1
                                                                    Exhibit 99.2

                           FIVE-YEAR CREDIT AGREEMENT

                            Dated as of May 23, 2001

                  THE KROGER CO., an Ohio corporation (the "BORROWER"), the
banks, financial institutions and other institutional lenders (the "INITIAL
LENDERS") listed on the signature pages hereof, and CITIBANK, N.A. ("CITIBANK"),
as an Issuing Bank (as defined below) and as an administrative agent (in such
capacity, an "ADMINISTRATIVE AGENT") for the Lenders (as hereinafter defined)
and the Issuing Banks and paying agent (in such capacity, the "PAYING AGENT")
for the Lenders and the Issuing Banks, THE CHASE MANHATTAN BANK ("CHASE"), as an
Issuing Bank and as an administrative agent (in such capacity, an
"ADMINISTRATIVE AGENT"; the Administrative Agents and the Paying Agent are,
collectively, the "AGENTS") for the Lenders and the Issuing Banks, and BANK OF
AMERICA, N.A., BANK ONE, NA and THE BANK OF NEW YORK, as co-syndication agents
for the Lenders and the Issuing Banks, agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. CERTAIN DEFINED TERMS.

                    As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

                  "ACQUIRED EBITDA" means, for any period, with respect to any
         Acquired Entity, (a) the sum of (i) Acquired Net Income for such
         period, (ii) depreciation and amortization expense for such period,
         (iii) interest expense net of interest income for such period, (iv)
         Federal and state income taxes for such period as determined in
         accordance with GAAP, (v) extraordinary losses that have been included
         in the calculation of Acquired Net Income for such period, (vi) LIFO
         charges included in the calculation of Acquired Net Income for such
         period and (vii) non-cash charges made with respect to "expected post
         retirement benefit obligations" within the meaning of Statement of
         Financial Accounting Standards No. 106 MINUS (b) the sum of (i)
         extraordinary gains that have been included in the calculation of
         Acquired Net Income for such period and (ii) LIFO credits included in
         the calculation of Acquired Net Income for such period.

                  "ACQUIRED ENTITY" means any Person in the Borrower's line of
         business or the assets of any Person in the Borrower's line of business
         to be invested in or acquired.

                  "ACQUIRED ENTITY FISCAL QUARTER" means, with respect to any
         Acquired Entity, any fiscal quarter of such Acquired Entity.

                  "ACQUIRED NET INCOME" means, for any period, with respect to
         any Acquired Entity, the net income of such Acquired Entity for such
         period before the payment of dividends on all capital stock, determined
         in accordance with GAAP.

                  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative
         Questionnaire in the form of Exhibit D.

                  "ADVANCE" means a Revolving Credit Advance, drawings under
         Letters of Credit or a Competitive Bid Advance.

                  "AFFILIATE" means, with respect to any designated Person, any
         other Person that has a relationship with the designated Person whereby
         either of such Persons directly or indirectly controls or is controlled
         by



   2

         or is under common control with the other of such Persons, or holds or
         beneficially owns 10% or more of the equity interest in the other
         Person or 10% or more of any class of voting securities of the other
         Person. The term "control" means the possession, directly or
         indirectly, of the power, whether or not exercised, to direct or cause
         the direction of the management or policies of any Person, whether
         through ownership of voting securities, by contract or otherwise.

                  "ANNIVERSARY DATE" means May 23, 2002 and May 23 in each
         succeeding calendar year occurring during the term of this Agreement.

                  "APPLICABLE LENDING OFFICE" means, with respect to each
         Lender, such Lender's Domestic Lending Office in the case of a Base
         Rate Advance, such Lender's Eurodollar Lending Office in the case of a
         Eurodollar Rate Advance and, in the case of a Competitive Bid Advance,
         the office of such Lender specified in a notice of such Lender to the
         Paying Agent as such Lender's Applicable Lending Office with respect to
         such Competitive Bid Advance.

                  "APPLICABLE MARGIN" means, on any date, a percentage per annum
         determined by reference to the Borrower's Performance Level in effect
         on such date as set forth below:



         -----------------------------------------------------------------------------------------------------------
                     Performance                    Applicable Margin for               Applicable Margin for
                        Level                         Base Rate Advances              Eurodollar Rate Advances,
                                                                                    Standby Letters of Credit and
                                                                                    Documentary Letters of Credit
         -----------------------------------------------------------------------------------------------------------
                                                                                         
         Level 1                                            0.000%                             0.300%
         -----------------------------------------------------------------------------------------------------------
         Level 2                                            0.000%                             0.500%
         -----------------------------------------------------------------------------------------------------------
         Level 3                                            0.000%                             0.600%
         -----------------------------------------------------------------------------------------------------------
         Level 4                                            0.000%                             0.750%
         -----------------------------------------------------------------------------------------------------------
         Level 5                                            0.000%                             0.950%
         -----------------------------------------------------------------------------------------------------------


         PROVIDED that, in each case, the Applicable Margin for Eurodollar Rate
         Advances set opposite the Performance Level 1 and Performance Level 2
         above shall be increased by 0.125% until the date that the Borrower's
         Commercial Paper is rated at least A2 by S&P or P2 by Moody's.

                  "APPLICABLE PERCENTAGE RATIO" means the ratio (determined as
         of the last day of each Fiscal Quarter for the Rolling Period ending on
         such day) of (a) Consolidated EBITDA for such Rolling Period to (b)
         Consolidated Total Interest Expense for such Rolling Period.

                  "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
         entered into by a Lender and an assignee, and to the extent required by
         Section 8.06, accepted by the Borrower and the Administrative Agents,
         in substantially the form of Exhibit C hereto or such other form as
         shall be approved by the Administrative Agents.

                  "ASSUMING LENDER" has the meaning specified in Section
         2.16(c).

                  "ASSUMPTION AGREEMENT" has the meaning specified in Section
         2.16(c).

                  "BASE RATE" means a fluctuating rate per annum equal to the
         highest from time to time of:

                           (a) the rate of interest announced publicly by
                  Citibank in New York, New York, from time to time, as
                  Citibank's base rate;

                           (b) the sum (adjusted to the nearer 1/16 of 1% or, if
                  there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%)
                  of (i) 1/2 of 1% per annum, PLUS (ii) the rate obtained by
                  dividing (A) the latest three-week moving average of secondary
                  market morning offering rates in the




   3

                  United States for three-month certificates of deposit of major
                  United States money market banks, such three-week moving
                  average (adjusted to the basis of a year of 360 days) being
                  determined weekly on each Monday (or, if any such day is not a
                  Business Day, on the next succeeding Business Day) for the
                  three-week period ending on the previous Friday by Citibank on
                  the basis of such rates reported by certificate of deposit
                  dealers to and published by the Federal Reserve Bank of New
                  York or, if such publication shall be suspended or terminated,
                  on the basis of quotations for such rates received by the
                  Paying Agent from three New York certificate of deposit
                  dealers of recognized standing selected by the Paying Agent,
                  by (B) a percentage equal to 100% minus the average of the
                  daily percentages specified during such three-week period by
                  the Board of Governors of the Federal Reserve System (or any
                  successor) for determining the maximum reserve requirement
                  (including, but not limited to, any emergency, supplemental or
                  other marginal reserve requirement) for Citibank with respect
                  to liabilities consisting of or including (among other
                  liabilities) three-month U.S. dollar non-personal time
                  deposits in the United States, PLUS (iii) the average during
                  such three-week period of the daily annual assessment rates
                  estimated by Citibank for determining the current annual
                  assessment payable by Citibank to the Federal Deposit
                  Insurance Corporation (or any successor) for insuring U.S.
                  dollar deposits of Citibank in the United States; and

                           (c) a rate equal to 1/2 of 1% per annum above the
                  Federal Funds Rate.

                  "BASE RATE ADVANCE" means a Revolving Credit Advance that
         bears interest as provided in Section 2.06(a).

                  "BORROWING" means a Revolving Credit Borrowing or a
         Competitive Bid Borrowing.

                  "BUSINESS DAY" means a day of the year on which banks are not
         required or authorized to close in New York City and, if the applicable
         Business Day relates to any Eurodollar Rate Advances, on which dealings
         are carried on in the London interbank market.

                  "CAPITAL LEASE OBLIGATION" means, with respect to any lessee,
         the obligations under any lease of property that, in accordance with
         GAAP, should be capitalized on such lessee's balance sheet.

                  "CHANGE OF CONTROL" means any one or more of the following
         events:

                           (a) the acquisition, by contract or otherwise
                  (including the entry into a contract or arrangement that upon
                  consummation will result in such acquisition), by any Person
                  or group (as such term is defined for purposes of Section
                  13(d) of the Securities Exchange Act of 1934, as amended (the
                  "EXCHANGE ACT"), and the rules and regulations pertaining
                  thereto), other than the trusts for the employee benefit plans
                  (as defined in Section 3(2) of ERISA) maintained by the
                  Borrower or any Subsidiary of the Borrower that is an ERISA
                  Affiliate, of beneficial ownership (within the meaning of Rule
                  13d-3, or any regulation or ruling promulgated to replace or
                  supplement Rule 13d-3, of the General Rules and Regulations
                  under the Exchange Act), directly or indirectly, of securities
                  of the Borrower representing 20% or more of the voting power
                  of all securities of the Borrower, or

                           (b) during any period of up to 24 consecutive months,
                  commencing before or after the date of this Agreement,
                  individuals who at the beginning of such period were directors
                  of the Borrower (together with any new directors whose
                  election by the Board of Directors or whose nomination for
                  election by the stockholders of the Borrower was approved by a
                  vote of at least 75% of the directors then in office who
                  either were directors at the beginning of such period or whose
                  election or nomination for election was previously so
                  approved) shall cease for any reason to constitute at least
                  75% of the Board of Directors of the Borrower.



   4

                  "COMMERCIAL PAPER" means any unsecured promissory note issued
         by the Borrower pursuant to any commercial paper program (whether rated
         or unrated) with a maturity of not more than nine months from the time
         of issuance, exclusive of grace periods.

                  "COMMITMENT" has the meaning specified in Section 2.01(a).

                  "COMPETITIVE BID ADVANCE" means an advance by a Lender to the
         Borrower as part of a Competitive Bid Borrowing resulting from the
         competitive bidding procedure described in Section 2.01(b).

                  "COMPETITIVE BID BORROWING" means a borrowing consisting of
         simultaneous Competitive Bid Advances from each of the Lenders whose
         offer to make one or more Competitive Bid Advances as part of such
         borrowing has been accepted by the Borrower under the competitive
         bidding procedure described in Section 2.01(b).

                  "COMPETITIVE BID REDUCTION" has the meaning specified in
         Section 2.01(a).

                  "CONSENTING LENDER" has the meaning specified in Section
         2.16(b).

                  "CONSOLIDATED" refers to the consolidation of accounts in
         accordance with GAAP, including principles of consolidation, consistent
         with those applied in the preparation of the Consolidated financial
         statements referred to in Section 4.01(e).

                  "CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
         interest expense net of interest income, whether paid or accrued
         (including the interest component of Capital Lease Obligations) on all
         Debt of the Borrower and its Subsidiaries on a Consolidated basis for
         such period, including (a) commissions and other fees and charges
         payable in connection with Letters of Credit and other letters of
         credit, (b) net payments payable in connection with all Interest Rate
         Agreements, (c) interest capitalized during construction and (d) cash
         dividends paid in respect of any preferred stock issued by the
         Borrower, but EXCLUDING, HOWEVER, the sum of (i) interest expense not
         payable in cash and (ii) amortization of discount and deferred debt
         expense, all as determined in conformity with GAAP.

                  "CONSOLIDATED EBITDA" means, for any period, on a Consolidated
         basis for the Borrower and its Subsidiaries, (a) the sum of (i)
         Consolidated Net Income for such period, (ii) depreciation and
         amortization expense for such period, (iii) interest expense net of
         interest income for such period, (iv) Federal and state income taxes
         for such period as determined in accordance with GAAP, (v)
         extraordinary losses (and any unusual losses in excess of $1,000,000
         arising in or outside of the ordinary course of business not included
         in extraordinary losses (determined in accordance with GAAP) that have
         been included in the calculation of Consolidated Net Income) for such
         period, (vi) LIFO charges that have been included in the calculation of
         Consolidated Net Income for such period and (vii) non-cash charges made
         with respect to "expected post retirement benefit obligations" within
         the meaning of Statement of Financial Accounting Standards No. 106
         MINUS (b) the sum of (i) extraordinary gains (and any unusual gains in
         excess of $1,000,000 arising in or outside of the ordinary course of
         business not included in extraordinary gains (determined in accordance
         with GAAP) that have been included in the calculation of Consolidated
         Net Income) for such period and (ii) LIFO credits that have been
         included in the calculation of Consolidated Net Income for such period.

                  "CONSOLIDATED NET INCOME" means, for any period, the net
         income of the Borrower and its Consolidated Subsidiaries for such
         period, before the payment of dividends on all capital stock,
         determined in accordance with GAAP.

                  "CONSOLIDATED RENTAL EXPENSE" means, for any period, the
         aggregate rental expense (including any contingent or percentage rental
         expense) of the Borrower and its Subsidiaries on a Consolidated basis
         for such period (excluding real estate taxes and common area
         maintenance charges) in respect of all rent obligations under all
         operating leases for real or personal property MINUS any rental income
         of the Borrower and its Subsidiaries on a Consolidated basis for such
         period, all as determined in conformity with GAAP.

   5

                  "CONSOLIDATED TOTAL INTEREST EXPENSE" means, for any period,
         interest expense net of interest income, whether paid or accrued
         (including the interest component of Capital Lease Obligations) on all
         Debt of the Borrower and its Subsidiaries on a Consolidated basis for
         such period, including (a) commissions and other fees and charges
         payable in connection with Letters of Credit and other letters of
         credit, (b) net payments payable in connection with all Interest Rate
         Agreements and (c) cash dividends paid in respect of any preferred
         stock issued by the Borrower, but EXCLUDING, HOWEVER, (i) amortization
         of deferred debt expense and (ii) interest capitalized during
         construction, all as determined in conformity with GAAP.

                  "CONVERT", "CONVERSION" and "CONVERTED" each refers to a
         conversion of Revolving Credit Advances of one Type into Revolving
         Credit Advances of the other Type pursuant to Section 2.02(b), 2.07 or
         2.08.

                  "DEBT" of any Person means, without duplication, (a) all
         indebtedness of such Person for borrowed money or for the deferred
         purchase price of property or services (including all obligations,
         contingent or otherwise, of such Person in connection with the Letters
         of Credit, letter of credit facilities, acceptance facilities or other
         similar facilities and in connection with any agreement to purchase,
         redeem, exchange into debt securities, convert into debt securities or
         otherwise acquire for value (i) any capital stock of such Person or
         (ii) any warrants, rights or options to acquire such capital stock, now
         or hereafter outstanding), (b) all obligations of such Person evidenced
         by bonds, notes, debentures or other similar instruments, (c) 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), (d) all Capital Lease
         Obligations of such Person, (e) all Debt referred to in clause (a),
         (b), (c) or (d) above secured by (or for which the holder of such Debt
         has an existing right, contingent or otherwise, to be secured by) any
         lien, security interest or other charge or encumbrance upon or in
         property (including accounts and contract rights) owned by such Person,
         even though such Person has not assumed or become liable for the
         payment of such Debt, (f) all Guaranteed Debt of such Person and (g)
         any preferred stock of such Person that is classified as a liability on
         such Person's Consolidated balance sheet.

                  "DEFAULT" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.

                  "DISCLOSED LITIGATION" has the meaning specified in Section
         3.01(b)

                  "DOCUMENTARY LETTER OF CREDIT" means any Letter of Credit that
         is issued under the Letter of Credit Facility in support of trade
         obligations incurred in the ordinary course of business and that
         includes, as a condition to drawing thereunder, the presentation to the
         Issuing Bank of negotiable bills of lading, invoices and related
         documents sufficient, in the judgment of the Issuing Bank, to create a
         valid and perfected security interest in the goods covered thereby.

                  "DOMESTIC LENDING OFFICE" means, with respect to any Lender,
         the office of such Lender specified as its "Domestic Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance or the Assumption Agreement, as the case may be, pursuant to
         which it became a Lender, or such other office of such Lender as such
         Lender may from time to time specify to the Borrower and the Paying
         Agent.

                  "EFFECTIVE DATE" has the meaning specified in Section 3.01.

                  "ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate of a
         Lender; (iii) a commercial bank organized under the laws of the United
         States, or any State thereof, and having total assets in excess of
         $5,000,000,000; (iv) a savings and loan association or savings bank
         organized under the laws of the United States, or any State thereof,
         and having total assets in excess of $5,000,000,000; (v) a commercial
         bank organized under the laws of any other country that is a member of
         the Organization for Economic


   6

         Cooperation and Development or has concluded special lending
         arrangements with the International Monetary Fund associated with its
         General Arrangements to Borrow or of the Cayman Islands, or a political
         subdivision of any such country, and having total assets in excess of
         $5,000,000,000 so long as such bank is acting through a branch or
         agency located in the United States or in the country in which it is
         organized or another country that is described in this clause (v); (vi)
         the central bank of any country that is a member of the Organization
         for Economic Cooperation and Development; or (vii) any other Person
         approved by the Administrative Agents and the Borrower, such approval
         not to be unreasonably withheld; PROVIDED, HOWEVER, that neither the
         Borrower nor any Affiliate of the Borrower shall qualify as an Eligible
         Assignee.

                  "ENVIRONMENTAL LAWS" means all current and future Federal,
         state, local and foreign laws, rules or regulations, codes, ordinances,
         orders, decrees, judgments or injunctions issued, promulgated, approved
         or entered thereunder or other requirements of Governmental Authorities
         or the common law, relating to health, safety, or pollution or
         protection of the environment, including laws relating to emissions,
         discharges, releases or threatened releases of pollutants,
         contaminants, chemicals or industrial, toxic or hazardous substances,
         or wastes into the environment (including ambient air, surface water,
         groundwater, land surface or subsurface strata) or otherwise relating
         to the manufacture, processing, distribution, use, generation,
         treatment, storage, disposal, transport or handling of pollutants,
         contaminants, chemicals, or industrial, toxic or hazardous substances,
         or wastes, or underground storage tanks and emissions therefrom.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, or any successor statute, as the same may be amended from time to
         time.

                  "ERISA AFFILIATE" means any trade or business (whether or not
         incorporated) that, together with the Borrower, is treated as a single
         employer under Section 414 of the Internal Revenue Code.

                  "EUROCURRENCY LIABILITIES" has the meaning assigned to that
         term in Regulation D of the Board of Governors of the Federal Reserve
         System, as in effect from time to time.

                  "EURODOLLAR LENDING OFFICE" means, with respect to any Lender,
         the office of such Lender specified as its "Eurodollar Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance or the Assumption Agreement, as the case may be, pursuant to
         which it became a Lender (or, if no such office is specified, its
         Domestic Lending Office), or such other office of such Lender as such
         Lender may from time to time specify to the Borrower and the Paying
         Agent.

                  "EURODOLLAR RATE" means, with respect to each day during each
         Interest Period for a Eurodollar Rate Advance, the rate of interest
         determined on the basis of the rate for deposits in United States
         dollars for a period equal to such Interest Period appearing on Page
         3750 of the Telerate 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 Telerate
         Markets Service (or otherwise on such service), the "Eurodollar Rate"
         for the purposes of this paragraph shall be determined by reference to
         such other publicly available service for displaying eurodollar rates
         as may be agreed upon by the Paying Agent and the Borrower or, in the
         absence of such agreement, the "Eurodollar Rate" for the purposes of
         this paragraph shall instead be an interest rate per annum equal to the
         rate of interest (rounded upward to the nearest whole multiple of 1/100
         of 1% per annum, if such average is not such a multiple) of the rate
         per annum at which deposits in U.S. dollars are offered by the
         principal office of each of the Reference Banks in London, England, to
         prime banks in the London interbank market at 11:00 a.m. (London time)
         two Business Days before the first day of such Interest Period in an
         amount substantially equal to such Reference Bank's Eurodollar Rate
         Advance to be outstanding during such Interest Period (or, if such
         Reference Bank shall not have a Eurodollar Rate Advance that is to be
         outstanding during such Interest Period, in an amount equal to
         $1,000,000) and for a period equal to such Interest Period. The
         Eurodollar Rate for an Interest Period shall be determined by the
         Paying Agent on the basis of applicable rates furnished to and received
         by the Paying Agent two Business Days before the first day of such
         Interest Period, SUBJECT, HOWEVER, to the provisions of Section 2.07.


   7

                  "EURODOLLAR RATE ADVANCE" means a Revolving Credit Advance
         that bears interest as provided in Section 2.06(b).

                  "EURODOLLAR RATE RESERVE PERCENTAGE" means the reserve
         percentage under regulations issued from time to time by the Board of
         Governors of the Federal Reserve System (or any successor) for
         determining the maximum reserve requirement (including any emergency,
         supplemental or other marginal reserve requirement) for a member bank
         of the Federal Reserve System in New York City with respect to
         liabilities or assets consisting of or including Eurocurrency
         Liabilities (or with respect to any other category of liabilities that
         includes deposits by reference to which the interest rate on Eurodollar
         Rate Advances is determined).

                  "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

                  "EXISTING CREDIT AGREEMENT" has the meaning specified in
         Section 3.01(i).

                  "EXISTING LENDERS" has the meaning specified in Section
         2.01(c).

                  "EXISTING LETTERS OF CREDIT" means each standby Letter of
         Credit that (a) was issued for the account of the Borrower by one of
         the issuing banks under the Existing Credit Agreement that is also an
         Issuing Bank under this Agreement, (b) is outstanding on the Closing
         Date and (c) is listed on Schedule 2.01(c).

                  "EXTENSION DATE" has the meaning specified in Section 2.16(b).

                  "FACILITY FEE PERCENTAGE" means, on any date, a percentage per
         annum determined by reference to the Borrower's Performance Level in
         effect on such date as set forth below:



    --------------------------------------------------------------
              Performance                    Facility Fee
                 Level                        Percentage
    --------------------------------------------------------------
                                             
    Level 1                                     0.100%
    --------------------------------------------------------------
    Level 2                                     0.125%
    --------------------------------------------------------------
    Level 3                                     0.150%
    --------------------------------------------------------------
    Level 4                                     0.250%
    --------------------------------------------------------------
    Level 5                                     0.300%
    --------------------------------------------------------------


                  "FACILITY FEES" has the meaning specified in Section 2.03.

                  "FACILITY USAGE" means, at any time, without duplication, the
         sum of (a) the amount of Advances outstanding at such time and (b) the
         aggregate amount available at such time to be drawn under outstanding
         Letters of Credit (in each case assuming the occurrence of, and
         compliance with, all conditions referred to therein).

