TAYLOR ANN STORES CORP
EXHIBIT 10.18
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>bankag.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>


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                               ANNTAYLOR, INC.


               ________________________________________________

                                 $175,000,000

                    AMENDED AND RESTATED CREDIT AGREEMENT

                                April 30, 2001

              __________________________________________________


                JPMORGAN a division of Chase Securities, Inc.,
                          FIRST UNION NATIONAL BANK,
                            as Syndication Agents

                             FLEET NATIONAL BANK,
                            as Documentation Agent

                     THE CIT GROUP/BUSINESS CREDIT, INC.,
                             FIRSTAR BANK, N.A.,
                  TRANSAMERICA BUSINESS CAPITAL CORPORATION,
                                 as Co-Agents

                            BANK OF AMERICA, N.A.,
                          THE CHASE MANHATTAN BANK,
                          FIRST UNION NATIONAL BANK,
                               as Issuing Banks

                       BANC OF AMERICA SECURITIES LLC,
                 as Sole Lead Arranger and Sole Book Manager

                   BANK OF AMERICA, N.A., formerly known as
           Bank of America National Trust and Savings Association,
                           as Administrative Agent

       --------------------------------------------------------------
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                              TABLE OF CONTENTS
                                                                         Page


                                  ARTICLE I
                                  ---------

                  AMENDMENT AND RESTATEMENT AND DEFINITIONS
                  -----------------------------------------

1.01.    Amendment and Restatement...........................................1
1.02.    Certain Defined Terms...............................................2
1.03.    Computation of Time Periods........................................27
1.04.    Accounting Terms...................................................27
1.05.    Other Definitional Provisions......................................27

                                  ARTICLE II
                                  ----------

                          AMOUNTS AND TERMS OF LOANS
                          --------------------------

2.01.    The Revolving Credit Facility......................................29
2.02.    Interest on the Loans..............................................31
2.03.    Fees...............................................................34
2.04.    Voluntary and Mandatory Prepayments................................35
2.05.    Payments...........................................................36
2.06.    Interest Periods...................................................38
2.07.    Special Provisions Governing Eurodollar Rate Loans.................39
2.08.    Taxes..............................................................41
2.09.    Increased Capital..................................................44
2.10.    Use of Proceeds of the Loans.......................................44
2.11.    Replacement of Lender in Event of Adverse Condition................45
2.12.    Authorized Officers of the Borrower................................45

                                 ARTICLE III
                                 -----------

                              LETTERS OF CREDIT
                              -----------------

3.01.    Obligation to Issue................................................46
3.02.    Types and Amounts..................................................46
3.03.    Conditions.........................................................47
3.04.    Issuance of Letters of Credit......................................47
3.05.    Reimbursement Obligations; Duties of the Issuing Banks.............49
3.06.    Participations.....................................................50
3.07.    Payment of Reimbursement Obligations...............................52
3.08.    Compensation for Letters of Credit.................................52
3.09.    Indemnification; Exoneration.......................................54
3.10     Applicability of ISP98 and UCP.....................................54


                                   i


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



                                 ARTICLE IV
                                 ----------

                  CONDITIONS TO LOANS AND LETTERS OF CREDIT
                  -----------------------------------------

4.01.    Conditions Precedent to the Effective Date.........................56
4.02.    Conditions Precedent to all Loans and Letters of Credit............58

                                  ARTICLE V
                                  ---------

                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

5.01.    Representations and Warranties on the Effective Date...............60
5.02.    Subsequent Funding Representations and Warranties..................64

                                  ARTICLE VI
                                  ----------

                             REPORTING COVENANTS
                             -------------------

6.01.    Financial Statements...............................................65

                                 ARTICLE VII
                                 -----------

                            AFFIRMATIVE COVENANTS
                            ---------------------

7.01.    Corporate Existence, Etc...........................................69
7.02.    Corporate Powers, Etc..............................................69
7.03.    Compliance with Laws...............................................69
7.04.    Payment of Taxes and Claims........................................69
7.05.    Maintenance of Properties; Insurance...............................69
7.06.    Inspection of Property; Books and Records; Discussions.............70
7.07.    Labor Matters......................................................70
7.08.    Maintenance of Permits.............................................70
7.09.    ERISA..............................................................70
7.10.    Pledge of After-Acquired Property; Additional Guarantors...........70
7.11.    Further Assurances.................................................72

                                 ARTICLE VIII
                                 ------------

                              NEGATIVE COVENANTS
                              ------------------

8.01.    Indebtedness.......................................................73
8.02.    Sales of Assets; Liens.............................................74
8.03.    Investments........................................................75
8.04.    Accommodation Obligations..........................................76
8.05.    Restricted Payments................................................77
8.06.    Conduct of Business................................................78
8.07.    Transactions with Affiliates.......................................78
8.08.    Restriction on Fundamental Changes.................................78

                                     ii

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8.09.    ERISA..............................................................79
8.10.    Sales and Leasebacks...............................................79
8.11.    Convertible Debentures and other Indebtedness......................79
8.12.    Margin Regulations.................................................80
8.13.    Change of Fiscal Year..............................................80
8.14.    Subsidiaries.......................................................80
8.15.    Consignment of Title Documents.....................................80

                                  ARTICLE IX
                                  ----------

                             FINANCIAL COVENANTS
                             -------------------

9.01.    Minimum Tangible Net Worth.........................................81
9.02.    Leverage Ratio.....................................................81
9.03.    Minimum Fixed Charge Coverage Ratio................................81

                                  ARTICLE X
                                  ---------

                    EVENTS OF DEFAULT, RIGHT AND REMEDIES
                    -------------------------------------

10.01.   Events of Default..................................................82
10.02.   Rights and Remedies................................................84

                                  ARTICLE XI
                                  ----------

                           THE ADMINISTRATIVE AGENT
                           ------------------------

11.01.   Appointment and Authorization......................................86
11.02.   Delegation of Duties...............................................86
11.03.   Liability of Administrative Agent..................................86
11.04.   Reliance by Administrative Agent...................................87
11.05.   Notice of Default..................................................87
11.06.   Credit Decision....................................................88
11.07.   Indemnification....................................................88
11.08.   Administrative Agent in Individual.................................89
11.09.   Successor Administrative Agent.....................................89
11.10.   The Arranger.......................................................90
11.11.   Syndication Agents, Co-Agents and Documentation Agent..............90
11.12.   Collateral Matters.................................................90
11.13.   Relations Among Lenders............................................91

                                 ARTICLE XII
                                 -----------

                                MISCELLANEOUS
                                -------------

12.01.   Assignments and Participations.....................................92
12.02.   Assignments to Federal Reserve Banks...............................94
12.03.   Expenses...........................................................94


                                     iii

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12.04.   Indemnity..........................................................95
12.05.   Change in Accounting Principles....................................96
12.06.   Setoff.............................................................96
12.07.   Ratable Sharing....................................................97
12.08.   Amendments and Waivers.............................................97
12.09.   Independence of Covenants..........................................98
12.10.   Notices............................................................98
12.11.   Survival of Warranties and Agreements..............................99
12.12.   Failure or Indulgence Not Waiver; Remedies Cumulative..............99
12.13.   Marshalling; Recourse to Security; Payments Set Aside..............99
12.14.   Severability......................................................100
12.15.   Headings..........................................................100
12.16.   Governing Law.....................................................100
12.17.   Confidentiality...................................................100
12.18.   Consent to Jurisdiction and Service of Process; Waiver of Jury Trial101
12.19.   Counterparts; Effectiveness; Inconsistencies......................102

                                     iv
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      EXHIBITS

Exhibit 2.01(b)...      Form of Notice of Borrowing
Exhibit 2.01(d)...      Form of Note
Exhibit 2.02......            Form of Notice of Conversion/Continuation
Exhibit 4.01(a)(ii)           Form of Borrower Pledge Agreement
Exhibit 4.01(a)(iii)          Form of Trademark Security Agreement
Exhibit 4.01(a)(iv)           Form of ATSC Guaranty
Exhibit 4.01(a)(v)            Form of ATSC Pledge Agreement
Exhibit 4.01(a)(vi)           Form of Subsidiary Guaranty and Collateral
Agreement
Exhibit 4.01(a)(xi)           Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP
Exhibit 6.01(d)(i)            Form of Compliance Certificate
Exhibit 6.01(d)(ii)           Form of Pricing Ratio Certificate
Exhibit 6.01(o)...      Form of Borrowing Base Certificate
Exhibit 12.01.....            Form of Assignment and Acceptance

      SCHEDULES

Schedule 1.01(a)..      Lending Offices
Schedule 1.01(b)..      Commitments
Schedule 3.01(b)..      Existing Letters of Credit
Schedule 3.01(c)..      Citibank Letters of Credit
Schedule 4.01.....            UCC Filing Jurisdictions
Schedule 5.01(p)..      Restricted Subsidiaries
Schedule 8.01(k)..      Permitted Existing Indebtedness
Schedule 8.02(b)..      Permitted Existing Liens

                                      iv

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      AMENDED AND RESTATED  CREDIT  AGREEMENT,  dated as of April 30, 2001 (as

amended, supplemented or modified from time to time, this "Agreement"),  among

ANNTAYLOR,  INC.,  a  Delaware  corporation  (the  "Borrower"),   each  Person

signatory  hereto  as a Lender  or which  from  time to time  becomes a Lender

party  hereto  in  accordance  with  Section   12.01(a)   (together  with  its

respective   successors   and   assigns,   individually,   a   "Lender"   and,

collectively,  the "Lenders"), BANC OF AMERICA SECURITIES LLC, as Arranger (in

such capacity, the "Arranger"),  BANK OF AMERICA, N.A., formerly known as Bank

of America National Trust and Savings  Association,  in its separate  capacity

as  administrative  agent for the Lenders  hereunder  (in such  capacity,  the

"Administrative  Agent"),  JPMORGAN a division of Chase  Securities,  Inc. and

FIRST UNION  NATIONAL  BANK, in their  respective  capacities  as  syndication

agents (collectively,  in such capacities,  the "Syndication  Agents"),  FLEET

NATIONAL BANK, as documentation  agent (in such capacity,  the  "Documentation

Agent"),  THE  CIT  GROUP/BUSINESS   CREDIT,  INC.,  FIRSTAR  BANK,  N.A.  and

TRANSAMERICA  BUSINESS CAPITAL  CORPORATION,  as co-agents  (collectively,  in

such  capacities,  the  "Co-Agents")  and BANK OF  AMERICA,  N.A.,  THE  CHASE

MANHATTAN BANK, and FIRST UNION NATIONAL BANK, as Issuing Banks.



                             W I T N E S S E T H:
                             --------------------

      WHEREAS, the Borrower,  the lenders referred to therein, the syndication
      -------

agents named therein,  the issuing banks named therein and the  administrative

agent  named  therein  have  entered  into that  certain  $150,000,000  Credit

Agreement dated June 30, 1998 (as amended,  the "Original Credit  Agreement");

and



      WHEREAS,  the  parties  hereto  desire  to  amend  the  Original  Credit
      -------
Agreement as set forth herein,  including providing for Fleet National Bank to

act as documentation agent for the Lenders and The CIT Group/Business  Credit,

Inc., Firstar Bank, N.A. and Transamerica  Business Capital Corporation to act

as co-agents for the Lenders,  and to restate the Original Credit Agreement as

so amended in its entirety;



      NOW,  THEREFORE,  in  consideration of the premises and mutual covenants

contained  herein,  the parties  hereto  hereby  agree that,  on and as of the

Effective Date, the Original  Credit  Agreement is hereby amended and restated

in its entirety as follows:




                                  ARTICLE I

                  Amendment and Restatement and Definitions
                  -----------------------------------------

      1.01. Amendment and Restatement.  The Borrower,  the Agents, the Issuing
            --------------------------
Banks,  the Arranger and the Lenders hereby agree that upon the  effectiveness

of this Agreement,  the terms and provisions of the Original Credit  Agreement

which in any  manner  govern or  evidence  the  Obligations,  the  rights  and

interests of the Lenders and any terms,  conditions or matters  related to any

thereof,  shall be and hereby are  amended and  restated in their  entirety by

the terms and  provisions of this  Agreement  and the terms and  conditions of

the Original Credit  Agreement  shall be superseded by this Agreement,  except

as expressly provided herein.

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




      Notwithstanding   the  amendment  and  restatement  of  Original  Credit

Agreement  and  certain  of the  related  "Loan  Documents"  as defined in the

Original Credit  Agreement (the "Prior Loan  Documents") by this Agreement and

the  other  Loan  Documents  as  herein  defined,  all  of  the  indebtedness,

liabilities  and  obligations  owing by the Borrower under the Original Credit

Agreement  (other than  Reimbursement  Obligations (as defined in the Original

Credit  Agreement) with respect to Citibank  Letters of Credit) shall continue

as  Obligations  hereunder and shall be and remain  secured by the  Collateral

Documents  for the benefit of the Agents and the  Lenders.  This  Agreement is

given  as a  substitution  of,  and not as a  payment  of,  the  indebtedness,

liabilities  and  obligations  of  the  Borrower  under  the  Original  Credit

Agreement  and is not intended to  constitute a novation  thereof or of any of

the other Prior Loan  Documents.  Upon the  effectiveness  of this  Agreement,

all Loans owing by the  Borrower and Letters of Credit  outstanding  under the

Original Credit  Agreement  (other than the Citibank  Letters of Credit) shall

continue  as Loans and  Letters  of Credit  hereunder,  in each case  accruing

interest, as of the date hereof, at the Base Rate hereunder.



      The  Borrower,  the Agents,  the Issuing  Banks,  the  Arranger  and the

Lenders hereby  acknowledge the assignment to Bank of America of all Loans and

Commitments  by the  other  lenders  party to the  Original  Credit  Agreement

substantially  simultaneously  with the  effectiveness of this Agreement.  The

Borrower,  the Agents,  the Issuing Banks, the Arranger and the Lenders hereby

agree that the  assignment  by Bank of America to the Lenders  party hereto of

Loans and Commitments in the amounts and allocations as reflected on Schedule
                                                                     --------
1.01(b) hereto  substantially  simultaneously  with the  effectiveness of this
-------
Agreement shall be deemed to have been consummated in accordance with Section
                                                                      -------
12.01  of  the  Original   Credit   Agreement   and  the  terms,   conditions,
-----
representations  and  warranties  set  forth  in the  form of  Assignment  and

Acceptance set forth as Exhibit 12.01 of the Original  Credit  Agreement shall
                        -------------
be deemed to have been made and agreed to as between  Bank of America and each

such Lender as if an Assignment  and  Acceptance  had been fully  executed and

delivered by such parties.



      1.02. Certain Defined Terms.
            ---------------------


      The  following  terms used in this  Agreement  shall have the  following

meanings  (such  meanings  to be  applicable,  except to the extent  otherwise

indicated in a definition of a particular  term,  both to the singular and the

plural forms of the terms defined):



      "Accommodation  Obligation",  as applied to any  Person,  shall mean any

contractual  obligation,  contingent or otherwise, of that Person with respect

to any  Indebtedness  or other  obligation or liability of another,  including

any  such  Indebtedness,   obligation  or  liability  directly  or  indirectly

guaranteed,  endorsed  (otherwise  than  for  collection  or  deposit  in  the

ordinary  course of business),  co-made or discounted or sold with recourse by

that  Person,  or in respect of which that  Person is  otherwise  directly  or

indirectly   liable,   including   Contractual   Obligations   (contingent  or

otherwise)  arising  through  any  agreement  to  purchase,   repurchase,   or

otherwise acquire such  Indebtedness,  obligation or liability or any security

therefor,  or to provide funds for the payment or discharge  thereof  (whether

in the form of loans,  advances,  stock  purchases,  capital  contributions or

otherwise),  or to  maintain  solvency,  assets,  level  of  income,  or other

financial condition, or to make payment other than for value received.


                                       2

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



      "Accounts"  shall mean, as to any Person,  any  "account",  as such term

is defined in Section 9-106 of the UCC, now or hereafter  owned by such Person

which is classified as a receivable  on a  consolidated  balance sheet of such

Person in accordance with GAAP.



      "Account  Debtor"  shall mean any Person that is liable to make payments

with respect to a Credit Card Account.



      "Administrative  Agent" shall have the meaning  ascribed to such term in

the preamble and shall include any successor  Administrative  Agent  appointed

pursuant to Section 11.09.
            -------------



      "Administrative  Agent's  Payment  Office"  shall mean the  address  for

payments   set  forth  on  the   signature   page   hereto   relating  to  the

Administrative  Agent or such other  address as the  Administrative  Agent may

from time to time specify in accordance with Section 12.10.
                                             -------------



      "Advance Rate" shall mean with respect to Eligible Accounts  Receivable,

75%,  with  respect to Eligible  Inventory,  65%, and with respect to Eligible

Fixed  Assets,   10%.  The   Administrative   Agent  may,  in  its  reasonable

discretion, but subject to Section 12.08(a)(vi),  adjust the Advance Rate with
                           --------------------
respect to Eligible Accounts  Receivable based upon an increase or decrease in

the  dilution  of the  Credit  Card  Accounts  reflected  in the  most  recent

collateral audit performed pursuant to Section 7.06.
                                       ------------



      "Affiliate",  as applied  to any  Person,  shall  mean any other  Person

directly or indirectly  controlling,  controlled  by, or under common  control

with,  that Person.  For purposes of this  definition,  "control"  (including,

with  correlative  meanings,  the  terms  "controlling",  "controlled  by" and

"under common control with"), as applied to any Person,  means the possession,

directly  or  indirectly,  of the power to vote 10% or more of the  Securities

having  voting power for the election of directors of such Person or otherwise

to  direct or cause the  direction  of the  management  and  policies  of that

Person,  whether through the ownership of voting  Securities or by contract or

otherwise;  provided that no financial institution,  mutual fund or investment

banking firm shall be an Affiliate  of the Borrower  unless it owns,  directly

or indirectly, at least 20% of such Securities of the Borrower.



      "Agent-Related  Person" shall mean the  Administrative  Agent (including

any successor  administrative agent), together with its Affiliates (including,

in the case of Bank of America in its  capacity as the  Administrative  Agent,

the   Arranger),   and  the  officers,   directors,   employees,   agents  and

attorneys-in-fact of such Persons and Affiliates.



      "Agents"  shall  mean,  collectively,   the  Administrative  Agent,  the

Documentation Agent, the Syndication Agents and the Co-Agents.



      "Agreement"  shall  have  the  meaning  ascribed  to  such  term  in the

preamble hereto.



      "Applicable  Approved  Issuance  Amount"  shall mean, as to each Issuing

Bank (other than Bank of America),  the amount  notified  from time to time by

the  Administrative  Agent at the  direction  of the  Borrower to such Issuing

Banks.  The aggregate  Applicable  Approved  Issuance Amounts for such Issuing


                                        3

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



Banks shall not at any time exceed the lesser of (i) the  Commitments  then in

effect less the aggregate  principal amount of all outstanding  Loans and (ii)

the Borrowing Base Amount then in effect less the aggregate  principal  amount

of all outstanding Loans.



      "Applicable  Lending  Office"  shall mean,  with respect to each Lender,

such Lender's  Domestic  Lending Office,  in the case of a Base Rate Loan, and

such Lender's  Eurodollar  Lending  Office,  in the case of a Eurodollar  Rate

Loan.



      "Approved  Fund" means any Fund that is administered or managed by (a) a

Lender,  (b) an  Affiliate  of a Lender or (c) an entity or an Affiliate of an

entity that administers or manages a Lender.



      "Arranger"  shall mean Banc of America  Securities  LLC, in its capacity

as sole lead arranger and sole book manager.



      "Assignment and  Acceptance"  shall mean an Assignment and Acceptance in

the form of Exhibit 12.01 (with blanks  appropriately  filled in) delivered to
            -------------
the Administrative  Agent and the Borrower in connection with an assignment of

a Lender's interest under this Agreement pursuant to Section 12.01.
                                                     -------------



      "ATSC" shall mean AnnTaylor Stores Corporation, a Delaware corporation.



      "ATSC  Guaranty"  shall mean the Amended and Restated  Guaranty dated as

of the  Effective  Date  substantially  in the form of,  and on the  terms set

forth  in,  Exhibit  4.01(a)(iv),  as the same  may be  amended,  modified  or
            --------------------
otherwise supplemented from time to time.



      "ATSC Pledge  Agreement"  shall mean the Amended and  Restated  Security

and Pledge Agreement dated as of the Effective Date  substantially in the form

of,  and on the terms set forth  in,  Exhibit  4.01(a)(v),  as the same may be
                                      -------------------
amended, supplemented or otherwise modified from time to time.



      "Available  In-Transit  Amount" shall mean, as of any Calculation  Date,

an amount equal to 55% of the sum of (i) the aggregate  undrawn face amount of

Commercial  Letters of Credit  issued to finance  the  purchase  of  Inventory

(other than Inventory  included in the  determination of Eligible  Inventory),

and (ii) the aggregate  Inventory Value of Inventory  financed with Commercial

Letters  of  Credit  which  have  been  fully  drawn  and  the   Reimbursement

Obligations  in  respect of which have been fully paid so long as, in the case

of clause (i) and (ii), (A) such  Inventory  shall be in transit to properties

owned or leased by the  Borrower or the  Subsidiary  Guarantors  in the United

States or such other  locations  as to which  UCC-1  financing  statements  in

favor of the  Administrative  Agent for the benefit of the Lenders,  have been

filed,  and (B) such Inventory is not included in the  calculation of Eligible

Inventory  and,  upon  arrival in the United  States,  will be included in the

determination of the Eligible Inventory.



      "'Baa3/BBB-'  Rating Status" shall mean that the following  requirements

are satisfied:


                                         4
================================================================================



(i)   the Fixed Charge  Coverage  Ratio,  calculated on a four fiscal  quarter

                  basis,  as of the end of the two preceding  fiscal  quarters

                  shall have been not less than 2.25 to 1.00, and


(ii)  the Borrower's senior implied  non-credit-enhanced  long-term debt shall

                  have a rating  of Baa3 or better as  determined  by  Moody's

                  or BBB- or better as determined by S&P.



      "Bank of America"  shall mean Bank of America,  N.A.,  formerly known as

Bank of America National Trust and Savings Association.



      "Bankruptcy  Code"  shall mean Title 11 of the  United  States  Code (11

U.S.C. Section 101 et seq.), as amended from time to time, or any successor

statute.



      "Base Rate" shall mean,  for any day a fluctuating  rate per annum equal

to the higher of (a) the  Federal  Funds Rate plus 1/2 of 1% and (b) the Prime

Rate for such  day.  Any  change in the Base Rate due to a change in the Prime

Rate or the Federal  Funds Rate shall be  effective at the opening of business

on the day specified in the public announcement of such change.



      "Base Rate Loans" shall mean all Loans  outstanding  which bear interest

at a rate  determined  by  reference  to the Base Rate as provided in Section
                                                                      -------
2.02.
----


      "Benefit  Plan" shall mean a defined  benefit plan as defined in Section

3(35) of ERISA  (other than a  Multiemployer  Plan)  which the  Borrower or an

ERISA  Affiliate  maintains,  administers,  contributes  to or is  required to

contribute  to, or under which the Borrower or any ERISA  Affiliate  may incur

any liability.



      "Borrower"  shall have the meaning ascribed to such term in the preamble

hereto.



      "Borrower  Pledge   Agreement"  shall  mean  the  Amended  and  Restated

Security and Pledge Agreement dated as of the Effective Date  substantially in

the form of, and on the terms set forth in, Exhibit 4.01(a)(iii),  as the same
                                            --------------------
may be amended, supplemented or otherwise modified from time to time.



      "Borrowing"  shall  mean,  except  as  otherwise  provided  in  Section
                                                                      -------
2.07(c)(ii),  a  borrowing  consisting  of Loans of the same type,  having the
-----------
same Interest Period and made on the same day by the Lenders.



      "Borrowing Base Amount" shall mean, as of any Calculation  Date, the sum

of (a) the  product of (i) the  Eligible  Accounts  Receivable  Amount at such

Calculation   Date  times  (ii)  the  Advance  Rate  for   Eligible   Accounts

Receivable,  (b) the  product  of (i) the  Eligible  Inventory  Amount at such

Calculation Date times (ii) the Advance Rate for Eligible  Inventory,  (c) the

Available  In-Transit  Amount at such  Calculation  Date and (d) the  Eligible

Fixed Asset Amount at such  Calculation  Date.  The  Borrowing  Base Amount as

determined  on any  Calculation  Date  shall  remain in effect  until the next

succeeding  Calculation  Date.  Notwithstanding  the  foregoing,   during  any

period for which the  'Baa3/BBB-'  Rating Status  exists,  the Borrowing  Base

Amount shall equal the Commitments.


                                        5
================================================================================




      "Borrowing Base Certificate" shall mean a certificate,  substantially in

the form of  Exhibit  6.01(o)  delivered  to the  Administrative  Agent by the
             ----------------
Borrower pursuant to Section 6.01(o).
                     ---------------



      "Business  Day" shall mean (a) for all purposes other than as covered by

clause (b) below,  any day excluding  Saturday,  Sunday and any day which is a

legal  holiday  under  the laws of the State of New York or the State of North

Carolina,  or is a day on which  banking  institutions  located  in  either of

those states are required or  authorized by law or other  governmental  action

to close and (b) with  respect to all  notices,  determinations,  fundings and

payments in connection  with the Eurodollar  Rate, any day which is a Business

Day  described  in  clause  (a) and  which  is also a day for  trading  by and

between banks in the London interbank market.



      "Calculation  Date" shall mean, at any time,  the last day of any period

covered by the most recent Borrowing Base Certificate.



      "Capital  Expenditures"  shall mean,  for any period,  on a consolidated

basis for the Borrower and its Restricted  Subsidiaries,  the aggregate of all

expenditures  (whether  paid in cash or accrued  as  liabilities  during  that

period and including that portion of Capital  Leases  (except any  capitalized

interest)  which  is  capitalized  on the  consolidated  balance  sheet of the

Borrower  and  its  Restricted  Subsidiaries)  made  by  the  Borrower  or any

Restricted  Subsidiary  during such period that, in conformity  with GAAP, are

required  to be included  in or  reflected  by  property,  plant or  equipment

(including  expenditures  for  equipment  purchased  simultaneously  with  the

trade-in of existing  equipment  owned by the Borrower or any such  Restricted

Subsidiary to the extent the gross amount of such  purchase  price exceeds the

book value of the equipment being traded in, but excluding  expenditures  made

in connection  with the  replacement or  restoration of assets,  to the extent

reimbursed or financed from insurance proceeds or condemnation awards).



      "Capital Lease",  as applied to any Person,  shall mean any lease of any

property  (whether real,  personal,  or mixed) by that Person as lessee which,

in  conformity  with GAAP,  is accounted for as a capital lease on the balance

sheet of that Person.



      "Cash  Collateral  Account" shall have the meaning ascribed to such term

in Section 2.04.
   ------------



      "Cash  Equivalents"  shall mean (a) marketable direct obligations issued

or unconditionally  guaranteed by the United States Government or issued by an

agency  thereof  and backed by the full faith and credit of the United  States

of  America  or  having a rating  of at least  A-1 or P-1 from  either  S&P or

Moody's,  in each case maturing  within 360 days after the date of acquisition

thereof;  (b) marketable direct  obligations issued by any state of the United

States  of  America  or any  political  subdivision  of any such  state or any

public  instrumentality  thereof maturing within 180 days (or, if no Loans are

outstanding  at the  time of  acquisition  thereof  and  after  giving  effect

thereto,  360 days) after the date of acquisition  thereof and, at the time of

acquisition,  having one of the two highest ratings obtainable from either S&P

or Moody's  (or, if at any time  neither S&P nor Moody's  shall be rating such

obligations,  then from  such  other  nationally  recognized  rating  services

acceptable to the Requisite  Lenders) and not listed in Credit Watch published
                                                        ------------
by S & P;  (c)  commercial  paper,  other than  commercial  paper  issued by the

Borrower  or any  Subsidiary  of the  Borrower  or  any of  their  Affiliates,


                                      6

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



maturing  no more than 180 days (or, if no Loans are  outstanding  at the time

of acquisition  thereof and after giving effect  thereto,  270 days) after the

date of creation  thereof and, at the time of  acquisition  thereof,  having a

rating of at least A-1 or P-1 from  either S&P or Moody's  (or, if at any time

neither S&P nor Moody's  shall be rating  such  obligations,  then the highest

rating from other  nationally  recognized  rating  services  acceptable to the

Requisite  Lenders);  (d) domestic and Eurodollar  certificates  of deposit or

time  deposits or  bankers'  acceptances  maturing  within 180 days (or, if no

Loans are  outstanding  at the time of  acquisition  thereof and after  giving

effect thereto,  360 days) after the date of acquisition thereof issued by any

commercial  bank  organized  under the laws of the United States of America or

any state  thereof or the  District of Columbia  having  combined  capital and

surplus  of not  less  than  $500,000,000;  and  (e)  auction  rate  preferred

instruments maturing no later than 35 days from the date of purchase.



      "Change in  Control"  shall be deemed to have  occurred  at such time as

either of the following events shall occur:



            (i)   There shall be consummated  any  consolidation  or merger of

      ATSC or the  Borrower  pursuant  to  which  the  Common  Stock  would be

      converted  into cash,  or other  property,  in each  case,  other than a

      consolidation  or merger of ATSC or the Borrower in which the holders of

      Common  Stock  immediately  prior to the  consolidation  or merger have,

      directly or  indirectly,  at least a majority of the total  voting power

      in the  aggregate  of all classes of common stock of the  continuing  or

      surviving   corporation  normally  entitled  to  vote  in  elections  of

      directors immediately after such consolidation or merger; or



            (ii)  There  is a  report  filed  by  any  person,  including  its

      Affiliates  and  Associates  (as  defined in Rule  12b-2 of the  General

      Rules and Regulations  under the Exchange Act), on Schedule 13D or 14D-1

      (or any  successor  schedule,  form or report)  pursuant to the Exchange

      Act,  disclosing  that such person (for the purposes of this  definition

      only, the term "person"  shall include a "person"  within the meaning of

      Section  13(d)(3)  or  Section  14(d)(2)  of  the  Exchange  Act  or any

      successor   provision  to  either  of  the  foregoing)  has  become  the

      beneficial owner (as the term  "beneficial  owner" is defined under Rule

      13d-3  or  any  successor  rule  or  regulation  promulgated  under  the

      Exchange  Act) of 50% or more of the total voting power in the aggregate

      of all  classes  of  capital  stock  then  outstanding  of  ATSC  or the

      Borrower normally entitled to vote in elections of directors;  provided,

      however,  that a person shall not be deemed  beneficial  owner of, or to

      own  beneficially,  (A) any securities  tendered pursuant to a tender or

      exchange  offer  made  by or on  behalf  of such  person  or any of such

      person's  Affiliates or Associates  until such tendered  securities  are

      accepted for purchase or exchange  thereunder,  or (B) any securities if

      such  beneficial  ownership (1) arises solely as a result of a revocable

      proxy  delivered  in  response to a proxy or consent  solicitation  made

      pursuant  to,  and  in  accordance   with,  the  applicable   rules  and

      regulations  under the Exchange Act, and (2) is not also then reportable

      on Schedule 13D (or any  successor  schedule,  form or report) under the

      Exchange Act; or



            (iii) The  occurrence  of any  transaction  or event in connection

      with which all or  substantially  all Common  Stock  shall be  exchanged



                                           7

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



      for,  converted  into,  acquired for or  constitute  solely the right to

      receive   consideration   (whether  by  means  of  an  exchange   offer,

      liquidation,   tender   offer,   consolidation,   merger,   combination,

      reclassification,  recapitalization  or otherwise) all or  substantially

      all of which  consists of common stock which is (or,  upon  consummation

      of or immediately  following such  transaction or event,  which will be)

      listed on a United States national  securities  exchange or approved for

      quotation on the Nasdaq  National  Market or any similar  United  States

      system of automated dissemination of quotations of securities prices.



            Notwithstanding  the  foregoing,  a Change in Control shall not be

      deemed to have  occurred if at any time ATSC,  any  Subsidiary  of ATSC,

      any employee stock ownership plan or any other employee  benefit plan of

      either ATSC or any  Subsidiary of ATSC, or any person  holding shares of

      Common Stock for or pursuant to the terms of any such  employee  benefit

      plan,  files or becomes  obligated to file a report under or in response

      to Schedule 13D or Schedule  14D-1 (or any successor  schedule,  form or

      report) under the Exchange Act disclosing  beneficial ownership by it of

      50% or more of the total  voting  power in the  aggregate of all classes

      of Common Stock then  outstanding  of ATSC normally  entitled to vote in

      elections of directors.



      "Citibank  Letters of Credit" shall mean the letters of credit listed on

Schedule 3.01(c).
---------------



      "Claim"  shall mean any claim or demand,  by any Person,  of  whatsoever

kind or nature for any actual or alleged Liabilities and Costs,  whether based

in contract, tort, implied or express warranty, strict liability,  criminal or

civil statute, Permit, ordinance or regulation, common law or otherwise.



      "Cleandown"  shall have the  meaning  ascribed  to such term in Section
                                                                      -------
2.01(a)(v).
----------



      "Cleandown  Period"  shall  have the  meaning  ascribed  to such term in

Section 2.01(a)(v).
------------------



      "Code"  shall mean the Internal  Revenue  Code of 1986,  as amended from

time to time, and any successor statute.



      "Collateral"  shall mean all  property  and  interests  in property  now

owned or  hereafter  acquired  in or upon which a security  interest,  pledge,

lien or mortgage is granted or of which a collateral  assignment is made under

the Collateral Documents.



      "Collateral  Documents"  shall mean the ATSC  Guaranty,  the ATSC Pledge

Agreement,  the Borrower Pledge Agreement,  the Trademark  Security  Agreement

and the Subsidiary Guaranty and Collateral  Agreement,  and any other document

creating  in  favor  of the  Administrative  Agent,  for  the  benefit  of the

Lenders,  a security interest in any property as security for the Obligations,

as any of the foregoing  may be amended,  supplemented  or otherwise  modified

from time to time.



      "Commercial  Letter of Credit"  shall mean any Letter of Credit which is

drawable  upon  presentation  of  documents,  drafts at sight and time  drafts

evidencing  the sale or shipment  of goods  purchased  by the  Borrower in the

ordinary course of its business.


                                        8
================================================================================



      "Commission" shall mean the Securities and Exchange Commission.



      "Commitment"  shall mean, with respect to each Lender as the context may

require,  (a) the amount set out opposite such Lender's name under the heading

"Commitment" in Schedule 1.01(b) or assigned to it in accordance with Section
                ----------------                                      -------
12.01(a),  as such amount may be reduced or  otherwise  adjusted  from time to
--------
time  pursuant to the terms of this  Agreement or (b) the  obligation  of such

Lender to make Loans  hereunder and participate in Letters of Credit up to the

amount specified in the immediately  preceding  clause (a), and  "Commitments"

shall mean the aggregate amount of the Commitments of all Lenders.



      "Commitment  Letter"  shall mean the  Commitment  Letter  dated March 1,

2001 from Bank of America,  as  Administrative  Agent, and the Arranger to the

Borrower.



      "Common  Stock"  shall mean the common  stock of ATSC,  the par value of

which  is  set  forth  in the  ATSC  Certificate  of  Incorporation,  as  such

certificate may be amended, restated or otherwise modified from time to time.



      "Compliance  Certificate" shall mean a certificate  substantially in the

form of  Exhibit  6.01(d)(i)  delivered  to the  Administrative  Agent  by the
         ------------------
Borrower   pursuant  to  Section   6.01(d)(i)   and  covering  the  Borrower's
                         -------------------
compliance  with the  covenants  contained  in Article  IX and  certain of the
                                               -----------
covenants contained in Article VIII.
                       ------------


      "Contaminant" shall mean any pollutant,  hazardous substance,  hazardous

chemical,  toxic  substance,  hazardous waste or special waste, as those terms

are  defined  in  federal,  state or local laws and  regulations,  radioactive

material,  petroleum,  including crude oil or any petroleum-derived substance,

or breakdown or decomposition  product thereof, or any constituent of any such

substance or waste, including polychlorinated biphenyls and asbestos.



      "Contractual  Obligation",  as  applied  to any  Person,  shall mean any

provision of any Securities issued by that Person or any indenture,  mortgage,

deed of trust, contract, undertaking,  document, instrument or other agreement

or  instrument  to which  that  Person is a party or by which it or any of its

properties  is  bound,  or to which  it or any of its  properties  is  subject

(including  any  restrictive  covenant  affecting  such  Person  or any of its

properties).



      "Convertible   Debentures"  shall  mean  the  Convertible   Subordinated

Debentures due 2019 issued pursuant to the Convertible Debenture Indenture.



      "Convertible  Debenture  Indenture"  shall mean that certain  Indenture,

dated as of June 18, 1999, between ATSC and the Bank of New York, as Trustee.



      "Convertible Debentures Note" shall mean the $180,975,000.00  promissory

note of the  Borrower  dated  June 18,  1999  payable  to ATSC in  respect  of

payments due on the Convertible Debentures.



                                        9

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



      "Cost/Market  Reserve" shall mean, as of any Calculation Date, the lower

of cost or market  reserve  for the most recent  fiscal  month  calculated  in

accordance  with the  accounting  practices of the Borrower and the Subsidiary

Guarantors.



      "Credit Card Accounts"  shall mean all accounts  receivable  arising out

of any sale in the ordinary course of business pursuant to proprietary  credit

card transactions.



      "Credit  Facility"  shall  mean the loan and  letter of credit  facility

provided to the Borrower pursuant to this Agreement.



      "Current  Assets"  shall  mean,  as at any  date of  determination,  the

consolidated assets of the Borrower and its Restricted  Subsidiaries which may

properly be classified as current assets in conformity with GAAP.



      "Current  Liabilities" shall mean, as at any date of determination,  the

consolidated  liabilities  of the  Borrower  and its  Restricted  Subsidiaries

which may properly be classified  as current  liabilities  in conformity  with

GAAP.



      "Customary Permitted Liens" shall mean:



      (a)   Liens (other than  Environmental  Liens and any Lien imposed under

ERISA)  for  claims,  taxes,   assessments  or  charges  of  any  Governmental

Authority  not  yet  due or  which  are  being  contested  in  good  faith  by

appropriate  proceedings and with respect to which adequate  reserves or other

appropriate provisions are being maintained in accordance with GAAP;



      (b)   statutory  Liens of landlords,  bankers,  carriers,  warehousemen,

mechanics,  materialmen  and other Liens  (other than any Lien  imposed  under

ERISA or any  Environmental  Lien)  imposed by law,  arising  in the  ordinary

course of  business  and for amounts  which (i) are not yet due,  (ii) are not

more than 30 days past due as long as no notice of  default  has been given or

other  action  taken to enforce  such Liens,  or (iii)(A) are not more than 30

days past due and a notice of default has been given or other  action taken to

enforce  such Liens,  or (B) are more than 30 days past due,  and, in the case

of  clause  (A) or (B),  are  being  contested  in good  faith by  appropriate

proceedings  which are  sufficient  to prevent  imminent  foreclosure  of such

Liens  and  with  respect  to which  adequate  reserves  or other  appropriate

provisions are being maintained in accordance with GAAP;



      (c)   Liens   (other   than  any  Lien   imposed   under  ERISA  or  any

Environmental  Lien)  incurred  or  deposits  made in the  ordinary  course of

business  (including  surety  bonds  and  appeal  bonds)  in  connection  with

workers'  compensation,  unemployment  insurance and other types of employment

benefits or to secure the  performance  of tenders,  bids,  leases,  contracts

(other  than in  respect of  Indebtedness),  statutory  obligations  and other

similar  obligations  or  arising  as a  result  of  progress  payments  under

government contracts;



      (d)   easements  (including  reciprocal  easement agreements and utility

agreements),   rights-of-way,   covenants,   consents,  rights  of  landlords,

reservations,  encroachments,  variations and other  restrictions,  charges or



                                       10

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




encumbrances  (whether or not recsrded)  affecting  the use of real  property,

which do not materially  interfere  with the ordinary  conduct of the business

of the Borrower; and



      (e)   Liens  on  goods  in favor  of  customs  and  revenue  authorities

arising as a matter of law to secure  payment of customs  duties in connection

with the importation of such goods.



