of more than 50% of the aggregate unpaid principal amount of the Term Loans, the
Total Revolving Extensions of Credit or the Total LC/MD Extensions of Credit, as
the case may be, outstanding under such Facility (or (a) in the case of the
Revolving Facility, prior to any termination of the Revolving Commitments, the
holders of more than 50% of the Total Revolving Commitments and (b) in the case
of the LC/MD Facility, prior to any termination of the LC/MD Commitments, the
holders of more than 50% of the Total LC/MD Commitments).

         "Material Adverse Effect": a material adverse effect on (a) the
business, property, operations, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken



                                      -17-
<PAGE>   23


as a whole or (b) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Administrative Agent
or the Lenders hereunder or thereunder.

         "Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.

         "Mortgaged Properties": the real properties listed on Schedule 1.1B, as
to which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages in accordance with Section 6.12.

         "Mortgages": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time.

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

         "Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness secured by
a Lien expressly permitted hereunder on any asset that is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable currently
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.

         "NJ LC Termination Date": as defined in Section 2.1(b).

         "NJ Letter of Credit": as defined in Section 3.1(a).

         "Non-Excluded Taxes": as defined in Section 2.19(a).

         "Non-U.S. Lender": as defined in Section 2.19(d).



                                      -18-
<PAGE>   24


         "Notes": the collective reference to any promissory note evidencing
Loans.

         "Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender in connection with
this Agreement or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

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

         "Participant": as defined in Section 10.6(b).

         "PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).

         "Permitted Acquisition": any acquisition, consisting of a single
transaction or a series of related transactions, by the Borrower or any one or
more of its Wholly Owned Subsidiary Guarantors of all of the Capital Stock of,
or all or a substantial part of the assets of, or of a business, unit or
division of, any Person organized under the laws of the United States or any
state thereof (such business, unit or division, the "Acquired Business"),
provided that (a) the consideration paid by the Borrower or such Subsidiary or
Subsidiaries pursuant to such acquisition shall be solely in a form referred to
in clause (a), (b), (c) or (d) of the definition of "Purchase Price" set forth
in Section 1.1 (or some combination thereof), (b) the requirements of Section
6.11 have been satisfied with respect to such acquisition, (c) the Borrower
shall be in compliance, on a pro forma basis after giving effect to such
acquisition, with the covenants contained in Section 7.1, in each case
recomputed as at the last day of the most recently ended fiscal quarter of the
Borrower as if such acquisition had occurred on the first day of each relevant
period for testing such compliance, (d) no Default or Event of Default shall
have occurred and be continuing, or would occur after giving effect to such
acquisition, (e) all actions required to be taken with respect to any acquired
or newly formed Subsidiary or otherwise with respect to the Acquired Business in
such acquisition under Section 6.10 shall have been taken, (f) the aggregate
Purchase Prices in respect of such acquisition and all other



                                      -19-
<PAGE>   25

Permitted Acquisitions consummated in accordance with this Agreement shall not
exceed (i) during the Borrower's fiscal years 1998 and 1999, $50,000,000 in
each such fiscal year (or, in the case of fiscal 1998, the portion thereof
occurring after the Closing Date), and (ii) thereafter, in any fiscal year of
the Borrower, the sum of (A) $100,000,000 (or, if the Consolidated Leverage
Ratio as of the last day of any fiscal quarter during such fiscal year is less
than 3.50 to 1.0, $150,000,000) and (B) an additional up to $25,000,000 to the
extent not expended as Capital Expenditures (Expansion) during such fiscal year
pursuant to 7.7(b), (g) the Cash/Debt Consideration in respect of such
acquisition and all other Permitted Acquisitions consummated in accordance with
this Agreement shall not exceed (i) during the Borrower's fiscal years 1998 and
1999, $50,000,000 in each such fiscal year (or, in the case of fiscal 1998, the
portion thereof occurring after the Closing Date), and (ii) thereafter, in any
fiscal year of the Borrower, $70,000,000 (plus any amounts available pursuant
to the foregoing clause (f)(ii)(B)), and (h) any such acquisition shall have
been approved by the Board of Directors or such comparable governing body of
the Person (or whose business, unit or division is, as the case may be) being
acquired.

         "Permitted Investors": the collective reference to (i) the Sponsor,
(ii) the Talley Persons and (iii) the Speese Persons.

         "Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

         "Plan": at a particular time, any employee benefit plan that is covered
by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

         "Preferred Stock": as defined in Section 5.1(b)(ii).

         "Pricing Grid": the pricing grid attached hereto as Annex A.

         "Pro Forma Financial Statements": as defined in Section 4.1(a).

         "Projections": as defined in Section 6.2(c).

         "Properties": as defined in Section 4.17(a).

         "Purchase Price": with respect to any Permitted Acquisition, the sum
(without duplication) of (a) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such acquisition, (b) the value (as determined
for purposes of such acquisition in accordance with the applicable acquisition
agreement) of all Capital Stock of the Borrower issued or given as consideration
in connection with such acquisition, (c) the Qualified Net Cash Equity Proceeds



                                      -20-
<PAGE>   26
applied to finance such acquisition and (d) the principal amount (or, if less,
the accreted value) at the time of such acquisition of all Assumed Indebtedness
with respect thereto.

         "Qualified Net Cash Equity Proceeds": the Net Cash Proceeds of any
offering of Capital Stock of the Borrower, provided that (a) such offering was
made in express contemplation of a Permitted Acquisition, (b) such Capital Stock
is not mandatorily redeemable and (c) such Permitted Acquisition is consummated
within 90 days after receipt by the Borrower of such Net Cash Proceeds.

         "Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of the Borrower or any of its Subsidiaries. "Reference Lender": The
Chase Manhattan Bank.

         "Reference Period": with respect to any date, the period of four
consecutive fiscal quarters of the Borrower immediately preceding such date or,
if such date is the last day of a fiscal quarter, ending on such date.

         "Refunded Swingline Loans": as defined in Section 2.6(b).

         "Refunding Date": as defined in Section 2.6(c).

         "Register": as defined in Section 10.6(d).

         "Regulation U": Regulation U of the Board as in effect from time to
time.

         "Reimbursement Obligation": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to Section 3.5 for amounts paid under Letters of
Credit.

         "Reinvestment Deferred Amount": with respect to any Reinvestment Event,
the aggregate Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection therewith that are not applied to prepay the Term
Loans or reduce the Revolving Commitments pursuant to Section 2.11(c) as a
result of the delivery of a Reinvestment Notice.

         "Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.

         "Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire assets useful in its business.



                                      -21-
<PAGE>   27


         "Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire assets
useful in the Borrower's business.

         "Reinvestment Prepayment Date": with respect to any Reinvestment Event,
the earlier of (a) the date occurring twelve months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the Borrower's business
with all or any portion of the relevant Reinvestment Deferred Amount.

         "Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

         "Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
ss. 4043.

         "Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Commitments then in effect and (b) thereafter, the
sum of (i) the aggregate unpaid principal amount of the A/B/C Term Loans then
outstanding, (ii) the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding and (iii) the Total LC/MD Commitments then in effect or,
if the LC/MD Commitments have been terminated, the Total LC/MD Extensions of
Credit then outstanding.

         "Required Prepayment Lenders": the Majority Facility Lenders in respect
of each Facility.

         "Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

         "Responsible Officer": the chief executive officer, president, chief
financial officer or treasurer of the Borrower, but in any event, with respect
to financial matters, the chief financial officer or president of the Borrower.

         "Restricted Payments": as defined in Section 7.6.

         "Revolving Commitment": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Swingline Loans and
Revolving Letters of Credit in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading 



                                      -22-
<PAGE>   28

"Revolving Commitment" opposite such Lender's name on Schedule 1.1A or in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof. The
original amount of the Total Revolving Commitments is $120,000,000.

         "Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Scheduled Commitment Termination Date.

         "Revolving Extensions of Credit": as to any Revolving Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the Revolving LC Obligations then outstanding and (c)
such Lender's Revolving Percentage of the aggregate principal amount of
Swingline Loans then outstanding.

         "Revolving LC Commitment": $75,000,000.

         "Revolving LC Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Revolving Letters of Credit and (b) the aggregate amount of drawings under
Revolving Letters of Credit that have not then been reimbursed pursuant to
Section 3.5.

         "Revolving Lender": each Lender that has a Revolving Commitment or that
holds Revolving Loans.

         "Revolving Letters of Credit": as defined in Section 3.1.

         "Revolving Loans": as defined in Section 2.2.

         "Revolving Percentage": as to any Revolving Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding).

         "Revolving Scheduled Commitment Termination Date": July 31, 2004.

         "Sale/Leaseback Transaction": any arrangement providing for the leasing
to the Borrower or any Subsidiary of real or personal property that has been or
is to be (a) sold or transferred by the Borrower or any Subsidiary or (b)
constructed or acquired by a third party in anticipation of a program of leasing
to the Borrower or any Subsidiary.

         "SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.



                                      -23-
<PAGE>   29

         "Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.

         "Seller": Thorn International BV.

         "Senior Subordinated Note Indenture": the Indenture to be entered into
by the Borrower and certain of its Subsidiaries in connection with the issuance
of the Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 7.9.

         "Senior Subordinated Notes": the subordinated notes of the Borrower to
be issued pursuant to the Senior Subordinated Note Indenture.

         "Single Employer Plan": any Plan that is covered by Title IV of ERISA,
but that is not a Multiemployer Plan.

         "Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.

         "Specified Change of Control": a "Change of Control" as defined in the
Subordinated Bridge Facility or the Senior Subordinated Note Indenture.

         "Speese Persons": the collective reference to Mark E. Speese, any
person having a relationship with Mark E. Speese by blood, marriage or adoption
not more remote than first cousin and any trust established for the benefit of
any such person.



                                      -24-
<PAGE>   30

         "Sponsor": Apollo Management IV, L.P., Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P. and their Control Investment Affiliates.

         "Subordinated Bridge Facility": the collective reference to (i) the
Senior Subordinated Credit Agreement, dated as of the date hereof, among the
Borrower, the lenders from time to time parties thereto and Chase, as
administrative agent for such lenders, together with the Indenture referred to
therein, and (ii) any other document governing Indebtedness (other than the
Senior Subordinated Notes) incurred pursuant to Section 7.2(f)(i)(A)(y).

         "Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower. All references to Subsidiaries
of the Borrower applicable on the Closing Date and thereafter shall include the
Acquired Company and its Subsidiaries.

         "Subsidiary Guarantor": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.

         "Swingline Commitment": the obligation of the Swingline Lender to make
Swingline Loans pursuant to Section 2.6 in an aggregate principal amount at any
one time outstanding not to exceed $20,000,000.

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

         "Swingline Loans": as defined in Section 2.3.

         "Swingline Participation Amount": as defined in Section 2.6(c).

         "Syndication Agent": as defined in the preamble hereto.

         "Talley Persons": the collective reference to J. Ernest Talley, any
person having a relationship with J. Ernest Talley by blood, marriage or
adoption not more remote than first cousin (other than his children) and any
trust established for the benefit of any person having a relationship with J.
Ernest Talley by blood, marriage or adoption not more remote than first cousin.

         "Term Lenders": the collective reference to the Tranche A Term Lenders,
the Tranche B Term Lenders, the Tranche C Term Lenders and the LC/MD Lenders.



                                      -25-
<PAGE>   31

         "Term Loans": the collective reference to the A/B/C Term Loans and the
LC/MD Loans.

         "Total LC/MD Commitments": at any time, (a) until the NJ LC Termination
Date, the aggregate amount of the LC/MD LC Commitments then in effect and (b)
thereafter, the aggregate amount of the LC/MD Term Commitments then in effect.

         "Total LC/MD Extensions of Credit": at any time, the aggregate amount
of the LC/MD Extensions of Credit of the LC/MD Lenders outstanding at such time.

         "Total Revolving Commitments": at any time, the aggregate amount of the
Revolving Commitments then in effect.

         "Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.

         "Tranche A Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Tranche A
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche A Term Commitments is $120,000,000.

         "Tranche A Term Lender": each Lender that has a Tranche A Term
Commitment or is the holder of a Tranche A Term Loan.

         "Tranche A Term Loan": as defined in Section 2.1(a).

         "Tranche A Term Percentage": as to any Tranche A Term Lender at any
time, the percentage which such Lender's Tranche A Term Commitment then
constitutes of the aggregate Tranche A Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche A Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche A Term Loans then outstanding).

         "Tranche B Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Tranche B
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche B Term Commitments is $270,000,000.

         "Tranche B Term Lender": each Lender that has a Tranche B Term
Commitment or that holds a Tranche B Term Loan.

         "Tranche B Term Loan": as defined in Section 2.1(b).



                                      -26-
<PAGE>   32

         "Tranche B Term Percentage": as to any Tranche B Term Lender at any
time, the percentage which such Lender's Tranche B Term Commitment then
constitutes of the aggregate Tranche B Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).

         "Tranche C Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Tranche C Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Tranche C
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche C Term Commitments is $330,000,000.

         "Tranche C Term Lender": each Lender that has a Tranche C Term
Commitment or that holds a Tranche C Term Loan.

         "Tranche C Term Loan": as defined in Section 2.1(c).

         "Tranche C Term Percentage": as to any Tranche C Term Lender at any
time, the percentage which such Lender's Tranche C Term Commitment then
constitutes of the aggregate Tranche C Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche C Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche C Term Loans then outstanding).

         "Transferee": any Assignee or Participant.

         "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

         "Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.

         "United States": the United States of America.

         "Voting Stock": with respect to any Person, any class or series of
Capital Stock of such Person that is ordinarily entitled to vote in the election
of directors thereof at a meeting of stockholders called for such purpose,
without the occurrence of any additional event or contingency.

         "Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

         "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.



                                      -27-
<PAGE>   33

              1.2  Other Definitional Provisions. Unless otherwise specified
                   therein, all terms defined in this Agreement shall have the
                   defined meanings when used in the other Loan Documents or any
                   certificate or other document made or delivered pursuant
                   hereto or thereto.

                   (b)   As used herein and in the other Loan Documents, and any
                         certificate or other document made or delivered
                         pursuant hereto or thereto, (i) accounting terms
                         relating to the Borrower and its Subsidiaries not
                         defined in Section 1.1 and accounting terms partly
                         defined in Section 1.1, to the extent not defined,
                         shall have the respective meanings given to them under
                         GAAP, (ii) the words "include", "includes" and
                         "including" shall be deemed to be followed by the
                         phrase "without limitation" and (iii) the words "asset"
                         and "property" shall be construed to have the same
                         meaning and effect and to refer to any and all tangible
                         and intangible assets and properties, including cash,
                         Capital Stock, securities, revenues, accounts,
                         leasehold interests and contract rights.

                   (c)   The words "hereof", "herein" and "hereunder" and words
                         of similar import when used in this Agreement shall
                         refer to this Agreement as a whole and not to any
                         particular provision of this Agreement, and Section,
                         Schedule and Exhibit references are to this Agreement
                         unless otherwise specified.

                   (d)   The meanings given to terms defined herein shall be
                         equally applicable to both the singular and plural
                         forms of such terms.

                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

              2.1  Term Commitments and LC/MD Commitments. (a) Subject to the
                   terms and conditions hereof, (i) each Tranche A Term Lender
                   severally agrees to make a term loan (a "Tranche A Term
                   Loan") to the Borrower on the Closing Date in an amount not
                   to exceed the amount of the Tranche A Term Commitment of such
                   Lender, (ii) each Tranche B Term Lender severally agrees to
                   make a term loan (a "Tranche B Term Loan") to the Borrower on
                   the Closing Date in an amount not to exceed the amount of the
                   Tranche B Term Commitment of such Lender and (iii) each
                   Tranche C Term Lender severally agrees to make a term loan (a
                   "Tranche C Term Loan") to the Borrower on the Closing Date in
                   an amount not to exceed the amount of the Tranche C Term
                   Commitment of such Lender



                                      -28-
<PAGE>   34


         (b) Subject to the terms and conditions hereof, each LC/MD Lender
severally agrees to make LC/MD Reimbursement Loans upon the occurrence of any
drawing under the NJ Letter of Credit to the extent contemplated by Section 3.5
in an aggregate amount not to exceed the amount of the LC/MD LC Commitment of
such Lender. In addition, after the date (the "NJ LC Termination Date") on which
the NJ Letter of Credit has expired or otherwise been terminated or on which the
full amount available thereunder has been drawn, subject to the terms and
conditions hereof, each LC/MD Lender severally agrees to make term loans ("LC/MD
Term Loans") to the Borrower from time to time to the extent, but only to the
extent, of any remaining LC/MD Term Commitment of such Lender as in effect
immediately prior to the making of the relevant LC/MD Term Loan. The obligation
of the LC/MD Lenders to make LC/MD Term Loans shall terminate on the date (the
"LC/MD Scheduled Termination Date") that is the earlier of (i) the later of (x)
September 30, 2000 and (y) the date that is 90 days after the NJ LC Termination
Date and (ii) March 30, 2004. The LC/MD LC Commitments shall automatically be
permanently reduced by the principal amount of any LC/MD Reimbursement Loans
created hereunder. The LC/MD LC Commitments shall terminate on the NJ LC
Termination Date. The LC/MD Term Commitments shall automatically be permanently
reduced by the principal amount of any LC/MD Reimbursement Loans or LC/MD Term
Loans borrowed hereunder. The LC/MD Term Commitments shall terminate on the
LC/MD Scheduled Termination Date.

         (c) The Term Loans may from time to time be Eurodollar Loans or ABR
Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.4, 2.5 and 2.12.

              2.2  Revolving Commitments. Subject to the terms and conditions
                   hereof, each Revolving Lender severally agrees to make
                   revolving credit loans ("Revolving Loans") to the Borrower
                   from time to time during the Revolving Commitment Period in
                   an aggregate principal amount at any one time outstanding
                   which, when added to such Lender's Revolving Percentage of
                   the sum of (a) the Revolving LC Obligations then outstanding
                   and (b) the aggregate principal amount of the Swingline Loans
                   then outstanding, does not exceed the amount of such Lender's
                   Revolving Commitment. During the Revolving Commitment Period
                   the Borrower may use the Revolving Commitments by borrowing,
                   prepaying the Revolving Loans in whole or in part, and
                   reborrowing, all in accordance with the terms and conditions
                   hereof. The Revolving Loans may from time to time be
                   Eurodollar Loans or ABR Loans, as determined by the Borrower
                   and notified to the Administrative Agent in accordance with
                   Sections 2.5 and 2.12.

              2.3  Swingline Commitment. Subject to the terms and conditions
                   hereof, the Swingline Lender agrees to make a portion of the
                   credit otherwise



                                      -29-
<PAGE>   35

                   available to the Borrower under the Revolving Commitments
                   from time to time during the Revolving Commitment Period by
                   making swing line loans ("Swingline Loans") to the Borrower;
                   provided that (a) the aggregate principal amount of Swingline
                   Loans outstanding at any time shall not exceed the Swingline
                   Commitment then in effect (notwithstanding that the Swingline
                   Loans outstanding at any time, when aggregated with the
                   Swingline Lender's other outstanding Revolving Loans
                   hereunder, may exceed the Swingline Commitment then in
                   effect) and (b) the Borrower shall not request, and the
                   Swingline Lender shall not make, any Swingline Loan if, after
                   giving effect to the making of such Swingline Loan, the
                   aggregate amount of the Available Revolving Commitments would
                   be less than zero. During the Revolving Commitment Period,
                   the Borrower may use the Swingline Commitment by borrowing,
                   repaying and reborrowing, all in accordance with the terms
                   and conditions hereof. Swingline Loans shall be ABR Loans
                   only.

              2.4  Procedure for A/B/C Term Loan Borrowing. The Borrower shall
                   give the Administrative Agent irrevocable notice (which
                   notice must be received by the Administrative Agent prior to
                   10:00 A.M., New York City time, one Business Day prior to the
                   anticipated Closing Date) requesting that the relevant Term
                   Lenders make the A/B/C Term Loans on the Closing Date and
                   specifying the amount to be borrowed. The A/B/C Term Loans
                   made on the Closing Date shall initially be ABR Loans and,
                   unless otherwise agreed by the Administrative Agent in its
                   sole discretion, (A) no such Term Loan may be converted into
                   or continued as a Eurodollar Loan prior to the date that is
                   30 days after the Closing Date and (B) no such Term Loan may
                   be converted into or continued as a Eurodollar Loan having an
                   Interest Period in excess of one month prior to the date that
                   is 90 days after the Closing Date. Upon receipt of such
                   notice the Administrative Agent shall promptly notify each
                   relevant Term Lender thereof. Not later than 12:00 Noon, New
                   York City time, on the Closing Date each relevant Term Lender
                   shall make available to the Administrative Agent at the
                   Funding Office an amount in immediately available funds equal
                   to the A/B/C Term Loan(s) to be made by such Lender. The
                   Administrative Agent shall credit the account of the Borrower
                   on the books of such office of the Administrative Agent with
                   the aggregate of the amounts so made available to the
                   Administrative Agent by the Term Lenders in immediately
                   available funds.



                                      -30-
<PAGE>   36


              2.5  Procedure for LC/MD Term Loan and Revolving Loan Borrowing.
                   The Borrower may borrow under the LC/MD Term Commitments
                   during the LC/MD Term Commitment Period or under the
                   Revolving Commitments during the Revolving Commitment Period
                   on any Business Day, provided that the Borrower shall give
                   the Administrative Agent irrevocable notice (which notice
                   must be received by the Administrative Agent prior to 12:00
                   Noon, New York City time, (a) three Business Days prior to
                   the requested Borrowing Date, in the case of Eurodollar
                   Loans, or (b) one Business Day prior to the requested
                   Borrowing Date, in the case of ABR Loans), specifying (i) the
                   amount and Type of Loans to be borrowed, (ii) the requested
                   Borrowing Date and (iii) in the case of Eurodollar Loans, the
                   respective amounts of each such Type of Loan and the
                   respective lengths of the initial Interest Period therefor.
                   Any Revolving Loans made on the Closing Date shall initially
                   be ABR Loans and, unless otherwise agreed by the
                   Administrative Agent in its sole discretion, (A) no Revolving
                   Loan may be made as, converted into or continued as a
                   Eurodollar Loan prior to the date that is 30 days after the
                   Closing Date and (B) no Revolving Loan may be made as,
                   converted into or continued as a Eurodollar Loan having an
                   Interest Period in excess of one month prior to the date that
                   is 90 days after the Closing Date. Each borrowing under the
                   LC/MD Term Commitments shall be in an amount equal to (x) in
                   the case of ABR Loans, $4,000,000 or a whole multiple of
                   $500,000 in excess thereof (or, if the then aggregate LC/MD
                   Term Commitments are less than $4,000,000, such lesser
                   amount) and (y) in the case of Eurodollar Loans, $5,000,000
                   or a whole multiple of $1,000,000 in excess thereof. Each
                   borrowing under the Revolving Commitments shall be in an
                   amount equal to (x) in the case of ABR Loans, $4,000,000 or a
                   whole multiple of $500,000 in excess thereof (or, if the then
                   aggregate Available Revolving Commitments are less than
                   $4,000,000, such lesser amount) and (y) in the case of
                   Eurodollar Loans, $5,000,000 or a whole multiple of
                   $1,000,000 in excess thereof; provided, that the Swingline
                   Lender may request, on behalf of the Borrower, borrowings
                   under the Revolving Commitments that are ABR Loans in other
                   amounts pursuant to Section 2.6. Upon receipt of any such
                   notice from the Borrower, the Administrative Agent shall
                   promptly notify each relevant Lender thereof. Each relevant
                   Lender will make the amount of its pro rata share of each
                   borrowing available to the Administrative Agent for the
                   account of the Borrower at the Funding Office prior to 12:00
                   Noon, New York City time, on the Borrowing Date requested by
                   the Borrower in funds immediately available to the
                   Administrative Agent. Such borrowing will then be made
                   available 



                                      -31-
<PAGE>   37



                   to the Borrower by the Administrative Agent crediting the
                   account of the Borrower on the books of such office with the
                   aggregate of the amounts made available to the Administrative
                   Agent by the relevant Lenders and in like funds as received
                   by the Administrative Agent.

              2.6  Procedure for Swingline Borrowing; Refunding of Swingline
                   Loans. Whenever the Borrower desires that the Swingline
                   Lender make Swingline Loans it shall give the Swingline
                   Lender irrevocable telephonic notice confirmed promptly in
                   writing (which telephonic notice must be received by the
                   Swingline Lender not later than 1:00 P.M., New York City
                   time, on the proposed Borrowing Date), specifying (i) the
                   amount to be borrowed and (ii) the requested Borrowing Date
                   (which shall be a Business Day during the Revolving
                   Commitment Period). Each borrowing under the Swingline
                   Commitment shall be in an amount equal to $500,000 or a whole
                   multiple of $100,000 in excess thereof. Not later than 3:00
                   P.M., New York City time, on the Borrowing Date specified in
                   a notice in respect of Swingline Loans, the Swingline Lender
                   shall make available to the Administrative Agent at the
                   Funding Office an amount in immediately available funds equal
                   to the amount of the Swingline Loan to be made by the
                   Swingline Lender. The Administrative Agent shall make the
                   proceeds of such Swingline Loan available to the Borrower on
                   such Borrowing Date by depositing such proceeds in the
                   account of the Borrower with the Administrative Agent on such
                   Borrowing Date in immediately available funds.