                  "FEDERAL FUNDS RATE" means a fluctuating rate per annum equal
         for each day to 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 for such day (or, if such day is
         not a Business Day, for the next preceding 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 such day
         on such transactions received by the Paying Agent from three Federal
         funds brokers of recognized standing selected by it.

                  "FINANCIAL OFFICER" means, with respect to any corporation,
         the chief financial officer, principal accounting officer, treasurer or
         controller of such corporation.


   8

                  "FISCAL QUARTER" means (a) with respect to the first Fiscal
         Quarter of any Fiscal Year, the first 16 calendar weeks of such Fiscal
         Year, (b) with respect to the second Fiscal Quarter of such Fiscal
         Year, the next successive period of 12 calendar weeks in such Fiscal
         Year, (c) with respect to the third Fiscal Quarter of any Fiscal Year,
         the next successive period of 12 calendar weeks in such Fiscal Year and
         (d) with respect to the last Fiscal Quarter of any Fiscal Year, the
         period of time after the first three Fiscal Quarters of such Fiscal
         Year through the last day of such Fiscal Year.

                  "FISCAL YEAR" means a year of 364 or 371 days, as the case may
         be, ending on the Saturday closest to the 31st day of January in any
         calendar year, and such Fiscal Year, when referred to from time to time
         herein by reference to a calendar year shall be the Fiscal Year that
         includes February 28th of such calendar year.

                  "FIXED CHARGE COVERAGE RATIO" means the ratio (determined as
         of the last day of each Fiscal Quarter for the Rolling Period ending on
         such day) of (a) the sum of (i) Consolidated EBITDA for such Rolling
         Period and (ii) Consolidated Rental Expense for such Rolling Period to
         (b) the sum of (i) Consolidated Cash Interest Expense for such Rolling
         Period and (ii) Consolidated Rental Expense for such Rolling Period.

                  "FIXED RATE" means, for the period for each Fixed Rate Advance
         comprising part of the same Competitive Bid Borrowing, the fixed
         interest rate per annum determined for such Advance, as provided in
         Section 2.01(b).

                  "FIXED RATE ADVANCE" means a Competitive Bid Advance that
         bears interest at a fixed rate per annum determined as provided in
         Section 2.01(b).

                  "GAAP" has the meaning specified in Section 1.03.

                  "GOVERNMENTAL AUTHORITY" means any Federal, state, local or
         foreign court or governmental agency, authority, instrumentality or
         regulatory body.

                  "GUARANTEE AGREEMENT" means the Guarantee Agreement,
         substantially in the form of Exhibit E, among the Guarantors and the
         Paying Agent, as amended, supplemented or otherwise modified from time
         to time in compliance with Section 8.01.

                  "GUARANTEED DEBT" of any Person means all Debt referred to in
         clause (a), (b), (c), (d) or (e) of the definition of the term "Debt"
         in this Section guaranteed directly or indirectly in any manner by such
         Person, or in effect guaranteed directly or indirectly by such Person
         through an agreement (a) to pay or purchase such Debt or to advance or
         supply funds for the payment or purchase of such Debt, (b) to purchase,
         sell or lease (as lessee or lessor) property, or to purchase or sell
         services, primarily for the purpose of enabling the debtor to make
         payment of such Debt or to assure the holder of such Debt against loss,
         (c) to supply funds to, or in any other manner invest in, the debtor
         (including any agreement to pay for property or services irrespective
         of whether such property is received or such services are rendered) or
         (d) otherwise to assure a creditor against loss, but excluding leases
         at a rental at least as favorable to the Borrower as could be obtained
         in an arm's-length transaction with a party that is not an Affiliate.

                  "GUARANTOR" means (a) each existing and hereafter created or
         acquired Material Subsidiary of the Borrower and (b) each other
         existing or hereafter acquired Subsidiary of the Borrower designated
         from time to time by the Borrower as a Guarantor.

                  "HAZARDOUS MATERIALS" means any toxic substance, hazardous
         waste, hazardous constituents, hazardous materials, asbestos or
         asbestos containing material, polychlorinated biphenyls, petroleum,
         including crude oil and any fractions thereof, or other wastes,
         chemicals, substances or materials regulated by any Environmental Laws.


   9

                  "INFORMATION MEMORANDUM" means the information memorandum
         dated April 19, 2001 used by the Agents in connection with the
         syndication of the Commitments.

                  "INTEREST PERIOD" means, for each Eurodollar Rate Advance
         comprising part of the same Revolving Credit Borrowing, the period
         commencing on the date of such Eurodollar Rate Advance or the date of
         the Conversion of any Base Rate Advance into such Eurodollar Rate
         Advance and ending on the last day of the period selected by the
         Borrower pursuant to the provisions below and, thereafter, each
         subsequent period commencing on the last day of the immediately
         preceding Interest Period and ending on the last day of the period
         selected by the Borrower pursuant to the provisions below. The duration
         of each such Interest Period shall be seven days, one, two, three or
         six months (or, if available from all the Lenders, nine months), as the
         Borrower may, upon notice received by the Paying Agent not later than
         11:00 A.M. (New York City time) on the third Business Day prior to the
         first day of such Interest Period, select; PROVIDED, HOWEVER, that:

                           (i) the Borrower may not select any Interest Period
                  that ends after the scheduled Termination Date then in effect;

                           (ii) Interest Periods commencing on the same date for
                  Eurodollar Rate Advances comprising part of the same Revolving
                  Credit Borrowing shall be of the same duration;

                           (iii) whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day, PROVIDED that, if such
                  extension would cause the last day of such Interest Period to
                  occur in the next following calendar month, the last day of
                  such Interest Period shall occur on the next preceding
                  Business Day; and

                           (iv) whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "INTEREST RATE AGREEMENT" means any forward contract, forward
         option, futures contract, futures option, interest rate swap agreement,
         interest rate cap agreement, interest rate collar agreement, interest
         rate floor agreement or other similar agreement or arrangement entered
         into by the Borrower.

                  "INTERNAL REVENUE CODE" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "ISSUING BANK" means any Lender that is a commercial bank
         acting through a branch or agency located in the United States, as
         issuer of a Letter of Credit.

                  "LENDERS" means the Initial Lenders, each Assuming Lender that
         shall become a party hereto pursuant to Section 2.16 and each Person
         that shall become a party hereto pursuant to Section 8.06.

                  "LETTER OF CREDIT" means any Standby Letter of Credit and any
         Documentary Letter of Credit.

                  "LETTER OF CREDIT COLLATERAL" has the meaning specified in
         Section 6.02(b).

                  "LETTER OF CREDIT COLLATERAL ACCOUNT" has the meaning
         specified in Section 6.02(a).

                  "LETTER OF CREDIT DOCUMENTS" has the meaning specified in
         Section 2.17.

                  "LETTER OF CREDIT FACILITY" has the meaning specified in
         Section 2.01(c)(ii).


   10

                  "LETTER OF CREDIT OBLIGATIONS" means, at any time, the sum of
         (a) the maximum aggregate amount then available to be drawn under the
         Letters of Credit outstanding at such time (the determination of such
         maximum amount to assume the occurrence of, and compliance with, all
         conditions for drawing referred to therein) PLUS (b) the aggregate
         amount of the Borrower's obligations then outstanding under this
         Agreement in respect of the Letters of Credit, including all Advances
         resulting from drawings under Letters of Credit and all fees and
         expenses in respect of the Letters of Credit payable pursuant to
         Section 2.03.

                  "LIEN" means, with respect to any asset, (a) any mortgage,
         deed of trust, lien, pledge, assignment for security (whether
         collateral or otherwise), hypothecation, encumbrance, lease, sublease,
         charge or security interest in or on such asset, (b) the interest of a
         vendor or a lessor under any conditional sale agreement, capital lease
         or title retention agreement relating to such asset and (c) in the case
         of securities, any purchase option, call or similar right of a third
         party with respect to such securities.

                  "LIFO" means the pretax charge against income determined by
         using the last-in-first-out method of valuing inventory.

                  "LOAN DOCUMENTS" means this Agreement and Notes, if any, the
         Letter of Credit Documents and each Guarantee Agreement.

                  "MATERIAL ADVERSE CHANGE" means any material adverse change in
         the business, assets, operations, properties, prospects or condition
         (financial or otherwise) of the Borrower and its Subsidiaries, taken as
         a whole.

                  "MATERIAL ADVERSE EFFECT" means (a) a materially adverse
         effect on the business, assets, operations, properties, prospects or
         condition (financial or otherwise) of the Borrower and its
         Subsidiaries, taken as a whole, (b) material impairment of the ability
         of the Borrower to perform any of its obligations under any Loan
         Document to which it is or will be a party or (c) material impairment
         of the rights of or benefits available to the Administrative Agents,
         the Paying Agent, the Issuing Banks or the Lenders under any Loan
         Document.

                  "MATERIAL SUBSIDIARY" of the Borrower means, at any time, any
         Subsidiary of the Borrower (other than One Holdings, Inc. and any
         Subsidiary of the Borrower that is a captive insurance company) having
         (a) assets with a value of not less than 5% of the total value of the
         assets of the Borrower and its Consolidated Subsidiaries, taken as a
         whole, or (b) Consolidated EBITDA not less than 5% of the Consolidated
         EBITDA of the Borrower and its Consolidated Subsidiaries, taken as a
         whole, in each case as of the end of or for the most recently completed
         Fiscal Year of the Borrower.

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

                  "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
         Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
         Affiliate (other than one considered an ERISA Affiliate only pursuant
         to subsection (m) or (o) of Section 414 of the Internal Revenue Code)
         is making or accruing an obligation to make contributions, or has
         within any of the preceding five plan years made or accrued an
         obligation to make contributions.

                  "NET DEBT" means, on a Consolidated basis for the Borrower and
         its Subsidiaries as of any date, (a) Debt MINUS (b) the sum as of such
         date of (i) the aggregate outstanding amount of Debt represented by
         investments made by the Borrower in Debt of another Person in
         connection with a real estate transaction, so long as the Borrower or
         one of its Subsidiaries is or becomes an anchor tenant of the real
         estate development with respect thereto and no more than two anchor
         tenants exist with respect to such real estate development or the
         Borrower or one of its Subsidiaries has a contractual obligation to
         make lease or other payments to such Person as a result of the real
         estate transaction in which such Debt was issued and (ii) the aggregate
         amount of Permitted Investments in excess of $100,000,000.


   11

                  "NON-CONSENTING LENDER" has the meaning specified in Section
         2.16(b).

                  "NOTE" has the meaning specified in Section 2.14.

                  "NOTICE OF REVOLVING CREDIT BORROWING" has the meaning
         specified in Section 2.02(a).

                  "PAYING AGENT'S ACCOUNT" means the account of the Paying Agent
         maintained by the Paying Agent at Citibank with its office at 1 Court
         Square, 7th Floor, Long Island City, New York 11120, Account No.
         36852248, Attention: Leonard Sarcona.

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
         to and defined in ERISA or any successor thereto.

                  "PERFORMANCE LEVEL" means, as of any date of determination,
         the numerically lowest level set forth below as then in effect, as
         determined in accordance with the following provisions of this
         definition:

         Level 1           The Public Debt Rating by Moody's is A3 or better or
                           the Public Debt Rating by S&P is A- or better OR the
                           Applicable Percentage Ratio is 5.25:1.00 or greater;

         Level 2           The Public Debt Rating by Moody's is Baa1 or the
                           Public Debt Rating by S&P is BBB+ OR the Applicable
                           Percentage Ratio is 4.75:1.00 or greater but less
                           than 5.25:1.00;

         Level 3           The Public Debt Rating by Moody's is Baa2 or the
                           Public Debt Rating by S&P is BBB OR the Applicable
                           Percentage Ratio is 4.00:1.00 or greater but less
                           than 4.75:1.00;

         Level 4           The Public Debt Rating by Moody's is Baa3 or the
                           Public Debt Rating by S&P is BBB- OR the Applicable
                           Percentage Ratio is less than 4.00:1.00;

         Level 5           The Public Debt Rating by Moody's is Ba1 or lower or
                           the Public Debt Rating by S&P is BB+ or lower AND the
                           Applicable Percentage Ratio is lower than 4.00:1.00;

         PROVIDED (a) if any rating established or deemed to have been
         established by S&P or Moody's shall be changed (other than as a result
         of a change in the rating system of either S&P or Moody's), such change
         shall be effective as of the date on which such change is first
         announced publicly by the rating agency making such change, (b) any
         change in the Performance Level based on a change in the Applicable
         Percentage Ratio shall be effective for all purposes on and after the
         date of delivery to the Administrative Agents of a certificate of the
         Borrower with respect to the financial statements to be delivered, as
         applicable, pursuant to Section 5.01(h) for the most recently ended
         Fiscal Quarter, (c) if the Public Debt Ratings by Moody's and S&P and
         the Applicable Percentage Ratio shall fall within different Levels the
         Applicable Margin, the Facility Fee Percentage and the Utilization Fee
         Percentage shall be determined based upon the lower Level unless the
         Levels determined based upon the Public Debt Ratings and Applicable
         Percentage Ratio are two or more Levels apart, in which case the
         Applicable Margin and Facility Fee Percentage shall be determined by
         reference to the Level next below the higher of the two Levels (it
         being understood that Level 1 is the lowest Level and Level 5 is the
         highest Level) and (d) notwithstanding the foregoing provisions of
         clause (a), no reduction in the Performance Level shall be effective if
         any Default shall have occurred and be continuing. Any change in the
         Performance Level shall be effective on the effective date of such
         change in the applicable Performance Level and shall apply to all
         Eurodollar Rate Advances made or continued on or after the commencement
         of the period (and to Base Rate Advances that are outstanding at any
         time during the period) commencing on the effective date of such change
         in the applicable Performance Level and ending on the date immediately
         preceding the effective date of the next such change in the applicable
         Performance Level.

                  "PERMITTED INVESTMENTS" means (a) cash, (b) readily marketable
         securities issued or guaranteed by the government of the United States
         of America or any agency thereof having a maturity at the time of

   12

         issuance not exceeding one year, (c) commercial paper rated at least
         A-1 by S&P or P-1 by Moody's, in each case having a maturity at the
         time of issuance not exceeding one year, and (d) certificates of
         deposit of or time deposits with any commercial bank, the long-term
         debt of which has been assigned a rating of at least BBB by S&P or A3
         by Moody's and which is a Lender and is organized and existing under
         the laws of the United States of America or any state thereof or the
         District of Columbia.

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

                  "PLAN" means any pension plan (other than a Multiemployer
         Plan) subject to the provisions of Title IV of ERISA or Section 412 of
         the Internal Revenue Code that is maintained for current or former
         employees, or any beneficiary thereof, of the Borrower or any ERISA
         Affiliate.

                  "PUBLIC DEBT RATING" means, as of any date, the rating that
         has been most recently announced by either S&P or Moody's, as the case
         may be, for any class of non-credit enhanced long-term senior unsecured
         debt issued by the Borrower. For purposes of the foregoing, (a) if only
         one of S&P and Moody's shall have in effect a Public Debt Rating, the
         Applicable Margin, the Facility Fee Percentage and the Utilization Fee
         Percentage shall be determined by reference to the available rating;
         (b) if neither S&P nor Moody's shall have in effect a Public Debt
         Rating, the Applicable Margin, the Facility Fee Percentage and the
         Utilization Fee Percentage will be set in accordance with the
         Applicable Percentage Ratio; (c) if the ratings established by S&P and
         Moody's shall fall within different levels, the Applicable Margin, the
         Facility Fee Percentage and the Utilization Fee Percentage shall be
         based upon the higher rating; (d) if any rating established by S&P or
         Moody's shall be changed, such change shall be effective as of the date
         on which such change is first announced publicly by the rating agency
         making such change; and (e) if S&P or Moody's shall change the basis on
         which ratings are established, or either such rating agency shall cease
         to be in the business of rating corporate debt obligations, the
         Borrower and the Lenders shall negotiate in good faith to amend this
         definition to reflect such changed rating system or the unavailability
         of ratings from such rating agency and, pending the effectiveness of
         such amendment, the Applicable Margin, the Facility Fee Percentage and
         the Utilization Fee Percentage shall be determined by reference to the
         rating most recently in effect prior to such change or cessation.

                  "REFERENCE BANKS" means Citibank, Chase, Bank One, NA and Bank
         of America, N.A.

                  "REGISTER" has the meaning specified in Section 8.06(d).

                  "REPORTABLE EVENT" means any reportable event as defined in
         Section 4043(b) of ERISA or the regulations issued thereunder with
         respect to a Plan (other than a Plan maintained by an ERISA Affiliate
         that is considered an ERISA Affiliate only pursuant to subsection (m)
         or (o) of Section 414 of the Internal Revenue Code).

                  "REQUIRED LENDERS" means, at any time, Lenders holding at
         least 51% of the then aggregate unpaid principal amount of all
         outstanding Advances (other than Competitive Bid Advances) or, if no
         such principal amount is then outstanding, Lenders having at least 51%
         of the Commitments.

                  "RESPONSIBLE OFFICER" of any corporation means any executive
         officer or Financial Officer of such corporation and any other officer
         or similar official thereof responsible for the administration of the
         obligations of such corporation in respect of this Agreement.

                  "REVOLVING CREDIT ADVANCE" means an advance by a Lender to the
         Borrower as part of a Revolving Credit Borrowing and refers to a Base
         Rate Advance or a Eurodollar Rate Advance (each of which shall be a
         "TYPE" of Revolving Credit Advance).


   13

                  "REVOLVING CREDIT BORROWING" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by each of
         the Lenders pursuant to Section 2.01(a).

                  "ROLLING PERIOD" means, in respect of any Fiscal Quarter, such
         Fiscal Quarter and the three preceding Fiscal Quarters.

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

                  "SETTLEMENT AMOUNT" has the meaning specified in Section 2.18.

                  "SETTLEMENT DATE" has the meaning specified in Section 2.18.

                  "STANDBY LETTER OF CREDIT" means a Letter of Credit other than
         a Documentary Letter of Credit, including direct-pay Letters of Credit.

                  "SUBSIDIARY" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such limited liability
         company, partnership or joint venture or (c) the beneficial interest in
         such trust or estate is at the time directly or indirectly owned or
         controlled by such Person, by such Person and one or more of its other
         Subsidiaries or by one or more of such Person's other Subsidiaries.

                  "TERMINATION DATE" means the earlier of (a) May 23, 2006,
         subject to the extension thereof pursuant to Section 2.16, and (b) the
         date of termination in whole of the aggregate Commitments pursuant to
         Section 2.04 or 6.01; PROVIDED, HOWEVER, that the Termination Date of
         any Lender that is a Non-Consenting Lender to any requested extension
         pursuant to Section 2.16 shall be the Termination Date in effect
         immediately prior to the applicable Extension Date for all purposes of
         this Agreement.

                  "TRADE-RELATED LETTERS OF CREDIT" means Documentary Letters of
         Credit and Standby Letters of Credit issued in support of trade
         obligations incurred in the ordinary course of business.

                  "UTILIZATION FEE PERCENTAGE" means, as of any date that the
         aggregate Advances exceed 50% of the aggregate Commitments, a
         percentage per annum determined by reference to the Borrower's
         Performance Level in effect on such date as set forth below:



         ------------------------------------------------------------------------
                     Performance                       Utilization Fee
                        Level                             Percentage
         ------------------------------------------------------------------------
                                                         
         Level 1                                            0.100%
         ------------------------------------------------------------------------
         Level 2                                            0.125%
         ------------------------------------------------------------------------
         Level 3                                            0.125%
         ------------------------------------------------------------------------
         Level 4                                            0.125%
         ------------------------------------------------------------------------
         Level 5                                            0.250%
         ------------------------------------------------------------------------


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

                  SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".


   14

                  SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP").

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

                  SECTION 2.01. THE ADVANCES AND THE LETTERS OF CREDIT. (a) THE
REVOLVING CREDIT ADVANCES. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Revolving Credit Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount not to exceed
at any time outstanding the amount set forth opposite such Lender's name on the
signature pages hereof or, if such Lender has become a Lender hereunder pursuant
to an Assumption Agreement, the amount set forth as the Commitment of such
Lender in such Assumption Agreement or, if such Lender has entered into any
Assignment and Acceptance, set forth for such Lender in the Register maintained
by the Paying Agent pursuant to Section 8.06(d), as such amount may be reduced
pursuant to Section 2.04 (such Lender's "COMMITMENT"), PROVIDED that (i) the
Facility Usage shall not exceed the aggregate amount of the Commitments of the
Lenders and (ii) the aggregate amount of the Commitments of the Lenders shall be
deemed used from time to time to the extent of the aggregate amount of the
Competitive Bid Advances then outstanding and such deemed use of the aggregate
amount of the Commitments shall be allocated among the Lenders ratably according
to their respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "COMPETITIVE BID REDUCTION"). The aggregate amount of each
Lender's Advances outstanding at any time shall be adjusted to the extent
necessary to give effect to the provisions for the adjustment of Advances set
forth in Section 2.18. Each Revolving Credit Borrowing shall be in an aggregate
minimum amount of $10,000,000 or any whole multiple of $1,000,000 in excess
thereof and shall consist of Revolving Credit Advances of the same Type made on
the same day by the Lenders ratably according to their respective Commitments.
Within the limits of each Lender's Commitment, the Borrower may borrow under
this Section 2.01(a), prepay pursuant to Section 2.09 and reborrow under this
Section 2.01(a).

                  (b) THE COMPETITIVE BID ADVANCES. (i) Each Lender severally
agrees that the Borrower may make Competitive Bid Borrowings under this Section
2.01(b) from time to time on any Business Day during the period from the date
hereof until the date occurring 30 days prior to the Termination Date in the
manner set forth below; PROVIDED that, following the making of each Competitive
Bid Borrowing, the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders (computed without
regard to any Competitive Bid Reduction).

                  (A) The Borrower, either directly or through the Specified
         Administrative Agent (as defined in paragraph (B) below), may request a
         Competitive Bid Borrowing or Competitive Bid Borrowings under this
         Section 2.01(b) by delivering to the Paying Agent and some or all of
         the Lenders, by telephone, telex or cable, confirmed immediately in
         writing or by telecopier, a notice of a Competitive Bid Borrowing or
         Borrowings (a "NOTICE OF COMPETITIVE BID BORROWING"), in substantially
         the form of Exhibit A-2 or in such other form as the Administrative
         Agents and the Borrower may agree upon specifying the date and
         aggregate amount of the proposed Competitive Bid Borrowing, the
         maturity date for repayment of each Competitive Bid Advance to be made
         as part of such Competitive Bid Borrowing (which maturity date may not
         be earlier than the date that is 27 days after the date of such
         Competitive Bid Borrowing in the case of Eurodollar Rate Advances, may
         not be later than the date that is 270 days after the date of such
         Competitive Bid Borrowing in the case of Fixed Rate Advances, and in
         any case may not be later than the Termination Date), whether the
         Lenders should offer to make Fixed Rate Advances or Eurodollar Rate
         Advances, the interest payment date or dates relating thereto and any
         other terms to be applicable to such Competitive Bid Borrowing, not
         later than (1) 11:00 a.m. (New York City time) on the same Business Day
         as any proposed Competitive Bid Borrowing consisting of Fixed Rate
         Advances and (2) 12:00 noon (New York City time) at least three
         Business Days, or, if through the Specified Administrative Agent, 10:00
         a.m. (New York City time) at least four Business Days prior to the date
         of a proposed Competitive Bid Borrowing consisting of Eurodollar Rate
         Advances.