      "DOL"  shall  mean  the  United  States  Department  of  Labor  and  any

successor department or agency.



      "Dollars"  and "$" shall mean the lawful  money of the United  States of

America.



      "Domestic  Lending Office" shall mean,  with respect to any Lender,  the

office of such Lender specified as its "Domestic  Lending Office" in Schedule
                                                                     --------
1.01(a) or in the  Assignment  and  Acceptance  by 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 Administrative Agent.



      "EBITDAR"  shall mean,  for any period,  the sum of the amounts for such

period,  of (a) Net  Income,  plus (b) to the  extent  Net  Income is  reduced

thereby (i) all charges for  amortization  of  intangibles  and  depreciation,

(ii) Interest Expense,  (iii) income tax expense,  (iv)  extraordinary  losses

(net of tax benefits) as shown on the  consolidated  income statement of ATSC,

the Borrower and its Restricted  Subsidiaries,  plus (c) Rental Expense, minus

(d)  extraordinary  gains (net of taxes) as shown on the  consolidated  income

statement of ATSC, the Borrower and its Restricted Subsidiaries.



      "EBITR"  shall  mean,  for any  period,  the sum of the amounts for such

period,  of (a) Net  Income,  plus (b) to the  extent  Net  Income is  reduced

thereby (i) Interest Expense,  (ii) income tax expense and (iii) extraordinary

losses (net of tax benefits) as shown on the consolidated  income statement of

ATSC, the Borrower and its Restricted  Subsidiaries,  plus (c) Rental Expense,

minus (d)  extraordinary  gains  (net of  taxes) as shown on the  consolidated

income statement of ATSC, the Borrower and its Restricted Subsidiaries.



      "Effective  Date" shall mean the date this Agreement  becomes  effective

in accordance with Section 4.01.
                   ------------



      "Eligible  Accounts  Receivable" shall mean, as of any Calculation Date,

all Credit Card Accounts of the Borrower and the  Subsidiary  Guarantors  that

satisfy each of the following criteria:



            (a)   such  Credit Card  Account has been  adjusted to reflect the

      return  or  rejection  of,  or  any  loss  of or  damage  to  any of the

      Inventory  giving rise to such Credit Card  Account,  and is not subject

      to bona fide set-offs,  counterclaims,  defenses,  or disputes  asserted

      with respect to such Credit Card Account;



            (b)   to the best  knowledge of the  Borrower  and the  Subsidiary

      Guarantors,  the Account Debtor with respect to such Credit Card Account

      is not  insolvent or the subject of any  bankruptcy  case or  insolvency

      proceeding  of any kind,  unless such  Credit  Card  Account is due from



                                          11

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




      such  Account  Debtor as an  administrative  claim under the  Bankruptcy

      Code and the  Administrative  Agent,  in the exercise of its  reasonable

      business judgment, deems the Account Debtor to be creditworthy;




            (c)   the Account  Debtor in respect of such  Credit Card  Account

      has a mailing  address  within the United  States of America  (excluding

      the Virgin  Islands  and any other  territory  of the United  States) or

      Puerto Rico;



            (d)   the Account  Debtor in respect of such  Credit Card  Account

      is  not  the  United   States  of  America  or  any  state,   territory,

      subdivision, department, or agency thereof;



            (e)   such Credit Card Account does not arise out of  transactions

      with a  Subsidiary  or  Affiliate  (other than  directors,  officers and

      employees) of the Borrower or any Subsidiary Guarantor;



            (f)   no amount  payable in respect of such  Credit  Card  Account

      has  remained  unpaid  for a period  exceeding  sixty days after the due

      date stated on the customer statement therefor;



            (g)   such Credit Card Account is owed by an Account  Debtor which

      does not then have balances on its Credit Card  Accounts  which are more

      than 60 days past due which exceed 50% of the total  balance of all such

      Credit Card Accounts owed by such Account Debtor;



            (h)   such  Credit Card  Account has not been and is not  required

      to be charged off or written off as  uncollectible  in  accordance  with

      the  customary  business  practice of the  Borrower  and the  Subsidiary

      Guarantors;



            (i)   such Credit Card  Account does not arise out of any claim in

      tort,  is  not  evidenced  by  chattel  paper,  a  promissory   note,  a

      negotiable  instrument,  or any other instrument of any kind or, if such

      Credit Card Account is evidenced by chattel paper, a promissory  note, a

      negotiable  instrument  or any other  instrument,  such  chattel  paper,

      promissory  note,  negotiable  instrument or other  instrument  has been

      delivered  to  the  Administrative  Agent  and  is  subject  to a  first

      priority security interest in favor of the Administrative Agent;



            (j)   the amount of the face  value of such  Credit  Card  Account

      listed  on any  schedule  of  Credit  Card  Accounts  and  shown  on all

      customer statements  delivered to the Administrative  Agent with respect

      to such Credit Card  Account is not  subject to any  asserted  bona fide

      retainages or holdbacks of any type, is actually and  absolutely  owing,

      and is not  contingent  on any  condition,  in each case,  other than in

      respect  of  repurchase  or  return  agreements  that  (i)  arise in the

      ordinary course of the Borrower's  business and (ii) are consistent with

      the  Borrower  or  such  Subsidiary   Guarantor's   historical  business

      practice;


                                           12

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





            (k)   such  Credit  Card  Account  does not arise out of a cash on

      delivery sale;



            (l)   such Credit Card  Account  does not arise out of the sale of

      samples;



            (m)   such Credit Card  Account is owned solely by the Borrower or

      a Subsidiary  Guarantor and is evidenced by a customer statement and has

      arisen from the sale of goods which have been  shipped or  delivered  to

      an Account  Debtor on an absolute  sale basis,  have not been shipped or

      delivered on a consignment,  approval,  or sale-or-return basis, and are

      not subject to any repurchase or return agreement or arrangement,  other

      than those  repurchase  or return  agreements or  arrangements  that (i)

      arise in the  ordinary  course of the  Borrower's  business and (ii) are

      consistent with the Borrower or such Subsidiary  Guarantor's  historical

      business practices; and



            (n)   such  Credit  Card  Account is subject to a Lien in favor of

      the  Administrative  Agent  and is  not  subject  to  Liens  other  than

      Permitted Account Liens.



      The Administrative  Agent may, in its reasonable  discretion,  adjust or

change the  foregoing  eligibility  criteria or add  additional  reserves with

respect to  Eligible  Accounts  Receivable  based upon the results of the most

recent collateral audit performed pursuant to Section 7.06.
                                              ------------


      "Eligible Accounts  Receivable Amount" shall mean, as of any Calculation

Date,  (a) Eligible  Accounts  Receivable  of the Borrower and the  Subsidiary

Guarantors  at such  Calculation  Date minus (b) the Sales Tax Reserve at such

Calculation Date.



      "Eligible  Assignee"  means (a) a Lender;  (b) an Affiliate of a Lender;

(c) an Approved Fund;  and (d) any other Person (other than a natural  Person)

approved by the  Administrative  Agent,  and, unless (x) such Person is taking

delivery of an assignment in connection  with physical  settlement of a credit

derivatives  transaction  and such  Person  has  total  assets  in  excess  of

$1,000,000,000  and such  transaction is documented by an  International  Swap

Dealers  Association  Inc.  Master  Agreement  or (y) an Event of Default  has

occurred  and is  continuing,  the  Borrower  (each  such  approval  not to be

unreasonably withheld or delayed).



      "Eligible Fixed Assets" shall mean, as of any Calculation  Date, the net

book value of all furniture and fixtures  (excluding  leasehold  improvements)

of the Borrower and the Subsidiary  Guarantors as set forth on the most recent

balance  sheet of the  Borrower  and the  Subsidiary  Guarantors  prepared  in

accordance with GAAP,  which are subject to a perfected  security  interest in

favor of the  Administrative  Agent and are  subject to no other  Liens  other

than  Permitted  Fixed  Asset  Liens.  The  Administrative  Agent may,  in its

reasonable  discretion,  add additional  eligibility criteria or reserves with

respect to  Eligible  Fixed  Assets  based upon the results of the most recent

collateral audit performed pursuant to Section 7.06.
                                       ------------


      "Eligible  Fixed Asset Amount" shall mean, as of any  Calculation  Date,

the Eligible  Fixed Assets of the Borrower and the  Subsidiary  Guarantors  at

such Calculation Date times the Advance Rate for Eligible Fixed Assets.




                                         13
================================================================================





      "Eligible  Inventory Amount" shall mean, as of any Calculation Date, (a)

the  Inventory  Value  of all  Eligible  Inventory  of the  Borrower  and  the

Subsidiary  Guarantors at such  Calculation Date minus (b) the sum of, (i) the

Cost/Market  Reserve as of such  Calculation  Date, (ii) the Shrink Reserve as

of such Calculation  Date, and (iii) the Positive Price Variance Reserve as of

such Calculation Date.



      "Eligible  Inventory"  shall  mean,  as of  the  Calculation  Date,  all

Inventory  of  the  Borrower  and  the  Subsidiary  Guarantors  consisting  of

finished  goods  available  for  sale  that  satisfies  each of the  following

criteria as of such day:



            (a)   such  Inventory  (i) is owned  solely by the Borrower or any

      such  Subsidiary  Guarantor and (ii) is not leased by or on  consignment

      to the Borrower or any Subsidiary Guarantor;



            (b)   such  Inventory  is  located  at  property  that is owned or

      leased  by the  Borrower  or any  Subsidiary  Guarantor  or  such  other

      location as to which UCC-1  financing  statements  in favor of the Agent

      for the benefit of the  Lenders  have been  filed,  including  Inventory

      which is in  transit  from one  property  that is owned or leased by the

      Borrower or any  Subsidiary  Guarantor  (or a flow  through  center or a

      distribution  center) to another property that is owned or leased by the

      Borrower or any  Subsidiary  Guarantor  (or a flow  through  center or a

      distribution center);



            (c)   such  Inventory is not subject to a layaway  purchase by any

      customer;



            (d)   such  Inventory is not located at any return  center used by

      the Borrower or any Subsidiary Guarantor;



            (e)   such  Inventory  is located in the United  States of America

      (excluding territories and possessions thereof) and Puerto Rico; and



            (f)   such Inventory is subject to a perfected  security  interest

      in favor of the  Administrative  Agent and is not subject to Liens other

      than Permitted Inventory Liens.



      The Administrative  Agent may, in its reasonable  discretion,  adjust or

change the  foregoing  eligibility  criteria or add  additional  reserves with

respect  to  Eligible  Inventory  based upon the  results  of the most  recent

collateral audit performed pursuant to Section 7.06.
                                       ------------



      "Environmental  Lien"  shall  mean a Lien in favor  of any  Governmental

Authority  for (a) any  liability  of the  Borrower or any  Subsidiary  of the

Borrower  under federal or state  environmental  laws or  regulations,  or (b)

damages  arising from,  or costs  incurred by such  Governmental  Authority in

response  to, a  Release  or  threatened  Release  of a  Contaminant  into the

environment.



      "ERISA" shall mean the Employee  Retirement Income Security Act of 1974,

as amended from time to time, and any successor statute.



                                        14
================================================================================




      "ERISA  Affiliate"  shall mean any (a) corporation  which is a member of

the same  controlled  group of  corporations  (within  the  meaning of Section

414(b)  of  the  Code)  as the  Borrower  or  any  of  its  Subsidiaries,  (b)

partnership  or other trade or business  (whether or not  incorporated)  under

common  control  (within the  meaning of Section  414(c) of the Code) with the

Borrower  or any of its  Subsidiaries,  and (c) member of the same  affiliated

service  group  (within  the  meaning  of  Section  414(m) of the Code) as the

Borrower or any of its Subsidiaries,  any corporation  described in clause (a)

above or any partnership or trade or business described in clause (b) above.



      "Eurodollar  Lending  Office"  means,  with  respect to any Lender,  the

office  of  such  Lender  specified  as its  "Eurodollar  Lending  Office"  in

Schedule  1.01(a) or in the  Assignment  and  Acceptance  by 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

by written notice to the Borrower and the Administrative Agent.



      "Eurodollar  Rate" means,  for any  Interest  Period with respect to any

Eurodollar Rate Loan, a rate per annum determined by the Administrative  Agent

pursuant to the following formula:


            Eurodollar Rate =                Eurodollar Base Rate
                                   -------------------------------------
                                   1.00 - Eurodollar Reserve Percentage



      "Eurodollar Base Rate" shall mean, for any Interest Period with respect

to any Eurodollar Rate Loan:



      (a)   the  rate  per  annum  equal  to  the  rate   determined   by  the

Administrative  Agent to be the offered  rate that  appears on the page of the

Telerate  screen (or any successor  thereto) that displays an average  British

Bankers  Association  Interest  Settlement  Rate for  deposits in Dollars (for

delivery on the first day of such Interest  Period) with a term  equivalent to

such Interest Period,  determined as of approximately 11:00 a.m. (London time)

two Business Days prior to the first day of such Interest Period, or



      (b)   if the rate  referenced in the preceding  subsection  (a) does not

appear  on such page or  service  or such page or  service  shall  cease to be

available,   the  rate  per  annum  equal  to  the  rate   determined  by  the

Administrative  Agent  to be the  offered  rate on such  other  page or  other

service  that  displays  an  average  British  Bankers  Association   Interest

Settlement  Rate for  deposits  in Dollars  (for  delivery on the first day of

such  Interest  Period)  with a  term  equivalent  to  such  Interest  Period,

determined  as of  approximately  11:00 a.m.  (London  time) two Business Days

prior to the first day of such Interest Period, or



      (c)   if the rates  referenced in the preceding  subsections (a) and (b)

are not available,  the rate per annum determined by the Administrative  Agent

as the rate of interest  (rounded  upward to the next  1/100th of 1%) at which

deposits in Dollars for delivery on the first day of such  Interest  Period in

same day funds in the  approximate  amount of the  Eurodollar  Rate Loan being

made,  continued or converted by Bank of America and with a term equivalent to

such  Interest  Period would be offered by Bank of America's  London Branch to



                                       15

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





major banks in the offshore  Dollar market at their  request at  approximately

11:00  a.m.  (London  time) two  Business  Days prior to the first day of such

Interest Period.



      "Eurodollar  Rate Loans" shall mean those Loans  outstanding  which bear

interest at a rate  determined by reference to the Eurodollar Rate as provided

in Section 2.02.
   ------------


      "Eurodollar  Reserve Percentage" shall mean with respect to any Interest

Period for any Eurodollar Rate Loan,  that percentage  (expressed as a decimal

rounded  upwards  to the  nearest  1/100%)  which is in effect on the date the

Eurodollar  Rate for such  Interest  Period is determined as prescribed by the

Federal  Reserve  Board,  for  determining  the  maximum  reserve  requirement

(including any emergency,  supplemental or other marginal reserve requirement)

for a member  bank of the  Federal  Reserve  System  with  deposits  exceeding

$5,000,000,000  in respect of "Eurocurrency  liabilities"  having a term equal

to such Interest  Period (or in respect of any other  category of  liabilities

which includes  deposits by reference to which the interest rate on Eurodollar

Rate Loans is  determined  or any  category of  extensions  of credit or other

assets  which  includes  loans by a  non-United  States  office of any bank to

United States residents).



      "Event  of  Default"  shall  mean any of the  occurrences  set  forth in

Section 10.01 after the  expiration of any applicable  grace period  expressly
-------------
provided therein.



      "Existing Letter of Credit" shall mean each Letter of Credit  identified

in Schedule 3.01(b).
   ----------------



      "Exchange  Act" shall  mean the  Securities  Exchange  Act of 1934 as it

shall be amended  from time to time,  and any  successor  act  thereto and the

rules and  regulations  of the  Federal  Securities  and  Exchange  Commission

promulgated thereunder.



      "FDIC"  shall mean the  Federal  Deposit  Insurance  Corporation  or any

successor thereto.



      "Federal  Funds  Rate"  shall  mean,  for any day,  the  rate per  annum

(rounded  upwards to the nearest 1/100 of 1%) equal to the weighted average of

the rates on overnight Federal funds  transactions with members of the Federal

Reserve System  arranged by Federal funds brokers on such day, as published by

the  Federal  Reserve  Bank on the  Business  Day next  succeeding  such  day;

provided  that (a) if such day is not a Business  Day, the Federal  Funds Rate
--------
for such day shall be such  rate on such  transactions  on the next  preceding

Business Day as so published on the next  succeeding  Business Day, and (b) if

no such  rate is so  published  on such  next  succeeding  Business  Day,  the

Federal  Funds Rate for such day shall be the average  rate charged to Bank of

America on such day on such  transactions as determined by the  Administrative

Agent.



      "Federal  Reserve  Board"  shall  mean  the  Board of  Governors  of the

Federal  Reserve  System  or  any  Governmental  Authority  succeeding  to its

functions.



      "Fee  Letter"  shall mean the Fee Letter dated March 1, 2001 between the

Borrower, Bank of America, as Administrative Agent, and the Arranger.



      "Final Maturity Date" shall mean April 29, 2004.



                                  16

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




      "Fiscal  Year" shall mean the fiscal year of the  Borrower,  which shall

be the  twelve-month  period  ending on the Saturday  closest to January 31 in

each  year  or  such  other  period  as the  Borrower  may  designate  and the

Requisite Lenders may approve (such approval not to be unreasonably  withheld)

in writing.  A Fiscal Year ending in January or February,  as the case may be,

of any  calendar  year  shall  have the  numerical  designation  of the  prior

calendar year.



      "Fixed Charge Coverage  Ratio" shall mean, for any period,  the quotient

obtained by dividing (a) EBITDAR minus Capital  Expenditures by (b) the sum of

(i) Interest Expense plus (ii) Rental Expense.



      "Foreign  Currency  Exchange  Contracts" shall mean any foreign currency

exchange  agreement or other  currency  exchange  rate  arrangement  providing

currency exchange rate protection,  entered into by the Borrower,  ATSC or any

of their respective Restricted Subsidiaries.



      "Foreign   Subsidiary"   shall  mean  any  Subsidiary  of  the  Borrower

organized  under the laws of any  jurisdiction  outside  the United  States of

America.



      "Fund" means any Person  (other than a natural  Person) that is (or will

be)  engaged  in  making,  purchasing,   holding  or  otherwise  investing  in

commercial  loans and similar  extensions of credit in the ordinary  course of

its business.



      "Funded  Debt"  shall  mean,  as  at  any  date  of  determination,  all

Indebtedness  then  outstanding  (a) for the  principal  of Loans  under  this

Agreement and (b) for money  borrowed or under any debt  Securities  issued by

ATSC, the Borrower or any Restricted  Subsidiary (whether or not subordinated)

determined on a consolidated basis in accordance with GAAP.



      "Funding Date" shall mean the date of borrowing any Loan.



      "GAAP" shall mean generally accepted accounting  principles set forth in

the opinions and  pronouncements  of the  Accounting  Principles  Board of the

American   Institute  of  Certified  Public  Accountants  and  statements  and

pronouncements of the Financial  Accounting  Standards Board, or in such other

statements  by such  other  entity  as may be in  general  use by  significant

segments  of  the   accounting   profession,   which  are  applicable  to  the

circumstances as of the date of determination.



      "Governmental  Acts"  shall have the  meaning  ascribed  to such term in

Section 3.09(a).
---------------


      "Governmental  Authority" shall mean any nation,  state,  sovereign,  or

government,  any federal,  regional, state, local or political subdivision and

any  entity  exercising  executive,   legislative,   judicial,  regulatory  or

administrative functions of or pertaining to government.



      "Guarantors" shall mean ATSC and each Restricted  Subsidiary (other than

Foreign Subsidiaries and Nonmaterial Domestic Subsidiaries) of the Borrower.



                                17

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




      "Indebtedness",   as  applied  to  any   Person,   shall  mean  (a)  all

indebtedness,  obligations  or other  liabilities  of such Person for borrowed

money or under  any debt  Securities,  whether  or not  subordinated,  (b) all

obligations  with respect to  redeemable  stock and  redemption  or repurchase

obligations under any equity securities or profit payment agreements,  (c) all

reimbursement  obligations  and other  liabilities of such Person with respect

to letters of credit issued for such Person's account,  (d) all obligations of

such Person to pay the purchase  price of property or  services,  except trade

payables  incurred  by such  Person  in the  ordinary  course of  business  as

presently conducted,  (e) all obligations in respect of Capital Leases of such

Person,   (f)  all   Accommodation   Obligations  of  such  Person,   (g)  all

indebtedness,  obligations  or other  liabilities  of such  Person  or  others

secured  by a  Lien  on  any  asset  of  such  Person,  whether  or  not  such

indebtedness,  obligations  or  liabilities  are  assumed by or are a personal

liability  of such  Person,  all as of such  time,  and (h) all  indebtedness,

obligations  or other  liabilities  in respect of Interest Rate  Contracts and

Foreign   Currency   Exchange   Contracts.   For   purposes   of   determining

Indebtedness,  the  "principal  amount" of the  obligations of the Borrower or

any  Subsidiary in respect of any Interest  Rate Contract or Foreign  Currency

Exchange  Contract at any time shall be the maximum  aggregate  amount (giving

effect to any netting  agreements)  that the Borrower or such Subsidiary would

be required to pay if such Contract were terminated at such time.



      "Initial Loans" shall have the meaning ascribed to such term in Section
                                                                       ------
4.01.
----


      "Interest  Expense"  shall mean,  for any period for ATSC,  the Borrower

and its Restricted  Subsidiaries on a consolidated  basis,  total consolidated

interest  expense,  whether paid or accrued  (including  any  amortization  of

discount  and the  interest  component  of Capital  Leases),  for such period,

including  to the  extent  included  in  interest  expense,  all  commissions,

discounts  and other fees and  charges  owed with  respect  to the  letters of

credit,  the fees payable under this  Agreement  and net costs under  Interest

Rate  Contracts,  all as  determined in  conformity  with GAAP,  plus (without

duplication) all capitalized interest,  minus payments received under Interest

Rate Contracts and interest income.



      "Interest  Payment Date" shall mean with respect to any Eurodollar  Rate

Loan, the last day of each Interest Period  applicable to such Loan;  provided

that in the case of an  Interest  Period of six  months or  longer,  "Interest

Payment Date" shall also include each date that is a  three-month  anniversary

of the first day of such Interest Period.



      "Interest  Period"  shall  have the  meaning  ascribed  to such  term in

Section 2.06.
------------


      "Interest Rate  Contracts"  shall mean interest rate  exchange,  collar,

cap or similar agreements providing interest rate protection,  entered into by

the Borrower, ATSC or any of their respective Restricted Subsidiaries.



      "Inventory"  shall mean, as to any Person,  any "inventory" as such term

is defined in Section  9-109(4)  of the UCC,  now or  hereafter  owned by such

Person.



      "Inventory  Value"  shall mean,  with  respect to any  Inventory  of the

Borrower or any Subsidiary  Guarantor,  the value of such Inventory  valued at

cost on a basis consistent with the Borrower's or such Subsidiary  Guarantor's

current  and  historical   accounting   practice  (without  giving  effect  to




                                      18
================================================================================





markdowns,   intercompany  profit,   rebates  and  discounts  and  capitalized

inventory  costs on the  consolidated  balance  sheet of the  Borrower and the

Subsidiary  Guarantors in respect of Inventory (other than  capitalized  costs

recorded in accordance with GAAP)).



      "Investment"  shall  mean,  as  applied  to any  Person,  any  direct or

indirect purchase or other  acquisition by that Person of Securities,  or of a

beneficial  interest in  Securities,  of any other  Person,  and any direct or

indirect  loan,  advance  (other than  deposits  with  financial  institutions

available for withdrawal on demand,  prepaid  expenses,  advances to employees

and similar  items made or incurred in the ordinary  course of  business),  or

capital  contribution  by such  Person  to any  other  Person,  including  all

Indebtedness  and  accounts  owed by that other  Person  which are not current

assets or did not arise from sales of goods or  services to that Person in the

ordinary  course  of  business.   The  amount  of  any  Investment   shall  be

determined in conformity with GAAP.



      "IRS" shall mean the Internal  Revenue  Service of the United  States or

any Governmental Authority succeeding to the functions thereof.



      "Issuing  Banks"  shall  mean  First  Union  National  Bank,  The  Chase

Manhattan  Bank and Bank of  America,  and any other  Lender  selected  by the

Borrower and approved by the Administrative Agent.



      "Issuing  Bank  Agreement"  shall mean,  as to each  Issuing  Bank,  any

agreement  entered  into by such  Issuing  Bank and the  Borrower  relating to

Letters of Credit.



      "Lender"  shall have the meaning  ascribed to such term in the  preamble

and shall include Bank of America,  in its individual  capacity,  each Issuing

Bank and each Person which at any time  becomes a Lender  pursuant to Section
                                                                      -------
12.01(a).
--------


      "Letter of Credit"  shall  mean any  Commercial  Letter of Credit or any

Standby  Letter of Credit  issued by any  Issuing  Bank for the account of the

Borrower  pursuant to Article III and includes each Existing Letter of Credit,
                      -----------
but excludes the Citibank Letters of Credit.



      "Letter of Credit Fee" shall have the  meaning  ascribed to such term in

Section 2.03(d).
---------------



      "Letter of Credit  Obligations"  shall mean, at any particular time, the

sum of (a)  Reimbursement  Obligations  and (b) the aggregate  maximum  amount

then available for drawing under the Letters of Credit.



      "Level I Status"  exists at any date if the  Pricing  Ratio on such date

is greater than or equal to 3.25 to 1.00.



      "Level II Status"  exists at any date if the Pricing  Ratio on such date

is less than 3.25 to 1.00 but greater than or equal to 2.50 to 1.00.



      "Level III Status"  exists at any date if the Pricing Ratio on such date

is less than 2.50 to 1.00 but greater than or equal to 1.75 to 1.00.



                                        19

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




      "Level IV Status"  exists at any date if the Pricing  Ratio on such date

is less than 1.75 to 1.00.



      "Liabilities   and   Costs"   shall   mean  all   liabilities,   claims,

obligations,    responsibilities,    losses,   damages,    punitive   damages,

consequential damages, treble damages,  charges, costs and expenses (including

attorney's,  expert's  and  consulting  fees and  costs of  investigation  and

feasibility  studies),  fines,  penalties  and monetary  sanctions,  interest,

direct or indirect,  known or unknown,  absolute or contingent,  past, present

or future.



      "Lien" shall mean any mortgage,  deed of trust,  pledge,  hypothecation,

assignment,  deposit arrangement,  security interest,  encumbrance (including,

but not limited to,  easements,  rights of way and the like),  lien (statutory

or other),  Environmental  Lien,  security  agreement or transfer  intended as

security,  including any conditional sale or other title retention  agreement,

the interest of a lessor under a Capital  Lease,  any  financing  lease having

substantially  the  same  economic  effect  as any of the  foregoing,  and the

filing of any  financing  statement  (other than a financing  statement  filed

pursuant  to Section  9-408 of the  Uniform  Commercial  Code not  intended as

security).



      "Loan Account" shall have the meaning  ascribed to such term in Section
                                                                      -------
2.01(d).
------


      "Loan  Documents"  shall mean this Agreement,  the Notes, the Collateral

Documents and the Letters of Credit and all other agreements  delivered to the

Administrative  Agent,  the Issuing Banks or any Lender by or on behalf of the

Borrower in satisfaction of the requirements of this Agreement.



      "Loan  Party"  shall  mean  ATSC,   the  Borrower  and  any   Restricted

Subsidiary which is a party to any Loan Document.



      "Loans" shall have the meaning ascribed to such term in Section 2.01(a).
                                                              ---------------


      "Margin  Stock"  shall  have  the  meaning  ascribed  to  such  term  in

Regulation U.



      "Material  Adverse  Effect"  shall mean,  with respect to the  Borrower,

ATSC and its  Restricted  Subsidiaries,  a material  adverse  effect  upon the

business,  assets or other properties,  liabilities or condition (financial or

otherwise),  results  of  operations  or  prospects  of the  Borrower  and its

Restricted  Subsidiaries  taken as a whole or ATSC and its Subsidiaries  taken

as a whole,  as the case may be, upon the ability of the Borrower to repay the

Loans,  or upon  the  benefits  provided  to the  Administrative  Agent or the

Lenders under the Collateral Documents.



      "Maximum  Loan Amount"  shall mean,  at any time,  the lesser of (a) (i)

the  Commitments  at such time (as reduced  pursuant  to Sections  2.01(e) and
                                                         -----------------
2.04 less (ii) the then  aggregate  outstanding  Letter of Credit  Obligations
----
and (b) $75,000,000.



      "Moody's" shall mean Moody's Investors Service, Inc.


                                         20
================================================================================





      "Multiemployer  Plan"  shall mean a  "multiemployer  plan" as defined in

Section 4001(a)(3) of ERISA which is, or within the immediately  preceding six

years was,  contributed  to by either the  Borrower or any ERISA  Affiliate or

under which the Borrower or any ERISA Affiliate may incur any liability.



      "Net  Income"  shall mean,  for any period on a  consolidated  basis for

ATSC,  the Borrower and its  Restricted  Subsidiaries,  the  consolidated  net

income (or loss) of ATSC,  the Borrower and its  Restricted  Subsidiaries  for

such period taken as a single  accounting  period,  determined  in  conformity

with GAAP.



      "Nonmaterial   Domestic   Subsidiaries"   shall   mean  any   Restricted

Subsidiary  (other  than a  Foreign  Subsidiary)  which  has  total  assets of

$500,000 or less,  provided that the total assets of all Nonmaterial  Domestic

Subsidiaries  shall not exceed  $2,000,000  in the aggregate and to the extent

the  aggregate  total  assets  of all  such  Restricted  Subsidiaries  exceeds

$2,000,000,  one or more such  Restricted  Subsidiaries  (in descending  order

based  upon  their  total   assets)   shall  not  be   "Nonmaterial   Domestic

Subsidiaries" until such excess is eliminated.



      "Non-U.S.  Lender"  shall  have the  meaning  ascribed  to such  term in

Section 2.08(e).
---------------



      "Note" shall have the meaning ascribed to such term in Section 2.01(d).
                                                             ---------------


      "Notice of Borrowing"  shall mean, with respect to a proposed  Borrowing

pursuant to Section  2.01(b),  a notice  substantially in the form of Exhibit
            ---------------                                           -------
2.01.
----



      "Notice  of  Conversion/Continuation"  shall  mean,  with  respect  to a

proposed  conversion or continuation of a Loan pursuant to Section 2.02(c),  a
                                                           --------------
notice substantially in the form of Exhibit 2.02.
                                    -------------



      "Obligations"  shall mean the principal of and all interest on all Loans

and  Reimbursement  Obligations,  all  fees,  expense  reimbursements,  taxes,

compensation  and  indemnities  payable by the Borrower to the  Administrative

Agent,  the Issuing  Banks,  or any Lender  pursuant to this Agreement and all

other present and future  Indebtedness  and other  liabilities of the Borrower

owing to the  Administrative  Agent, the Issuing Banks, any Lender (or, in the

case of any Interest Rate Contract or Foreign Currency Exchange Contract,  any

Affiliate of any Lender),  or any Person entitled to indemnification  pursuant

to  Section  12.04,  or any of their  respective  successors,  transferees  or
    --------------
assigns, of every type and description,  whether or not evidenced by any note,

guaranty  or other  instrument,  arising  under  or in  connection  with  this

Agreement,  any other Loan Document,  or any Interest Rate Contract or Foreign

Currency Exchange Contract,  whether or not for the payment of money,  whether

direct or  indirect  (including  those  acquired by  assignment),  absolute or

contingent,  due or to become  due,  now  existing  or  hereafter  arising and

however arising.



      "Operating  Lease"  shall mean,  as applied to any Person,  any lease of

any Property by that Person as lessee which is not a Capital Lease.




                                       21

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




      "Original  Credit  Agreement"  shall have the  meaning  ascribed to such

term in the preamble.



      "Other  Taxes" shall have the meaning  ascribed to such term in Section
                                                                      --------
2.08(b).
-------



      "PBGC"  shall mean the  Pension  Benefit  Guaranty  Corporation  and any

Person succeeding to the functions thereof.



      "Permits"  shall  mean any  permit,  approval,  consent,  authorization,

license,  variance, or permission required from a Governmental Authority under

an applicable Requirement of Law.



      "Permitted  Account Liens" shall mean the collective  reference to Liens

permitted by clause (a) of the definition of Customary Permitted Liens.



      "Permitted Existing  Indebtedness" shall mean the Indebtedness  existing

on the date hereof and set forth in Schedule 8.01(k).
                                    ---------------



      "Permitted  Existing Liens" shall mean the Liens on any Property,  other

than any Environmental Liens, reflected on Schedule 8.02(b).
                                           ----------------



      "Permitted  Fixed Asset  Liens" shall mean the  collective  reference to

Liens  permitted  by  clauses  (a)  and  (b) of the  definition  of  Customary

Permitted Liens.



      "Permitted  Inventory  Liens"  shall mean the  collective  reference  to

Liens  permitted by clauses (a),  (b) and (e) of the  definition  of Customary

Permitted Liens.



      "Permitted  Receivables   Securitization"  shall  mean  any  transaction

involving  a "true  sale" of  Credit  Card  Accounts  of the  Borrower  or any

Subsidiary of the Borrower and related  chattel paper and general  intangibles

to any  entity  that is not a  Guarantor,  which  transaction  may  include  a

transfer of the right to originate Credit Card Accounts.



      "Person"   shall  mean  any   natural   person,   corporation,   limited

partnership,  general  partnership,  limited  liability  company,  joint stock

company,  joint venture,  association,  company,  trust,  bank, trust company,

land  trust,  business  trust or other  organization,  whether  or not a legal

entity, or any other nongovernmental entity, or any Governmental Authority.



      "Plan"  shall mean an employee  benefit  plan defined in Section 3(3) of

ERISA  which the  Borrower  or any  ERISA  Affiliate  maintains,  administers,

contributes  to or is required to  contribute  to, or under which the Borrower

or any ERISA Affiliate may incur any liability.



      "Positive  Price  Variance  Reserve"  shall mean, as of any  Calculation

Date, the reserve  established  by the Borrower and the Subsidiary  Guarantors

for the  most  recently  completed  fiscal  quarter  in  accordance  with  the

historical  accounting practices of the Borrower and the Subsidiary Guarantors

in respect of the excess,  if any, of (a) the standard costs  associated  with

the  importation  of Inventory over (b) the actual costs  associated  with the

importation of Inventory.


                                          22
================================================================================




      "Potential Event of Default" shall mean an event which,  with the giving

of notice or the lapse of time, or both, would constitute an Event of Default.



      "Pricing  Ratio"  shall mean,  during any fiscal  quarter,  the quotient

obtained by dividing  (a) EBITR by (b) the sum of (i)  Interest  Expense  plus

(ii) Rental Expense for the period of four  consecutive  fiscal quarters ended

on the last day of the immediately  preceding  fiscal quarter.  Changes in the

Pricing Ratio indicated by a Pricing Ratio  Certificate shall become effective

on the first  day of the  fiscal  quarter  following  the  fiscal  quarter  in

respect  of which such  Pricing  Ratio  Certificate  is  delivered;  provided,

however,  that (a) if any  payment of  interest,  commitment  fee or Letter of

Credit  Fee is made  during  the  period  between  the  first  day of a fiscal

quarter  (including  the fiscal quarter ending May 5, 2001) and the date which

is five  Business  Days  after  the  date of  delivery  of the  Pricing  Ratio

Certificate for the immediately  preceding fiscal quarter,  such payment shall

be  tentatively  calculated on the basis of the Pricing Ratio in effect during

such immediately  preceding fiscal quarter until the Pricing Ratio is adjusted

upon  delivery of such Pricing Ratio  Certificate  (it being agreed that Level

III Status  shall be deemed to exist in respect of the fiscal  quarter  ending

May 5, 2001) and (b) in the event that no Pricing Ratio  Certificate  has been

delivered for a fiscal  quarter  prior to the last day of the next  succeeding

fiscal  quarter,  Level IV Status shall be presumed to exist until delivery of

such  Pricing  Ratio  Certificate.  Changes  in the  rates of  calculation  of

interest,  commitment fee or Letter of Credit Fee resulting from the operation

of either of clauses  (a) or (b) above for any fiscal  quarter  shall be given

effect  through  adjustments  to the  next  payments  to be made of  interest,

commitment  fee or  Letter of  Credit  Fee,  as the case may be, so as to give

effect to such changes retroactively to the beginning of such fiscal quarter.



      "Pricing  Ratio  Certificate"  shall have the meaning given to such term

in Section 6.01(d)(ii).
   -------------------



      "Prime Rate" means the per annum rate of interest as publicly  announced

from time to time by Bank of America as its "prime rate".  Such rate is a rate

set by Bank of America based upon various factors  including Bank of America's

costs and desired return,  general economic conditions and other factors,  and

is used as a reference  point for pricing some loans,  which may be priced at,

above or below  such  announced  rate.  Any change in such rate  announced  by

Bank of  America  shall take  effect at the  opening  of  business  on the day

specified in the public announcement of such change.



      "Property"  shall mean with respect to any Person,  any real or personal

property, plant, building,  facility,  structure,  equipment or unit, or other

asset (tangible or intangible) owned, leased or operated by such Person.



      "Pro Rata Share" shall mean, at any particular  time and with respect to

any Lender,  a fraction  (expressed as a  percentage),  the numerator of which

shall be the then amount of such Lender's  Commitment  (or, if the Commitments

have been terminated,  such Lender's Commitment as in effect immediately prior

to such  termination,  after  giving  effect to any  assignments  pursuant  to

Section  12.01)  and the  denominator  of which  shall  be the then  aggregate
--------------
amount of all Commitments (or, if the Commitments  have been  terminated,  the



                                    23
================================================================================





aggregate  amount of all  Commitments as in effect  immediately  prior to such

termination,  after  giving  effect to any  assignments  pursuant  to Section
                                                                      -------
12.01).
------



      "Reference Bank" shall mean Bank of America.



      "Register"  shall  have the  meaning  ascribed  to such term in Section
                                                                      -------
12.01(c).
--------



      "Regulation A",  "Regulation T", "Regulation U" and "Regulation X" shall

mean Regulation A, Regulation T, Regulation U and Regulation X,  respectively,

of the Federal Reserve Board as in effect from time to time.



      "Reimbursement  Obligations"  shall mean the  reimbursement or repayment

obligations  of the  Borrower to the Issuing  Banks with respect to Letters of

Credit, for amounts paid out thereunder.



      "Release" shall mean any release,  spill,  emission,  leaking,  pumping,

injection,  deposit,  disposal,  discharge,  dispersal,  leaching or migration

from  any  Property   into  the   environment,   including   the  movement  of

Contaminants  through  or in the air,  soil,  surface  water,  groundwater  or

Property.



      "Remedial  Action"  shall  mean any  action  required  to (i)  clean up,

remove,  treat or in any  other  way  address  Contaminants  in the  indoor or

outdoor  environment;  (ii) prevent a Release or threat of Release or minimize

the  further  Release of  Contaminants  so they do not  migrate or endanger or

threaten  to  endanger  public  health or  welfare  or the  indoor or  outdoor

environment;  or (iii) perform  pre-remedial  studies and  investigations  and

post-remedial monitoring and care.



      "Rental  Expense"  shall mean, for any period for ATSC, the Borrower and

its  Restricted  Subsidiaries,  on a  consolidated  basis,  the aggregate base

rental  payments to lessors or their assignees by such Persons for such period

under  agreements  to rent or lease any real property  (excluding  payments in

respect of Capital Leases) as recorded in accordance with GAAP.



      "Reportable  Event"  shall mean the events  described in Section 4043 of

ERISA with respect to which the 30-day notice requirement is not waived.



      "Requirements  of Law" shall  mean,  as to any  Person,  the charter and

by-laws or other  organizational  or governing  documents of such Person,  and

any law, rule or regulation,  Permit,  or  determination of an arbitrator or a

court or other Governmental  Authority,  in each case applicable to or binding

upon such Person or any of its  property or to which such Person or any of its

property is subject,  including the Securities  Act, the  Securities  Exchange

Act,  Regulation  T,  Regulation U and  Regulation X, and any  certificate  of

occupancy, zoning ordinance,  building,  environmental or land use requirement

or Permit or occupational safety or health law, rule or regulation.