                   (b)   The Swingline Lender, at any time and from time to time
                         in its sole and absolute discretion may, on behalf of
                         the Borrower (which hereby irrevocably directs the
                         Swingline Lender to act on its behalf), on one Business
                         Day's notice given by the Swingline Lender no later
                         than 12:00 Noon, New York City time (with a copy of
                         such notice being provided to the Borrower), request
                         each Revolving Lender to make, and each Revolving
                         Lender hereby agrees to make, a Revolving Loan, in an
                         amount equal to such Revolving Lender's Revolving
                         Percentage of the aggregate amount of the Swingline
                         Loans (the "Refunded Swingline Loans") outstanding on
                         the date of such notice, to repay the Swingline Lender.
                         Each Revolving Lender shall make the amount of such
                         Revolving Loan available to the Administrative Agent at
                         the Funding Office in immediately available funds, not
                         later than 10:00 A.M., New York City time, one Business
                         Day



                                      -32-
<PAGE>   38

                         after the date of such notice. The proceeds of such
                         Revolving Loans shall be immediately made available by
                         the Administrative Agent to the Swingline Lender for
                         application by the Swingline Lender to the repayment of
                         the Refunded Swingline Loans. The Borrower irrevocably
                         authorizes the Swingline Lender to charge the
                         Borrower's accounts with the Administrative Agent (up
                         to the amount available in each such account) in order
                         to immediately pay the amount of such Refunded
                         Swingline Loans to the extent amounts received from the
                         Revolving Lenders are not sufficient to repay in full
                         such Refunded Swingline Loans (with notice of such
                         charge being provided to the Borrower, provided that
                         the failure to give such notice shall not affect the
                         validity of such charge).

                   (c)   If prior to the time a Revolving Loan would have
                         otherwise been made pursuant to Section 2.6(b), one of
                         the events described in Section 8(f) shall have
                         occurred and be continuing with respect to the Borrower
                         or if for any other reason, as determined by the
                         Swingline Lender in its sole discretion, Revolving
                         Loans may not be made as contemplated by Section
                         2.6(b), each Revolving Lender shall, on the date such
                         Revolving Loan was to have been made pursuant to the
                         notice referred to in Section 2.6(b) (the "Refunding
                         Date"), purchase for cash an undivided participating
                         interest in the then outstanding Swingline Loans by
                         paying to the Swingline Lender an amount (the
                         "Swingline Participation Amount") equal to (i) such
                         Revolving Lender's Revolving Percentage times (ii) the
                         sum of the aggregate principal amount of Swingline
                         Loans then outstanding that were to have been repaid
                         with such Revolving Loans.

                   (d)   Whenever, at any time after the Swingline Lender has
                         received from any Revolving Lender such Lender's
                         Swingline Participation Amount, the Swingline Lender
                         receives any payment on account of the Swingline Loans,
                         the Swingline Lender will distribute to such Lender its
                         Swingline Participation Amount (appropriately adjusted,
                         in the case of interest payments, to reflect the period
                         of time during which such Lender's participating
                         interest was outstanding and funded and, in the case of
                         principal and interest payments, to reflect such
                         Lender's pro rata portion of such payment if such
                         payment is not sufficient to pay the principal of and
                         interest on all Swingline Loans then due); provided,
                         however, that in the event that such payment received
                         by the Swingline Lender is



                                      -33-
<PAGE>   39


                         required to be returned, such Revolving Lender will
                         return to the Swingline Lender any portion thereof
                         previously distributed to it by the Swingline Lender.

                   (e)   Each Revolving Lender's obligation to make the Loans
                         referred to in Section 2.6(b) and to purchase
                         participating interests pursuant to Section 2.6(c)
                         shall be absolute and unconditional and shall not be
                         affected by any circumstance, including (i) any setoff,
                         counterclaim, recoupment, defense or other right that
                         such Revolving Lender or the Borrower may have against
                         the Swingline Lender, the Borrower or any other Person
                         for any reason whatsoever; (ii) the occurrence or
                         continuance of a Default or an Event of Default or the
                         failure to satisfy any of the other conditions
                         specified in Section 5; (iii) any adverse change in the
                         condition (financial or otherwise) of the Borrower;
                         (iv) any breach of this Agreement or any other Loan
                         Document by the Borrower, any other Loan Party or any
                         other Revolving Lender; or (v) any other circumstance,
                         happening or event whatsoever, whether or not similar
                         to any of the foregoing.

              2.7  Repayment of Loans; Scheduled Commitment Reductions. (a) The
                   Tranche A Term Loan of each Tranche A Lender shall mature in
                   9 installments, each of which shall be in an amount equal to
                   such Lender's Tranche A Term Percentage multiplied by the
                   amount set forth below opposite such installment:

<TABLE>
<CAPTION>
                   Installment                                       Principal Amount
                   -----------                                       ----------------

<S>                                                                 <C>
                   September 30, 2000                                     $12,000,000
                   March 31, 2001                                          10,000,000
                   September 30, 2001                                      10,000,000
                   March 31, 2002                                          12,000,000
                   September 30, 2002                                      12,000,000
                   March 31, 2003                                          14,000,000
                   September 30, 2003                                      14,000,000
                   March 31, 2004                                          18,000,000
                   July 31, 2004                                           18,000,000
</TABLE>

         (b) The Tranche B Term Loan of each Tranche B Lender shall mature in 12
installments, each of which shall be in an amount equal to such Lender's Tranche
B Term Percentage multiplied by the amount set forth below opposite such
installment:



                                      -34-
<PAGE>   40

<TABLE>
<CAPTION>
                   Installment                                       Principal Amount
                   -----------                                       ----------------

<S>                                                                 <C>
                   September 30, 1999                                      $1,000,000
                   September 30, 2000                                       1,000,000
                   September 30, 2001                                       1,000,000
                   September 30, 2002                                       1,000,000
                   September 30, 2003                                       1,000,000
                   September 30, 2004                                       1,000,000
                   December 31, 2004                                       44,000,000
                   March 31, 2005                                          44,000,000
                   June 30, 2005                                           44,000,000
                   September 30, 2005                                      44,000,000
                   December 31, 2005                                       44,000,000
                   January 31, 2006                                        44,000,000
</TABLE>

         (c) The Tranche C Term Loan of each Tranche C Lender shall mature in 13
installments, each of which shall be in an amount equal to such Lender's Tranche
C Term Percentage multiplied by the amount set forth below opposite such
installment:

<TABLE>
<CAPTION>
                   Installment                                       Principal Amount
                   -----------                                       ----------------

<S>                                                                 <C>       
                   September 30, 1999                                      $1,000,000
                   September 30, 2000                                       1,000,000
                   September 30, 2001                                       1,000,000
                   September 30, 2002                                       1,000,000
                   September 30, 2003                                       1,000,000
                   September 30, 2004                                       1,000,000
                   September 30, 2005                                       1,000,000
                   December 31, 2005                                        1,000,000
                   March 31, 2006                                          64,400,000
                   June 30, 2006                                           64,400,000
                   September 30, 2006                                      64,400,000
                   December 31, 2006                                       64,400,000
                   January 31, 2007                                        64,400,000
</TABLE>

         (d) The LC/MD Loans of each LC/MD Lender shall mature in equal
quarterly installments (determined on the basis of the aggregate outstanding
principal amount of such LC/MD Loans on the LC/MD Scheduled Termination Date),
which installments shall be payable on the last day of each calendar quarter
ending after the LC/MD Scheduled Termination Date (provided that the last such
installment shall be payable on July 31, 2004). Notwithstanding anything to the
contrary in this Agreement, in the event that, on any date (an "Excess Date"),
the aggregate principal amount of the LC/MD Reimbursement Loans exceeds (such
excess, "Excess LC/MD Reimbursement Loans") the Total LC/MD Term Commitments in
effect immediately prior to the


                                      -35-
<PAGE>   41


creation of such LC/MD Reimbursement Loans, such Excess LC/MD Reimbursement
Loans shall be due and payable on the date that is 30 days after such Excess
Date.

         (e) The Borrower shall repay all outstanding Revolving Loans and
Swingline Loans on the Revolving Scheduled Commitment Termination Date.

              2.8  Commitment Fees, etc. The Borrower agrees to pay to the
                   Administrative Agent for the account of each Revolving Lender
                   a commitment fee for the period from and including the
                   Closing Date to the last day of the Revolving Commitment
                   Period, computed at a per annum rate equal to the Commitment
                   Fee Rate on the average daily amount of the Available
                   Revolving Commitment of such Lender during the period for
                   which payment is made, payable quarterly in arrears on the
                   last day of each March, June, September and December and on
                   the Revolving Scheduled Commitment Termination Date,
                   commencing on the first of such dates to occur after the date
                   hereof.

                   (b)   The Borrower agrees to pay to the Administrative Agent
                         for the account of each LC/MD Lender a commitment fee
                         for the period from and including the NJ LC Termination
                         Date to the last day of the LC/MD Term Commitment
                         Period, computed at the Commitment Fee Rate on the
                         average daily amount of the LC/MD Term Commitment of
                         such Lender during the period for which payment is
                         made, payable quarterly in arrears on the last day of
                         each March, June, September and December and on the
                         LC/MD Scheduled Termination Date, commencing on the
                         first of such dates to occur after the NJ LC
                         Termination Date.

                   (c)   The Borrower agrees to pay to the Administrative Agent
                         the fees in the amounts and on the dates previously
                         agreed to in writing by the Borrower and the
                         Administrative Agent.

              2.9  Termination or Reduction of Commitments. The Borrower shall
                   have the right, upon not less than three Business Days'
                   notice to the Administrative Agent, to terminate the
                   Revolving Commitments or the LC/MD Commitments or, from time
                   to time, to reduce the amount of the Revolving Commitments or
                   the LC/MD Commitments; provided that (i) no such termination
                   or reduction of Revolving Commitments shall be permitted if,
                   after giving effect thereto and to any prepayments of the
                   Revolving Loans and Swingline Loans made on the effective
                   date thereof, the Total Revolving Extensions of 



                                      -36-
<PAGE>   42

                   Credit would exceed the Total Revolving Commitments and (ii)
                   no such termination or reduction of LC/MD Commitments shall
                   be permitted if, after giving effect thereto, the LC/MD LC
                   Obligations would exceed the Total LC/MD Commitments. Any
                   such partial reduction shall be in an amount equal to
                   $1,000,000, or a whole multiple thereof, and shall reduce
                   permanently the relevant Commitments then in effect.

              2.10 Optional Prepayments. Subject to Section 2.17, the Borrower
                   may at any time and from time to time prepay the Loans, in
                   whole or in part, without premium or penalty, upon
                   irrevocable notice delivered to the Administrative Agent at
                   least three Business Days prior thereto in the case of
                   Eurodollar Loans and at least one Business Day prior thereto
                   in the case of ABR Loans, which notice shall specify the date
                   and amount of prepayment and whether the prepayment is of
                   Eurodollar Loans or ABR Loans; provided, that if a Eurodollar
                   Loan is prepaid on any day other than the last day of the
                   Interest Period applicable thereto, the Borrower shall also
                   pay any amounts owing pursuant to Section 2.20. Upon receipt
                   of any such notice the Administrative Agent shall promptly
                   notify each relevant Lender thereof. If any such notice is
                   given, the amount specified in such notice shall be due and
                   payable on the date specified therein, together with (except
                   in the case of Revolving Loans that are ABR Loans and
                   Swingline Loans) accrued interest to such date on the amount
                   prepaid. Partial prepayments of Term Loans and Revolving
                   Loans shall be in an aggregate principal amount of $1,000,000
                   or a whole multiple thereof. Partial prepayments of Swingline
                   Loans shall be in an aggregate principal amount of $100,000
                   or a whole multiple thereof.

              2.11 Mandatory Prepayments. Unless the Required Prepayment Lenders
                   shall otherwise agree, if any Capital Stock (other than any
                   Capital Stock issued by the Borrower to finance any Permitted
                   Acquisition or to refinance the Subordinated Bridge Facility)
                   shall be issued by the Borrower or any of its Subsidiaries,
                   an amount equal to 75% (the "Equity Percentage") of the Net
                   Cash Proceeds thereof shall be applied within two Business
                   Days following the date of such issuance toward the
                   prepayment of the Term Loans; provided that the Equity
                   Percentage shall instead equal 50% if the Consolidated
                   Leverage Ratio, determined as at the end of the most recent
                   period of four consecutive fiscal quarters ended prior to the
                   required date of prepayment for which the relevant financial
                   information is available



                                      -37-
<PAGE>   43


                   on a pro forma basis as if such issuance had occurred on the
                   first day of such period, is less than 3.50 to 1.0.

                   (b)   (i) Unless the Required Prepayment Lenders shall
                         otherwise agree, if any Indebtedness shall be incurred
                         by the Borrower or any of its Subsidiaries (excluding
                         any Indebtedness incurred in accordance with Section
                         7.2 as in effect on the date of this Agreement), an
                         amount equal to 100% of the Net Cash Proceeds thereof
                         shall be applied on the date of such incurrence toward
                         the prepayment of the Term Loans.

         (ii) Notwithstanding Section 2.11(b)(i) and anything to the contrary in
Section 2.17, if the Borrower shall issue an aggregate principal amount of
Senior Subordinated Notes in excess of $175,000,000 (any such excess amount, the
"Excess Senior Subordinated Note Amount"), (A) an amount equal to 50% of the Net
Cash Proceeds of such excess issuance shall be applied on the date of such
issuance toward the prepayment of the Tranche A Term Loans in reduction of the
then remaining installments thereof pro rata based upon the then remaining
principal amount thereof and (B) an amount equal to 50% of the Net Cash Proceeds
of such excess issuance shall be applied on the date of such issuance toward the
permanent reduction of the Revolving Commitments. Any such reduction of the
Revolving Commitments shall be accompanied by prepayment of the Revolving Loans
and/or Swingline Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Loans and
Swingline Loans then outstanding is less than the amount of such excess (because
Revolving LC Obligations constitute a portion thereof), the Borrower shall, to
the extent of the balance of such excess, replace outstanding Revolving Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent.

                   (c)   Unless the Required Prepayment Lenders shall otherwise
                         agree, if on any date the Borrower or any of its
                         Subsidiaries shall receive Net Cash Proceeds from any
                         Asset Sale or Recovery Event then, unless a
                         Reinvestment Notice shall be delivered in respect
                         thereof, an amount equal to 75% of such Net Cash
                         Proceeds shall be applied within two Business Days
                         following such date toward the prepayment of the Term
                         Loans; provided, that, notwithstanding the foregoing,
                         (i) the aggregate Net Cash Proceeds of Asset Sales that
                         may be excluded from the foregoing requirement pursuant
                         to a Reinvestment Notice shall not exceed (x) during
                         the period from the Closing Date to the second
                         anniversary of the Closing Date, $45,000,000, and (y)
                         thereafter, $15,000,000 in any fiscal year of the
                         Borrower (or, in the case of the period



                                      -38-
<PAGE>   44
                         commencing on the second anniversary of the Closing
                         Date, the remaining portion of the fiscal year in which
                         such second anniversary falls), and (ii) on each
                         Reinvestment Prepayment Date, an amount equal to the
                         Reinvestment Prepayment Amount with respect to the
                         relevant Reinvestment Event shall be applied toward the
                         prepayment of the Term Loans; provided, further, that,
                         notwithstanding the foregoing, the Borrower and its
                         Subsidiaries shall not be required to prepay the Term
                         Loans in accordance with this paragraph (c) except to
                         the extent that the Net Cash Proceeds from all Asset
                         Sales which have not been so applied equals or exceeds
                         $5,000,000 in the aggregate.

                   (d)   Unless the Required Prepayment Lenders shall otherwise
                         agree, if, for any fiscal year of the Borrower
                         commencing with the fiscal year ending December 31,
                         1999, there shall be Excess Cash Flow, the Borrower
                         shall, on the relevant Excess Cash Flow Application
                         Date, apply 75% (or, if the Consolidated Leverage Ratio
                         as of the last day of such fiscal year is not greater
                         than 3.50 to 1.0, 50%) of such Excess Cash Flow toward
                         the prepayment of the Term Loans. Each such prepayment
                         and commitment reduction shall be made on a date (an
                         "Excess Cash Flow Application Date") no later than five
                         Business Days after the earlier of (i) the date on
                         which the financial statements of the Borrower referred
                         to in Section 6.1(a), for the fiscal year with respect
                         to which such prepayment is made, are required to be
                         delivered to the Lenders and (ii) the date such
                         financial statements are actually delivered.

                   (e)   The application of any prepayment under a Facility
                         pursuant to Section 2.11 shall be made, first, to ABR
                         Loans and, second, to Eurodollar Loans. Each prepayment
                         of the Loans under Section 2.11 (except in the case of
                         Revolving Loans that are ABR Loans and Swingline Loans)
                         shall be accompanied by accrued interest to the date of
                         such prepayment on the amount prepaid.

              2.12 Conversion and Continuation Options. The Borrower may elect
                   from time to time to convert Eurodollar Loans to ABR Loans by
                   giving the Administrative Agent at least two Business Days'
                   prior irrevocable notice of such election, provided that any
                   such conversion of Eurodollar Loans may only be made on the
                   last day of an Interest 



                                      -39-
<PAGE>   45

                   Period with respect thereto. The Borrower may elect from time
                   to time to convert ABR Loans to Eurodollar Loans by giving
                   the Administrative Agent at least three Business Days' prior
                   irrevocable notice of such election (which notice shall
                   specify the length of the initial Interest Period therefor),
                   provided that no ABR Loan under a particular Facility may be
                   converted into a Eurodollar Loan when any Event of Default
                   has occurred and is continuing and the Administrative Agent
                   or the Majority Facility Lenders in respect of such Facility
                   have determined in its or their sole discretion not to permit
                   such conversions. Upon receipt of any such notice the
                   Administrative Agent shall promptly notify each relevant
                   Lender thereof.

                   (b)   Any Eurodollar Loan may be continued as such upon the
                         expiration of the then current Interest Period with
                         respect thereto by the Borrower giving irrevocable
                         notice to the Administrative Agent, in accordance with
                         the applicable provisions of the term "Interest Period"
                         set forth in Section 1.1, of the length of the next
                         Interest Period to be applicable to such Loans,
                         provided that no Eurodollar Loan under a particular
                         Facility may be continued as such when any Event of
                         Default has occurred and is continuing and the
                         Administrative Agent has or the Majority Facility
                         Lenders in respect of such Facility have determined in
                         its or their sole discretion not to permit such
                         continuations, and provided, further, that if the
                         Borrower shall fail to give any required notice as
                         described above in this paragraph or if such
                         continuation is not permitted pursuant to the preceding
                         proviso such Loans shall be automatically converted to
                         ABR Loans on the last day of such then expiring
                         Interest Period. Upon receipt of any such notice the
                         Administrative Agent shall promptly notify each
                         relevant Lender thereof.

              2.13 Limitations on Eurodollar Tranches. Notwithstanding anything
                   to the contrary in this Agreement, all borrowings,
                   conversions and continuations of Eurodollar Loans hereunder
                   and all selections of Interest Periods hereunder shall be in
                   such amounts and be made pursuant to such elections so that,
                   (a) after giving effect thereto, the aggregate principal
                   amount of the Eurodollar Loans comprising each Eurodollar
                   Tranche shall be equal to $5,000,000 or a whole multiple of
                   $1,000,000 in excess thereof and (b) no more than 15
                   Eurodollar Tranches shall be outstanding at any one time.



                                      -40-
<PAGE>   46

              2.14 Interest Rates and Payment Dates. Each Eurodollar Loan shall
                   bear interest for each day during each Interest Period with
                   respect thereto at a rate per annum equal to the Eurodollar
                   Rate determined for such day plus the Applicable Margin.

                   (b)   Each ABR Loan shall bear interest at a rate per annum
                         equal to the ABR plus the Applicable Margin.

                   (c)   (i) If all or a portion of the principal amount of any
                         Loan or Reimbursement Obligation shall not be paid when
                         due (whether at the stated maturity, by acceleration or
                         otherwise), all outstanding Loans and Reimbursement
                         Obligations (whether or not overdue) shall bear
                         interest at a rate per annum equal to (x) in the case
                         of the Loans, the rate that would otherwise be
                         applicable thereto pursuant to the foregoing provisions
                         of this Section plus 2% or (y) in the case of
                         Reimbursement Obligations, the rate applicable to ABR
                         Loans under the Revolving Facility or the LC/MD
                         Facility, as the case may be, plus 2%, and (ii) if all
                         or a portion of any interest payable on any Loan or
                         Reimbursement Obligation or any commitment fee or other
                         amount payable hereunder shall not be paid when due
                         (whether at the stated maturity, by acceleration or
                         otherwise), such overdue amount shall bear interest at
                         a rate per annum equal to the rate then applicable to
                         ABR Loans under the relevant Facility plus 2% (or, in
                         the case of any such other amounts that do not relate
                         to a particular Facility, the rate then applicable to
                         ABR Loans under the Revolving Facility plus 2%), in
                         each case, with respect to clauses (i) and (ii) above,
                         from the date of such non-payment until such amount is
                         paid in full (as well after as before judgment).

                   (d)   Interest shall be payable in arrears on each Interest
                         Payment Date, provided that interest accruing pursuant
                         to paragraph (c) of this Section shall be payable from
                         time to time on demand.

              2.15 Computation of Interest and Fees. Interest and fees payable
                   pursuant hereto shall be calculated on the basis of a 360-day
                   year for the actual days elapsed, except that, with respect
                   to ABR Loans the rate of interest on which is calculated on
                   the basis of the Prime Rate, the interest thereon shall be
                   calculated on the basis of a 365- (or 366-, as the case may
                   be) day year for the actual days elapsed. The Administrative
                   Agent shall as soon as practicable notify the Borrower



                                      -41-
<PAGE>   47


                         and the relevant Lenders of each determination of a
                         Eurodollar Rate. Any change in the interest rate on a
                         Loan resulting from a change in the ABR or the
                         Eurocurrency Reserve Requirements shall become
                         effective as of the opening of business on the day on
                         which such change becomes effective. The Administrative
                         Agent shall as soon as practicable notify the Borrower
                         and the relevant Lenders of the effective date and the
                         amount of each such change in interest rate.

                   (b)   Each determination of an interest rate by the
                         Administrative Agent pursuant to any provision of this
                         Agreement shall be conclusive and binding on the
                         Borrower and the Lenders in the absence of manifest
                         error. The Administrative Agent shall, at the request
                         of the Borrower, deliver to the Borrower a statement
                         showing the quotations used by the Administrative Agent
                         in determining any interest rate pursuant to Section
                         2.15(a).

              2.16 Inability to Determine Interest Rate. If prior to the first
                   day of any Interest Period:

                   (a)   the Administrative Agent shall have determined (which
                         determination shall be conclusive and binding upon the
                         Borrower) that, by reason of circumstances affecting
                         the relevant market, adequate and reasonable means do
                         not exist for ascertaining the Eurodollar Rate for such
                         Interest Period, or

                   (b)   the Administrative Agent shall have received notice
                         from the Majority Facility Lenders in respect of the
                         relevant Facility that the Eurodollar Rate determined
                         or to be determined for such Interest Period will not
                         adequately and fairly reflect the cost to such Lenders
                         (as conclusively certified by such Lenders) of making
                         or maintaining their affected Loans during such
                         Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then-current
Interest Period, to ABR Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or 



                                      -42-
<PAGE>   48

continued as such, nor shall the Borrower have the right to convert Loans under
the relevant Facility to Eurodollar Loans.

              2.17 Pro Rata Treatment and Payments. Each borrowing by the
                   Borrower from the Lenders hereunder, each payment by the
                   Borrower on account of any commitment fee and any reduction
                   of the Commitments of the Lenders shall be made pro rata
                   according to the respective Tranche A Term Percentages,
                   Tranche B Term Percentages, Tranche C Term Percentages,
                   Revolving Percentages or LC/MD Percentages, as the case may
                   be, of the relevant Lenders.

                   (b)   Except for payments made pursuant to Section 2.7, each
                         payment (including each prepayment) by the Borrower on
                         account of principal of and interest on the Term Loans
                         shall be made pro rata according to the respective
                         outstanding principal amounts of the Term Loans then
                         held by the Term Lenders (except as otherwise provided
                         in Section 2.17(c)). The amount of each principal
                         prepayment of the Term Loans shall be applied to reduce
                         the then remaining installments of the Tranche A Term
                         Loans, Tranche B Term Loans, Tranche C Term Loans or
                         LC/MD Loans, as the case may be, pro rata based upon
                         the then remaining principal amount thereof. Amounts
                         prepaid on account of the Term Loans may not be
                         reborrowed.