   15

                  (B) Each Lender so notified may, if, in its sole discretion,
         it elects to do so, irrevocably offer to make one or more Competitive
         Bid Advances (which Competitive Bid Advances may, subject to the
         provisos to the first sentence to this Section 2.01(b), have a
         principal amount exceeding such Lender's Commitment) to the Borrower as
         part of such proposed Competitive Bid Borrowing at a Fixed Rate or
         Rates or a margin or margins relative to the Eurodollar Rate, as
         requested by the Borrower. Each Lender electing to make such an offer
         shall do so by notifying the Borrower or one of the Administrative
         Agents, as shall be specified in the Notice of Competitive Bid
         Borrowing (the "SPECIFIED ADMINISTRATIVE AGENT"), before such time and
         date as is specified in the Notice of Competitive Bid Borrowing in
         paragraph (A) above, of the minimum amount and maximum amount of each
         Competitive Bid Advance that such Lender would be willing to make as
         part of such proposed Competitive Bid Borrowing (which amount may
         exceed such Lender's Commitment), the Fixed Rate or Rates or margin or
         margins relative to the Eurodollar Rate, as requested by the Borrower,
         that such Lender would be willing to accept for such Competitive Bid
         Advance and such Lender's Applicable Lending Office with respect to
         such Competitive Bid Advance, PROVIDED that, if the Specified
         Administrative Agent in its capacity as a Lender shall, in its sole
         discretion, elect to make any such offer, it shall notify the Borrower
         of such offer before 15 minutes prior to the Borrower's deadline
         specified in paragraph (A) above on the date on which notice of such
         election is to be given to such Administrative Agent by the other
         Lenders. If any Lender shall elect not to make such an offer, such
         Lender shall so notify the Specified Administrative Agent, before such
         time as is specified in the Notice of Competitive Bid Borrowing on the
         date on which notice of such election is to be given to the Borrower or
         the Specified Administrative Agent, as the case may be, by the other
         Lenders, and such Lender shall not be obligated to, and shall not, make
         any Competitive Bid Advance as part of such Competitive Bid Borrowing,
         PROVIDED that the failure by any Lender to give such notice shall not
         cause such Lender to be obligated to make any Competitive Bid Advance
         as part of such proposed Competitive Bid Borrowing.

                  (C) The Borrower (either directly or through the Specified
         Administrative Agent) shall, in turn, before such time and date as is
         specified in the Notice of Competitive Bid Borrowing, either

                           (1) cancel such Competitive Bid Borrowing by giving
                  the Lenders who received notice pursuant to paragraph (A)
                  above notice to that effect, or

                           (2) accept one or more of the offers (or portions of
                  such offers) made by any Lender or Lenders pursuant to
                  paragraph (B) above, in its sole discretion, by giving notice
                  to the applicable Lender or Lenders of the amount of each
                  Competitive Bid Advance to be made by each Lender as part of
                  such Competitive Bid Borrowing, with simultaneous notice
                  thereof to the Paying Agent, and reject any remaining offers
                  made by Lenders pursuant to paragraph (B) above by giving them
                  notice to that effect.

                  (D) If the Borrower notifies the Paying Agent that such
         Competitive Bid Borrowing is canceled pursuant to paragraph (C)(1)
         above, the Borrower or the Specified Administrative Agent, as the case
         may be, shall give prompt notice thereof to the Lenders and such
         Competitive Bid Borrowing shall not be made.

                  (E) If the Borrower accepts one or more of the offers (or
         portions of such offers) made by any Lender or Lenders pursuant to
         paragraph (C)(2) above, the Borrower or the Specified Administrative
         Agent, as the case may be, shall in turn promptly notify each Lender
         that is to make a Competitive Bid Advance as part of such Competitive
         Bid Borrowing, of the amount of each Competitive Bid Advance to be made
         by such Lender as part of such Competitive Bid Borrowing.

                  (ii) Each Lender that is to make a Competitive Bid Advance as
part of a Competitive Bid Borrowing shall, before 12:00 noon (New York City
time) on the date of such Competitive Bid Borrowing specified in the Notice of
Competitive Bid Borrowing relating thereto, make available for the account of
its Applicable Lending Office to the Paying Agent in same day funds, such
Lender's ratable portion of such Competitive Bid Borrowing. Upon fulfillment of
the applicable conditions set forth in Article III and after receipt by the
Paying Agent of such funds, the Paying Agent will make such funds available to
the Borrower. Promptly after each


   16

Competitive Bid Borrowing, the Paying Agent will notify each Lender of the
amount of the Competitive Bid Borrowing, the consequent Competitive Bid
Reduction and the dates upon which such Competitive Bid Reduction commenced and
will terminate.

                  (iii) Each Competitive Bid Borrowing shall be in an aggregate
principal amount of not less than $1,000,000. Following the making of each
Competitive Bid Borrowing, the Borrower shall be in compliance with the
limitations set forth in the proviso to the first sentence of subsection (i)
above.

                  (iv) Within the limits and on the conditions set forth in this
Section 2.01(b), the Borrower may from time to time borrow under this Section
2.01(b), repay or prepay pursuant to subsection (v) below, and reborrow under
this Section 2.01(b).

                  (v) The Borrower shall repay to the Paying Agent for the
account of each Lender that has made, or holds the right to repayment of, a
Competitive Bid Advance on the maturity date of each Competitive Bid Advance
(such maturity date being that specified by the Borrower for repayment of such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (i)(A) above) the then-unpaid principal amount
of such Competitive Bid Advance. The Borrower shall not have any right to prepay
any principal amount of any Competitive Bid Advance unless, and then only on the
terms, specified by the Borrower for such Competitive Bid Advance in the related
Notice of Competitive Bid Borrowing delivered pursuant to subsection (i)(A)
above.

                  (vi) The Borrower shall pay interest on the unpaid principal
amount of each Competitive Bid Advance from and including the date of such
Competitive Bid Advance to but excluding the date the principal amount of such
Competitive Bid Advance is repaid in full, at the rate of interest for such
Competitive Bid Advance (including any rate specified for past due amounts)
specified by the Lender making such Competitive Bid Advance in its notice with
respect thereto delivered pursuant to subsection (i)(B) above, payable on the
interest payment date or dates specified by the Borrower for such Competitive
Bid Advance in the related Notice of Competitive Bid Borrowing delivered
pursuant to subsection (i)(A) above.

                  (c) THE LETTERS OF CREDIT. (i) Effective as of the Closing
Date, the lenders under the Existing Credit Agreement (the "EXISTING LENDERS")
will be deemed to have sold and transferred an undivided interest and
participation, pro rata to such Existing Lender's "Commitment" under the
Existing Credit Agreement, in respect of the Existing Letters of Credit and each
Lender under this Agreement will be deemed to have purchased and received,
without further action on the part of any party, an undivided interest and
participation in such Existing Letters of Credit, pro rata to such Lender's
Commitment under this Agreement and such Existing Letters of Credit shall be
deemed to be issued and outstanding hereunder.

                  (ii) Upon the terms and subject to the conditions of this
Agreement, the Borrower may request any Issuing Bank to issue, and any such
Issuing Bank may in its discretion issue, additional Letters of Credit from time
to time on any Business Day during the period from the Closing Date until the
date that is 30 days prior to the Termination Date in an aggregate undrawn
amount that (together with the aggregate undrawn amount at such time under
Existing Letters of Credit, if any), shall not exceed $100,000,000 (such
aggregate amount being the "LETTER OF CREDIT FACILITY"); PROVIDED, HOWEVER, that
immediately after giving effect to each such issuance, Facility Usage shall not
exceed the aggregate amount of the Commitments of the Lenders.

                  (iii) Each Letter of Credit (other than Existing Letters of
Credit) shall be for a period of no more than one year or shall be renewable or
terminable (upon no more than 180 days' notice) annually and, in each case,
shall contain such terms and conditions as may be acceptable to the
Administrative Agents and the Issuing Bank in their sole discretion, but in any
event shall expire no later than 30 days prior to the Termination Date in effect
at the date of issuance thereof. The Issuing Bank may, in its sole discretion,
renew such Letter of Credit, and such renewal shall in any case be subject to
the conditions specified herein. Concurrently with the issuance of each Letter
of Credit by an Issuing Bank, such Issuing Bank shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from such Issuing Bank, in each case without any further action on
the part of any party, an undivided interest and participation, pro rata to such
Lender's Commitment, in and to such Letter of Credit and the obligations of the
Borrower under this Agreement in respect of such Letter of Credit. Upon each
drawing or payment under a Letter of Credit, the amount of such drawing or

   17

payment shall become and be deemed to be, without any further action on the part
of any Person, an Advance by the Issuing Bank that issued such Letter of Credit
made on the date of such drawing or payment for all purposes under this
Agreement (but without any requirement for compliance with the conditions to the
making of Advances contained in Article III).

                  SECTION 2.02. MAKING THE REVOLVING CREDIT ADVANCES; ISSUING
THE LETTERS OF CREDIT. (a) Each Revolving Credit Borrowing (other than a
Borrowing resulting from a drawing under a Letter of Credit) shall be made on
notice, given not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Revolving Credit Borrowing in the
case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, or
the Business Day of the proposed Revolving Credit Borrowing in the case of a
Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to
the Paying Agent, which shall give to each Lender prompt notice thereof by
telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice
of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit A-1 hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 12:00 noon (New York City time) on the date of such Revolving Credit
Borrowing, make available for the account of its Applicable Lending Office to
the Paying Agent at the Paying Agent's Account, in same day funds, such Lender's
ratable portion of such Revolving Credit Borrowing. After the Paying Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Paying Agent will make such funds available to the
Borrower at the Paying Agent's address referred to in Section 8.02.

                  (b) Anything in subsection (a) above or Section 2.08 to the
         contrary notwithstanding,

                  (i) if fewer than two Reference Banks furnish timely
         information to the Paying Agent for determining the Eurodollar Rate for
         any Eurodollar Rate Advances, (A) the Paying Agent shall forthwith
         notify the Borrower and the Lenders that the interest rate cannot be
         determined for such Eurodollar Rate Advances, (B) each such Advance
         will automatically, on the last day of the then existing Interest
         Period therefor, Convert into a Base Rate Advance (or if such Advance
         is then a Base Rate Advance, will continue as a Base Rate Advance), and
         (C) the obligation of the Lenders to make Eurodollar Rate Advances or
         to Convert Revolving Credit Advances into Eurodollar Rate Advances
         shall be suspended until the Paying Agent shall notify the Borrower and
         the Lenders that the circumstances causing such suspension no longer
         exist,

                  (ii) if, with respect to any Eurodollar Rate Advances, the
         Lenders required to make at least 51% of such Eurodollar Rate Advances
         notify the Paying Agent that the Eurodollar Rate for any Interest
         Period for such Advances will not adequately reflect the cost to such
         Lenders of making or funding their respective Eurodollar Rate Advances
         for such Interest Period, the Paying Agent shall forthwith so notify
         the Borrower and the Lenders, whereupon (A) each Eurodollar Rate
         Advance will automatically, on the last day of the then existing
         Interest Period therefor, Convert into a Base Rate Advance, and (B) the
         obligation of the Lenders to make, or to Convert Revolving Credit
         Advances into, Eurodollar Rate Advances shall be suspended until the
         Paying Agent shall notify the Borrower and the Lenders that the
         circumstances causing such suspension no longer exist, and

                  (iii) if the Borrower shall select an Interest Period of six
         months or nine months for any Eurodollar Rate Advances and any Lender
         shall notify the Paying Agent that the Eurodollar Rate for such
         Interest Period will not adequately reflect the cost to such Lender of
         making or funding its Eurodollar Rate Advance for such Interest Period,
         the Paying Agent shall forthwith so notify such Borrower and the
         Lenders, whereupon (A) each such Eurodollar Rate Advance will
         automatically, on the last day of the then existing Interest Period
         therefor, Convert into a Base Rate Advance, and (B) the obligations of
         the Lenders to make, or to Convert Advances into, Eurodollar Rate
         Advances having an Interest Period of six months or nine months shall
         be suspended until the Paying Agent shall notify the Borrower and such
         Lenders that the circumstances causing such suspension no longer exist.


   18

                  (c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower and, in respect of any Borrowing comprised of or including
Eurodollar Rate Advances specified in such Notice of Borrowing, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender solely as a result of any failure by the Borrower to borrow on the date
specified in the Notice of Borrowing for such Borrowing, including any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Eurodollar Rate Advance to be made by such Lender as part of
such Borrowing when such Eurodollar Rate Advance, solely as a result of such
failure, is not made on such date. Without prejudice to the survival of any
other provision of this Agreement, the provisions of this paragraph shall
survive any termination of this Agreement.

                  (d) Unless the Paying Agent shall have received notice from a
Lender prior to the date of any Revolving Credit Borrowing that such Lender will
not make available to the Paying Agent such Lender's ratable portion of such
Revolving Credit Borrowing, the Paying Agent may assume that such Lender has
made such portion available to the Paying Agent on the date of such Revolving
Credit Borrowing in accordance with subsection (a) of this Section 2.02 and the
Paying Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent such Lender
shall not have so made available to the Paying Agent on the date of any
Revolving Credit Borrowing such Lender's ratable portion of such Borrowing, such
Lender agrees, and the Borrower agrees, to pay or repay to the Paying Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is paid or repaid to the Paying Agent, at (in the case of such Lender)
the Federal Funds Rate and (in the case of the Borrower) the Base Rate plus the
Applicable Margin (provided that such payment at the Federal Funds Rate or the
Base Rate (plus the Applicable Margin) with respect to any Eurodollar Rate
Advance shall not affect the status of such Advance as a Eurodollar Rate
Advance). If such Lender shall pay to the Paying Agent such amount, the amount
so paid shall constitute such Lender's Revolving Credit Advance as part of such
Revolving Credit Borrowing for purposes of this Agreement from and including the
date of such Revolving Credit Borrowing.

                  (e) The failure of any Lender to make the Revolving Credit
Advance to be made by it as part of any Revolving Credit Borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make its
Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Revolving Credit Advance to be made by such other Lender on the date of any
Revolving Credit Borrowing.

                  (f) Each Letter of Credit shall be issued on reasonable notice
from the Borrower to the Paying Agent specifying the date of issuance (which
shall be a Business Day) and the amount, expiration date, beneficiary and other
terms thereof. Upon fulfillment of such conditions as the Issuing Bank issuing
such Letter of Credit or the Paying Agent may reasonably require, which shall
include the conditions set forth in Article III (as though the issuance of the
Letter of Credit were an Advance), the Issuing Bank will issue the Letter of
Credit in accordance with its terms. The Paying Agent shall notify the Lenders
of any issuance by an Issuing Bank of a Letter of Credit on the Settlement Date
next succeeding the date of such issuance.

                  SECTION 2.03. FEES. (a) FACILITY FEES. The Borrower agrees to
pay to the Paying Agent for distribution to each Lender until the Termination
Date a facility fee (the "FACILITY FEE") with respect to such Lender's
Commitment, at a rate per annum equal to the Facility Fee Percentage from time
to time in effect on the aggregate amount of such Lender's Commitment,
regardless of usage. The Facility Fees will commence to accrue on the date of
execution of this Agreement and will be payable in arrears on (i) the Effective
Date, (ii) on the third day of each January, April, July and October and (iii)
on the Termination Date.

                  (b) PAYING AGENT'S FEES. The Borrower agrees to pay to the
Paying Agent, for its own account, such fees as may from time to time be agreed
between the Borrower and the Paying Agent.

                  (c) LETTER OF CREDIT FEES. (i) Upon the issuance, extension or
renewal of each Letter of Credit by an Issuing Bank, the Borrower agrees to pay
to such Issuing Bank a fee in an amount to be agreed upon between such Issuing
Bank and the Borrower, payable on the date of such issuance (or on such other
date as may be agreed upon by such Issuing Bank and the Borrower).


   19

                           (ii) The Borrower agrees to pay to the Paying Agent,
for the ratable benefit of the Lenders (determined in accordance with the
respective amounts of their Commitments), a letter of credit fee at the
Applicable Margin on the maximum amount available to be drawn on each day under
outstanding Letters of Credit issued pursuant to Section 2.01(c) for the account
of the Borrower (the determination of such maximum amount to assume the
occurrence of, and compliance with, all conditions for drawing referred to
therein), in each case payable quarterly in arrears on the third day of each
January, April, July and October after the date of issuance until the date each
such Letter of Credit shall expire or terminate in accordance with its terms and
on the date of such expiration or termination.

                  (d) TRANSFER FEE; AMENDMENT FEE. (i) The Borrower agrees to
pay to each Issuing Bank, upon each transfer or amendment of a Letter of Credit
issued for the account of the Borrower, the normal and customary transfer fee or
amendment fee, as the case may be (or such other fee as the Borrower and such
Issuing Bank may agree upon), charged by such Issuing Bank upon the transfer or
amendment of letters of credit.

                  (e) LETTER OF CREDIT EXPENSES. The Borrower agrees to pay to
each Issuing Bank, on demand, sums equal to any and all reasonable charges such
Issuing Bank may assess, and expenses that such Issuing Bank may pay or incur,
relative to the issuance by such Issuing Bank of any Letter of Credit issued for
the account of the Borrower or to presentment to, or to a payment by, the
Issuing Bank thereunder.

                  SECTION 2.04. TERMINATION OR REDUCTION OF THE COMMITMENTS. (a)
The Commitments shall be automatically terminated on the Termination Date.

                  (b) The Borrower shall have the right, upon at least three
Business Days' notice to the Administrative Agents, to terminate in whole, or
reduce ratably in part (in a minimum principal amount of $10,000,000 or any
whole multiple of $1,000,000 in excess thereof), the unused portion of the
Commitments (such unused portion having been determined after subtracting the
Competitive Bid Reduction and the Facility Usage).

                  (c) The Letter of Credit Facility shall not be reduced until
such time as the Commitments shall equal such Letter of Credit Facility, and
thereafter shall reduce proportionately with any reduction in the amount of the
Commitments pursuant to this Section 2.04.

                  SECTION 2.05. REPAYMENT OF REVOLVING CREDIT ADVANCES. The
Borrower shall repay to the Paying Agent for the account of the Lenders on the
Termination Date the aggregate principal amount of the Advances owing to the
Lenders on such date.

                  SECTION 2.06. INTEREST ON REVOLVING CREDIT ADVANCES. The
Borrower shall pay interest on the unpaid principal amount of each Revolving
Credit Advance owing to each Lender from the date of such Revolving Credit
Advance until such principal amount shall be paid in full, at the following
rates per annum:

                  (a) BASE RATE ADVANCES. During such periods as such Revolving
         Credit Advance is a Base Rate Advance, a rate per annum equal at all
         times to the sum of (x) the Base Rate in effect from time to time plus
         (y) the Applicable Margin plus (z) the Utilization Fee Percentage, if
         any, payable quarterly in arrears on the third day of each January,
         April, July and October and on the date such Base Rate Advance shall be
         Converted into a Eurodollar Rate Advance or paid in full; PROVIDED that
         commencing on the date and during the continuance of any Event of
         Default the applicable interest rate for all outstanding Base Rate
         Advances shall be a rate per annum equal at all times to 2% per annum
         above the rate otherwise in effect for such Base Rate Advances pursuant
         to this Section 2.06(a) from time to time.

                  (b) EURODOLLAR RATE ADVANCES. During such periods as such
         Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
         equal at all times during each Interest Period for such Advance to the
         sum of (x) the Eurodollar Rate for such Interest Period plus (y) the
         Applicable Margin plus (z) the Utilization Fee Percentage, if any,
         payable on the last day of each Interest Period and, if such Interest
         Period has a duration of six months or nine months, on each day that
         occurs during such Interest Period every three months from the first
         day of such Interest Period, PROVIDED that commencing on the date and

   20

         during the continuance of any Event of Default the applicable interest
         rate for all outstanding Eurodollar Rate Advances shall be a rate per
         annum equal at all times to 2% per annum above the rate otherwise in
         effect for such Eurodollar Rate Advances pursuant to this Section
         2.06(b).

                  SECTION 2.07. INTEREST RATE DETERMINATION. (a) Each Reference
Bank agrees to furnish to the Paying Agent timely information for the purpose of
determining each Eurodollar Rate. If any one or more of the Reference Banks
shall not furnish such timely information to the Paying Agent for the purpose of
determining any such interest rate (but at least two Reference Banks shall have
furnished such information), the Paying Agent shall determine such interest rate
on the basis of timely information furnished by the remaining Reference Banks.

                  (b) The Paying Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Paying Agent
for purposes of Section 2.06(a) or (b), and the rate, if any, furnished by each
Reference Bank for the purpose of determining the interest rate under Section
2.06(b).

                  (c) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Paying Agent will forthwith so notify the Borrower and the Lenders and such
Advances will automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.

                  SECTION 2.08. CONVERSION OF REVOLVING CREDIT ADVANCES. (a) The
Borrower may on any Business Day, upon notice given to the Paying Agent not
later than 11:00 a.m. (New York City time) on the third Business Day prior to
the date of the proposed Conversion, and subject to the provisions of Sections
2.02(c), 2.06, 2.07, 2.08(d) and 2.10(c), Convert all or any Revolving Credit
Advances of one Type into Advances of the other Type; PROVIDED, HOWEVER, that
(i) except as provided in Section 2.10(c), any Conversion of any Eurodollar Rate
Advances into Base Rate Advances shall be made on, and only on, the last day of
an Interest Period for such Eurodollar Rate Advances and (ii) the Borrower may
not Convert any Base Rate Advances into Eurodollar Rate Advances unless such
Base Rate Advances are in an aggregate amount not less than $10,000,000. Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Type and aggregate amount of
Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate
Advances, the duration of the Interest Period for such Advances.

                  (b) Each notice of Conversion shall be irrevocable and binding
on the Borrower and, in respect of any notice of Conversion to Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender solely as a result of any failure to Convert on
the date specified in such notice, including any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Eurodollar Rate Advance to be made by such Lender as part of such Conversion
when such Eurodollar Rate Advance, solely as a result of such failure, is not
made on such date. Without prejudice to the survival of any other provision of
this Agreement, the provisions of this paragraph shall survive any termination
of this Agreement.

                  (c) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances having the same Interest Period shall be reduced, by
payment or prepayment or otherwise, to less than $10,000,000, such Advances
shall automatically Convert into Base Rate Advances.

                  (d) Upon the occurrence of any Default and so long as such
Default shall continue, (i) each Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, or to Convert any
Advances into, Eurodollar Rate Advances shall be suspended.