      "Requisite  Lenders"  shall mean Lenders  whose Pro Rata Shares,  in the

aggregate,  are more than 50%, or after the  termination  of the  Commitments,

represent  more  than  50% of the  outstanding  Loans  and  Letter  of  Credit

Obligations.



                                         24
================================================================================





      "Responsible  Officer"  shall  mean,  as to  ATSC or the  Borrower,  the

President,  any  Executive  Vice  President,  any Senior Vice  President,  its

Treasurer or its Vice President-Controller.



      "Restricted  Payment" shall mean (a) any dividend or other distribution,

direct or indirect,  on account of any shares of any class of capital stock of

ATSC or the Borrower or any of its Subsidiaries now or hereafter  outstanding,

including the Common Stock,  except a distribution of stock as part of a stock

split and  except a dividend  payable  solely in shares of that class of stock

or in any  junior  class  of  stock  to the  holders  of that  class,  (b) any

redemption,  retirement,  sinking fund or similar  payment,  purchase or other

acquisition  for  value,  direct or  indirect,  of any  shares of any class of

capital  stock  of  ATSC or the  Borrower  or any of its  Subsidiaries  now or

hereafter  outstanding,  (c)  any  payment  or  prepayment  of  principal  of,

premium, if any, or interest on, and any redemption,  purchase,  retirement or

defeasance  of, or  sinking  fund or  similar  payment  with  respect  to, the

Convertible  Debentures  or any  consideration  paid  to any  Person  for  the

purpose of any of the  foregoing,  and (d) any payment  made to retire,  or to

obtain the surrender of, any outstanding warrants,  options or other rights to

acquire  shares of any class of capital  stock of ATSC or the  Borrower or any

of the Borrower's Subsidiaries now or hereafter outstanding.



      "Restricted  Subsidiary" shall mean any Subsidiary of the Borrower which

is not an Unrestricted  Subsidiary.  Whether or not a Restricted Subsidiary is

a  "wholly-owned  Restricted  Subsidiary"  shall be determined  without taking

into account any directors'  qualifying shares or similar nominal requirements

under foreign laws.



      "Sales Tax Reserve"  shall mean, as of any  Calculation  Date, an amount

equal to 5% of Eligible Accounts Receivable at such Calculation Date.



      "S&P" shall mean Standard and Poor's Ratings Services.



      "Securities" shall mean any stock,  shares,  voting trust  certificates,

bonds,  debentures,  notes or other  evidences  of  indebtedness,  secured  or

unsecured,   convertible,   subordinated  or  otherwise,  or  in  general  any

instruments  commonly known as "securities",  or any certificates of interest,

shares,  or  participations  in  temporary  or  interim  certificates  for the

purchase or acquisition  of, or any right to subscribe to, purchase or acquire

any of the foregoing, but shall not include any evidence of the Obligations.



      "Securities  Act" shall mean the  Securities  Act of 1933, as amended to

the date hereof and from time to time hereafter, and any successor statute.



      "Securities  Exchange  Act" shall mean the  Securities  Exchange  Act of

1934, as amended to the date hereof and from time to time  hereafter,  and any

successor statute.



      "Shareholders' Equity" shall mean, as at any date of determination,  the

amount which would be set forth under  shareholders'  equity on a consolidated

balance sheet of ATSC and its  Subsidiaries  in  accordance  with GAAP at such

date of determination.



                                      25

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





      "Shrink  Reserve"  shall mean, as of any  Calculation  Date,  the shrink

reserve for the most recent fiscal month  calculated  in  accordance  with the

accounting practices of the Borrower and the Subsidiary Guarantors.



      "Standby  Letter of Credit" shall mean any Letter of Credit which is not

a Commercial Letter of Credit.



      "Subsidiary"  shall mean, with respect to any Person,  any  corporation,

partnership,  trust or other  entity  of which a  majority  of the  stock  (or

equivalent  ownership or controlling  interest) having voting power to elect a

majority  of the  Board of  Directors  (if a  corporation)  or to  select  the

trustee or equivalent  controlling interest is directly or indirectly owned or

controlled  by such  Person or one or more of the other  Subsidiaries  of such

Person or any combination  thereof;  provided,  however,  that for purposes of

this Agreement the charitable  foundation permitted to be established pursuant

to Section  8.02(x)  shall not be deemed to be a Subsidiary of the Borrower or
   ---------------
ATSC.



      "Subsidiary   Guaranty  and   Collateral   Agreement"   shall  mean  the

Consolidated   Amended  and  Restated   Subsidiary   Guaranty  and  Collateral

Agreement dated as of the Effective Date  substantially in the form of, and on

the  terms  set forth in,  Exhibit  4.01(a)(vi),  as the same may be  amended,
                           --------------------
supplemented or otherwise modified from time to time.



      "Subsidiary Guarantor" shall mean any Guarantor (other than ATSC).



      "Tangible  Net Worth" shall mean, as at any date of  determination,  the

difference of Shareholders'  Equity less all intangible  assets,  as set forth

on the most recent  consolidated  balance sheet of ATSC,  the Borrower and its

Restricted Subsidiaries in accordance with GAAP at such date of determination.



      "Taxes" shall have the meaning ascribed to such term in Section 2.08.
                                                              ------------


      "Termination  Date"  shall  mean the  earlier  to occur of (a) the Final

Maturity Date and (b) the date of termination of the  Commitments  pursuant to

Section 10.02(a).
----------------



      "Termination  Event" shall mean (i) a  Reportable  Event with respect to

any Plan;  (ii) the  withdrawal of the Borrower or any ERISA  Affiliate from a

Benefit Plan during a plan year in which the Borrower or such ERISA  Affiliate

was a "substantial  employer" as defined in Section 4001(a)(2) of ERISA or the

cessation of operations  which results in the termination of employment of 20%

of Benefit Plan  participants  who are employees of the Borrower and its ERISA

Affiliates;  (iii) the  imposition  of an  obligation  on the  Borrower or any

ERISA  Affiliate  under  Section  4041 of ERISA to  provide  affected  parties

written   notice  of  intent  to  terminate  a  Benefit  Plan  in  a  distress

termination  described in Section  4041(c) of ERISA;  (iv) the termination of,

or the  institution  under ERISA of proceedings  to terminate,  a Benefit Plan

(including the giving of written notice  thereof);  (v) any event or condition

which  constitutes  grounds  under  Section 4042 of ERISA  (excluding  Section

4042(a)(4))  for the  termination  of,  or the  appointment  of a  trustee  to

administer,   any  Benefit  Plan  (including  the  giving  of  written  notice

thereof);  (vi) the  partial or  complete  withdrawal  of the  Borrower or any



                                      26
================================================================================





ERISA   Affiliate  from  a   Multiemployer   Plan  or   notification   that  a

Multiemployer  Plan  is in  reorganization;  (vii)  any  "accumulated  funding

deficiency"  (as  defined in Section  302 of  ERISA),  whether or not  waived,

shall  exist  with  respect  to any Plan;  (viii)  the  Borrower  or any ERISA

Affiliate  has incurred or is likely to incur a liability in  connection  with

any nonexempt "prohibited  transaction" (as defined in Section 406 of ERISA or

Section  4975 of the Code)  involving  any Plan;  (ix) the  failure  to make a

required  contribution to a Benefit Plan if such failure is sufficient to give

rise to a lien under  Section 302 (f) of ERISA;  or (x) the  imposition of any

liability  under  Title IV of  ERISA,  other  than PBGC  premiums  due but not

delinquent  under  Section  4007 of  ERISA,  upon the  Borrower  or any  ERISA

Affiliate.



      "Trademark  Security  Agreement"  shall mean the  Amended  and  Restated

Trademark  Security  Agreement dated as of the Effective Date substantially in

the form of, and on the terms set forth in, Exhibit 4.01(a)(iii),  as the same
                                            --------------------
may be amended, supplemented or otherwise modified from time to time.



      "UCC"  shall mean the  Uniform  Commercial  Code as from time to time in

effect in the State of New York.



      "Unrestricted  Subsidiary" shall mean a Subsidiary of the Borrower which

has  been  designated  as such by  resolution  duly  adopted  by the  board of

directors of the Borrower,  which at the time of such designation does not own

or hold any  Securities of ATSC,  the Borrower or any  Restricted  Subsidiary,

provided  (a) no  Subsidiary  of the  Borrower  shall  be  (or if  already  an

Unrestricted  Subsidiary  shall  immediately  cease  to  be)  an  Unrestricted

Subsidiary  if, at any  time,  ATSC,  the  Borrower  or any  other  Restricted

Subsidiary of the Borrower shall create,  incur, issue,  assume,  guarantee or

in any other manner  whatsoever  be or become liable with respect to any Claim

against or any  Contractual  Obligation or  Indebtedness  of, such  Subsidiary

which is not permitted  under Article VIII and (b) ATSC,  the Borrower and its

Restricted  Subsidiaries  shall be  deemed to have  made an  Investment  in an

Unrestricted  Subsidiary at the time of designation  of such  Subsidiary as an

"Unrestricted   Subsidiary"  in  an  amount  equal  to  the  sum  of  (i)  any

Indebtedness  owed by such Subsidiary to ATSC, the Borrower and its Restricted

Subsidiaries at such time,  (ii) any  outstanding  Guarantees or Liens created

by ATSC, the Borrower and its Restricted  Subsidiaries  in favor of or for the

benefit of such  Subsidiary  and (iii) the total assets of such  Subsidiary at

such time as determined on a consolidated basis in accordance with GAAP.



      1.03. 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".  Periods of days  referred  to in this

Agreement  shall  be  counted  in  calendar  days  unless  Business  Days  are

expressly prescribed.



      1.04. Accounting  Terms. For purposes of this Agreement,  all accounting
            -----------------
terms not otherwise  defined  herein shall have the meanings  assigned to them

in conformity with GAAP.



      1.05. Other   Definitional   Provisions.   References   to   "Articles",
            ---------------------------------
"Sections",  "subsections",  "Schedules",  "Exhibits" and "the preamble" shall

be to Articles, Sections,  subsections,  Schedules, Exhibits and the preamble,



                                      27
================================================================================





respectively,  of this Agreement unless otherwise  specifically  provided. The

words  "include"  and  "including"  when used  herein are not  intended  to be

exclusive and mean  "include,  without  limitation"  and  "including,  without

limitation."



                                    28
================================================================================




                                  ARTICLE II

                          AMOUNTS AND TERMS OF LOANS
                          --------------------------

      2.01. THE REVOLVING CREDIT FACILITY.
            ------------------------------------


      (a)   Availability.  (i) Subject to the terms and  conditions  set forth
            ------------
in this  Agreement,  each Lender hereby  severally  and not jointly  agrees to

make to the  Borrower  from time to time during the period from the  Effective

Date to the Termination  Date,  revolving loans (each  individually,  a "Loan"

and,  collectively,  the  "Loans"),  in an amount  which,  together  with such

Lender's  Pro Rata Share of the  outstanding  Letters  of Credit  Obligations,

shall not exceed, in the aggregate at any time outstanding,  the lesser of (A)

such  Lender's  Commitment  and  (B)  such  Lender's  Pro  Rata  Share  of the

Borrowing  Base Amount then in effect;  provided that the aggregate  principal

amount of all Loans  outstanding  at any one time  shall not  exceed  the then

Maximum Loan Amount.



            (ii)  All Loans under this Agreement  shall be made by the Lenders

      simultaneously and  proportionately to their respective Pro Rata Shares,

      it being  understood that no Lender shall be responsible for any failure

      by any other Lender to perform its  obligation to make a Loan  hereunder

      and  that  the  Commitment  of any  Lender  shall  not be  increased  or

      decreased  without the prior written  consent of such Lender as a result

      of the failure by any other Lender to perform its  obligation  to make a

      Loan.   The   failure   of  any   Lender  to  make   available   to  the

      Administrative  Agent any Borrowing of the Commitments shall not relieve

      any other Lender of its  obligation  hereunder to make  available to the

      Administrative   Agent  such  other  Lender's  Pro  Rata  Share  of  any

      Borrowing  of the  Commitments  on the date  such  funds  are to be made

      available pursuant to the terms of this Agreement.



            (iii) Loans may be prepaid  pursuant to Section 2.04, and, subject
                                                    ------------
      to the  provisions  of this  Agreement,  any  amounts so prepaid  may be

      reborrowed,  up to the amount  available  under this Section  2.01(a) at
                                                           ----------------
      the  time  of  such  Borrowing,   until  the  Business  Day  immediately

      preceding  the Final  Maturity  Date.  Each  Lender's  Commitment  shall

      expire,  and each Loan then  outstanding  shall  mature and be repaid by

      the Borrower,  without further action on the part of the Lenders, on the

      Final Maturity Date.



            (iv)  Loans made on any  Funding  Date  shall be in the  aggregate

      minimum amount of $1,000,000 and in integral  multiples of $1,000,000 in

      excess thereof.



            (v)   Each calendar  year,  the Borrower shall effect a prepayment

      of the outstanding  Loans (such amount, a "Cleandown") so as to cause no

      Loans to be outstanding  for a period of 30 consecutive  days (each such

      period,  a  "Cleandown  Period").  Within  15 days  after the end of any

      Cleandown  Period,  the Borrower shall notify the  Administrative  Agent

      that a Cleandown Period has occurred and the Administrative  Agent shall

      notify the Lenders.



                                          29
================================================================================





      (b)   Notice of  Borrowing.  Whenever  the  Borrower  desires  to borrow
            --------------------
under this Section  2.01,  the Borrower  shall  deliver to the  Administrative
           -------------
Agent a Notice of  Borrowing  (i) no later than 11:00 a.m.  (New York time) on

the proposed  Funding Date, in the case of a Borrowing of Base Rate Loans, and

(ii) not later than 11:00 a.m.  (New York time) at least three  Business  Days

in  advance  of the  proposed  Funding  Date,  in the case of a  Borrowing  of

Eurodollar  Rate Loans.  The Notice of Borrowing shall specify (A) the Funding

Date  (which  shall  be a  Business  Day),  (B)  the  amount  of the  proposed

Borrowing,  (C) whether the proposed  Borrowing  will be of Base Rate Loans or

Eurodollar  Rate Loans,  and (D) in the case of  Eurodollar  Rate  Loans,  the

requested  Interest Period. In lieu of delivering the  above-described  Notice

of  Borrowing  and only with the  consent of the  Administrative  Agent in its

sole discretion at such time, the Borrower may give the  Administrative  Agent

telephonic  notice of any proposed  Borrowing by the time required  under this

Section  2.01(b);  provided  that,  in the event the  Administrative  Agent so
----------------
consents,  such  notice  shall be  confirmed  immediately  by  delivery to the

Administrative  Agent of a Notice of  Borrowing  by  facsimile.  Any Notice of

Borrowing (or  telephonic  notice in lieu  thereof)  pursuant to this Section
                                                                      -------
2.01(b) shall be irrevocable.
-------


      (c)   Making of Loans.  Promptly  after receipt of a Notice of Borrowing
            ---------------
under  Section   2.01(b)  (or  telephonic   notice  in  lieu  thereof  if  the
       -----------------
Administrative   Agent  consents  to  such  telephonic   notice,   immediately

confirmed by facsimile),  the Administrative Agent shall notify each Lender by

facsimile  or  other  similar  form  of  teletransmission,   of  the  proposed

Borrowing.  Each  Lender  shall make the amount of its Loan  available  to the

Administrative  Agent at the Administrative  Agent's Payment Office in Dollars

and in  immediately  available  funds,  not later than (i) 1:00 p.m. (New York

time) on the Funding  Date,  in the case of a Borrowing of Base Rate Loans and

(ii)  11:00  a.m.  (New  York  time)  on the  Funding  Date,  in the case of a

Borrowing of Eurodollar Rate Loans. After the  Administrative  Agent's receipt

of the  proceeds  of such  Loans,  the  Administrative  Agent  shall  make the

proceeds  of such Loans  available  to the  Borrower on such  Funding  Date in

Dollars  and in  immediately  available  funds to an account of the  Borrower,

designated in writing by the Borrower.



      (d)   Loan  Accounts;  Notes.  The Loans  made by each  Lender  shall be
            ----------------------
evidenced by one or more loan accounts maintained by the Administrative  Agent

and such Lender in the ordinary  course of business  (each a "Loan  Account").

The Loan Accounts or records maintained by the  Administrative  Agent and each

Lender shall be conclusive  absent  manifest  error of the amount of the Loans

made by the Lenders to the Borrower  and the  interest  and payments  thereon.

Any  failure so to record or any error in doing so shall not,  however,  limit

or  otherwise  affect the  obligation  of the  Borrower  hereunder  to pay any

amount owing with respect to the Loans.  In case of a discrepancy  between the

entries in the  Administrative  Agent's  books and any  Lender's  books,  such

Lender's  books shall  constitute  prima facie evidence of the accuracy of the

information so recorded.  Notwithstanding  the foregoing,  the Borrower agrees

that,  upon  request to the  Administrative  Agent by any Lender,  in order to

evidence  such Lender's  Loans,  the Borrower will execute and deliver to such

Lender a promissory note  substantially  in the form of Exhibit 2.01(d) (each,
                                                        ---------------
as amended, supplemented,  replaced or otherwise modified from time to time, a

"Note"),  with appropriate  insertions therein as to payee, date and principal

amount.  Each Note shall (i) be dated the Effective  Date,  (ii) be payable as

provided in Section 2.01(g) and  (iii) provide  for the payment of interest in
            ---------------
accordance with Section 2.02.
                -------------


                                        30
================================================================================






      (e)   Termination or Reduction of  Commitments.  The Borrower shall have
            -----------------------------------------
the  right,  at  any  time  and  from  time  to  time,  (a) to  terminate  the

Commitments  in whole,  without  premium or penalty,  if no Loans or Letter of

Credit  Obligations  are then  outstanding,  or (b) to  permanently  reduce in

part,  without  premium or penalty,  the Commitments by an amount of up to (i)

the then maximum amount of the Commitments,  less (ii) the aggregate principal

amount of Loans and Letter of Credit  Obligations then  outstanding,  provided

that the Borrower shall pay any funding losses,  breakfunding fees and related

expenses  in  connection  with any  prepayment  made in respect  thereof.  The

Borrower  shall  give not less than three  Business  Days'  prior  irrevocable

notice  thereof (not later than 11:00 a.m. (New York time) on such day) to the

Administrative  Agent  designating the date (which shall be a Business Day) of

such  termination  or  reduction  and the  amount  of any  partial  reduction.

Promptly  after  receipt of a notice of such  termination  or  reduction,  the

Administrative  Agent shall notify each Lender of the proposed  termination or

reduction.  Such termination or partial  reduction of the Commitments shall be

effective on the date specified in the Borrower's  notice and shall reduce the

Commitment  of each Lender  proportionately  in  accordance  with its Pro Rata

Share.  Any  such  partial  reduction  of  the  Commitments  shall  be  in  an

aggregate  minimum amount of $2,000,000  and integral  multiples of $1,000,000

in excess of that amount.



      (f)   Repayment  of Loans.  The Borrower  hereby  promises to pay on the
            -------------------
Final Maturity Date the then outstanding principal amount of Loans.



      2.02. Interest on the Loans.
            ---------------------


      (a)   Rate of  Interest.  The  Borrower  promises to pay interest on the
            -----------------
unpaid  principal amount of all Loans from the date made until paid in full at

a fluctuating  rate determined from time to time by reference to the Base Rate

or the  Eurodollar  Rate.  The applicable  basis for  determining  the rate of

interest  shall be selected by the  Borrower at the time a Notice of Borrowing

is given by the Borrower  pursuant to Section  2.01(b) or at the time a Notice
                                      ----------------
of  Conversion/Continuation  is delivered by the Borrower pursuant to Section
                                                                      --------
2.02(c);  provided that the Borrower may not select the Eurodollar Rate as the
-------
applicable  basis for  determining  the rate of  interest  on a Loan if at the

time of such  selection an Event of Default has  occurred  and is  continuing.

If on any day a Loan is outstanding  with respect to which notice has not been

delivered to the  Administrative  Agent in  accordance  with the terms of this

Agreement specifying the basis for determining the rate of interest,  then for

each  such day such Loan  shall be a Base Rate  Loan.  The  Loans  shall  bear

interest, subject to Section 2.02(d), as follows:
                     ---------------


      Loans shall bear interest  from the Effective  Date until May 5, 2001 at

a rate per annum for each day  which is,  (A) in the case of Base Rate  Loans,

equal to the Base  Rate  plus  0.75%  and (B) in the case of  Eurodollar  Rate

Loans,  equal to the Eurodollar  Rate  determined for the applicable  Interest

Period plus 1.75%; thereafter, Loans shall bear interest as follows:



      (1) in the case of Base  Rate  Loans,  then at a rate per annum for each

day equal to the sum of (x) the Base  Rate as in  effect  from time to time as

interest  accrues and (y) the  applicable  margin set forth below opposite the

Pricing Ratio in effect on such day:



                                      31

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





                  Pricing Ratio                       Applicable Margin

                  Level I Status                            0.25%
                  Level II Status                           0.50%
                  Level III Status                          0.75%
                  Level IV Status                           1.00%


      (2) in the case of Eurodollar  Rate Loans,  then at a rate per annum for

each  day  equal  to the sum of (x) the  Eurodollar  Rate  determined  for the

applicable  Interest  Period and (y) the  applicable  margin  set forth  below

opposite the Pricing Ratio in effect on such day:



                  Pricing Ratio                       Applicable Margin

                  Level I Status                            1.25%
                  Level II Status                           1.50%
                  Level III Status                          1.75%
                  Level IV Status                           2.00%



      (b)   Interest  Payments.  Subject  to  Section  2.02(d),  (i)  interest
            ------------------                ----------------
accrued  on each  Base  Rate  Loan  shall be  payable  in  arrears  (A) on the

fifteenth day of each January,  April,  July and October,  for the three-month

period  ending on such date,  commencing  on the first such day  following the

making  of such  Base  Rate  Loan,  and (B) at the  Termination  Date and (ii)

interest  accrued on each  Eurodollar Rate Loan shall be payable in arrears on

the earlier of (A) each Interest  Payment Date  applicable to such  Eurodollar

Rate Loan,  (B) upon the  prepayment  thereof on the amount prepaid and (C) at

the Termination Date.



      (c)   Conversion  or  Continuation.  (i)  Subject to the  provisions  of
            -----------------------------
Sections 2.06 and 2.07,  the Borrower  shall have the option (A) to convert at
--------------    ----
any time all or any part of outstanding  Loans which comprise part of the same

Borrowing  and  which,  in the  aggregate,  equal  $1,000,000  or an  integral

multiple  of  $1,000,000  in excess  of such  amount  from Base Rate  Loans to

Eurodollar Rate Loans; or (B) to convert all or any part of outstanding  Loans

which,  in  the  aggregate,  equal  $1,000,000  or  an  integral  multiple  of

$1,000,000  in excess of that amount from  Eurodollar  Rate Loans to Base Rate

Loans  on the  expiration  date of any  Interest  Period  applicable  thereto,

provided the remaining  amount of Eurodollar Rate Loans with the same Interest

Period shall not be less than  $1,000,000;  or (C) upon the  expiration of any

Interest  Period  applicable  to a Borrowing  of  Eurodollar  Rate  Loans,  to

continue all or any portion of such Loans equal to  $1,000,000  or an integral

multiple of $1,000,000 in excess of such amount as Eurodollar Rate Loans,  and

the succeeding  Interest  Period of such continued Loans shall commence on the

expiration date of the Interest Period  applicable  thereto;  provided that no

outstanding  Loan may be continued as, or be converted into, a Eurodollar Rate

Loan when any Event of Default has occurred and is continuing.



      (ii) In the event the  Borrower  shall  elect to convert  or  continue a

Loan under this Section  2.02(c),  the Borrower  shall deliver an  irrevocable
                ----------------
Notice of  Conversion/Continuation  to the Administrative  Agent no later than

11:00 a.m.  (New York  time) at least  three  Business  Days in advance of the

proposed  conversion  date or date of  continuation  in the case of Eurodollar



                                         32
================================================================================





Rate  Loans and on the  conversion  or  continuation  date in the case of Base

Rate  Loans.  A  Notice  of  Conversion/Continuation  shall  specify  (w)  the

proposed  conversion/continuation  date (which shall be a Business  Day),  (x)

the  amount  of the  Loan to be  converted/continued,  (y) the  nature  of the

proposed  conversion/continuation,  and (z) in the case of a conversion to, or

a continuation of, a Eurodollar Rate Loan, the requested  Interest Period.  In

lieu of delivering the above-described Notice of Conversion/Continuation,  the

Borrower may give the  Administrative  Agent telephonic notice of any proposed

conversion/continuation  by the time  required  under  this  Section  2.02(c);
                                                             ----------------
provided  that such notice shall be confirmed  immediately  by delivery to the

Administrative Agent by facsimile of a Notice of  Conversion/Continuation.  No

failure of the Borrower to confirm any  telephonic  notice by facsimile  shall

impair or in any way limit the  Borrower's  obligations  with  respect to such

Loans.  Promptly  after receipt of a Notice of  Conversion/Continuation  under

this  Section  2.02(c)  (or  telephonic  notice  in lieu  thereof  immediately
      ---------------
confirmed by facsimile),  the Administrative Agent shall notify each Lender of

the proposed conversion/continuation.



      (iii)  Any  Notice  of  Conversion/Continuation  for  conversion  to, or

continuation  of, a Loan  (or  telephonic  notice  in lieu  thereof)  shall be

irrevocable  and the  Borrower  shall be  bound  to  convert  or  continue  in

accordance therewith.



      (d)   Default   Interest.   Notwithstanding   the   rates  of   interest
            ------------------
specified  in Section  2.02(a) and the  payment  dates  specified  in Section
              ---------------                                         -------
2.02(b),  effective immediately upon the occurrence of any Event of Default of
-------
the type  specified  in Section  10.01(a)  or upon  acceleration  of  maturity
                        ----------------
pursuant to Section  10.02(a) and for so long  thereafter as any such Event of
            -----------------
Default or  acceleration  shall be  continuing,  the principal  balance of all

Loans  and  Reimbursement  Obligations  then due and  payable  (including  all

amounts  due and  payable  pursuant  to  Section  10.02(a))  and any  interest
                                         -----------------
payments  on the Loans not paid when due,  shall bear  interest  payable  upon

demand  at a rate  which is 2% per  annum in  excess  of the rate of  interest

otherwise payable under this Agreement.



      (e)   Computation of Interest.  Interest on Base Rate Loans,  Eurodollar
            -----------------------
Rate Loans and  Reimbursement  Obligations  shall be  computed on the basis of

the actual number of days elapsed in the period during which interest  accrues

and a year of 360 days (except that a year of 365 or 366 days, as  applicable,

shall  be  used  if the  Base  Rate  is  derived  from  the  Prime  Rate),  as

applicable.  In computing  interest on any Loan, the date of the making of the

Loan or the  first day of an  Interest  Period,  as the case may be,  shall be

included  and the  date  of  payment  or the  expiration  date of an  Interest

Period,  as the case may be,  shall be  excluded;  provided  that if a Loan is

repaid on the same day on which it is made,  one day's  interest shall be paid

on that Loan.



      (f)   Changes;  Legal  Restrictions.  In the event  that  after the date
            -----------------------------
hereof  (a)  the  adoption  of  or  any  change  in  any  law,  treaty,  rule,

regulation,  guideline or  determination  of a  Governmental  Authority or any

change  in  the  interpretation  or  application  thereof  by  a  Governmental

Authority,  or (b)  compliance  by any Lender  with any  request or  directive

(whether  or not  having the force of law and  whether  or not the  failure to

comply   therewith   would  be  unlawful)  from  any  central  bank  or  other

Governmental    Authority   or    quasi-governmental    authority   exercising

jurisdiction,   power  or  control  over  banks  or   financial   institutions




                                      33
================================================================================





generally,  does impose, modify, or hold applicable, in the determination of a

Lender,  any  reserve,  special  deposit,  compulsory  loan,  FDIC  insurance,

capital allocation or similar  requirement against assets held by, or deposits

or other  liabilities  (including those pertaining to Letters of Credit) in or

for the account of,  advances or loans by,  Commitments  made, or other credit

extended by, or any other  acquisition of funds by, a Lender or any Applicable

Lending Office of such Lender (except (a) with respect to Base Rate Loans,  so

long as the Base Rate in effect at the time is determined  under clause (a) in

the  definition  of "Base Rate",  (b) with respect to Base Rate Loans,  to the

extent that the reserve and FDIC insurance  requirements  are reflected in the

definition  of "Base Rate" and (c) with respect to Eurodollar  Rate Loans,  to

the extent that the reserve  requirements  are reflected in the  definition of

"Eurodollar  Rate"), and the result of any of the foregoing is to increase the

cost to such  Lender  of  making,  renewing  or  maintaining  the Loans or its

Commitment  to the Borrower or issuing to the Borrower any Letter of Credit or

to reduce any amount  receivable  hereunder or  thereunder;  then, in any such

case,  the Borrower  shall upon written  notice from and demand by that Lender

pay to such  Lender,  within 15 Business  Days of the date  specified  in such

notice and demand, such amount or amounts (based upon a reasonable  allocation

thereof by such  Lender to the  financing  transactions  contemplated  by this

Agreement  and  affected  by this  Section  2.02(f))  as may be  necessary  to
                                   ----------------
compensate  that  Lender  for any such  additional  cost  incurred  or reduced

amount  received.  Such  Lender  shall  deliver  to  the  Borrower  a  written

statement of the costs or reductions  claimed and the basis therefor,  and the

allocation made by such Lender of such costs and  reductions,  which statement

shall,  in  the  absence  of  manifest  error,  be  conclusive.  If  a  Lender

subsequently  recovers from another Person any amount  previously  paid by the

Borrower pursuant to this Section 2.02(f),  such Lender shall,  within 30 days
                          ---------------
after receipt of such refund and to the extent  permitted by  applicable  law,

pay to the Borrower, without interest, the amount of any such recovery.



      2.03. Fees.
            ----


      (a)   Fees  to  Bank  of  America.  The  Borrower  shall  pay to Bank of
            ---------------------------
America,  for its own account and/or for the account of the Arranger,  fees in

the  amounts  set forth in the Fee  Letter,  payable  on the  Effective  Date.

Except  as  contemplated  by the Fee  Letter,  no  Person  other  than Bank of

America and the Arranger shall have any interest in such fees.



      (b)   Commitment    Fee.   (i)   The   Borrower   shall   pay   to   the
            -----------------
Administrative  Agent,  for the account of each  Lender,  in  accordance  with

their Pro Rata Shares,  a commitment fee accruing from and after the Effective

Date to the Termination  Date,  calculated on the basis of a year of 360 days,

upon the  difference  between (A) the  Commitments in effect from time to time

and (B) the Loans and Letter of Credit  Obligations  outstanding  from time to

time. All such  commitment  fees payable under this paragraph shall be payable

in arrears on the fifteenth day of each January,  April,  July and October for

the  three-month  period  ending on such date,  beginning  after the Effective

Date and in addition on the Termination Date.



      (ii)  Commitment  fees shall accrue from the Effective Date until May 5,

2001 at the rate of  0.425%  per  annum;  thereafter,  commitment  fees  shall

accrue for each day at a rate per annum equal to the  percentage per annum set

forth below opposite the Pricing Ratio in effect on such day:



                                        34
================================================================================






                     Pricing Ratio        Commitment Fee

                     Level I Status           0.300%
                     Level II Status          0.375%
                     Level III Status         0.425%
                     Level IV Status          0.500%



      (c)   Agency Fee. The Borrower  shall pay to the  Administrative  Agent,
            ----------
solely for its own account,  the agency fee set forth in the Fee Letter in the

amount per annum  agreed  between the  Administrative  Agent and the  Borrower

payable in advance on the Effective Date and each one-year  anniversary of the

Effective Date. No Person other than the  Administrative  Agent shall have any

interest in such fee.



      (d)   Letter   of  Credit   Fees.   The   Borrower   shall  pay  to  the
            --------------------------
Administrative  Agent,  for the  account of the  Lenders,  or to the  relevant

Issuing Bank, as applicable,  a fee for each Letter of Credit issued on behalf

of the  Borrower  (the  "Letter of Credit  Fee"),  determined  as set forth in

Section 3.08(a) and (b).
----------------------


      (e)   Payment  of  Fees.   The  fees  described  in  this  Section  2.03
            -----------------                                    -------------
represent  compensation for services  rendered and to be rendered separate and

apart  from the  lending  of  money  or the  provision  of  credit  and do not

constitute  compensation  for the use,  detention or forbearance of money, and

the  obligation of the Borrower to pay each fee  described  herein shall be in

addition  to,  and not in lieu  of,  the  obligation  of the  Borrower  to pay

interest,  other fees and  expenses  otherwise  described  in this  Agreement.

Fees and expenses  shall be payable when due in immediately  available  funds.

All  fees  and  expenses  shall  be  nonrefundable  when  paid.  All  fees and

expenses  specified or referred to in this Agreement due to the Administrative

Agent,  the Issuing  Banks or a Lender,  including  those  referred to in this

Section 2.03 and in Section 12.03,  shall constitute  Obligations and shall be
------------        -------------
secured by all the  Collateral.  All fees described in this Section 2.03 which
                                                            ------------
are  expressed as a per annum charge shall be  calculated  on the basis of the

actual number of days elapsed in a 360-day year.



      2.04. Voluntary  and  Mandatory  Prepayments.  (a) The Borrower may, (i)
            --------------------------------------
upon written or  telephonic  irrevocable  notice for any Base Rate Loan on the

proposed  prepayment  date, or upon not less than three  Business  Day's prior

written or telephonic  notice for any  Eurodollar  Rate Loan (in each case not

later than 11:00 a.m.  (New York time) on the date such notice is given),  and

if  made  by   telephone,   confirmed   immediately   by   facsimile   to  the

Administrative  Agent (which notice the  Administrative  Agent shall  promptly

transmit by facsimile or telephone to each Lender),  at any time and from time

to time, prepay any Loan in whole or in part,  without premium or penalty,  in

an  aggregate  minimum  amount  of  $1,000,000,   and  integral  multiples  of

$1,000,000  in excess of such  amounts;  provided that the Borrower may prepay

such  Loans in full  without  regard to such  minimum  amount;  and  provided,

further,  that if the  Borrower  prepays  any  Eurodollar  Rate Loan on a date

other than the expiration date of the Interest Period applicable thereto,  the

Borrower  shall pay to the  Administrative  Agent  the  amounts  described  in

Section 2.07(d).  Any notice of prepayment given to the  Administrative  Agent
---------------


                                      35
================================================================================




under this  Section  2.04(a)  shall  specify  the date of  prepayment  and the
            ----------------
aggregate  principal  amount of the prepayment.  If a notice of prepayment has

been delivered as provided  herein,  such notice shall be irrevocable  and the

principal  amount of the Loans  specified  in such notice shall become due and

payable on the prepayment date specified in such notice.



      (b)   If at any time the sum of (i) the  aggregate  principal  amount of

Loans  outstanding at such time plus (ii) the Letter of Credit  Obligations at

such time exceed the Borrowing Base Amount at such time,  the Borrower  shall,

without notice or demand,  immediately  repay Loans in an aggregate  principal

amount  equal to the  lesser  of (x) the  amount  of such  excess  and (y) the

aggregate  principal  amount  of  Loans  then  outstanding,  in  the  case  of

Eurodollar  Rate Loans,  together  with  interest  accrued to the date of such

payment or  prepayment  on the  principal  so prepaid and any amounts  payable

under  Section  2.07(d)  in  connection  therewith.  In the case of Base  Rate
       ---------------
Loans,  interest  shall be payable at the next  Interest  Payment Date. To the

extent that after giving effect to any  prepayment  of Loans  required by this

Section  2.04(b),  the sum of (i) the  aggregate  principal  amount  of  Loans
----------------
outstanding  at such time plus (ii) the Letter of Credit  Obligations  at such

time  exceed the  Borrowing  Base  Amount at such time,  the  Borrower  shall,

without notice or demand,  immediately  deposit in a Cash  Collateral  Account

upon  terms  reasonably  satisfactory  to the  Administrative  Agent an amount

equal to the lesser of (i) the Letter of Credit  Obligations  at such time and

(ii) the amount of such  remaining  excess.  The  Administrative  Agent  shall

apply  any  cash  deposited  in the Cash  Collateral  Account  (to the  extent

thereof) to pay any  Reimbursement  Obligations  which become due  thereafter,

provided  that the  Administrative  Agent shall  release to the Borrower  from

time to time such  portion of the  amount on  deposit  in the Cash  Collateral

Account  which is equal to the amount by which the sum of (A)  Borrowing  Base

Amount at such time plus (B) the  amount  on  deposit  in the Cash  Collateral

Account at such time exceeds the sum of (i) the aggregate  principal amount of

Loans  outstanding at such time plus (ii) the Letter of Credit  Obligations at

such time.  "Cash  Collateral  Account"  means an account  established  by the

Borrower  with the  Administrative  Agent and over  which  the  Administrative

Agent  shall have  exclusive  dominion  and  control,  including  the right of

withdrawal  for  application  in  accordance  with this Section  2.04(b).  The
                                                        ---------------
Borrower  shall also  prepay the Loans to the extent  required  to comply with

Section 2.01(a)(v).
-----------------


      2.05. Payments.
            --------


      (a)   Manner  and  Time of  Payment.  (i)  All  payments  of  principal,
            -----------------------------
interest,  Reimbursement  Obligations  and fees  hereunder  or any  Letter  of

Credit payable to the Lenders shall be made without condition,  reservation of

right or deduction for any  counterclaim,  defense,  recoupment or setoff,  in

Dollars and in immediately  available funds,  delivered to the  Administrative

Agent at the  Administrative  Agent's  Payment Office not later than 1:00 p.m.

(New York  time) on the date due;  and funds  received  by the  Administrative

Agent after that time and date shall be deemed to have been paid and  received

by the  Administrative  Agent on the next  succeeding  Business Day.  Payments

actually received by the  Administrative  Agent for the account of the Lenders

shall be paid to them  promptly  in like funds  after  receipt  thereof by the

Administrative Agent.



      (ii)  Unless the  Administrative  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



                                      36
================================================================================





Administrative  Agent may assume that the  Borrower  has made such  payment in

full to the Administrative  Agent on such date, and the  Administrative  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

Administrative  Agent,  each Lender  shall repay to the  Administrative  Agent

forthwith on demand the excess of the amount  distributed  to such Lender over

the amount,  if any,  paid by the  Borrower  for the  account of such  Lender,

together  with interest  thereon at the Federal Funds Rate,  for each day from

the date such amount is  distributed to such Lender until the date such Lender

repays such amount to the Administrative  Agent;  provided,  however,  that if

any Lender shall fail to repay such amount  within three  Business  Days after

demand  therefor,  such Lender shall,  from and after such third  Business Day

until payment is made to the  Administrative  Agent, pay interest thereon at a

rate per annum equal to the Base Rate.



A notice of the Administrative  Agent to any Lender with respect to any amount

owing under this subsection (a) shall be conclusive, absent manifest error.