                   (c)   Notwithstanding anything to the contrary in this
                         Agreement, with respect to the amount of any optional
                         or mandatory prepayment that would otherwise be
                         allocated to Tranche B Term Loans or Tranche C Term
                         Loans (such amounts, the "Tranche B Prepayment Amount"
                         and the "Tranche C Prepayment Amount", respectively),
                         at any time when Tranche A Term Loans and/or LC/MD
                         Loans remain outstanding, the Borrower will, in lieu of
                         applying such amount to the prepayment of Tranche B
                         Term Loans and Tranche C Term Loans, on the date
                         specified for such prepayment, give the Administrative
                         Agent telephonic notice (promptly confirmed in writing)
                         requesting that the Administrative Agent prepare and
                         provide to each Tranche B Lender and Tranche C Lender a
                         notice (each, a "Prepayment Option Notice") as
                         described below. As promptly as practicable after
                         receiving such notice from the Borrower, the
                         Administrative Agent will send to each Tranche B Lender
                         and Tranche C Lender a Prepayment Option Notice, which
                         shall


                                      -43-
<PAGE>   49


                         be in the form of Exhibit H, and shall include an offer
                         by the Borrower to prepay, on the date (each a
                         "Prepayment Date") that is 10 Business Days after the
                         date of the Prepayment Option Notice, the relevant Term
                         Loans of such Lender by an amount equal to the portion
                         of the Prepayment Amount indicated in such Lender's
                         Prepayment Option Notice as being applicable to such
                         Lender's Tranche B Term Loans or Tranche C Term Loans,
                         as the case may be. On the Prepayment Date, (i) the
                         Borrower shall pay to the relevant Tranche B Lenders
                         and Tranche C Lenders the aggregate amount necessary to
                         prepay that portion of the outstanding relevant Term
                         Loans in respect of which such Lenders have accepted
                         prepayment as described above (such Lenders, the
                         "Accepting Lenders") and (ii) the Borrower shall pay to
                         the Tranche A Lenders and the LC/MD Lenders an amount
                         equal to the portion of the Tranche B Prepayment Amount
                         and the Tranche C Prepayment Amount not accepted by the
                         Accepting Lenders, and such amount shall be applied pro
                         rata to the prepayment of the then outstanding Tranche
                         A Term Loans and the LC/MD Loans.

                   (d)   Each payment (including each prepayment) by the
                         Borrower on account of principal of and interest on the
                         Revolving Loans shall be made pro rata according to the
                         respective outstanding principal amounts of the
                         Revolving Loans then held by the Revolving Lenders.

                   (e)   All payments (including prepayments) to be made by the
                         Borrower hereunder, whether on account of principal,
                         interest, fees or otherwise, shall be made without
                         setoff or counterclaim and shall be made prior to 12:00
                         Noon, New York City time, on the due date thereof to
                         the Administrative Agent, for the account of the
                         Lenders, at the Funding Office, in Dollars and in
                         immediately available funds. The Administrative Agent
                         shall distribute such payments to the Lenders promptly
                         upon receipt in like funds as received. If any payment
                         hereunder (other than payments on the Eurodollar Loans)
                         becomes due and payable on a day other than a Business
                         Day, such payment shall be extended to the next
                         succeeding Business Day. If any payment on a Eurodollar
                         Loan becomes due and payable on a day other than a
                         Business Day, the maturity thereof shall be extended to
                         the next succeeding Business Day unless the result of
                         such 



                                      -44-
<PAGE>   50


                         extension would be to extend such payment into another
                         calendar month, in which event such payment shall be
                         made on the immediately preceding Business Day. In the
                         case of any extension of any payment of principal
                         pursuant to the preceding two sentences, interest
                         thereon shall be payable at the then applicable rate
                         during such extension.

                   (f)   Unless the Administrative Agent shall have been
                         notified in writing by any Lender prior to a borrowing
                         that such Lender will not make the amount that would
                         constitute its share of such borrowing available to the
                         Administrative Agent, the Administrative Agent may
                         assume that such Lender is making such amount available
                         to the Administrative Agent, and the Administrative
                         Agent may, in reliance upon such assumption, make
                         available to the Borrower a corresponding amount. If
                         such amount is not made available to the Administrative
                         Agent by the required time on the Borrowing Date
                         therefor, such Lender shall pay to the Administrative
                         Agent, on demand, such amount with interest thereon at
                         a rate equal to the daily average Federal Funds
                         Effective Rate for the period until such Lender makes
                         such amount immediately available to the Administrative
                         Agent. A certificate of the Administrative Agent
                         submitted to any Lender with respect to any amounts
                         owing under this paragraph shall be conclusive in the
                         absence of manifest error. If such Lender's share of
                         such borrowing is not made available to the
                         Administrative Agent by such Lender within three
                         Business Days of such Borrowing Date, the
                         Administrative Agent shall also be entitled to recover
                         such amount with interest thereon at the rate per annum
                         applicable to ABR Loans under the relevant Facility, on
                         demand, from the Borrower.

                   (g)   Unless the Administrative Agent shall have been
                         notified in writing by the Borrower prior to the date
                         of any payment being made hereunder that the Borrower
                         will not make such payment to the Administrative Agent,
                         the Administrative Agent may assume that the Borrower
                         is making such payment, and the Administrative Agent
                         may, but shall not be required to, in reliance upon
                         such assumption, make available to the Lenders their
                         respective pro rata shares of a corresponding amount.
                         If such payment is not made to the Administrative Agent
                         by the Borrower within three Business Days of such
                         required date, the Administrative Agent shall be



                                      -45-
<PAGE>   51


                         entitled to recover, on demand, from each Lender to
                         which any amount which was made available pursuant to
                         the preceding sentence, such amount with interest
                         thereon at the rate per annum equal to the daily
                         average Federal Funds Effective Rate. Nothing herein
                         shall be deemed to limit the rights of the
                         Administrative Agent or any Lender against the
                         Borrower.

              2.18 Requirements of Law. If the adoption of or any change in any
                   Requirement of Law or in the interpretation or application
                   thereof or compliance by any Lender with any request or
                   directive (whether or not having the force of law) from any
                   central bank or other Governmental Authority made subsequent
                   to the date hereof:

         (i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.19
and changes in the rate of tax on the overall net income of such Lender);

         (ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender that is not otherwise included in the determination of the
Eurodollar Rate hereunder; or

         (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this paragraph, it shall
promptly notify (no more frequently than quarterly) the Borrower (with a copy
to the Administrative Agent) of the event by reason of which it has become so
entitled.

                   (b)   If any Lender shall have determined that the adoption
                         of or any change in any Requirement of Law regarding
                         capital adequacy or in the interpretation or
                         application thereof or compliance by such Lender or any
                         corporation controlling such Lender with any request or
                         directive regarding capital adequacy (whether or not
                         having the force of law) from any 



                                      -46-
<PAGE>   52


                         Governmental Authority made subsequent to the date
                         hereof shall have the effect of reducing the rate of
                         return on such Lender's or such corporation's capital
                         as a consequence of its obligations hereunder or under
                         or in respect of any Letter of Credit to a level below
                         that which such Lender or such corporation could have
                         achieved but for such adoption, change or compliance
                         (taking into consideration such Lender's or such
                         corporation's policies with respect to capital
                         adequacy) by an amount deemed by such Lender to be
                         material, then from time to time, after submission by
                         such Lender to the Borrower (with a copy to the
                         Administrative Agent) of a written request therefor
                         (which may be submitted no more frequently than
                         quarterly), the Borrower shall pay to such Lender such
                         additional amount or amounts as will compensate such
                         Lender for such reduction; provided that the Borrower
                         shall not be required to compensate a Lender pursuant
                         to this paragraph for any amounts incurred more than
                         six months prior to the date that such Lender notifies
                         the Borrower of such Lender's intention to claim
                         compensation therefor; and provided further that, if
                         the circumstances giving rise to such claim have a
                         retroactive effect, then such six-month period shall be
                         extended to include the period of such retroactive
                         effect.

                   (c)   In determining any additional amounts payable pursuant
                         to this Section 2.18, each Lender will act reasonably
                         and in good faith and will use averaging and
                         attribution methods which are reasonable, provided that
                         such Lender's determination of compensation owing under
                         this Section 2.18 shall, absent manifest error, be
                         final and conclusive and binding on all the parties
                         hereto. Each Lender, upon determining that any
                         additional amounts will be payable pursuant to this
                         Section 2.18, shall give prompt written notice of such
                         determination to the Borrower, which notice shall show
                         the basis for calculation of such additional amounts.
                         The obligations of the Borrower pursuant to this
                         Section 2.18 shall survive the termination of this
                         Agreement and the payment of the Loans and all other
                         amounts payable hereunder.

              2.19 Taxes. Subject to the last proviso of this paragraph (a), all
                   payments made by the Borrower under this Agreement shall be
                   made free and clear of, and without deduction or withholding
                   for or on account of, any present or future income, stamp or
                   other taxes, levies, 



                                      -47-
<PAGE>   53

                   imposts, duties, charges, fees, deductions or withholdings,
                   now or hereafter imposed, levied, collected, withheld or
                   assessed by any Governmental Authority, excluding net income
                   taxes and franchise taxes imposed on the Administrative Agent
                   or any Lender as a result of a present or former connection
                   between the Administrative Agent or such Lender and the
                   jurisdiction of the Governmental Authority imposing such tax
                   or any political subdivision or taxing authority thereof or
                   therein (other than any such connection arising solely from
                   the Administrative Agent or such Lender having executed,
                   delivered or performed its obligations or received a payment
                   under, or enforced, this Agreement or any other Loan
                   Document). If any such non-excluded taxes, levies, imposts,
                   duties, charges, fees, deductions or withholdings
                   ("Non-Excluded Taxes") or Other Taxes are required to be
                   withheld from any amounts payable to the Administrative Agent
                   or any Lender hereunder, the amounts so payable to the
                   Administrative Agent or such Lender shall be increased to the
                   extent necessary to yield to the Administrative Agent or such
                   Lender (after payment of all Non-Excluded Taxes and Other
                   Taxes) interest or any such other amounts payable hereunder
                   at the rates or in the amounts specified in this Agreement,
                   provided, however, that the Borrower shall not be required to
                   increase any such amounts payable to any Lender with respect
                   to any Non-Excluded Taxes (i) that are attributable to such
                   Lender's failure to comply with the requirements of paragraph
                   (d) or (e) of this Section or (ii) that are United States
                   withholding taxes imposed on amounts payable to such Lender
                   at the time the Lender becomes a party to this Agreement,
                   except to the extent that such Lender's assignor (if any) was
                   entitled, at the time of assignment, to receive additional
                   amounts from the Borrower with respect to such Non-Excluded
                   Taxes pursuant to this paragraph.

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

                   (c)   Whenever any Non-Excluded Taxes or Other Taxes are
                         payable by the Borrower, as promptly as possible
                         thereafter the Borrower shall send to the
                         Administrative Agent for its own account or for the
                         account of the relevant Lender, as the case may be, a
                         certified copy of an original official receipt received
                         by the Borrower showing payment thereof. If the
                         Borrower fails to pay any Non-Excluded Taxes or Other
                         Taxes when due to the appropriate taxing authority or
                         fails to remit to the Administrative Agent the required
                         receipts or 



                                      -48-
<PAGE>   54

                         other required documentary evidence, the Borrower shall
                         indemnify the Administrative Agent and the Lenders for
                         any incremental taxes, interest or penalties that may
                         become payable by the Administrative Agent or any
                         Lender as a result of any such failure.

                   (d)   Each Lender (or Transferee) that is not a citizen or
                         resident of the United States of America, a
                         corporation, partnership or other entity created or
                         organized in or under the laws of the United States of
                         America (or any state thereof), or any estate or trust
                         that is subject to federal income taxation regardless
                         of the source of its income (a "Non-U.S. Lender") shall
                         deliver to the Borrower and the Administrative Agent
                         (or, in the case of a Participant, to the Lender from
                         which the related participation shall have been
                         purchased) two copies of either U.S. Internal Revenue
                         Service Form 1001 or Form 4224, or, in the case of a
                         Non-U.S. Lender claiming exemption from U.S. federal
                         withholding tax under Section 871(h) or 881(c) of the
                         Code with respect to payments of "portfolio interest",
                         a statement substantially in the form of Exhibit I and
                         a Form W-8, or any subsequent versions thereof or
                         successors thereto, properly completed and duly
                         executed by such Non- U.S. Lender claiming complete
                         exemption from, or a reduced rate of, U.S. federal
                         withholding tax on all payments by the Borrower under
                         this Agreement and the other Loan Documents. Such forms
                         shall be delivered by each Non-U.S. Lender on or before
                         the date it becomes a party to this Agreement (or, in
                         the case of any Participant, on or before the date such
                         Participant purchases the related participation). In
                         addition, each Non-U.S. Lender shall deliver such forms
                         promptly upon the request of the Borrower as a result
                         of the obsolescence, inaccuracy or invalidity of any
                         form previously delivered by such Non-U.S. Lender. Each
                         Non-U.S. Lender shall promptly notify the Borrower at
                         any time it determines that it is no longer qualified
                         to provide or capable of providing any previously
                         delivered certificate to the Borrower (or any other
                         form of certification adopted by the U.S. taxing
                         authorities for such purpose). Notwithstanding any
                         other provision of this paragraph, a Non-U.S. Lender
                         shall not be required to deliver any form pursuant to
                         this paragraph that such Non-U.S. Lender is not legally
                         able to deliver.



                                      -49-
<PAGE>   55

                   (e)   A Lender that is entitled to an exemption from or
                         reduction of non-U.S. withholding tax under the law of
                         the jurisdiction in which the Borrower is located, or
                         any treaty to which such jurisdiction is a party, with
                         respect to payments under this Agreement shall deliver
                         to the Borrower (with a copy to the Administrative
                         Agent), at the time or times prescribed by applicable
                         law or reasonably requested by the Borrower, such
                         properly completed and executed documentation
                         prescribed by applicable law as will permit such
                         payments to be made without withholding or at a reduced
                         rate, provided that such Lender is legally entitled to
                         complete, execute and deliver such documentation and in
                         such Lender's judgment such completion, execution or
                         submission would not materially prejudice the legal
                         position of such Lender.

                   (f)   If any Lender receives a refund of any Non-Excluded
                         Taxes or Other Taxes paid or indemnified by the
                         Borrower under this Section 2.19, such Lender shall pay
                         the amount of such refund to the Borrower within 15
                         days of the date it received such refund.

                   (g)   The agreements in this Section shall survive the
                         termination of this Agreement and the payment of the
                         Loans and all other amounts payable hereunder.

              2.20 Indemnity. The Borrower agrees to indemnify each Lender and
                   to hold each Lender harmless from any loss or expense that
                   such Lender may sustain or incur as a consequence of (a)
                   default by the Borrower in making a borrowing of, conversion
                   into or continuation of Eurodollar Loans after the Borrower
                   has given a notice requesting the same in accordance with the
                   provisions of this Agreement, (b) default by the Borrower in
                   making any prepayment of or conversion from Eurodollar Loans
                   after the Borrower has given a notice thereof in accordance
                   with the provisions of this Agreement or (c) the making of a
                   prepayment of Eurodollar Loans on a day that is not the last
                   day of an Interest Period with respect thereto. Such
                   indemnification may include an amount equal to the excess, if
                   any, of (i) the amount of interest that would have accrued on
                   the amount so prepaid, or not so borrowed, converted or
                   continued, for the period from the date of such prepayment or
                   of such failure to borrow, convert or continue to the last
                   day of such Interest Period (or, in the case of a failure to
                   borrow, convert or continue, the Interest Period that would
                   have commenced on the date of such failure) in each case at
                   the applicable 



                                      -50-
<PAGE>   56

                   rate of interest for such Loans provided for herein
                   (excluding, however, the Applicable Margin included therein,
                   if any) over (ii) the amount of interest (as reasonably
                   determined by such Lender) that would have accrued to such
                   Lender on such amount by placing such amount on deposit for a
                   comparable period with leading banks in the interbank
                   eurodollar market. A certificate as to any amounts payable
                   pursuant to this Section submitted to the Borrower by any
                   Lender shall be conclusive in the absence of manifest error.
                   This covenant shall survive the termination of this Agreement
                   and the payment of the Loans and all other amounts payable
                   hereunder.

              2.21 Change of Lending Office. Each Lender agrees that, upon the
                   occurrence of any event giving rise to the operation of
                   Section 2.18 or 2.19(a) with respect to such Lender, it will
                   use reasonable efforts (subject to overall policy
                   considerations of such Lender) to designate another lending
                   office for any Loans affected by such event with the object
                   of avoiding the consequences of such event; provided, that
                   such designation is made on terms that, in the sole judgment
                   of such Lender, cause such Lender and its lending office(s)
                   to suffer no economic, legal or regulatory disadvantage, and
                   provided, further, that nothing in this Section shall affect
                   or postpone any of the obligations of any Borrower or the
                   rights of any Lender pursuant to Section 2.18 or 2.19(a).

              2.22 Replacement of Lenders. The Borrower shall be permitted to
                   replace any Lender that (a) requests reimbursement for
                   amounts owing pursuant to Section 2.18 or 2.19(a) or (b)
                   defaults in its obligation to make Loans hereunder, with a
                   replacement financial institution; provided that (i) such
                   replacement does not conflict with any Requirement of Law,
                   (ii) no Event of Default shall have occurred and be
                   continuing at the time of such replacement, (iii) prior to
                   any such replacement, such Lender shall have taken no action
                   under Section 2.21 so as to eliminate the continued need for
                   payment of amounts owing pursuant to Section 2.18 or 2.19(a),
                   (iv) the replacement financial institution shall purchase, at
                   par, all Loans and other amounts owing to such replaced
                   Lender on or prior to the date of replacement, (v) the
                   Borrower shall be liable to such replaced Lender under
                   Section 2.20 if any Eurodollar Loan owing to such replaced
                   Lender shall be purchased other than on the last day of the
                   Interest Period relating thereto, (vi) the replacement
                   financial institution, if not already a Lender, shall be
                   reasonably satisfactory to the Administrative Agent, (vii)
                   the replaced Lender shall be obligated to make such
                   replacement in accordance with the provisions of 



                                      -51-
<PAGE>   57


                   Section 10.6 (provided that the Borrower shall be obligated
                   to pay the registration and processing fee referred to
                   therein), (viii) until such time as such replacement shall be
                   consummated, the Borrower shall pay all additional amounts
                   (if any) required pursuant to Section 2.18 or 2.19(a), as the
                   case may be, and (ix) any such replacement shall not be
                   deemed to be a waiver of any rights that the Borrower, the
                   Administrative Agent or any other Lender shall have against
                   the replaced Lender.

                          SECTION 3. LETTERS OF CREDIT

              3.1  LC Commitment. Subject to the terms and conditions hereof,
                   the Issuing Lender, in reliance on the agreements of the LC
                   Participants, as set forth in Section 3.4(a), agrees to issue
                   (i) on the Closing Date, a letter of credit (the "NJ Letter
                   of Credit") for the benefit of the Superior Court of New
                   Jersey supporting a potential liability with respect to a
                   judgment rendered in the case of Robinson v. Thorn Americas,
                   Inc. in the State of New Jersey and (ii) on any Business Day
                   during the Revolving Commitment Period, other letters of
                   credit ("Revolving Letters of Credit"), in each case for the
                   account of the Borrower (including the account of the
                   Borrower acting on behalf of any of its Subsidiaries) and in
                   such form as may be approved from time to time by the Issuing
                   Lender; provided that the Issuing Lender shall have no
                   obligation to issue any Revolving Letter of Credit if, after
                   giving effect to such issuance, (i) the Revolving LC
                   Obligations would exceed the Revolving LC Commitment or (ii)
                   the aggregate amount of the Available Revolving Commitments
                   would be less than zero. Each Letter of Credit shall (i) be
                   denominated in Dollars and (ii) expire no later than the
                   earlier of (x) the first anniversary of its date of issuance
                   and (y) the date that is five Business Days prior to the
                   Revolving Scheduled Commitment Termination Date or, in the
                   case of the NJ Letter of Credit, March 30, 2004, provided
                   that any Letter of Credit with a one-year term may provide
                   for the renewal thereof for additional one-year periods
                   (which shall in no event extend beyond the date referred to
                   in clause (y) above).

                   (b)   Each Letter of Credit shall be subject to the Uniform
                         Customs and, to the extent not inconsistent therewith,
                         the laws of the State of New York.

                   (c)   The Issuing Lender shall not at any time be obligated
                         to issue any Letter of Credit hereunder if such
                         issuance would conflict with, or cause the Issuing
                         Lender or any LC 



                                      -52-
<PAGE>   58

                         Participant to exceed any limits imposed by, any
                         applicable Requirement of Law.

              3.2  Procedure for Issuance of Letter of Credit. The Borrower may
                   from time to time request that the Issuing Lender issue a
                   Letter of Credit by delivering to the Issuing Lender at its
                   address for notices specified herein an Application therefor,
                   completed to the satisfaction of the Issuing Lender, and such
                   other certificates, documents and other papers and
                   information as the Issuing Lender may request. Upon receipt
                   of any Application, the Issuing Lender will process such
                   Application and the certificates, documents and other papers
                   and information delivered to it in connection therewith in
                   accordance with its customary procedures and shall promptly
                   issue the Letter of Credit requested thereby (but in no event
                   shall the Issuing Lender be required to issue any Letter of
                   Credit earlier than three Business Days after its receipt of
                   the Application therefor and all such other certificates,
                   documents and other papers and information relating thereto)
                   by issuing the original of such Letter of Credit to the
                   beneficiary thereof or as otherwise may be agreed to by the
                   Issuing Lender and the Borrower. The Issuing Lender shall
                   furnish a copy of such Letter of Credit to the Borrower
                   promptly following the issuance thereof. The Issuing Lender
                   shall promptly furnish to the Administrative Agent, which
                   shall in turn promptly furnish to the Lenders, notice of the
                   issuance of each Letter of Credit (including the amount
                   thereof).

              3.3  Fees and Other Charges. The Borrower will pay a fee on all
                   outstanding Letters of Credit at a per annum rate equal to
                   the Applicable Margin then in effect with respect to
                   Eurodollar Loans under the Revolving Facility or, in the case
                   of the NJ Letter of Credit, the LC/MD Facility, shared
                   ratably among the Lenders under the relevant Facility and
                   payable quarterly in arrears on each LC Fee Payment Date
                   after the issuance date. In addition, the Borrower shall pay
                   to the Issuing Lender for its own account a fronting fee of
                   0.25% per annum on the undrawn and unexpired amount of each
                   Letter of Credit, payable quarterly in arrears on each LC Fee
                   Payment Date after the Issuance Date.

                   (b)   In addition to the foregoing fees, the Borrower shall
                         pay or reimburse the Issuing Lender for such normal and
                         customary costs and expenses as are incurred or charged
                         by the Issuing Lender in issuing, negotiating,
                         effecting payment under, amending or otherwise
                         administering any Letter of Credit.



                                      -53-
<PAGE>   59

              3.4  LC Participations. The Issuing Lender irrevocably agrees to
                   grant and hereby grants to each LC Participant, and, to
                   induce the Issuing Lender to issue Letters of Credit
                   hereunder, each LC Participant irrevocably agrees to accept
                   and purchase and hereby accepts and purchases from the
                   Issuing Lender, on the terms and conditions hereinafter
                   stated, for such LC Participant's own account and risk an
                   undivided interest equal to such LC Participant's Revolving
                   Percentage or LC/MD Percentage, as the case may be, in the
                   Issuing Lender's obligations and rights under each Letter of
                   Credit issued hereunder and the amount of each draft paid by
                   the Issuing Lender thereunder. Each LC Participant
                   unconditionally and irrevocably agrees with the Issuing
                   Lender that, if a draft is paid under any Letter of Credit
                   for which the Issuing Lender is not reimbursed in full by the
                   Borrower in accordance with the terms of this Agreement, such
                   LC Participant shall pay to the Issuing Lender upon demand at
                   the Issuing Lender's address for notices specified herein an
                   amount equal to such LC Participant's Revolving Percentage or
                   LC/MD Percentage, as the case may be, of the amount of such
                   draft, or any part thereof, that is not so reimbursed (which
                   payments shall constitute LC/MD Reimbursement Loans to the
                   extent contemplated by Section 3.5).

                   (b)   If any amount required to be paid by any LC Participant
                         to the Issuing Lender pursuant to Section 3.4(a) in
                         respect of any unreimbursed portion of any payment made
                         by the Issuing Lender under any Letter of Credit is
                         paid to the Issuing Lender within three Business Days
                         after the date such payment is due, such LC Participant
                         shall pay to the Issuing Lender on demand an amount
                         equal to the product of such amount, times the daily
                         average Federal Funds Effective Rate during the period
                         from and including the date such payment is required to
                         the date on which such payment is immediately available
                         to the Issuing Lender, times a fraction the numerator
                         of which is the number of days that elapse during such
                         period and the denominator of which is 360. If any such
                         amount required to be paid by any LC Participant
                         pursuant to Section 3.4(a) is not made available to the
                         Issuing Lender by such LC Participant within three
                         Business Days after the date such payment is due, the
                         Issuing Lender shall be entitled to recover from such
                         LC Participant, on demand, such amount with interest
                         thereon calculated from such due date at the rate per
                         annum applicable to ABR Loans under the Revolving
                         Facility or the LC/MD Facility, as the case may be. A



                                      -54-
<PAGE>   60

                         certificate of the Issuing Lender submitted to any LC
                         Participant with respect to any amounts owing under
                         this Section shall be conclusive in the absence of
                         manifest error.

                   (c)   Whenever, at any time after the Issuing Lender has made
                         payment under any Letter of Credit and has received
                         from any LC Participant its pro rata share of such
                         payment in accordance with Section 3.4(a), the Issuing
                         Lender receives any payment related to such Letter of
                         Credit (whether directly from the Borrower or
                         otherwise, including proceeds of collateral applied
                         thereto by the Issuing Lender), or any payment of
                         interest on account thereof, the Issuing Lender will
                         distribute to such LC Participant its pro rata share
                         thereof; provided, however, that in the event that any
                         such payment received by the Issuing Lender shall be
                         required to be returned by the Issuing Lender, such LC
                         Participant shall return to the Issuing Lender the
                         portion thereof previously distributed by the Issuing
                         Lender to it.