                  SECTION 2.09. PREPAYMENTS. (a) OPTIONAL PREPAYMENTS. The
Borrower may, upon at least two Business Days' notice in the case of Eurodollar
Rate Advances, and upon at least one Business Day's notice in the case of Base
Rate Advances, to the Paying Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; PROVIDED, HOWEVER,


   21
that (x) each partial prepayment pursuant to this Section 2.09 shall be in an
aggregate principal amount of $5,000,000or any whole multiple of $1,000,000 in
excess thereof] and (y) in the event of any such prepayment of a Eurodollar Rate
Advance, such prepayment shall either be made on the last day of an Interest
Period for such Eurodollar Rate Advance or shall be made together with payment
of all amounts required pursuant to Section 8.03(c).

                  (b) MANDATORY PREPAYMENTS. (i) If any Lender shall for any
reason fail to pay the Settlement Amount payable by it on a Settlement Date, on
demand by the Administrative Agents the Borrower shall forthwith prepay the
Advances in an amount equal to such Settlement Amount, and the Paying Agent
shall apply such prepayment in the same manner as is specified in the second
sentence of Section 2.18.

                  (ii) The Borrower shall, on each Business Day, pay to the
Paying Agent for deposit in the Letter of Credit Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such Account to equal the
amount by which the aggregate maximum amount available to be drawn under Letters
of Credit then outstanding (assuming compliance with all conditions to drawing)
exceeds the Letter of Credit Facility on such Business Day.

                  (iii) All prepayments by the Borrower under this subsection
(b) shall be made together with accrued interest to the date of such prepayment
on the principal amount prepaid and shall be applied first against the Advances
to be prepaid that are Base Rate Advances and thereafter against the Advances to
be prepaid that are Eurodollar Advances having Interest Periods ending as close
as possible to the date of such prepayment.

                  SECTION 2.10. INCREASED COSTS; ILLEGALITY. (a) If, due to
either (i) the introduction of or any change (including any change by way of
imposition or increase of reserve requirements included in the Eurodollar Rate
Reserve Percentage) in or change in the interpretation of any law or regulation
or (ii) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to any Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Advances, then the Borrower shall from
time to time, upon demand by such Lender (with a copy of such demand to the
Administrative Agents), pay to the Paying Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
and the Administrative Agents by such Lender, shall be conclusive and binding
for all purposes, absent manifest error.

                  (b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type or of the Letters of Credit
(or similar contingent obligations), then, upon demand by such Lender (with a
copy of such demand to the Administrative Agents), the Borrower shall pay to the
Paying Agent for the account of such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender in the
light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder or to the issuance or maintenance of the
Letters of Credit. A certificate as to such amounts, submitted to the Borrower
and the Administrative Agents by such Lender, shall be conclusive and binding
for all purposes, absent manifest error.

                  (c) If, due to either (i) the introduction of or any change in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Issuing Bank or any Lender of agreeing to issue or of issuing or
maintaining any Letter of Credit or any participation therein, then the Borrower
shall from time to time, upon demand by such Issuing Bank or Lender (with a copy
of such demand to the Administrative Agents), pay to the Paying Agent for the
account of such Issuing Bank or such Lender, as the case may be, additional
amounts sufficient to compensate such Issuing Bank or such Lender, as the case
may be, for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Administrative Agents by such
Issuing Bank or such Lender, as the case may be, shall be conclusive and binding
for all purposes, absent manifest error.


   22

                  (d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, as determined by any Lender, or any central
bank or other Governmental Authority shall assert that it is unlawful, for such
Lender or its Eurodollar Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder, then, on notice thereof and demand therefor by such Lender
to the Borrower through the Administrative Agents, (i) the obligation of such
Lender to make Eurodollar Rate Advances and to Convert Advances into Eurodollar
Rate Advances shall terminate and (ii) the Borrower shall forthwith Convert all
Eurodollar Rate Advances of such Lender then outstanding into Base Rate Advances
in accordance with Section 2.08, except that such Conversion may occur,
notwithstanding Section 2.08, other than on the last day of the respective
Interest Periods for such Eurodollar Rate Advances, if the Borrower has paid all
amounts payable under Section 8.03(c).

                  SECTION 2.11. PAYMENTS AND COMPUTATIONS. (a) The Borrower
shall make each payment hereunder and under the Notes, if any, without set-off
or counterclaim, not later than 12:00 noon (New York City time) on the day when
due in U.S. dollars to the Paying Agent at the Paying Agent's Account in same
day funds. The Paying Agent will promptly thereafter cause to be distributed
like funds relating to the payment of principal or interest, letter of credit
fees payable pursuant to Section 2.03(c)(ii) or facility fees ratably (other
than amounts payable pursuant to Section 2.03(b), 2.03(c)(i), 2.03(d), 2.10,
2.13, 2.16 or 8.03(c)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon any Assuming Lender becoming a Lender hereunder as a result of
an extension of the Termination Date pursuant to Section 2.16, and upon the
Paying Agent's receipt of such Lender's Assumption Agreement and recording of
the information contained therein in the Register, from and after the applicable
Extension Date, the Paying Agent shall make all payments hereunder and under any
Notes issued in connection therewith in respect of the interest assumed thereby
to the Assuming Lender. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.06(d), from and after the effective date specified in such Assignment
and Acceptance, the Paying Agent shall make all payments hereunder and under the
Notes, if any, in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.

                  (b) The Borrower hereby authorizes (i) each Issuing Bank on
behalf of each Lender, if and to the extent payment owed to such Lender is not
made by the Borrower to the Paying Agent when due hereunder, to charge from time
to time against any or all of the Borrower's accounts with such Issuing Bank any
amount so due and (ii) each Lender, if and to the extent payment is not made
when due hereunder, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due to such Lender prior to
any sharing under Section 2.12. Nothing contained in this subsection (b) shall
impair the obligations of any Lender under Section 2.12, the rights of the
Administrative Agents, the Paying Agent or any Lender under Section 8.04 or any
other rights and remedies (including other rights of set-off) that the
Administrative Agents, the Paying Agent or such Lender may have.

                  (c) All computations of interest based on the Base Rate (when
determined pursuant to clause (a) of the definition thereof) and fees shall be
made by the Paying Agent on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on Base Rate (when determined
pursuant to clause (b) or (c) of the definition thereof), the Eurodollar Rate or
the Federal Funds Rate shall be made by the Paying Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Paying Agent of an interest
rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.

                  (d) Whenever any payment hereunder or under the Notes, if any,
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fees, as the
case may be; PROVIDED, HOWEVER, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.


   23

                  (e) Unless the Paying Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the Paying Agent
may assume that the Borrower has made such payment in full to the Paying Agent
on such date and the Paying Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Paying Agent, each Lender shall repay to the Paying
Agent forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Paying Agent, at the
Federal Funds Rate.

                  SECTION 2.12. SHARING OF PAYMENTS, ETC. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Revolving Credit Advances made
by it (other than pursuant to Section 2.03(b), 2.03(c)(i), 2.03(d),
2.03(e),2.10, 2.13, 2.16 or 8.03(c)) in excess of its ratable share of payments
on account of the Revolving Credit Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Revolving Credit Advances made to the other Lenders as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to each such other Lender's ratable share (according to the proportion of
(i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.12 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.

                  SECTION 2.13. TAXES. (a) Any and all payments by the Borrower
hereunder or under any Note shall be made, in accordance with Section 2.11, free
and clear of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto (including interest, additions to tax, and penalties thereon)
imposed by the United States of America or any political subdivision thereof
(or, in the event that the Borrower assigns any of its rights or obligations or
any interest hereunder or under any Notes, by any foreign country and its
political subdivisions in which the assignee is incorporated or is resident),
EXCLUDING, in the case of each Lender, the Paying Agent and each Administrative
Agent, taxes imposed on or measured by its net income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Administrative
Agent, the Paying Agent or such Lender (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
or measured by its net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "TAXES").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to any Lender, the Paying Agent or either
Administrative Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender, the Paying Agent
or such Administrative Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

                  (b) In addition, the Borrower agrees to pay any current or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or under any Note
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any Note (hereinafter referred to as "OTHER TAXES").

                  (c) The Borrower will indemnify each Lender, the Paying Agent
and each Administrative Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.13) paid by such Lender, the Paying Agent or such
Administrative Agent (as the case may be) and any liability (including interest,
expenses, additions to tax, and penalties) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payments under this indemnification shall be made within 30 days from
the date such Lender, the Paying Agent or such


   24

Administrative Agent (as the case may be) makes written demand therefor.
However, in the case of any Taxes not required by law to be deducted by the
Borrower from or in respect of any sum payable hereunder to any Lender, the
Paying Agent or either Administrative Agent, payment under this indemnification
must be made by the Borrower only if such written demand has been made within 60
days from the date on which such Lender, the Paying Agent or such Administrative
Agent, as the case may be, makes payment of the Taxes to the relevant taxing
authority.

                  (d) Within 30 days after the reasonable request therefor by
the Paying Agent in connection with any payment of Taxes or Other Taxes, the
Borrower will furnish to the Paying Agent, at its address referred to in, or
determined pursuant to, Section 8.02, the original or a certified copy of an
official receipt from the jurisdiction to which payment is made evidencing
payment thereof or, if unavailable, a certificate from the Borrower's treasurer
or responsible officer that states that such payment has been made and that sets
forth the date and amount of such payment.

                  (e) Prior to or on the Effective Date in the case of each
Lender that is a Lender on the Effective Date, and on the date of the Assignment
and Acceptance or the Assumption Agreement, as the case may be, pursuant to
which it became a Lender in the case of each other Lender, and from time to time
thereafter if reasonably requested by the Borrower or the Paying Agent, each
Lender organized under the laws of a foreign jurisdiction that is exempt from
United States Federal withholding tax, or that is subject to such tax at a
reduced rate under an applicable treaty, with respect to payments under this
Agreement has provided or is herewith providing the Borrower or the Paying Agent
with an Internal Revenue Form 4224 or Form 1001 or other certificate or document
required under United States law to establish entitlement to such exemption or
reduced rate. A determination of whether a Lender is exempt from United States
Federal withholding tax or is subject to such tax at a reduced rate shall be
within the reasonable judgment of the Lender.

                  (f) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.13 shall survive the payment in full of principal
and interest hereunder.

                  SECTION 2.14. EVIDENCE OF DEBT. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender to the Borrower (with a copy of such notice to
the Paying Agent) to the effect that a promissory note or other evidence of
indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender a promissory note or other evidence of indebtedness, in
form and substance reasonably satisfactory to the Borrower and such Lender (each
a "NOTE"), payable to the order of such Lender in a principal amount equal to
the Commitment of such Lender.

                  (b) The Register maintained by the Paying Agent pursuant to
Section 8.06(d) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances comprising
such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii)
the terms of each Assignment and Acceptance delivered to and accepted by it,
(iii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder, and (iv) the amount of
any sum received by the Paying Agent from the Borrower hereunder and each
Lender's share thereof.

                  (c) Entries made in good faith by the Paying Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be PRIMA FACIE evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; PROVIDED, HOWEVER, that the failure of the Paying Agent or such Lender to
make an entry, or any finding that an entry is incorrect, in the Register or
such account or accounts shall not limit or otherwise affect the obligations of
the Borrower under this Agreement.


   25

                  SECTION 2.15. USE OF PROCEEDS. The proceeds of the Advances
shall be available (and the Borrower agrees that it shall use such proceeds) for
general corporate purposes of the Borrower and its Subsidiaries.

                  SECTION 2.16. EXTENSION OF TERMINATION DATE. (a) At least 30
days but not more than 60 days prior to each of the first and second Anniversary
Dates, the Borrower, by written notice to the Paying Agent, may request an
extension of the Termination Date in effect at such time by one year from its
then scheduled expiration. The Paying Agent shall promptly notify each Lender of
such request, and each Lender shall in turn, in its sole discretion, at least 20
days prior to such Anniversary Date, notify the Borrower and the Paying Agent in
writing as to whether such Lender will consent to such extension. If any Lender
shall fail to notify the Paying Agent and the Borrower in writing of its consent
to any such request for extension of the Termination Date at least 20 days prior
to the scheduled occurrence thereof at such time, such Lender shall be deemed to
be a Non-Consenting Lender with respect to such request. The Paying Agent shall
notify the Borrower not later than 15 days prior to the pending Anniversary Date
of the decision of the Lenders regarding the Borrower's request for an extension
of the Termination Date.

                  (b) If all of the Lenders consent in writing to any such
request in accordance with subsection (a) of this Section 2.16, the Termination
Date in effect at such time shall, effective as at the next Anniversary Date
(the "EXTENSION DATE"), be extended for one calendar year; PROVIDED that on each
Extension Date, no Default shall have occurred and be continuing, or shall occur
as a consequence thereof and the giving of a request for extension shall
constitute a representation and warranty by the Borrower that the
representations and warranties contained in Section 4.01 are correct in all
material respects on and as of the date of such notice and on such Extension
Date, as though made on and as of such dates. If Lenders holding at least a
majority in interest of the aggregate Commitments at such time consent in
writing to any such request in accordance with subsection (a) of this Section
2.16, the Termination Date in effect at such time shall, effective as at the
applicable Extension Date, be extended as to those Lenders that so consented
(each a "CONSENTING LENDER") but shall not be extended as to any other Lender
(each a "NON-CONSENTING LENDER"). To the extent that the Termination Date is not
extended as to any Lender pursuant to this Section 2.16 and the Commitment of
such Lender is not assumed in accordance with subsection (c) of this Section
2.16 on or prior to the applicable Extension Date, the Commitment of such
Non-Consenting Lender shall automatically terminate in whole on such unextended
Termination Date without any further notice or other action by the Borrower,
such Lender or any other Person; PROVIDED that such Non-Consenting Lender's
rights under Sections 2.10, 2.13, 8.03 and 8.07, and its obligations under
Section 7.05, shall survive the Termination Date for such Lender as to matters
occurring prior to such date. It is understood and agreed that no Lender shall
have any obligation whatsoever to agree to any request made by the Borrower for
any requested extension of the Termination Date.

                  (c) If Lenders holding at least a majority in interest of the
aggregate Commitments at any time consent to any such request pursuant to
subsection (a) of this Section 2.16, the Borrower may arrange for one or more
Consenting Lenders or other Eligible Assignees (each such Eligible Assignee that
accepts an offer to assume a Non-Consenting Lender's Commitment as of the
applicable Extension Date being an "ASSUMING LENDER") to assume, effective as of
the Extension Date, any Non-Consenting Lender's Commitment and all of the
obligations of such Non-Consenting Lender under this Agreement thereafter
arising, without recourse to or warranty by, or expense to, such Non-Consenting
Lender; PROVIDED, HOWEVER, that the amount of the Commitment of any such
Assuming Lender as a result of such substitution shall in no event be less than
$10,000,000 unless the amount of the Commitment of such Non-Consenting Lender is
less than $10,000,000, in which case such Assuming Lender shall assume all of
such lesser amount; and PROVIDED FURTHER that:

                  (i) any such Consenting Lender or Assuming Lender shall have
         paid to such Non-Consenting Lender (A) the aggregate principal amount
         of, and any interest accrued and unpaid to the effective date of the
         assignment on, the outstanding Revolving Credit Advances, if any, of
         such Non-Consenting Lender PLUS (B) any accrued but unpaid Facility
         Fees and fees pursuant to Section 2.03(c)(ii) owing to such
         Non-Consenting Lender as of the effective date of such assignment;

                  (ii) all additional costs reimbursements, expense
         reimbursements and indemnities payable to such Non-Consenting Lender,
         and all other accrued and unpaid amounts owing to such Non-Consenting

   26

         Lender hereunder, as of the effective date of such assignment shall
         have been paid to such Non-Consenting Lender; and

                  (iii) with respect to any such Assuming Lender, the applicable
         processing and recordation fee required under Section 8.06(a) for such
         assignment shall have been paid;

PROVIDED FURTHER that such Non-Consenting Lender's rights under Sections 2.10,
2.13, 8.03 and 8.07, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower and the Paying Agent an assumption
agreement, in form and substance satisfactory to the Borrower and the Paying
Agent (an "ASSUMPTION AGREEMENT"), duly executed by such Assuming Lender, such
Non-Consenting Lender, the Borrower and the Paying Agent, (B) any such
Consenting Lender shall have delivered confirmation in writing satisfactory to
the Borrower and the Paying Agent as to the increase in the amount of its
Commitment and (C) each Non-Consenting Lender being replaced pursuant to this
Section 2.16 shall have delivered to the Paying Agent any Note or Notes held by
such Non-Consenting Lender. Upon the payment or prepayment of all amounts
referred to in clauses (i), (ii) and (iii) of the immediately preceding
sentence, each such Consenting Lender or Assuming Lender, as of the Extension
Date, will be substituted for such Non-Consenting Lender under this Agreement
and shall be a Lender for all purposes of this Agreement, without any further
acknowledgment by or the consent of the other Lenders, and the obligations of
each such Non-Consenting Lender hereunder shall, by the provisions hereof, be
released and discharged.

                  (d) If Lenders holding a majority in interest of the aggregate
Commitments (after giving effect to any assumptions pursuant to subsection (c)
of this Section 2.16) consent in writing to a requested extension (whether by
execution or delivery of an Assumption Agreement or otherwise) not later than
one Business Day prior to such Extension Date, the Paying Agent shall so notify
the Borrower, and, so long as no Default shall have occurred and be continuing
as of such Extension Date, or shall occur as a consequence thereof, the
Termination Date then in effect with respect to the Commitment of such
Consenting Lenders and Assuming Lenders shall be extended for the additional
one-year period described in subsection (a) of this Section 2.16, and all
references in this Agreement, and in the Notes, if any, to the "TERMINATION
DATE" shall, with respect to each Consenting Lender and each Assuming Lender for
such Extension Date, refer to the Termination Date as so extended. Promptly
following each Extension Date, the Paying Agent shall notify the Lenders
(including, without limitation, each Assuming Lender) of the extension of the
scheduled Termination Date in effect immediately prior thereto and shall
thereupon record in the Register the relevant information with respect to each
such Consenting Lender and each such Assuming Lender.

                  SECTION 2.17. OBLIGATIONS ABSOLUTE. The obligations of the
Borrower under this Agreement in respect of any Letter of Credit and under any
other agreement or instrument relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement and such other agreement or instrument under all
circumstances, including to the extent permitted by law, the following
circumstances:

                  (a) any lack of validity or enforceability of any Letter of
         Credit or any other agreement or instrument relating thereto
         (collectively, the "LETTER OF CREDIT DOCUMENTS") or any Loan Document;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the obligations of the Borrower in
         respect of any Letter of Credit or any other amendment or waiver of or
         any consent to departure from all or any of the Letter of Credit
         Documents or any other Loan Document;

                  (c) any exchange, release or nonperfection of any collateral,
         or any release or amendment or waiver of or consent to departure from
         any guaranty, for all or any of the obligations of the Borrower in
         respect of any Letter of Credit;

                  (d) the existence of any claim, set-off, defense or other
         right that the Borrower may have at any time against any beneficiary or
         any transferee of a Letter of Credit (or any Persons for whom any such
         beneficiary or any such transferee may be acting), any of the Lenders,
         the Administrative Agent, the Paying



                                       65
   27

         Agent or any other Person, whether in connection with any Loan
         Document, the transactions contemplated hereby or thereby or any
         unrelated transaction;

                  (e) any statement or any other document presented under or in
         connection with any Letter of Credit or other Loan Document proving to
         be forged, fraudulent, invalid or insufficient in any respect or any
         statement therein being untrue or inaccurate in any respect;

                  (f) payment in good faith by an Issuing Bank under a Letter of
         Credit against presentation of a draft or certificate that does not
         comply with the terms of such Letter of Credit; and

                  (g) any other circumstance or happening whatsoever other than
         the payment in full of all obligations hereunder in respect of any
         Letter of Credit or any agreement or instrument relating to any Letter
         of Credit, whether or not similar to any of the foregoing, that might
         otherwise constitute a defense available to, or a discharge of, the
         Borrower.

                  SECTION 2.18. SPECIAL ADJUSTMENTS OF ADVANCES. The Paying
Agent will notify the Lenders of the aggregate amount of Advances (other than
Competitive Bid Advances) outstanding upon the occurrence of a Default and at
such times and at such frequencies as the Paying Agent or any Issuing Bank in
their sole discretion may determine, but in any event not less frequently than
weekly (the date of each such notice by the Paying Agent being a "SETTLEMENT
DATE"). Upon receipt of any such notice, such Issuing Bank or each of the other
Lenders, as the case may be, will forthwith unconditionally pay to the Paying
Agent (for distribution by the Paying Agent to such Issuing Bank or each of the
other Lenders, as the case may be) such amount (a "SETTLEMENT AMOUNT"), if any,
as is necessary to cause the aggregate unpaid principal amount of the Advances
(other than Competitive Bid Advances) to be shared by the Lenders ratably in
accordance with the amounts of their Commitments. Upon each payment and
distribution pursuant to the preceding sentence, each Lender will be deemed from
the date of such payment and distribution for all purposes under the Loan
Documents (including in respect of interest accruing from such date on the
principal amount of such Advances) to have outstanding Advances owed to it in
the amount of its ratable share of such Advances as aforesaid; PROVIDED that in
no event shall any Lender have Advances (other than Competitive Bid Advances) in
an aggregate outstanding principal amount greater than such Lender's Commitment.

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION 3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION
2.01. Section 2.01 of this Agreement shall become effective on and as of the
first date (the "EFFECTIVE DATE") on which the following conditions precedent
have been satisfied:

                  (a) There shall have occurred no Material Adverse Change since
         February 3, 2001.

                  (b) There shall exist no action, suit, investigation,
         litigation or proceeding affecting the Borrower or any of its
         Subsidiaries pending or threatened before any court, governmental
         agency or arbitrator that (i) could be reasonably likely to have a
         Material Adverse Effect other than the matters described on Schedule
         3.01(b) hereto (the "DISCLOSED LITIGATION") or (ii) purports to affect
         the legality, validity or enforceability of this Agreement or any Note
         or the consummation of the transactions contemplated hereby, and there
         shall have been no adverse change in the status, or financial effect on
         the Borrower or any of its Subsidiaries, of the Disclosed Litigation
         from that described on Schedule 3.01(b) hereto.

                  (c) Nothing shall have come to the attention of the Lenders
         during the course of their due diligence investigation to lead them to
         believe that the Information Memorandum was or has become misleading,
         incorrect or incomplete in any material respect; without limiting the
         generality of the foregoing, the Lenders shall have been given such
         access to the management, records, books of account, contracts and
         properties of the Borrower and its Subsidiaries as they shall have
         requested.