      (b)   Apportionment  of  Payments.  So long as there  does not  exist an
            ---------------------------
Event of  Default,  all  payments  of  principal  and  interest  in respect of

outstanding  Loans,  all payments of fees  constituting  Obligations,  and all

payments in respect of any other  Obligations shall be allocated among such of

the Lenders as are entitled  thereto,  in proportion to their  respective  Pro

Rata Shares or otherwise as provided  herein.  After the occurrence and during

the   continuance   of  an  Event  of  Default,   and  after   notice  by  the

Administrative  Agent to the Borrower that  payments and proceeds  shall be so

applied,  all payments  remitted to the  Administrative  Agent and all amounts

and  proceeds  of  Collateral  received by the  Administrative  Agent shall be

applied,  subject to the  provisions  of this  Agreement,  (i)  first,  to pay

Obligations  in  respect  of  any  fees  or   indemnities   then  due  to  the

Administrative  Agent, the Issuing Banks and the Lenders;  (ii) second, to pay

Obligations  in  respect  of expense  reimbursements  then due under  Section
                                                                      -------
12.03;  (iii)  third,  to pay or  prepay  principal  of  and  interest  on any
-----
outstanding  Reimbursement Obligations and Loans, and to pay (or to the extent

such Obligations are contingent,  prepay or provide cash collateral in respect

of) Letter of Credit  Obligations;  provided that if sufficient  funds are not

available  to fund all  payments to be made to the holders of the  Obligations

described in this clause (iii),  the available funds shall be allocated to the

payment of such  Obligations  ratably,  based on the  proportion  of each such

holder's   interest  in  the  aggregate   outstanding   Loans,   Reimbursement

Obligations and other Letter of Credit  Obligations (in each instance  whether

or not due); and provided,  further, that matured and, to the extent permitted

by law,  unmatured  interest-bearing  Obligations shall, in any event, be paid

prior to prepayment or provision of cash  collateral for contingent  Letter of

Credit  Obligations;  (iv)  fourth,  to  the  ratable  payment  of  all  other

Obligations  then due and payable for expense  reimbursements;  (v) fifth,  to

pay  Obligations  then  due  and  payable  in  respect  of the  Interest  Rate

Contracts,  if any;  and (vi)  sixth,  to the  ratable  payment  of all  other

Obligations due to any and all holders of Obligations.



      The  Administrative  Agent shall  promptly  distribute to each Lender at

its primary  address set forth in Schedule  1.01(a),  or at such other address
                                  -----------------
as a Lender  may  request in  writing,  such  funds as it may be  entitled  to

receive  or as may be  shown  due to it in  the  Administrative  Agent's  Loan

Account,  provided  that the  Administrative  Agent  shall in any event not be

bound to inquire  into or  determine  the  validity,  scope or priority of any



                                        37
================================================================================





interest or entitlement  of any Lender or any other holder of Obligations  and

may suspend all payments or seek appropriate  relief  (including  instructions

from the Requisite  Lenders or an action in the nature of interpleader) in the

event  of any  doubt  or  dispute  as to  any  apportionment  or  distribution

contemplated  hereby.  The order of  priority  herein  is set forth  solely to

determine  the rights and  priorities of the holders of  Obligations  as among

themselves  and may at any time or from time to time be changed by the Lenders

as they may elect,  in writing in  accordance  with Section 12.08 (except that
                                                    -------------
no amendment  shall  require  prepayment or provision of cash  collateral  for

contingent  Letter of Credit  Obligations  unless (as provided in clause (iii)

of  Section   2.05(b))   matured   and  certain   interest-bearing   unmatured
    -----------------
Obligations  shall have been paid),  without necessity of notice to or consent

of or approval by the Borrower or any other Person.



      (c)   Payments on  Non-Business  Days.  Whenever  any payment to be made
            -------------------------------
by the  Borrower  hereunder  shall be stated to be due on a day which is not a

Business Day,  payments shall be made on the next succeeding  Business Day and

such extension of time shall be included in the  computation of the payment of

interest  hereunder  and of any of the fees  specified in Section 2.03, as the
                                                          ------------
case may be.



      (d)   Payments  by  Lenders  to the  Administrative  Agent.  Unless  the
            ----------------------------------------------------
Administrative  Agent  shall have been  notified  by any  Lender  prior to any

Funding  Date that  such  Lender  does not  intend  to make  available  to the

Administrative  Agent such  Lender's Loan on such Funding Date (except that in

the case of Base Rate  Loans,  the  Administrative  Agent  shall  have been so

notified  no later than 1:00 p.m.  (New York time) on the Funding  Date),  the

Administrative  Agent  may  assume  that  such  Lender  has made  such  amount

available  to  the   Administrative   Agent  on  such  Funding  Date  and  the

Administrative  Agent in its sole  discretion  may, but shall not be obligated

to, make  available  to the  Borrower a  corresponding  amount on such Funding

Date.  If such  corresponding  amount  is not in fact  made  available  to the

Administrative  Agent  by such  Lender  on or prior to a  Funding  Date,  such

Lender  agrees  to pay and the  Borrower  agrees  to  repay  severally  to the

Administrative  Agent forthwith on demand such  corresponding  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

Administrative  Agent,  at (A) in the case of such Lender,  the Federal  Funds

Rate for the first three  Business Days and  thereafter at the Base Rate,  and

(B) in the case of the Borrower,  the interest rate  applicable at the time to

a  Borrowing  of Base Rate Loans made on such  Funding  Date.  If such  Lender

shall pay to the Administrative  Agent such corresponding  amount, such amount

so paid shall  constitute  such Lender's Loan, and if both such Lender and the

Borrower shall have paid and repaid, respectively,  such corresponding amount,

the  Administrative  Agent  shall  promptly  pay  over  to the  Borrower  such

corresponding  amount  in same  day  funds,  but  the  Borrower  shall  remain

obligated for all interest  thereon.  Nothing in this Section 2.05(d) shall be
                                                      ---------------
deemed to relieve any Lender of its  obligation  hereunder to make its Loan on

any Funding  Date.  Notwithstanding  any  provision  of this  Agreement to the

contrary,  the  Administrative  Agent may apply  all  funds  and  proceeds  of

Collateral  available  for the payment of any  Obligations  first to repay any

amount  owing by any  Lender to the  Administrative  Agent as a result of such

Lender's failure to fund its Loan as required hereunder.



      2.06. Interest  Periods.  By giving  notice  as set  forth in  Sections
                                                                     --------
2.01(b) or 2.02(c)(ii) with respect to a Eurodollar  Borrowing of,  conversion
-------    -----------
into or  continuation  of Eurodollar  Rate Loans,  the Borrower shall have the




                                      38
================================================================================






option,  subject to the other  provisions  of this  Section  2.06 and Section
                                                    -------------     -------
2.07,  to specify an interest  period (each an "Interest  Period") to apply to
----
the Borrowing described in such notice,  which Interest Period shall be either

a 1-, 2-, 3-, or 6-month period.  The  determination of Interest Periods shall

be subject to the following provisions:



      (a)   In the  case of  immediately  successive  Interest  Periods,  each

successive  Interest  Period  shall  commence  on the day on  which  the  next

preceding Interest Period expires;



      (b)   If any Interest  Period would  otherwise  expire on a day which is

not a Business  Day,  the  Interest  Period shall be extended to expire on the

next succeeding  Business Day; provided that if any such Interest Period would

otherwise  expire on a day which is not a Business Day and no further Business

Day  occurs  in  that  month,   that  Interest  Period  shall  expire  on  the

immediately preceding Business Day;



      (c)   The  Borrower  may not  select an  Interest  Period in  respect of

Loans which terminates later than the Final Maturity Date; and



      (d)   Without the prior written consent of the Administrative  Agent and

the  Requisite  Lenders,  there  shall be no more than five  Interest  Periods

under this Agreement at any time.



      2.07. Special    Provisions    Governing    Eurodollar    Rate    Loans.
            -----------------------------------------------------------------
Notwithstanding  other provisions of this Agreement,  the following provisions

shall govern with respect to Eurodollar Rate Loans as to the matters covered:



      (a)   Determination  of Interest Rate. As soon as practicable  but in no
            -------------------------------
event  later  than two  Business  Days  prior to the  Funding  Date or date of

conversion or continuation,  the  Administrative  Agent shall determine (which

determination  shall,  absent manifest error,  be  presumptively  correct) the

interest  rate which  shall  apply to the  Eurodollar  Rate Loans for which an

interest rate is then being determined for the applicable  Interest Period and

shall  promptly give notice  thereof (in writing or by telephone  confirmed in

writing) to the Borrower and to each Lender.



      (b)   Interest  Rate   Unascertainable,   Inadequate  or  Unfair.   With
            ----------------------------------------------------------
respect to any  Interest  Period,  if (i) the  Reference  Bank is not offering

deposits  in Dollars  (in the  applicable  amounts)  in the  London  interbank

Eurodollar market for such Interest Period, or (ii) the  Administrative  Agent

reasonably   determines  that  adequate  and  fair  means  do  not  exist  for

ascertaining  the  applicable  interest rate on the basis  provided for in the

definition  of Eurodollar  Rate,  for any reason other than the failure of the

Reference Bank to offer deposits in Dollars in the relevant  market,  then the

Administrative  Agent shall  forthwith  give notice  thereof to the  Borrower,

whereupon   until   the   Administrative   Agent  has   determined   that  the

circumstances  giving rise to such  suspension no longer exist,  (a) the right

of the  Borrower  to  elect  to  have  Loans  bear  interest  based  upon  the

Eurodollar Rate, shall be suspended,  and (b) each outstanding Eurodollar Rate

Loan,  shall be converted into a Base Rate Loan or a Eurodollar  Rate Loan not

covered by the notice  described  above (as may be designated by the Borrower)

on the last day of the then current Interest Period therefor,  notwithstanding

any prior election by the Borrower to the contrary.



                                      39
================================================================================






      (c)   Illegality.  (i) In the event  that on any date any  Lender  shall
            ----------
have determined (which  determination shall, in the absence of manifest error,

be final and  conclusive  and  binding  upon all  parties)  that the making or

continuation  of any Eurodollar Rate Loan has become unlawful by compliance by

that  Lender in good  faith with any law,  governmental  rule,  regulation  or

order of any  Governmental  Authority  (whether or not having the force of law

and whether or not failure to comply  therewith would be unlawful),  then, and

in any such event,  such Lender shall promptly give notice (by facsimile or by

telephone   promptly   confirmed   in  writing)  to  the   Borrower   and  the

Administrative Agent of that determination and the reasons therefor.



      (ii) Upon the giving of the notice  referred  to in Section  2.07(c)(i),
                                                          ------------------
(A)  the  Borrower's  right  to  request  of such  Lender  and  such  Lender's

obligation to make Eurodollar Rate Loans shall be immediately  suspended,  and

such  Lender  shall  make a  Loan,  as  part  of any  requested  Borrowing  of

Eurodollar  Rate Loans,  as a Base Rate Loan or as a Eurodollar  Rate Loan not

covered by the notice  described in Section  2.07(c)(i)  (as designated by the
                                    -------------------
Borrower),  which  Base  Rate Loan or  Eurodollar  Rate  Loan  shall,  for all

purposes,  be  considesred  a part of such  Borrowing,  and (B) if the affected

Eurodollar  Rate  Loan or  Loans  are then  outstanding,  the  Borrower  shall

immediately  (or,  if  permitted  by  applicable  law,  no later than the date

permitted  thereby,  upon at least one Business  Day's  written  notice to the

Administrative  Agent and the affected  Lender)  convert each such Loan into a

Base Rate Loan or a  Eurodollar  Rate Loan not covered by such  notice.  If at

any time notice is given under Section 2.07(c)(i) by one or more Lenders,  but
                               -----------------
not by all of them,  the  provisions of this Section  2.07(c)(ii)  shall apply
                                             -------------------
only in favor of the Lenders which gave such notice.



      (iii) In the event that a Lender  determines  at any time  following its

giving of a notice  referred  to in Section  2.07(c)(i)  that such  Lender may
                                    -------------------
lawfully  make  Eurodollar  Rate  Loans  of the  type(s)  referred  to in such

notice,  such Lender shall  promptly give notice (by facsimile or by telephone

promptly  confirmed in writing) to the Borrower and the  Administrative  Agent

of that  determination,  whereupon  the  Borrower's  right to  request of such

Lender and such  Lender's  obligation  to make  Eurodollar  Rate Loans of such

type(s) shall be restored.



      (d)   Compensation.  Upon  demand  of any  Lender  (with  a copy  to the
            -------------
Administrative   Agent)  from  time  to  time,  the  Borrower  shall  promptly

compensate  such Lender for and hold such Lender  harmless from any loss, cost

or expense incurred by such Lender as a result of:



(i)   any continuation, conversion, payment or prepayment of


(ii)  any Loan  other  than a Base Rate Loan on a day other  than the last day

                  of the  Interest  Period for such Loan  (whether  voluntary,

                  mandatory,   automatic,   by  reason  of  acceleration,   or

                  otherwise); or


            (iii) any  failure by the  Borrower  (for a reason  other than the

                  failure of such  Lender to make a Loan) to  prepay,  borrow,

                  continue  or convert any Loan other than a Base Rate Loan on

                  the date or in the amount notified by the Borrower.



      Such  Lender  shall  deliver  to  the  Borrower,  with  a  copy  to  the

Administrative   Agent,  as  a  condition  to  the  Borrower's  obligation  to

compensate such Lender,  a written  statement as to such losses,  expenses and



                                      40
================================================================================





liabilities,  which  statement,  in the  absence of manifest  error,  shall be

conclusive as to such amounts.



      (e)   Quotation of Eurodollar  Rate.  If the  Reference  Bank shall have
            -----------------------------
failed  to  provide  offered  quotations  to  the   Administrative   Agent  in

accordance with the definition of "Eurodollar Rate", the Administrative  Agent

shall give the Borrower and each Lender  prompt  notice  thereof and the Loans

requested shall be made or continued as, or converted into, Base Rate Loans.



      (f)   Booking of Eurodollar  Rate Loans.  Any Lender may make,  carry or
            ---------------------------------
transfer  Eurodollar  Rate  Loans at,  to, or for the  account  of, any of its

branch  offices,  agencies  or the  office  of an  Affiliate  of that  Lender;

provided  that no such Lender shall be entitled to receive any greater  amount

under Section  2.02(f) or Section 2.08 as a result of the transfer of any such
      ----------------    -------------
Loan than such Lender would be entitled to  immediately  prior thereto  unless

(i) such  transfer  occurred at a time when  circumstances  giving rise to the

claim  for  such  greater  amount  did  not  exist  and  were  not  reasonably

foreseeable by such Lender,  or (ii) such claim would have arisen even if such

transfer had not occurred.



      2.08. Taxes.
            ------


      (a)   Any and all payments by the Borrower  hereunder  shall be made, in

accordance with Section 2.05, free and clear of and without  deduction for any
                ------------
and all present or future taxes,  levies,  imposts,  deductions,  charges,  or

withholdings,  and all liabilities with respect thereto but excluding,  in the

case of each Lender and the  Administrative  Agent,  taxes  imposed on its net

income,  branch profits taxes and franchise  taxes imposed on it by the United

States of America or any Governmental  Authority  (including Puerto Rico) and,

in the case of each Lender,  taxes imposed on its income and  franchise  taxes

imposed on it as a result of making any Loan,  by the  Governmental  Authority

of the  jurisdiction  of such  Lender's  Applicable  Lending  Office (all such

non-excluded taxes, levies, imposts, deductions,  charges,  withholdings,  and

liabilities which a Lender determines to be applicable to this Agreement,  the

Commitments,  the Loans or the Letters of Credit 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  or the

Administrative  Agent, (i) so long as such Lender or the Administrative  Agent

is in compliance with Section  2.08(e),  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 2.08)
                                                                 -------------
such  Lender  or the  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. If a withholding tax of

the United States of America or any other  Governmental  Authority shall be or

become  applicable (y) after the date of this  Agreement,  to such payments by

the Borrower made to the Applicable  Lending Office or any other office that a

Lender  specified  on  Schedule  1.01(a)  to this  Agreement  may claim as its

Applicable   Lending   Office  or  (z)  after  such  Lender's   selection  and

designation of any other Applicable  Lending Office,  to such payments made to

such other  Applicable  Lending Office,  such Lender shall, in good faith, use

its  reasonable  best efforts to make,  fund and  maintain  its Loans,  and to

make, fund and maintain its obligations  under the Letters of Credit,  through


                               41
================================================================================




another  Applicable  Lending Office of such Lender in another  jurisdiction so

as to reduce the Borrower's  liability  hereunder,  if the making,  funding or

maintenance of such Loans or  obligations  under the Letters of Credit through

such other Applicable  Lending Office of such Lender does not, in the judgment

of such Lender,  otherwise materially adversely affect such Loans, obligations

under the Letters of Credit or such Lender.



      (b)   In  addition,  the  Borrower  agrees to pay any  present or future

stamp or documentary taxes or any other excise or property taxes,  charges, or

similar levies which arise from any payment made hereunder,  from the issuance

of  Letters  of  Credit  hereunder,   or  from  the  execution,   delivery  or

registration   of,  or  otherwise  with  respect  to,  this   Agreement,   the

Commitments,  the Loans or the Letters of Credit  (hereinafter  referred to as

"Other Taxes").



      (c)   The Borrower  will  indemnify  each Lender and the  Administrative

Agent for the full  amount of Taxes and Other  Taxes  (including  any Taxes or

Other Taxes  imposed by any  Governmental  Authority on amounts  payable under

this  Section  2.08) paid by such Lender or the  Administrative  Agent (as the
      --------------
case may be) and any liability (including penalties,  interest,  and expenses)

arising therefrom or with respect thereto,  whether or not such Taxes or Other

Taxes were  correctly  or legally  asserted  by such  Governmental  Authority.

This  indemnification  shall be made within 30 days after the date such Lender

or the  Administrative  Agent  (as the  case  may  be)  makes  written  demand

therefor.  A certificate  as to any  additional  amount  payable to any Lender

under this Section  2.08  submitted  to such  Borrower and the  Administrative
           -------------
Agent  (if a Lender is so  submitting)  by such  Lender or the  Administrative

Agent shall show in reasonable  detail the amount payable and the calculations

used to determine  such amount and shall,  absent  manifest  error,  be final,

conclusive  and binding upon all parties  hereto.  Each Lender agrees that, to

the extent that such Lender is  entitled to claim an  exemption  in respect of

all or a portion  of any  Taxes  which are  otherwise  required  to be paid or

deducted or withheld  pursuant to this Section 2.08 in respect of any payments

under  this  Agreement  such  Lender  shall  within a  reasonable  time  after

receiving  written  request by the  Borrower  provide the  Borrower  with such

certificates  as such Lender in good faith may deem  appropriate to obtain the

benefits of such exemption.



      (d)   Within  30 days  after the date of any  payment  of Taxes or Other

Taxes by the Borrower,  the Borrower will furnish to the Administrative Agent,

at its address  referred to in Section 12.10, the original or a certified copy
                               -------------
of a receipt evidencing payment thereof.



      (e)   Each Lender (or  transferee  of any  Lender)  that is not a United

States  person (as defined in Section  7701(a)(30)  of the Code) (a  "Non-U.S.

Lender")  shall  deliver to the Borrower and the  Administrative  Agent (or in

the case of a participant,  to the Lender from which the related participation

shall have been  purchased) two copies of U.S.  Internal  Revenue Service Form

1001, Form 4224 or any subsequent versions thereof or successors thereto,  or,

in the  case  of a  Non-U.S.  Lender  claiming  exemption  from  U.S.  federal

withholding  tax under  Section  871(h) or 881(c) of the Code with  respect to

payments  of  "portfolio  interest",  a Form W-8, or any  subsequent  versions

thereof or successors  thereto (and, if such Non-U.S.  Lender  delivers a Form

W-8, or any  subsequent  versions  thereof or  successors  thereto,  an annual

certificate  representing  that such  Non-U.S.  Lender (i) is not a "bank" for

purposes of Section  881(c) of the Code (and is not subject to  regulatory  or

other  legal  requirements  as a bank in any  jurisdiction,  and has not  been

treated as a bank in any filing with or  submission  made to any  Governmental



                                      42
================================================================================





Authority or rating agency), (ii) is not a 10-percent  shareholder (within the

meaning of Section  871(h)(3)(B) of the Code) of the Borrower and (iii) is not

a controlled foreign  corporation  related to the Borrower (within the meaning

of Section  864(d)(4) of the Code)),  properly  completed and duly executed by

such  Non-U.S.   Lender  claiming   complete   exemption  from  U.S.   federal

withholding  tax on all payments by the Borrower  under this Agreement and the

other Loan Documents,  along with such other  additional forms as the Borrower

or  the   Administrative   Agent  may  reasonably  request  to  establish  the

availability  of  such  exemption.  Such  forms  shall  be  delivered  by each

Non-U.S.  Lender on or before  the date it  becomes a party to this  Agreement

(or, in the case of any  participant,  on or before the date such  participant

purchases the related  participation)  and on or before the date, if any, such

Non-U.S.  Lender  changes  its  Applicable  Lending  Office by  designating  a

different  lending  office  (a  "New  Lending  Office").  In  addition,   each

Non-U.S.  Lender  shall  timely  deliver  such  forms  (or any  other  form of

certification  adopted by U.S. taxing  authorities for such purpose)  promptly

upon the  obsolescence or invalidity of any form previously  delivered by such

Non-U.S.  Lender.  Each Non-U.S.  Lender shall promptly notify the Borrower at

any time it  determines  that it is no longer in a  position  to  provide  any

previously  delivered  certificate  to the  Borrower  (or  any  other  form of

certification  adopted  by the U.S.  taxing  authorities  for  such  purpose).

Notwithstanding  any other provision of Section 2.08, a Non-U.S.  Lender shall
                                        ------------
not be required to deliver any form  pursuant  to this  Section  2.08(e)  that
                                                        ----------------
such Non-U.S. Lender is not legally able to deliver.



      (f)   The  Borrower  shall not be required  to  indemnify  any  Non-U.S.

Lender,  or to pay any additional  amounts to any Non-U.S.  Lender, in respect

of United  States  federal  withholding  tax pursuant to paragraph  (a) or (c)

above to the extent that the  obligation  to withhold  amounts with respect to

United  States  federal  withholding  tax  existed  on the date such  Non-U.S.

Lender became a party to this Agreement (or, in the case of a participant,  on

the date such  participant  became a transferee  of a  participation  interest

hereunder)  or, with  respect to payments  to a New Lending  Office,  the date

such  Non-U.S.  Lender  designated  such New Lending  Office with respect to a

Loan.



      (g)   If the  IRS or any  other  Governmental  Authority  of the  United

States or of any other  jurisdiction  asserts a claim that the  Administrative

Agent or the Borrower  did not  properly  withhold tax from amounts paid to or

for  the  account  of  any  Lender  (because  the  appropriate  form  was  not

delivered,  was not properly executed, or because such Lender failed to notify

the  Administrative  Agent of a change in  circumstances  which  rendered  the

exemption from  withholding  tax  ineffective  or for any other reason),  such

Lender  shall  indemnify  the  Administrative  Agent and/or the  Borrower,  as

applicable,  fully  for all  amounts  paid,  directly  or  indirectly,  by the

Administrative Agent and/or the Borrower, as applicable,  as tax or otherwise,

including  penalties  and  interest,  and  including  any taxes imposed by any

jurisdiction  on the  amounts  payable  to  the  Administrative  Agent  or the

Borrower, as applicable,  under this Section 2.08, together with all costs and

expenses,  including,  legal fees, incurred by the Administrative Agent or the

Borrower.



      (h)   If the  Administrative  Agent or any  Lender  receives  a  refund,

which in the good  faith  judgment  of such  Lender is  allocable  to Taxes or

Other Taxes paid by the  Borrower,  it shall  promptly  pay such refund to the

Borrower,  net of all  out-of-pocket  expenses  of  such  Lender  incurred  in

obtaining  such Tax Refund,  provided,  however,  that the Borrower  agrees to




                                        43
================================================================================





promptly  return such  refund to the  Administrative  Agent or the  applicable

Lender,  as the case may be, if it  receives  notice  from the  Administrative

Agent or  applicable  Lender  that  such  Administrative  Agent or  Lender  is

required to repay such refund.  In addition,  the Lender shall take such steps

as the Borrower shall reasonably  request to recover or assist the Borrower in

recovering  any  Taxes  or  Other  taxes  paid  by the  Borrower  pursuant  to

paragraph (a) or (c) above.



      (i)   Without  prejudice to the  survival of any other  agreement of the

Borrower  hereunder,  the agreements and obligations of the Borrower contained

in this  Section  2.08 shall  survive  the  payment in full of  principal  and
         -------------
interest  hereunder,  the  termination  of  the  Letters  of  Credit  and  the

termination of this Agreement.



      2.09. Increased  Capital.  If any Lender or Issuing Bank determines that
            ------------------
either (a) the  introduction  of or any change in any law, order or regulation

or in the  interpretation or administration of any law, order or regulation by

any Governmental  Authority charged with the  interpretation or administration

thereof after the date hereof or (b) compliance  with any guideline or request

issued  or made  after  the  date  hereof  from  any  central  bank  or  other

Governmental  Authority  (whether or not having the force of law) has or would

have the effect of  reducing  the rate of return on the capital of such Lender

or Issuing Bank or any  corporation  controlling  such Lender or Issuing Bank,

as a  consequence  of or with  reference to such  Lender's  Commitment  or its

making or  maintaining  Loans or such Issuing  Bank's  issuance or maintenance

of, or such  Lender's  participation  in any Letter of Credit,  below the rate

which such Lender or such  Issuing Bank or such other  corporation  could have

achieved  but for such  compliance  (taking  into account the policies of such

Lender or such Issuing Bank or corporation  with regard to capital),  then the

Borrower  shall from time to time,  upon demand by such Lender or Issuing Bank

(with a copy of such demand to the  Administrative  Agent), pay to such Lender

or Issuing Bank  additional  amounts  sufficient to compensate  such Lender or

Issuing  Bank or other  corporation  for such  reduction,  upon receipt by the

Borrower  (with a copy to the  Administrative  Agent) of a  certificate  as to

such  amounts,  by such Lender or Issuing  Bank,  setting  forth in reasonable

detail  the basis for,  and the  calculations  used by such  Lender or Issuing

Bank in determining,  any such amounts.  Such  certificate,  in the absence of

manifest error shall be conclusive  and binding for all purposes.  Each Lender

and  Issuing   Bank  agrees   promptly   to  notify  the   Borrower   and  the

Administrative  Agent of any  circumstances  that would cause the  Borrower to

pay  additional  amounts  pursuant to this  Section  2.09,  provided  that the
                                            --------------
failure to give such notice shall not affect the Borrower's  obligation to pay

such additional  amounts  hereunder,  provided further that the Borrower shall

not be required to compensate a Lender or the Issuing  Banks  pursuant to this

Section for any  increased  costs or  reductions  incurred  more than 180 days

prior to the date  that  such  Lender  or  Issuing  Bank,  as the case may be,

notifies  the  Borrower of the  circumstances  giving  rise to such  increased

costs or reductions and of such Lender's or Issuing Bank's  intention to claim

compensation  therefor;  provided  further that, if the  circumstances  giving

rise to such increased  costs or reductions is  retroactive,  then the 180-day

period  referred  to  above  shall  be  extended  to  include  the  period  of

retroactive effect thereof.



      2.10. Use of  Proceeds  of the Loans.  The  proceeds of the Loans may be
            ------------------------------
used for general corporate purposes,  including share repurchases as permitted

hereunder.

                                       44
================================================================================





      2.11. Replacement  of  Lender  in Event  of  Adverse  Condition.  If the
            ---------------------------------------------------------
Borrower  becomes  obligated to pay additional  amounts to any Lender pursuant

to  Sections  2.02(f),  2.07(d),  2.08 or 2.09 as a  result  of any  condition
    -----------------------------------   ----
described in such Sections  which is not generally  applicable to all Lenders,

then,  unless such Lender has  theretofore  taken steps to remove or cure, and

has removed or cured,  the conditions  creating the cause for such  obligation

to pay such  additional  amounts,  or if any Lender defaults in its obligation

to fund Loans  hereunder,  the  Borrower may  designate  another bank which is

reasonably  acceptable to the Administrative Agent and the Issuing Banks (such

bank being herein called a  "Replacement  Lender") to purchase for cash all of

the  Obligations  of such Lender and all of such  Lender's  rights  hereunder,

without  recourse to or warranty by, or expense to, such Lender for a purchase

price equal to the  outstanding  principal  amount payable to such Lender plus

any accrued but unpaid  interest and accrued but unpaid  commitment  and other

fees,  expense  reimbursements  and  indemnities  in respect of that  Lender's

Commitment.  Such Lender shall  consummate  such sale in accordance  with such

terms  (and,  if such  Lender is an Issuing  Bank,  such other terms as may be

necessary  to  compensate  fully such  Lender)  within a  reasonable  time not

exceeding 60 days from the date the Borrower  designated a Replacement Lender,

and upon  compliance with the provisions of Section 12.01 such Lender shall no
                                            -------------
longer be a party hereto or have any obligations or rights  hereunder  (except

rights  which,  pursuant  to the  provisions  of this  Agreement,  survive the

termination  of  this  Agreement  and the  repayment  of the  Loans),  and the

Replacement Lender shall succeed to such obligations and rights.



      2.12. Authorized  Officers of the  Borrower.  The  Administrative  Agent
            -------------------------------------
shall be  entitled to rely  conclusively  on the  authority  of any officer or

employee  designated pursuant to Section 4.01(c) to request any Loan or Letter
                                 ---------------
of Credit or any  conversion/continuation of any Loan until the Administrative

Agent  receives  written  notice to the  contrary.  The  Administrative  Agent

shall have no duty to verify the  authenticity  of the signature  appearing on

any written  Notice of  Borrowing  or Notice of  Conversion/Continuation  and,

with  respect to an oral  request  for such a Loan or Letter of Credit or such

conversion/continuation,  the  Administrative  Agent  shall  have  no  duty to

verify the identity of any person representing  himself as one of the officers

or  employees  authorized  to make such  request  on  behalf of the  Borrower.

Neither the  Administrative  Agent nor any Lender shall incur any liability to

the Borrower in acting upon any telephonic  notice referred to above which the

Administrative  Agent  believes  in good  faith to have  been  given by a duly

authorized  officer  or other  person  authorized  to  borrow on behalf of the

Borrower.



                                      45
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                                 ARTICLE III

                              LETTERS OF CREDIT
                              -----------------


      3.01. Obligation to Issue.  (a) Subject to the terms and  conditions set
            -------------------
forth herein,  each Issuing Bank agrees,  in reliance  upon the  agreements of

the other  Lenders set forth in this  Section  3.01 to issue,  and each Lender

agrees to  participate  in, one or more  Letters of Credit for the  account of

the  Borrower,  up to an  aggregate  face amount at any one time  outstanding,

together with the aggregate  principal amount of outstanding  Loans,  equal to

the lesser of the  Commitments  or the Borrowing Base Amount from time to time

during the period  commencing on the Effective Date and ending on the Business

Day which is five Business Days prior to the Final Maturity Date.



      (b)   The Lenders  acknowledge  that the Existing Letters of Credit have

been issued for the account of the Borrower  prior to the  Effective  Date and

agree to  participate  in such Letters of Credit to the same extent and on the

same  conditions  as if such  Letters of Credit had been  issued  pursuant  to

paragraph (a) above.



      (c)   The parties agree that on the Effective Date, Bank of America,  as

Issuing  Bank,  shall  issue to Citibank  U.S.A.,  as  beneficiary,  a Standby

Letter of Credit having a stated amount of not to exceed  $17,310,937.00 and a

stated  termination  date of not later than July 1, 2001 which  shall  provide

for the  reimbursement  of Citibank U.S.A. for draws under any Citibank Letter

of Credit (the  "Citibank  Back-up  LC").  Notwithstanding  the  provisions of

Section  3.08(a)(i),  the  Letter of Credit  Fee  applicable  to the  Citibank
------------------
Back-up  LC  shall  be an  amount  equal  to 0.50%  times  the  stated  amount

thereof.  Other than the Letter of Credit Fee, all other  provisions  relating

to Standby Letters of Credit set forth in this Article III shall apply.



      3.02. Types and  Amounts.  Each  Issuing  Bank  agrees  not to issue any
            ------------------
Letter of Credit at any time:



      (a)   if the aggregate  maximum  amount then available for drawing under

Letters of Credit  issued by such Issuing  Bank,  after  giving  effect to the

issuance of such Letter of Credit,  would  exceed any limit  imposed by law or

regulation upon such Issuing Bank;



      (b)   if,  immediately after the issuance of such Letter of Credit,  the

aggregate  amount of Letter of Credit  Obligations then existing (which amount

shall be calculated  without giving effect to the participation of the Lenders

pursuant to Section 3.06) would exceed the lesser of (i) the Commitments  then
            ------------
in effect less the aggregate  principal  amount of all  outstanding  Loans and

(ii) the  Borrowing  Base Amount then in effect less the  aggregate  principal

amount of all outstanding Loans;



      (c)   which  has an  expiration  date (i) more  than one year  after the

date of  issuance,  for  Standby  Letters of Credit  (provided  that a Standby

Letter of Credit may provide  for an annual  renewal on the terms set forth in

Section 3.04(c)) or more than 180 days after the date of issuance  (subject to
---------------
extension for a maximum period of 60 days), for Commercial  Letters of Credit,

or (ii) after four Business  Days  immediately  preceding  the Final  Maturity

Date; or


                                       46
================================================================================





      (d)   if such  Issuing  Bank has  received  written  notice from (i) the

Requisite Lenders,  (ii) the Administrative Agent or (iii) the Borrower, on or

prior to the  Business  Day prior to the  requested  date of  issuance of such

Letter of Credit, that one or more of the applicable  conditions  contained in

Article IV has not been then satisfied or waived.
---------


      3.03. Conditions.  In addition to being subject to the  satisfaction  of
            ----------
the  conditions  precedent  contained in Section  4.02,  the  obligation of an
                                         -------------
Issuing  Bank to issue any Letter of Credit is subject to the  condition  that

as of the date of issuance,  no order,  judgment or decree of any Governmental

Authority or  arbitrator  shall by its terms purport to enjoin or restrain the

Issuing Bank from issuing such Letter of Credit,  or any Law applicable to the

Issuing Bank or any request or  directive  (whether or not having the force of

law) from any Governmental  Authority with  jurisdiction over the Issuing Bank

shall  prohibit,  or request that the Issuing Bank refrain from,  the issuance

of letters  of credit  generally  or such  Letter of Credit in  particular  or

shall  impose upon the Issuing  Bank with respect to such Letter of Credit any

restriction,  reserve or capital  requirement  (for which the Issuing  Bank is

not  otherwise  compensated  hereunder)  not in effect on the Closing Date, or

shall  impose upon the Issuing  Bank any  unreimbursed  loss,  cost or expense

which was not  applicable  on the Closing  Date and which the Issuing  Bank in

good faith  deems  material to it. No Issuing  Bank shall have any  obligation

to issue any  Letter of  Credit if (a) in the case of a  Commercial  Letter of

Credit,  such  Commercial  Letter of Credit does not provide for drafts or (b)

in the case of any Letter of Credit,  such  Letter of Credit is not  otherwise

in form  and  substance  reasonably  acceptable  to such  Issuing  Bank or the

issuance of such Letter of Credit  would  violate one or more  policies of the

Issuing  Bank.  No Issuing Bank shall  violate  Section  3.02(b) in connection
                                                ---------------
with  the  issuance  of  any  Letter  of  Credit  by  such  Issuing  Bank  if,

immediately after the issuance of such Letter of Credit,  the aggregate amount

of  Letter  of  Credit  Obligations  then  existing  (which  amount  shall  be

calculated  without giving effect to the participation of the Lenders pursuant

to Section  3.06) in respect of Letters of Credit  issued by such Issuing Bank
   -------------
are equal to or less than the  Applicable  Approved  Issuance  Amount for such

Issuing  Bank.  In the  event  that the  issuance  of a Letter of Credit by an

Issuing Bank would cause the aggregate amount of Letter of Credit  Obligations

then existing  (which amount shall be calculated  without giving effect to the

participation  of the Lenders  pursuant to Section 3.06) in respect of Letters
                                           ------------
of  Credit  issued by such  Issuing  Bank to exceed  the  Applicable  Approved

Issuance  Amount for such Issuing Bank (or would  increase such excess),  such

Issuing  Bank  shall  notify the  Administrative  Agent  thereof  prior to the

issuance  of such Letter of Credit and shall  verify  with the  Administrative

Agent  whether the  issuance of such Letter of Credit would  violate  Section
                                                                      -------
3.02(b).
------


      3.04. Issuance  of Letters of Credit.  (a) The  Borrower  shall give the
            ------------------------------
relevant  Issuing Bank notice in  accordance  with the  relevant  Issuing Bank

Agreement  of the  requested  issuance  by such  Issuing  Bank of a Letter  of

Credit  under this  Agreement.  Such  notice  shall be  irrevocable  and shall

specify (A) the stated amount of the Letter of Credit  requested to be issued,

(B) the  effective  date  (which day shall be a Business  Day) of  issuance of

such  Letter  of  Credit,  (C) the date on which  such  Letter of Credit is to

expire  (which date shall be a Business  Day and shall be subject to paragraph

(c) of Section  3.02),  (D) the Person for whose benefit the requested  Letter
       -------------
of Credit is to be issued,  (E) in the case of Standby Letters of Credit,  the

full text of any  certificate  to be presented by the  beneficiary  in case of

any  drawing  thereunder  and (F) such  other  matters as are set forth in the



                                           47
================================================================================



relevant Issuing Bank Agreement or as the relevant Issuing Bank may require.



      (b)   No Issuing  Bank shall extend or amend any Letter of Credit if the

issuance  of a new Letter of Credit  having  the same terms as such  Letter of

Credit as so extended or amended  would be  prohibited  by Section  3.02.  Any
                                                           --------------
request for  amendment  to any  previously  issued  Letter of Credit  shall be

given in accordance  with the relevant  Issuing Bank  Agreement.  Each request

for an amendment to a previously  issued Letter of Credit shall not request an

extension beyond four Business Days  immediately  preceding the Final Maturity

Date.  Notwithstanding  any provision of any letter of credit  application  or

Issuing Bank Agreement to the contrary,  in the event of any conflict  between

the terms of any such letter of credit  application  or Issuing Bank Agreement

and the terms of this  Agreement,  the terms of this  Agreement  shall control

with  respect  to events  of  default,  representations  and  warranties,  and

covenants,  except  that such  letter of credit  application  or Issuing  Bank

Agreement  may provide for further  warranties  relating  specifically  to the

transaction or affairs underlying such Letter of Credit.



      (c)   The  Issuing  Banks and the Lenders  agree  that,  while a Standby

Letter of Credit is  outstanding  and prior to the Final Maturity Date, at the

option of the Borrower and upon the written  request of the Borrower  received

by the relevant  Issuing Bank at least five days (or such shorter time as such

Issuing Bank may agree in a particular  instance in its sole discretion) prior

to the proposed date of  notification  of renewal,  such Issuing Bank shall be

entitled to authorize the automatic  renewal of any Letter of Credit issued by

it so long as, immediately after the renewal thereof,  the aggregate amount of

Letter of Credit  Obligations  then existing (which amount shall be calculated

without giving effect to the participation of the Lenders pursuant to Section
                                                                      -------
3.06) in respect of Letters of Credit  issued by such  Issuing  Bank are equal
-----
to or less than the  Applicable  Approved  Issuance  Amount  for such  Issuing

Bank.  Each such  request for  renewal of a Letter of Credit  shall be made in

accordance  with the relevant  Issuing Bank  Agreement,  and shall  specify in

form and detail  satisfactory to the relevant  Issuing Bank: (i) the Letter of

Credit to be renewed;  (ii) the proposed  date of  notification  of renewal of

the  Letter of Credit  (which  shall be a  Business  Day);  (iii) the  revised

expiry  date of the Letter of Credit;  and (iv) such other  matters as are set

forth in the  relevant  Issuing  Bank  Agreement  or as such  Issuing Bank may

require.  No  Issuing  Bank  shall so renew any  Letter of Credit if: (A) such

Issuing  Bank  would  have no  obligation  at such time to issue or amend such

Letter of Credit in its renewed  form under the terms of Section 3.02 or 3.03;
                                                         --------------------
or (B) the  beneficiary  of any such  Letter of  Credit  does not  accept  the

proposed renewal of the Letter of Credit.  If any outstanding  Existing Letter

of Credit shall  provide  that it shall be  automatically  renewed  unless the

beneficiary  thereof  receives notice from the relevant Issuing Bank that such

Letter of Credit  shall not be  renewed,  and if at the time of  renewal  such

Issuing  Bank would be entitled to  authorize  the  automatic  renewal of such

Letter of Credit in  accordance  with this  paragraph  (c) upon the request of

the  Borrower,  but such  Issuing Bank shall not have  received any  amendment

application  from the Borrower  with respect to such renewal or other  written

direction  by the  Borrower  with  respect  thereto,  such  Issuing Bank shall

nonetheless  be  permitted  to allow such  Letter of Credit to renew,  and the

Borrower and the Lenders  hereby  authorize  such renewal,  and,  accordingly,

such  Issuing Bank shall be deemed to have  received an amendment  application

from the Borrower requesting such renewal.