                   (d)   Each LC Participant's obligation to purchase
                         participating interests pursuant to Section 3.4(a)
                         (including participating interests that constitute
                         LC/MD Reimbursement Loans) shall be absolute and
                         unconditional and shall not be affected by any
                         circumstance, including (i) any setoff, counterclaim,
                         recoupment, defense or other right that such LC
                         Participant or the Borrower may have against the
                         Issuing Lender, the Borrower or any other Person for
                         any reason whatsoever; (ii) the occurrence or
                         continuance of a Default or an Event of Default or the
                         failure to satisfy any of the other conditions
                         specified in Section 5; (iii) any adverse change in the
                         condition (financial or otherwise) of the Borrower;
                         (iv) any breach of this Agreement or any other Loan
                         Document by the Borrower, any other Loan Party or any
                         other Lender; or (v) any other circumstance, happening
                         or event whatsoever, whether or not similar to any of
                         the foregoing.

              3.5  Reimbursement Obligation of the Borrower. The Borrower agrees
                   to reimburse the Issuing Lender in accordance with the
                   immediately following sentence upon notification of the
                   Borrower of the date and amount of a draft presented under
                   any Revolving Letter of Credit and paid by the Issuing Lender
                   for the amount of (a) such draft so paid and (b) any taxes,
                   fees, charges or other costs or expenses incurred by the
                   Issuing Lender in connection with such payment. If the
                   Borrower 



                                      -55-
<PAGE>   61

                   is notified as provided in the immediately preceding sentence
                   by 2:00 P.M., New York City time, on any day, then the
                   Borrower shall so reimburse the Issuing Lender by 12:00 Noon,
                   New York City time, on the next succeeding Business Day, and,
                   if so notified after 2:00 P.M., New York City time, on any
                   day, the Borrower shall so reimburse the Issuing Lender by
                   12:00 Noon, New York City time, on the second succeeding
                   Business Day. Each such payment shall be made to the Issuing
                   Lender at its address for notices specified herein in lawful
                   money of the United States and in immediately available
                   funds. Interest shall be payable on any and all amounts
                   remaining unpaid by the Borrower under this Section from the
                   date such amounts become payable (whether at stated maturity,
                   by acceleration or otherwise) until payment in full at the
                   rate set forth in (i) until the second Business Day following
                   the date of payment of the applicable drawing, Section
                   2.14(b) and (ii) thereafter, Section 2.14(c) (but only, in
                   the case of the NJ Letter of Credit, to the extent such
                   payment of such drawing has not been refunded by the LC
                   Participants as contemplated in the next succeeding
                   sentence). Notwithstanding anything to the contrary herein,
                   in the case of any payment of any drawing under the NJ Letter
                   of Credit, the Issuing Lender shall notify the relevant LC
                   Participants that such payment of such drawing is to be
                   refunded by such LC Participants through the purchase of
                   participating interests pursuant to Section 3.4 that will
                   constitute LC/MD Reimbursement Loans, with the funding date
                   thereof to be the second Business Day after the date of
                   payment of such drawing. Any such LC/MD Reimbursement Loans
                   shall initially be ABR Loans and may from time to time
                   thereafter be Eurodollar Loans or ABR Loans, as contemplated
                   by Section 2.1. In the event that, for any reason, any
                   portion of the LC/MD Reimbursement Loans required to be
                   funded by the relevant LC Participants as provided above are
                   not so funded, the Borrower shall be obligated to reimburse
                   the Issuing Lender for such unfunded amounts no later than
                   the date that is three Business Days after the date such
                   funding by the LC Participants was otherwise required to be
                   made.

              3.6  Obligations Absolute. The Borrower's obligations under this
                   Section 3 shall be absolute and unconditional under any and
                   all circumstances and irrespective of any setoff,
                   counterclaim or defense to payment that the Borrower may have
                   or have had against the Issuing Lender, any beneficiary of a
                   Letter of Credit or any other Person. The Borrower also
                   agrees with the Issuing Lender that the Issuing Lender shall
                   not be responsible for, and the Borrower's Reimbursement
                   Obligations under Section 3.5 shall not be affected 



                                      -56-
<PAGE>   62

                   by, among other things, the validity or genuineness of
                   documents or of any endorsements thereon, even though such
                   documents shall in fact prove to be invalid, fraudulent or
                   forged, or any dispute between or among the Borrower and any
                   beneficiary of any Letter of Credit or any other party to
                   which such Letter of Credit may be transferred or any claims
                   whatsoever of the Borrower against any beneficiary of such
                   Letter of Credit or any such transferee. The Issuing Lender
                   shall not be liable for any error, omission, interruption or
                   delay in transmission, dispatch or delivery of any message or
                   advice, however transmitted, in connection with any Letter of
                   Credit, except for errors or omissions constituting gross
                   negligence or willful misconduct of the Issuing Lender. The
                   Borrower agrees that any action taken or omitted by the
                   Issuing Lender under or in connection with any Letter of
                   Credit or the related drafts or documents, if done in the
                   absence of gross negligence or willful misconduct and in
                   accordance with the standards of care specified in the
                   Uniform Customs and, to the extent not inconsistent
                   therewith, the Uniform Commercial Code of the State of New
                   York, shall be binding on the Borrower and shall not result
                   in any liability of the Issuing Lender to the Borrower.

              3.7  Letter of Credit Payments. If any draft shall be presented
                   for payment under any Letter of Credit, the Issuing Lender
                   shall promptly notify the Borrower of the date and amount
                   thereof. The responsibility of the Issuing Lender to the
                   Borrower in connection with any draft presented for payment
                   under any Letter of Credit shall, in addition to any payment
                   obligation expressly provided for in such Letter of Credit,
                   be limited to determining that the documents (including each
                   draft) delivered under such Letter of Credit in connection
                   with such presentment are substantially in conformity with
                   such Letter of Credit.

              3.8  Applications. To the extent that any provision of any
                   Application related to any Letter of Credit is inconsistent
                   with the provisions of this Section 3, the provisions of this
                   Section 3 shall apply.

              SECTION 4. REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:



                                      -57-
<PAGE>   63

              4.1  Financial Condition. The unaudited pro forma consolidated
                   balance sheet and statement of operations of the Borrower and
                   its consolidated Subsidiaries as at, or for the period of
                   four consecutive fiscal quarters ended, March 31, 1998 (the
                   "Pro Forma Financial Statements"), copies of which have
                   heretofore been furnished to each Lender, have been prepared
                   giving effect (as if such events had occurred on such date or
                   at the beginning of such period, as the case may be) to (i)
                   the consummation of the Acquisition, (ii) the Loans to be
                   made and the Senior Subordinated Notes (or the Subordinated
                   Bridge Facility to be funded, as the case may be) and
                   Preferred Stock to be issued on the Closing Date and the use
                   of proceeds thereof and (iii) the payment of fees and
                   expenses in connection with the foregoing. The Pro Forma
                   Financial Statements have been prepared based on the best
                   information available to the Borrower as of the date of
                   delivery thereof, and present fairly on a pro forma basis the
                   estimated financial position of Borrower and its consolidated
                   Subsidiaries as at, or for the period of four consecutive
                   fiscal quarters ended, March 31, 1998, assuming that the
                   events specified in the preceding sentence had actually
                   occurred at such date or at the beginning of such period, as
                   the case may be.

                   (b)   The audited consolidated balance sheets of the Borrower
                         as at December 31, 1995, December 31, 1996 and December
                         31, 1997, and the related consolidated statements of
                         operations, stockholder's equity and cash flows for the
                         fiscal years ended on such dates, reported on by and
                         accompanied by an unqualified report from Grant
                         Thornton LLP, present fairly the consolidated financial
                         condition of the Borrower as at such date, and the
                         consolidated results of its operations and its
                         consolidated cash flows for the respective fiscal years
                         then ended. The unaudited consolidated balance sheet of
                         the Borrower as at March 31, 1998, and the related
                         unaudited consolidated statements of operations,
                         stockholder's equity and cash flows for the three-month
                         period ended on such date, present fairly the
                         consolidated financial condition of the Borrower as at
                         such date, and the consolidated results of its
                         operations and its consolidated cash flows for the
                         three-month period then ended (subject to normal
                         year-end audit adjustments). All such financial
                         statements have been prepared in accordance with GAAP
                         applied consistently throughout the periods involved
                         (except as approved by the aforementioned firm of
                         accountants and disclosed therein). The Borrower and
                         its Subsidiaries do not have any material 



                                      -58-
<PAGE>   64

                         Guarantee Obligations, contingent liabilities and
                         liabilities for taxes, or any long-term leases or
                         unusual forward or long-term commitments, including any
                         interest rate or foreign currency swap or exchange
                         transaction or other obligation in respect of
                         derivatives, that are not reflected in the most recent
                         financial statements referred to in this paragraph.
                         During the period from December 31, 1997 to and
                         including the date hereof there has been no Disposition
                         by the Borrower or any of its Subsidiaries of any
                         material part of its business or property.

                   (c)   The Borrower has provided to the Lenders the audited
                         consolidated balance sheets of the Acquired Company as
                         at March 31, 1996, March 31, 1997 and March 31, 1998,
                         and the related consolidated statements of operations,
                         stockholder's equity and cash flows for the fiscal
                         years ended on such dates, reported on by and
                         accompanied by an unqualified report from Ernst & Young
                         LLP (the "Audited Acquired Company Financials"), as
                         adjusted in certain respects by the Borrower in order
                         to achieve consistency with the Borrower's customary
                         presentation of financial information. Such adjustments
                         do not unfairly present the consolidated financial
                         condition of the Acquired Company as at such date, and
                         the consolidated results of its operations and its
                         consolidated cash flows for the respective fiscal years
                         then ended, in each case as reflected in the Audited
                         Acquired Company Financials.

              4.2  No Change. Since March 31, 1998 there has been no development
                   or event that has had or could reasonably be expected to have
                   a Material Adverse Effect.

              4.3  Corporate Existence; Compliance with Law. Each of the
                   Borrower and its Subsidiaries (a) is duly organized, validly
                   existing and in good standing under the laws of the
                   jurisdiction of its organization, (b) has the corporate power
                   and authority, and the legal right, to own and operate its
                   property, to lease the property it operates as lessee and to
                   conduct the business in which it is currently engaged, (c) is
                   duly qualified as a foreign corporation and in good standing
                   under the laws of each jurisdiction where its ownership,
                   lease or operation of property or the conduct of its business
                   requires such qualification, except to the extent that the
                   failure to be so qualified and in good standing could not, in
                   the aggregate, reasonably be expected to have a Material
                   Adverse Effect, and (d) is in compliance with all



                                      -59-
<PAGE>   65

                   Requirements of Law except to the extent that the failure to
                   comply therewith could not, in the aggregate, reasonably be
                   expected to have a Material Adverse Effect.

              4.4  Corporate Power; Authorization; Enforceable Obligations. Each
                   Loan Party has the corporate power and authority, and the
                   legal right, to make, deliver and perform the Loan Documents
                   to which it is a party and, in the case of the Borrower, to
                   borrow hereunder. Each Loan Party has taken all necessary
                   corporate action to authorize the execution, delivery and
                   performance of the Loan Documents to which it is a party and,
                   in the case of the Borrower, to authorize the borrowings on
                   the terms and conditions of this Agreement. No consent or
                   authorization of, filing with, notice to or other act by or
                   in respect of, any Governmental Authority or any other Person
                   is required in connection with the Acquisition and the
                   borrowings hereunder or with the execution, delivery,
                   performance, validity or enforceability of this Agreement or
                   any of the Loan Documents, except (i) consents,
                   authorizations, filings and notices described in Schedule
                   4.4, which consents, authorizations, filings and notices have
                   been obtained or made and are in full force and effect and
                   (ii) the filings referred to in Section 4.19. Each Loan
                   Document has been duly executed and delivered on behalf of
                   each Loan Party party thereto. This Agreement constitutes,
                   and each other Loan Document upon execution will constitute,
                   a legal, valid and binding obligation of each Loan Party
                   party thereto, enforceable against each such Loan Party in
                   accordance with its terms, except as enforceability may be
                   limited by applicable bankruptcy, insolvency, reorganization,
                   moratorium or similar laws affecting the enforcement of
                   creditors' rights generally and by general equitable
                   principles (whether enforcement is sought by proceedings in
                   equity or at law).

              4.5  No Legal Bar. The execution, delivery and performance of this
                   Agreement and the other Loan Documents, the issuance of
                   Letters of Credit, the borrowings hereunder and the use of
                   the proceeds thereof will not violate any Requirement of Law
                   or any material Contractual Obligation of the Borrower or any
                   of its Subsidiaries and will not result in, or require, the
                   creation or imposition of any Lien on any of their respective
                   properties or revenues pursuant to any Requirement of Law or
                   any such Contractual Obligation (other than the Liens created
                   by the Security Documents). No Requirement of Law or
                   Contractual Obligation applicable to the Borrower or any of
                   its Subsidiaries could reasonably be expected to have a
                   Material Adverse Effect.



                                      -60-
<PAGE>   66

              4.6  Litigation. Except as set forth on Schedule 4.6, no
                   litigation, investigation or proceeding of or before any
                   arbitrator or Governmental Authority is pending or, to the
                   knowledge of the Borrower, threatened by or against the
                   Borrower or any of its Subsidiaries or against any of their
                   respective properties or revenues (a) with respect to any of
                   the Loan Documents or any of the transactions contemplated
                   hereby or thereby, or (b) that could reasonably be expected
                   to have a Material Adverse Effect.

              4.7  No Default. Neither the Borrower nor any of its Subsidiaries
                   is in default under or with respect to any of its Contractual
                   Obligations in any respect that could reasonably be expected
                   to have a Material Adverse Effect. No Default or Event of
                   Default has occurred and is continuing.

              4.8  Ownership of Property; Liens. Each of the Borrower and its
                   Subsidiaries has title in fee simple to, or a valid leasehold
                   interest in, all its material real property, and good title
                   to, or a valid leasehold interest in, all its other material
                   property, and none of such property is subject to any Lien
                   except as permitted by Section 7.3.

              4.9  Intellectual Property. The Borrower and each of its
                   Subsidiaries owns, or is licensed to use, all Intellectual
                   Property necessary for the conduct of its business as
                   currently conducted. No material claim has been asserted and
                   is pending by any Person challenging or questioning the use
                   of any Intellectual Property or the validity or effectiveness
                   of any Intellectual Property, nor does the Borrower know of
                   any valid basis for any such claim. The use of Intellectual
                   Property by the Borrower and its Subsidiaries does not
                   infringe on the rights of any Person in any material respect.

              4.10 Taxes. Each of the Borrower and each of its Subsidiaries has
                   filed or caused to be filed all Federal, state and other
                   material tax returns that are required to be filed and has
                   paid all taxes shown to be due and payable on said returns or
                   on any assessments made against it or any of its property and
                   all other taxes, fees or other charges imposed on it or any
                   of its property by any Governmental Authority to the extent
                   due and payable (other than any the amount or validity of
                   that are currently being contested in good faith by
                   appropriate proceedings and with respect to which reserves in
                   conformity with GAAP have been provided on the books of the
                   Borrower or its Subsidiaries, as the case may be); no
                   material tax Lien has been filed, and, to the 



                                      -61-
<PAGE>   67

                   knowledge of the Borrower, no claim is being asserted, with
                   respect to any such tax, fee or other charge.

              4.11 Federal Regulations. No part of the proceeds of any Loans
                   will be used for "buying" or "carrying" any "margin stock"
                   within the respective meanings of each of the quoted terms
                   under Regulation U as now and from time to time hereafter in
                   effect or for any purpose that violates the provisions of the
                   Regulations of the Board. If requested by any Lender or the
                   Administrative Agent, the Borrower will furnish to the
                   Administrative Agent and each Lender a statement to the
                   foregoing effect in conformity with the requirements of FR
                   Form G-3 or FR Form U-1, as applicable, referred to in
                   Regulation U.

              4.12 Labor Matters. Except as set forth on Schedule 4.6 and as, in
                   the aggregate, could not reasonably be expected to have a
                   Material Adverse Effect: (a) there are no strikes or other
                   labor disputes against the Borrower or any of its
                   Subsidiaries pending or, to the knowledge of the Borrower,
                   threatened; (b) hours worked by and payment made to employees
                   of the Borrower and its Subsidiaries have not been in
                   violation of the Fair Labor Standards Act or any other
                   applicable Requirement of Law dealing with such matters; and
                   (c) all payments due from the Borrower or any of its
                   Subsidiaries on account of employee health and welfare
                   insurance have been paid or accrued as a liability on the
                   books of the Borrower or the relevant Subsidiary.

              4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
                   deficiency" (within the meaning of Section 412 of the Code or
                   Section 302 of ERISA) has occurred during the five-year
                   period prior to the date on which this representation is made
                   or deemed made with respect to any Plan, and each Plan has
                   complied in all material respects with the applicable
                   provisions of ERISA and the Code. No termination of a Single
                   Employer Plan has occurred, and no Lien against the Borrower
                   or any Commonly Controlled Entity and in favor of the PBGC or
                   a Plan has arisen, during such five-year period. The present
                   value of all accrued benefits under each Single Employer Plan
                   (based on those assumptions used to fund such Plans) did not,
                   as of the last annual valuation date prior to the date on
                   which this representation is made or deemed made, exceed the
                   value of the assets of such Plan allocable to such accrued
                   benefits by a material amount. Neither the Borrower nor any
                   Commonly Controlled Entity has had a complete or partial
                   withdrawal from any Multiemployer Plan that has resulted or
                   could reasonably be expected to result in a material
                   liability under ERISA, and neither the Borrower nor any


                                      -62-
<PAGE>   68
                   Commonly Controlled Entity would become subject to any
                   material liability under ERISA if the Borrower or any such
                   Commonly Controlled Entity were to withdraw completely from
                   all Multiemployer Plans as of the valuation date most closely
                   preceding the date on which this representation is made or
                   deemed made. No such Multiemployer Plan is in Reorganization
                   or Insolvent.

              4.14 Investment Company Act; Other Regulations. No Loan Party is
                   an "investment company", or a company "controlled" by an
                   "investment company", within the meaning of the Investment
                   Company Act of 1940, as amended. No Loan Party is subject to
                   regulation under any Requirement of Law (other than
                   Regulation X of the Board) that limits its ability to incur
                   Indebtedness.

              4.15 Subsidiaries. Except as disclosed to the Administrative Agent
                   by the Borrower in writing from time to time after the
                   Closing Date, Schedule 4.15 sets forth the name and
                   jurisdiction of incorporation of each Subsidiary and, as to
                   each such Subsidiary, the percentage of each class of Capital
                   Stock owned by any Loan Party and there are no outstanding
                   subscriptions, options, warrants (other than any warrants
                   issued in connection with the funding under the Subordinated
                   Bridge Facility), calls, rights or other agreements or
                   commitments (other than stock options granted to employees or
                   directors and directors' qualifying shares) of any nature
                   relating to any Capital Stock of the Borrower or any
                   Subsidiary, except as created by the Loan Documents.

              4.16 Use of Proceeds. The proceeds of the A/B/C Term Loans shall
                   be used to finance a portion of the Acquisition, to repay
                   certain existing Indebtedness of the Borrower and its
                   Subsidiaries and to pay related fees and expenses. The
                   proceeds of the LC/MD Term Loans shall be used for general
                   corporate purposes (other than financing acquisitions,
                   capital expenditures or the working capital needs of the
                   Borrower and its Subsidiaries). The proceeds of the Revolving
                   Loans and the Swingline Loans, and the Revolving Letters of
                   Credit, shall be used for general corporate purposes. The NJ
                   Letter of Credit shall be used for the purpose specified in
                   Section 3.1.

              4.17 Environmental Matters. Except as, in the aggregate, could not
                   reasonably be expected to have a Material Adverse Effect:

         (a) the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and have
not previously contained, any 



                                      -63-
<PAGE>   69

Materials of Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could give rise
to liability under, any Environmental Law;

         (b) neither the Borrower nor any of its Subsidiaries has received or is
aware of any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the business operated
by the Borrower or any of its Subsidiaries (the "Business"), nor does the
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened;

         (c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law;

         (d) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business;

         (e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws;

         (f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or about
the Properties or violation of any Environmental Law with respect to the
Properties or the Business; and

         (g) neither the Borrower nor any of its Subsidiaries has assumed any
liability of any other Person under Environmental Laws.

              4.18 Accuracy of Information, etc. No statement or information
                   contained in this Agreement, any other Loan Document, the
                   Confidential Information Memorandum or any other document,
                   certificate or statement furnished by or on behalf of any
                   Loan Party to the Administrative Agent or the Lenders, or any
                   of them, for use in 



                                      -64-
<PAGE>   70

                   connection with the transactions contemplated by this
                   Agreement or the other Loan Documents, contained as of the
                   date such statement, information, document or certificate was
                   so furnished (or, in the case of the Confidential Information
                   Memorandum, as of the date of this Agreement), any untrue
                   statement of a material fact or omitted to state a material
                   fact necessary to make the statements contained herein or
                   therein not misleading. The projections and pro forma
                   financial information contained in the materials referenced
                   above are based upon good faith estimates and assumptions
                   believed by management of the Borrower to be reasonable at
                   the time made, it being recognized by the Lenders that such
                   financial information as it relates to future events is not
                   to be viewed as fact and that actual results during the
                   period or periods covered by such financial information may
                   differ from the projected results set forth therein by a
                   material amount. As of the date hereof, the representations
                   and warranties made by the Borrower and, to the Borrower's
                   knowledge, made by the Seller and Thorn plc, in the
                   Acquisition Documentation are true and correct in all
                   material respects. There is no fact known to any Loan Party
                   that could reasonably be expected to have a Material Adverse
                   Effect that has not been expressly disclosed herein, in the
                   other Loan Documents, in the Confidential Information
                   Memorandum or in any other documents, certificates and
                   statements furnished to the Administrative Agent and the
                   Lenders for use in connection with the transactions
                   contemplated hereby and by the other Loan Documents.

              4.19 Security Documents. The Guarantee and Collateral Agreement is
                   effective to create in favor of the Administrative Agent, for
                   the benefit of the Lenders, a legal, valid and enforceable
                   security interest in the Collateral described in paragraphs
                   (a) through (k), inclusive, (m) and (n) of Section 3 thereof
                   and proceeds of such Collateral. In the case of the Pledged
                   Stock described in the Guarantee and Collateral Agreement,
                   when stock certificates representing such Pledged Stock are
                   delivered to the Administrative Agent, and in the case of the
                   other Collateral described in the Guarantee and Collateral
                   Agreement, when financing statements and other filings
                   specified on Schedule 4.19(a) (or otherwise notified to the
                   Administrative Agent) in appropriate form are filed in the
                   offices specified on Schedule 4.19(a) (or otherwise notified
                   to the Administrative Agent), the Guarantee and Collateral
                   Agreement shall constitute a fully perfected Lien on, and
                   security interest in, all right, title and interest of the
                   Loan Parties in such Collateral and the proceeds thereof, as
                   security for the Obligations (as defined in the Guarantee and



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<PAGE>   71

                   Collateral Agreement), in each case prior and superior in
                   right to any other Person (except, in the case of Collateral
                   other than Pledged Stock, Liens permitted by Section 7.3).

                   (b)   Each of the Mortgages (if any) is effective to create
                         in favor of the Administrative Agent, for the benefit
                         of the Lenders, a legal, valid and enforceable Lien on
                         the Mortgaged Properties described therein and proceeds
                         thereof, and when filed in the offices specified on
                         Schedule 4.19(b), each such Mortgage shall constitute a
                         fully perfected Lien on, and security interest in, all
                         right, title and interest of the Loan Parties in such
                         Mortgaged Properties and the proceeds thereof, as
                         security for the Obligations (as defined in the
                         relevant Mortgage), in each case prior and superior in
                         right to any other Person except Liens permitted by
                         Section 7.3.

              4.20 Solvency. Each Loan Party is, and after giving effect to the
                   Acquisition and the incurrence of all Indebtedness and
                   obligations being incurred in connection herewith and
                   therewith will be and will continue to be, Solvent.

              4.21 Senior Indebtedness. The Obligations constitute "Senior
                   Indebtedness" of the Borrower under and as defined in the
                   Subordinated Bridge Facility and the Senior Subordinated Note
                   Indenture. The obligations of each Subsidiary Guarantor under
                   the Guarantee and Collateral Agreement constitute "Guarantor
                   Senior Indebtedness" of such Subsidiary Guarantor under and
                   as defined in the Subordinated Bridge Facility and the Senior
                   Subordinated Note Indenture.

              4.22 Year 2000 Matters. Any reprogramming required to permit the
                   proper functioning (but only to the extent that such proper
                   functioning would otherwise be impaired by the occurrence of
                   the year 2000) in and following the year 2000 of computer
                   systems and other equipment containing embedded microchips,
                   in either case owned or operated by the Borrower or any of
                   its Subsidiaries or used or relied upon in the conduct of
                   their business (including any such systems and other
                   equipment supplied by others), and the testing of all such
                   systems and other equipment as so reprogrammed, will be
                   completed by June 30, 1999. The costs to the Borrower and its
                   Subsidiaries that have not been incurred as of the date
                   hereof for such reprogramming and testing and for the other
                   reasonably foreseeable consequences to them of any improper
                   functioning of other computer systems and 



                                      -66-
<PAGE>   72

                   equipment containing embedded microchips due to the
                   occurrence of the year 2000 could not reasonably be expected
                   to result in a Default or Event of Default or to have a
                   Material Adverse Effect. Except for any reprogramming
                   referred to above, the computer systems of the Borrower and
                   its Subsidiaries are and, with ordinary course upgrading and
                   maintenance, will continue for the term of this Agreement to
                   be, sufficient for the conduct of their business as currently
                   conducted.