   28

                  (d) All governmental and third party consents and approvals
         necessary in connection with the transactions contemplated hereby shall
         have been obtained (without the imposition of any conditions that are
         not acceptable to the Lenders) and shall remain in effect, and no law
         or regulation shall be applicable in the reasonable judgment of the
         Lenders that restrains, prevents or imposes materially adverse
         conditions upon the transactions contemplated hereby.

                  (e) The Borrower shall have notified each Lender and the
         Agents in writing as to the proposed Effective Date.

                  (f) The Borrower shall have paid all accrued fees and expenses
         of the Agents, the Issuing Banks and the Lenders (including the accrued
         fees and expenses of counsel to the Agents).

                  (g) On the Effective Date, the following statements shall be
         true and the Agents shall have received for the account of each Lender
         a certificate signed by a duly authorized officer of the Borrower,
         dated the Effective Date, stating that:

                           (i) The representations and warranties contained in
                  Section 4.01 are correct on and as of the Effective Date, and

                           (ii) No event has occurred and is continuing that
                  constitutes a Default.

                  (h) The Agents shall have received on or before the Effective
         Date the following, each dated such day, in form and substance
         satisfactory to the Agents and in sufficient copies for each Lender:

                           (i) The Guarantee Agreement, duly executed by each
                  Guarantor existing on the Effective Date.

                           (ii) Certified copies of the resolutions of the Board
                  of Directors of the Borrower approving this Agreement,
                  certified copies of the resolutions of the Board of Directors
                  of each Guarantor approving the Guarantee Agreement and of all
                  documents evidencing other necessary corporate action and
                  governmental approvals, if any, with respect to this Agreement
                  and the other Loan Documents.

                           (iii) A certificate of the Secretary or an Assistant
                  Secretary of the Borrower and each Guarantor certifying the
                  names and true signatures of the officers of the Borrower or
                  such Guarantor, as applicable, authorized to sign this
                  Agreement, each other Loan Document to which it is a party and
                  the other documents to be delivered hereunder or thereunder.

                           (iv) A favorable opinion of Paul W. Heldman, Senior
                  Vice President, Secretary and General Counsel for the
                  Borrower, substantially in the form of Exhibit D hereto and as
                  to such other matters as any Lender through the Agents may
                  reasonably request.

                           (v) A favorable opinion of Shearman & Sterling,
                  counsel for the Agents, in form and substance satisfactory to
                  the Agents.

                  (i) The termination of the commitments of the lenders and the
         payment in full of all Debt outstanding under (i) the 364-Day Credit
         Agreement dated as of May 28, 1997, as amended and restated as of
         December 18, 1998, among the Borrower, the lenders parties thereto,
         Chase, as swing line bank, issuing bank and administrative agent, and
         Citibank, as swing line bank, administrative agent and paying agent,
         First Chicago Capital Markets, Inc., as syndication agent, and The Bank
         of New York, as documentation agent, and (ii) the Five-Year Credit
         Agreement dated as of May 28, 1997, as amended and restated as of
         December 18, 1998, among the Borrower, the banking institutions parties
         thereto, Chase, as swing line bank, issuing bank and administrative
         agent, and Citibank, as swing line bank, administrative agent and

   29

         paying agent, First Chicago Capital Markets, Inc., as syndication
         agent, and The Bank of New York, as documentation agent.

                  SECTION 3.02. CONDITIONS PRECEDENT TO EACH REVOLVING CREDIT
BORROWING. The obligation of each Lender to make a Revolving Credit Advance on
the occasion of each Revolving Credit Borrowing and the right of the Borrower to
request the issuance of a Letter of Credit shall be subject to the conditions
precedent that the Effective Date shall have occurred and on the date of such
Revolving Credit Borrowing or issuance (a) the following statements shall be
true (and each of the giving of the applicable Notice of Revolving Credit
Borrowing or notice of issuance and the acceptance by the Borrower of the
proceeds of such Revolving Credit Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing or issuance such statements are true):

                  (i) the representations and warranties contained in Section
         4.01 are correct in all material respects on and as of the date of such
         Revolving Credit Borrowing, before and after giving effect to such
         Revolving Credit Borrowing or issuance of a Letter of Credit and to the
         application of the proceeds therefrom, as though made on and as of such
         date, and

                  (ii) no event has occurred and is continuing, or would result
         from such Revolving Credit Borrowing or issuance of a Letter of Credit
         or from the application of the proceeds therefrom, that constitutes a
         Default;

and (b) the Agents shall have received such other approvals, opinions or
documents as any Lender through the Agents may reasonably request.

                  SECTION 3.03. DETERMINATIONS UNDER SECTION 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of any Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agents shall promptly notify the Lenders of the
occurrence of the Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:

                  (a) The Borrower is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Ohio. Each
         Guarantor is a corporation duly organized, validly existing and in good
         standing under the laws of the jurisdiction of its organization.

                  (b) The execution, delivery and performance by the Borrower
         and each Guarantor of the Loan Documents to which it is a party and
         which are delivered hereunder and the consummation of the transactions
         contemplated hereby and thereby, are within the Borrower's or such
         Guarantor's corporate powers, have been duly authorized by all
         necessary corporate action, and do not contravene (i) the Borrower's or
         such Guarantor's charter, regulations or by-laws, as applicable, or
         (ii) law or any contractual restriction binding on or affecting the
         Borrower or such Guarantor.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for the due execution, delivery
         and performance by the Borrower or any Guarantor of any Loan Document
         to which it is a party,


   30

         except for those authorizations, approvals, actions, notices and
         filings listed on Schedule 4.01(c) hereto, all of which have been duly
         obtained, taken, given or made and are in full force and effect.

                  (d) This Agreement has been, and each of the other Loan
         Documents to which it is a party, will have been, duly executed and
         delivered by the Borrower. The Guarantee Agreement has been duly
         executed and delivered by each Guarantor. This Agreement and the
         Guarantee Agreement are, and each of the other Loan Documents, when
         delivered hereunder, will be, the legal, valid and binding obligation
         of the Borrower and each Guarantor party thereto, as the case may be,
         enforceable against the Borrower and such Guarantor, as the case may
         be, in accordance with their respective terms.

                  (e) The Consolidated balance sheet of the Borrower and its
         Subsidiaries as at February 3, 2001, and the related Consolidated
         statements of income and cash flows of the Borrower and its
         Subsidiaries for the Fiscal Year then ended, accompanied by an opinion
         of PricewaterhouseCoopers LLP, independent public accountants, copies
         of which have been furnished to each Lender, fairly present the
         Consolidated financial condition of the Borrower and its Subsidiaries
         as at such date and the Consolidated results of the operations of the
         Borrower and its Subsidiaries for the period ended on such date, all in
         accordance with generally accepted accounting principles consistently
         applied. Since February 3, 2001, there has been no Material Adverse
         Change.

                  (f) There is no pending or threatened action, suit,
         investigation, litigation or proceeding affecting the Borrower or any
         of its Subsidiaries before any court, governmental agency or arbitrator
         that (i) could be reasonably likely to have a Material Adverse Effect
         (other than the Disclosed Litigation) or (ii) purports to affect the
         legality, validity or enforceability of the Loan Documents or the
         consummation of the transactions contemplated hereby and thereby, and
         there has been no adverse change in the status, or financial effect on
         the Borrower or any of its Subsidiaries, of the Disclosed Litigation
         from that described on Schedule 3.01(b) hereto.

                  (g) Neither the Borrower nor any Guarantor is engaged in the
         business of extending credit for the purpose of purchasing or carrying
         margin stock (within the meaning of Regulation U issued by the Board of
         Governors of the Federal Reserve System), and no proceeds of any
         Advance or of any Letter of Credit will be used to purchase or carry
         any margin stock or to extend credit to others for the purpose of
         purchasing or carrying any margin stock.

                  (h) Neither the Borrower nor any Guarantor is (i) an
         "investment company", within the meaning of the Investment Company Act
         of 1940, as amended or (ii) a "holding company" as defined in, or
         subject to regulation under, the Public Utility Holding Company Act of
         1935, as amended.

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

                  SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder or any
Letter of Credit shall remain outstanding, the Borrower will:

                  (a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
         Subsidiaries to comply, in all material respects, with all applicable
         laws, rules, regulations and orders, such compliance to include,
         without limitation, compliance with ERISA and Environmental Laws.

                  (b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each
         of its Subsidiaries to pay and discharge, before the same shall become
         delinquent, (i) all taxes, assessments and governmental charges or
         levies imposed upon it or upon its property and (ii) all lawful claims
         that, if unpaid, might by law become a Lien upon its property;
         PROVIDED, HOWEVER, that neither the Borrower nor any of its
         Subsidiaries shall be required to pay or discharge any such tax,
         assessment, charge or claim that is being contested in good faith and
         by proper proceedings and as to which appropriate reserves are being
         maintained.


   31

                  (c) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
         Subsidiaries to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts and covering such
         risks as is usually carried by companies engaged in similar businesses
         and owning similar properties in the same general areas in which the
         Borrower or such Subsidiary operates; PROVIDED, however, that the
         Borrower and its Subsidiaries may self-insure to the same extent as
         other companies engaged in similar businesses and owning similar
         properties in the same general areas in which the Borrower or such
         Subsidiary operates and to the extent consistent with prudent business
         practice.

                  (d) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
         maintain, and cause each of its Subsidiaries to preserve and maintain,
         its corporate existence, rights (charter and statutory) and franchises;
         PROVIDED, HOWEVER, that the Borrower and its Subsidiaries may
         consummate any merger or consolidation permitted under Section 5.02(b)
         and PROVIDED FURTHER that neither the Borrower nor any of its
         Subsidiaries shall be required to preserve any right or franchise if a
         Responsible Officer of the Borrower or such Subsidiary shall determine
         that the preservation thereof is no longer desirable in the conduct of
         the business of the Borrower or such Subsidiary, as the case may be,
         and that the loss thereof is not disadvantageous in any material
         respect to the Borrower, such Subsidiary or the Lenders.

                  (e) VISITATION RIGHTS. At any reasonable time and from time to
         time, permit any Agent or any of the Lenders or any agents or
         representatives thereof, to examine and make copies of and abstracts
         from the records and books of account of, and visit the properties of,
         the Borrower and any of its Subsidiaries, and to discuss the affairs,
         finances and accounts of the Borrower and any of its Subsidiaries with
         any of their officers or directors and with their independent certified
         public accountants.

                  (f) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries
         to keep, proper books of record and account, in which full and correct
         entries shall be made of all financial transactions and the assets and
         business of the Borrower and each such Subsidiary in accordance with
         generally accepted accounting principles in effect from time to time.

                  (g) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve all
         of its properties in good working order and condition, ordinary wear
         and tear excepted, and maintain all necessary licenses and permits if,
         in each case, failure to so maintain and preserve would result in a
         Material Adverse Effect.

                  (h) REPORTING REQUIREMENTS. Furnish to the Lenders:

                           (i) as soon as available and in any event within 50
                  days after the end of each of the first three quarters of each
                  Fiscal Year of the Borrower, Consolidated balance sheet of the
                  Borrower and its Subsidiaries as of the end of such quarter
                  and Consolidated statements of income and cash flows of the
                  Borrower and its Subsidiaries for the period commencing at the
                  end of the previous Fiscal Year and ending with the end of
                  such quarter, duly certified (subject to year-end audit
                  adjustments) by a Financial Officer of the Borrower as having
                  been prepared in accordance with generally accepted accounting
                  principles and certificates of a Financial Officer of the
                  Borrower as to compliance with the terms of this Agreement and
                  setting forth in reasonable detail the calculations necessary
                  to demonstrate compliance with Section 5.03, PROVIDED that in
                  the event of any change in generally accepted accounting
                  principles used in the preparation of such financial
                  statements, the Borrower shall also provide, if necessary for
                  the determination of compliance with Section 5.03, a statement
                  of reconciliation conforming such financial statements to
                  GAAP;

                           (ii) as soon as available and in any event within 100
                  days after the end of each Fiscal Year of the Borrower, a copy
                  of the annual audit report for such year for the Borrower and
                  its Subsidiaries, containing Consolidated balance sheet of the
                  Borrower and its Subsidiaries as of the end of such Fiscal
                  Year and Consolidated statements of income and cash flows of
                  the Borrower and its Subsidiaries for such Fiscal Year, in
                  each case accompanied by an opinion acceptable to the Required
                  Lenders by PricewaterhouseCoopers LLP or other independent
                  public accountants acceptable to the Required Lenders,
                  PROVIDED that in the event of any change in


   32

                  generally accepted accounting principles used in the
                  preparation of such financial statements, the Borrower shall
                  also provide, if necessary for the determination of compliance
                  with Section 5.03, a statement of reconciliation conforming
                  such financial statements to GAAP;

                           (iii) as soon as possible and in any event within
                  five days after the occurrence of each Default continuing on
                  the date of such statement, a statement of a Financial Officer
                  of the Borrower setting forth details of such Default and the
                  action that the Borrower has taken and proposes to take with
                  respect thereto;

                           (iv) promptly after the sending or filing thereof,
                  copies of all quarterly and annual reports and proxy
                  solicitations that the Borrower sends to any of its
                  securityholders, and copies of all reports on Form 8-K that
                  the Borrower or any Subsidiary files with the Securities and
                  Exchange Commission (other than reports on Form 8-K filed
                  solely for the purpose of incorporating exhibits into a
                  registration statement previously filed with the Securities
                  and Exchange Commission);

                           (v) promptly after the commencement thereof, notice
                  of all actions and proceedings before any court, governmental
                  agency or arbitrator affecting the Borrower or any of its
                  Subsidiaries of the type described in Section 4.01(f); and

                           (vi) such other information respecting the Borrower
                  or any of its Subsidiaries as any Lender through the Agents
                  may from time to time reasonably request.

                  The financial statements required to be delivered pursuant to
                  clauses (i) and (ii) and the reports required to be delivered
                  pursuant to clause (iv) of this Section 5.01(h) shall be
                  deemed to have been delivered on the date on which the same
                  have been posted on the SEC's website at www.sec.gov; PROVIDED
                  that the Borrower shall deliver paper copies of the reports
                  referred to in clauses (i), (ii) and (iv) above to the Agent
                  or any Lender who requests the Borrower to deliver such paper
                  copies until written notice to cease delivering paper copies
                  is given by the Agent or such Lender.

                  (i) GUARANTORS. Cause (i) each Material Subsidiary organized
         under the laws of the United States of America or any political
         subdivision thereof created or acquired by it from time to time and
         (ii) each Subsidiary that is not a Material Subsidiary immediately
         prior to becoming such a Material Subsidiary to undertake the
         obligation of and to become a Guarantor pursuant to the Guarantee
         Agreement pursuant to one or more instruments or agreements
         satisfactory in form and substance to the Paying Agent.

                  SECTION 5.02. NEGATIVE COVENANTS. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder or any Letter of
Credit shall remain outstanding, the Borrower will not:

                  (a) LIENS, ETC. Create or suffer to exist, or permit any of
         its Subsidiaries to create or suffer to exist, any Lien on or with
         respect to any of its properties, whether now owned or hereafter
         acquired, or assign, or permit any of its Subsidiaries to assign, any
         right to receive income, other than:

                           (i) Liens on any property or assets of any
                  corporation existing at the time such corporation becomes a
                  Subsidiary PROVIDED that such Lien does not extend to any
                  other property of the Borrower or any of its Subsidiaries;

                           (ii) Liens on any property or assets (including
                  stock) existing at the time of acquisition of such property or
                  assets by the Borrower or any of its Subsidiaries, or Liens to
                  secure the payment of all or any part of the purchase price of
                  such property or assets (including stock), upon the
                  acquisition of such property or assets by the Borrower or any
                  of its Subsidiaries or to secure Debt incurred, assumed or
                  guaranteed by the Borrower or any of its Subsidiaries for the
                  purpose of financing all or any part of the purchase price of
                  such property or in the case of real


   33

                  property, construction or improvements thereon or attaching to
                  property substituted by the Borrower to obtain the release of
                  a Lien on other property of the Borrower on which a Lien then
                  exists, which Debt is incurred, assumed or guaranteed prior
                  to, at the time of, or within 18 months after such acquisition
                  (or in the case of real property, completion of construction
                  (including any improvements on an existing asset) or
                  commencement of full operations at such property, whichever is
                  later (which in the case of a retail store is the opening of
                  the store for business to the public)), PROVIDED that in the
                  case of any such acquisition, construction or improvement, the
                  Lien shall not apply to any other property or assets
                  theretofore owned by the Borrower or any of its Subsidiaries;

                           (iii) Liens securing Debt owing by any Subsidiary of
                  the Borrower to the Borrower or to another Subsidiary of the
                  Borrower;

                           (iv) Liens on any property or assets of the Borrower
                  or any of its Subsidiaries in favor of the United States of
                  America or any State thereof, or any department, agency or
                  instrumentality or political subdivision of the United States
                  of America or any State thereof, or in favor of any other
                  country, or any political subdivision thereof, to secure
                  partial, progress, advance or other payments pursuant to any
                  contract or statute or to secure any Debt incurred or
                  guaranteed for the purpose of financing all or any part of the
                  purchase price (or, in the case of real property, the cost of
                  construction) of the property or assets subject to such Liens
                  (including, but not limited to, Liens incurred in connection
                  with pollution control, industrial revenue or similar
                  financing);

                           (v) Liens existing on properties or assets of the
                  Borrower or any of its Subsidiaries existing on the Effective
                  Date and described on Schedule 5.02(a); PROVIDED that such
                  Liens shall secure only those obligations which they secure on
                  the Effective Date or any extension, renewal or replacement
                  thereof;

                           (vi) any extension, renewal or replacement (or
                  successive extensions, renewals or replacements), in whole or
                  in part, of any Lien referred to in the foregoing clauses (i)
                  to (v), inclusive; provided that such extension, renewal or
                  replacement shall be limited to all or a part of the property
                  or assets which secured the Lien so extended, renewed or
                  replaced (plus improvements and construction on real
                  property);

                           (vii) Liens imposed by law, such as mechanics',
                  workmen's, repairmen's, materialmen's, carriers'
                  warehouseman's, vendors', or other similar Liens arising in
                  the ordinary course of business of the Borrower or any of its
                  Subsidiaries, or governmental (federal, state or municipal)
                  Liens arising out of contracts for the sale of products or
                  services by the Borrower or any of its Subsidiaries, or
                  deposits or pledges to obtain the release of any of the
                  foregoing Liens;

                           (viii) pledges, Liens or deposits under worker's
                  compensation laws or similar legislation and Liens or
                  judgments thereunder which are not currently dischargeable, or
                  in connection with bids, tenders, contracts (other than for
                  the payment of money) or leases to which the Borrower or any
                  of its Subsidiaries is a party, or to secure the public or
                  statutory obligations of the Borrower or any of its
                  Subsidiaries, or in connection with obtaining or maintaining
                  self insurance or to obtain the benefits of any law,
                  regulation or arrangement pertaining to unemployment
                  insurance, old age pensions, social security or similar
                  matters, or to secure surety, appeal or customs bonds to which
                  the Borrower or any of its Subsidiaries is a party, or in
                  litigation or other proceedings such as, but not limited to,
                  interpleader proceedings, and other similar pledges, Liens or
                  deposits made or incurred in the ordinary course of business;

                           (ix) Liens created by or resulting from any
                  litigation or other proceeding which is being contested in
                  good faith by appropriate proceedings, including Liens arising
                  out of judgments or awards against the Borrower or any of its
                  Subsidiaries, with respect to which the Borrower or such
                  Subsidiary is in good faith prosecuting an appeal or
                  proceedings for review or for which the


   34

                  time to make an appeal has not yet expired; or final
                  unappealable judgment Liens which are satisfied within 30 days
                  of the date of judgment; or Liens incurred by the Borrower or
                  any of its Subsidiaries for the purpose of obtaining a stay or
                  discharge in the course of any litigation or other proceeding
                  to which the Borrower or such Subsidiary is a party;

                           (x) Liens for taxes or assessments of governmental
                  charges or levies not yet due or delinquent, or which can
                  thereafter be paid without penalty, or which are being
                  contested in good faith by appropriate proceedings; landlord's
                  Liens on property held under lease; and any other Liens or
                  charges incidental to the conduct of the business of the
                  Borrower or any of its Subsidiaries or the ownership of the
                  property or assets of any of them which were not incurred in
                  connection with the borrowing of money or the obtaining of
                  advances or credit and which do not, in the opinion of the
                  Borrower, materially impair the use of such property or assets
                  in the operation of the business of the Borrower or such
                  Subsidiary or the value of such property or assets for the
                  purposes of such business; or

                           (xi) Liens not permitted by the foregoing clauses (i)
                  to (x), inclusive, if at the time of, and after giving effect
                  to, the creation or assumption of such Lien, the aggregate
                  amount of all Debt of the Borrower and its Subsidiaries
                  secured by all Liens not so permitted by the foregoing clauses
                  (i) through (x) above does not exceed 10% of the total assets
                  from time to time before giving effect to the LIFO reserve of
                  the Borrower and its Subsidiaries on a Consolidated basis.

                  (b) MERGERS, ETC. Merge or consolidate with or into any
         Person, or permit any of its Subsidiaries to do so, except that any
         Subsidiary of the Borrower may merge or consolidate with or into any
         other Subsidiary of the Borrower or into any other Person (so long as
         the surviving corporation is a Subsidiary of the Borrower), and except
         that any Subsidiary of the Borrower or any other Person may merge into
         the Borrower, PROVIDED, in each case, that no Default shall have
         occurred and be continuing at the time of such proposed transaction or
         would result therefrom.

                  (c) ACCOUNTING CHANGES. Make or permit, or permit any of its
         Subsidiaries to make or permit, any significant change in accounting
         policies or reporting practices, except as required by generally
         accepted accounting principles; PROVIDED, HOWEVER, that the Borrower
         may make or permit its Subsidiaries to make any changes in accounting
         policies or reporting practices in order to conform to any policies or
         practices of Fred Meyer, Inc. and its Subsidiaries or to conform any
         policies or practices of Fred Meyer, Inc., or its Subsidiaries to those
         of Borrower or its Subsidiaries. The parties acknowledge that the
         Borrower and its Subsidiaries may change their fiscal years to conform
         the fiscal years of the Borrower and its Subsidiaries (including Fred
         Meyer, Inc. and its Subsidiaries).

                  (d) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
         dispose of, or permit any of its Subsidiaries to sell, lease, transfer
         or otherwise dispose of, any assets, or grant any option or other right
         to purchase, lease or otherwise acquire any assets, except (i)
         dispositions of assets in the ordinary course of its business, (ii) in
         a transaction authorized by subsection (b) of this Section, (iii)
         pursuant to sale-leaseback transactions for not less than fair market
         value, (iv) in a transaction with any Subsidiary that is, or as a
         result of such transaction becomes, a Material Subsidiary and (v) sales
         of assets for fair value, PROVIDED that the aggregate value of such
         assets sold, leased, transferred or otherwise disposed of pursuant to
         clause (v) during the term of this Agreement shall not be greater than
         10% of the total assets from time to time before giving effect to the
         LIFO reserve of Kroger and its Subsidiaries on a Consolidated basis.