                                         48
================================================================================





      (d)   Each Issuing Bank shall  notify the  Administrative  Agent and the

Administrative  Agent shall  notify the Lenders on the first  Business  Day of

each week of the total face amount of all of the  Letters of Credit  issued by

it on each  Business Day of the  preceding  week or calendar  quarter,  as the

case may be.



      3.05. Reimbursement Obligations; Duties of the Issuing Banks.
            ------------------------------------------------------


      (a)   (i) The Borrower  shall  reimburse  each Issuing Bank for drawings

under a Letter of Credit  issued by it no later than 1:00 p.m. (New York time)

on each date that any amount is paid by such  Issuing Bank under any Letter of

Credit in an amount equal to the amount so paid by such Issuing Bank.



      (ii) Any  Reimbursement  Obligation with respect to any Letter of Credit

shall bear  interest  from the date of the  relevant  drawing at the  interest

rate  applicable  to Base Rate Loans  until the first  Business  Day after the

date on which the  relevant  Issuing  Bank gives notice of such drawing to the

Borrower and  thereafter  at the interest rate for past due Base Rate Loans in

accordance with Section 2.02(d).
                ---------------




      (b)   No action  taken or omitted  to be taken by an Issuing  Bank under

or in  connection  with any  Letter  of  Credit  issued  by it shall  put such

Issuing  Bank under any  resulting  liability  to any  Lender or relieve  such

Lender of its  obligations  hereunder to such Issuing Bank except in the event

of such  Issuing  Bank's  gross  negligence  or  willful  misconduct.  Without

limiting  the  foregoing,  in  determining  whether to pay under any Letter of

Credit,  an Issuing Bank shall have no obligation to the Lenders other than to

confirm  that any  documents  required  to be  delivered  under such Letter of

Credit have been  delivered  and that they appear on their face to comply with

the requirements of such Letter of Credit.



      (c)   The  obligations  of the  Borrower  under this  Agreement  and any

Letter of Credit to reimburse an Issuing Bank for a drawing  under a Letter of

Credit  issued by it, and to repay any drawing under a Letter of Credit issued

by it, shall be unconditional  and irrevocable,  and shall be paid strictly in

accordance  with the terms of this  Agreement  and such Letter of Credit under

all circumstances, including the following:



      (i) any lack of  validity or  enforceability  of this  Agreement  or any

Letter of Credit;



      (ii) any change in the time,  manner or place of  payment  of, or in any

other term of, all or any of the  obligations  of the  Borrower  in respect of

any  Letter of Credit or any other  amendment  or waiver of or any  consent to

departure from all or any Letter of Credit;



      (iii) the existence of any claim,  set-off,  defense or other right that

the Borrower may have at any time against any  beneficiary  or any  transferee

of any Letter of Credit (or any  Person for whom any such  beneficiary  or any

such transferee may be acting), any Issuing Bank or any other Person,  whether

in connection with this Agreement, the transactions  contemplated hereby or by

the Letter of Credit or any unrelated transaction;




                                         49

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




      (iv) any draft,  demand,  certificate or other document  presented under

any  Letter  of  Credit   proving  to  be  forged,   fraudulent,   invalid  or

insufficient  in  any  respect  or  any  statement  therein  being  untrue  or

inaccurate  in any  respect;  or any  loss or  delay  in the  transmission  or

otherwise  of any  document  required  in order to make a  drawing  under  any

Letter of Credit;



      (v) any payment by any Issuing  Bank under any Letter of Credit  against

presentation of a draft or certificate  that does not strictly comply with the

terms of any Letter of Credit;  or any payment  made by any Issuing Bank under

any Letter of Credit to any Person  purporting to be a trustee in  bankruptcy,

debtor-in-possession,  assignee  for the  benefit  of  creditors,  liquidator,

receiver or other  representative  of or successor to any  beneficiary  or any

transferee of any Letter of Credit,  including any arising in connection  with

any insolvency proceeding;



      (vi) any exchange,  release or non-perfection of any collateral,  or any

release  or  amendment  or waiver of or consent  to  departure  from any other

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

any Letter of Credit; or



      (vii) any other  circumstance  or happening  whatsoever,  whether or not

similar to any of the foregoing,  including any other  circumstance that might

otherwise  constitute a defense  available to, or a discharge of, the Borrower

or a guarantor.



      3.06. Participations.
            --------------


      (a)   Immediately  upon  issuance  by an  Issuing  Bank of any Letter of

Credit for the account of the Borrower in accordance  with the  procedures set

forth in this  Article III,  each Lender  shall be deemed to have  irrevocably

and  unconditionally  purchased and received  from such Issuing Bank,  without

recourse or  warranty,  an undivided  interest in the amount of such  Lender's

Pro Rata Share in such  Letter of Credit  (including  all  obligations  of the

Borrower  with respect  thereto  other than amounts owing to such Issuing Bank

under  Section  3.08(b))  and any  security  therefor or  guaranty  pertaining

thereto.



      (b)   If an Issuing  Bank makes any  payment  under any Letter of Credit

and the Borrower  does not repay such amount to such Issuing Bank  pursuant to

Sections  3.05(a)  or 3.07,  such  Issuing  Bank  shall  promptly  notify  the
--------------------------
Administrative  Agent and the Administrative  Agent shall promptly notify each

Lender of such  failure,  and each Lender shall  promptly and  unconditionally

pay to the  Administrative  Agent for the  account  of such  Issuing  Bank the

amount of such  Lender's  Pro Rata Share of such  payment,  in Dollars  and in

immediately  available funds, and the Administrative  Agent shall promptly pay

such amount,  and any other amounts received by the  Administrative  Agent for

such Issuing Bank's account pursuant to this Section 3.06(b),  to such Issuing
                                             --------------
Bank.  If the  Administrative  Agent so notifies  such  Lender  prior to 11:00

a.m. (New York time) on any Business Day, such Lender shall make  available to

the Administrative  Agent for the account of the relevant Issuing Bank its Pro

Rata Share of the amount of such  payment on such  Business Day in Dollars and

in immediately  available funds at the Administrative  Agent's Payment Office.

If and to the extent such Lender  shall not have so made its Pro Rata Share of

the  amount of such  payment  available  to the  Administrative  Agent for the

account of such Issuing Bank, such Lender agrees to pay to the  Administrative

Agent for the account of such  Issuing  Bank  forthwith  on demand such amount

together  with interest  thereon,  for each day from the date such payment was


                                      50
================================================================================




first due until the date such amount is paid to the  Administrative  Agent for

the  account  of such  Issuing  Bank,  at the  Federal  Funds  Rate for  three

Business  Days and then at the Base  Rate.  The  failure of any Lender to make

available to the  Administrative  Agent for the account of an Issuing Bank its

Pro Rata Share of any such  payment  shall not relieve any other Lender of its

obligation  hereunder to make  available to the  Administrative  Agent for the

account of such  Issuing  Bank its Pro Rata  Share of any  payment on the date

such payment is to be made.



      (c)   Whenever an Issuing  Bank  receives a payment from the Borrower on

account of a Reimbursement  Obligation,  including any interest thereon, as to

which the  Administrative  Agent has  previously  received  payments  from the

Lenders for the account of such  Issuing Bank  pursuant to this Section  3.06,
                                                                -------------
it  shall  promptly  pay to the  Administrative  Agent  at the  Administrative

Agent's  Payment  Office and the  Administrative  Agent shall  promptly pay to

each Lender  which has funded its  participating  interest  therein in Dollars

and in the kind of funds so  received,  an amount  equal to such  Lender's Pro

Rata Share  thereof.  Each such payment shall be made by the relevant  Issuing

Bank or the  Administrative  Agent, as the case may be, on the Business Day on

which such  Person  receives  the funds paid to such  Person  pursuant  to the

preceding  sentence,  if received  prior to 11:00 a.m. (New York time) on such

Business Day, and otherwise on the next succeeding Business Day.



      (d)   Upon the request of the  Administrative  Agent,  each Issuing Bank

shall  furnish to the  Administrative  Agent copies of any Letter of Credit or

Letter of Credit  application  form to which  such  Issuing  Bank is party and

such other  documentation as may reasonably be requested by the Administrative

Agent.



      (e)   The   obligations   of  a   Lender   to  make   payments   to  the

Administrative  Agent for the  account  of an Issuing  Bank with  respect to a

Letter of Credit  issued by it on behalf of the  Borrower in  accordance  with

the  terms  hereof  shall  be  irrevocable,   shall  not  be  subject  to  any

qualification  or  exception  whatsoever  (except in the event of such Issuing

Bank's  gross  negligence  or  willful  misconduct),  and shall be  honored in

accordance  with  the  terms  and  conditions  of  this  Agreement  under  all

circumstances  (subject  to  Section  3.02),  including  any of the  following
                             -------------
circumstances:



      (i) any lack of validity or  enforceability  of this Agreement or any of

the other Loan Documents;



      (ii) the existence of any claim,  set-off,  defense or other right which

the Borrower may have at any time against a  beneficiary  named in a Letter of

Credit or any  transferee  of any Letter of Credit (or any Person for whom any

such transferee may be acting),  the  Administrative  Agent, any Issuing Bank,

any Lender,  or any other Person,  whether in connection  with this Agreement,

any Letter of Credit,  the transactions  contemplated  herein or any unrelated

transactions  (including any underlying  transactions between the Borrower and

the beneficiary named in any Letter of Credit);


                                     51
================================================================================




      (iii) any draft,  certificate of any other document  presented under the

Letter of Credit proving to be forged, fraudulent,  invalid or insufficient in

any  respect  or any  statement  therein  being  untrue or  inaccurate  in any

respect;



      (iv) the  surrender or  impairment  of any security for the  performance

or observance of any of the terms of any of the Loan Documents;



      (v) any  failure  by the  Administrative  Agent or any  Issuing  Bank to

make any reports required pursuant to Section 3.04; or
                                      ------------



      (vi) the  occurrence  of any  Event of  Default  or  Potential  Event of

Default.



      3.07. Payment of Reimbursement Obligations.
            ------------------------------------


      (a)   The  Borrower  agrees  to pay to the  relevant  Issuing  Bank  the

amount of all  Reimbursement  Obligations,  interest and other amounts payable

to such Issuing Banks under or in connection  with any Letter of Credit issued

on behalf of the Borrower  immediately  when due,  irrespective  of any claim,

setoff,  defense  or  other  right  which  the  Borrower  may have at any time

against any Issuing Bank or any other Person.



      (b)   In the event any  payment by the  Borrower  received by an Issuing

Bank with respect to any Letter of Credit issued by it and  distributed by the

Administrative  Agent to the  Lenders on account  of their  participations  is

thereafter  set  aside,  avoided  or  recovered  from  such  Issuing  Bank  in

connection  with any  receivership,  liquidation  or bankruptcy  proceeding or

otherwise,  each Lender which received such distribution shall, upon demand by

such Issuing Bank,  contribute  such Lender's Pro Rata Share of the amount set

aside,  avoided or recovered together with interest at the rate required to be

paid by such Issuing Bank upon the amount required to be repaid by it.



      3.08. Compensation for Letters of Credit.
            ----------------------------------


      (a)   Letter of Credit  Fees.  (i) The  Borrower  shall pay with respect
            ----------------------
to each Letter of Credit  issued as a Standby  Letter of Credit  quarterly  in

arrears,  on the fifteenth day of each  January,  April,  July and October for

the  three-month  period  ending on such date,  beginning  after the Effective

Date and also on the  Termination  Date,  a Letter of Credit  Fee equal to the

percentage  per annum set forth  below  based on the  Pricing  Ratio in effect

from time to time,  applied (on the basis of actual days  elapsed in a 360-day

year) to the maximum  amount  available to be drawn under such Standby  Letter

of Credit from day to day during such  quarter.  This fee shall be paid to the

Administrative  Agent,  for the account of the Lenders in  proportion to their

respective Pro Rata Shares.



                                      52
================================================================================




                  Pricing Ratio                 Standby Letter of Credit Fee

                  Level I Status                          1.25%
                  Level II Status                         1.50%
                  Level III Status                        1.75%
                  Level IV Status                         2.00%


      On the Business Day preceding the fifteenth day of each January,  April,

July or October,  each  Issuing Bank will report to the  Administrative  Agent

the  aggregate  daily  outstanding  Standby  Letter of Credit  amounts for the

three-month  period ending on the fifteenth of such  January,  April,  July or

October.



      (ii) The  Borrower  shall  pay with  respect  to each  Letter  of Credit

issued  as a  Commercial  Letter  of  Credit  quarterly  in  arrears,  on  the

fifteenth day of each  January,  April,  July and October for the  three-month

period ending on such date,  beginning  after the  Effective  Date and also on

the  Termination  Date,  a Letter of Credit  Fee equal to the  percentage  per

annum set forth below based on the Pricing  Ratio in effect from time to time,

applied  (on the  basis of  actual  days  elapsed  in a  360-day  year) to the

maximum amount  available to be drawn under such  Commercial  Letter of Credit

from  day  to  day  during  such  quarter.  This  fee  shall  be  paid  to the

Administrative  Agent,  for the account of the Lenders in  proportion to their

respective Pro Rata Shares.



                  Pricing Ratio                 Commercial Letter of Credit Fee

                  Level I Status                          0.500%
                  Level II Status                         0.625%
                  Level III Status                        0.750%
                  Level IV Status                         0.875%


      On the Business Day preceding the fifteenth day of each January,  April,

July or October,  each  Issuing Bank will report to the  Administrative  Agent

the aggregate daily  outstanding  Commercial  Letter of Credit amounts for the

three-month  period ending on the fifteenth of such  January,  April,  July or

October.



      (b)   Issuing  Bank  Charges.  The Borrower  shall  directly pay to each
            ----------------------
Issuing  Bank,  solely for its own  account,  (i)  quarterly in arrears on the

fifteenth day of each January,  April,  July and October  beginning  after the

Effective  Date and also on the  Termination  Date,  a  fronting  fee of up to

0.125% per annum  applied  (on the basis of actual  days  elapsed in a 360-day

year) to the maximum  amount  available to be drawn from day to day during the

immediately  preceding  fiscal  quarter  under each Letter of Credit issued by

it, and (ii) on demand the  standard  charges  assessed by such  Issuing  Bank

including  charges assessed in connection with the  negotiation,  amendment or

cancellation of Letters of Credit.


                                     53
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      3.09. Indemnification; Exoneration.
            ----------------------------


      (a)   In  addition  to amounts  payable as  elsewhere  provided  in this

Article III, the Borrower  hereby agrees to protect,  indemnify,  pay and save

the Administrative  Agent, each Issuing Bank and each Lender harmless from and

against any and all  Liabilities and Costs which the  Administrative  Agent or

such  Issuing  Bank or Lender  may incur or be  subject  to as a  consequence,

direct or  indirect,  of (i) the  issuance of the Letter of Credit other than,

in the case of such  Issuing  Bank,  as a result  of its gross  negligence  or

willful  misconduct,  as  determined  by the  final  judgment  of a  court  of

competent  jurisdiction  or (ii) the failure of such  Issuing  Bank to honor a

drawing  under  such  Letter of  Credit  as a result  of any act or  omission,

whether  rightful  or  wrongful,  of any present or future de jure or de facto

Governmental   Authority   (all  such   acts  or   omissions   herein   called

"Governmental Acts").



      (b)   As between the Borrower,  the  Administrative  Agent,  the Lenders

and the  Issuing  Banks,  the  Borrower  assumes  all  risks  of the  acts and

omissions of, or misuse of such Letter of Credit by, the  beneficiary  of such

Letter of Credit.  In furtherance and not in limitation of the foregoing,  the

Issuing  Banks,  the  Administrative  Agent  and  the  Lenders  shall  not  be

responsible  (except,  in the case of an Issuing Bank, for such Issuing Bank's

gross  negligence  or willful  misconduct in  connection  therewith):  (i) for

the form, validity, sufficiency,  accuracy, genuineness or legal effect of any

document  submitted by any party in connection  with the  application  for and

issuance  of the  Letters of Credit,  even if it should in fact prove to be in

any or all respects invalid, insufficient,  inaccurate,  fraudulent or forged;

(ii)  for the  validity  or  sufficiency  of any  instrument  transferring  or

assigning  or  purporting  to  transfer  or  assign a Letter  of Credit or the

rights or benefits  thereunder or proceeds thereof, in whole or in part, which

may prove to be invalid  or  ineffective  for any  reason;  (iii) for  errors,

omissions,  interruptions  or  delays  in  transmission  or  delivery  of  any

messages, by mail, cable,  telegraph,  telex, facsimile, or other similar form

of teletransmission  or otherwise,  whether or not they be in cipher; (iv) for

errors in  interpretation of technical terms; (v) for any loss or delay in the

transmission or otherwise of any document  required in order to make a drawing

under  any  Letter  of  Credit  or of  the  proceeds  thereof;  (vi)  for  the

misapplication  by the  beneficiary  of a Letter of Credit of the  proceeds of

any  drawing  under  such  Letter of  Credit;  and (vii) for any  consequences

arising  from  causes  beyond the  control of the  Administrative  Agent,  the

Issuing Banks and the Lenders  including any  Governmental  Acts.  None of the

above shall  affect,  impair,  or prevent  the  vesting of any Issuing  Bank's

rights or powers under this Section 3.09.
                            ------------



      (c)   In  furtherance  and  extension  and  not  in  limitation  of  the

specific  provisions  hereinabove set forth, any action taken or omitted by an

Issuing Bank under or in  connection  with Letters of Credit  issued on behalf

of the  Borrower  or any  related  certificates,  if taken or  omitted in good

faith,  shall not, in the absence of gross  negligence or willful  misconduct,

put such  Issuing  Bank,  the  Administrative  Agent or any  Lender  under any

resulting  liability  to the  Borrower or relieve  the  Borrower of any of its

obligations hereunder to any such Person.



      3.10  Applicability  of  ISP98  and  UCP.  Unless  otherwise   expressly
            -----------------------------------
agreed by the Issuing Bank and the Borrower  when a Letter of Credit is issued

(including  any such  agreement  applicable to an Existing  Letter of Credit),

(i) the rules of the  "International  Standby Practices 1998" published by the

Institute  of  International  Banking  Law & Practice  (or such later  version


                                      54
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thereof  as may be in  effect  at the time of  issuance)  shall  apply to each

Standby  Letter of  Credit,  and (ii) the  rules of the  Uniform  Customs  and

Practice  for  Documentary   Credits,   as  most  recently  published  by  the

International  Chamber  of  Commerce  (the  "ICC")  at the  time  of  issuance

(including the ICC decision  published by the Commission on Banking  Technique

and Practice on April 6, 1998 regarding the European single  currency  (euro))

shall apply to each Commercial Letter of Credit.



                                         55
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                                  ARTICLE IV

                  Conditions To Loans and Letters of Credit
                  -----------------------------------------



      4.01. Conditions  Precedent to the  Effective  Date.  The  obligation of
            ----------------------------------------------
each Lender to make any Loan  requested to be made by it on the Effective Date

(individually,  an "Initial Loan" and  collectively,  the "Initial Loans") and

of the  Issuing  Banks to issue any  Letter of Credit  pursuant  hereto on the

Effective  Date,  and the  effectiveness  of this  Agreement on the  Effective

Date,  shall be subject to  satisfaction  of all of the  following  conditions

precedent (unless waived by all the Lenders):



      (a)   Certain  Documents  and  Other  Items.  The  Administrative  Agent
            -------------------------------------
shall have received on or before the Effective Date all of the following,  all

of  which,   except  as  provided  below,  shall  be  in  form  and  substance

satisfactory  to the  Administrative  Agent and the Lenders and in  sufficient

copies for each Lender:



      (i) This  Agreement,  executed by the  Borrower and each of the Lenders,

together with all Exhibits and Schedules;



      (ii) (A) The Borrower  Pledge  Agreement and (B) the Trademark  Security

Agreement,  in each  case,  executed  by the  Borrower,  together  with  stock

certificates  and appropriate  stock powers  (endorsed in blank) in respect of

any securities pledged pursuant to the Borrower Pledge Agreement;



      (iii)  The ATSC Guaranty executed by ATSC;



      (iv) The ATSC Pledge  Agreement  executed by ATSC,  together  with stock

certificates  and appropriate  stock powers  (endorsed in blank) in respect of

any securities pledged pursuant to the ATSC Pledge Agreement;



      (v) The Subsidiary  Guaranty and Collateral  Agreement  executed by each

Restricted Subsidiary (other than Foreign  Subsidiaries),  together with stock

certificates  and appropriate  stock powers  (endorsed in blank) in respect of

any  securities  pledged  pursuant to the  Subsidiary  Guaranty and Collateral

Agreement;



      (vi) The Borrower's Certificate of Incorporation,  as amended,  modified

or  supplemented  to the  Effective  Date,  certified to be true,  correct and

complete by the  Secretary  of State of  Delaware  dated as of a date not more

than ten  Business  Days prior to the  Effective  Date,  together  with a good

standing  certificate  from the  Secretary of State of Delaware  dated as of a

date not more than ten Business Days prior to the Effective Date;



      (vii)  ATSC's  Certificate  of  Incorporation,  as amended,  modified or

supplemented,  to the  Effective  Date,  certified  to be  true,  correct  and

complete by the  Secretary  of State of  Delaware  dated as of a date not more

than ten  Business  Days prior to the  Effective  Date,  together  with a good


                                      56
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standing  certificate  from the  Secretary of State of Delaware  dated as of a

date not more than ten Business Days prior to the Effective Date;



      (viii) A  certificate  of the  Secretary or  Assistant  Secretary of the

Borrower  dated  the  Effective  Date   certifying  (A)  the  names  and  true

signatures of the incumbent  officers of the Borrower  authorized to sign this

Agreement,  the other  Loan  Documents  and any  notice or  certificate  to be

delivered hereunder,  (B) the By-Laws of the Borrower as in effect on the date

of  such  certification,  (C)  the  resolutions  of the  Borrower's  Board  of

Directors   approving  and  authorizing   (x)  the  execution,   delivery  and

performance of this  Agreement,  and all other Loan Documents  executed by the

Borrower,  (y) the  extensions  of credit  contemplated  hereunder and (z) the

granting  by the  Borrower  of the Liens  created  by the  security  documents

related  hereto and (D) that there have been no changes in the  Certificate of

Incorporation of the Borrower since the date of the most recent  certification

thereof by the Secretary of State of Delaware;



      (ix) A  certificate  of the  Secretary  or  Assistant  Secretary of ATSC

dated the Effective Date  certifying (A) the names and true  signatures of the

incumbent  officers of ATSC  authorized to sign the ATSC Guaranty and the ATSC

Pledge  Agreement,  (B) the  By-Laws  of ATSC as in effect on the date of such

certification,  (C) the resolutions of ATSC's Board of Directors approving and

authorizing  the execution,  delivery and performance of the ATSC Guaranty and

the ATSC Pledge  Agreement and all other Loan Documents  executed by ATSC, and

(D) that there have been no changes in the  Certificate  of  Incorporation  of

ATSC since the date of the most recent certification  thereof by the Secretary

of the State of Delaware;



      (x) A favorable legal opinion,  dated the Effective  Date,  addressed to

the  Administrative  Agent,  the Issuing  Banks and the Lenders from  Skadden,

Arps, Slate,  Meagher & Flom LLP, special counsel to the Borrower and ATSC, in

substantially  the form of Exhibit  4.01(a)(xi),  with such changes thereto as
                           --------------------
may be approved by the Administrative Agent;



      (xi) UCC-1 financing  statements signed by the Borrower,  the Subsidiary

Guarantors or ATSC,  as the case may be, as debtor  naming the  Administrative

Agent as secured  party to be filed in the  jurisdictions  listed on Schedule
                                                                     ---------
4.01; provided, that no fixture filings shall be required to be made;
----


      (xii) A certificate  dated the Effective  Date executed by a Responsible

Officer of each of the  Borrower and ATSC to the effect that there has been no

material adverse change in the condition  (financial or otherwise),  business,

operations,  properties or prospects of the Borrower or ATSC, from the date of

the last available financial statements;



      (xiii)  A  field  exam  of  certain  assets  of  the  Borrower  and  its

Subsidiaries as of March 29, 2001 issued by Bank of America;



      (xiv) A Borrowing Base  Certificate  for the Borrower and the Subsidiary

Guarantors,   dated  the  Effective  Date,  with  appropriate  insertions  and

attachments  executed by a  Responsible  Officer of the  Borrower  and setting

forth the Borrowing Base Amount as of April 7, 2001.



                                      57
================================================================================





      (xv) The results of a recent  lien  search in each of the  jurisdictions

where  assets of the Borrower and its  Subsidiaries  are located  revealing no

liens on any  assets of the  Borrower  or its  Subsidiaries  except  for liens

permitted by Section 8.02(b); and
             ---------------


      (xvi)  Such  additional  items  as  the  Administrative   Agent  or  the

Requisite Lenders may reasonably require.



      (b)   Fees and Expenses Paid. All costs,  fees (including  participation
            ----------------------
fees as  provided in the Fee Letter)  and  expenses  (including  the costs and

expenses of one outside counsel and, without  duplication,  the allocated cost

of  in-house  counsel  for which  invoices  have been  delivered  prior to the

Effective  Date)  and  other  compensation   payable  to  the  Arranger,   the

Syndication  Agents, the Documentation  Agent, the  Administrative  Agent, the

Issuing  Banks and the Lenders  shall have been paid and all fees and expenses

accrued under the Original Credit  Agreement to the Effective Date,  including

but not limited to commitment fees and letter of credit fees,  shall have been

paid in full.



      (c)   Authorized  Officers  of the  Borrower.  The  Borrower  shall have
            --------------------------------------
notified the Administrative  Agent in writing of the names of the officers and

employees  authorized  to request Loans and Letters of Credit and to request a

conversion/continuation  of any  Loan and  shall  provide  the  Administrative

Agent with a specimen signature of each such officer or employee.



      The  acceptance  by the  Borrower of the  proceeds of the Initial  Loans

made hereunder shall constitute a representation  and warranty by the Borrower

as of the  Effective  Date in respect  of such  Loans that all the  conditions

contained  in this  Section  4.01 have  been  satisfied  or waived in  writing
                    -------------
pursuant to Section 12.08.
            -------------



      4.02. Conditions  Precedent  to all Loans and  Letters  of  Credit.  The
            -------------------------------------------------------------
obligation of the Lenders to make any Loan  requested to be made by it, and of

any  Issuing  Bank to issue any Letter of Credit,  on any date,  is subject to

the following conditions precedent as of such date:



      (a)   Notice  of  Borrowing.   The   Administrative   Agent  shall  have
            ---------------------
received in accordance  with the provisions of Section  2.01(b),  on or before
                                               ----------------
any Funding Date for any Loan, a Notice of Borrowing.



      (b)   Additional  Matters.  As of the  Funding  Date for any Loan or the
            -------------------
date of issuance of any Letter of Credit:



            (i)   Representations  and Warranties.  All of the representations
                  -------------------------------
and warranties of the Borrower  contained in or repeated  pursuant to Section
                                                                      --------
5.02  and  in  any  other  Loan  Document  (other  than   representations  and
----
warranties  which  expressly  speak only as of a different date) shall be true

and  complete  in all  material  respects  on and as of such  Funding  Date or

issuance date, as though made on and as of such date;



            (ii)  No  Default.  No  Event of  Default  or  Potential  Event of
                  -----------
Default  shall have occurred and be continuing or would result from the making

of the requested Loan or the issuance of the Letter of Credit; and



                                   58
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            (iii).No Material  Adverse  Change.  No event shall have  occurred
                  ----------------------------
after  February 3,  2001,  which, in the reasonable  judgment of the Requisite

Lenders, has had or is likely to have a Material Adverse Effect.



      (c)   Supplemental   Documentation.    Such   additional   documentation
            ----------------------------
(including  opinions  of counsel)  as the  Administrative  Agent or any Lender

through the Administrative Agent may reasonably require.



      (d)   Compliance  with  Borrowing  Base.  After  giving  effect  to  the
            ---------------------------------
making of such Loans or the  issuance  of such  Letters of Credit,  the sum of

(i) the aggregate  principal  amount of Loans then  outstanding  plus (ii) the

Letter of Credit  Obligations  at such time does not exceed the Borrowing Base

Amount at such time.



      The  acceptance by the Borrower of the proceeds of each Loan made on any

Funding  Date other than the  Effective  Date or the issuance of any Letter of

Credit in accordance  with this Agreement  shall  constitute a  representation

and warranty by the  Borrower as of such  Funding  Date or issuance  date that

all the  conditions  contained  in this  Section  4.02 have been  satisfied or
                                         -------------
waived in writing pursuant to Section 12.08.
                              -------------



                                    59
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                                  ARTICLE V

                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------



      5.01. Representations  and  Warranties on the  Effective  Date. In order
            --------------------------------------------------------
to induce the  Lenders to enter into this  Agreement  and to make the  Initial

Loans,  the Borrower  hereby  represents  and  warrants to each  Lender,  each

Issuing  Bank,  the  Syndication  Agents,  the  Documentation  Agent  and  the

Administrative Agent that the following statements are true and correct:



      (a)   Organization;  Corporate  Powers.  Each of ATSC,  the Borrower and
            --------------------------------
each Subsidiary of the Borrower (i) is a corporation  duly organized,  validly

existing  and in good  standing  under  the  laws of the  jurisdiction  of its

organization,  (ii) is duly qualified to do business as a foreign  corporation

and is in good standing under the laws of each  jurisdiction  in which it owns

or leases real property or in which the nature of its business  requires it to

be so qualified,  except those  jurisdictions  where the failure to be in good

standing  or to so  qualify  has not had or will not have a  Material  Adverse

Effect,  and (iii) has all  requisite  corporate  power and  authority to own,

operate and  encumber  its  property and assets and to conduct its business as

presently  conducted  and as proposed to be conducted in  connection  with and

following  the  consummation  of the  transactions  contemplated  by the  Loan

Documents.



      (b)   Authority.  (i) Each Loan Party has the requisite  corporate power
            ----------
and authority to execute,  deliver and perform its  obligations  under each of

the Loan Documents executed by it, or to be executed by it.



      (ii) The execution,  delivery and  performance  (or filing or recording,

as the  case may be) of each of the Loan  Documents  to which it is party  and

the  consummation of the  transactions  contemplated  thereby,  have been duly

authorized  by all necessary  corporate  action on the part of each Loan Party

and no  other  corporate  proceedings  on the  part of  such  Loan  Party  are

necessary to consummate such transactions.



      (iii)  Each of the Loan  Documents  (other  than  those not in effect on

the date of the  making  of this  representation)  to which it is a party  has

been duly  executed  and  delivered  by each Loan  Party and  constitutes  its

legal,  valid and binding  obligation,  enforceable  against it in  accordance

with its terms,  is in full force and effect and no term or condition  thereof

has been amended,  modified or waived from the terms and conditions  contained

therein delivered to the  Administrative  Agent pursuant to Article IV without
                                                            ----------
the prior  written  consent  of the  Administrative  Agent  and the  Requisite

Lenders,  and each Loan Party and,  to the best of the  Borrower's  knowledge,

the  other  parties  thereto  have  performed  and  complied  in all  material

respects with all the material  terms,  provisions,  agreements and conditions

set forth  therein and  required  to be  performed  or  complied  with by such

parties on or before the effective  date  thereof,  and no default by any such

party exists thereunder.



      (c)   No  Conflict.  The  execution,  delivery and  performance  of each
            ------------
Loan  Document  to  which  it is a party by each  Loan  Party  and each of the

transactions  contemplated  thereby  do not  and  will  not (i)  constitute  a




                                      60
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tortious  interference  with any  Contractual  Obligation  of any Person,  any

liability  resulting from which would have or be reasonably expected to have a

Material  Adverse  Effect,  or (ii)  conflict  with or violate  such  Person's

Certificate of Incorporation or By-Laws,  or (iii) conflict with,  result in a

breach of or  constitute  (with or without  notice or lapse of time or both) a

default under any  Requirement  of Law or material  Contractual  Obligation of

ATSC or of the Borrower or any  Subsidiary of the Borrower,  or (iv) result in

or require the creation or imposition of any Lien  whatsoever  upon any of the

properties or assets of ATSC,  the Borrower or any  Subsidiary of the Borrower

(other than Liens in favor of the  Administrative  Agent or the Issuing  Banks

arising pursuant to the Loan Documents or Liens permitted pursuant to Section
                                                                      -------
8.02(b)),  or (v) require any approval of  stockholders,  unless such approval
--------
has been obtained.



      (d)   Governmental  Consents.  The execution,  delivery and  performance
            ----------------------
of each  Loan  Document  to which it is a party,  by each  Loan  Party and the

transactions   contemplated   thereby  do  not  and  will  not   require   any

registration  with,  consent or  approval  of, or notice to, or other  action,

with or by any  Governmental  Authority,  except filings,  consents or notices

which have been, or will in due course be, made, obtained or given.



      (e)   Governmental  Regulation.  None of ATSC,  the  Borrower  or any of
            ------------------------
its  Subsidiaries is subject to regulation  under the Public Utility  Holdings

Company Act of 1935, the Federal Power Act, the  Interstate  Commerce Act, the

Investment  Company  Act of 1940 or any other  statute  or  regulation  of any

Governmental  Authority such that its ability to incur indebtedness is limited

or  its  ability  to  consummate  the  transactions   contemplated  hereby  is

materially impaired.



      (f)   Financial   Position.   All   quarterly   and   annual   financial
            ---------------------
statements of ATSC,  the Borrower or of the Borrower and any of its Restricted

Subsidiaries   delivered  to  the   Administrative   Agent  were  prepared  in

conformity with GAAP,  except as otherwise  noted therein,  and fairly present

the financial  position of ATSC,  the Borrower or the  consolidated  financial

position of ATSC, the Borrower and such  Subsidiaries,  as the case may be, as

at the  respective  dates thereof and the results of operations and changes in

cash flows for each of the periods covered  thereby,  subject,  in the case of

any unaudited  interim financial  statements,  to changes resulting from audit

and  normal  year-end   adjustments.   Except  as  contemplated  in  the  Loan

Documents,  none of ATSC, the Borrower or any of its  Restricted  Subsidiaries

has any  material  obligations,  contingent  liabilities  or  liabilities  for

taxes,  long  term  leases  or  material  or  unusual  forward  or  long  term

commitments  which are not  reflected  in such  financial  statements  and the

notes thereto.



      (g)   Litigation;  Adverse  Effects.  (i)  There  is  no  action,  suit,
            -----------------------------
proceeding,  investigation  of any Governmental  Authority or arbitration,  at

law or in equity, or before or by any Governmental Authority,  pending, or, to

the best knowledge of the Borrower,  threatened  against ATSC, the Borrower or

any Subsidiary of the Borrower or any property of any of them,  which would be

reasonably  expected  to  (A)  result  in any  Material  Adverse  Effect,  (B)

materially  and  adversely  affect the ability of any party to any of the Loan

Documents  to  perform  its  obligations  thereunder,  or (C)  materially  and

adversely  affect the ability of the  Borrower to perform its  Obligations  or

the Lenders' ability to enforce such Obligations.



                                       61
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      (ii) None of ATSC,  the  Borrower or any  Subsidiary  of the Borrower is

(A)  in  violation  of  any  applicable  law  which  violation  has  or  might

reasonably be expected to have a Material  Adverse  Effect,  or (B) subject to

or in default with respect to any final judgment,  writ,  injunction,  decree,

order, rule or regulation of any court or Governmental  Authority which has or

might have a Material  Adverse Effect.  There is no action,  suit,  proceeding

or  investigation  pending or, to the  knowledge of the  Borrower,  threatened

against or  affecting  ATSC,  the Borrower or any  Subsidiary  of the Borrower

challenging the validity or the enforceability of any of the Loan Documents.



      (h)   No  Material  Adverse  Change.  There has  occurred no event since
            -----------------------------
February 3,  2001,  which  has or  would  be  reasonably  expected  to  have a

Material Adverse Effect.



      (i)   Payment of Taxes.  All tax  returns  and  reports of each of ATSC,
            ----------------
the  Borrower   and  its   Subsidiaries   required  to  be  filed   (including

extensions),  have been timely  filed,  and all taxes,  assessments,  fees and

other charges of Governmental  Authorities thereupon and upon their respective

properties,  assets,  income and franchises which are shown on such returns as

being  due and  payable,  have been paid  when due and  payable,  except  such

taxes,  if any, that are reserved  against in accordance with GAAP, such taxes

which are not yet delinquent,  such taxes which are payable in installments so

long as paid before any penalty  accrues with  respect  thereto and such taxes

as are being contested in good faith by appropriate proceedings.



      (j)   Material  Adverse  Agreements.  None of ATSC,  the Borrower or any
            -----------------------------
of its Subsidiaries is a party to or subject to any Contractual  Obligation or

other  restriction  contained  in its  charter or  By-laws  which has or would

reasonably be expected to have a Material  Adverse  Effect after giving effect

to the consummation of the transactions  contemplated in the Loan Documents or

otherwise.



      (k)   Securities  Activities.  None of ATSC,  the Borrower or any of its
            -----------------------
Subsidiaries  is engaged in the business of  extending  credit for the purpose

of purchasing or carrying any Margin Stock and the Borrower  shall not use the

proceeds  of any Loan in  violation  of  Regulation  T, U or X of the  Federal

Reserve Board.



      (l)   Disclosure.  Subject to changes in facts or  conditions  which are
            ----------
required  or  permitted  under  this  Agreement,   the   representations   and

warranties of ATSC and the Borrower  contained in the Loan Documents,  and all

certificates  and other  documents  delivered to the  Administrative  Agent in

connection therewith,  taken as a whole do not contain any untrue statement of

a material  fact or omit to state a material  fact  necessary in order to make

the  statements  contained  herein or therein,  in light of the  circumstances

under which they were made, not misleading.



      (m)   Patents,  Trademarks,  Permits,  Etc. The Borrower and each of its
            ------------------------------------
Restricted  Subsidiaries  owns,  is licensed or otherwise has the lawful right

to use, or has all permits and other  approvals of  Governmental  Authorities,

patents,  trademarks,  service  marks,  trade names,  copyrights,  technology,

know-how and  processes  used in or necessary  for the conduct of its business

as  currently  conducted  which  are  material  to  its  financial  condition,



                                        62
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business,  operations,  assets  and  prospects,  individually  or  taken  as a

whole.   The  use  of  such  permits  and  other   approvals  of  Governmental

Authorities,  patents,  trademarks,  service  marks trade  names,  copyrights,

technology,  know-how and  processes  by the  Borrower or any such  Subsidiary

does not  infringe  on the rights of any  Person,  subject to such  claims and

infringements  the  existence  of  which  do not  have or are  not  reasonably

expected to have a Material Adverse Effect.  The transactions  contemplated by

the Loan  Documents  will not impair the  ownership of or rights under (or the

license  or  other  right  to  use,  as the  case  may  be)  any  permits  and

governmental  approvals,  patents,  trademarks,  service  marks,  trade names,

copyrights,  technology,  know-how or  processes  by the  Borrower or any such

Subsidiary in any manner which has or might have a Material Adverse Effect.



      (n)   Environmental  Matters.  To the best of the Borrower's  knowledge,
            ----------------------
the operations of the Borrower and its Restricted  Subsidiaries  comply in all

material  respects  with  all  applicable  environmental,  health  and  safety

Requirements  of Law  except  where any  failure  to comply is not  reasonably

likely to have a Material  Adverse Effect,  and that no notice has been served

on the Borrower or any of its Restricted Subsidiaries.