              4.23 Regulation H. No Mortgage encumbers improved real property
                   that is located in an area that has been identified by the
                   Secretary of Housing and Urban Development as an area having
                   special flood hazards and in which flood insurance has been
                   made available under the National Flood Insurance Act of
                   1968.

                        SECTION 5. CONDITIONS PRECEDENT

              5.1  Conditions to Initial Extension of Credit. The agreement of
                   each Lender to make the initial extension of credit requested
                   to be made by it is subject to the satisfaction, prior to or
                   concurrently with the making of such extension of credit on
                   the Closing Date, of the following conditions precedent:

                   (a)   Credit Agreement; Addenda; Guarantee and Collateral
                         Agreement. The Administrative Agent shall have received
                         (i) this Agreement, executed and delivered by the
                         Agents and the Borrower, (ii) an Addendum, executed and
                         delivered by each Person listed on Schedule 1.1A, (iii)
                         the Guarantee and Collateral Agreement, executed and
                         delivered by the Borrower and each Subsidiary Guarantor
                         and (iv) an Acknowledgement and Consent in the form
                         attached to the Guarantee and Collateral Agreement,
                         executed and delivered by each Issuer (as defined
                         therein), if any, that is not a Loan Party.

         In the event that an Addendum has not been duly executed and delivered
by each Person listed on Schedule 1.1A on the date scheduled to be the Closing
Date, the condition referred to in clause (ii) above shall nevertheless be
deemed satisfied if on such date the Borrower and the Administrative Agent shall
have designated one or more Persons (the "Designated Lenders") to assume, in the
aggregate, all of the Commitments that would have been held by the Persons
listed on Schedule 1.1A (the "Non-Executing Persons") which have not so executed
and delivered an Addendum (subject to each such Designated Lender's consent and
its execution and delivery of an Addendum). Schedule 1.1A shall automatically 



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<PAGE>   73

be deemed to be amended to reflect the respective Commitments of the Designated
Lenders and the omission of the Non-Executing Persons as Lenders hereunder.

                   (b)   Acquisition, etc. The following transactions shall have
                         been consummated prior to or concurrently with the
                         funding of the initial Loans hereunder:

                         (i)    the Borrower shall have acquired 100% of the
                                outstanding Capital Stock of the Acquired
                                Company in accordance with the terms and
                                conditions of the Acquisition Agreement (the
                                "Acquisition") for a purchase price (including
                                approximately $27,000,000 of change of control
                                bonuses paid on the Closing Date on behalf of
                                Thorn plc) not exceeding $900,000,000;

                         (ii)   the Borrower shall have received at least
                                $235,000,000 in gross cash proceeds from the
                                issuance of preferred stock (the "Preferred
                                Stock") to the Sponsor;

                         (iii)  the Borrower shall have received at least
                                $175,000,000 in gross cash proceeds from the
                                issuance of the Senior Subordinated Notes or the
                                funding under the Subordinated Bridge Facility;

                         (iv)   the transaction fees and expenses to be incurred
                                in connection with the Acquisition and the
                                financing thereof shall not exceed $40,000,000;
                                and

                         (v)    (i) the Administrative Agent shall have received
                                satisfactory evidence that the Existing Credit
                                Agreement shall have been terminated and all
                                amounts thereunder shall have been paid in full
                                and (ii) satisfactory arrangements shall have
                                been made for the termination of all Liens
                                granted in connection therewith.



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<PAGE>   74

                   (c)   Pro Forma Financial Statements; Financial Statements.
                         The Lenders shall have received (i) the Pro Forma
                         Financial Statements and (ii) the consolidated
                         financial statements of the Borrower and the Acquired
                         Company referred to in Sections 4.1(b) and 4.1(c).

                   (d)   Approvals. All governmental and material third party
                         approvals (including landlords' and other consents)
                         necessary in connection with the Acquisition, the
                         continuing operations of the Borrower and its
                         Subsidiaries and the transactions contemplated hereby
                         shall have been obtained and be in full force and
                         effect, and all applicable waiting periods shall have
                         expired without any action being taken by any competent
                         authority that would restrain, prevent or otherwise
                         impose materially adverse conditions on the Acquisition
                         or the financing contemplated hereby.

                   (e)   Lien Searches. The Administrative Agent shall have
                         received the results of a recent lien search in each of
                         the jurisdictions where material assets of the Loan
                         Parties are located, and such search shall reveal no
                         liens on any of the assets of the Borrower or its
                         Subsidiaries except for liens permitted by Section 7.3
                         or discharged on or prior to the Closing Date pursuant
                         to documentation satisfactory to the Administrative
                         Agent.

                   (f)   Fees. The Lenders and the Administrative Agent shall
                         have received all fees required to be paid by the
                         Borrower, and all expenses for which invoices have been
                         presented (including the reasonable fees and expenses
                         of legal counsel to the Administrative Agent only), on
                         or before the Closing Date. All such amounts may be
                         paid with proceeds of Loans made on the Closing Date
                         and, to the extent paid in such manner, will be
                         reflected in the funding instructions given by the
                         Borrower to the Administrative Agent on or before the
                         Closing Date.

                   (g)   Closing Certificate. The Administrative Agent shall
                         have received, with a counterpart for each Lender, a
                         certificate of each Loan Party, dated the Closing Date,
                         substantially in the form of Exhibit C, with
                         appropriate insertions and attachments.



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<PAGE>   75

                   (h)   Legal Opinions. The Administrative Agent shall have
                         received the following executed legal opinions:

              (i) the legal opinion of Winstead Sechrest & Minick P.C., 
counsel to the Borrower and its Subsidiaries, substantially in the form of 
Exhibit F-1;

              (ii) the legal opinion of Arnold & Porter, New York counsel to the
Borrower and its Subsidiaries, substantially in the form of Exhibit F-2;

              (iii) the legal opinion of Stinson, Mag & Fizzell, P.C., Kansas
counsel to the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-3; and

              (iv) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Acquisition Agreement,
accompanied by a reliance letter in favor of the Lenders.

         Each such legal opinion shall cover such other matters incident to the
         transactions contemplated by this Agreement as the Administrative Agent
         may reasonably require.

                   (i)   Pledged Stock; Stock Powers; Pledged Notes. The
                         Administrative Agent shall have received (i) the
                         certificates representing the shares of Capital Stock
                         pledged pursuant to the Guarantee and Collateral
                         Agreement, together with an undated stock power for
                         each such certificate executed in blank by a duly
                         authorized officer of the pledgor thereof and (ii) each
                         promissory note (if any) pledged to the Administrative
                         Agent pursuant to the Guarantee and Collateral
                         Agreement endorsed (without recourse) in blank (or
                         accompanied by an executed transfer form in blank) by
                         the pledgor thereof.

                   (j)   Filings, Registrations and Recordings. Each document
                         (including any Uniform Commercial Code financing
                         statement) required by the Security Documents or under
                         law or reasonably requested by the Administrative Agent
                         to be filed, registered or recorded in order to create
                         in favor of the Administrative Agent, for the benefit
                         of the Lenders, a perfected Lien on the Collateral
                         described therein, prior and superior in right to any
                         other Person (other than with respect to Liens
                         expressly permitted by Section 7.3), shall be in proper
                         form for filing, registration or recordation.



                                      -70-
<PAGE>   76

                   (k)   Solvency Opinion. The Administrative Agent shall have
                         received a solvency opinion from Valuation Research
                         Corporation.

                   (l)   Insurance. The Administrative Agent shall have received
                         insurance certificates satisfying the requirements of
                         Section 5.2(b) of the Guarantee and Collateral
                         Agreement.

              5.2  Conditions to Each Extension of Credit. The agreement of each
                   Lender to make any extension of credit requested to be made
                   by it on any date (including its initial extension of credit)
                   is subject to the satisfaction of the following conditions
                   precedent:

                   (a)   Representations and Warranties. Each of the
                         representations and warranties made by any Loan Party
                         in or pursuant to the Loan Documents shall be true and
                         correct in all material respects on and as of such date
                         as if made on and as of such date (unless such
                         representations expressly relate to an earlier date, in
                         which case they shall be true and correct in all
                         material respects on and as of such earlier date).

                   (b)   No Default. No Default or Event of Default shall have
                         occurred and be continuing on such date or after giving
                         effect to the extensions of credit requested to be made
                         on such date.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.

                        SECTION 6. AFFIRMATIVE COVENANTS

         The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Administrative Agent hereunder, the Borrower shall
and shall cause each of its Subsidiaries to:

              6.1  Financial Statements. Furnish to the Administrative Agent
                   with sufficient copies for each Lender:

                   (a)   as soon as available, but in any event within 90 days
                         after the end of each fiscal year of the Borrower, a
                         copy of the audited consolidated balance sheet of the
                         Borrower and its consolidated Subsidiaries as at the
                         end of such year and the related audited consolidated
                         statements of income and of cash flows for such year,
                         setting forth in each case 



                                      -71-
<PAGE>   77

                         in comparative form the figures for the previous year,
                         reported on without a "going concern" or like
                         qualification or exception, or qualification arising
                         out of the scope of the audit, by Grant Thornton LLP or
                         other independent certified public accountants of
                         nationally recognized standing; and

                   (b)   as soon as available, but in any event not later than
                         45 days after the end of each of the first three
                         quarterly periods of each fiscal year of the Borrower,
                         the unaudited consolidated balance sheet of the
                         Borrower and its consolidated Subsidiaries as at the
                         end of such quarter and the related unaudited
                         consolidated statements of income and of cash flows for
                         such quarter and the portion of the fiscal year through
                         the end of such quarter, setting forth in each case in
                         comparative form the figures for the previous year,
                         certified by a Responsible Officer as being fairly
                         stated in all material respects (subject to normal
                         year-end audit adjustments and the absence of notes
                         thereto).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

              6.2  Certificates; Other Information. Furnish to the
                   Administrative Agent with sufficient copies for each Lender
                   (or, in the case of clause (g), to the relevant Lender):

                   (a)   concurrently with the delivery of the financial
                         statements referred to in Section 6.1(a), a certificate
                         of the independent certified public accountants
                         reporting on such financial statements stating that in
                         making the examination necessary therefor no knowledge
                         was obtained of any Default or Event of Default, except
                         as specified in such certificate;

                   (b)   concurrently with the delivery of any financial
                         statements pursuant to Section 6.1, (i) a certificate
                         of a Responsible Officer stating that, to the best of
                         each such Responsible Officer's knowledge, each Loan
                         Party during such period has observed or performed all
                         of its covenants and other agreements, and satisfied
                         every condition, contained in this Agreement and the
                         other Loan Documents to which it is a party to be
                         observed, performed or satisfied by it, and that such
                         Responsible Officer has obtained no knowledge of any
                         Default or Event of Default except as specified in such
                         certificate and (ii) in the 



                                      -72-
<PAGE>   78

                         case of quarterly or annual financial statements, (x) a
                         Compliance Certificate containing all information and
                         calculations necessary for determining compliance by
                         the Borrower and its Subsidiaries with the provisions
                         of this Agreement referred to therein as of the last
                         day of the fiscal quarter or fiscal year of the
                         Borrower, as the case may be, and (y) to the extent not
                         previously disclosed to the Administrative Agent, a
                         listing of each new Subsidiary of any Loan Party, of
                         any new county or state within the United States where
                         any Loan Party keeps material inventory or equipment
                         and of any new fee-owned real property or material
                         Intellectual Property acquired by any Loan Party since
                         the date of the most recent list delivered pursuant to
                         this clause (y) (or, in the case of the first such list
                         so delivered, since the Closing Date);

                   (c)   as soon as available, and in any event no later than 45
                         days after the end of each fiscal year of the Borrower,
                         a detailed consolidated budget for the following fiscal
                         year (including a projected consolidated balance sheet
                         of the Borrower and its Subsidiaries as of the end of
                         the following fiscal year, the related consolidated
                         statements of projected cash flow, projected changes in
                         financial position and projected income and a
                         description of the underlying assumptions applicable
                         thereto), and, as soon as available, significant
                         revisions, if any, of such budget and projections with
                         respect to such fiscal year (collectively, the
                         "Projections"), which Projections shall in each case be
                         accompanied by a certificate of a Responsible Officer
                         stating that such Projections are based on reasonable
                         estimates, information and assumptions and that such
                         Responsible Officer has no reason to believe that such
                         Projections are incorrect or misleading in any material
                         respect;

                   (d)   within 45 days after the end of each of the first three
                         fiscal quarters of each fiscal year of the Borrower, a
                         narrative discussion and analysis of the financial
                         condition and results of operations of the Borrower and
                         its Subsidiaries for such fiscal quarter and for the
                         period from the beginning of the then current fiscal
                         year to the end of such fiscal quarter, as compared to
                         the portion of the Projections covering such periods
                         and to the comparable periods of the previous year;
                         provided that delivery of the Report on Form 10-Q filed
                         with the SEC with respect to such fiscal quarter shall
                         be deemed to satisfy the foregoing requirement;

                   (e)   no later than five Business Days prior to the
                         effectiveness thereof, copies of substantially final
                         drafts of any proposed amendment, 



                                      -73-
<PAGE>   79

                         supplement, waiver or other modification with respect
                         to (i) the Acquisition Documentation or (ii) the Senior
                         Subordinated Note Indenture or the Subordinated Bridge
                         Facility as to which the Senior Subordinated Note
                         Indenture or the Subordinated Bridge Facility requires
                         the approval of any percentage of the holders of
                         Indebtedness thereunder;

                   (f)   within five Business Days after the same are sent,
                         copies of all financial statements and reports that the
                         Borrower sends to the holders of any class of its debt
                         securities or public equity securities and, within five
                         Business Days after the same are filed, copies of all
                         financial statements and reports that the Borrower may
                         make to, or file with, the SEC; and

                   (g)   promptly, such additional financial and other
                         information as any Lender may from time to time
                         reasonably request.

              6.3  Payment of Obligations. Pay, discharge or otherwise satisfy
                   at or before maturity or before they become delinquent, as
                   the case may be, all its material obligations of whatever
                   nature, except where the amount or validity thereof is
                   currently being contested in good faith by appropriate
                   proceedings and reserves in conformity with GAAP with respect
                   thereto have been provided on the books of the Borrower or
                   its Subsidiaries, as the case may be.

              6.4  Maintenance of Existence; Compliance. (i) Preserve, renew and
                   keep in full force and effect its corporate existence and
                   (ii) take all reasonable action to maintain all rights,
                   privileges and franchises necessary or desirable in the
                   normal conduct of its business, except, in each case, as
                   otherwise permitted by Section 7.4 and except, in the case of
                   clause (ii) above, to the extent that failure to do so could
                   not reasonably be expected to have a Material Adverse Effect;
                   and (b) comply with all Contractual Obligations and
                   Requirements of Law except to the extent that failure to
                   comply therewith could not, in the aggregate, reasonably be
                   expected to have a Material Adverse Effect.

              6.5  Maintenance of Property; Insurance. Keep all property useful
                   and necessary in its business in good working order and
                   condition, ordinary wear and tear excepted and (b) maintain
                   with financially sound and reputable insurance companies
                   insurance on all its property in at least such amounts and
                   against at least such risks (but including in any event
                   public liability, product liability and business interruption
                   expense coverage) as are usually insured against in the 



                                      -74-
<PAGE>   80

                   same general area by companies engaged in the same or a
                   similar business.

              6.6  Inspection of Property; Books and Records; Discussions. (a)
                   Keep proper books of records 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
                   (b) subject to the provisions of Section 10.14, permit
                   representatives of any Lender, upon reasonable prior notice,
                   to visit and inspect any of its properties and examine and
                   make abstracts from any of its books and records at any
                   reasonable time and as often as may reasonably be desired and
                   to discuss the business, operations, properties and financial
                   and other condition of the Borrower and its Subsidiaries with
                   officers and employees of the Borrower and its Subsidiaries
                   and with its independent certified public accountants.

              6.7  Notices. Promptly give notice to the Administrative Agent
                   with sufficient copies for each Lender of:

                   (a)   the occurrence of any Default or Event of Default;

                   (b)   any (i) default or event of default under any
                         Contractual Obligation of the Borrower or any of its
                         Subsidiaries or (ii) litigation, investigation or
                         proceeding that may exist at any time between the
                         Borrower or any of its Subsidiaries and any
                         Governmental Authority, that in either case, if not
                         cured or if reasonably expected to be adversely
                         determined, as the case may be, could reasonably be
                         expected to have a Material Adverse Effect;

                   (c)   any litigation or proceeding affecting the Borrower or
                         any of its Subsidiaries in which the amount claimed is
                         $5,000,000 or more and not covered by insurance or in
                         which injunctive or similar relief is sought which
                         could reasonably be expected to be granted and which,
                         if granted, could reasonably be expected to have a
                         Material Adverse Effect;

                   (d)   the following events, as soon as possible and in any
                         event within 30 days after the Borrower knows or has
                         reason to know thereof: (i) the occurrence of any
                         Reportable Event with respect to any Plan, a failure to
                         make any required contribution to a Plan, the creation
                         of any Lien in favor of the PBGC or a Plan or any
                         withdrawal from, or the termination, Reorganization or
                         Insolvency of, any Multiemployer Plan or (ii) the
                         institution of proceedings or the taking of any other



                                      -75-
<PAGE>   81

                         action by the PBGC or the Borrower or any Commonly
                         Controlled Entity or any Multiemployer Plan with
                         respect to the withdrawal from, or the termination,
                         Reorganization or Insolvency of, any Single Employer
                         Plan or Multiemployer Plan; and

                   (e)   any development or event that has had or could
                         reasonably be expected to have a Material Adverse
                         Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.

              6.8  Environmental Laws. Except as could not reasonably be
                   expected to have a Material Adverse Effect:

                   (a)   Comply with, and contractually require compliance by
                         all tenants and subtenants, if any, with, all
                         applicable Environmental Laws, and obtain and comply
                         with and maintain, and contractually require that all
                         tenants and subtenants obtain and comply with and
                         maintain, any and all licenses, approvals,
                         notifications, registrations or permits required by
                         applicable Environmental Laws.

                   (b)   Conduct and complete all investigations, studies,
                         sampling and testing, and all remedial, removal and
                         other actions required under Environmental Laws and
                         promptly comply with all lawful orders and directives
                         of all Governmental Authorities regarding Environmental
                         Laws.

              6.9  Interest Rate Protection. In the case of the Borrower, within
                   90 days after the Closing Date, enter into Hedge Agreements
                   to the extent necessary to provide that at least 50% of the
                   aggregate principal amount of the A/B/C Term Loans is subject
                   to either a fixed interest rate or interest rate protection
                   for a period of not less than three years, which Hedge
                   Agreements shall have terms and conditions reasonably
                   satisfactory to the Administrative Agent.

              6.10 Additional Collateral, etc. With respect to any property
                   acquired after the Closing Date by the Borrower or any of its
                   Subsidiaries (other than (w) any vehicles and any immaterial
                   inventory and equipment, (x) any property described in
                   paragraph (b), (c) or (d) below, (y) any property subject to
                   a Lien expressly permitted by Section 7.3(g) or (j) and (z)
                   property acquired by any Excluded Foreign Subsidiary) as to
                   which the Administrative Agent, for the 



                                      -76-
<PAGE>   82

                   benefit of the Lenders, does not have a perfected Lien,
                   promptly (i) execute and deliver to the Administrative Agent
                   such amendments to the Guarantee and Collateral Agreement or
                   such other documents as the Administrative Agent deems
                   necessary or advisable to grant to the Administrative Agent,
                   for the benefit of the Lenders, a security interest in such
                   property and (ii) take all actions necessary or advisable to
                   grant to the Administrative Agent, for the benefit of the
                   Lenders, a perfected first priority security interest in such
                   property, including the filing of Uniform Commercial Code
                   financing statements in such jurisdictions as may be required
                   by the Guarantee and Collateral Agreement or by law or as may
                   be requested by the Administrative Agent.

                   (b)   With respect to any fee interest in any real property
                         having a value (together with improvements thereof) of
                         at least $750,000 acquired after the Closing Date by
                         the Borrower or any of its Subsidiaries (other than (x)
                         any such real property subject to a Lien expressly
                         permitted by Section 7.3(g) or (j) and (z) real
                         property acquired by any Excluded Foreign Subsidiary),
                         promptly (i) execute and deliver a first priority
                         Mortgage, in favor of the Administrative Agent, for the
                         benefit of the Lenders, covering such real property,
                         (ii) if requested by the Administrative Agent, provide
                         the Lenders with (x) title and extended coverage
                         insurance covering such real property in an amount at
                         least equal to the purchase price of such real property
                         (or such other amount as shall be reasonably specified
                         by the Administrative Agent) as well as a current ALTA
                         survey thereof, together with a surveyor's certificate
                         and (y) any consents or estoppels reasonably deemed
                         necessary or advisable by the Administrative Agent in
                         connection with such mortgage or deed of trust, each of
                         the foregoing in form and substance reasonably
                         satisfactory to the Administrative Agent and (iii) if
                         requested by the Administrative Agent, deliver to the
                         Administrative Agent legal opinions relating to the
                         matters described above, which opinions shall be in
                         form and substance, and from counsel, reasonably
                         satisfactory to the Administrative Agent.

                   (c)   With respect to any new Subsidiary (other than an
                         Excluded Foreign Subsidiary) created or acquired after
                         the Closing Date by the Borrower (which, for the
                         purposes of this paragraph (c), shall include any
                         existing Subsidiary that ceases to be an Excluded
                         Foreign Subsidiary), the Borrower or any of its
                         Subsidiaries, promptly (i) 



                                      -77-
<PAGE>   83

                         execute and deliver to the Administrative Agent such
                         amendments to the Guarantee and Collateral Agreement as
                         the Administrative Agent deems necessary or advisable
                         to grant to the Administrative Agent, for the benefit
                         of the Lenders, a perfected first priority security
                         interest in the Capital Stock of such new Subsidiary
                         that is owned by the Borrower or any of its
                         Subsidiaries, (ii) deliver to the Administrative Agent
                         the certificates representing such Capital Stock,
                         together with undated stock powers, in blank, executed
                         and delivered by a duly authorized officer of the
                         Borrower or such Subsidiary, as the case may be, and
                         (iii) cause such new Subsidiary (A) to become a party
                         to the Guarantee and Collateral Agreement, (B) to take
                         such actions necessary or advisable to grant to the
                         Administrative Agent for the benefit of the Lenders a
                         perfected first priority security interest in the
                         Collateral described in the Guarantee and Collateral
                         Agreement with respect to such new Subsidiary,
                         including the filing of Uniform Commercial Code
                         financing statements in such jurisdictions as may be
                         required by the Guarantee and Collateral Agreement or
                         by law or as may be requested by the Administrative
                         Agent and (C) to deliver to the Administrative Agent a
                         certificate of such Subsidiary, substantially in the
                         form of Exhibit C, with appropriate insertions and
                         attachments.

                   (d)   With respect to any new Excluded Foreign Subsidiary
                         created or acquired after the Closing Date by the
                         Borrower or any of its Subsidiaries, promptly (i)
                         execute and deliver to the Administrative Agent such
                         amendments to the Guarantee and Collateral Agreement as
                         the Administrative Agent deems necessary or advisable
                         to grant to the Administrative Agent, for the benefit
                         of the Lenders, a perfected first priority security
                         interest in the Capital Stock of such new Subsidiary
                         that is owned by the Borrower or any of its
                         Subsidiaries (provided that in no event shall more than
                         65% of the total outstanding Capital Stock of any such
                         new Subsidiary be required to be so pledged), and (ii)
                         deliver to the Administrative Agent the certificates
                         representing such Capital Stock, together with undated
                         stock powers, in blank, executed and delivered by a
                         duly authorized officer of the Borrower or such
                         Subsidiary, as the case may be, and take such other
                         action as may be necessary or, in the opinion of the
                         Administrative Agent, desirable to perfect the
                         Administrative Agent's security interest therein.

              6.11 Permitted Acquisitions. Deliver to the Lenders, within ten
                   Business Days following the closing date of any Permitted
                   Acquisition involving a Purchase Price less than $20,000,000,
                   each of the 



                                      -78-
<PAGE>   84

                   following: (i) a description of the property, assets and/or
                   equity interest being purchased, in reasonable detail; and
                   (ii) a copy of the purchase agreement pursuant to which such
                   acquisition is to be consummated or a term sheet or other
                   description setting forth the essential terms and the basic
                   structure of such acquisition.