                  (e) DIVIDENDS, ETC. Declare or make any cash dividend payment
         on account of any shares of any class of its common stock.

                  SECTION 5.03. FINANCIAL COVENANTS. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will:


   35

                  (a) LEVERAGE RATIO. Maintain a ratio (determined as of the
         last day of each Fiscal Quarter for the Rolling Period ending on such
         day) of (i) Net Debt on such day to (ii) the sum of (A) Consolidated
         EBITDA for such Rolling Period and (B) from and after the making of any
         investment or acquisition, the Acquired EBITDA for such Rolling Period
         for any Acquired Entity so invested in or acquired (determined as of
         the last day of the Acquired Entity Fiscal Quarter ending during such
         Rolling Period) of not greater than: 3.50:1.00.

                  (b) FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge
         Coverage Ratio (determined as of the last day of any Fiscal Quarter for
         the Rolling Period ending on such day) of not less than 1.70:1.00.


                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION 6.01. EVENTS OF DEFAULT. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing:

                  (a) The Borrower shall fail to pay any principal of any
         Advance when the same becomes due and payable; or the Borrower shall
         fail to pay any interest on any Advance or make any other payment of
         fees or other amounts payable under this Agreement or any Note within
         three Business Days after the same becomes due and payable; or

                  (b) Any representation or warranty made by the Borrower herein
         or by the Borrower (or any of its officers) in connection with any Loan
         Document shall prove to have been incorrect in any material respect
         when made; or

                  (c) (i) The Borrower shall fail to perform or observe any
         term, covenant or agreement contained in Section 5.01(d), (e) or (h),
         5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any
         other term, covenant or agreement contained in any Loan Document on its
         part to be performed or observed if such failure shall remain
         unremedied for 30 days after written notice thereof shall have been
         given to the Borrower by any Agent or any Lender; or

                  (d) The Borrower or any of its Subsidiaries shall fail to pay
         any principal of or premium or interest on any Debt that is outstanding
         in a principal or notional amount of at least $50,000,000 in the
         aggregate (but excluding Debt outstanding hereunder) of the Borrower or
         such Subsidiary (as the case may be), when the same becomes due and
         payable (whether by scheduled maturity, required prepayment,
         acceleration, demand or otherwise), and such failure shall continue
         after the applicable grace period, if any, specified in the agreement
         or instrument relating to such Debt; or any other event shall occur or
         condition shall exist under any agreement or instrument relating to any
         such Debt and shall continue after the applicable grace period, if any,
         specified in such agreement or instrument, if the effect of such event
         or condition is to accelerate, or to permit the acceleration of, the
         maturity of such Debt; or any such Debt shall be declared to be due and
         payable, or required to be prepaid or redeemed (other than by a
         regularly scheduled required prepayment or redemption), purchased or
         defeased, or an offer to prepay, redeem, purchase or defease such Debt
         shall be required to be made, in each case prior to the stated maturity
         thereof; or

                  (e) The Borrower or any of its Subsidiaries shall generally
         not pay its debts as such debts become due, or shall admit in writing
         its inability to pay its debts generally, or shall make a general
         assignment for the benefit of creditors; or any proceeding shall be
         instituted by or against the Borrower or any of its Subsidiaries
         seeking to adjudicate it as bankrupt or insolvent, or seeking
         liquidation, winding up, reorganization, arrangement, adjustment,
         protection, relief, or composition of it or its debts under any law
         relating to bankruptcy, insolvency or reorganization or relief of
         debtors, or seeking the entry of an order for relief or the appointment
         of a receiver, trustee, custodian or other similar official for it or
         for any substantial


   36

         part of its property and, in the case of any such proceeding instituted
         against it (but not instituted by it), either such proceeding shall
         remain undismissed or unstayed for a period of 30 days, or any of the
         actions sought in such proceeding (including, without limitation, the
         entry of an order for relief against, or the appointment of a receiver,
         trustee, custodian or other similar official for, it or for any
         substantial part of its property) shall occur; or the Borrower or any
         of its Subsidiaries shall take any corporate action to authorize any of
         the actions set forth above in this subsection (e); or

                  (f) Any judgment or order for the payment of money in excess
         of $50,000,000 shall be rendered against the Borrower or any of its
         Subsidiaries and either (i) enforcement proceedings shall have been
         commenced by any creditor upon such judgment or order or (ii) there
         shall be any period of 10 consecutive days during which a stay of
         enforcement of such judgment or order, by reason of a pending appeal or
         otherwise, shall not be in effect; PROVIDED, HOWEVER, that any such
         judgment or order shall not be an Event of Default under this Section
         6.01(f) if and for so long as (i) the amount of such judgment or order
         is covered by a valid and binding policy of insurance between the
         defendant and the insurer covering payment thereof and (ii) such
         insurer, which shall be rated at least "A" by A.M. Best Company, has
         been notified of, and has not disputed the claim made for payment of,
         the amount of such judgment or order; or

                  (g) Any non-monetary judgment or order shall be rendered
         against the Borrower or any of its Subsidiaries that could be
         reasonably expected to have a Material Adverse Effect, and there shall
         be any period of 10 consecutive days during which a stay of enforcement
         of such judgment or order, by reason of a pending appeal or otherwise,
         shall not be in effect; or

                  (h) Any Change in Control shall have occurred; or

                  (i) A Reportable Event or Reportable Events, or a failure to
         make a required installment or other payment (within the meaning of
         Section 412(n)(l) of the Internal Revenue Code), shall have occurred
         with respect to any Plan or Plans that reasonably could be expected to
         result in liability of the Borrower or any of its Subsidiaries to the
         PBGC or to a Plan in an aggregate amount exceeding $50,000,000 and,
         within 30 days after the Borrower has provided written notice of any
         such Reportable Event to the Administrative Agents, the Administrative
         Agents shall have notified the Borrower in writing that (i) the
         Required Lenders have determined that, on the basis of such Reportable
         Event or Reportable Events or the failure to make a required payment,
         there are reasonable grounds (A) for the termination of such Plan or
         Plans by the PBGC, (B) for the appointment by the appropriate United
         States District Court of a trustee to administer such Plan or Plans or
         (C) for the imposition of a lien in favor of a Plan and (ii) as a
         result thereof an Event of Default exists hereunder; or a trustee shall
         be appointed by a United States District Court to administer any such
         Plan or Plans; or the PBGC shall institute proceedings (including
         giving notice of intent thereof) to terminate any Plan or Plans; or

                  (j) (i) the Borrower or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that it has incurred
         Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or
         such ERISA Affiliate does not have reasonable grounds for contesting
         such Withdrawal Liability or is not in fact contesting such Withdrawal
         Liability in a timely and appropriate manner and (iii) the amount of
         the Withdrawal Liability specified in such notice, when aggregated with
         all other amounts required to be paid to Multiemployer Plans in
         connection with Withdrawal Liabilities (determined as of the date or
         dates of such notification), either (A) exceeds $100,000,000 or
         requires payments exceeding $50,000,000 in any year or (B) is less than
         $100,000,000 but any Withdrawal Liability payment remains unpaid 30
         days after such payment is due (unless such Withdrawal Liability is
         being contested in good faith by the Borrower or any ERISA Affiliate);
         or

                  (k) the Borrower or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that such Multiemployer
         Plan is in reorganization or is being terminated, within the meaning of
         Title IV of ERISA, if solely as a result of such reorganization or
         termination the aggregate contributions of the Borrower and its ERISA
         Affiliates to all Multiemployer Plans that are then in reorganization
         or have been or are being terminated have been or will be increased
         over the amounts


   37

         required to be contributed to such Multiemployer Plans for their most
         recently completed plan years by an amount exceeding $50,000,000; or

                  (l) any Loan Document shall not be for any reason, or shall be
         asserted by the Borrower or any Guarantor party thereto (except as
         otherwise expressly provided in this Agreement or such Loan Document
         (including Section 11 of the Guarantee Agreement)) not to be, in full
         force and effect and enforceable in all material respects in accordance
         with its terms;

then, and in any such event, the Agents (i) shall at the request, or may with
the consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, (ii) shall at the request, or may with the consent,
of any Issuing Bank or of the Required Lenders, by notice to the Borrower,
declare the obligation of any Issuing Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (iii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Advances, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advances, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; PROVIDED,
HOWEVER, that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower under the Federal Bankruptcy Code, (A) the
obligation of each Lender to make Advances and of any Issuing Bank to issue
Letters of Credit shall automatically be terminated and (B) the Advances, all
such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.

                  SECTION 6.02. ACTIONS IN RESPECT OF LETTERS OF CREDIT. (a) If,
at any time and from time to time, any Letters of Credit shall have been issued
by any Issuing Bank hereunder and (i) a Default shall have occurred and be
continuing, (ii) the Borrower shall have given notice of prepayment in whole
under Section 2.09 of all Advances or shall have prepaid in whole all Advances,
(iii) the Termination Date shall have occurred or (iv) if at any time, as a
result of prepayments pursuant to Section 2.09, the Termination Date shall be a
date not more than 30 days following the expiration of any Letter of Credit,
then, upon the occurrence of any of the events described in clauses (i) through
(iv) above, the Administrative Agents may, and upon the request of any Issuing
Bank or of the Required Lenders shall, whether in addition to the taking by the
Administrative Agents of any of the actions described in Article VI or
otherwise, make demand upon the Borrower to, and forthwith upon such demand the
Borrower will, pay to the Paying Agent for its benefit and the ratable benefit
of the Lenders in same day funds at the Paying Agent's office designated in such
demand, for deposit in a special cash collateral account (the "LETTER OF CREDIT
COLLATERAL ACCOUNT") to be maintained in the name of the Paying Agent and under
the sole dominion and control of the Paying Agent for the benefit of the Paying
Agent and the ratable benefit of the Lenders at such place as shall be
designated by the Paying Agent, an amount equal to the amount of the Letter of
Credit Obligations.

                  (b) The Borrower hereby pledges and assigns to the Paying
Agent for its benefit and the ratable benefit of the Lenders, and grants to the
Paying Agent for its benefit and the ratable benefit of the Lenders a lien on
and a security interest in, the following collateral (the "LETTER OF CREDIT
COLLATERAL"):

                  (i) the Letter of Credit Collateral Account, all cash
         deposited therein, and all certificates and instruments, if any, from
         time to time representing or evidencing the Letter of Credit Collateral
         Account;

                  (ii) all Eligible Securities (as defined below) from time to
         time held by the Paying Agent and all certificates and instruments from
         time to time representing or evidencing Eligible Securities;

                  (iii) all notes, certificates of deposit and other instruments
         from time to time hereafter delivered to or otherwise possessed by the
         Paying Agent for or on behalf of the Borrower in substitution for or in
         respect of any or all of the then existing Letter of Credit Collateral;

                  (iv) all interest, dividends, cash, instruments and other
         property from time to time received, receivable or otherwise
         distributed in respect of or in exchange for any or all of the then
         existing Letter of Credit Collateral; and
   38

                  (v) to the extent not covered by clauses (i) through (iv)
         above, all proceeds of any or all of the foregoing Letter of Credit
         Collateral.

The lien and security interest granted hereby secures the payment of all
obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.

                  (c) The Borrower hereby authorizes the Paying Agent to apply,
from time to time after funds are deposited in the Letter of Credit Collateral
Account, funds then held in the Letter of Credit Collateral Account to the
payment of any amounts, in such order as the Paying Agent may elect, as shall
have become or shall become due and payable by the Borrower to the Lenders in
respect of the Letters of Credit.

                  (d) Neither the Borrower nor any Person claiming or acting on
behalf of or through the Borrower shall have any right to withdraw any of the
funds held in the Letter of Credit Collateral Account, except as provided in
Section 6.02(h); PROVIDED, HOWEVER, that as long as no Default shall have
occurred and be continuing, and to the extent that there is an amount in excess
of $1,000,000 in the Letter of Credit Collateral Account at the end of any
Business Day after taking into account applications of funds, if any, from the
Letter of Credit Collateral Account made pursuant to Section 6.02(c), the Paying
Agent will, at the written request of the Borrower, from time to time invest
amounts on deposit in the Letter of Credit Collateral Account in such
instruments described in clause (b), (c) or (d) of the definition of the term
"Permitted Investments" in Section 1.01 as the Borrower may select and the
Paying Agent may approve (the "ELIGIBLE SECURITIES"); PROVIDED FURTHER that in
order to provide the Paying Agent with a perfected security interest therein,
each investment in Eligible Securities shall be evidenced by negotiable
certificates or instruments, of which the Paying Agent shall take physical
possession. If the Borrower shall have the right to have amounts on deposit in
the Letter of Credit Collateral Account invested by the Paying Agent, but shall
have failed to request the Paying Agent to invest such amounts, the Paying Agent
will endeavor to invest such amounts in such Eligible Securities as the Paying
Agent shall select. Any interest received by the Paying Agent in respect of
Eligible Securities shall be credited against the Letter of Credit Obligations.
Non-interest proceeds from Eligible Securities that are not invested or
reinvested in Eligible Securities as provided above shall be deposited and held
in cash in the Letter of Credit Collateral Account under the sole dominion and
control of the Paying Agent.

                  (e) The Borrower agrees that it will not (i) sell or otherwise
dispose of any interest in the Letter of Credit Collateral or (ii) create or
permit to exist any lien, security interest or other charge or encumbrance upon
or with respect to any of the Letter of Credit Collateral, except for the
security interest created by this Section 6.02.

                  (f) If any Event of Default shall have occurred and be
         continuing:

                  (i) The Paying Agent may, in its sole discretion, without
         notice to the Borrower except as required by law and at any time from
         time to time, charge, set off and otherwise apply all or any part of
         FIRST, the Letter of Credit Obligations and SECOND, the obligations of
         the Borrower now or hereafter existing under any of the Loan Documents,
         against the Letter of Credit Collateral Account or any part thereof, in
         such order as the Paying Agent shall elect. The Paying Agent agrees
         promptly to notify the Borrower after any such set-off and application
         made by the Paying Agent, PROVIDED that the failure to give such notice
         shall not affect the validity of such set-off and application. The
         rights of the Paying Agent under this Section 6.02(f) are in addition
         to other rights and remedies (including other rights of set-off) that
         the Paying Agent may have.

                  (ii) The Paying Agent may also exercise, in its sole
         discretion, in respect of the Letter of Credit Collateral Account, in
         addition to the other rights and remedies provided for herein or
         otherwise available to it, all the rights and remedies of a secured
         party upon default under the Uniform Commercial Code in effect in the
         State of New York at that time, and the Paying Agent may, without
         notice except as specified below, sell the Letter of Credit Collateral
         or any part thereof in one or more parcels at public or private sale,
         at any of the Paying Agent's offices or elsewhere, for cash, on credit
         or for future delivery, and upon such other terms as the Paying Agent
         may deem commercially reasonable. The Borrower agrees that, to the
         extent notice of sale shall be required by law, at least ten days'
         notice to the Borrower of the time and


   39

         place of any public sale or the time after which any private sale is to
         be made shall constitute reasonable notification. The Paying Agent
         shall not be obligated to make any sale of Letter of Credit Collateral
         or any part thereof, regardless of notice of sale having been given.
         The Paying Agent may adjourn any public or private sale from time to
         time by announcement at the time and place fixed therefor, and such
         sale may, without further notice, be made at the time and place to
         which it was so adjourned.

                  (iii) Any cash held in the Letter of Credit Collateral
         Account, and all cash proceeds received by the Paying Agent in respect
         of any sale of, collection from or other realization upon all or any
         part of the Letter of Credit Collateral Account may, in the discretion
         of the Paying Agent, then or at any time thereafter be applied (after
         payment of any amounts payable pursuant to Section 8.03) in whole or in
         part by the Paying Agent for the ratable benefit of the Lenders against
         all or any part of the obligations of the Borrower now or hereafter
         existing under any of the Loan Documents in such order as the Paying
         Agent may elect.

                  (g) The Paying Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Letter of Credit
Collateral if the Letter of Credit Collateral is accorded treatment
substantially equal to that which the Paying Agent accords its own property, it
being understood that the Paying Agent shall not have any responsibility or
liability (i) for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Eligible Securities, whether or not the Paying Agent has or is deemed to have
knowledge of such matters, (ii) for taking any necessary steps to preserve
rights against any parties with respect to the Letter of Credit Collateral,
(iii) for the collection of any proceeds from Eligible Securities, (iv) by
reason of any invalidity, lack of value or uncollectability of any of the
payments received by the Paying Agent from obligors with respect to Eligible
Securities, or (v) for any loss resulting from investments made pursuant to
Section 6.02(d), except to the extent such loss was attributable to the Paying
Agent's gross negligence or wilful misconduct in complying with Section 6.02(d),
or (vi) in connection with any investments made pursuant to Section 6.02(d)
without a written request from the Borrower, or any failure by the Paying Agent
to make any such investment.

                  (h) Any surplus of the funds held in the Letter of Credit
Collateral Account and remaining after payment in full of all of the obligations
of the Borrower under this Agreement and under any other Loan Document after the
Termination Date shall be paid to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.

                                   ARTICLE VII

                                   THE AGENTS

                  SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender (in its
capacity as a Lender and an Issuing Bank (if applicable)) hereby appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agents
by the terms hereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Advances), no Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; PROVIDED, HOWEVER, that no Agent shall be required to
take any action that exposes such Agent to personal liability or that is
contrary to this Agreement or applicable law. Each Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.

                  SECTION 7.02. AGENT'S RELIANCE, ETC. No Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agents: (i) may treat the
Lender which made any Advance as the holder of the Debt resulting therefrom
until the Paying Agent receives and accepts an Assumption Agreement entered into
by an Assuming Lender as provided in Section 2.16, or an Assignment and
Acceptance entered into by such Lender, as assignor, and


   40

an Eligible Assignee, as assignee, as provided in Section 8.06; (ii) may consult
with legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) make no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

                  SECTION 7.03. CITIBANK, CHASE AND AFFILIATES. With respect to
its Commitment, the Advances made by it and any Note or Notes issued to it, each
of Citibank and Chase shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as though it were not an Agent;
and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include each of Citibank and Chase in its individual capacity. Each of Citibank
and Chase and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if it were not an Agent and without any
duty to account therefor to the Lenders.

                  SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon 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 decisions in taking or
not taking action under this Agreement.

                  SECTION 7.05. INDEMNIFICATION. (a) The Lenders agree to
indemnify the Agents in their capacity as such (to the extent not reimbursed by
the Borrower without limiting the obligation of the Borrower to do so), ratably
according to the respective principal amounts of the Revolving Credit Advances
then owing to each of them (or if no Revolving Credit Advances are at the time
outstanding or if any Revolving Credit Advances are then owing to Persons that
are not Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against any Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by such Agent under the Loan Documents
(collectively, the "INDEMNIFIED COSTS"), PROVIDED that no Lender shall be liable
for any portion of the Indemnified Costs resulting from such Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse each Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by such Agent in
connection with the preparation, execution, delivery, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that such Agent is not reimbursed for such expenses by the
Borrower. In the case of any investigation, litigation or proceeding giving rise
to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by any Agent, any Lender or a
third party.

                  (b) The Lenders agree to indemnify each Issuing Bank (to the
extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Revolving Credit Advances then owing to each of them
(or if no Revolving Credit Advances are at the time outstanding or if any
Revolving Credit Advances are then owing to Persons that are not Lenders,
ratably according to the respective amounts of their Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against any
Issuing Bank in any way relating to or arising out of this Agreement or any
action taken or omitted by


   41

such Issuing Bank under the Loan Documents, PROVIDED that no Lender shall be
liable for any portion of such indemnified costs resulting from such Issuing
Bank's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses (including counsel fees)
payable by the Borrower under Section 8.03, to the extent such Issuing Bank is
not promptly reimbursed for such costs and expenses by the Borrower.

                  SECTION 7.06. SUCCESSOR AGENTS. The Administrative Agents and
the Paying Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower and may be removed at any time with or without cause by
the Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent or Paying
Agent, as the case may be. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.01. WAIVERS; AMENDMENTS, ETC. (a) No failure or
delay on the part of the Administrative Agents, the Issuing Banks, the Paying
Agent or any Lender in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuation of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agents, the
Issuing Banks, the Paying Agent and the Lenders hereunder are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below (other than a waiver of the minimum amount of
Commitment assumed by an Assuming Lender pursuant to Section 2.16 or by an
Eligible Assignee pursuant to Section 8.03, which may be waived by unilateral
consent of the Borrower), and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.

                  (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except (i) in the case of this Agreement, pursuant
to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders, (ii) in the case of the Guarantee Agreement, pursuant to an
agreement or agreements in writing entered into by the Guarantors and the Paying
Agent and consented to by the Required Lenders or (iii) in the case of a Letter
of Credit, pursuant to an agreement or agreements entered into by the Borrower
and the applicable Issuing Bank; PROVIDED, HOWEVER, that no such agreement shall
(A) change the principal amount of any Advance or Letter of Credit Obligation,
extend the final scheduled maturity of any Advance, extend the scheduled date
for payment (but not prepayments) of principal of or interest on any Advance
(other than as provided in Section 2.16), forgive any such payment or any part
thereof or reduce the rate of interest on any Advance, in each case without the
prior written consent of each Lender affected thereby, (B) increase the amount
or extend the termination date of the Commitment of any Lender or reduce or
extend the date for payment of the Facility Fees or other amounts payable under
this Agreement to any Lender, in each case without the prior written consent of
such Lender or (C) amend or modify the provisions of this Section 8.01(b) or
Section 8.05 or the definition of the term "Required Lenders" without the prior
written consent of each Lender; and PROVIDED FURTHER that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agents, the Issuing Banks or the Paying Agent hereunder without
the prior written consent of the Administrative Agents, the Issuing Banks or the
Paying Agent, respectively.


   42

                  SECTION 8.02. NOTICES, ETC. Except as otherwise expressly
permitted herein, notices and other communications provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed
or sent by telecopy, as follows:

                  (a) If to the Borrower, to it at The Kroger Co., 1014 Vine
         Street, Cincinnati, Ohio 45202, Attention of Mr. Lawrence M. Turner
         (Telecopy No. (513) 762-4454); WITH A COPY TO Mr. Paul W. Heldman
         (Telecopy No. (513) 762-4935).

                  (b) If to Citibank in its capacity as an Administrative Agent
         or Paying Agent, to it at 399 Park Avenue, New York, NY 10043,
         Attention of Marc Merlino (Telecopy No. (212) 793-1875); with a copy to
         Bank Loan Syndications, Two Penns Way, New Castle, Delaware 19720,
         Attention of Brian Maxwell. If to Chase in its capacity as an
         Administrative Agent, to it at 270 Park Avenue, New York, New York
         10017, Attention of Ms. Margaret T. Lane (Telecopy No. (212) 270-5646).