      (o)   ERISA.  Each Plan is in compliance  in all material  respects with
            -----
its terms and with ERISA,  the Code and any  applicable  law.  Each Plan which

is intended to be qualified  under Section  401(a) of the Code is so qualified

and has received a  determination  letter to that effect,  or will promptly be

submitted to the IRS for a determination  that it is so qualified and that the

trust  related  to any such  Plan is  exempt  from  Federal  income  tax under

Section  501(a) of the Code as currently  in effect.  Neither the Borrower nor

any ERISA Affiliate has breached any of the  responsibilities,  obligations or

duties  imposed  on it by ERISA or  regulations  promulgated  thereunder  with

respect to any Plan which  breach would have or would be  reasonably  expected

to  have  a  Material  Adverse  Effect.  No  Benefit  Plan  has  incurred  any

accumulated  funding deficiency (as defined in Sections 302(a)(2) of ERISA and

412(a) of the Code) or is reasonably likely to have such a deficiency  whether

or not waived  which  would  have or would be  reasonably  expected  to have a

Material Adverse Effect,  and no application for a funding waiver or extension

of any  amortization  period pursuant to Section 412 of the Code has been made

with respect to any Plan.  None of the  Borrower,  any ERISA  Affiliate or any

fiduciary  of any Plan which is not a  Multiemployer  Plan has taken or failed

to take any action which would  constitute  or result in a  Termination  Event

that would have or would be  reasonably  expected  to have a Material  Adverse

Effect.  There are no  premium  payments  which  have  become  due to the PBGC

which  are  unpaid.  Neither  the  Borrower  nor any ERISA  Affiliate  has (i)

failed to make a required  contribution  or payment  to a  Multiemployer  Plan

which would have or would be  reasonably  expected to have a Material  Adverse

Effect or (ii) made a complete or partial  withdrawal  under  Section  4203 or

4205  of  ERISA  from a  Multiemployer  Plan  which  would  have or  would  be

reasonably  expected to have a Material  Adverse Effect.  Neither the Borrower

nor any ERISA  Affiliate  has  failed to make a  required  installment  or any

other  required  payment  under  Section  412 of the Code on or before the due

date for  such  installment  or other  payment  which  would  have or would be

reasonably  expected to have a Material  Adverse Effect.  Neither the Borrower

nor any ERISA  Affiliate  is  required to provide  security to a Benefit  Plan

under Section  401(a)(29) of the Code due to a Plan  amendment that results in

an increase in current liability for, the plan year.




                                         63
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      (p)   Restricted   Subsidiaries.   As  of  the   Effective   Date,   the
            -------------------------
Restricted  Subsidiaries  of the  Borrower  are those  set forth on  Schedule
                                                                     --------
5.01(p).
-------



      5.02. Subsequent  Funding  Representations  and Warranties.  In order to
            ----------------------------------------------------
induce  the  Lenders  to make any Loans  after  the  Effective  Date,  and the

Issuing Banks to issue Letters of Credit,  the Borrower hereby  represents and

warrants to each Lender, each Issuing Bank, and the Administrative  Agent that

the  statements  set forth in Section  5.01  (except  to the extent  that such
                              -------------
statements  expressly  are made  only as of the  Effective  Date),  are  true,

correct and complete in all material  respects as though made on and as of the

Funding Date in respect of each  Borrowing  after the  Effective  Date and the

date of  issuance of each  Letter of Credit,  except that the  representations

and warranties  need not be true and correct to the extent that changes in the

facts and  conditions on which such  representations  and warranties are based

are required or permitted under this Agreement.



                                      64
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                                  ARTICLE VI

                             Reporting Covenants
                             -------------------


      6.01. Financial  Statements.  So long as the  Borrower  shall  have  any
            ---------------------
Obligation or any Lender shall have any Commitment  hereunder or any Letter of

Credit  shall be  outstanding,  the  Borrower  shall  maintain  or cause to be

maintained a system of accounting  established and  administered in accordance

with sound  business  practices  and  consistent  with past practice to permit

preparation of financial  statements in conformity  with GAAP, and each of the

financial  statements  described  below shall be prepared from such system and

records.  The  Borrower  shall  deliver  or  cause  to  be  delivered  to  the

Administrative Agent (with a sufficient number of copies for each Lender):



      (a)   As soon as practicable,  and in any event within 45 days after the

end of each of ATSC's first three fiscal quarters on a consolidated  basis for

ATSC, the Borrower and its Restricted  Subsidiaries,  a balance sheet,  income

statement and cash flow  statement for such fiscal  quarter and a year-to-date

balance sheet,  income statement and cash flow statement of ATSC, the Borrower

and its  Restricted  Subsidiaries,  and a report  identifying  the  Restricted

Subsidiaries  of the  Borrower  and any  Unrestricted  Subsidiaries  that have

become Restricted  Subsidiaries since the date of the most recent such report,

all certified by a Responsible Officer;



      (b)   As soon as practicable,  and in any event within 90 days after the

end of each Fiscal Year, annual financial  statements on a consolidated  basis

for ATSC,  the Borrower and its  Subsidiaries,  consisting of a balance sheet,

income statement and cash flow statement,  certified without  qualification by

the firm of independent  certified public  accountants of recognized  national

standing  regularly  retained  by ATSC and  acceptable  to the  Administrative

Agent,  and  accompanied by such firm's  certification  that, in the course of

its  audit   (conducted  in  accordance  with  generally   accepted   auditing

standards),  it obtained no  knowledge  that an Event of Default or  Potential

Event of  Default  has  occurred  as a  result  of a  violation  of any of the

covenants set forth in Article IX;



      (c)   As soon as practicable,  and in any event within 45 days after the

end of each Fiscal Year, on a  consolidated  basis for ATSC,  the Borrower and

its  Subsidiaries,  detailed  financial  projections  for the Fiscal Year next

succeeding such Fiscal Year,  including a written explanation of the principal

assumptions made with respect thereto;



      (d)   (i)  Together  with  each  delivery  of the  financial  statements

pursuant to paragraphs  (a)(i) and (b) above, a Compliance  Certificate of the

Borrower  substantially  in the form of Exhibit  6.01(d)(i),  stating that the
                                        -------------------
executive   officers  signatory  thereto  have  reviewed  the  terms  of  this

Agreement and the  Collateral  Documents,  and have made, or caused to be made

under their  supervision,  a review in reasonable  detail of the  transactions

and  condition  of the Borrower and its  Subsidiaries,  during the  accounting

period  covered by such  financial  statements,  and that such  review has not

disclosed the existence  during or at the end of such accounting  period,  and

that the  signers do not have  knowledge  of the  existence  as at the date of

such  certificate,  of any  condition or event which  constitutes  an Event of

Default or  Potential  Event of Default,  or, if any such  condition  or event



                                         65
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existed or exists,  specifying the nature and period of existence  thereof and

what  action the  Borrower  has taken,  is taking  and  proposes  to take with

respect thereto;  provided,  however, that Attachment 2 to Exhibit 6.01(d)(i),
                                                           ------------------
need not be included in the Compliance  Certificate provided together with the

financial  statements  delivered  pursuant to paragraph (a) above and (ii) not

later than 45 days after the end of each fiscal quarter  (including the fourth

fiscal  quarter),  a Pricing Ratio  Certificate,  substantially in the form of

Exhibit 6.01(d)(ii) (a "Pricing Ratio  Certificate"),  calculating the Pricing
------------------
Ratio  for the four  consecutive  fiscal  quarters  ending  with  such  fiscal

quarter.



      (e)   Promptly upon ATSC or the Borrower obtaining  knowledge (A) of any

condition or event which  constitutes  an Event of Default or Potential  Event

of  Default,  (B) of any  condition  or event  which  constitutes  an event of

default or which,  with the  giving of notice or lapse of time or both,  would

constitute an event of default under the Convertible  Debenture Indenture,  or

(C) of any  condition  or event  which has or in the  Borrower's  judgment  is

likely to have a Material  Adverse  Effect,  a  certificate  of a  Responsible

Officer  specifying  the nature and period of existence of any such  condition

or event,  or  specifying  the notice  given or action  taken by any lender or

holder of any Convertible  Debentures and the nature of such claimed  default,

Event of Default,  Potential  Event of Default,  event or condition,  and what

action the  Borrower  has taken,  is taking and  proposes to take with respect

thereto;



      (f)   (A) Promptly after  learning  thereof,  notice of the  institution

of, or threat of, any action, suit, proceeding,  governmental investigation or

arbitration  against  or  affecting  ATSC,  the  Borrower  or  any  Restricted

Subsidiary of the Borrower  involving claims in excess of $10,000,000,  or any

Property of ATSC,  the Borrower or any  Restricted  Subsidiary of the Borrower

valued in excess of $10,000,000  except, in each case, where the same is fully

covered  by  insurance  (other  than any  applicable  deductible)  or has been

previously  disclosed in writing by the  Borrower and of any material  adverse

change in any existing action, suit,  proceeding,  governmental  investigation

or  arbitration;  and  (B)  promptly  upon  learning  thereof,  notice  of any

investigation  or  proceeding  before or by any  Governmental  Authority,  the

effect of which might  limit,  prohibit or restrict  materially  the manner in

which  it  currently  conducts  its  business  or  to  declare  any  substance

contained in the products  manufactured  or distributed by it to be dangerous,

if such declaration is reasonably likely to have a Material Adverse Effect;



      (g)   As soon as possible,  and in any event  within ten  Business  Days

after either the Borrower or any ERISA  Affiliate  knows or has reason to know

that a Termination  Event has occurred,  a written  statement of a Responsible

Officer of the Borrower  describing such Termination  Event and the action, if

any,  which the  Borrower  or such ERISA  Affiliate  has  taken,  is taking or

proposes to take with  respect  thereto,  and when known,  any action taken or

threatened by the IRS, DOL or PBGC with respect thereto;



      (h)   Promptly  upon,  and in any event within ten Business  Days after,

receipt by the  Borrower  or an ERISA  Affiliate  of the PBGC's  intention  to

terminate  a  Benefit  Plan or to have a trustee  appointed  to  administer  a

Benefit Plan, copies of each such notice;



                                      66
================================================================================




      (i)   Promptly  upon,  and in any event within ten Business  Days after,

receipt  by  the  Borrower  or  any  ERISA   Affiliate   of  any   unfavorable

determination  letter from the IRS regarding the qualification of a Plan under

Section 401(a) of the Code, copies of such letter;



      (j)   Promptly  upon,  and in any event within ten Business  Days after,

receipt  by  the   Borrower  or  an  ERISA   Affiliate  of  a  notice  from  a

Multiemployer  Plan regarding the imposition of withdrawal  liability,  copies

of each such notice;



      (k)   (i) Promptly  upon,  and in any event  within ten  Business  Days,

after the Borrower or any ERISA Affiliate  knows (A) a Multiemployer  Plan has

been  terminated,  (B) the  administrator  or plan sponsor of a  Multiemployer

Plan  intends  to  terminate  a  Multiemployer  Plan,  or  (C)  the  PBGC  has

instituted  or will  institute  proceedings  under  Section  4042 of  ERISA to

terminate a Multiemployer  Plan a notification of such information;  (ii) with

reasonable promptness,  and in any event within thirty (30) days thereof, give

notice to the Agent of (a) the  establishment  of any new Plan  (which  notice

shall include a copy of such Plan),  (b) the  commencement of contributions to

any  Plan  to  which  the  Borrower  or any of its  ERISA  Affiliates  was not

previously  contributing,  (c) any  material  increase in the  benefits of any

existing  Plan, (d) each funding waiver request filed with respect to any Plan

and  all  communications  received  or  sent  by the  Borrower  or  any  ERISA

Affiliate  with respect to such request and (e) the failure of the Borrower or

any ERISA  Affiliate to make a required  installment  or payment under Section

302 of ERISA or Section  412 of the Code by the due date;  and (iii)  promptly

and in any event within  fifteen (15) days of becoming aware of the occurrence

or  forthcoming  occurrence  of any (a)  Termination  Event  or (b)  nonexempt

"prohibited  transactions," as such term is defined in Section 406 of ERISA or

Section 4975 of the Code,  in  connection  with any Plan or any trust  created

thereunder,  deliver to the Agent a notice specifying the nature thereof, what

action the Borrower or any ERISA  Affiliate  has taken,  is taking or proposes

to take with respect  thereto and, when known,  any action taken or threatened

by the IRS, the DOL or the PBGC with respect thereto;



      (l)   Such other  information  respecting  the  financial  condition  of

ATSC,  the Borrower or any  Restricted  Subsidiary of the Borrower,  business,

operations,  assets,  performance or prospects as the Administrative  Agent or

the Requisite  Lenders may, from time to time,  reasonably  request  including

financial  projections and including monthly balance sheets, income statements

and cash flow statements;



      (m)   On  a  timely  basis   consistent   with  the   Borrower's   legal

obligations  to release such  materials,  copies of all financial  statements,

reports and notices,  if any, sent or made available generally by the Borrower

to the  holders  of its  publicly-held  Securities  or sent or made  available

generally to a holder of any  Convertible  Debentures or the trustee under the

Convertible  Debenture Indenture or filed with the Commission and of all press

releases  made  available  generally by the Borrower to the public  concerning

material developments in the business of the Borrower;



      (n)   Upon  the  request  of the  Administrative  Agent  or any  Lender,

copies  of any  management  reports  prepared  by the  Borrower's  independent

certified public accountants in connection with the annual audit;



                                        67
================================================================================




      (o)   As soon as  available,  but in any  event  no  later  than 15 days

after  the  end of  each  fiscal  month  of the  Borrower,  a  Borrowing  Base

Certificate  of the  Borrower  dated as of the last day of such  fiscal  month

with  appropriate  insertions  and  attachments  certified  by  a  Responsible

Officer;



(p)   Promptly upon sending or receiving copies, any and all management

letters and correspondence relating to management letters, sent or received

by the Borrower to or from the Borrower's independent certified public

accountants, and



(q)   Promptly  upon,  and in any event within ten Business Days after receipt

by the  Borrower  or any  Restricted  Subsidiary,  of notice  from any entity,

governmental  body,  or  individual  claiming  any  violation  of any material

environmental,  health and safety Requirements of Law or requiring  compliance

with any material  environmental,  health and safety  Requirements  of Law, or

demanding  payment of or  contribution  for damages  regarding the Borrower or

any  of its  Restricted  Subsidiaries  related  in  any  way  to any  material

environmental, health and safety Requirements of Law.



                                     68
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                                 ARTICLE VII

                            Affirmative Covenants
                            ---------------------


      The Borrower  covenants  and agrees  that,  on and after the date hereof

and so long as any Lender  shall have any  Commitment  hereunder or any Letter

of Credit shall be  outstanding  hereunder and until payment in full of all of

the Obligations:



      7.01. Corporate  Existence,  Etc.  The Borrower  shall,  and shall cause
            ---------------------------
ATSC and each of its  Restricted  Subsidiaries  to, at all times  maintain its

corporate  existence and preserve and keep in full force and effect its rights

and franchises except as permitted under Section 8.08.



      7.02. Corporate  Powers,  Etc. The Borrower shall,  and shall cause ATSC
            -----------------------
and  each  Restricted  Subsidiary  of the  Borrower  to,  qualify  and  remain

qualified  to do  business  in each  jurisdiction  in which the  nature of its

business requires it to be so qualified,  except in those  jurisdictions where

the failure to so qualify  does not have or would not  reasonably  be expected

to have a Material Adverse Effect.



      7.03. Compliance  with Laws.  The Borrower  shall,  and shall cause ATSC
            ---------------------
and  each   Restricted   Subsidiary  of  the  Borrower  to,  comply  with  all

Requirements  of  Law,  and  all  restrictive  covenants  affecting  it or its

business,  properties,  assets or  operations,  where the failure so to comply

would reasonably be expected to have Material Adverse Effect.



      7.04. Payment of Taxes and Claims.  The Borrower shall,  and shall cause
            ---------------------------
ATSC and each Restricted  Subsidiary of the Borrower,  to pay (a) all material

taxes,  assessments and other  governmental  charges imposed upon it or on any

of its properties or assets or in respect of any of its franchises,  business,

income or  property  before any  material  penalty or  interest  in a material

amount  accrues  thereon,  and (b) all  claims  (including  claims  for labor,

services,  materials and supplies) for sums, material in the aggregate,  which

have  become due and payable and which by law have or may become a Lien (other

than a Customary  Permitted Lien) upon any of its properties or assets,  prior

to the time when any material  penalty or fine shall be incurred  with respect

thereto;  provided that no such taxes,  assessments and  governmental  charges

referred  to in clause  (a) above or claims  referred  to in clause  (b) above

need be paid if  being  contested  in good  faith by  appropriate  proceedings

instituted and diligently  conducted and if such reserve or other  appropriate

provision,  if any, as shall be required  in  conformity  with GAAP shall have

been made therefor.



      7.05. Maintenance  of  Properties;  Insurance.  The  Borrower  shall and
            ----------------------------------------
shall cause ATSC and each  Restricted  Subsidiary of the Borrower to, maintain

or cause  to be  maintained  in good  repair,  working  order  and  condition,

excepting  ordinary wear and tear and damage due to casualty or  condemnation,

all Property  material to its operations and will make or cause to be made all

appropriate repairs,  renewals and replacements thereof,  consistent with past

practice.  The  Borrower  shall,  and  shall  cause  each  of  its  Restricted

Subsidiaries  to,  maintain  such  insurance as it may be required to maintain

under its leases and other contracts and, to the extent not inconsistent  with

such  requirements,  shall also  maintain  with  financially  sound  insurance

companies,  insurance  policies and  programs  against loss or damage by fire,


                                       69
================================================================================



theft,  burglary,  pilferage  and loss in  transit,  together  with such other

hazards as is  reasonably  consistent  with  prudent  industry  practice,  and

maintain  product  and  other  liability  insurance  consistent  with  prudent

industry practice with financially sound insurance companies.



      7.06. Inspection  of  Property;  Books  and  Records;  Discussions.  The
            ------------------------------------------------------------
Borrower  shall,  and shall cause ATSC and each  Restricted  Subsidiary of the

Borrower to,  permit (a) any  authorized  representative(s)  designated by the

Administrative  Agent to visit and  inspect any of its  properties,  including

financial  and  accounting  records,  and to make  copies  and  take  extracts

therefrom,  and to  discuss  its  affairs,  finances  and  accounts  with  its

officers, employees,  representatives,  agents or independent certified public

accountants,  all upon  reasonable  notice and at such  reasonable time and as

often as may be reasonably  requested and (b) the Administrative Agent and its

representatives  to perform  collateral audits with respect to the Credit Card

Accounts,  Inventory  and  Eligible  Fixed  Assets  of the  Borrower  and  the

Subsidiary  Guarantors,  provided that,  unless an Event of Default shall have

occurred and be continuing,  the Administrative  Agent shall have the right to

perform  or cause to be  performed  only one such  collateral  audit per year.

Each such  visitation,  inspection or collateral audit made by or on behalf of

the  Administrative  Agent shall be at the  Borrower's  expense.  The Borrower

will keep proper  books of record and account in which  entries in  conformity

with GAAP shall be made to  prepare  the  financial  statements  described  in

Section 6.01 and to satisfy all Requirements of Law.
------------



      7.07. Labor  Matters.  The  Borrower  shall  notify  the  Administrative
            --------------
Agent in writing,  promptly,  of any  material  labor  dispute to which it may

become a party, any strikes or walkouts  relating to any of its facilities and

the  expiration of any labor contract to which it is a party or by which it is

bound.



      7.08. Maintenance  of Permits.  The Borrower  shall obtain and maintain,
            -----------------------
and shall cause each of its  Restricted  Subsidiaries  to obtain and maintain,

in full  force and  effect  all  Permits  or other  rights  necessary  for the

operation  of its  business,  except  where the  failure to obtain or maintain

such Permits or rights would not have or would not  reasonably  be expected to

have a Material Adverse Effect.



      7.09. ERISA.  The  Borrower  shall  establish,  maintain and operate and
            ------
cause each of its ERISA  Affiliates  to establish,  maintain and operate,  all

Plans in all  material  respects in  compliance  with their terms and with the

applicable provisions of ERISA, the Code, and all other Requirements of Law.



      7.10. Pledge of  After-Acquired  Property;  Additional  Guarantors.  (a)
            ------------------------------------------------------------
With respect to any property  acquired  after the Effective  Date by ATSC, the

Borrower or any of the  Subsidiary  Guarantors  (other  than (x) any  property

described in paragraph  (b), (c) or (d) below,  (y) any property  subject to a

Lien expressly  permitted by Section  8.02(b)(iv) and (z) property acquired by
                             --------------------
any Foreign Subsidiary) as to which the Administrative  Agent, for the benefit

of the Lenders,  does not have a perfected  Lien, the Borrower shall, or shall

cause ATSC or the relevant Subsidiary  Guarantors to, promptly (i) execute and

deliver  to  the  Administrative  Agent  such  amendments  to  the  Collateral

Documents or such other documents as the Administrative  Agent deems necessary

or  advisable  to grant to the  Administrative  Agent,  for the benefit of the

Lenders,  a  security  interest  in such  property  and (ii) take all  actions



                                       70
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necessary or advisable to grant to the  Administrative  Agent, for the benefit

of  the  Lenders,  a  perfected  first  priority  security  interest  in  such

property,   including  the  filing  of  Uniform   Commercial   Code  financing

statements  in  such  jurisdictions  as may  be  required  by  the  Collateral

Documents or by law or as may be requested by the Administrative Agent.



      (b)   With  respect to any fee interest in any real  property  having an

appraised value (together with  improvements  thereof) of at least  $1,000,000

acquired  after  the  Effective  Date  by  ATSC,  the  Borrower  or any of the

Subsidiary  Guarantors  (other  than (x) any such real  property  subject to a

Lien  expressly  permitted  by  Section  8.02(b)(iv)  and  (z)  real  property
                                --------------------
acquired by any Foreign  Subsidiary),  the Borrower shall, or shall cause ATSC

or the relevant  Subsidiary  Guarantors to, promptly (i) execute and deliver a

first  priority  mortgage,  in  favor  of the  Administrative  Agent,  for the

benefit of the Lenders,  covering such real property, (ii) if requested by the

Administrative  Agent,  provide  the  Lenders  with  (x)  title  and  extended

coverage  insurance covering such real property in an amount at least equal to

the  purchase  price of such real  property  (or such other amount as shall be

reasonably  specified by the  Administrative  Agent) as well as a current ALTA

survey  thereof,  together with a surveyor's  certificate and (y) any consents

or estoppels  reasonably  deemed necessary or advisable by the  Administrative

Agent  in  connection  with  such  mortgage  or  deed  of  trust,  each of the

foregoing in form and substance reasonably  satisfactory to the Administrative

Agent and (iii) if  requested  by the  Administrative  Agent,  deliver  to the

Administrative  Agent legal opinions  relating to the matters described above,

which opinions shall be in form and  substance,  and from counsel,  reasonably

satisfactory to the Administrative Agent.



      (c)   With  respect  to any  new  Restricted  Subsidiary  (other  than a

Foreign Subsidiary or a Nonmaterial  Domestic  Subsidiary) created or acquired

(or any  Subsidiary  which ceases to be a Nonmaterial  Domestic  Subsidiary in

accordance with the definition  thereof) after the Effective Date by ATSC, the

Borrower or any of its Restricted  Subsidiaries,  the Borrower shall, or shall

cause ATSC or the relevant  Restricted  Subsidiaries  to, promptly (i) execute

and deliver to the  Administrative  Agent such  amendments  to the  Collateral

Documents and UCC-1  financing  statements as the  Administrative  Agent deems

necessary or advisable to grant to the  Administrative  Agent, for the benefit

of  the  Lenders,   a  perfected  first  priority  security  interest  in  the

Securities of such new Subsidiary  that are owned by ATSC, the Borrower or any

Subsidiary   Guarantor,   (ii)  deliver  to  the   Administrative   Agent  the

certificates,  if any,  representing  such  Securities,  together with undated

stock powers,  in blank,  executed and delivered by a duly authorized  officer

of ATSC, the Borrower or such Subsidiary Guarantor,  as the case may be, (iii)

cause such new  Subsidiary  (A) to become a party to the  Subsidiary  Guaranty

and Collateral  Agreement,  (B) to take such actions necessary or advisable to

grant to the  Administrative  Agent for the benefit of the Lenders a perfected

first  priority  security   interest  in  the  Collateral   described  in  the

Subsidiary  Guaranty  and  Collateral  Agreement  with  respect  to  such  new

Subsidiary,   including  the  filing  of  Uniform  Commercial  Code  financing

statements  in  such  jurisdictions  as may  be  required  by  the  Subsidiary

Guaranty  and  Collateral  Agreement  or by law or as may be  requested by the

Administrative  Agent  and  (C) to  deliver  to  the  Administrative  Agent  a

certificate of such  Subsidiary of the type  described in Section  4.01(a)(ix)
                                                          --------------------
in form and substance  satisfactory to the  Administrative  Agent, and (iv) if

requested by the Administrative  Agent,  deliver to the  Administrative  Agent

legal opinions relating to the matters  described above,  which opinions shall




                                    71
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be in form and substance,  and from counsel,  reasonably  satisfactory  to the

Administrative Agent.



      (d)   With  respect to any new  Foreign  Subsidiary  created or acquired

after  the  Effective  Date by ATSC,  the  Borrower  or any of the  Subsidiary

Guarantors,   the  Borrower  shall,  or  shall  cause  ATSC  or  the  relevant

Subsidiary   Guarantors   to,   promptly   (i)  execute  and  deliver  to  the

Administrative  Agent  such  amendments  to the  Collateral  Documents  as the

Administrative   Agent  deems   necessary   or   advisable  to  grant  to  the

Administrative  Agent,  for the  benefit of the  Lenders,  a  perfected  first

priority  security  interest in the Securities of such new Subsidiary  that is

owned by ATSC, the Borrower or any Subsidiary  Guarantor  (provided that in no

event shall more than 65% of the total  outstanding  voting equity  Securities

of any such new Subsidiary be required to be so pledged),  (ii) deliver to the

Administrative Agent the certificates,  if any,  representing such Securities,

together  with undated  stock  powers,  in blank,  executed and delivered by a

duly authorized  officer of ATSC, the Borrower or such  Subsidiary  Guarantor,

as the case may be, and take such other action as may be necessary  or, in the

opinion of the Administrative  Agent,  desirable to perfect the Administrative

Agent's   security   interest   therein,   and  (iii)  if   requested  by  the

Administrative  Agent,  deliver to the  Administrative  Agent  legal  opinions

relating to the matters  described above,  which opinions shall be in form and

substance,  and from counsel,  reasonably  satisfactory to the  Administrative

Agent.



      7.11. Further  Assurances.  At any time and from time to time,  upon the
            -------------------
Administrative  Agent's  request and at the expense of the Borrower,  promptly

and duly  execute and deliver or cause to be executed  and  delivered  any and

all further  instruments  and  documents  and take such further  action as the

Administrative  Agent may  reasonably  request  to effect  the  purpose of the

Collateral  Documents,  including,  without  limitation,  the  filing  of  any

financing or  continuation  statements  under the Uniform  Commercial  Code in

effect in any jurisdiction.




                                      72
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                                 ARTICLE VIII

                              Negative Covenants
                              ------------------


      The Borrower  covenants  and agrees  that,  on and after the date hereof

and so long as any Lender  shall have any  Commitment  hereunder or any Letter

of Credit shall be  outstanding  hereunder and until payment in full of all of

the Obligations:



      8.01. Indebtedness.  The  Borrower  shall not, and shall not permit ATSC
            ------------
or any Restricted  Subsidiary to, create, incur, assume or otherwise become or

remain  directly  or  indirectly  liable  with  respect  to any  Indebtedness,

except:



      (a)   the Obligations;



      (b)   Indebtedness  in the  form  of  bank  overdrafts  in the  ordinary

course of business;



      (c)   (i)  Indebtedness  incurred  by the  Borrower  or  any  Restricted

Subsidiary to finance Capital  Expenditures and (ii) Capital Lease obligations

of the Borrower or any Restricted Subsidiary;



      (d)   Indebtedness  in respect of  Accommodation  Obligations  permitted

under Section 8.04;
      ------------


      (e)   Indebtedness   of  ATSC  to  the  Borrower   and  any   Restricted

Subsidiary in connection with any advances made pursuant to Section 8.03(b);
                                                             --------------



      (f)   Indebtedness  in respect of Interest  Rate  Contracts  and Foreign

Currency  Exchange  Contracts  entered into in the ordinary course of business

and not for speculative purposes;



      (g)   subject to Section 8.03(d),  intercompany  Indebtedness  among the
                       ---------------
Borrower and its Restricted Subsidiaries;



      (h)   Indebtedness  arising out of Liens  permitted under clauses (iii),

(vi) and (ix) of Section 8.02(b);



      (i)   Indebtedness of ATSC under the Convertible Debentures;



      (j)   Permitted  Existing  Indebtedness  and  refinancings,  renewals or

extensions  thereof  so long as the  principal  amount  of any such  Permitted

Existing  Indebtedness  is not  increased and the maturity date thereof is not

accelerated as a result of any such  refinancing,  renewal or extension (other

than by an  amount  equal  to the  amount  of fees  and  expenses  payable  in

connection with such refinancing, renewal or extension);



      (k)   other   Indebtedness   of  the   Borrower   and   its   Restricted

Subsidiaries  not exceeding in the aggregate  principal  amount of $25,000,000

at any one time outstanding; and






                                            73
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      (l)   the Convertible Debentures Note.



      8.02. Sales of Assets; Liens.
            ----------------------


      (a)   Sales.  The  Borrower  shall not, and shall not permit ATSC or any
            -----
Restricted Subsidiary to, sell, assign,  transfer,  lease, convey or otherwise

dispose  of,  any  properties  or  assets,  whether  now  owned  or  hereafter

acquired, or any income or profits therefrom,  except among ATSC, the Borrower

and any Restricted Subsidiary and except:



      (i)   sales of inventory  and subleases of real property in the ordinary

course of business  (and with respect to such  subleases  consistent  with its

past practices);



      (ii)  subleases  of  real  property  not  in  the  ordinary   course  of

business,  but only to the extent the aggregate annual rental payments accrued

under all such subleases do not exceed $1,000,000;



      (iii) other  sales  of  assets,  including  the  sale of  Securities  of

Subsidiaries,  whether or not in the ordinary  course of  business,  having an

aggregate  fair market value of not more than  $2,000,000  pursuant to any one

single  disposition  or  $4,000,000  in  the  aggregate  pursuant  to  several

dispositions in any one Fiscal Year;



      (iv)  sales or other dispositions of equipment that is obsolete,  unused

or, in the  judgment  of the  Borrower,  no longer  best used or useful in its

business or that of any Restricted Subsidiary;



      (v)   licenses  of  trademarks  to the extent  necessary  to maintain or

protect  such  trademarks  in  jurisdictions  outside  the  United  States  of

America;



      (vi)  sales or dispositions of Cash Equivalents;



      (vii) licenses of  trademarks  to third  parties in exchange for royalty

or other similar  payments made on an arms-length  basis for use in connection

with products not marketed under such trademarks as of the date hereof;



      (viii) dispositions  of Credit Card  Accounts  and related  chattel

paper and general  intangibles  in  connection  with a  Permitted  Receivables

Securitization;



      (ix)  Sales of Investments permitted under Section 8.03; and
                                                 -------------



      (x)   so long as no Event of  Default  shall have then  occurred  and be

continuing  or would  result  therefrom,  transfer  of cash or  property in an

amount  not  to  exceed  $1,000,000  for  each  Fiscal  Year  to a  charitable

foundation established by the Borrower or ATSC;



provided,  that no disposition (other than transfers  permitted by clause (ix)

or (x)) in excess of  $1,000,000  shall be  permitted  unless  the price to be

received  therefor  represents  the then  fair  market  value of the  asset or


                                  74
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property sold at the time of such  disposition  and (other than in the case of

subleases or license  arrangements) at least 80% of the price is to be paid in

cash at the closing of the disposition.



      (b)   Liens.  The  Borrower  shall not, and shall not permit ATSC or any
            -----
Restricted  Subsidiary to, create,  incur, assume or permit to exist, directly

or indirectly, any Lien on or with respect to any of its Property except:



      (i)  Liens securing the Obligations;



      (ii)  Liens  upon the  interest  or title of a lessor  or  secured  by a

lessor's  interest  under any lease under which the Borrower or any Restricted

Subsidiary  is the lessee and the interest of the lessee under any lease under

which the Borrower or any Restricted Subsidiary is the lessor;



      (iii)  Customary Permitted Liens;



      (iv)  Liens  granted  by  the  Borrower  or  any  Restricted  Subsidiary

(including  the  interest  of a lessor  under a  Capital  Lease)  and Liens on

Property  existing at the time of  acquisition  thereof by the Borrower or any

Restricted  Subsidiary  securing  Indebtedness  permitted by Section  8.01(c),
                                                             ----------------
provided  that  such  Liens  are  limited  to the  assets  financed  with such

Indebtedness;



      (v) Liens on  Property  of any Person  existing  at the time such Person

becomes a Restricted  Subsidiary securing  Indebtedness  permitted by Section
                                                                       -------
8.01;
----


      (vi)  Liens  with  respect  to  judgments  or  attachments  which do not

result in an Event of Default or Potential Event of Default hereunder;



      (vii)  Permitted  Existing  Liens  and  any  extensions,   renewals  and

replacements  thereof  so long as (i) the  amount of the  obligations  secured

thereby is not increased in  connection  with any such  extension,  renewal or

replacement  and (ii) such Lien is limited  to the  property  subject  thereto

prior to such extension, renewal or replacement;



      (viii) Liens in respect of Indebtedness  permitted  pursuant to Section
                                                                      -------
8.01(k); and
-------


      (ix) to the  extent  Indebtedness  secured  thereby is  permitted  to be

extended,  renewed,  replaced or  refinanced,  a future Lien upon any Property

which is subject to a Lien  described in clause  (vii)  above,  if such future

Lien  attaches  only  to  the  same  Property,  secures  only  such  permitted

extensions,  renewals,  replacements or  refinancings  and is of like quality,

character and extent.



      8.03. Investments.  The  Borrower  shall not,  and shall not permit ATSC

or any  Restricted  Subsidiary to, make or own,  directly or  indirectly,  any

Investment in any Person except:



      (a)   Investments by the Borrower or any  Restricted  Subsidiary in Cash

Equivalents;

                                       75
================================================================================


      (b)   Investments   by  the  Borrower  or  any   Restricted   Subsidiary

resulting from advances to ATSC to fund any of the items set forth in Section
                                                                       -------
8.05(a);
-------



      (c)   Investments by ATSC in the Borrower;



      (d)   Investments by ATSC, the Borrower and Restricted  Subsidiaries  in

the  Borrower  or any other  Restricted  Subsidiaries,  provided  that,  after

giving effect to such  Investment,  the aggregate then  outstanding  amount of

all such Investments by the Borrower and the Subsidiary  Guarantors (including

Investments  in the nature of sales and transfers of assets for less than fair

market value and Accommodation  Obligations) in Foreign Subsidiaries shall not

exceed   $10,000,000,   provided,   further,   that  the   conversion  of  any

Indebtedness owed to the Borrower or any Restricted  Subsidiary by any Foreign

Subsidiary  into equity of such Foreign  Subsidiary  shall not  constitute  an

additional  Investment  in such  Foreign  Subsidiary  by the  Borrower or such

Restricted  Subsidiary  for  purposes  of  the  limitation  contained  in  the

immediately preceding proviso;  notwithstanding the foregoing,  no Investments

in  Foreign  Subsidiaries  shall be made upon the  occurrence  and  during the

continuance of an Event of Default;



      (e)   Investments  in  joint  ventures  (in the  form  of  corporations,

partnerships or otherwise) and  Unrestricted  Subsidiaries in a maximum amount

not  exceeding  $25,000,000  at any one  time  outstanding;  provided  that no

Investments  in joint  ventures and  Unrestricted  Subsidiaries  shall be made

upon the occurrence and during the continuation of an Event of Default;



      (f)   Investments not exceeding  $10,000,000 at any one time outstanding

in  respect  of loans to senior  executives  and key  employees  of ATSC,  the

Borrower  or any  Restricted  Subsidiary;  provided  that no such  Investments

shall be made upon the occurrence and during the  continuation  of an Event of

Default;



      (g)   Investments  in the form of advance  payments to suppliers  not in

excess of an aggregate amount of $20,000,000 outstanding at any one time;



      (h)   Investments in the form of any residual interest  participation in

connection with a Permitted Receivables Securitization;



      (i)   the Convertible Debentures Note;



      (j)   other  Investments  by the Borrower or any  Restricted  Subsidiary

not in excess of an  aggregate  amount of  $2,500,000  outstanding  at any one

time; and



      (k)   Investments  in  respect of  Interest  Rate  Contracts  or Foreign

Currency  Exchange  Contracts  entered into in the ordinary course of business

and not for speculative purposes.



      8.04. Accommodation  Obligations.  The Borrower shall not, and shall not
            ---------------------------
permit ATSC or any  Restricted  Subsidiary  to, create or become or be liable,

directly or indirectly, with respect to any Accommodation Obligation except:



                                        76
================================================================================



      (a)   guaranties  resulting from  endorsement of negotiable  instruments

for collection in the ordinary course of business;



      (b)   obligations,   warranties   and   indemnities,   not  relating  to

Indebtedness  of any Person,  which have been or are undertaken or made in the

ordinary  course  of  business  and not  for the  benefit  or in  favor  of an

Affiliate of the Borrower or such Subsidiary;



      (c)   guaranties  of  obligations  of ATSC,  the  Borrower or any of its

Restricted  Subsidiaries  in  connection  with the  leasing  or  financing  of

materials handling equipment,  computer  equipment,  furniture and fixtures in

the ordinary course of business;



      (d)   Accommodation   Obligations   arising  in   connection   with  the

Borrower's  agreement to provide one or more Letters of Credit  issued for the

benefit of any joint venture to the extent permitted by Section 8.03(e);
                                                        ---------------


      (e)   with  respect  to  ATSC,  Accommodation   Obligations  arising  in

connection  with (i) the ATSC Guaranty (ii) the ATSC Pledge  Agreement,  (iii)

the  ATSC  Guarantee   Agreements  or  (iv)   Accommodation   Obligations  for

Indebtedness  of the  Borrower  or its  wholly-owned  Restricted  Subsidiaries

permitted to be incurred under Section 8.01;
                               ------------


      (f)   Accommodation   Obligations  under  the  Subsidiary  Guaranty  and

Collateral Agreement; and



      (g)   guarantees  by the Borrower of  obligations  of AnnTaylor  Retail,

Inc., a Restricted  Subsidiary of the Borrower,  not relating to  Indebtedness

(other than Indebtedness  incurred in relation to clause (d) of the definition

of Indebtedness  herein),  to third parties with respect to retail  operations

of AnnTaylor  Retail,  Inc.,  entered into on an arm's length basis and in the

ordinary course of business.



      8.05. Restricted  Payments.  The  Borrower  shall  not,  and  shall  not
            ----------  --------
permit  any of its  Restricted  Subsidiaries  or ATSC,  to declare or make any

Restricted Payment except:



      (a)   dividends  paid and declared in any Fiscal Year by the Borrower to

ATSC to fund (i) income and  franchise  taxes payable in such Fiscal Year owed

by ATSC  pursuant  to the Tax  Sharing  Agreement  dated as of July  12,  1989

between ATSC and the Borrower;  (ii) other ordinary operating expenses of ATSC

not in excess of  $500,000  in any  Fiscal  Year;  and (iii)  ATSC's  share of

expenses incurred in connection with, any public offering of Common Stock;



      (b)   any  Restricted  Payment  made by any  Subsidiary  on its  capital

stock;



      (c)   payments  by ATSC or the  Borrower  to  acquire  shares  of Common

Stock from employees of ATSC, the Borrower or any Restricted  Subsidiary in an

aggregate amount not exceeding $100,000 in any Fiscal Year;



      (d)   dividends  paid and  declared by the  Borrower to ATSC to fund (i)

any  redemption,  retirement,  sinking fund, or similar  payment,  purchase or

other  acquisition  for  value,  direct or  indirect,  of any shares of Common


                                      77
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Stock of ATSC now or hereafter  outstanding  or (ii) any payment or prepayment

of  principal  of,  premium,  if any,  or  interest  on,  and any  redemption,

purchase,  retirement  or  defeasance  of, or sinking fund or similar  payment

with respect to the  Convertible  Debentures;  provided that (A) the aggregate

consideration  paid  pursuant to this clause (d) shall not exceed  $50,000,000

per Fiscal Year and (B) immediately  prior to and after giving effect thereto,

no Potential  Event of Default or Event of Default  shall have occurred and be

continuing; and



      (e)   payments  of  interest on the  Convertible  Debentures  by ATSC so

long as no Potential  Event of Default or Event of Default shall have occurred

and be continuing.