                   (b)   Deliver to the Lenders, (i) within ten Business Days
                         following the closing date of any Permitted Acquisition
                         involving a Purchase Price greater than or equal to
                         $20,000,000 but less than $30,000,000 and (ii) not less
                         than five Business Days prior to the closing date of
                         any Permitted Acquisition involving a Purchase Price
                         greater than or equal to $30,000,000, each of the
                         following: (A) a description of the property, assets
                         and/or equity interest being purchased, in reasonable
                         detail; (B) a copy of the purchase agreement pursuant
                         to which such acquisition is to be consummated or a
                         term sheet or other description setting forth the
                         essential terms and the basic structure of such
                         acquisition; (C) projected statements of income for the
                         entity that is being acquired (or the assets, if an
                         acquisition of assets) for at least a two-year period
                         following such acquisition (including a summary of
                         assumptions or pro forma adjustments for such
                         projections); (D) to the extent made available to the
                         Borrower, historical financial statements for the
                         entity that is being acquired (or the assets, if an
                         acquisition of assets) (including balance sheets and
                         statements of income, retained earnings and cash flows
                         for at least a two-year period prior to such
                         acquisition); and (E) confirmation, supported by
                         detailed calculations, that the Borrower and its
                         Subsidiaries would have been in compliance with all the
                         covenants in Section 7.1 for the fiscal quarter ending
                         immediately prior to the consummation of such
                         acquisition, with such compliance determined on a pro
                         forma basis as if such acquisition had been consummated
                         on the first day of the Reference Period ending on the
                         last day of such fiscal quarter.

              6.12 Real Estate Matters. Except in the case of any Mortgaged
                   Property as to which the Borrower (or its relevant
                   Subsidiary, as the case may be) shall have obtained a written
                   commitment for the sale thereof in a transaction otherwise in
                   accordance with the terms of this Agreement, within 90 days
                   after the Closing Date:



                                      -79-
<PAGE>   85

                   (a)   Furnish to the Administrative Agent a Mortgage with
                         respect to each Mortgaged Property, executed and
                         delivered by a duly authorized officer of each party
                         thereto.

                   (b)   If requested by the Administrative Agent, furnish to
                         the Administrative Agent and the title insurance
                         company issuing the policy referred to in paragraph (c)
                         below (the "Title Insurance Company"), maps or plats of
                         an as-built survey of the sites of the Mortgaged
                         Properties certified to the Administrative Agent and
                         the Title Insurance Company in a manner satisfactory to
                         them, dated a date satisfactory to the Administrative
                         Agent and the Title Insurance Company by an independent
                         professional licensed land surveyor satisfactory to the
                         Administrative Agent and the Title Insurance Company,
                         which maps or plats and the surveys on which they are
                         based shall be made in accordance with the Minimum
                         Standard Detail Requirements for Land Title Surveys
                         jointly established and adopted by the American Land
                         Title Association and the American Congress on
                         Surveying and Mapping in 1992, and, without limiting
                         the generality of the foregoing, there shall be
                         surveyed and shown on such maps, plats or surveys the
                         following: (i) the locations on such sites of all the
                         buildings, structures and other improvements and the
                         established building setback lines; (ii) the lines of
                         streets abutting the sites and width thereof; (iii) all
                         access and other easements appurtenant to the sites;
                         (iv) all roadways, paths, driveways, easements,
                         encroachments and overhanging projections and similar
                         encumbrances affecting the site, whether recorded,
                         apparent from a physical inspection of the sites or
                         otherwise known to the surveyor; (v) any encroachments
                         on any adjoining property by the building structures
                         and improvements on the sites; (vi) if the site is
                         described as being on a filed map, a legend relating
                         the survey to said map; and (vii) the flood zone
                         designations, if any, in which the Mortgaged Properties
                         are located.

                   (c)   Furnish to the Administrative Agent in respect of each
                         Mortgaged Property a mortgagee's title insurance policy
                         (or policies) or marked up unconditional binder for
                         such insurance. Each such policy shall (i) be in an
                         amount satisfactory to the Administrative Agent; (ii)
                         be issued at ordinary rates; (iii) insure that the
                         Mortgage insured thereby creates a valid first Lien on
                         such Mortgaged Property free and clear of all defects
                         and encumbrances, except as disclosed therein; (iv)
                         name the Administrative Agent for the benefit of the
                         Lenders as the insured thereunder; (v) be in the form
                         of ALTA Loan Policy - 1970 (Amended 10/17/70 and
                         10/17/84) (or equivalent policies); (vi) 



                                      -80-
<PAGE>   86

                         contain such endorsements and affirmative coverage as
                         the Administrative Agent may reasonably request and
                         (vii) be issued by title companies satisfactory to the
                         Administrative Agent (including any such title
                         companies acting as co-insurers or reinsurers, at the
                         option of the Administrative Agent). The Administrative
                         Agent shall have received evidence satisfactory to it
                         that all premiums in respect of each such policy, all
                         charges for mortgage recording tax, and all related
                         expenses, if any, have been paid.

                   (d)   If requested by the Administrative Agent, furnish to
                         the Administrative Agent (i) a policy of flood
                         insurance that (A) covers any parcel of improved real
                         property that is encumbered by any Mortgage, (B) is
                         written in an amount not less than the outstanding
                         principal amount of the indebtedness secured by such
                         Mortgage that is reasonably allocable to such real
                         property or the maximum limit of coverage made
                         available with respect to the particular type of
                         property under the National Flood Insurance Act of
                         1968, whichever is less, and (C) has a term ending not
                         later than the maturity of the Indebtedness secured by
                         such Mortgage and (ii) confirmation that the Borrower
                         has received the notice required pursuant to Section
                         208(e)(3) of Regulation H of the Board.

                   (e)   Furnish to the Administrative Agent a copy of all
                         recorded documents referred to, or listed as exceptions
                         to title in, the title policy or policies referred to
                         in paragraph (c) above and a copy of all other material
                         documents affecting the Mortgaged Properties.


                         SECTION 7. NEGATIVE COVENANTS

         The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Administrative Agent hereunder, the Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly:

              7.1  Financial Condition Covenants.

                   (a)   Consolidated Leverage Ratio. Permit the Consolidated
                         Leverage Ratio as at the last day of any period of four
                         consecutive fiscal quarters of the Borrower ending with
                         any fiscal quarter during any period set forth below to
                         exceed the ratio set forth below opposite such period:


                                      -81-
<PAGE>   87

<TABLE>
<CAPTION>
                                                             Consolidated
        Period                                               Leverage Ratio
        ------                                               --------------

<S>                                                          <C>
        Fiscal quarter ending 12/31/98
         to fiscal quarter ending 9/30/99                    5.60 to 1.00
        Fiscal quarter ending 12/31/99
         to fiscal quarter ending 3/31/00                    5.50 to 1.00
        Fiscal quarter ending 6/30/00                        5.25 to 1.00
        Fiscal quarter ending 9/30/00                        5.00 to 1.00
        Fiscal quarter ending 12/31/00                       4.75 to 1.00
        Fiscal quarter ending 3/31/01
         to fiscal quarter ending 6/30/01                    4.50 to 1.00
        Fiscal quarter ending 9/30/01
         to fiscal quarter ending 12/31/01                   4.25 to 1.00
        Fiscal year 2002                                     3.75 to 1.00
        Fiscal year 2003 and thereafter                      3.00 to 1.00.
</TABLE>

                   (b)   Consolidated Interest Coverage Ratio. Permit the
                         Consolidated Interest Coverage Ratio for any period of
                         four consecutive fiscal quarters of the Borrower ending
                         with any fiscal quarter during any period set forth
                         below to be less than the ratio set forth below
                         opposite such period:

<TABLE>
<CAPTION>
                                                             Consolidated Interest
        Period                                               Coverage Ratio
        ------                                               --------------

<S>                                                          <C>
        Fiscal quarter ending 12/31/98
         to fiscal quarter ending 12/31/99                   2.00 to 1.00
        Fiscal year 2000                                     2.15 to 1.00
        Fiscal year 2001                                     2.50 to 1.00
        Fiscal year 2002                                     3.00 to 1.00
        Fiscal year 2003                                     3.50 to 1.00
        Fiscal year 2004 and thereafter                      4.00 to 1.00.
</TABLE>

                   (c)   Consolidated Fixed Charge Coverage Ratio. Permit the
                         Consolidated Fixed Charge Coverage Ratio for any period
                         of four consecutive fiscal quarters of the Borrower
                         ending with any fiscal quarter during the period set
                         forth below to be less than the ratio set forth below
                         opposite such period:

<TABLE>
<CAPTION>
                                                             Consolidated Fixed
        Period                                               Charge Coverage Ratio
        ------                                               ---------------------

<S>                                                          <C>
        Fiscal quarter ending 12/31/98
         and thereafter                                           1.30 to 1.00.
</TABLE>



                                      -82-
<PAGE>   88

              7.2  Indebtedness. Create, issue, incur, assume, become liable in
                   respect of or suffer to exist any Indebtedness, except:

                   (a)   Indebtedness of any Loan Party pursuant to any Loan
                         Document;

                   (b)   Indebtedness of the Borrower to any Subsidiary and of
                         any Wholly Owned Subsidiary Guarantor to the Borrower
                         or any other Subsidiary;

                   (c)   Guarantee Obligations incurred in the ordinary course
                         of business by the Borrower or any of its Subsidiaries
                         of obligations of any Wholly Owned Subsidiary
                         Guarantor;

                   (d)   Indebtedness outstanding on the date hereof and listed
                         on Schedule 7.2(d) and any refinancings, refundings,
                         renewals or extensions thereof (without increasing, or
                         shortening the maturity of, the principal amount
                         thereof);

                   (e)   Indebtedness (including, without limitation, Capital
                         Lease Obligations) secured by Liens permitted by
                         Section 7.3(g) in an aggregate principal amount not to
                         exceed $15,000,000 at any one time outstanding;

                   (f)   either (i) (A) Indebtedness of the Borrower (x) in
                         respect of the Subordinated Bridge Facility or (y) the
                         proceeds of which are used solely to refinance the
                         Subordinated Bridge Facility, provided that any
                         Indebtedness incurred pursuant to this clause (y) shall
                         be subordinated to the Obligations and shall have a
                         final stated maturity no earlier than one year and one
                         day after the final maturity of the Loans and (B)
                         Guarantee Obligations of any Subsidiary Guarantor in
                         respect of Indebtedness incurred pursuant to clause
                         (i), provided that such Guarantee Obligations are
                         subordinated to the same extent as the obligations of
                         the Borrower in respect of such Indebtedness, or (ii)
                         (A) Indebtedness of the Borrower in respect of the
                         Senior Subordinated Notes in an aggregate principal
                         amount not to exceed $300,000,000 and (B) Guarantee
                         Obligations of any Subsidiary Guarantor in respect of
                         such Indebtedness, provided that such Guarantee
                         Obligations are subordinated to the same extent as the
                         obligations of the Borrower in respect of the Senior
                         Subordinated Notes;

                   (g)   Assumed Indebtedness incurred pursuant to Permitted
                         Acquisitions;



                                      -83-
<PAGE>   89

                   (h)   Guarantee Obligations of the Borrower in respect of
                         Indebtedness of franchisees not to exceed $50,000,000
                         at any one time outstanding; and

                   (i)   additional Indebtedness of the Borrower or any of its
                         Subsidiaries in an aggregate principal amount (for the
                         Borrower and all Subsidiaries) not to exceed
                         $25,000,000 at any one time outstanding.

              7.3  Liens. Create, incur, assume or suffer to exist any Lien upon
                   any of its property, whether now owned or hereafter acquired,
                   except for:

                   (a)   Liens for taxes not yet due or that are being contested
                         in good faith by appropriate proceedings, provided that
                         adequate reserves with respect thereto are maintained
                         on the books of the Borrower or its Subsidiaries, as
                         the case may be, in conformity with GAAP;

                   (b)   carriers', warehousemen's, mechanics', materialmen's,
                         repairmen's or other like Liens arising in the ordinary
                         course of business that are not overdue for a period of
                         more than 30 days or that are being contested in good
                         faith by appropriate proceedings;

                   (c)   pledges or deposits in connection with workers'
                         compensation, unemployment insurance and other social
                         security legislation;

                   (d)   deposits to secure the performance of bids, trade
                         contracts (other than for borrowed money), leases,
                         statutory obligations, surety and appeal bonds,
                         performance bonds and other obligations of a like
                         nature incurred in the ordinary course of business;

                   (e)   easements, rights-of-way, restrictions and other
                         similar encumbrances incurred in the ordinary course of
                         business that, in the aggregate, are not substantial in
                         amount and that do not in any case materially detract
                         from the value of the property subject thereto or
                         materially interfere with the ordinary conduct of the
                         business of the Borrower or any of its Subsidiaries;

                   (f)   Liens in existence on the date hereof listed on
                         Schedule 7.3(f), securing Indebtedness permitted by
                         Section 7.2(d), provided that no such Lien is spread to
                         cover any additional property after the Closing Date
                         (other than "products" and "proceeds" thereof, as each
                         such term is defined in the Uniform Commercial Code of
                         the State of New York) and that the amount of
                         Indebtedness secured thereby is not increased;



                                      -84-
<PAGE>   90

                   (g)   Liens securing Indebtedness of the Borrower or any
                         other Subsidiary incurred pursuant to Section 7.2(e) to
                         finance the acquisition of fixed or capital assets,
                         provided that (i) such Liens shall be created
                         substantially simultaneously with the acquisition of
                         such fixed or capital assets, (ii) such Liens do not at
                         any time encumber any property other than the property
                         financed by such Indebtedness (including the "products"
                         and "proceeds" thereof, as each such term is defined in
                         the Uniform Commercial Code of the State of New York)
                         and (iii) the amount of Indebtedness secured thereby is
                         not increased;

                   (h)   Liens created pursuant to the Security Documents;

                   (i)   any interest or title of a lessor under any lease
                         entered into by the Borrower or any other Subsidiary in
                         the ordinary course of its business and covering only
                         the assets so leased;

                   (j)   Liens securing Assumed Indebtedness, provided that such
                         Liens (i) were not incurred in contemplation of the
                         Permitted Acquisition consummated in conjunction with
                         the assumption of such Assumed Indebtedness and (ii) do
                         not encumber any property other than the property
                         acquired pursuant to such acquisition; and

                   (k)   Liens not otherwise permitted by this Section so long
                         as neither (i) the aggregate outstanding principal
                         amount of the obligations secured thereby nor (ii) the
                         aggregate fair market value (determined as of the date
                         such Lien is incurred) of the assets subject thereto
                         exceeds (as to the Borrower and all Subsidiaries)
                         $10,000,000 at any one time.

              7.4  Fundamental Changes. Enter into any merger, consolidation or
                   amalgamation, or liquidate, wind up or dissolve itself (or
                   suffer any liquidation or dissolution), or Dispose of, all or
                   substantially all of its property or business, except that:

                   (a)   any Subsidiary of the Borrower may be merged or
                         consolidated with or into the Borrower (provided that
                         the Borrower shall be the continuing or surviving
                         corporation) or with or into any Wholly Owned
                         Subsidiary Guarantor (provided that the Wholly Owned
                         Subsidiary Guarantor shall be the continuing or
                         surviving corporation);



                                      -85-
<PAGE>   91

                   (b)   any Subsidiary of the Borrower may Dispose of any or
                         all of its assets (upon voluntary liquidation or
                         otherwise) to the Borrower or any Wholly Owned
                         Subsidiary Guarantor; and

                   (c)   any Permitted Acquisition may be structured as a merger
                         with or into the Borrower (provided that the Borrower
                         shall be the continuing or surviving corporation) or
                         with or into any Wholly Owned Subsidiary Guarantor
                         (provided that such Wholly Owned Subsidiary Guarantor
                         shall be the continuing or surviving corporation).

              7.5  Disposition of Property. Dispose of any of its property,
                   whether now owned or hereafter acquired, or, in the case of
                   any Subsidiary, issue or sell any shares of such Subsidiary's
                   Capital Stock to any Person, except:

                   (a)   the Disposition of obsolete or worn out property in the
                         ordinary course of business;

                   (b)   the sale of inventory in the ordinary course of
                         business;

                   (c)   Dispositions permitted by Section 7.4(b);

                   (d)   the sale or issuance of any Subsidiary's Capital Stock
                         to the Borrower or any Wholly Owned Subsidiary
                         Guarantor;

                   (e)   (i) Dispositions of the Acquired Vehicles otherwise
                         permitted by this Agreement and (ii) the Disposition of
                         other property having a fair market value not to exceed
                         (A) during the period from the Closing Date to and
                         including the date that is two years after the Closing
                         Date, $60,000,000 in the aggregate, and (B) thereafter,
                         $20,000,000 for any fiscal year of the Borrower;
                         provided, in the case of each of the foregoing clauses
                         (i) and (ii), that the requirements of Section 2.11(c)
                         are complied with in connection therewith; and

                   (f)   Dispositions referred to in Section 7.8(g).

              7.6  Restricted Payments. Declare or pay any dividend (other than
                   dividends payable solely in (i) common stock of the Person
                   making such dividend or (ii) the same class of Capital Stock
                   of the Person making such dividend on which such dividend is
                   being declared or paid) on, or make any payment on account
                   of, or set apart assets for a sinking or other analogous fund
                   for, the purchase, redemption, defeasance, retirement or
                   other acquisition of, any Capital Stock of 



                                      -86-
<PAGE>   92

                   the Borrower or any Subsidiary, whether now or hereafter
                   outstanding, or make any other distribution in respect
                   thereof, either directly or indirectly, whether in cash or
                   property or in obligations of the Borrower or any Subsidiary
                   (collectively, "Restricted Payments"), except that:

                   (a)   any Subsidiary may make Restricted Payments to the
                         Borrower or any Wholly Owned Subsidiary Guarantor; and

                   (b)   so long as no Default or Event of Default shall have
                         occurred and be continuing, the Borrower may purchase
                         the Borrower's common stock or common stock options
                         from present or former officers or employees of the
                         Borrower or any Subsidiary upon the death, disability
                         or termination of employment of such officer or
                         employee, provided, that the aggregate amount of
                         payments under this paragraph (b) after the date hereof
                         (net of any proceeds received by the Borrower after the
                         date hereof in connection with resales of any common
                         stock or common stock options so purchased) shall not
                         exceed $10,000,000; provided, further, that the
                         Borrower shall be permitted to make additional payments
                         under this paragraph (b) not in excess of $25,000,000
                         in the aggregate in order to purchase shares owned by
                         the Talley Persons in connection with the Acquisition.

              7.7  Capital Expenditures. (a) Make or commit to make any Capital
                   Expenditure (Maintenance) (in addition to restructuring
                   charges in an amount up to $10,000,000 in connection with the
                   Acquisition), except (i) Capital Expenditures (Maintenance)
                   of the Borrower and its Subsidiaries not exceeding in the
                   aggregate (x) during the period from the Closing Date to the
                   end of fiscal 1998, $16,700,000, and (y) during each fiscal
                   year thereafter, $40,000,000; provided, that (A) up to
                   $10,000,000 of any such amount, if not so expended in the
                   fiscal year for which it is permitted, may be carried over
                   for expenditure in the next succeeding fiscal year and (B)
                   Capital Expenditures (Maintenance) made pursuant to this
                   clause (i) during any fiscal year shall be deemed made,
                   first, in respect of amounts permitted for such fiscal year
                   as provided in clauses (x) and (y) above and, second, in
                   respect of amounts carried over from the prior fiscal year
                   pursuant to subclause (A) above and (ii) Capital Expenditures
                   (Maintenance) made with the proceeds of any Reinvestment
                   Deferred Amount.

         (b) Make or commit to make any Capital Expenditure (Expansion), except
(i) Capital Expenditures (Expansion) of the Borrower and its Subsidiaries not
exceeding in the aggregate for any fiscal year $25,000,000; provided, that (A)
up to $10,000,000 of such amount, if not so expended 



                                      -87-
<PAGE>   93

in the fiscal year for which it is permitted, may be carried over for
expenditure in the next succeeding fiscal year and (B) Capital Expenditures
(Expansion) made pursuant to this clause (i) during any fiscal year shall be
deemed made, first, in respect of the $25,000,000 initially permitted for such
fiscal year as provided above and, second, in respect of amounts carried over
from the prior fiscal year pursuant to subclause (A) above and (ii) Capital
Expenditures (Expansion) made with the proceeds of any Reinvestment Deferred
Amount.

              7.8  Investments. Make any advance, loan, extension of credit (by
                   way of guaranty or otherwise) or capital contribution to, or
                   purchase any Capital Stock, bonds, notes, debentures or other
                   debt securities of, or any assets constituting a business
                   unit of, or make any other investment in, any other Person
                   (all of the foregoing, "Investments"), except:

                   (a)   extensions of trade credit in the ordinary course of
                         business;

                   (b)   investments in Cash Equivalents;

                   (c)   Guarantee Obligations permitted by Section 7.2;

                   (d)   loans and advances to employees of the Borrower or any
                         Subsidiary of the Borrower in the ordinary course of
                         business (including for travel, entertainment and
                         relocation expenses) in an aggregate amount for the
                         Borrower and its Subsidiaries not to exceed $5,000,000
                         at any one time outstanding;

                   (e)   the Acquisition;

                   (f)   intercompany Investments in the ordinary course of
                         business by the Borrower or any of its Subsidiaries in
                         the Borrower or any Person that, prior to such
                         investment, is a Wholly Owned Subsidiary Guarantor;

                   (g)   in addition to Investments otherwise expressly
                         permitted by this Section, Investments by the Borrower
                         or any of its Subsidiaries in an aggregate amount
                         (valued at cost) not to exceed $10,000,000 (net of the
                         amount of any Net Cash Proceeds received by the
                         Borrower and its Subsidiaries in respect of a
                         Disposition of any such Investment; provided, that such
                         amount shall not exceed the original amount of such
                         Investment) during the term of this Agreement;

                   (h)   Investments not in excess of $40,000,000 in the
                         aggregate during the period from the Closing Date to
                         the end of the 1999 fiscal year 



                                      -88-
<PAGE>   94

                         constituting purchases of franchisees of the Borrower
                         and its Subsidiaries; and

                   (i)   additional Investments constituting Permitted
                         Acquisitions.

              7.9  Payments and Modifications of Certain Debt Instruments and
                   Preferred Stock. (a) Make or offer to make any payment,
                   prepayment, repurchase or redemption of or otherwise defease
                   or segregate funds with respect to the Senior Subordinated
                   Notes or Indebtedness under the Subordinated Bridge Facility,
                   other than interest payments expressly required by the terms
                   thereof and pursuant to mandatory prepayment provisions
                   contained in the Subordinated Bridge Facility, (b) amend,
                   modify, waive or otherwise change, or consent or agree to any
                   amendment, modification, waiver or other change to, any of
                   the terms of the Senior Subordinated Notes or the
                   Subordinated Bridge Facility (other than any such amendment,
                   modification, waiver or other change that (i) would extend
                   the maturity or reduce the amount of any payment of principal
                   thereof or reduce the rate or extend any date for payment of
                   interest thereon and (ii) does not involve the payment of a
                   consent fee), (c) amend, modify, waive or otherwise change,
                   or consent or agree to any amendment, modification, waiver or
                   other change to, any of the terms of the Preferred Stock
                   (other than any such amendment, modification, waiver or other
                   change that (i) would extend the scheduled redemption date or
                   reduce the amount of any scheduled redemption payment or
                   reduce the rate or extend any date for payment of dividends
                   thereon and (ii) does not involve the payment of a consent
                   fee) or (d) designate any Indebtedness (other than
                   obligations of the Loan Parties pursuant to the Loan
                   Documents) as "Designated Senior Indebtedness" for the
                   purposes of the Senior Subordinated Note Indenture or the
                   Subordinated Bridge Facility.

              7.10 Transactions with Affiliates. Enter into any transaction,
                   including any purchase, sale, lease or exchange of property,
                   the rendering of any service or the payment of any
                   management, advisory or similar fees, with any Affiliate
                   (other than the Borrower or any Wholly Owned Subsidiary
                   Guarantor) unless such transaction is (a) otherwise permitted
                   under this Agreement, (b) in the ordinary course of business
                   of the Borrower or such Subsidiary, as the case may be, and
                   (c) upon fair and reasonable terms no less favorable to the
                   Borrower or such Subsidiary, as the case may be, than it
                   would obtain in a comparable arm's length transaction with a
                   Person that is not an Affiliate.



                                      -89-
<PAGE>   95

              7.11 Sales/Leaseback Transactions. Enter into any Sale/Leaseback
                   Transaction, except for any Sale/Leaseback Transaction with
                   respect to the Acquired Vehicles pursuant to which such
                   Acquired Vehicles are leased under an operating lease.

              7.12 Changes in Fiscal Periods. Permit the fiscal year of the
                   Borrower to end on a day other than December 31 or change the
                   Borrower's method of determining fiscal quarters.

              7.13 Negative Pledge Clauses. Enter into or suffer to exist or
                   become effective any agreement that prohibits or limits the
                   ability of the Borrower or any of its Subsidiaries to create,
                   incur, assume or suffer to exist any Lien upon any of its
                   property or revenues, whether now owned or hereafter
                   acquired, other than (a) this Agreement and the other Loan
                   Documents and (b) any agreements governing any purchase money
                   Liens or Capital Lease Obligations otherwise permitted hereby
                   (in which case, any prohibition or limitation shall only be
                   effective against the assets financed thereby).

              7.14 Clauses Restricting Subsidiary Distributions. Enter into or
                   suffer to exist or become effective any consensual
                   encumbrance or restriction on the ability of any Subsidiary
                   of the Borrower to (a) make Restricted Payments in respect of
                   any Capital Stock of such Subsidiary held by, or pay any
                   Indebtedness owed to, the Borrower or any other Subsidiary of
                   the Borrower, (b) make loans or advances to, or other
                   Investments in, the Borrower or any other Subsidiary of the
                   Borrower or (c) transfer any of its assets to the Borrower or
                   any other Subsidiary of the Borrower, except for such
                   encumbrances or restrictions existing under or by reason of
                   (i) any restrictions existing under the Loan Documents, (ii)
                   restrictions in effect on the date hereof and listed on
                   Schedule 7.14, (iii) in the case of clause (c) above,
                   customary non-assignment clauses in leases and other
                   contracts entered into in the ordinary course of business and
                   (iv) any restrictions with respect to a Subsidiary imposed
                   pursuant to an agreement that has been entered into in
                   connection with the Disposition of all or substantially all
                   of the Capital Stock or assets of such Subsidiary.