                  (c) If to any other Lender as Issuing Bank, at its address (or
         telecopy number) set forth on Schedule I or in the Assignment and
         Acceptance pursuant to which such Lender shall have become a party
         hereto.

                  (d) If to a Lender, at its address (or telecopy number) as set
         forth on Schedule I or in the Assumption Agreement or Assignment and
         Acceptance pursuant to which such Lender shall have become a party
         hereto.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in Section 8.02 or in accordance with the
latest unrevoked direction from such party given in accordance with this Section
8.02. The Administrative Agents shall deliver to the Borrower a copy of each
Administrative Questionnaire received by it.

                  SECTION 8.03. EXPENSES; INDEMNITY. (a) The Borrower agrees to
pay (i) the reasonable fees, disbursements and other charges of counsel for the
Administrative Agents, the Issuing Banks and the Paying Agent incurred in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) and (ii) all reasonable out-of-pocket expenses incurred by the
Administrative Agents, the Issuing Banks, the Paying Agent or any Lender in
connection with the enforcement or protection of their rights in connection with
this Agreement and the other Loan Documents or in connection with the Advances
or the Letters of Credit issued hereunder, including the reasonable fees,
disbursements and other charges of Shearman & Sterling, counsel for the
Administrative Agents, the Issuing Banks and the Paying Agent, in connection
with any such enforcement or protection and the reasonable fees, disbursements
and other charges of any other counsel for the Administrative Agents, the
Issuing Banks, the Paying Agent or any Lender. The Borrower further agrees that
it shall indemnify the Administrative Agents, the Issuing Banks, the Paying
Agent and the Lenders from, and hold them harmless against, any documentary
taxes, assessments or similar charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any Note.

                  (b) The Borrower agrees to indemnify the Administrative
Agents, the Paying Agent, the Issuing Banks and each Lender and each of their
respective directors, officers, employees and agents (each such person being
called an "INDEMNITEE") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, disbursements and other charges, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) the use of
the Letters of Credit or proceeds of the Advances or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, PROVIDED that such indemnity
shall not, as to any Indemnitee, be available to


   43

the extent that such losses, claims, damages, liabilities or related expenses
have resulted from the gross negligence or wilful misconduct of such Indemnitee.

                  (c) If any payment of principal of any Eurodollar Rate Advance
is made other than on the last day of the Interest Period for such Advance, as a
result of any Conversion, payment pursuant to Section 2.05, prepayment pursuant
to clause (ii) of the proviso to Section 2.09(a) or acceleration of the maturity
of the Advances pursuant to Section 6.01 or for any other reason, the Borrower
shall, upon demand by any Lender (with a copy of such demand to the
Administrative Agents), pay to the Paying Agent for the account of such Lender
any amounts required to compensate such Lender for any additional losses, costs
or expenses that such Lender may incur as a result of such payment, including
any loss (excluding loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
any Lender to fund or maintain such Advance.

                  (d) The provisions of this Section 8.03 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Advances, the invalidity or unenforceability of any term
or provision of this Agreement, or any investigation made by or on behalf of the
Administrative Agents, the Issuing Banks, the Paying Agent or any Lender. All
amounts due under this Section 8.03 shall be payable on written demand therefor.

                  SECTION 8.04. RIGHT OF SET-OFF. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized, in addition
to any other right or remedy that any Lender may have by operation of law or
otherwise, at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to exercise its
banker's lien or right of setoff and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement and any Note held by such Lender,
irrespective of whether such Lender shall have made any demand under this
Agreement or any Note and although such obligations may be unmatured.

                  SECTION 8.05. BINDING EFFECT. This Agreement shall become
effective (other than Section 2.01, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower, the Administrative Agents, the Issuing
Banks and the Paying Agent and when the Paying Agent shall have been notified by
each Initial Lender that such Initial Lender has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agents, the Issuing Banks, the Paying Agent and each Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.

                  SECTION 8.06. SUCCESSORS AND ASSIGNS. (a) Subject to Section
8.05, whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrower, the
Administrative Agents, the Issuing Banks, the Paying Agent or the Lenders that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

                  (b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitments, the outstanding Letters of Credit and the
Advances at the time owing to it); PROVIDED, HOWEVER, that (i) except in the
case of an assignment to a Lender or an Affiliate of a Lender, each of the
Administrative Agents and the Borrower must give its prior written consent to
such assignment (which consent shall not be unreasonably withheld); PROVIDED
FURTHER, HOWEVER, the consent of the Borrower shall not be required if a Default
has occurred and is continuing on the date of the Assignment and Acceptance,
(ii) except in the case of an assignment to a Lender or an Affiliate of a
Lender, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agents) shall not
be less than $5,000,000 (or an amount equal to the remaining balance of such
Lender's Commitment), (iii) the parties to each such assignment shall execute
and deliver to the Paying Agent (with a copy to the other Administrative Agent)
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500 (except that such fee shall not be required with respect to assignments
to Affiliates), and (iv) the assignee, if it shall not be a Lender, shall

   44

deliver to the Administrative Agents an Administrative Questionnaire. Each
assignment shall be of a constant, and not a varying, percentage of the
assigning Lender's rights and obligations under this Agreement (other than any
right to make Competitive Bid Advances and Competitive Bid Advances owing to
it). Upon acceptance and recording pursuant to paragraph (e) of this Section
8.06, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof and in no event shall precede the date of such recording, (i)
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, shall have the rights and
obligations of a Lender under this Agreement and (ii) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto, but shall continue to be entitled to the
benefits of Sections 2.10, 2.13 and 8.03, as well as to any Facility Fees
accrued for its account and not yet paid). Notwithstanding the foregoing, (i)
any Lender assigning its rights and obligations under this Agreement may retain
any Competitive Bid Advances made by it outstanding at such time, and in such
case shall retain its rights hereunder in respect of any Advances so retained
until such Advances have been repaid in full in accordance with this Agreement.

                  (c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim created
by it and that its Commitment, and the outstanding balances of its Advances, in
each case without giving effect to assignments thereof that have not become
effective, are as set forth in such Assignment and Acceptance; (ii) except as
set forth in clause (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of any amendments or consents
entered into prior to the date of such Assignment and Acceptance and copies of
the most recent financial statements delivered pursuant to Section 5.01(h) and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance upon the
Administrative Agents, such assigning Lender 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 decisions in taking or not taking action under
this Agreement; (vi) such assignee confirms that it is an Eligible Assignee;
(vii) such assignee appoints and authorizes the Administrative Agents and the
Paying Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agents and
the Paying Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (viii) such assignee agrees that it will
perform in accordance with their terms all the obligations that by the terms of
this Agreement are required to be performed by it as a Lender.

                  (d) The Paying Agent shall maintain at its address referred to
in, or determined pursuant to, Section 8.02 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the "REGISTER") for
the recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Advances owing to, each Lender from time to time and
whether such Lender is a Lender on the Effective Date, or the assignee of such a
Lender or an Assuming Lender. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent, the Paying Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.

                  (e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee representing that it
is an Eligible Assignee, together with an Administrative Questionnaire completed
in respect of the assignee (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
above to the extent required under paragraph (b) above


   45

and the written consent (to the extent required under paragraph (b) above), of
the Administrative Agents and the Borrower, the Administrative Agents shall (i)
accept such Assignment and Acceptance, (ii) in the case of the Paying Agent,
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders and the Issuing Banks. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (e).

                  (f) Each Lender may, without the consent of the Borrower or
the Administrative Agents, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment, the outstanding of Letters of
Credit and the Advances owing to it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.10, 2.13 and 8.03 to the same extent as if they were Lenders (PROVIDED that
the Borrower shall not be required to reimburse the participating banks or other
entities pursuant to Section 2.10, 2.13 or 8.03 in an amount that exceeds the
amount that would have been payable thereunder to such Lender had such Lender
not sold such participation) and (iv) the Borrower, the Administrative Agents,
the Issuing Banks, the Paying Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower and to approve any amendment,
modification or waiver of any provision of this Agreement (PROVIDED that the
participating bank or other entity may be provided with the right to approve
amendments, modifications or waivers affecting it with respect to (A) any
decrease in the Facility Fees or other amounts payable hereunder with respect to
Commitments in which the participating bank or other entity has purchased a
participation, (B) any change in the amount of principal of, or decrease in the
rate at which interest is payable on, the Advances in which the participating
bank or other entity has purchased a participation or (C) any extension of the
final scheduled maturity of any Advance in which the participating bank or other
entity has purchased a participation.

                  (g) Notwithstanding the limitations set forth in paragraph (b)
above, any Lender may at any time assign all or any portion of its rights under
this Agreement to a Federal Reserve Bank without the prior written consent of
the Borrower or the Administrative Agents, PROVIDED that no such assignment
shall release a Lender from any of its obligations hereunder or substitute any
such Bank for such Lender as a party hereto.

                  (h) Except as expressly provided in this Agreement, the
Issuing Banks may not assign or delegate any of their respective rights and
duties hereunder without the prior written consent of the Borrower and the
Administrative Agents.

                  (i) The Borrower may, with the prior written consent of the
Administrative Agents, replace any of the Lenders with one or more assignees,
PROVIDED (i) that the Lender being replaced has been paid in full for all
Advances made by such Lender and all other amounts accrued or due to such Lender
hereunder, (ii) that the full amount of the Commitments remain unchanged and
(iii) that the percentages of the total Commitments allocated to the Lenders
(other than any replaced Lenders) remain unchanged unless prior written consent
from any such affected Lenders has been obtained. Upon any such replacement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.10, 2.13 and 8.03, as well as to any Facility Fees
accrued for its account under Section 2.03 and not yet paid.

                  (j) In the event that:

                  (i) any Lender shall have refused (and shall not have
         retracted such refusal) to make available any Advance on its part to be
         made available hereunder, other than solely as a result of the failure
         of any condition set forth in Article III to be satisfied (such
         condition not having been effectively waived in accordance with the
         terms hereof);

                  (ii) any Lender shall have notified either the Administrative
         Agents or the Borrower (and shall not have retracted such notification)
         that it does not intend to comply with any of its obligations
         hereunder, other than solely as a result of the failure of any
         condition set forth in Article III to be satisfied (such condition not
         having been effectively waived in accordance with the terms hereof);


   46

                  (iii) (A) a receiver, trustee, conservator or other custodian
         shall have been appointed with respect to any Lender or its property at
         the direction or request of any Governmental Authority or (B) an order,
         action, process or proceeding of the type contemplated by paragraph (e)
         of Section 6.01 shall be commenced by or against such Lender (or such
         Lender shall have consented to the entry of any such order, action,
         process or proceeding); or

                  (iv) any Lender shall make demand upon the Borrower for any
         amount pursuant to Section 2.10 or 2.13;

the Borrower shall have the right, at its own expense, upon notice to such
Lender and the Administrative Agents (A) to require such Lender, and such Lender
hereby agrees, to use commercially reasonable efforts to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in Section 8.06(b)) all the interests, rights and obligations of such Lender to
an assignee; PROVIDED, HOWEVER, that (1) no such assignment shall conflict with
any law, rule or regulation or order of any Governmental Authority and (2) the
Borrower or such assignee, as the case may be, shall pay to such Lender in same
day funds on the date of such assignment the principal of and interest accrued
on the date of payment on the Advances made by such Lender hereunder and all
other amounts accrued for such Lender's account or owed to it hereunder or (B)
to replace such Lender with one or more assignees, PROVIDED, in the case of this
clause (B), (1) that the Lender being replaced has been paid in full for all
Advances made by such Lender and all other amounts accrued or due to such Lender
hereunder, (2) that the full amount of the Commitments remains unchanged and (3)
that the percentage of the total Commitments allocated to the Lenders (other
than any replaced Lenders) remains unchanged unless prior written consent from
such Lenders has been obtained, (4) no Default shall have occurred and be
continuing, (5) the replacement Lender is acceptable to the Paying Agent and (6)
if such replacement Lender is not an existing Lender, the Borrower shall have
paid the Paying Agent a processing and recordation fee of $3,500. Upon any
assignment, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.10, 2.13 and 8.03, as well as to any
fees accrued for its account under Section 2.03 and not yet paid.

                  (j) Notwithstanding anything to the contrary contained herein,
any Lender (a "GRANTING LENDER") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time to
time by the Granting Lender to the Administrative Agent and the Borrower, the
option to provide to the Borrower all or any part of any Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement PROVIDED that (i) nothing herein shall constitute a commitment to make
any Advance by any SPC and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Advance, the Granting Lender
shall be obligated to make such Advance pursuant to the terms hereof. The making
of an Advance by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Advance were made by the Granting
Lender. Each party hereto hereby agrees that no SPC shall be liable for any
payment under this Agreement for which a Lender would otherwise be liable, for
so long as, and to the extent, the related Granting Lender makes such payment.
In furtherance of the foregoing, each party hereto hereby agrees that, prior to
the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section
8.06, any SPC may (i) with notice to, but without the prior written consent of,
the Borrower or the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Advances to its
Granting Lender or to any financial institutions (if consented to by the
Borrower and the Administrative Agent) providing liquidity and/or credit
facilities to or for the account of such SPC to fund the Advances made by such
SPC or to support the securities (if any) issued by such SPC to fund such
Advances and (ii) disclose on a confidential basis any non-public information
relating to its Advances to any rating agency, commercial paper dealer or
provider of a surety, guarantee or credit or liquidity enhancement to such SPC.

                  SECTION 8.07. CONFIDENTIALITY. Unless otherwise agreed to in
writing by the Borrower, each Administrative Agent, the Paying Agent and each
Lender hereby agree to keep all Proprietary Information (as defined below)
confidential and not to disclose or reveal any Proprietary Information to any
Person other than such Administrative Agent's, the Paying Agent's or such
Lender's directors, officers, employees, Affiliates and agents and to actual or
potential assignees and participants, and then only on a confidential basis;
PROVIDED, HOWEVER, that either


   47

Administrative Agent, the Paying Agent or any Lender may disclose Proprietary
Information (a) as required by law, rule, regulation or judicial process or in
connection with any litigation or other proceeding relating to this Agreement
(provided that the applicable Person shall give the Borrower notice of such
disclosure on the same day on which it determines such disclosure to be
necessary and in any event prior to such disclosure to the extent not prohibited
by law, and, if prior notice is prohibited by law, shall give notice of such
disclosure as promptly as is legally permitted), (b) to its attorneys and
accountants or (c) as requested or required by any state, or Federal or foreign
authority or examiner regulating banks or banking. For purposes of this
Agreement, the term "PROPRIETARY INFORMATION" shall include all information
about the Borrower or any of its Affiliates that has been furnished by the
Borrower or any of its Affiliates, whether furnished before or after the
Effective Date, and regardless of the manner in which it is furnished; PROVIDED,
HOWEVER, that Proprietary Information does not include information that (i) is
or becomes generally available to the public other than as a result of a
disclosure by either Administrative Agent, the Paying Agent or any Lender not
permitted by this Agreement, (ii) was available to either Administrative Agent,
the Paying Agent or any Lender on a nonconfidential basis prior to its
disclosure by either Administrative Agent, the Paying Agent or such Lender by
the Borrower or any of its Affiliates or (iii) becomes available to either
Administrative Agent, the Paying Agent or any Lender on a nonconfidential basis
from a Person other than the Borrower or its Affiliates who, to the best
knowledge of either Administrative Agent, the Paying Agent or such Lender, as
the case may be, is not otherwise bound by a confidentiality agreement with the
Borrower or any of its Affiliates, or is not otherwise prohibited from
transmitting the information to either Administrative Agent, the Paying Agent or
such Lender.

                  SECTION 8.08. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                  SECTION 8.09. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 8.10. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
The Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Lender may otherwise
have to bring any action or proceeding relating to this Agreement against the
Borrower or its properties in the courts of any jurisdiction.

                  (b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any New
York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

                  (c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.02. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

              [The rest of this page is intentionally left blank.]


   48


                    SECTION 8.11 WAIVER OF JURY TRIAL. Each of the Borrower, the
Agents and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of any
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof.

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

                               THE KROGER CO.


                               By_____________________________
                                   Title:


                               CITIBANK, N.A., as Administrative Agent, Issuing
                               Bank and as Paying Agent

                               By_____________________________
                                   Title:


                               THE CHASE MANHATTAN BANK, as
                               Administrative Agent and Issuing Bank

                               By_____________________________
                                   Title:

   49


Initial Lenders
- ---------------

Commitment                   Administrative Agents
                             ---------------------

$ 87,500,000                           CITIBANK, N.A.

                                       By_______________________________
                                           Title:


$ 55,000,000                           THE CHASE MANHATTAN BANK

                                       By________________________________
                                           Title:


                              Co-Syndication Agents
                              ---------------------

$ 35,000,000                           BANK OF AMERICA, N.A.

                                       By _________________________________
                                           Title:


$ 75,000,000                           BANK ONE, NA

                                       By ________________________________
                                           Title:


$ 75,000,000                           THE BANK OF NEW YORK

                                       By _________________________________
                                           Title:


                                 Managing Agents
                                 ---------------

$ 62,500,000                           THE BANK OF NOVA SCOTIA

                                       By ___________________________________
                                           Title:


$ 50,000,000                           THE BANK OF TOKYO-MITSUBISHI, LTD.
                                       CHICAGO BRANCH

                                       By __________________________________
                                           Title:

   50

$ 50,000,000                           FIRSTAR BANK, N.A.

                                       By __________________________________
                                           Title:


$ 50,000,000                           THE INDUSTRIAL BANK OF JAPAN, LIMITED

                                       By __________________________________
                                           Title:


$ 37,500,000                           BNP PARIBAS

                                       By ___________________________________
                                           Title:

                                       By ___________________________________
                                           Title:


$ 37,500,000                           COMERICA BANK

                                       By __________________________________
                                           Title:


$ 37,500,000                           FIRST UNION NATIONAL BANK OF NORTH
                                       CAROLINA

                                       By __________________________________
                                           Title:


$ 37,500,000                           FIFTH THIRD BANK

                                       By ___________________________________
                                           Title:


$ 25,000,000                           SUMITOMO MITSUI BANKING CORPORATION
                                       NEW YORK BRANCH


                                       By ___________________________________
                                           Title:


$ 17,500,000                           MELLON BANK, N.A.

                                       By ___________________________________
                                           Title:

   51

$ 12,500,000                           KBC BANK, N.V.

                                       By ___________________________________
                                           Title:


$ 12,500,000                           THE NORINCHUKIN BANK, NEW YORK
                                       BRANCH

                                       By ___________________________________
                                           Title:


$ 12,500,000                           PNC BANK, NATIONAL ASSOCIATION

                                       By ___________________________________
                                           Title:


$ 12,500,000                           COOPERATIEVE CENTRALE RAIFFEISEN-
                                       BOERENLEENBANK B.A. "RABOBANK
                                       NEDERLAND" NEW YORK BRANCH

                                       By ___________________________________
                                           Title:


$ 12,500,000                           THE TOKAI BANK, LIMITED-NEW YORK
                                       BRANCH

                                       By___________________________________
                                           Title:.


$ 10,000,000                           AMSOUTH BANK

                                       By ___________________________________
                                           Title:


$ 7,500,000                            FIRST HAWAIIAN BANK

                                       By ___________________________________
                                           Title:
$ 812,500,000  Total of Commitments


   52


                                                                      SCHEDULE I
                                                                  THE KROGER CO.
                                                      FIVE-YEAR CREDIT AGREEMENT
                                                      APPLICABLE LENDING OFFICES






NAME OF  INITIAL LENDERS   DOMESTIC LENDING OFFICE            EURODOLLAR LENDING OFFICE
- ---------------------------------------------------------------------------------------
                                                        
AMSOUTH BANK               315 Deaderick Street               315 Deaderick Street
                           Nashville, TN  37237               Nashville, TN  37237
                           Betty Parker                       Betty Parker
                           Tel:  (615 790-4405)               Tel:  (615 790-4405)
                           Fax:  (615 748-2731)               Fax:  (615 748-2731)

BANK OF AMERICA, N.A.      231 S. LaSalle Street              231 S. LaSalle Street
                           Chicago, IL 60697                  Chicago, IL 60697
                           Clyde Langham                      Clyde Langham
                           Tel: (312) 828-3808                Tel: (312) 828-3808
                           Fax: (312) 974-9626                Fax: (312) 974-9626

THE BANK OF NEW YORK       One Wall Street                    One Wall Street
                           New York, NY 10286                 New York, NY 10286
                           Paula Diponzio                     Paula Diponzio
                           Tel: (212) 635-7867                Tel: (212) 635-7867
                           Fax: (212) 635-1483                Fax: (212) 635-1483

THE BANK OF NOVA SCOTIA    600 Peachtree St., NE              600 Peachtree St., NE
                           Suite 2700                         Suite 2700
                           Atlanta, GA 30308                  Atlanta, GA 30308
                           Shannon Law                        Shannon Law
                           Tel: (404) 877-1561                Tel: (404) 877-1561
                           Fax: (404) 888-8998                Fax: (404) 888-8998

THE BANK OF TOKYO-         227 West Monroe Street             227 West Monroe Street
MITSUBISHI, LTD.,          Suite 2300                         Suite 2300
CHICAGO BRANCH             Chicago, IL 60606                  Chicago, IL 60606
                           Jean Chaney/Laura Kozlowski        Jean Chaney/Laura Kozlowski
                           Tel: (312) 696-4712/4709           Tel: (312) 696-4712/4709
                           Fax: (312) 696-4532                Fax: (312) 696-4532

BANK ONE, N.A.             1 Bank One Plaza                   1 Bank One Plaza
                           Chicago, IL  60670                 Chicago, IL  60670
                           Paul Rigby                         Paul Rigby
                           Tel: (312) 732-6132                Tel: (312) 732-6132
                           Fax: (312) 336-4380                Fax: (312) 336-4380

BNP PARIBAS                209 South LaSalle Street,          209 South LaSalle Street,
                           Suite 500                          Suite 500
                           Chicago, IL  60604                 Chicago, IL  60604
                           Nick Mast                          Nick Mast
                           Tel: (312) 853-6011                Tel: (312) 853-6011
                           Fax: (312) 853-6020                Fax: (312) 853-6020


   53


                                                        
THE CHASE MANHATTAN        1 Chase Manhattan Plaza            1 Chase Manhattan Plaza
BANK                       8th floor                          8th floor
                           New York, NY 10081                 New York, NY 10081
                           Jackie Carter                      Jackie Carter
                           Tel: (212) 552-7997                Tel: (212) 552-7997
                           Fax: (212) 552-7500                Fax: (212) 552-7500

CITIBANK, N.A.             Two Penns Way, Suite 200           Two Penns Way, Suite 200
                           New Castle, DE  19720              New Castle, DE  19720
                           Brian Maxwell                      Brian Maxwell
                           Tel: (302) 894-6023                Tel: (302) 894-6023
                           Fax: (302) 894-6120                Fax: (302) 894-6120