      8.06. Conduct  of  Business.  The  Borrower  shall  not,  and  shall not
            ---------------------
permit any of its  Restricted  Subsidiaries  to, engage in any business  other

than (a) the  business  engaged in by the Borrower or such  Subsidiary  on the

date hereof; and (b) any business activities  substantially similar or related

thereto.



      8.07. Transactions  with  Affiliates.  The Borrower shall not, and shall
            ------------------------------
not  permit  ATSC or any  Restricted  Subsidiary  to,  at any time  after  the

Effective  Date  directly  or  indirectly  enter  into or  permit to exist any

transaction  (including the purchase,  sale, lease or exchange of any property

or the rendering of any service) with any of its  Affiliates on terms that are

less  favorable  to it than  those  fair and  reasonable  terms  that might be

obtained in a comparable  arms-length  transaction at the time;  provided that

the foregoing  restriction  shall not apply to  transactions  among ATSC,  the

Borrower and its wholly-owned Restricted Subsidiaries,  customary fees paid to

members  of the  Board  of  Directors  of the  Borrower  or ATSC  or  payments

permitted  under  Section  8.03(f) or the business  contemplated  by the joint
                  ---------------
ventures permitted under Section 8.03(e).
                         ---------------



      8.08. Restriction on Fundamental Changes.
            ----------------------------------


      (a)   The  Borrower  shall  not,  and shall not  permit  any  Restricted

Subsidiary to, enter into any merger or consolidation,  or liquidate,  wind-up

or  dissolve  (or suffer any  liquidation  or  dissolution),  discontinue  its

business or convey,  lease,  sell,  transfer or  otherwise  dispose of, in one

transaction  or series of  transactions,  all or any  substantial  part of its

business  or  Property,  whether  now or  hereafter  acquired,  except  (i) as

otherwise   permitted  under  Section   8.02(a),   (ii)  that  any  Restricted
                              -----------------
Subsidiary  may  merge  into  or  convey,  sell,  lease  or  transfer  all  or

substantially  all of its  assets  to, the  Borrower  or any other  Restricted

Subsidiary  (provided that if any such  Restricted  Subsidiary is a Subsidiary

Guarantor,  the  surviving  entity of any such  merger or the  entity to which

such assets are conveyed,  sold, leased or transferred must be the Borrower or

a  Subsidiary  Guarantor)  and  (iii)  that  nothing  contained  herein  shall

prohibit the Borrower from  dissolving or liquidating any Subsidiary if in the

reasonable  opinion of the Borrower's  senior  management such  dissolution or

liquidation has no reasonable likelihood of having a Material Adverse Effect.



      (b)   The  Borrower   shall  not  and  shall  not  permit  ATSC  or  any

Restricted  Subsidiary to, amend its Certificate of  Incorporation  or By-Laws

in a manner  that is in any way  adverse to the  rights of the  Administrative

Agent and the Lenders hereunder.



                                      78
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      8.09. ERISA.  The  Borrower  shall not,  and shall not permit any of its
            -----
ERISA  Affiliates  to, do any of the  following to the extent that such act or

failure to act would in the  aggregate,  after  taking into  account any other

such acts or failures to act, have a Material Adverse Effect.



      (a)   Engage,   or  permit  any  ERISA  Affiliate  to  engage,   in  any

prohibited  transaction described in Sections 406 of ERISA or 4975 of the Code

for  which a  statutory  or class  exemption  is not  available  or a  private

exemption has not been previously obtained from the DOL;



      (b)   permit to exist any accumulated  funding deficiency (as defined in

Sections 302 of ERISA and 412 of the Code), whether or not waived;



      (c)   terminate,  or  permit  any  ERISA  Affiliate  to  terminate,  any

Benefit Plan which would result in any  liability of the Borrower or any ERISA

Affiliate under Title IV of ERISA;



      (d)   fail,  or  permit  any  ERISA  Affiliate  to  fail,  to  make  any

contribution  or payment to any  Multiemployer  Plan which the Borrower or any

ERISA  Affiliate may be required to make under any agreement  relating to such

Multiemployer Plan, or any law pertaining thereto;



      (e)   fail,  or permit any ERISA  Affiliate to fail, to pay any required

installment or any other payment  required under Section 412 of the Code on or

before the due date for such installment or other payment; or



      (f)   amend,  or permit any ERISA  Affiliate to amend,  a Plan resulting

in an increase in current  liability  for the plan year such that the Borrower

or any ERISA  Affiliate  is  required  to provide  security to such Plan under

Section 401(a)(29) of the Code.



      8.10. Sales  and  Leasebacks.  The  Borrower  shall  not,  and shall not
            ----------------------
permit any Restricted Subsidiary to, become liable,  directly or by way of any

Accommodation  Obligation,  with  respect to any lease,  whether an  Operating

Lease or a Capital  Lease,  of any  Property  whether  now owned or  hereafter

acquired,  (a) which the  Borrower or any  Restricted  Subsidiary  has sold or

transferred  or is to sell or transfer to any other  Person,  or (b) which the

Borrower or any such Restricted  Subsidiary  intends to use for  substantially

the same  purposes  as any other  Property  which has been or is to be sold or

transferred by that entity to any other Person in connection with such lease.



      8.11. Convertible Debentures and other Indebtedness.
            ----------------------------------------------


      (a)   No Change.  The Borrower  shall not, and shall not permit ATSC to,
            ---------
amend,  supplement  or modify the terms of the  Convertible  Debentures or the

Convertible  Debentures  Note (i)  which  relate  to  subordination,  interest

(including options to pay in kind),  principal,  tenor, extension of maturity,

payments in respect of  redemptions,  repurchases,  sinking  fund,  principal,

interest or other payments,  or the acceleration  thereof or any rescission of

acceleration  or (ii) except if necessary to comply with the provisions of the

Trust  Indenture Act of 1939 or (iii) by making more  restrictive,  or adding,

covenants,  breaches,  defaults,  or events of default,  or (iv) by shortening


                                            79
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cure periods, or (v) if the benefits to the Borrower or the Administrative

Agent or the Lenders would thereby be in any material respect limited,

restricted or diminished.




      (b)   Notices.  The Borrower shall deliver to the Administrative Agent (i)
            -------
a copy of each notice or other written communication delivered by or on half of

the Borrower to any trustee under the Convertible Debenture Indenture, such

delivery to be made at the same time and by the same means as such notice or

other written communication is delivered to such Person and (ii) a copy of each

notice or other written communication received by the Borrower from the trustee

under the  Convertible Debenture  Indenture,  such delivery to be made promptly

 after such notice or other written  communication is received by the Borrower.



      8.12. Margin  Regulations.  No  portion  of the  proceeds  of any credit
            -------------------
extended  under this  Agreement  shall be used in any manner which might cause

the  extension  of credit  or the  application  of such  proceeds  to  violate

Regulation  T,  Regulation U or  Regulation X or any other  regulation  of the

Federal  Reserve  Board  or to  violate  the  Securities  Exchange  Act or the

Securities  Act,  in each  case as in  effect  on the  date or  dates  of such

Borrowing and such use of proceeds.



      8.13. Change of Fiscal Year.  The  Borrower  shall not change its Fiscal
            ---------------------
Year.



      8.14. Subsidiaries.  (a) The  Borrower  shall not  permit,  without  the
            ------------
consent of the  Administrative  Agent,  any  Unrestricted  Subsidiary to enter

into any  Accommodation  Obligation with respect to any  Indebtedness of ATSC,

the Borrower or any  Restricted  Subsidiary or to grant or permit to exist any

Lien on its Property to secure any such Indebtedness.



      (b)   The  Borrower  shall  not,  and shall not  permit  any  Restricted

Subsidiary   to,  create  or  otherwise   become   effective  any   consensual

encumbrance  or  restriction  of any  kind on the  ability  of any  Restricted

Subsidiary to pay dividends or make any other distribution,  in respect of its

stock or make any other  Restricted  Payment,  pay any  Indebtedness  or other

Obligation  owed to the  Borrower  or any other  Restricted  Subsidiary,  make

loans  or  advances  or  other  Investments  in  the  Borrower  or  any  other

Restricted  Subsidiary  or  sell,  transfer  or  otherwise  convey  any of its

Property to the Borrower or any other Restricted Subsidiary.



      8.15. Consignment  of Title  Documents.  At any time at the  request  of
            --------------------------------
the  Administrative  Agent or the Requisite  Lenders after the  occurrence and

during the continuation of an Event of Default,  the Borrower shall deliver or

cause to be  delivered  to the  Administrative  Agent for the  benefit  of the

Lenders  any  title  or  similar  documents  (including,  without  limitation,

warehouse  receipts) in respect of goods  covered or  originally  covered by a

Letter of Credit (including any Existing Letter of Credit).



                                    80
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                                  ARTICLE IX

                             Financial Covenants
                             -------------------



      The Borrower  covenants  and agrees  that,  on and after the date hereof

and so long as any  Lender  has any  Commitment  hereunder  or any  Letter  of

Credit shall be  outstanding  hereunder  and until  payment in full of all the

Obligations:



      9.01. Minimum   Tangible  Net  Worth.  The  Borrower  shall  not  permit
            -------------------------------
Tangible  Net Worth at the end of any  fiscal  quarter to be less than the sum

of (a) $250,000,000  plus (b) 50% of Net Income for each fiscal quarter ending

after  February 3, 2001 (without  deducting  from such  cumulative  amount the

amount  of  any  net  loss  incurred  in  any  such  fiscal   quarter   except

extraordinary   losses   associated  with  the  redemption  or  repurchase  of

Indebtedness).



      9.02. Leverage Ratio.  As of the end of each period of four  consecutive
            ---------------
fiscal  quarters  ending with the  applicable  fiscal quarter set forth below,

the  Borrower  shall not permit  the ratio of (a) the sum of (i)  Funded  Debt

plus (ii) the product of (A) Rental  Expense for such period  times (B) six to

(b) EBITDAR for such  period to be greater  than the ratio set forth  opposite

such fiscal quarter:



            Ending Quarter                                  Maximum Ratio
            --------------                                  -------------
      2nd   Quarter, Fiscal Year 2001                       3.50 to 1.00
      3rd   Quarter, Fiscal Year 2001                       3.50 to 1.00
      4th   Quarter, Fiscal Year 2001                       3.25 to 1.00
      1st   Quarter, Fiscal Year 2002                       3.25 to 1.00
      2nd   Quarter, Fiscal Year 2002                       3.25 to 1.00
      3rd   Quarter, Fiscal Year 2002                       3.25 to 1.00
      4th   Quarter, Fiscal Year 2002                       3.25 to 1.00
      1st   Quarter, Fiscal Year 2003
         and each fiscal quarter thereafter                 3.00 to 1.00



      9.03. Minimum  Fixed  Charge  Coverage  Ratio.  The  Borrower  shall not
            ----------------------------------------
permit the Fixed Charge  Coverage  Ratio,  as determined for and at the end of

each period of four  consecutive  fiscal  quarters  ending with the applicable

fiscal  quarter set forth below,  to be less than the ratio set forth opposite

such fiscal quarter:



            Ending Quarter                                 Minimum Ratio
            ---------------                                --------------
      2nd   Quarter, Fiscal Year 2001                       1.15 to 1.00
      3rd   Quarter, Fiscal Year 2001                       1.15 to 1.00
      4th   Quarter, Fiscal Year 2001                       1.25 to 1.00
      1st   Quarter, Fiscal Year 2002                       1.30 to 1.00
      2nd   Quarter, Fiscal Year 2002                       1.30 to 1.00
      3rd   Quarter, Fiscal Year 2002                       1.35 to 1.00
      4th   Quarter, Fiscal Year 2002                       1.35 to 1.00
      1st   Quarter, Fiscal Year 2003
         and each fiscal quarter thereafter                 1.50 to 1.00


                                     81
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                                  ARTICLE X


                    Events of Default; Right and Remedies
                    -------------------------------------


      10.01.Events of Default.  Each of the following  occurrences shall
            -----------------
constitute an Event of Default under this Agreement:



      (a)   Failure to Make Payments When Due. (i) The Borrower  shall fail to
            ---------------------------------
pay when due any principal of any Loan or Reimbursement Obligation, or



      (ii)  the  Borrower  shall  fail  to pay  any  interest  on any  Loan or

Reimbursement  Obligation,  or any other Obligation  within the earlier of (A)

five  Business  Days after the same shall have  become due or (B) in the event

that a  principal  or  interest  payment  shall be due  undser the terms of the

Convertible  Debenture  Indenture  within such five  Business Day period,  one

Business  Day  prior  to such  payment  date  in  respect  of the  Convertible

Debentures if the payments are due on the same date.



      (b)   Breach of  Certain  Covenants.  The  Borrower  shall fail duly and
            -----------------------------
punctually to perform or observe (or cause ATSC or any  Restricted  Subsidiary

to perform or observe) any  agreement,  covenant or obligation  binding on the

Borrower, ATSC or any Restricted Subsidiary under Section 6.01(e)(A), Article
                                                   ---------------------------
VIII  or  Article  IX or  binding  on the  Borrower,  ATSC  or any  Subsidiary
----      ------------
Guarantor  under any  section of the  Collateral  Documents  for which a grace

period is provided (which failure  continues after the expiration of any grace

period specified under such section of the Collateral Documents).



      (c)   Breach  of  Representation  or  Warranty.  Any  representation  or
            ----------------------------------------
warranty  made  or  deemed  made  by the  Borrower,  ATSC  or  any  Subsidiary

Guarantor to the  Administrative  Agent, any Issuing Bank or any Lender herein

or in any  of  the  other  Loan  Documents  or in  any  written  statement  or

certificate  at  any  time  given  by the  Borrower,  ATSC  or any  Subsidiary

Guarantor  pursuant to any of the Loan Documents  shall be false or misleading

in any material respect on the date as of which made or deemed made.



      (d)   Other  Defaults.  Either  the  Borrower,  ATSC  or any  Restricted
            ---------------
Subsidiary   shall  fail  duly  and  punctually  to  perform  or  observe  any

agreement,  covenant or obligation  arising under this  Agreement or under any

of the other Loan Documents (except those described in Sections 10.01(a), (b)
                                                       ----------------------
and (c)),  and such  failure  shall  continue  for 20 days (or, in the case of
--------
Loan  Documents  other  than  this  Agreement,  any  longer  period  of  grace

expressly set forth therein).



      (e)   Default  as to  Other  Indebtedness.  ATSC,  the  Borrower  or any
            -----------------------------------
Restricted  Subsidiary  shall fail to make any  payment  when due  (whether by

scheduled maturity,  required prepayment,  acceleration,  demand or otherwise)

on any Indebtedness of ATSC, the Borrower or any such  Subsidiary,  other than

an Obligation,  if the aggregate amount of all such Indebtedness is $5,000,000

or more; or any breach,  default or event of default shall occur, or any other

event shall occur or condition shall exist,  under any  instrument,  agreement

or indenture  pertaining thereto,  if the effect thereof is to accelerate,  or

permit the holder(s) of such  Indebtedness to accelerate,  the maturity of any


                                   82
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such  Indebtedness;  or any such Indebtedness  shall be declared to be due and

payable  or  required  to be  prepaid  (other  than by a  regularly  scheduled

required  prepayment prior to the stated maturity  thereof);  or the holder of

any Lien (other than Liens upon property  leased to ATSC, the Borrower or such

Restricted  Subsidiary  which  were  created  by  the  landlord  prior  to the

commencement of the lease), in any amount,  shall commence foreclosure of such

Lien upon property of ATSC, the Borrower or any Restricted  Subsidiary  having

a value in excess of $5,000,000 in the aggregate.



      (f)   Involuntary  Bankruptcy;  Appointment  of  Receiver,  Etc.  (i) An
            ----------------------------------------------------------
involuntary  case  shall be  commenced  against  the  Borrower  or ATSC or any

Restricted Subsidiary,  and the petition shall not be dismissed within 60 days

after  commencement  of  the  case,  or a  court  having  jurisdiction  in the

premises  shall enter a decree or order for relief in respect of the  Borrower

or ATSC  or any  Restricted  Subsidiary  in an  involuntary  case,  under  any

applicable  bankruptcy,  insolvency or other similar law now or hereinafter in

effect;  or any other  similar  relief shall be granted  under any  applicable

federal, state or foreign law.



      (ii) A decree or order of a court  having  jurisdiction  in the premises

for  the  appointment  of  a  receiver,  liquidator,   sequestrator,  trustee,

custodian or other officer  having similar powers over the Borrower or ATSC or

any Restricted  Subsidiary,  or over all or a substantial part of the property

of the Borrower or ATSC or any Restricted Subsidiary,  shall be entered; or an

interim  receiver,  trustee or other  custodian of the Borrower or ATSC or any

Restricted Subsidiary,  or of all or a substantial part of the property of the

Borrower  or  ATSC or any  Restricted  Subsidiary,  shall  be  appointed  or a

warrant of attachment,  execution or similar  process  against any substantial

part of the  property of the  Borrower or ATSC or any  Restricted  Subsidiary,

shall be issued and any such event  shall not be stayed,  vacated,  dismissed,

bonded or discharged within 60 days of entry, appointment or issuance.



      (g)   Voluntary Bankruptcy;  Appointment of Receiver,  Etc. The Borrower
            -----------------------------------------------------
or ATSC or any  Restricted  Subsidiary  shall have an order for relief entered

with  respect  to it  or  commence  a  voluntary  case  under  any  applicable

bankruptcy,  insolvency  or other  similar law now or hereafter in effect,  or

shall consent to the entry of an order for relief in an  involuntary  case, or

to the conversion of an involuntary  case to a voluntary case,  under any such

law,  or shall  consent to the  appointment  of or taking of  possession  by a

receiver,  trustee or other  custodian  for all or a  substantial  part of its

property;  the Borrower or ATSC or any  Restricted  Subsidiary  shall make any

assignment for the benefit of creditors or shall be unable or generally  fail,

or admit in writing its inability,  to pay its debts as such debts become due;

or the Board of Directors (or any  committee  thereof) of the Borrower or ATSC

or any  Restricted  Subsidiary  adopts any  resolution  to approve  any of the

foregoing.



      (h)   Judgments  and  Attachments.  Any  money  judgment  (other  than a
            ---------------------------
money  judgment  covered by  insurance,  but only if the insurer has  admitted

liability  with  respect  to  such  money   judgment),   writ  or  warrant  of

attachment,  or similar  process  involving in any case an amount in excess of

$5,000,000  shall be  entered or filed  against  the  Borrower  or ATSC or any

Restricted   Subsidiary   or  any  of  their   Property,   and  shall   remain

undischarged, unvacated, unbonded or unstayed for a period of 60 days.

                                     83
================================================================================



      (i)   Dissolution.  Any  order,  judgment  or  decree  shall be  entered
            -----------
against  the  Borrower  or ATSC or any  Restricted  Subsidiary  decreeing  its

involuntary  dissolution or split-up and such order shall remain  undischarged

and  unstayed  for a period in excess of 60 days;  or the  Borrower or ATSC or

any Restricted  Subsidiary  shall otherwise  dissolve or cease to exist except

as permitted by Section 8.08.
                ------------



      (j)   Collateral  Documents;  Failure of Security or Subordination.  For
            -------------------------------------------------------------
any reason other than a release of Liens or the failure of the  Administrative

Agent and the  Lenders to take any action  unilaterally  available  to them to

maintain the  perfection of the Liens  created in favor of the  Administrative

Agent pursuant to this Agreement and the Collateral Documents,  any Collateral

Document  ceases to be in full  force and  effect or any Lien  intended  to be

created  thereby  ceases to be or is not valid and  perfected;  or any Lien in

favor  of the  Administrative  Agent  contemplated  by this  Agreement  or any

Collateral  Document,  or the  subordination  provisions  of  the  Convertible

Debentures  shall,  at any time, be  invalidated  or otherwise  cease to be in

full  force  and  effect;  or  any  such  Lien  or  any  Obligation  shall  be

subordinated  or shall not have the priority  contemplated  by this Agreement,

the Collateral Documents or such subordination provisions, for any reason.



      (k)   Change in Control.  (i) Any Change in Control  shall occur or (ii)
            -----------------
ATSC  shall  cease  to own all of the  outstanding  equity  Securities  of the

Borrower.



      (l)   ERISA  Liabilities.  Any Termination Event occurs which will or is
            ------------------
reasonably  likely to subject  either the Borrower or an ERISA  Affiliate to a

liability  which will or is  reasonably  expected  to have a Material  Adverse

Effect.



      An Event of Default shall be deemed  "continuing"  until cured or waived

in writing in accordance with Section 12.08.
                              -------------



      10.02.Rights and Remedies.
            -------------------


      (a)   Acceleration.   Upon  the  occurrence  of  any  Event  of  Default
            ------------
described in Section  10.01(f) or 10.01(g) with respect to the  Borrower,  the
             ----------------------------
Commitments  shall  automatically  and  immediately  terminate  and the unpaid

principal  amount  of and any and all  accrued  interest  on the Loans and all

Letter of Credit  Obligations shall  automatically  become immediately due and

payable,  with all additional  interest from time to time accrued  thereon and

without  presentment,  demand,  or protest or other  requirements  of any kind

(including  valuation  and  appraisement,  diligence,  presentment,  notice of

intent to demand or accelerate and of  acceleration),  all of which are hereby

expressly  waived by the Borrower,  and the  obligation of each Lender to make

any Loan  hereunder  and of any  Issuing  Bank to issue  any  Letter of Credit

shall thereupon terminate;  and upon the occurrence and during the continuance

of any other Event of Default,  the Administrative Agent shall at the request,

or may with the consent,  of the Requisite  Lenders,  by written notice to the

Borrower,  (i) declare that the  Commitments  are  terminated,  whereupon  the

Commitments  and the  obligation of each Lender to make any Loan hereunder and

of  any  Issuing  Bank  to  issue  any  Letter  of  Credit  shall  immediately

terminate,  and (ii)  declare the unpaid  principal  amount of and any and all

accrued and unpaid interest on the Loans and all Letter of Credit  Obligations

to be, and the same shall  thereupon be,  immediately due and payable with all


                                     84
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additional   interest   from  time  to  time   accrued   thereon  and  without

presentment,  demand, or protest or other  requirements of any kind (including

valuation  and  appraisement,  diligence,  presentment,  notice  of  intent to

demand or accelerate and of  acceleration),  all of which are hereby expressly

waived by the Borrower.



      (b)   Deposit for  Letters of Credit.  In  addition,  upon demand by the
            ------------------------------
Requisite  Lenders  after the  occurrence  and during the  continuance  of any

Event of Default,  the Borrower  shall deposit with the  Administrative  Agent

for the  benefit of such  Issuing  Bank with  respect to each Letter of Credit

issued by it then outstanding,  cash or Cash Equivalents in an amount equal to

the  greatest  amount  for which  such  Letter of  Credit  may be drawn.  Such

deposit  shall be held by the  Administrative  Agent for the  benefit  of such

Issuing  Bank as  security  for,  and to  provide  for  the  payment  of,  the

Reimbursement  Obligations.   Pending  the  application  of  such  deposit  to

payment of the Reimbursement Obligations,  the Administrative Agent may invest

such  deposit  in an open  account or similar  immediately  available  savings

deposit and all interest  accrued  thereon  shall be held with such deposit as

additional security for the Reimbursement Obligations.



      (c)   Rescission.  If at any time after  acceleration of the maturity of
            ----------
the Loans,  the Borrower shall pay all arrears of interest and all payments on

account of principal of the Loans and  Reimbursement  Obligations  which shall

have become due otherwise  than by  acceleration  (with  interest on principal

and on overdue  interest,  at the rates  specified in this  Agreement) and all

Events of Default and Potential  Events of Default  (other than  nonpayment of

principal  of and  accrued  interest  on the Loans due and  payable  solely by

virtue of  acceleration)  shall be  remedied  or waived  pursuant  to Section
                                                                      -------
12.08,  then by written  notice to the  Borrower,  the  Requisite  Lenders may
-----
elect, in the sole discretion of such Requisite Lenders,  to rescind and annul

the  acceleration and its consequences and thereupon shall release any deposit

made  pursuant to Section  10.02(b);  provided,  however,  that no  rescission
                  -----------------
shall  occur after the  earlier of 30 days after the date of  acceleration  or

any Event of Default  specified in paragraph (f) or (g) of Section  10.01.  No
                                                           --------------
action  pursuant to this  paragraph (c) shall affect any  subsequent  Event of

Default  or  Potential  Event  of  Default  or  impair  any  right  or  remedy

consequent  thereon.  The  provisions of the  preceding  sentence are intended

merely to bind the Lenders to a decision  which may be made at the election of

the  Requisite  Lenders;  they are not intended to benefit the Borrower and do

not give the  Borrower  the right to require  the  Lenders to rescind or annul

any acceleration hereunder, even if the conditions set forth herein are met.



                                      85
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                                  ARTICLE XI

                           The Administrative Agent
                           ------------------------



      11.01.Appointment and Authorization.
            -----------------------------

      (a)   Each  Lender and  Issuing  Bank  hereby  irrevocably  (subject  to

Section 11.09) appoints,  designates and authorizes the  Administrative  Agent
--------------
to take such action on its behalf under the  provisions of this  Agreement and

each other Loan  Document and to exercise  such powers and perform such duties

as are expressly  delegated to it by the terms of this  Agreement or any other

Loan  Document,  together  with  such  powers  as  are  reasonably  incidental

thereto.  Notwithstanding  any provision to the contrary  contained  elsewhere

in this  Agreement or in any other Loan  Document,  the  Administrative  Agent

shall not have any duties or  responsibilities,  except  those  expressly  set

forth  herein,  nor shall the  Administrative  Agent have or be deemed to have

any  fiduciary  relationship  with any Lender or  participant,  and no implied

covenants,  functions,  responsibilities,  duties,  obligations or liabilities

shall be read into this  Agreement  or any other Loan  Document  or  otherwise

exist against the  Administrative  Agent.  Without  limiting the generality of

the foregoing  sentence,  the use of the term "agent"  herein and in the other

Loan Documents with reference to the  Administrative  Agent is not intended to

connote any fiduciary or other implied (or express)  obligations arising under

agency  doctrine of any applicable law.  Instead,  such term is used merely as

a matter of market  custom,  and is  intended  to  create or  reflect  only an

administrative relationship between independent contracting parties.



      (b)   Each  Issuing Bank shall act on behalf of the Lenders with respect

to any Letters of Credit issued by it and the documents  associated  therewith

until  such  time (and  except  for so long) as the  Administrative  Agent may

agree at the request of the  Requisite  Lenders to act for such  Issuing  Bank

with respect thereto; provided,  however, that the Issuing Bank shall have all
                      ---------  -------
of the benefits and immunities  (i) provided  to the  Administrative  Agent in

this Article XI with  respect to any acts taken or  omissions  suffered by the
     ----------
Issuing Bank in connection  with Letters of Credit issued by it or proposed to

be issued by it and the  application  and  agreements  for  letters  of credit

pertaining  to the  Letters of Credit as fully as if the term  "Administrative

Agent" as used in this  Article XI included  the Issuing  Bank with respect to
                        ----------
such acts or omissions,  and (ii) as additionally provided herein with respect

to the Issuing Bank.



      11.02.Delegation of Duties. The  Administrative  Agent may execute
            --------------------
any of its  duties  under this  Agreement  or any other  Loan  Document  by or

through  agents,  employees  or  attorneys-in-fact  and shall be  entitled  to

advice of counsel  and other  consultants  or experts  concerning  all matters

pertaining to such duties. The  Administrative  Agent shall not be responsible

for the  negligence  or misconduct  of any agent or  attorney-in-fact  that it

selects in the absence of gross negligence or willful misconduct.



      11.03.Liability   of    Administrative    Agent.   None   of   the
            -----------------------------------------
Agent-Related  Persons  shall (a) be liable for any action taken or omitted to

be taken by any of them  under or in  connection  with this  Agreement  or any

other Loan Document or the  transactions  contemplated  hereby (except for its

own gross  negligence  or willful  misconduct  in  connection  with its duties

expressly set forth  herein),  or (b) be  responsible  in any manner to any of


                                     86
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the  Lenders,  participants  or  Issuing  Banks  for any  recital,  statement,

representation  or  warranty  made by  ATSC,  Borrower  or any  Subsidiary  or

Affiliate of ATSC or the Borrower,  or any officer thereof,  contained in this

Agreement  or in any  other  Loan  Document,  or in any  certificate,  report,

statement  or other  document  referred to or provided  for in, or received by

the  Administrative  Agent under or in connection  with, this Agreement or any

other   Loan   Document,   or  the   validity,   effectiveness,   genuineness,

enforceability  or  sufficiency  of this Agreement or any other Loan Document,

or for any  failure  of ATSC,  the  Borrower  or any  other  party to any Loan

Document   to  perform   its   obligations   hereunder   or   thereunder.   No

Agent-Related Person shall be under any obligation to any Lender,  participant

or  Issuing  Bank  to  ascertain  or  to  inquire  as  to  the  observance  or

performance  of any of the  agreements  contained in, or  conditions  of, this

Agreement or any other Loan Document,  or to inspect the Properties,  books or

records of ATSC,  the Borrower or any of the  Subsidiaries  or  Affiliates  of

ATSC or the Borrower.



      11.04.Reliance by Administrative Agent.
             -------------------------------


      (a)   The  Administrative  Agent shall be entitled to rely, and shall be

fully  protected  in  relying,  upon any  writing,  communication,  signature,

resolution,  representation,  notice, consent, certificate, affidavit, letter,

telegram,  facsimile,  telex or telephone message, statement or other document

or  conversation  believed  by it to be genuine  and  correct and to have been

signed,  sent or made by the proper  Person or  Persons,  and upon  advice and

statements   of  legal  counsel   (including   counsel  to  any  Loan  Party),

independent  accountants  and other  experts  selected  by the  Administrative

Agent.  The  Administrative  Agent  shall be fully  justified  in  failing  or

refusing to take any action under this  Agreement  or any other Loan  Document

unless it shall first  receive  such advice or  concurrence  of the  Requisite

Lenders as it deems  appropriate  and,  if it so  requests,  it shall first be

indemnified to its  satisfaction  by the Lenders against any and all liability

and expense  which may be incurred by it by reason of taking or  continuing to

take any such  action.  The  Administrative  Agent shall in all cases be fully

protected in acting,  or in refraining  from acting,  under this  Agreement or

any other  Loan  Document  in  accordance  with a request  or  consent  of the

Requisite Lenders or all Lenders,  if required  hereunder and such request and

any action taken or failure to act pursuant  thereto shall be binding upon all

of the  Lenders,  participants  and the Issuing  Banks.  Where this  Agreement

expressly  permits  or  prohibits  an  action  unless  the  Requisite  Lenders

otherwise  determine,  the  Administrative  Agent  shall,  and  in  all  other

instances,  the  Administrative  Agent  may,  but  shall not be  required  to,

initiate any solicitation for the consent or a vote of the Lenders.



      (b)   For  purposes  of  determining   compliance  with  the  conditions

specified in Section 4.01,  each Lender that has executed this Agreement shall
             ------------
be deemed to have consented to,  approved or accepted or to be satisfied with,

each document or other matter either sent by the Administrative  Agent to such

Lender  for  consent,  approval,   acceptance  or  satisfaction,  or  required

thereunder to be consented to or approved by or acceptable or  satisfactory to

such Lender.



      11.05.Notice of  Default.  The  Administrative  Agent shall not be
            ------------------
deemed to have  knowledge or notice of the  occurrence of any Potential  Event

of  Default or Event of  Default,  except  with  respect  to  defaults  in the

payment  of  principal,   interest  and  fees  required  to  be  paid  to  the

Administrative   Agent  for  the   account   of  the   Lenders,   unless   the


                                      87
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Administrative  Agent shall have received  written notice from a Lender or the

Borrower  referring to this  Agreement,  describing  such  Potential  Event of

Default  or Event of  Default  and  stating  that such  notice is a "notice of

default".  In the event that the Administrative  Agent receives such a notice,

the  Administrative  Agent  shall  give  notice  thereof to the  Lenders.  The

Administrative  Agent shall take such action  with  respect to such  Potential

Event of Default or Event of Default as shall be  requested  by the  Requisite

Lenders;  provided,  however,  that unless and until the Administrative  Agent

shall have received any such request,  the Administrative Agent may (but shall

not be  obligated  to) take such  action,  or refrain from taking such action,

with  respect  to such  Potential  Event of  Default or Event of Default as it

shall deem advisable or in the best interest of the Lenders.



      11.06.Credit  Decision.  Each Lender expressly  acknowledges  that
             ----------------
none of the Agent-Related  Persons has made any  representation or warranty to

it and that no act by the Administrative  Agent hereinafter  taken,  including

any consent to and  acceptance  of any  assignment or review of the affairs of

ATSC and the Borrower and its  Subsidiaries  shall be deemed to constitute any

representation  or  warranty by any  Agent-Related  Person to any Lender as to

any matter,  including whether  Agent-Related  Persons have disclosed material

information   in   their   possession.   Each   Lender   represents   to   the

Administrative Agent that it has,  independently and without reliance upon any

Agent-Related  Person and based on such  documents and  information  as it has

deemed  appropriate,  made its own  appraisal  of and  investigation  into the

business, prospects,  operations,  property, financial and other condition and

creditworthiness  of ATSC  and the  Borrower  and  its  Subsidiaries,  and all

applicable  bank  regulatory  laws relating to the  transactions  contemplated

thereby,  and made its own  decision to enter into this  Agreement  and extend

credit to the Borrower  hereunder.  Each Lender also  represents that it will,

independently and without reliance upon any Agent-Related  Person and based on

such  documents  and  information  as it shall deem  appropriate  at the time,

continue to make its own credit  analysis,  appraisals and decisions in taking

or not taking action under this  Agreement and the other Loan  Documents,  and

to make such  investigations  as it deems necessary to inform itself as to the

business, prospects,  operations,  property, financial and other condition and

creditworthiness  of the  Borrower.  Except  for  notices,  reports  and other

documents  expressly  herein  required to be  furnished  to the Lenders by the

Administrative  Agent,  the  Administrative  Agent  shall not have any duty or

responsibility  to  provide  any Lender  with any credit or other  information

concerning the business, prospects,  operations, property, financial and other

condition or  creditworthiness  of the Borrower or its Subsidiaries  which may

come into the possession of any of the Agent-Related Persons.



      11.07.Indemnification.    Whether   or   not   the    transactions
            ---------------
contemplated  hereby shall be  consummated,  the Lenders shall  indemnify upon

demand  the  Agent-Related  Persons  (to the extent  not  reimbursed  by or on

behalf of the Borrower and without  limiting the obligation of the Borrower to

do so),  ratably  from  and  against  any and  all  liabilities,  obligations,

losses, damages,  penalties,  actions,  judgments,  suits, costs, expenses and

disbursements  of any kind whatsoever  which may at any time (including at any

time  following the repayment of the Loans and the  termination or resignation

of the related  Administrative  Agent) be imposed on,  incurred by or asserted

against any such Person any way  relating to or arising out of this  Agreement

or any  document  contemplated  by or  referred  to herein or  therein  or the

transactions  contemplated hereby or thereby or any action taken or omitted by

any such Person under or in connection  with any of the  foregoing;  provided,


                                       88
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however,  that no Lender shall be liable for the payment to the  Agent-Related

Persons of any  portion of such  liabilities,  obligations,  losses,  damages,

penalties,   actions,  judgments,  suits,  costs,  expenses  or  disbursements

resulting from such Person's gross negligence or willful  misconduct.  Without

limitation of the foregoing,  each Lender shall  reimburse the  Administrative

Agent  upon  demand  for its  ratable  share  of any  costs  or  out-of-pocket

expenses  (including  legal  fees and the  allocated  cost of  staff  counsel)

incurred  by the  Administrative  Agent in  connection  with the  preparation,

execution, delivery,  administration,  modification,  amendment or enforcement

(whether through  negotiations,  legal  proceedings or otherwise) of, or legal

advice in respect of rights or  responsibilities  under,  this Agreement,  any

other Loan Document,  or any document contemplated by or referred to herein to

the extent that the  Administrative  Agent is not reimbursed for such expenses

by or on  behalf of the  Borrower.  Without  limiting  the  generality  of the

foregoing,  if the  IRS or any  other  Governmental  Authority  of the  United

States  of   America   or  other   jurisdiction   asserts  a  claim  that  the

Administrative  Agent did not  properly  withhold  tax from amounts paid to or

for  the  account  of  any  Lender  (because  the  appropriate  form  was  not

delivered,  was not properly executed, or because such Lender failed to notify

the  Administrative  Agent of a change in  circumstances  which  rendered  the

exemption  from,  or reduction of,  withholding  tax  ineffective,  or for any

other reason) such Lender shall indemnify the  Administrative  Agent fully for

all amounts paid, directly or indirectly,  by the Administrative  Agent as tax

or  otherwise,  including  penalties  and  interest,  and  including any taxes

imposed by any  jurisdiction  on the  amounts  payable  to the  Administrative

Agent under this  Section  11.07,  together  with all costs and  expenses  and

attorneys'  fees  (including  legal  fees  and the  allocated  cost  of  staff

counsel).  The  obligation  of the Lenders in this Section  shall  survive the

payment of all Obligations hereunder.



      11.08.Administrative  Agent as  Individual.  Bank of  America  and
            ------------------------------------
its  Affiliates may make loans to, issue letters of credit for the account of,

accept deposits from,  acquire equity interests in and generally engage in any

kind of banking,  trust,  financial  advisory,  underwriting or other business

with ATSC and the Borrower and its  Subsidiaries and Affiliates as though Bank

of America were not the  Administrative  Agent or the Issuing  Bank  hereunder

and  without  notice to or consent of the  Lenders.  The  Lenders  acknowledge

that,  pursuant  to such  activities,  Bank of America or its  Affiliates  may

receive  information  regarding  any Loan Party or its  Affiliates  (including

information  that may be subject to  confidentiality  obligations  in favor of

such Loan Party or such  Affiliate) and  acknowledge  that the  Administrative

Agent shall be under no obligation to provide such  information to them.  With

respect to its Loans,  Bank of America  shall have the same  rights and powers

under this  Agreement  as any other  Lender and may  exercise  such rights and

powers as though it were not the  Administrative  Agent or the  Issuing  Bank,

and the terms  "Lender"  and  "Lenders"  shall  include Bank of America in its

individual capacity.



      11.09.Successor  Administrative  Agent. The  Administrative  Agent
            --------------------------------
may resign as  Administrative  Agent upon 30 days' notice to the  Lenders.  If

the  Administrative  Agent  shall  resign as  Administrative  Agent under this

Agreement,  the  Requisite  Lenders  shall  appoint  from among the  Lenders a

successor  administrative agent for the Lenders which successor administrative

agent  shall be  consented  to by the  Borrower at all times other than during

the existence of an Event of Default  (which consent of the Borrower shall not

be unreasonably  withheld or delayed).  If no successor  administrative  agent

is  appointed   prior  to  the  effective  date  of  the  resignation  of  the


                                      89
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Administrative  Agent, the Administrative Agent may appoint,  after consulting

with the Lenders and the Borrower,  a successor  agent from among the Lenders.

Upon the acceptance of its  appointment  as successor  agent  hereunder,  such

successor  agent  shall  succeed to all the  rights,  powers and duties of the

retiring  Administrative Agent and the term "Administrative  Agent" shall mean

such  successor  agent and the retiring  Administrative  Agent's  appointment,

powers and  duties as  Administrative  Agent  shall be  terminated.  After any

retiring   Administrative  Agent's  resignation  hereunder  as  Administrative

Agent,  the  provisions of this Article XI and Sections  12.03 and 12.04 shall

inure to its  benefit  as to any  actions  taken or  omitted to be taken by it

while it was  Administrative  Agent  under  this  Agreement.  If no  successor

agent has accepted  appointment as  Administrative  Agent by the date which is

30 days following a retiring  Administrative  Agent's  notice of  resignation,

the retiring  Administrative  Agent's resignation shall nevertheless thereupon

become  effective  and the  Lenders  shall  perform  all of the  duties of the

Administrative  Agent  hereunder  until such time,  if any,  as the  Requisite

Lenders appoint a successor agent as provided for above.