              7.15 Lines of Business. Enter into any business, either directly
                   or through any Subsidiary, except for those businesses in
                   which the Borrower and its Subsidiaries are engaged on the
                   date of this Agreement (after giving effect to the
                   Acquisition) or that are reasonably related or incidental
                   thereto.



                                      -90-
<PAGE>   96

              7.16 Amendments to Acquisition Documents. (a) Amend, supplement or
                   otherwise modify (pursuant to a waiver or otherwise) the
                   terms and conditions of the indemnities and licenses
                   furnished to the Borrower or any of its Subsidiaries pursuant
                   to the Acquisition Documentation or any other document
                   delivered by the Seller or any of its affiliates in
                   connection therewith such that after giving effect thereto
                   such indemnities or licenses shall be materially less
                   favorable to the interests of the Loan Parties or the Lenders
                   with respect thereto or (b) otherwise amend, supplement or
                   otherwise modify the terms and conditions of the Acquisition
                   Documentation or any such other documents except for any such
                   amendment, supplement or modification that could not
                   reasonably be expected to have a Material Adverse Effect.

                          SECTION 8. EVENTS OF DEFAULT

         If any of the following events shall occur and be continuing:


              (a)  the Borrower shall fail to pay any principal of any Loan or
                   Reimbursement Obligation when due in accordance with the
                   terms hereof; or the Borrower shall fail to pay any interest
                   on any Loan or Reimbursement Obligation, or any other amount
                   payable hereunder or under any other Loan Document, within
                   five days after any such interest or other amount becomes due
                   in accordance with the terms hereof; or

              (b)  any representation or warranty made or deemed made by any
                   Loan Party herein or in any other Loan Document or that is
                   contained in any certificate, document or financial or other
                   statement furnished by it at any time under or in connection
                   with this Agreement or any such other Loan Document shall
                   prove to have been inaccurate in any material respect on or
                   as of the date made or deemed made; or

              (c)  any Loan Party shall default in the observance or performance
                   of any agreement contained in clause (i) or (ii) of Section
                   6.4(a) (with respect to the Borrower only), Section 6.7(a) or
                   Section 7 of this Agreement or Section 5.7(b) of the
                   Guarantee and Collateral Agreement; or

              (d)  any Loan Party shall default in the observance or performance
                   of any other agreement contained in this Agreement or any
                   other Loan Document (other than as provided in paragraphs (a)
                   through (c) of 



                                      -91-
<PAGE>   97

                   this Section), and such default shall continue unremedied for
                   a period of 30 days after notice to the Borrower from the
                   Administrative Agent or the Required Lenders; or

              (e)  the Borrower or any of its Subsidiaries shall (i) default in
                   making any payment of any principal of any Indebtedness
                   (including any Guarantee Obligation, but excluding the Loans)
                   on the scheduled or original due date with respect thereto;
                   or (ii) default in making any payment of any interest on any
                   such Indebtedness beyond the period of grace, if any,
                   provided in the instrument or agreement under which such
                   Indebtedness was created; or (iii) default in the observance
                   or performance of any other agreement or condition relating
                   to any such Indebtedness or contained in any instrument or
                   agreement evidencing, securing or relating thereto, or any
                   other event shall occur or condition exist, the effect of
                   which default or other event or condition is to cause, or to
                   permit the holder or beneficiary of such Indebtedness (or a
                   trustee or agent on behalf of such holder or beneficiary) to
                   cause, with the giving of notice if required, such
                   Indebtedness to become due prior to its stated maturity or
                   (in the case of any such Indebtedness constituting a
                   Guarantee Obligation) to become payable; provided, that a
                   default, event or condition described in clause (i), (ii) or
                   (iii) of this paragraph (e) shall not at any time constitute
                   an Event of Default unless, at such time, one or more
                   defaults, events or conditions of the type described in
                   clauses (i), (ii) and (iii) of this paragraph (e) shall have
                   occurred and be continuing with respect to Indebtedness the
                   outstanding principal amount of which exceeds in the
                   aggregate $10,000,000; or

              (f)  (i) the Borrower or any of its Subsidiaries shall commence
                   any case, proceeding or other action (A) under any existing
                   or future law of any jurisdiction, domestic or foreign,
                   relating to bankruptcy, insolvency, reorganization or relief
                   of debtors, seeking to have an order for relief entered with
                   respect to it, or seeking to adjudicate it a bankrupt or
                   insolvent, or seeking reorganization, arrangement,
                   adjustment, winding-up, liquidation, dissolution, composition
                   or other relief with respect to it or its debts, or (B)
                   seeking appointment of a receiver, trustee, custodian,
                   conservator or other similar official for it or for all or
                   any substantial part of its assets, or the Borrower or any of
                   its Subsidiaries shall make a general assignment for the
                   benefit of its creditors; or (ii) there shall be commenced
                   against the Borrower or any of its Subsidiaries any case,
                   proceeding or other action of a nature referred to in clause
                   (i) above that (A) results in the entry of an order for
                   relief or any such adjudication or appointment or (B) remains



                                      -92-
<PAGE>   98

                   undismissed, undischarged or unbonded for a period of 60
                   days; or (iii) there shall be commenced against the Borrower
                   or any of its Subsidiaries any case, proceeding or other
                   action seeking issuance of a warrant of attachment,
                   execution, distraint or similar process against all or any
                   substantial part of its assets that results in the entry of
                   an order for any such relief that shall not have been
                   vacated, discharged, or stayed or bonded pending appeal
                   within 60 days from the entry thereof; or (iv) the Borrower
                   or any of its Subsidiaries shall take any action in
                   furtherance of, or indicating its consent to, approval of, or
                   acquiescence in, any of the acts set forth in clause (i),
                   (ii), or (iii) above; or (v) the Borrower or any of its
                   Subsidiaries shall generally not, or shall be unable to, or
                   shall admit in writing its inability to, pay its debts as
                   they become due; or

              (g)  (i) any Person shall engage in any non-exempt "prohibited
                   transaction" (as defined in Section 406 and 408 of ERISA or
                   Section 4975 of the Code) involving any Plan, (ii) any
                   "accumulated funding deficiency" (as defined in Section 302
                   of ERISA), whether or not waived, shall exist with respect to
                   any Plan or any Lien in favor of the PBGC or a Plan shall
                   arise on the assets of the Borrower or any Commonly
                   Controlled Entity, (iii) a Reportable Event shall occur with
                   respect to, or proceedings shall commence under Title IV of
                   ERISA to have a trustee appointed, or a trustee shall be
                   appointed under Title IV of ERISA, to administer or to
                   terminate, any Single Employer Plan, which Reportable Event
                   or commencement of proceedings or appointment of a trustee
                   is, in the reasonable opinion of the Required Lenders, likely
                   to result in the termination of such Plan for purposes of
                   Title IV of ERISA, (iv) any Single Employer Plan shall
                   terminate in a "distress termination" or an "involuntary
                   termination", as such terms are defined in Title IV of ERISA,
                   (v) the Borrower or any Commonly Controlled Entity shall, or
                   in the reasonable opinion of the Required Lenders is likely
                   to, incur any liability in connection with a withdrawal from,
                   or the Insolvency or Reorganization of, a Multiemployer Plan
                   or (vi) any other event or condition shall occur or exist
                   with respect to a Plan; and in each case in clauses (i)
                   through (vi) above, such event or condition, together with
                   all other such events or conditions, if any, could, in the
                   sole judgment of the Required Lenders, reasonably be expected
                   to have a Material Adverse Effect; or

              (h)  one or more judgments or decrees shall be entered against the
                   Borrower or any of its Subsidiaries involving in the
                   aggregate a liability (not paid or fully covered by insurance
                   as to which the 



                                      -93-
<PAGE>   99

                   relevant insurance company has acknowledged coverage) of
                   $10,000,000 or more, and all such judgments or decrees shall
                   not have been vacated, discharged, stayed or bonded pending
                   appeal within 30 days from the entry thereof; or

              (i)  any of the Security Documents shall cease, for any reason, to
                   be in full force and effect, or any Loan Party or any
                   Affiliate of any Loan Party shall so assert, or any Lien
                   created by any of the Security Documents shall cease to be
                   enforceable and of the same effect and priority purported to
                   be created thereby; or

              (j)  the guarantee contained in Section 2 of the Guarantee and
                   Collateral Agreement shall cease, for any reason (other than,
                   with respect to the guarantee of a Subsidiary, (i) as a
                   result of a merger of such Subsidiary into the Borrower in
                   accordance with the terms of this Agreement or (ii) as a
                   result of a release pursuant to Section 8.15(b) of the
                   Guarantee and Collateral Agreement), to be in full force and
                   effect or any Loan Party or any Affiliate of any Loan Party
                   shall so assert; or

              (k)  (i) any "person" or "group" (as such terms are used in
                   Sections 13(d) and 14(d) of the Securities Exchange Act of
                   1934, as amended (the "Exchange Act")), excluding the
                   Permitted Investors, shall at any time become, or obtain
                   rights (whether by means of warrants, options or otherwise)
                   to become, the "beneficial owner" (as defined in Rules 13(d)
                   3 and 13(d) 5 under the Exchange Act), directly or
                   indirectly, of a percentage (the "Third Party Stock
                   Percentage") equal to 33-1/3% or more of the Voting Stock of
                   the Borrower unless at such time (x) the percentage of
                   outstanding Voting Stock of the Borrower beneficially owned
                   by the Permitted Investors (determined on a fully diluted
                   basis) is equal to or greater than the Third Party Stock
                   Percentage and (y) the Sponsor owns of record and
                   beneficially at least 35% of the Voting Stock of the Borrower
                   then owned by the Permitted Investors; (ii) the Sponsor at
                   any time shall cease to own of record and beneficially an
                   amount of Voting Stock of the Borrower equal to at least 50%
                   of the amount of Voting Stock of the Borrower owned by the
                   Sponsor of record and beneficially as of the Closing Date
                   immediately after giving effect to the Acquisition; (iii) the
                   Talley Persons at any time shall cease to own of record and
                   beneficially an amount of Voting Stock of the Borrower equal
                   to at least 50% of the amount of Voting Stock of the Borrower
                   owned by the Talley Persons of record and beneficially as of
                   the Closing Date immediately after giving effect to the
                   Acquisition (excluding the 



                                      -94-
<PAGE>   100

                   shares of Voting Stock to be repurchased by the Borrower from
                   the Talley Persons for $25,000,000 on or about the date of
                   issuance of the Senior Subordinated Notes); (iv) the Speese
                   Persons at any time shall cease to own of record and
                   beneficially an amount of Voting Stock of the Borrower equal
                   to at least 50% of the amount of Voting Stock of the Borrower
                   owned by the Speese Persons of record and beneficially as of
                   the Closing Date immediately after giving effect to the
                   Acquisition; or (v) a Specified Change of Control shall
                   occur; or

              (l)  the Senior Subordinated Notes or the guarantees thereof shall
                   cease, for any reason, to be validly subordinated to the
                   Obligations or the obligations of the Subsidiary Guarantors
                   under the Guarantee and Collateral Agreement, as the case may
                   be, as provided in the Senior Subordinated Note Indenture, or
                   any Loan Party, any Affiliate of any Loan Party, the trustee
                   in respect of the Senior Subordinated Notes or the holders of
                   at least 25% in aggregate principal amount of the Senior
                   Subordinated Notes shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of LC Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Revolving Commitments to be terminated forthwith, whereupon the Revolving
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of LC Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other 



                                      -95-
<PAGE>   101

obligations of the Borrower hereunder and under the other Loan Documents shall
have been paid in full, the balance, if any, in such cash collateral account
shall be returned to the Borrower (or such other Person as may be lawfully
entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind (other than
notices expressly required pursuant to this Agreement and any other Loan
Document) are hereby expressly waived by the Borrower.

                             SECTION 9. THE AGENTS

              9.1  Appointment. Each Lender hereby irrevocably designates and
                   appoints the Administrative Agent as the agent of such Lender
                   under this Agreement and the other Loan Documents, and each
                   such Lender irrevocably authorizes the Administrative Agent,
                   in such capacity, to take such action on its behalf under the
                   provisions of this Agreement and the other Loan Documents and
                   to exercise such powers and perform such duties as are
                   expressly delegated to the Administrative Agent by the terms
                   of this Agreement and the other Loan Documents, together with
                   such other powers as are reasonably incidental thereto.
                   Notwithstanding any provision to the contrary elsewhere in
                   this Agreement, the Administrative Agent shall not have any
                   duties or responsibilities, except those expressly set forth
                   herein, or any fiduciary relationship with any Lender, and no
                   implied covenants, functions, responsibilities, duties,
                   obligations or liabilities shall be read into this Agreement
                   or any other Loan Document or otherwise exist against the
                   Administrative Agent.

              9.2  Delegation of Duties. The Administrative Agent may execute
                   any of its duties under this Agreement and the other Loan
                   Documents by or through agents or attorneys-in-fact and shall
                   be entitled to advice of counsel concerning all matters
                   pertaining to such duties. The Administrative Agent shall not
                   be responsible for the negligence or misconduct of any agents
                   or attorneys in-fact selected by it with reasonable care.

              9.3  Exculpatory Provisions. Neither any Agent nor any of their
                   respective officers, directors, employees, agents,
                   attorneys-in-fact or affiliates shall be (i) liable for any
                   action lawfully taken or omitted to be taken by it or such
                   Person under or in connection with this Agreement or any
                   other Loan Document (except to the extent that any of the
                   foregoing are found by a final and nonappealable decision of
                   a court of competent jurisdiction to have resulted from its
                   or such Person's own gross negligence or willful misconduct)
                   or (ii) responsible in any manner to any of the Lenders for
                   any recitals, 



                                      -96-
<PAGE>   102

                   statements, representations or warranties made by any Loan
                   Party or any officer thereof contained in this Agreement or
                   any other Loan Document or in any certificate, report,
                   statement or other document referred to or provided for in,
                   or received by the Agents under or in connection with, this
                   Agreement or any other Loan Document or for the value,
                   validity, effectiveness, genuineness, enforceability or
                   sufficiency of this Agreement or any other Loan Document or
                   for any failure of any Loan Party a party thereto to perform
                   its obligations hereunder or thereunder. The Agents shall not
                   be under any obligation to any Lender to ascertain or to
                   inquire as to the observance or performance of any of the
                   agreements contained in, or conditions of, this Agreement or
                   any other Loan Document, or to inspect the properties, books
                   or records of any Loan Party.

              9.4  Reliance by Administrative Agent. The Administrative Agent
                   shall be entitled to rely, and shall be fully protected in
                   relying, upon any instrument, writing, resolution, notice,
                   consent, certificate, affidavit, letter, telecopy, telex or
                   teletype message, statement, order or other document or
                   conversation believed by it to be genuine and correct and to
                   have been signed, sent or made by the proper Person or
                   Persons and upon advice and statements of legal counsel
                   (including counsel to the Borrower), independent accountants
                   and other experts selected by the Administrative Agent. The
                   Administrative Agent may deem and treat the payee of any Note
                   as the owner thereof for all purposes unless a written notice
                   of assignment, negotiation or transfer thereof shall have
                   been filed with the Administrative Agent. The Administrative
                   Agent shall be fully justified in failing or refusing to take
                   any action under this Agreement or any other Loan Document
                   unless it shall first receive such advice or concurrence of
                   the Required Lenders (or, if so specified by this Agreement,
                   all Lenders) as it deems appropriate or it shall first be
                   indemnified to its satisfaction by the Lenders against any
                   and all liability and expense that may be incurred by it by
                   reason of taking or continuing to take any such action. The
                   Administrative Agent shall in all cases be fully protected in
                   acting, or in refraining from acting, under this Agreement
                   and the other Loan Documents in accordance with a request of
                   the Required Lenders (or, if so specified by this Agreement,
                   all Lenders), and such request and any action taken or
                   failure to act pursuant thereto shall be binding upon all the
                   Lenders and all future holders of the Loans.

              9.5  Notice of Default. The Administrative Agent shall not be
                   deemed to have knowledge or notice of the occurrence of any
                   Default or Event of Default hereunder unless the
                   Administrative Agent has 



                                      -97-
<PAGE>   103

                   received notice from a Lender, the Borrower referring to this
                   Agreement, describing such Default or Event of Default and
                   stating that such notice is a "notice of default". In the
                   event that the Administrative Agent receives such a notice,
                   the Administrative Agent shall give notice thereof to the
                   Lenders. The Administrative Agent shall take such action with
                   respect to such Default or Event of Default as shall be
                   reasonably directed by the Required Lenders (or, if so
                   specified by this Agreement, all Lenders); provided that
                   unless and until the Administrative Agent shall have received
                   such directions, the Administrative Agent may (but shall not
                   be obligated to) take such action, or refrain from taking
                   such action, with respect to such Default or Event of Default
                   as it shall deem advisable in the best interests of the
                   Lenders.

              9.6  Non-Reliance on Agents and Other Lenders. Each Lender
                   expressly acknowledges that neither the Agents nor any of
                   their respective officers, directors, employees, agents,
                   attorneys-in-fact or affiliates have made any representations
                   or warranties to it and that no act by any Agent hereinafter
                   taken, including any review of the affairs of a Loan Party or
                   any affiliate of a Loan Party, shall be deemed to constitute
                   any representation or warranty by any Agent to any Lender.
                   Each Lender represents to the Agents that it has,
                   independently and without reliance upon any Agent or any
                   other Lender, and based on such documents and information as
                   it has deemed appropriate, made its own appraisal of and
                   investigation into the business, operations, property,
                   financial and other condition and creditworthiness of the
                   Loan Parties and their affiliates and made its own decision
                   to make its Loans hereunder and enter into this Agreement.
                   Each Lender also represents that it will, independently and
                   without reliance upon any Agent or any other Lender, and
                   based on such documents and information as it shall deem
                   appropriate at the time, continue to make its own credit
                   analysis, appraisals and decisions in taking or not taking
                   action under this Agreement and the other Loan Documents, and
                   to make such investigation as it deems necessary to inform
                   itself as to the business, operations, property, financial
                   and other condition and creditworthiness of the Loan Parties
                   and their affiliates. Except for notices, reports and other
                   documents expressly required to be furnished to the Lenders
                   by the Administrative Agent hereunder, the Administrative
                   Agent shall not have any duty or responsibility to provide
                   any Lender with any credit or other information concerning
                   the business, operations, property, condition (financial or
                   otherwise), prospects or creditworthiness of any Loan Party
                   or any affiliate of a Loan Party that may come into the
                   possession of the Administrative 



                                      -98-
<PAGE>   104

                   Agent or any of its officers, directors, employees, agents,
                   attorneys-in-fact or affiliates.

              9.7  Indemnification. The Lenders agree to indemnify each Agent in
                   its capacity as such (to the extent not reimbursed by the
                   Borrower and without limiting the obligation of the Borrower
                   to do so), ratably according to their respective Aggregate
                   Exposure Percentages in effect on the date on which
                   indemnification is sought under this Section (or, if
                   indemnification is sought after the date upon which the
                   Commitments shall have terminated and the Loans shall have
                   been paid in full, ratably in accordance with such Aggregate
                   Exposure Percentages immediately prior to such date), from
                   and against any and all liabilities, obligations, losses,
                   damages, penalties, actions, judgments, suits, costs,
                   expenses or disbursements of any kind whatsoever that may at
                   any time (whether before or after the payment of the Loans)
                   be imposed on, incurred by or asserted against such Agent in
                   any way relating to or arising out of, the Commitments, this
                   Agreement, any of the other Loan Documents or any documents
                   contemplated by or referred to herein or therein or the
                   transactions contemplated hereby or thereby or any action
                   taken or omitted by such Agent under or in connection with
                   any of the foregoing; provided that no Lender shall be liable
                   for the payment of any portion of such liabilities,
                   obligations, losses, damages, penalties, actions, judgments,
                   suits, costs, expenses or disbursements that are found by a
                   final and nonappealable decision of a court of competent
                   jurisdiction to have resulted from such Agent's gross
                   negligence or willful misconduct. The agreements in this
                   Section shall survive the payment of the Loans and all other
                   amounts payable hereunder.

              9.8  Agent in Its Individual Capacity. Each Agent and its
                   affiliates may make loans to, accept deposits from and
                   generally engage in any kind of business with any Loan Party
                   as though such Agent was not an Agent. With respect to its
                   Loans made or renewed by it and with respect to any Letter of
                   Credit issued or participated in by it, each Agent shall have
                   the same rights and powers under this Agreement and the other
                   Loan Documents as any Lender and may exercise the same as
                   though it were not an Agent, and the terms "Lender" and
                   "Lenders" shall include each Agent in its individual
                   capacity.

              9.9  Successor Administrative Agent. The Administrative Agent may
                   resign as Administrative Agent upon 10 days' notice to the
                   Lenders and the Borrower. If the Administrative Agent shall
                   resign as Administrative Agent under this Agreement and the
                   other Loan 



                                      -99-
<PAGE>   105

                   Documents, then the Required Lenders shall appoint from among
                   the Lenders a successor agent for the Lenders, which
                   successor agent shall (unless an Event of Default under
                   Section 8(a) or Section 8(f) with respect to the Borrower
                   shall have occurred and be continuing) be subject to approval
                   by the Borrower (which approval shall not be unreasonably
                   withheld or delayed), whereupon such successor agent shall
                   succeed to the rights, powers and duties of the
                   Administrative Agent, and the term "Administrative Agent"
                   shall mean such successor agent effective upon such
                   appointment and approval, and the former Administrative
                   Agent's rights, powers and duties as Administrative Agent
                   shall be terminated, without any other or further act or deed
                   on the part of such former Administrative Agent or any of the
                   parties to this Agreement or any holders of the Loans. If no
                   successor agent has accepted appointment as Administrative
                   Agent by the date that is 10 days following a retiring
                   Administrative Agent's notice of resignation, the retiring
                   Administrative Agent's resignation shall nevertheless
                   thereupon become effective and the Lenders shall assume and
                   perform all of the duties of the Administrative Agent
                   hereunder until such time, if any, as the Required Lenders
                   appoint a successor agent as provided for above. After any
                   retiring Administrative Agent's resignation as Administrative
                   Agent, the provisions of this Section 9 shall inure to its
                   benefit as to any actions taken or omitted to be taken by it
                   while it was Administrative Agent under this Agreement and
                   the other Loan Documents.

              9.10 Authorization to Release Guarantees and Liens.
                   Notwithstanding anything to the contrary contained herein or
                   in any other Loan Document, the Administrative Agent is
                   hereby irrevocably authorized by each of the Lenders (without
                   requirement of notice to or consent of any Lender except as
                   expressly required by Section 10.1) to take any action
                   requested by the Borrower having the effect of releasing any
                   Collateral or guarantee obligations to the extent necessary
                   to permit consummation of any transaction not prohibited by
                   any Loan Document or that has been consented to in accordance
                   with Section 10.1.

              9.11 Documentation Agent and Syndication Agent. Neither the
                   Documentation Agent nor the Syndication Agent shall have any
                   duties or responsibilities hereunder in its capacity as such.



                                     -100-
<PAGE>   106

                           SECTION 10. MISCELLANEOUS

              10.1 Amendments and Waivers. Neither this Agreement, any other
                   Loan Document, nor any terms hereof or thereof may be
                   amended, supplemented or modified except in accordance with
                   the provisions of this Section 10.1. The Required Lenders and
                   each Loan Party party to the relevant Loan Document may, or,
                   with the written consent of the Required Lenders, the
                   Administrative Agent and each Loan Party party to the
                   relevant Loan Document may, from time to time, (a) enter into
                   written amendments, supplements or modifications hereto and
                   to the other Loan Documents for the purpose of adding any
                   provisions to this Agreement or the other Loan Documents or
                   changing in any manner the rights of the Lenders or of the
                   Loan Parties hereunder or thereunder or (b) waive, on such
                   terms and conditions as the Required Lenders or the
                   Administrative Agent, as the case may be, may specify in such
                   instrument, any of the requirements of this Agreement or the
                   other Loan Documents or any Default or Event of Default and
                   its consequences; provided, however, that no such waiver and
                   no such amendment, supplement or modification shall (i)
                   forgive the principal amount or extend the final scheduled
                   date of maturity of any Loan, extend the scheduled date of
                   any amortization payment in respect of any Term Loan, reduce
                   the stated rate of any interest or fee payable hereunder or
                   extend the scheduled date of any payment thereof, or increase
                   the amount or extend the expiration date of any Lender's
                   Revolving Commitment or LC/MD Commitment, in each case
                   without the consent of each Lender directly affected thereby;
                   (ii) amend, modify or waive any provision of this Section
                   10.1 or reduce any percentage specified in the definition of
                   Required Lenders or Required Prepayment Lenders, consent to
                   the assignment or transfer by the Borrower of any of its
                   rights and obligations under this Agreement and the other
                   Loan Documents, release all or substantially all of the
                   Collateral or release all or substantially all of the
                   Subsidiary Guarantors from their obligations under the
                   Guarantee and Collateral Agreement, in each case without the
                   written consent of all Lenders; (iii) reduce the percentage
                   specified in the definition of Majority Facility Lenders with
                   respect to any Facility without the written consent of all
                   Lenders under such Facility; (iv) amend, modify or waive any
                   provision of Section 9 without the written consent of the
                   Administrative Agent; (v) amend, modify or waive any
                   provision of Section 2.3 or 2.6 without the written consent
                   of the Swingline Lender; or (vi) amend, modify or waive any
                   provision of Section 3 without the written consent of the
                   Issuing Lender. Any such waiver and any such amendment,
                   supplement or modification shall apply equally to each of the
                   Lenders and shall be binding upon the Loan Parties, the



                                     -101-
<PAGE>   107

                   Lenders, the Administrative Agent and all future holders of
                   the Loans. In the case of any waiver, the Loan Parties, the
                   Lenders and the Administrative Agent shall be restored to
                   their former position and rights hereunder and under the
                   other Loan Documents, and any Default or Event of Default
                   waived shall be deemed to be cured and not continuing; but no
                   such waiver shall extend to any subsequent or other Default
                   or Event of Default, or impair any right consequent thereon.