COMERICA BANK              500 Woodward Avenue,               500 Woodward Avenue,
                           MC3268                             MC3268
                           Detroit, MI 48226                  Detroit, MI 48226
                           Jennifer Pugliano                  Jennifer Pugliano
                           Tel: (313) 222-9644                Tel: (313) 222-9644
                           Fax: (313) 222-9514                Fax: (313) 222-9514

FIFTH THIRD BANK           38 Fountain Square Plaza           38 Fountain Square Plaza
                           Cincinnati, OH 45263               Cincinnati, OH 45263
                           Dan Mullen                         Dan Mullen
                           Tel: (513) 579-4104                Tel: (513) 579-4104
                           Fax: (513) 579-5226                Fax: (513) 579-5226

FIRST HAWAIIAN BANK        999 Bishop Street, 11th Flr        999 Bishop Street, 11th Flr
                           Honolulu, HI 96813                 Honolulu, HI 96813
                           Charles L. Jenkins                 Charles L. Jenkins
                           Tel: (808) 525-6289                Tel: (808) 525-6289
                           Fax: (808) 525-6372                Fax: (808) 525-6372

FIRSTAR BANK, N.A.         Firstar Tower                      Firstar Tower
                           425 Walnut Street 8th Floor        425 Walnut Street 8th Floor
                           Cincinnati, OH  45202              Cincinnati, OH  45202
                           Rachel Mueller                     Rachel Mueller
                           Tel: (902) 426-7464                Tel: (902) 426-7464
                           Fax: (902) 426-7993                Fax: (902) 426-7993

FIRST UNION NATIONAL       201 South College Street           One First Union Center,
BANK OF NORTH CAROLINA     Charlotte, NC 28288-0745           Charlotte, NC 28288-0745
                           Todd Tucker                        Todd Tucker
                           Tel: (704) 382-0905                Tel: (704) 382-0905
                           Fax: (704) 383-7999                Fax: (704) 383-7999

THE INDUSTRIAL BANK
 OF JAPAN, LIMITED

KBC N.V.                   KBC, N.V.,                         KBC, N.V.,
                           New York Branch                    Cayman Islands Branch
                           125 West 55th Street               125 West 55th Street
                           New York, NY 10019                 New York, NY 10019
                           Lynda Resuma                       Lynda Resuma
                           Tel: (212) 541-0657                Tel: (212) 541-0657
                           Fax: (212) 956-5580                Fax: (212) 956-5580


   54


                                                        
MELLON BANK, N.A.          Three Mellon Bank Center           Three Mellon Bank Center
                           Room 1203                          Room 2305
                           Pittsburgh, PA 15259-0003          Pittsburgh, PA 15259-0003
                           Richard Bouchard                   Richard Bouchard
                           Tel: (412) 234-5767                Tel: (412) 234-5767
                           Fax: (412) 234-6124                Fax: (412) 234-6124

THE NORINCHUKIN BANK,      245 Park Avenue, 29th Floor        245 Park Avenue, 29th Floor
NEW YORK BRANCH            New York, NY 10167                 New York, NY 10167
                           Nicholas Fiore                     Nicholas Fiore
                           Tel:  (212) 697-1717               Tel:  (212) 697-1717
                           Fax:  (212) 697-5754               Fax:  (212) 697-5754

PNC BANK, NATIONAL         201 East Fifth Street              201 East Fifth Street
ASSOCIATION                Cincinnati, OH 45201               Cincinnati, OH 45201
                           C. Joseph Richardson               C. Joseph Richardson
                           Tel: (513) 651-8688                Tel: (513) 651-8688
                           Fax: (513) 651-8957                Fax: (513) 651-8957

RABOBANK NEDERLAND         c/o Rabo Support Services, Inc.    c/o Rabo Support Services, Inc.
                           10 Exchange Place, 16th Floor      10 Exchange Place, 16th Floor
                           Jersey City, NY 07302              Jersey City, NY 07302
                           Ann McDonough                      Ann McDonough
                           Tel:  (201) 499-5200               Tel:  (201) 499-5200
                           Fax:                               Fax:

SUMITOMO MITSUI            277 Park Avenue                    277 Park Avenue
BANKING CORPORATION        New York, NY  10172                New York, NY  10172
                           Courtney Whitlock                  Courtney Whitlock
                           Tel: (212) 224-4335                Tel: (212) 224-4335
                           Fax: (212) 224-5197                Fax: (212) 224-5197

THE TOKAI BANK LTD.        55 East 52nd Street                55 East 52nd Street
NEW YORK BRANCH            New York, NY  10055                New York, NY  10055
                           Sylvia Pace                        Sylvia Pace
                           Tel: (212) 339-1167                Tel: (212) 339-1167
                           Fax: (212) 832-1428                Fax: (212) 832-1428



   55

                                SCHEDULE 2.01(C)

                           STAND-BY LETTERS OF CREDIT

                              AS OF APRIL 25, 2001


                                                                
- -----------------------------------------------------------------------------------------------------------------------
      STAR             S36845               $1,700,000.00     07/06/01      SAFECO INS. SURETY BONDS
- -----------------------------------------------------------------------------------------------------------------------
      STAR            S51361A                  $29,340.00     09/19/01a     East Cocallico Twp
- -----------------------------------------------------------------------------------------------------------------------
      STAR            S51430A                  $24,000.00     10/03/01a     Commonweealth of Pennsylvania
- -----------------------------------------------------------------------------------------------------------------------
      STAR             S52339                  $20,000.00     03/31/02      State of TN
- -----------------------------------------------------------------------------------------------------------------------
      STAR            S48075A                 $750,000.00     12/31/01      Commissioner of Ins (St of VT)
- -----------------------------------------------------------------------------------------------------------------------
      STAR            S54497A                 $250,000.00     02/01/02      Commissioner of Ins (St of VT)
- -----------------------------------------------------------------------------------------------------------------------
      STAR             55131A                  $24,500.00     06/27/01      City of Wichita
- -----------------------------------------------------------------------------------------------------------------------
      STAR             55269                  $190,276.97     08/02/01      City of Topeka
- -----------------------------------------------------------------------------------------------------------------------
      STAR             55270                   $13,119.75     08/02/01      City of Topeka
- -----------------------------------------------------------------------------------------------------------------------
      STAR                                  $3,185,445.00     11/30/01      Chase Trust
- -----------------------------------------------------------------------------------------------------------------------
      STAR                                    $364,753.29     05/01/02      City of Greenwood
- -----------------------------------------------------------------------------------------------------------------------
    1st AMER          1612758               $6,000,000.00     03/08/02      UFCW LOCAL #1529
- -----------------------------------------------------------------------------------------------------------------------




   56


                                SCHEDULE 3.01(b)
                              DISCLOSED LITIGATION

On September 13, 1996, a class action lawsuit titled McCampbell, et al. v.
Ralphs Grocery Company, et al, as filed in the Superior Court of the State of
California, County of San Diego, against Ralphs Grocery Company ("Ralphs/Food 4
Less") and two other grocery store chains operating in the Southern California
area. The complaint alleged, among other things, that Ralphs/Food 4 Less and
others conspired to fix the retail price of eggs in Southern California. The
plaintiffs claimed that the defendants' actions violated provisions of the
California Cartwright Act and constituted unfair competition. The plaintiffs
sought damages they purported to have sustained as a result of the defendants'
alleged actions, which damages were subject to trebling under the applicable
statute, and an injunction from future actions in restraint of trade and unfair
competition. A class was certified consisting of all retail purchasers of white
chicken eggs sold by the dozen in Los Angeles, Riverside, San Diego, San
Bernardino, Imperial and Orange counties from September 13, 1992.

The case proceeded to trial before a jury in July and August 1999. On September
2, 1999, the jury returned a verdict in favor of Ralphs/Food 4 Less and against
the plaintiffs. Judgment was entered in favor of Ralphs/Food 4 Less on November
1, 1999. Plaintiffs have appealed the judgment.


   57


                                                 EXHIBIT A-1 - FORM OF NOTICE OF
                                                      REVOLVING CREDIT BORROWING

Citibank, N.A., as Paying Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
Two Penns Way, Suite 200
New Castle, Delaware 19720               [Date]

                  Attention:  Brian Maxwell

Ladies and Gentlemen:

                  The undersigned, The Kroger Co., refers to the Five-Year
Credit Agreement, dated as of May 23, 2001 (as amended or modified from time to
time, the "CREDIT AGREEMENT", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto,
Citibank, N.A., as Administrative Agent and as Paying Agent for said Lenders,
The Chase Manhattan Bank, as Administrative Agent for said Lenders, and Bank of
America, N.A., Bank One, NA and The Bank of New York., as co-syndication agents,
and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests a Revolving Credit Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Revolving Credit Borrowing (the "PROPOSED REVOLVING
CREDIT BORROWING") as required by Section 2.02(a) of the Credit Agreement:

                  (i) The Business Day of the Proposed Revolving Credit
         Borrowing is _______________, 200_.

                  (ii) The Type of Advances comprising the Proposed Revolving
         Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

                  (iii) The aggregate amount of the Proposed Revolving Credit
         Borrowing is $_______________.

                  [(iv) The initial Interest Period for each Eurodollar Rate
         Advance made as part of the Proposed Revolving Credit Borrowing is
         _____ month[s].]

                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Revolving Credit Borrowing:

                  (A) the representations and warranties contained in Section
         4.01 of the Credit Agreement are correct, before and after giving
         effect to the Proposed Revolving Credit Borrowing and to the
         application of the proceeds therefrom, as though made on and as of such
         date;

                  (B) no event has occurred and is continuing, or would result
         from such Proposed Revolving Credit Borrowing or from the application
         of the proceeds therefrom, that constitutes a Default; and


   58


                  (C) the aggregate amount of the Proposed Revolving Credit
         Borrowing and all other Borrowings to be made on the same day under the
         Credit Agreement is within the aggregate amount of the unused
         Commitments of the Lenders less Facility Usage.

                                                 Very truly yours,

                                                 THE KROGER CO.


                                                 By_____________________
                                                     Title:


   59


                                                 EXHIBIT A-2 - FORM OF NOTICE OF
                                                       COMPETITIVE BID BORROWING


____________________, as Agent

  for the Lenders parties
  to the Credit Agreement
  referred to below

_________________________
_________________________                [Date]

                  Attention:  _______________

Ladies and Gentlemen:

                  The undersigned, The Kroger Co., refers to the Five-Year
Credit Agreement, dated as of May 23, 2001 (as amended or modified from time to
time, the "CREDIT AGREEMENT", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto,
Citibank, N.A., as Administrative Agent and as Paying Agent for said Lenders,
The Chase Manhattan Bank, as Administrative Agent for said Lenders, and Bank of
America, N.A., Bank One, NA and The Bank of New York, as co-syndication agents,
and hereby gives you notice, irrevocably, pursuant to Section 2.01(b) of the
Credit Agreement that the undersigned hereby requests a Competitive Bid
Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such Competitive Bid Borrowing (the "PROPOSED COMPETITIVE BID
BORROWING") is requested to be made:


                                                                    
                  (A)      Date of Competitive Bid Borrowing           ________________________
                  (B)      Amount of Competitive Bid Borrowing         ________________________
                  (C)      [Maturity Date] [Interest Period]           ________________________
                  (D)      Interest Rate Basis                         ________________________
                  (E)      Interest Payment Date(s)                    ________________________
                  (F)      ___________________                         ________________________
                  (G)      ___________________                         ________________________
                  (H)      ___________________                         ________________________


                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:

                  (a) the representations and warranties contained in Section
         4.01 are correct, before and after giving effect to the Proposed
         Competitive Bid Borrowing and to the application of the proceeds
         therefrom, as though made on and as of such date;

                  (b) no event has occurred and is continuing, or would result
         from the Proposed Competitive Bid Borrowing or from the application of
         the proceeds therefrom, that constitutes a Default; and

                  (c) the aggregate amount of the Proposed Competitive Bid
         Borrowing and all other Borrowings to be made on the same day under the
         Credit Agreement is within the aggregate amount of the unused
         Commitments of the Lenders.


   60

                  The undersigned hereby confirms that the Proposed Competitive
Bid Borrowing is to be made available to it in accordance with Section 2.01(b)
of the Credit Agreement.

                                          Very truly yours,

                                          THE KROGER CO.




                                          By___________________________
                                              Title:


   61


                                                             EXHIBIT B - FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE


                  Reference is made to the Five-Year Credit Agreement dated as
of May 23, 2001 (as amended or modified from time to time, the "CREDIT
AGREEMENT") among The Kroger Co., an Ohio corporation (the "BORROWER"), the
Lenders (as defined in the Credit Agreement), Citibank, N.A., as Administrative
Agent and as Paying Agent for said Lenders, The Chase Manhattan Bank, as
Administrative Agent for said Lenders, Bank of America, N.A., Bank One, NA and
The Bank of New York, as co-syndication agents. Terms defined in the Credit
Agreement are used herein with the same meaning.

                  The "Assignor" and the "Assignee" referred to on Schedule I
hereto agree as follows:

                  1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement as of the
date hereof (other than in respect of Competitive Bid Advances and Competitive
Bid Notes) equal to the percentage interest specified on Schedule 1 hereto of
all outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes). After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Revolving Credit Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.

                  2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim created by it; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Revolving Credit Note
held by the Assignor and requests that the Agent exchange such Revolving Credit
Note for a new Revolving Credit Note payable to the order of the Assignee in an
amount equal to the Commitment assumed by the Assignee pursuant hereto or new
Revolving Credit Notes payable to the order of the Assignee in an amount equal
to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitment retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.

                  3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor 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 decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender; and (vi)
attaches any U.S. Internal Revenue Service forms required under Section 2.13 of
the Credit Agreement.

                  4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "EFFECTIVE DATE") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.

                  5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance,


   62

have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.

                  6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Revolving Credit Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
facility fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Revolving Credit Notes for periods prior to the Effective Date directly
between themselves.

                  7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.

                  IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.


   63

                                   Schedule 1

                                       to

                            Assignment and Acceptance


                                                                                                      
                  Percentage interest assigned:                                                            _____%

                  Assignee's Commitment:                                                                  $_____

                  Aggregate outstanding principal amount of Revolving Credit Advances assigned:           $_____

                  Principal amount of Revolving Credit Note payable to Assignee:                          $_____

                  Principal amount of Revolving Credit Note payable to Assignor:                          $_____

                  Effective Date*:  _______________, 200_


                                           [NAME OF ASSIGNOR], as Assignor

                                           By ____________________________
                                               Title:

                                           Dated:  _______________, 200_


                                           [NAME OF ASSIGNEE], as Assignee

                                           By ____________________________
                                               Title:

                                           Dated:  _______________, 200_

                                           Domestic Lending Office:
                                                    [Address]

                                           Eurodollar Lending Office:
                                                    [Address]

Accepted and Approved this
____ day of _______________, 200_

CITIBANK, N.A., as Administrative
Agent and as Paying Agent

By
   Title:

Approved this ____ day
of _______________, 200_

- --------
*        This date should be no earlier than five Business Days after the
         delivery of this Assignment and Acceptance to the Agent.

   64

THE CHASE MANHATTAN BANK,
as Administrative Agent

By______________________
   Title:

Approved this ____ day
of _______________, 200_

THE KROGER CO.

By______________________
   Title:


   65


                                                             EXHIBIT C - FORM OF
                                                             OPINION OF COUNSEL
                                                             FOR THE BORROWER


To each of the Lenders parties
  to the Credit Agreement dated
  as of May 23, 2001
  among The Kroger Co.,
  said Lenders, Citibank, N.A., as
  Administrative Agent and Paying
  Agent, and The Chase Manhattan
  Bank, as Administrative Agent
  for said Lenders, and to Citibank, N.A.,
  as Administrative Agent and Paying
  Agent and The Chase Manhattan Bank,
  as Administrative Agent

                                 The Kroger Co.
                                 --------------

Ladies and Gentlemen:

                  As Senior Vice President, Secretary and General Counsel of The
Kroger Co., an Ohio corporation (the "COMPANY"), I am familiar with its affairs
and, to the extent necessary to render this opinion, the affairs of its
subsidiaries and in particular the Five-Year Credit Agreement, dated as of May
23, 2001 (the "CREDIT AGREEMENT"), among the Company, the banking institutions
listed on the signature pages thereof (the "Lenders"), Citibank, N.A. and The
Chase Manhattan Bank, as Administrative Agents, Bank of America, N.A., Bank One,
NA and The Bank of New York, as Co-Syndication Agents. This opinion is delivered
to you pursuant to the Credit Agreement. All capitalized terms used herein which
are defined in, or by reference in, the Credit Agreement have the meanings
assigned to such terms in, or be reference in, the Credit Agreement unless
otherwise indicated herein.

                  In connection with the preparation of this opinion, I have
examined originals, or certified, conformed or reproduction copies, of such
corporate records, agreements, instruments and documents of the Borrower, such
certificates of public officials and such other documents as I have deemed
necessary or appropriate to its preparation and delivery. In all such
examinations, I have assumed the genuineness of all signatures on original or
certified, conformed or reproduction copies of documents of all parties other
than the Company and the conformity to original or certified copies of all
copies submitted to me as conformed or reproduction copies. As to various
questions of fact relevant to such opinions, I have relied upon, and assume the
accuracy of, statements or certificates of public officials and statements or
certificates of officers or representatives of the Borrower and others. I am
familiar with the proceedings of the Board of Directors of the Borrower in
connection with the Credit Agreement.

                  Based on the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, I am of the opinion that:

                  (1) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Ohio. The Borrower
has all requisite corporate power and authority to own or lease and operate its
properties, and to carry on its business as presently conducted. The Borrower
has the corporate power and authority to execute and deliver the Credit
Agreement, and to perform its obligations under the Credit Agreement. The
Borrower is duly qualified or licensed to do business as a foreign corporation
in good standing in all jurisdictions in which it owns or leases assets or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to be so licensed or qualified is not likely to have a
material adverse effect on the business, condition (financial or otherwise),
performance, operation, properties or prospects thereof.


   66

                  (2) The Credit Agreement has been duly executed and delivered
on behalf of the Borrower.

                  (3) There are no pending or overtly threatened actions or
proceedings against the Company or any of its Subsidiaries before any court,
governmental agency or arbitrator which, (a) except as set forth in the Credit
Agreement, are reasonably likely to have a Material Adverse Effect or (b)
purport to affect the legality, validity or enforceability of the Credit
Agreement.

                  (4) The execution and delivery by the Borrower of the Credit
Agreement and the performance by the Borrower of its obligations under the
Credit Agreement (a) have been duly authorized by all necessary corporate
action, (b) do not require any filing or registration with, or approval or
consent of, any governmental agency or authority generally applicable to
corporations for profit that has not been made or obtained, and (c) do not
contravene (i) any provisions of the Articles of Incorporation of the Borrower
or Regulations of the Borrower and all amendments thereto, or (ii) any present
law, or governmental regulation of any governmental agency or authority of the
State of Ohio generally applicable to corporations for profit which, to my
knowledge, is applicable to the Borrower.

                  (5) The execution and delivery by the Borrower of the Credit
Agreement and the performance by it of its obligations thereunder, to my
knowledge, will not contravene any indenture, loan or credit agreement, lease,
guarantee, mortgage, security agreement, bond, note or other agreement or
instrument, or any order, writ, judgment, award, injunction or decree, which
affect or purport to affect any of the rights or obligations of the Borrower
under the Credit Agreement, except as disclosed in the Credit Agreement.

                  (6) No authorization, consent, approval or other action by,
and no notice to or filing with, any governmental authority is required for the
due execution, delivery and performance by the Borrower of the Credit Agreement.

                  (7) The Credit Agreement constitutes the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.

                  (8) In general, an Ohio court would give effect to the choice
of law provisions in the Credit Agreement which specify New York law as the
applicable law (other than instances where Ohio law specifically governs Ohio
property, persons or activities, for example, with respect to real property and
choice of law rules under the Uniform Commercial Code ("UCC")). The Supreme
Court of Ohio has validated contractual choice of law provisions. JARVIS V.
ASHLAND OIL, INC., 17 Ohio St. 3d 189 (1985); SCHULKE RADIO PRODUCTIONS, LTD. V.
MIDWESTERN BROADCASTING CO., 6 Ohio St. 3d 436 (1983). In the latter case, the
Supreme Court held that the parties may choose the law applicable to their
contract unless (i) the state whose law is chosen has no substantial
relationship to the parties or to the transaction and there is no other
reasonable basis for the parties' choice or (ii) application of the chosen law
would be contrary to a fundamental policy of a state having a materially greater
interest in the issue than the chosen state and such other state would be the
state of applicable law in the absence of a choice by the parties. In addition,
Ohio Revised Code ("R.C.") ss. 1301.05 (UCC 1-105) provides generally with
respect to UCC matters (not including issues specifically addressed to the
contrary by the Ohio UCC, for example, perfection issues governed by R.C. ss.
1309.03 (UCC 9-103)) that when a transaction bears a reasonable relation to Ohio
and also to another state, the parties may agree that the law of either Ohio or
of such other state shall govern their rights and duties. Under the present
circumstances, it would appear that the parties' stipulation that the law of New
York should control should be given effect in Ohio. This conclusion is based
upon our understanding that the transactions provided for in the Credit
Agreement were negotiated primarily in New York, were executed and delivered in
New York, and are to be performed, in whole or in part, in New York and that the
Administrative Agents and the Paying Agent have their chief places of business
outside of the State of Ohio.

                  The opinions set forth above are subject to the following
qualifications:

                  (a) My opinion in paragraph 7 above as to enforceability is
         subject to the effect of any applicable bankruptcy, insolvency
         (including, without limitation, all laws relating to fraudulent
         transfers), reorganization, moratorium or similar law affecting
         creditors' rights generally.


   67

                  (b) My opinion in paragraph 7 above as to enforceability is
         subject to the effect of general principles of equity, including,
         without limitation, concepts of materiality, reasonableness, good faith
         and fair dealing (regardless of whether considered in a proceeding in
         equity or at law).

                  (c) I express no opinion as to (i) Section 2.12 of the Credit
         Agreement insofar as it provides that any Lender purchasing a
         participation from another Lender pursuant thereto may exercise set-off
         or similar rights with respect to such participation and (ii) the
         effect of the law of any jurisdiction other than the State of Ohio
         wherein any Lender may be located or wherein enforcement of the Credit
         Agreement or the Notes may be sought that limits the rates of interest
         legally chargeable or collectible.

                  The opinions stated herein are limited to the federal laws of
the United States of America and the laws of the State of Ohio. To the extent
the opinions stated herein relate to laws of a jurisdiction other than the
United States of America or the State of Ohio, I have assumed for purposes of
such opinions that the laws of such jurisdiction are identical to the laws of
the State of Ohio. The opinions are limited to the matters on which I have been
expressly asked to opine and do not extend beyond such limits. The opinions
expressed herein are solely for the benefit of the Agent and the Lenders and may
not be relied on in any manner or for any purpose by any other person or entity.

                                Very truly yours,