              10.2 Notices. All notices, requests and demands to or upon the
                   respective parties hereto to be effective shall be in writing
                   (including by telecopy), and, unless otherwise expressly
                   provided herein, shall be deemed to have been duly given or
                   made when delivered, or three Business Days after being
                   deposited in the mail, postage prepaid, or, in the case of
                   telecopy notice, when received, addressed as follows in the
                   case of the Borrower and the Administrative Agent, and as set
                   forth in an administrative questionnaire delivered to the
                   Administrative Agent in the case of the Lenders, or to such
                   other address as may be hereafter notified by the respective
                   parties hereto:

The Borrower:                   Renters Choice, Inc.
                                13800 Montfort Drive
                                Suite 300
                                Dallas, Texas 75240
                                Attention: J. Ernest Talley
                                Telecopy: (972) 701-0360
                                Telephone: (972) 419-2611

             with a copy to:    Winstead Sechrest & Minick P.C.
                                1201 Elm Street
                                5400 Renaissance Tower
                                Dallas, Texas 75270
                                Attention: Thomas W. Hughes
                                Telecopy: (214) 745-5390
                                Telephone: (214) 745-5201

The Administrative Agent:       The Chase Manhattan Bank
                                One Chase Manhattan Plaza, 8th Floor
                                New York, New York 10081
                                Attention: Agency Services,
                                Janet Belden
                                Telecopy: (212) 552-5658
                                Telephone: (212) 552-7277



                                     -102-
<PAGE>   108

             with copies to:    Chase Securities Inc.
                                270 Park Avenue, 4th Floor
                                New York, New York 10017
                                Attention: Kathy Duncan
                                Telecopy: (212) 972-0009
                                Telephone: (212) 270-5808

                           and

                                Chase Manhattan Bank Delaware
                                1201 Market Street, 8th Floor
                                Wilmington, Delaware 19801
                                Attention: Letter of Credit Department,
                                Michael Handago
                                Telecopy: (302) 428-3390 / 984-4904
                                Telephone: (302) 428-3311

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

              10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
                   delay in exercising, on the part of the Administrative Agent
                   or any Lender, any right, remedy, power or privilege
                   hereunder or under the other Loan Documents shall operate as
                   a waiver thereof; nor shall any single or partial exercise of
                   any right, remedy, power or privilege hereunder preclude any
                   other or further exercise thereof or the exercise of any
                   other right, remedy, power or privilege. The rights,
                   remedies, powers and privileges herein provided are
                   cumulative and not exclusive of any rights, remedies, powers
                   and privileges provided by law.

              10.4 Survival of Representations and Warranties. All
                   representations and warranties made hereunder, in the other
                   Loan Documents and in any document, certificate or statement
                   delivered pursuant hereto or in connection herewith shall
                   survive the execution and delivery of this Agreement and the
                   making of the Loans and other extensions of credit hereunder.

              10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
                   or reimburse the Administrative Agent for all its
                   out-of-pocket costs and expenses incurred in connection with
                   the development, preparation and execution of, and any
                   amendment, supplement or modification to, 



                                     -103-
<PAGE>   109

                   this Agreement and the other Loan Documents and any other
                   documents prepared in connection herewith or therewith, and
                   the consummation and administration of the transactions
                   contemplated hereby and thereby, including the reasonable
                   fees and disbursements of counsel to the Administrative Agent
                   and filing and recording fees and expenses, with statements
                   with respect to the foregoing to be submitted to the Borrower
                   prior to the Closing Date (in the case of amounts to be paid
                   on the Closing Date) and from time to time thereafter on a
                   quarterly basis or such other periodic basis as the
                   Administrative Agent shall deem appropriate, (b) to pay or
                   reimburse each Lender and the Administrative Agent (in the
                   case of each Lender, after the occurrence and during the
                   continuance of an Event of Default) for all its costs and
                   expenses incurred in connection with the enforcement or
                   preservation of any rights under this Agreement, the other
                   Loan Documents and any such other documents, including the
                   fees and disbursements of counsel (including the allocated
                   fees and expenses of in-house counsel (but not both outside
                   and in-house counsel)) to each Lender and of counsel to the
                   Administrative Agent, (c) to pay, indemnify, and hold each
                   Lender and the Administrative Agent harmless from, any and
                   all recording and filing fees and any and all liabilities
                   with respect to, or resulting from any delay in paying,
                   stamp, excise and other taxes, if any, that may be payable or
                   determined to be payable in connection with the execution and
                   delivery of, or consummation or administration of any of the
                   transactions contemplated by, or any amendment, supplement or
                   modification of, or any waiver or consent under or in respect
                   of, this Agreement, the other Loan Documents and any such
                   other documents, and (d) to pay, indemnify, and hold each
                   Lender and the Administrative Agent and their respective
                   officers, directors, trustees, employees, affiliates, agents
                   and controlling persons (each, an "Indemnitee") harmless from
                   and against any and all other liabilities, obligations,
                   losses, damages, penalties, actions, judgments, suits, costs,
                   expenses or disbursements of any kind or nature whatsoever
                   with respect to the execution, delivery, enforcement,
                   performance and administration of this Agreement, the other
                   Loan Documents and any such other documents, including any of
                   the foregoing relating to the use of proceeds of the Loans or
                   the violation of, noncompliance with or liability under, any
                   Environmental Law applicable to the operations of the
                   Borrower any of its Subsidiaries or any of the Properties and
                   the reasonable fees and expenses of legal counsel in
                   connection with claims, actions or proceedings by any
                   Indemnitee against any Loan Party under any Loan Document
                   (all the foregoing in this clause (d), collectively, the
                   "Indemnified Liabilities"), provided, that the 



                                     -104-
<PAGE>   110

                   Borrower shall have no obligation hereunder to any Indemnitee
                   with respect to Indemnified Liabilities to the extent such
                   Indemnified Liabilities arise from the gross negligence or
                   willful misconduct of such Indemnitee. Without limiting the
                   foregoing, and to the extent permitted by applicable law, the
                   Borrower agrees not to assert and to cause its Subsidiaries
                   not to assert, and hereby waives and agrees to cause its
                   Subsidiaries to so waive, all rights for contribution or any
                   other rights of recovery with respect to all claims, demands,
                   penalties, fines, liabilities, settlements, damages, costs
                   and expenses of whatever kind or nature, under or related to
                   Environmental Laws, that any of them might have by statute or
                   otherwise against any Indemnitee. All amounts due under this
                   Section 10.5 shall be payable not later than 10 Business Days
                   after written demand therefor. Statements payable by the
                   Borrower pursuant to this Section 10.5 shall be submitted to
                   Danny Z. Wilbanks (Telephone No. 972-419-2652) (Telecopy No.
                   972-701-0360), at the address of the Borrower set forth in
                   Section 10.2, or to such other Person or address as may be
                   hereafter designated by the Borrower in a written notice to
                   the Administrative Agent. The agreements in this Section 10.5
                   shall survive repayment of the Loans and all other amounts
                   payable hereunder.

              10.6 Successors and Assigns; Participations and Assignments. This
                   Agreement shall be binding upon and inure to the benefit of
                   the Borrower, the Lenders, the Administrative Agent, all
                   future holders of the Loans and their respective successors
                   and assigns, except that the Borrower may not assign or
                   transfer any of its rights or obligations under this
                   Agreement without the prior written consent of each Lender.

                   (b)   Any Lender may, without the consent of the Borrower, in
                         accordance with applicable law, at any time sell to one
                         or more banks, financial institutions or other entities
                         (each, a "Participant") participating interests in any
                         Loan owing to such Lender, any Commitment of such
                         Lender or any other interest of such Lender hereunder
                         and under the other Loan Documents. In the event of any
                         such sale by a Lender of a participating interest to a
                         Participant, such Lender's obligations under this
                         Agreement to the other parties to this Agreement shall
                         remain unchanged, such Lender shall remain solely
                         responsible for the performance thereof, such Lender
                         shall remain the holder of any such Loan for all
                         purposes under this Agreement and the other Loan
                         Documents, and the 



                                     -105-
<PAGE>   111

                         Borrower and the Administrative Agent shall continue to
                         deal solely and directly with such Lender in connection
                         with such Lender's rights and obligations under this
                         Agreement and the other Loan Documents. In no event
                         shall any Participant under any such participation have
                         any right to approve any amendment or waiver of any
                         provision of any Loan Document, or any consent to any
                         departure by any Loan Party therefrom, except to the
                         extent that such amendment, waiver or consent would
                         reduce the principal of, or interest on, the Loans or
                         any fees payable hereunder, or postpone the date of the
                         final maturity of the Loans, in each case to the extent
                         subject to such participation. The Borrower agrees that
                         if amounts outstanding under this Agreement and the
                         Loans are due or unpaid, or shall have been declared or
                         shall have become due and payable upon the occurrence
                         of an Event of Default, each Participant shall, to the
                         maximum extent permitted by applicable law, be deemed
                         to have the right of setoff in respect of its
                         participating interest in amounts owing under this
                         Agreement to the same extent as if the amount of its
                         participating interest were owing directly to it as a
                         Lender under this Agreement, provided that, in
                         purchasing such participating interest, such
                         Participant shall be deemed to have agreed to share
                         with the Lenders the proceeds thereof as provided in
                         Section 10.7(a) as fully as if it were a Lender
                         hereunder. The Borrower also agrees that each
                         Participant shall be entitled to the benefits of
                         Sections 2.18, 2.19 and 2.20 with respect to its
                         participation in the Commitments and the Loans
                         outstanding from time to time as if it was a Lender;
                         provided that, in the case of Section 2.19, such
                         Participant shall have complied with the requirements
                         of said Section and provided, further, that no
                         Participant shall be entitled to receive any greater
                         amount pursuant to any such Section than the transferor
                         Lender would have been entitled to receive in respect
                         of the amount of the participation transferred by such
                         transferor Lender to such Participant had no such
                         transfer occurred.

                   (c)   Any Lender (an "Assignor") may, in accordance with
                         applicable law, at any time and from time to time
                         assign to any Lender, any affiliate thereof or an
                         Approved Fund with respect thereto or, with the consent
                         of the Borrower and the Administrative Agent (which, in
                         each case, shall not be unreasonably withheld or
                         delayed), to an additional bank, financial institution
                         or other entity (an "Assignee") all or any part of 



                                     -106-
<PAGE>   112

                         its rights and obligations under this Agreement
                         pursuant to an Assignment and Acceptance, executed by
                         such Assignee, such Assignor and any other Person whose
                         consent is required pursuant to this paragraph, and
                         delivered to the Administrative Agent for its
                         acceptance and recording in the Register; provided that
                         no such assignment to an Assignee (other than any
                         Lender, any affiliate thereof or an Approved Fund with
                         respect thereto) shall be in an aggregate principal
                         amount of less than $5,000,000 (other than in the case
                         of an assignment of all of a Lender's interests under
                         this Agreement), unless otherwise agreed by the
                         Borrower and the Administrative Agent. Any such
                         assignment need not be ratable as among the Facilities.
                         Upon such execution, delivery, acceptance and
                         recording, from and after the effective date determined
                         pursuant to such Assignment and Acceptance, (x) the
                         Assignee thereunder shall be a party hereto and, to the
                         extent provided in such Assignment and Acceptance, have
                         the rights and obligations of a Lender hereunder with a
                         Commitment and/or Loans as set forth therein, and (y)
                         the Assignor thereunder shall, to the extent provided
                         in such Assignment and Acceptance, be released from its
                         obligations under this Agreement (and, in the case of
                         an Assignment and Acceptance covering all of an
                         Assignor's rights and obligations under this Agreement,
                         such Assignor shall cease to be a party hereto).
                         Notwithstanding any provision of this Section 10.6, the
                         consent of the Borrower shall not be required for any
                         assignment that occurs when an Event of Default
                         pursuant to Section 8(f) shall have occurred and be
                         continuing with respect to the Borrower.

                   (d)   The Administrative Agent shall, on behalf of the
                         Borrower, maintain at its address referred to in
                         Section 10.2 a copy of each Assignment and Acceptance
                         delivered to it and a register (the "Register") for the
                         recordation of the names and addresses of the Lenders
                         and the Commitment of, and the principal amount of the
                         Loans owing to, each Lender from time to time. The
                         entries in the Register shall be conclusive, in the
                         absence of manifest error, and the Borrower, each other
                         Loan Party, the Administrative Agent and the Lenders
                         shall treat each Person whose name is recorded in the
                         Register as the owner of the Loans and any Notes
                         evidencing the Loans recorded therein for all purposes
                         of this Agreement. Any assignment of any Loan, whether
                         or not evidenced by a Note, shall be effective only
                         upon appropriate entries with respect thereto being
                         made in the Register (and each Note shall expressly so
                         provide).



                                     -107-
<PAGE>   113

                   (e)   Upon its receipt of an Assignment and Acceptance
                         executed by an Assignor, an Assignee and any other
                         Person whose consent is required by Section 10.6(c),
                         together with payment to the Administrative Agent of a
                         registration and processing fee of $3,500, the
                         Administrative Agent shall (i) promptly accept such
                         Assignment and Acceptance and (ii) record the
                         information contained therein in the Register on the
                         effective date determined pursuant thereto; provided,
                         however, that no such fee shall be payable in the case
                         of an assignment by a Lender to an affiliate of such
                         Lender or an Approved Fund with respect to such Lender;
                         and provided, further, that, in the case of
                         contemporaneous assignments by a Lender to more than
                         one fund managed by the same investment advisor (which
                         funds are not then Lenders hereunder), only a single
                         such fee shall be payable for all such contemporaneous
                         assignments.

                   (f)   For avoidance of doubt, the parties to this Agreement
                         acknowledge that the provisions of this Section 10.6
                         concerning assignments of Loans and Notes relate only
                         to absolute assignments and that such provisions do not
                         prohibit assignments creating security interests,
                         including any pledge or assignment by a Lender of any
                         Loan or Note to any Federal Reserve Bank in accordance
                         with applicable law.

                   (g)   The Borrower, upon receipt of written notice from the
                         relevant Lender, agrees to issue Notes to any Lender
                         requiring Notes to facilitate transactions of the type
                         described in paragraph (f) above.

              10.7 Adjustments; Setoff. Except to the extent that this Agreement
                   expressly provides for payments to be allocated to a
                   particular Lender or to the Lenders under a particular
                   Facility, if any Lender (a "Benefitted Lender") shall, at any
                   time after the Loans and other amounts payable hereunder
                   shall immediately become due and payable pursuant to Section
                   8, receive any payment of all or part of the Obligations
                   owing to it, or receive any collateral in respect thereof
                   (whether voluntarily or involuntarily, by setoff, pursuant to
                   events or proceedings of the nature referred to in Section
                   8(f), or otherwise), in a greater proportion than any such
                   payment to or collateral received by any other Lender, if
                   any, in respect of the Obligations owing to such other
                   Lender, such Benefitted Lender shall purchase for cash from
                   the other Lenders a participating interest in such portion of
                   the Obligations owing to each such other Lender, or shall
                   provide such other Lenders with the benefits of any such
                   collateral, as shall be necessary to cause such Benefitted
                   Lender to share the excess payment or benefits of such
                   collateral ratably with each of the 



                                     -108-
<PAGE>   114

                   Lenders; provided, however, that if all or any portion of
                   such excess payment or benefits is thereafter recovered from
                   such Benefitted Lender, such purchase shall be rescinded, and
                   the purchase price and benefits returned, to the extent of
                   such recovery, but without interest.

                   (b)   In addition to any rights and remedies of the Lenders
                         provided by law, each Lender shall have the right,
                         without prior notice to the Borrower, any such notice
                         being expressly waived by the Borrower to the extent
                         permitted by applicable law, upon any amount becoming
                         due and payable by the Borrower hereunder (whether at
                         the stated maturity, by acceleration or otherwise), to
                         set off and appropriate and apply against such amount
                         any and all deposits (general or special, time or
                         demand, provisional or final), in any currency, and any
                         other credits, indebtedness or claims, in any currency,
                         in each case whether direct or indirect, absolute or
                         contingent, matured or unmatured, at any time held or
                         owing by such Lender or any branch or agency thereof to
                         or for the credit or the account of the Borrower. 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.

              10.8  Counterparts. This Agreement may be executed by one or more
                    of the parties to this Agreement on any number of separate
                    counterparts, and all of said counterparts taken together
                    shall be deemed to constitute one and the same instrument.
                    Delivery of an executed signature page of this Agreement by
                    facsimile transmission shall be effective as delivery of a
                    manually executed counterpart hereof. A set of the copies of
                    this Agreement signed by all the parties shall be lodged
                    with the Borrower and the Administrative Agent.

              10.9  Severability. Any provision of this Agreement that is
                    prohibited or unenforceable in any jurisdiction shall, as to
                    such jurisdiction, be ineffective to the extent of such
                    prohibition or unenforceability without invalidating the
                    remaining provisions hereof, and any such prohibition or
                    unenforceability in any jurisdiction shall not invalidate or
                    render unenforceable such provision in any other
                    jurisdiction.

              10.10 Integration. This Agreement and the other Loan Documents
                    represent the agreement of the Borrower, the Administrative
                    Agent and the Lenders with respect to the subject matter
                    hereof, and there



                                     -109-
<PAGE>   115

                    are no promises, undertakings, representations or warranties
                    by the Administrative Agent or any Lender relative to
                    subject matter hereof not expressly set forth or referred to
                    herein or in the other Loan Documents.

              10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
                    OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY,
                    AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
                    THE STATE OF NEW YORK.

              10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
                    irrevocably and unconditionally:

                    (a)  submits for itself and its property in any legal action
                         or proceeding relating to this Agreement and the other
                         Loan Documents to which it is a party, or for
                         recognition and enforcement of any judgment in respect
                         thereof, to the non-exclusive general jurisdiction of
                         the courts of the State of New York, the courts of the
                         United States for the Southern District of New York,
                         and appellate courts from any thereof;

                    (b)  consents that any such action or proceeding may be
                         brought in such courts and waives any objection that it
                         may now or hereafter have to the venue of any such
                         action or proceeding in any such court or that such
                         action or proceeding was brought in an inconvenient
                         court and agrees not to plead or claim the same;

                    (c)  agrees that service of process in any such action or
                         proceeding may be effected by mailing a copy thereof by
                         registered or certified mail (or any substantially
                         similar form of mail), postage prepaid, to the Borrower
                         at its address set forth in Section 10.2 or at such
                         other address of which the Administrative Agent shall
                         have been notified pursuant thereto;

                    (d)  agrees that nothing herein shall affect the right to
                         effect service of process in any other manner permitted
                         by law or shall limit the right to sue in any other
                         jurisdiction; and

                    (e)  waives, to the maximum extent not prohibited by law,
                         any right it may have to claim or recover in any legal
                         action or proceeding referred to in this Section any
                         special, exemplary, punitive or consequential damages.



                                     -110-
<PAGE>   116

              10.13 Acknowledgements. The Borrower hereby acknowledges that:

                    (a)  it has been advised by counsel in the negotiation,
                         execution and delivery of this Agreement and the other
                         Loan Documents;

                    (b)  neither the Administrative Agent nor any Lender has any
                         fiduciary relationship with or duty to the Borrower
                         arising out of or in connection with this Agreement or
                         any of the other Loan Documents, and the relationship
                         between Administrative Agent and Lenders, on one hand,
                         and the Borrower, on the other hand, in connection
                         herewith or therewith is solely that of debtor and
                         creditor; and

                    (c)  no joint venture is created hereby or by the other Loan
                         Documents or otherwise exists by virtue of the
                         transactions contemplated hereby among the Lenders or
                         among the Borrower and the Lenders.

              10.14 Confidentiality. Each of the Administrative Agent and each
                    Lender agrees to keep confidential all non-public
                    information provided to it by any Loan Party pursuant to
                    this Agreement that is designated by such Loan Party as
                    confidential; provided that nothing herein shall prevent the
                    Administrative Agent or any Lender from disclosing any such
                    information (a) to the Administrative Agent, any other
                    Lender or any affiliate or Approved Fund of any Lender, (b)
                    to any Transferee or prospective Transferee that agrees to
                    comply with the provisions of this Section, (c) to its
                    employees, directors, trustees, agents, attorneys,
                    accountants, investment advisors and other professional
                    advisors or those of any of its affiliates, (d) upon the
                    request or demand of any Governmental Authority, (e) in
                    response to any order of any court or other Governmental
                    Authority or as may otherwise be required pursuant to any
                    Requirement of Law, (f) if requested or required to do so in
                    connection with any litigation or similar proceeding,
                    provided that in the case of any such request or
                    requirement, the Administrative Agent or Lender (as
                    applicable) so requested or required to make such disclosure
                    shall as soon as practicable notify the Borrower thereof,
                    (g) that has been publicly disclosed, (h) to the National
                    Association of Insurance Commissioners or any similar
                    organization or any nationally recognized rating agency that
                    requires access to information about a Lender's investment
                    portfolio in connection with ratings issued with respect to
                    such Lender, or (i) in connection with the exercise of any
                    remedy hereunder or under any other Loan Document.



                                     -111-
<PAGE>   117

              10.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
                    AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
                    WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
                    RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
                    FOR ANY COUNTERCLAIM THEREIN.



                                     -112-
<PAGE>   118

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



                                       RENTERS CHOICE, INC.                    
                                                                               
                                       By:                                     
                                           ------------------------------------
                                          Name:                                
                                          Title:                               
                                                                               
                                                                               
                                       THE CHASE MANHATTAN BANK, as            
                                       Administrative Agent and as a Lender    
                                                                               
                                       By:                                     
                                           ------------------------------------
                                          Name:                                
                                          Title:                               
                                                                               
                                                                               
                                       NATIONSBANK, N.A., as Syndication Agent 
                                        and as a Lender                        
                                                                               
                                       By:                                     
                                           ------------------------------------
                                          Name:                                
                                          Title:                               
                                                                               
                                                                               
                                       COMERICA BANK, as Documentation Agent   
                                        and as a Lender                        
                                                                               
                                       By:                                     
                                           ------------------------------------
                                          Name:                                
                                          Title:                               





                                     -113-
<PAGE>   119

                                                                         Annex A

                                  PRICING GRID

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Consolidated       Applicable Margin for              Applicable Margin for             Commitment 
Leverage Ratio     Eurodollar Loans                   ABR Loans                         Fee Rate
                ---------------------------------------------------------------------
                   A/RC/LCMD        B          C      A/RC/LCMD        B        C
---------------------------------------------------------------------------------------------------

<S>                <C>             <C>       <C>      <C>             <C>      <C>      <C>   
Greater than or    2.25%           2.50%     2.75%    1.25%           1.50%    1.75%    0.500%
equal to
4.00 to 1.0

Greater than or    2.00%           2.25%     2.50%    1.00%           1.25%    1.50%    0.375%
equal to
3.50 to 1.0
and less than
4.00 to 1.0

Greater than or    1.75%           2.25%     2.50%    0.75%           1.25%    1.50%    0.375%
equal to
3.00 to 1.0
and less than
3.50 to 1.0

Greater than or    1.50%           2.00%     2.25%    0.50%           1.00%    1.25%    0.300%
equal to
2.50 to 1.0
and less than
3.00 to 1.0

Less than          1.25%           1.75%     2.00%    0.25%           0.75%    1.00%    0.250%
2.50 to 1.0
---------------------------------------------------------------------------------------------------
</TABLE>

         As used above, "A/RC/LCMD" refers to Tranche A Term Loans, Revolving
Credit Loans, Swing Line Loans and LC/MD Loans, "B" refers to Tranche B Term
Loans and "C" refers to Tranche C Term Loans.

         Changes in the Applicable Margin resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "Adjustment
Date") on which financial statements are delivered to the Lenders pursuant to
Section 6.1 (but in any event not later than the 45th day after the end of each
of the first three quarterly periods of each fiscal year or the 90th day after
the end of each fiscal year, as the case may be) and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Leverage Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 4.00 to 1.0. In addition, at any time prior to the first Adjustment
Date occurring after two full fiscal quarters have been completed after the
Closing Date and at all times while an Event of Default shall have occurred and
be continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.00 to 1.0. Each determination of the
Consolidated Leverage Ratio pursuant to this pricing grid shall be made with
respect to (or, in the case of Consolidated Funded Debt, as at the end of) the
period of four consecutive fiscal quarters of the Borrower ending at the end of
the period covered by the relevant financial statements.



                                     -114-