      11.10.The  Arranger.  The  Arranger  shall  have no right,  power,
            -------------
obligation, liability,  responsibility or duty under this Agreement other than

the right to receive the fee  referred to in Section  2.03(a) and the right to
                                             ----------------
indemnity under Section 12.04.
                -------------



      11.11.Syndication  Agents,   Co-Agents  and  Documentation  Agent.
             ----------------------------------------------------------
None of the Lenders  identified on the facing page or signature  pages of this

Agreement as a "Syndication Agent," "Co-Agent" or "Documentation  Agent" shall

have any right or power, obligations,  liability, responsibility or duty under

this  Agreement  other than those  applicable to all Lenders as such.  Without

limiting the  foregoing,  none of the Lenders so  identified  shall have or be

deemed  to have any  fiduciary  relationship  with  any  Lender.  Each  Lender

acknowledges that it has not relied,  and will not rely, on any of the Lenders

so  identified  in deciding to enter into this  Agreement  or in taking or not

taking action hereunder.



    11.12.Collateral  Matters.   (a)  Each  Lender  and  Issuing  Bank
          -------------------
authorizes and directs the  Administrative  Agent to enter into the Collateral

Documents  for the benefit of the Lenders and the Issuing  Banks.  Each Lender

and Issuing Bank agrees that any action taken by the  Administrative  Agent or

the Requisite  Lenders in accordance  with the provisions of this Agreement or

the Collateral Documents,  and the exercise by the Administrative Agent or the

Requisite  Lenders of the powers set forth  herein or therein,  together  with

such other powers as are reasonably  incidental  thereto,  shall be authorized

and binding upon all of the Lenders and the Issuing Banks.



      (b)   The Administrative  Agent is hereby authorized on behalf of all of

the Lenders and the Issuing  Banks,  without the necessity of any notice to or

further  consent from any Lender or Issuing Bank from time to time prior to an

Event of  Default,  to take any  action  with  respect  to any  Collateral  or

Collateral  Documents which may be necessary to perfect and maintain perfected

the Liens upon the Collateral granted pursuant to the Collateral Documents.



      (c)   Each Lender and  Issuing  Bank hereby  irrevocably  authorize  the

Administrative   Agent  to  release  any  Lien  granted  to  or  held  by  the

Administrative  Agent upon any Collateral upon (i) any sale of such Collateral

permitted under this Agreement (or any waiver hereof) and (ii)  termination of


                                        90
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the  Commitments  and payment  and  satisfaction  of all Loans,  Reimbursement

Obligations,  other Letter of Credit Obligations  (whether or not due) and all

other  Obligations which have matured and which the  Administrative  Agent has

been notified in writing are then due and payable.



      11.13.Relations  Among  Lenders.  (a) Each  Lender  agrees that it
            --------------------------
will not take any action,  nor institute any actions or  proceedings,  against

the  Borrower or any other  obligor  hereunder  or any other Loan  Document or

with  respect to any  Collateral,  without  the prior  written  consent of the

Requisite Lenders.



      (b)   The Lenders are not partners or co-venturers,  and no Lender shall

be liable for the acts or  omissions  of, or (except  as  otherwise  set forth

herein in case of the  Administrative  Agent) authorized to act for, any other

Lender.



                                      91
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                                 ARTICLE XII

                                Miscellaneous
                                -------------



      12.01.Assignments and  Participations.  (a) The provisions of this
            -------------------------------
Agreement  shall be  binding  upon and  inure to the  benefit  of the  parties

hereto and their respective  successors and assigns permitted  hereby,  except

that the Borrower  may not assign or  otherwise  transfer any of its rights or

obligations  hereunder  without the prior written  consent of each Lender (and

any  attempted  assignment  or transfer by the  Borrower  without such consent

shall be null and void).  Nothing in this  Agreement,  expressed  or  implied,

shall be construed to confer upon any Person  (other than the parties  hereto,

their  respective  successors and assigns  permitted hereby and, to the extent

expressly  contemplated hereby, the Indemnitees) any legal or equitable right,

remedy or claim under or by reason of this Agreement.



      (b)   At any time after the  Effective  Date,  each Lender may assign to

one or more Eligible  Assignees all or a portion of its rights and obligations

under this Agreement  (including all or a portion of its Commitment,  Loans or

interest in the Letters of Credit);  provided,  that (i) each such  assignment

in respect of  Commitments  or Loans shall cover the same  percentage  of such

Lender's Commitment,  Loans and Letter of Credit Obligations,  (ii) unless the

Administrative  Agent and the Borrower otherwise consent, the aggregate amount

of the  Commitment of the  assigning  Lender being  assigned  pursuant to each

such  assignment  (determined  as of the date of the Assignment and Acceptance

with  respect to such  assignment)  shall in no event be less than  $5,000,000

and shall be an integral  multiple of $100,000 (unless the assigning  Lender's

Commitment,  Loans and Letter of Credit  Obligations are less than $5,000,000,

in which case the  assignment may be in the amount of such  Commitment,  Loans

and Letter of Credit  Obligations)  provided that assignments  between Lenders

shall have no minimum amount,  (iii) except in respect of assignments  between

Lenders and their  Affiliates or any assignment by a Lender in connection with

the  sale  of all or  substantially  all of its  assets,  the  Borrower  shall

consent (which consent shall not be unreasonably  withheld and shall be deemed

to have been given if the  Borrower  has not  expressly  refused  such consent

within five  Business  Days after  notice  thereof has been  delivered  by the

Assigning Lender (through the  Administrative  Agent)) and the  Administrative

Agent and the Issuing Banks shall consent to such assignment  (which shall not

be unreasonably  withheld) and (iv) the parties to each such assignment  shall

execute and deliver to the Administrative  Agent an Assignment and Acceptance,

together  with  processing  and   recordation   fee  of  $3,500.   Subject  to

acceptance and  recordation  thereof by the  Administrative  Agent pursuant to

subsection  (d) of this Section,  from and after the effective  date specified

in each Assignment and Acceptance,  (A) the Eligible Assignee thereunder shall

be a party hereto and, to the extent of the  interest  assigned to it pursuant

to such  Assignment  and  Acceptance,  have the  rights and  obligations  of a

Lender  hereunder  as fully as if such  assignee had been named as a Lender in

accordance  with  the  terms of this  Agreement  and (B) the  Lender  assignor

thereunder  shall,  to the extent of the  interest  assigned by it pursuant to

such  Assignment  and  Acceptance,  relinquish its rights and be released from

its obligations  under this Agreement.  Notwithstanding  any provision of this

Section  12.01,  the consent of the  Borrower  shall not be  required  for any
--------------
assignment  that occurs when an Event of Default  shall have  occurred  and be

continuing with respect to the Borrower.


                                         92
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      (c)   By executing  and  delivering an Assignment  and  Acceptance,  the

Lender assignor  thereunder and the assignee  thereunder  confirm to and agree

with each other and the other parties  hereto as follows:  (i) the  assignment

made under such Assignment and Acceptance is made without  recourse and, other

than as provided in such  Assignment and  Acceptance,  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 any other Loan Document or the  execution,

legality, validity, enforceability,  genuineness, sufficiency or value of this

Agreement  or any other Loan  Document  or any other  instrument  or  document

furnished pursuant hereto;  (ii) such assigning Lender 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 any Loan  Document or any other  instrument  or

document furnished  pursuant hereto;  (iii) such assignee confirms that it has

received  a copy of this  Agreement,  together  with  copies of the  financial

statements  delivered pursuant to Article VI and such other Loan Documents and

other documents and  information as it has deemed  appropriate to make its own

credit  analysis and decision to enter into such  Assignment  and  Acceptance;

(iv)  such  assignee  will,   independently  and  without  reliance  upon  the

Administrative  Agent,  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;   (v)  such  assignee   appoints  and  authorizes  the

Administrative  Agent  to take  such  action  as agent  on its  behalf  and to

exercise such powers under this  Agreement and the other Loan Documents as are

delegated  to the  Administrative  Agent  by the  terms  hereof  and  thereof,

together with such powers as are reasonably  incidental thereto; and (vi) such

assignee  agrees that it will  perform in  accordance  with their terms all of

the  obligations  which by the  terms of this  Agreement  are  required  to be

performed  by it as a  Lender;  and  (vii)  such an  assignee  is an  Eligible

Assignee.



      (d)   Upon its receipt of an Assignment  and  Acceptance  executed by an

assigning  Lender,  the  Administrative  Agent shall,  if such  Assignment and

Acceptance  has been properly  completed and is in  substantially  the form of

Exhibit  12.01 and if the  conditions  for the  assignment  referred to in the
--------------
Assignment  and  Acceptance  set forth in Section  12.01(a) have been met, (i)
                                          -----------------
accept such Assignment and Acceptance,  (ii) record the information  contained

therein in the Register and the Administrative  Agent's Loan Account and (iii)

give  prompt  notice  thereof  to the  Borrower  and the  other  Lenders.  The

Administrative  Agent,  on  behalf  of the  Borrower,  shall  maintain  at the

address of the  Administrative  Agent  referred to in Section  12.10 a copy of
                                                      --------------
each   Assignment  and  Acceptance   delivered  to  it  and  a  register  (the

"Register")  for the recordation of the names and addresses of the Lenders and

the Commitments  of, and principal  amounts of the Loans owing to, each Lender

from time to time  whether  or not  evidenced  by a Note.  The  entries in the

Register  shall be  conclusive,  in the  absence of  manifest  error,  and the

Borrower,  the  Administrative  Agent and the Lenders  shall treat each Person

whose  name is  recorded  in the  Register  as the  owner  of a Loan or  other

obligation  hereunder  for all purposes of this  Agreement  and the other Loan

Documents,  notwithstanding any notice to the contrary.  Any assignment of any

Loan or other  obligation  hereunder shall be effective only upon  appropriate

entries with respect  thereto  being made in the Register.  Any  assignment or

transfer of all or part of a Loan  evidenced by a Note shall be  registered on

the Register only upon  surrender for  registration  of assignment or transfer

of the Note  evidencing such Loan,  accompanied by a duly executed  Assignment

and  Acceptance,  and  thereupon  one or more new Notes in the same  aggregate


                                             93
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principal amount shall be issued to the designated  assignee and the old Notes

shall  be  returned  by  the  Administrative  Agent  to  the  Borrower  marked

"cancelled."  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)   Each Lender may sell  participations to one or more banks or other

entities  (a  "Participant")  as  to  all  or a  portion  of  its  rights  and

obligations  under  this  Agreement   (including  all  or  a  portion  of  its

Commitment,  the Loans  owing to it,  and the  Letter of Credit  Obligations);

provided,  that (i) such Lender's  obligations under this Agreement (including

its Commitment) shall remain  unchanged,  (ii) such Lender shall remain solely

responsible  to  the  other  parties  hereto  for  the   performance  of  such

obligations,  (iii)  the  Borrower,  the  Administrative  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

with regard to any and all payments to be made under this Agreement,  (iv) the

holder of any such participation  shall not be entitled to voting rights under

this Agreement;  provided, however, that the participation agreement between a

Lender and any of its  participants  may provide  that such Lender will obtain

the  approval  of such  participant  prior to any  amendment  or waiver of any

provisions of this  Agreement  which would (A) extend the Final  Maturity Date

of any Loan,  (B) reduce the interest  rate or any fees  hereunder  payable in

respect of any Loan or  Commitment,  or (C)  increase  the  Commitment  of the

Lender granting the  participation if such increase affects such  participant,

and (v) the sale of any such  participations  which  require  the  Borrower to

file a  registration  statement  with the  Commission or under the  securities

regulation laws of any state shall not be permitted.



      (f)   A  Participant  shall be  entitled  to the  benefits  of Sections
                                                                     --------
2.02(f),  2.07(d),  2.08 and 2.09 as though  it were also a Lender  hereunder;
---------------------------------
provided  that no  Participant  shall be  entitled  to receive  any payment or

compensation  in excess of that to which  such  Participant's  selling  Lender

would have been  entitled with respect to the amount of the  Participation  if

such Lender had not sold such Participation.



      12.02.Assignments to Federal  Reserve Banks.  Notwithstanding  any
            -------------------------------------
other  provision  set  forth in this  Agreement,  any  Lender  may at any time

assign  or  pledge  all or any  portion  of its  Loans  and its Note to secure

obligations  of such  Lender,  including  any pledge or  assignment  to secure

obligations  of  such  Lender  to  any  Federal  Reserve  Bank  as  collateral

security  pursuant to Regulation A and any Operating  Circular  issued by such

Federal  Reserve Bank. No such assignment  shall release the assigning  Lender

from its obligations  hereunder or substitute any such pledgee or assignee for

such Lender as a party hereto.



      12.03.Expenses.
            ---------


      (a)   Generally.  Whether or not any Funding  Date shall have  occurred,
            ---------
the Borrower agrees upon demand to pay, or reimburse the Administrative  Agent

for,  all the  Administrative  Agent's and any of its  Affiliates'  reasonable

costs and expenses of every type and nature  (including the  reasonable  fees,

expenses and disbursements of counsel to the  Administrative  Agent (including

the costs and expenses of one outside counsel and,  without  duplication,  the

allocated costs of in-house  counsel)) and all fees,  taxes (except income and


                                             94
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franchise taxes),  assessments and duties incurred by the Administrative Agent

or its  Affiliates in connection  with (i) the  negotiation,  preparation  and

execution  of  this  Agreement   (including  the   satisfaction  or  attempted

satisfaction  of  any  of  the  conditions  set  forth  in  Article  IV),  the

Collateral  Documents and the other Loan Documents and the making of the Loans

hereunder;  (ii) the administration of this Agreement, the Loan Documents, the

Loans and the Collateral; and (iii) the protection,  collection or enforcement

of any of the Obligations or the Collateral.



      (b)   After  Default.  The Borrower  further agrees to pay, or reimburse
            ---------------
the  Administrative  Agent,  the  Issuing  Banks  and  the  Lenders  for,  all

out-of-pocket   costs  and  expenses,   including  the  reasonable   fees  and

disbursements  of counsel to the  Administrative  Agent,  the  Lenders and the

Issuing Banks  (including,  without  duplication,  the allocated cost of staff

counsel) and also  including all costs of settlement  after the  occurrence of

an Event  of  Default,  (i) in  enforcing  any  Obligation  or in  foreclosing

against the  Collateral  or  exercising or enforcing any other right or remedy

available  by reason of such Event of  Default;  (ii) in  connection  with any

refinancing or  restructuring of the credit  arrangements  provided under this

Agreement in the nature of a "work-out"  or in any  insolvency  or  bankruptcy

proceeding,  including  any costs  related  to the  hiring of  consultants  or

experts;  (iii) in  commencing,  defending or intervening in any litigation or

in filing a petition,  complaint,  answer,  motion or other  pleadings  in any

legal  proceeding  relating to the  Borrower  and related to or arising out of

the  transactions  contemplated  hereby or by any of the Loan Documents (other

than, with respect to any Lender,  to the extent resulting from or arising out

of any  litigation by the Borrower  against such Lender in respect of a breach

by such  Lender of its  obligations  under this  Agreement  if such  Lender is

found by a court of competent  jurisdiction  to have breached its  obligations

under this  Agreement  (it being agreed that,  to the extent that the Borrower

shall have paid any fees and  expenses  of such  Lender  relating  to any such

litigation,  such amounts shall be refunded to the Borrower upon such decision

of such  court);  (iv) in taking  any other  action in or with  respect to any

suit or proceeding  (whether in bankruptcy or  otherwise);  (v) in protecting,

preserving,   collecting,   leasing,   selling,   taking   possession  of,  or

liquidating any of the Collateral;  or (vi) attempting to enforce or enforcing

any security  interest in any of the  Collateral or any other rights under the

Collateral  Documents.  Any  payments  made by the Borrower or received by the

Administrative  Agent and  applied as  reimbursements  for costs and  expenses

under this Section  12.03(b)  shall be  apportioned  among the  Administrative

Agent,  the Issuing  Banks and the Lenders in the order of priority  set forth

in Section 2.05(b).
   ---------------



      12.04.Indemnity.  The Borrower further agrees to defend,  protect,
            ---------
indemnify,  and hold harmless the  Administrative  Agent,  the  Arranger,  the

Issuing  Banks  and each  and all of the  Lenders,  each of  their  respective

Affiliates  and each of the  respective  officers,  directors,  employees  and

agents of each of the  foregoing  (collectively,  the  "Indemnified  Parties")

from  and  against  any and all  liabilities,  obligations,  losses,  damages,

penalties,   actions,   judgments,   suits,   claims,   costs,   expenses  and

disbursements  of any  kind or  nature  whatsoever  (including  the  fees  and

disbursements of one counsel (including,  without  duplication,  the allocated

cost of staff  counsel) for such  Indemnified  Parties  (except  that,  in the

event of any actual or apparent  conflicts  of  interest  between or among any

Indemnified  Parties,  such  Indemnified  Parties  shall be entitled to retain

separate  counsel  the fees  and  disbursements  of which  will be paid by the

Borrower) in connection  with any  investigative,  administrative  or judicial

proceeding,  whether or not such  Indemnified  Parties  shall be  designated a

party thereto),  imposed on, incurred by, or asserted against such Indemnified



                                    95
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Parties in any manner  relating  to or arising out of the  Commitment  Letter,

the  transactions  contemplated  hereby  (whether  or  not  consummated),  the

capitalization of the Borrower,  the Convertible  Debentures,  this Agreement,

the Collateral  Documents or any of the other Loan Documents,  any predecessor

loan  documents,  the  Commitments,  the making of the Loans and the making of

and  participation  in the Letters of Credit,  the use or intended  use of the

Letters  of  Credit  and  the  proceeds  of  the  Loans   hereunder,   or  the

relationship  of any Loan  Party,  the  Administrative  Agent and the  Lenders

under  this  Agreement  or  any  other  Loan  Documents   (collectively,   the

"Indemnified  Matters");  provided, that the Borrower shall have no obligation

to an Indemnified  Party  hereunder with respect to (a) matters for which such

Indemnified  Party has been compensated  pursuant to or for which an exemption

is  provided  in  Section  2.02(f),  2.07(d)  or any other  provision  of this

Agreement  and (b)  Indemnified  Matters  caused by or resulting  from (i) the

gross  negligence  or  willful  misconduct  of that  Indemnified  Party  or an

Affiliate of such  Indemnified  Party,  as determined by a final judgment of a

court of competent jurisdiction,  or (ii) a dispute solely between one or more

Lenders,  in such capacity.  To the extent that the  undertaking to indemnify,

pay  and  hold   harmless  set  forth  in  the   preceding   sentence  may  be

unenforceable  because  it is  violative  of any  law or  public  policy,  the

Borrower  shall  contribute  the maximum  portion which it is permitted to pay

and satisfy  under  applicable  law, to the  payment and  satisfaction  of all

Indemnified  Matters  incurred by the Indemnified  Parties.  The agreements in

this Section shall survive the  termination of the  Commitments  and repayment

of all the other Obligations.



      12.05.Change  in   Accounting   Principles.   If  any  changes  in
            ------------------------------------
accounting  principles  from  those  used  by  ATSC  or  the  Borrower  in the

preparation  of the  financial  statements  dated as of  February  3, 2000 are

hereafter required or permitted by the rules, regulations,  pronouncements and

opinions  of  the  Financial   Accounting  Standards  Board  of  the  American

Institute of Certified Public  Accountants (or successors  thereto or agencies

with  similar  functions)  and are  adopted by ATSC or the  Borrower  with the

agreement of its  independent  certified  public  accountants and such changes

result in a change in the method of calculation of any of the pricing  ratios,

financial covenants,  standards or terms found in Articles VIII and IX hereof,

the parties  hereto  agree to enter into  negotiations  in order to amend such

provisions  so as to reflect  equitably  such changes with the desired  result

that the criteria for evaluating ATSC's or the Borrower's  financial condition

shall be the same after such  changes  as if such  changes  had not been made;

provided,  however, that no change in generally accepted accounting principles

that  would  affect  the  method  of  calculation  of  any  of  the  financial

covenants,  standards  or terms  shall be given  effect  in such  calculations

until such provisions are amended,  in a manner  satisfactory to the Requisite

Lenders, to so reflect such change in accounting principles.




      12.06.Setoff.   In   addition   to  any  Liens   granted   to  the
            ------
Administrative  Agent,  the Issuing Banks or the Lenders and any rights now or

hereafter  granted  under  applicable  law and not by way of limitation of any

such Lien or rights,  upon the  occurrence  and during the  continuance of any

Event of Default,  each Lender and Issuing  Bank is hereby  authorized  by the

Borrower at any time or from time to time, without notice to the Borrower,  or

to any other  Person (any such notice being  hereby  expressly  waived) to set

off and to appropriate and to apply any and all deposits  (general or special,

including indebtedness  evidenced by certificates of deposit,  whether matured

or unmatured but not including trust  accounts) and any other  Indebtedness at

any time held or owing by that Lender or Issuing  Bank to or for the credit or


                                          96
================================================================================



the account of the Borrower  against and on account of the  Obligations of the

Borrower to that  Lender or Issuing  Bank  including,  but not limited to, all

Loans and  Letter  of  Credit  Obligations  and all  claims  of any  nature or

description  arising out of or  connected  with this  Agreement  or any of the

other  Loan  Documents,  irrespective  of  whether  or not (a) that  Lender or

Issuing Bank shall have made any demand  hereunder  or (b) the  Administrative

Agent  shall have  declared  the  principal  of and  interest on the Loans and

other  amounts due  hereunder  to be due and payable as permitted by Article X
                                                                     ---------
and  although  said  obligations  and  liabilities,  or  any of  them,  may be

contingent  or  unmatured.  Each Lender and Issuing  Bank agrees that it shall

not,  without the express  consent of the  Administrative  Agent,  and that it

shall, to the extent it is lawfully  entitled to do so during the continuation

of an  Event  of  Default,  upon  the  request  of the  Administrative  Agent,

exercise  its set-off  rights  hereunder  against any accounts of the Borrower

now or hereafter maintained with such Lender or Issuing Bank.



      12.07.Ratable  Sharing.  Subject to Section  2.05(b),  the Lenders
            ----------------              ----------------
agree among  themselves that (a) with respect to all amounts  received by them

which are  applicable to the payment of the  Obligations  (excluding  the fees

described or referred to in Section 2.03),  equitable  adjustment will be made
                            -------------
so that,  in effect,  all such  amounts  will be shared  among them ratably in

accordance with their Pro Rata Shares,  whether received by voluntary payment,

by the exercise of the right of set-off or banker's lien, by  counterclaim  or

cross  action  or by  the  enforcement  of  any  or  all  of  the  Obligations

(excluding  the  fees  described  or  referred  to in  Section  2.03)  or  the
                                                       -------------
Collateral,  (b) if any of them shall by voluntary  payment or by the exercise

of any right of  counterclaim,  setoff,  banke's lien or  otherwise,  receive

payment of a proportion of the aggregate  amount of the Obligations held by it

which is  greater  than its Pro Rata Share of the  payments  on account of the

Obligations  (excluding  the fees  described or referred to in Section  2.03),
                                                                ------------
the one receiving  such excess  payment shall  purchase,  without  recourse or

warranty,  an undivided  interest and participation  (which it shall be deemed

to  have  done  simultaneously  upon  the  receipt  of such  payment)  in such

Obligations  owed to the others so that all such  recoveries  with  respect to

such  Obligations  shall be applied  ratably in accordance with their Pro Rata

Shares;  provided,  however,  that  if all or  part  of  such  excess  payment

received  by the  purchasing  party is  thereafter  recovered  from it,  those

purchases   shall  be  rescinded  and  the  purchase   prices  paid  for  such

participations  shall be  returned  to that party to the extent  necessary  to

adjust  for such  recovery,  but  without  interest  except to the  extent the

purchasing  party  is  required  to  pay  interest  in  connection  with  such

recovery.  The Borrower  agrees that any Lender so purchasing a  participation

from another Lender  pursuant to this Section 12.07 may, to the fullest extent
                                      -------------
permitted by law,  exercise all its rights of payment  (including,  subject to

Section  12.06,  the right of setoff)  with respect to such  participation  as
--------------
fully as if such  Lender  were the  direct  creditor  of the  Borrower  in the

amount of such participation.



      12.08.Amendments  and Waivers.  (a) No  amendment or  modification
            -----------------------
of any  provision of this  Agreement  shall be  effective  without the written

agreement of the Requisite  Lenders and the Borrower,  and no  termination  or

waiver of any  provision  of this  Agreement  or any other Loan  Document,  or

consent to any  departure  by the  Borrower  therefrom,  shall in any event be

effective without the written concurrence of the Requisite Lenders,  which the

Requisite  Lenders  shall  have the right to grant or  withhold  at their sole

discretion;  provided,  however,  that no  amendment,  modification  or waiver

shall,  unless  evidenced  by a  writing  signed  by or on  behalf  of all the

Lenders,  do any of the  following:  (i) increase the Commitment of any Lender


                                      97
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(other than by  assignment  and other than under Section  12.01);  (ii) reduce
                                                 ---------------
the  principal of, or rate of interest on, the Loans or the amount of any fees

payable  hereunder;  (iii) extend the Final  Maturity  Date or the  expiration

date of any Letter of Credit beyond the Final Maturity Date;  (iv) rescind and

annul any  acceleration  of the  maturity  of the Loans at any time  after the

date  of  acceleration;  (v)  release  the  ATSC  Guaranty  or any  Subsidiary

Guaranty and Collateral  Agreement or release  Collateral  having an aggregate

fair market value in excess of 15% of the  aggregate  fair market value of all

Collateral  existing  at  the  time  of  such  release  under  the  Collateral

Documents  (other than as specifically  provided  hereunder);  (vi) change the

definitions  of "Pro Rata Shares" or "Requisite  Lenders";  (vii) increase any

of the  percentages  set forth in the definition of "Advance  Rate"; or (viii)

amend this Section 12.08(a).
           ---------------



      (b)   No  amendment,   modification,   termination,  or  waiver  of  any

provision of this  Agreement or any Loan  Documents  shall,  unless in writing

and signed by the  Administrative  Agent or the Issuing Banks, as the case may

be, in  addition  to the  Requisite  Lenders or  Lenders,  as the case may be,

affect the rights or duties of the Administrative  Agent or the Issuing Banks,

as the  case  may  be,  under  this  Agreement  or  any  Loan  Documents.  The

Administrative   Agent  may,  but  shall  have  no  obligation  to,  with  the

concurrence of any Lender or Issuing Bank, execute amendments,  modifications,

waivers or consents on behalf of such Lender or Issuing Bank.



      (c)   Any  waiver or consent  shall be  effective  only in the  specific

instance  and for the  specific  purpose for which it was given.  No notice to

or demand on the Borrower in any case shall  entitle the Borrower to any other

or further notice or demand in similar or other circumstances.



      (d)   Any  amendment,  modification,   termination,  waiver  or  consent

effected  in  accordance  with this  Section  12.08  shall be  binding on each
                                     --------------
assignee,  transferee,  recipient  of a  Lender's  Commitment  or Loans,  each

future assignee, transferee,  recipient of a Lender's Commitment or Loans and,

if signed by the Borrower, on the Borrower.



      12.09.Independence  of Covenants.  All covenants  hereunder  shall
            --------------------------
be given  independent  effect so that if a  particular  action or condition is

not  permitted by any of such  covenants,  the fact that it would be permitted

by an  exception  to, or be  otherwise  within  the  limitations  of,  another

covenant  shall not avoid the  occurrence  of an Event of Default or Potential

Event of Default if such action is taken or condition exists.



      12.10.Notices.
            -------


      (a)   Unless  otherwise   specifically  provided  herein,  all  notices,

requests and other  communications  provided for hereunder shall be in writing

(including by facsimile  transmission),  provided that any matter  transmitted

by the Borrower by  facsimile  shall be  immediately  confirmed by a telephone

call to the recipient at the number  specified in Schedule 1.01(a) and mailed,
                                                  ----------------
faxed or delivered:  if to the Borrower or the  Administrative  Agent,  to the

address or facsimile  number  specified on the signature  pages hereof and, if

to any Lender,  to the address or facsimile  number  specified  for notices in

Schedule 1.01(a) or in the applicable  Assignment and Acceptance or, as to the
----------------
Borrower  or the  Administrative  Agent,  to such  other  address  as shall be



                                        98
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designated by such party in a written notice to the other  parties,  and as to

each other party,  at such other  address as shall be designated by such party

in a written notice to the Borrower and the Administrative Agent.



      (b)   All  such  notices,   requests  and  communications   shall,  when

transmitted  by overnight  (next-day)  delivery or faxed,  be effective on the

next day or when transmitted by facsimile  machine,  respectively;  if mailed,

be effective  upon the third  Business Day after the date  deposited  into the

U.S. mail, or if delivered,  be effective  upon delivery;  except that notices

pursuant to Article II or XI shall not be effective  until  actually  received
            ----------------
by the Administrative Agent.



      (c)   Any  notice,  request or  communication  permitted  to be given by

telephone shall be confirmed immediately in writing, including by facsimile.



      (d)   The  Borrower  acknowledges  and agrees that any  agreement of the

Administrative  Agent and the Lenders to receive  certain notices by telephone

and  facsimile  is  solely  for  the  convenience  and at the  request  of the

Borrower.  The Administrative  Agent and the Lenders shall be entitled to rely

on the  authority of any Person  purporting  to be a Person  authorized by the

Borrower  to give such  notice and the  Administrative  Agent and the  Lenders

shall not have any  liability  to the  Borrower or any other Person on account

of any action  taken or not taken by the  Administrative  Agent or the Lenders

in reliance upon such  telephonic or facsimile  notice.  The obligation of the

Borrower  to repay the Loans shall not be affected in any way or to any extent

by any failure by the Administrative  Agent and the Lenders to receive written

confirmation  of any  telephonic  or  facsimile  notice or the  receipt by the

Administrative  Agent and the Lenders of a  confirmation  which is at variance

with the terms  understood by the  Administrative  Agent and the Lenders to be

contained in the telephonic or facsimile notice.



      12.11.Survival  of  Warranties  and  Agreements.  All  agreements,
            -----------------------------------------
representations  and  warranties  made herein shall  survive the execution and

delivery of this  Agreement and the other Loan Documents and the making of the

Loans hereunder.



      12.12.Failure or Indulgence Not Waiver;  Remedies  Cumulative.  No
            -------------------------------------------------------
failure or delay on the part of the Administrative  Agent, any Issuing Bank or

any Lender in the exercise of any power,  right or privilege  under any of the

Loan Documents shall impair such power,  right or privilege or be construed to

be a waiver of any default or  acquiescence  therein,  nor shall any single or

partial exercise of any such power,  right or privilege  preclude any other or

further  exercise  thereof  or of any other  right,  power or  privilege.  All

rights and remedies  existing  under the Loan  Documents are cumulative to and

not exclusive of any rights or remedies otherwise available.



      12.13.Marshalling;  Recourse  to  Security;  Payments  Set  Aside.
            -----------------------------------------------------------
Neither any Lender nor the Administrative  Agent shall be under any obligation

to marshal  any assets in favor of the  Borrower or any other party or against

or in payment of any or all of the  Obligations.  Recourse to  security  shall

not be required at any time.  To the extent that the Borrower  makes a payment

or payments to the Administrative  Agent or the Lenders, or the Administrative

Agent or the Lenders  enforce  their  security  interests  or  exercise  their

rights of  setoff,  and such  payment  or  payments  or the  proceeds  of such



                                         99
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enforcement  or  setoff  or any part  thereof  are  subsequently  invalidated,

declared to be fraudulent  or  preferential,  set aside and/or  required to be

repaid to a trustee,  receiver or any other party  under any  bankruptcy  law,

state or federal  law,  common law or equitable  cause,  then to the extent of

such  recovery,  the  obligation  or part  thereof  originally  intended to be

satisfied,  and all Liens, right and remedies  therefor,  shall be revived and

continued  in full  force and effect as if such  payment  had not been made or

such enforcement or setoff had not occurred.



      12.14.Severability.  In case any provision in or obligation  under
            ------------
this  Agreement  or the other  Loan  Documents  shall be  invalid,  illegal or

unenforceable in any jurisdiction,  the validity,  legality and enforceability

of  the  remaining  provisions  or  obligations,   or  of  such  provision  or

obligation  in any other  jurisdiction,  shall not in any way be  affected  or

impaired thereby.



      12.15.Headings.  Article  and Section  headings in this  Agreement
            --------
are  included   herein  for  convenience  of  reference  only  and  shall  not

constitute  a part of this  Agreement  for any other  purpose  or be given any

substantive effect.



      12.16.Governing  Law.  THIS  AGREEMENT  SHALL BE GOVERNED  BY, AND
            --------------
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE  WITH,  THE LAWS OF THE STATE OF

NEW YORK.



      12.17.Confidentiality.  Each  Lender  agrees  to take  normal  and
            ---------------
reasonable  precautions and exercise due care to maintain the  confidentiality

of all  information  provided to it by ATSC or the Borrower or any  Subsidiary

of the Borrower,  or by the  Administrative  Agent on ATSC's or the Borrower's

or such  Subsidiary's  behalf,  in connection with this Agreement or any other

Loan  Document,  and neither it nor any of its  Affiliates  shall use any such

information  for any purpose or in any manner other than pursuant to the terms

contemplated by this Agreement;  except to the extent such information (i) was

or  becomes  generally  available  to the  public  other than as a result of a

disclosure   by  such   Lender,   (ii)   was  or   becomes   available   on  a

non-confidential  basis from a source other than the  Borrower,  provided such

source is not bound by fiduciary duty or a confidentiality  agreement with the

Borrower  known to such  Lender,  or (iii)  was or is made  available  to such

Lender  on a  nonconfidential  basis  prior  to  disclosure  by the  Borrower;

provided,  however,  that any Lender may disclose such  information (A) at the
--------   -------
request or pursuant to any requirement of any Governmental  Authority to which

such Lender is subject or in connection  with an examination of such Lender by

any such authority;  (B) pursuant to subpoena or other court process; (C) when

required  to do  so in  accordance  with  the  provisions  of  any  applicable

Requirement of Law; (D) to the extent  reasonably  required in connection with

any litigation or proceeding to which the Administrative  Agent, any Lender or

their  respective  Affiliates  may be party  and  which is  necessary  in such

party's  judgment to protect the interest of such party in connection with any

claim or dispute involving such party, (E) to the extent  reasonably  required

in  connection  with the  exercise of any remedy  hereunder or under any other

Loan Document, (F) to its and its Affiliates' directors,  officers,  employees

and  agents,   including  independent   auditors,   legal  counsel  and  other

professional  advisors,  which Persons to whom such disclosure is made will be

informed of the  confidential  nature of such  information  and  instructed to

keep such information confidential;  (G) to any other party to this Agreement;

(H) with the written  consent of ATSC or the Borrower or any Subsidiary of the

Borrower;  and (I) to the National  Association of Insurance  Commissioners or


                                 100
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any other similar  organization  or any  nationally  recognized  rating agency

that  requires   access  to  information   about  a  Lender's  or  Affiliate's

investment  portfolio in connection  with ratings  issued with respect to such

Lender or its  Affiliates.  If any Lender  becomes  compelled  to disclose any

information  pursuant  to  clause  (A),  (B),  (C) or  (D) of the  immediately

preceding sentence,  such Lender shall provide prior written notice thereof to

the  Borrower  to the  extent  practicable  and  permitted  by law  and  shall

cooperate  with  the  Borrower  to  take,  at  the  Borrower's  expense,   all

reasonably  available  actions to limit  disclosure to the extent permitted by

law.  Notwithstanding  the foregoing,  the Borrower  authorizes each Lender to

disclose  to any  Participant  or  Eligible  Assignee  and to any  prospective

Participant  or Eligible  Assignee,  such  financial and other  information in

such Lender's  possession  concerning ATSC or the Borrower or its Subsidiaries

which has been delivered to  Administrative  Agent or the Lenders  pursuant to

this Agreement or which has been delivered to the Administrative  Agent or the

Lenders by the Borrower in connection with the Lenders'  credit  evaluation of

the Borrower  prior to entering into this  Agreement;  provided  that,  unless

otherwise  agreed by the  Borrower,  such  Participant  or  Eligible  Assignee

agrees in writing to such Lender to keep such information  confidential to the

same extent required of the Lenders hereunder.




      12.18.Consent to Jurisdiction  and Service of Process;  Waiver of
            -----------------------------------------------------------
Jury  Trial.  ALL  JUDICIAL  PROCEEDINGS  BROUGHT  AGAINST THE  BORROWER,  THE
-----------
ADMINISTRATIVE  AGENT,  THE  ISSUING  BANKS,  THE  ARRANGER,  THE  SYNDICATION

AGENTS,  THE  DOCUMENTATION  AGENT  AND  THE  LENDERS  WITH  RESPECT  TO  THIS

AGREEMENT  OR ANY OTHER LOAN  DOCUMENT  MAY BE BROUGHT IN ANY STATE OR FEDERAL

COURT OF  COMPETENT  JURISDICTION  IN THE STATE OF NEW YORK,  AND BY EXECUTION

AND DELIVERY OF THIS AGREEMENT,  THE BORROWER,  THE ADMINISTRATIVE  AGENT, THE

ISSUING BANKS, THE ARRANGER,  THE SYNDICATION  AGENTS, THE DOCUMENTATION AGENT

AND  THE  LENDERS  EACH  ACCEPT,   FOR  ITSELF  AND  IN  CONNECTION  WITH  ITS

PROPERTIES,  GENERALLY AND UNCONDITIONALLY,  THE NONEXCLUSIVE  JURISDICTION OF

THE  AFORESAID  COURTS,  AND  IRREVOCABLY  AGREES  TO BE  BOUND  BY ANY  FINAL

JUDGMENT  RENDERED  THEREBY IN  CONNECTION  WITH THIS  AGREEMENT OR ANY OF THE

OTHER LOAN  DOCUMENTS  FROM  WHICH NO APPEAL  HAS BEEN TAKEN OR IS  AVAILABLE.

EACH OF THE  BORROWER,  THE  ADMINISTRATIVE  AGENT,  THE  ISSUING  BANKS,  THE

ARRANGER,  THE SYNDICATION  AGENTS,  THE  DOCUMENTATION  AGENT AND THE LENDERS

IRREVOCABLY  CONSENTS TO THE  SERVICE OF PROCESS OF ANY OF THE  AFOREMENTIONED

COURTS IN ANY SUCH ACTION OR  PROCEEDING  BY THE MAILING OF COPIES  THEREOF BY

REGISTERED  OR CERTIFIED  MAIL,  POSTAGE  PREPAID,  TO ITS  RESPECTIVE  NOTICE

ADDRESSES  SPECIFIED ON THE  SIGNATURE  PAGES  HEREOF,  SUCH SERVICE TO BECOME

EFFECTIVE TEN DAYS AFTER SUCH  MAILING.  EACH PARTY TO THIS  AGREEMENT  HEREBY

EXPRESSLY WAIVES ANY RIGHT TO (A) TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION

OR CAUSE OF ACTION  ARISING  UNDER ANY LOAN  DOCUMENT OR IN ANY WAY  CONNECTED

WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF

THEM WITH RESPECT TO ANY LOAN DOCUMENT,  OR THE TRANSACTIONS  RELATED THERETO,

IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER  FOUNDED


                                     101
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IN CONTRACT OR TORT OR  OTHERWISE;  AND EACH PARTY HEREBY  AGREES AND CONSENTS

THAT ANY SUCH  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE DECIDED BY

COURT TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS  AGREEMENT MAY FILE AN

ORIGINAL  COUNTERPART  OR A COPY OF THIS  SECTION  WITH ANY  COURT AS  WRITTEN

EVIDENCE  OF THE  CONSENT  OF THE  SIGNATORIES  HERETO TO THE  WAIVER OF THEIR

RIGHT TO TRIAL BY JURY, AND (B) ANY OBJECTION  (INCLUDING ANY OBJECTION OF THE

LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS)  WHICH IT MAY

NOW OR HEREAFTER  HAVE TO THE BRINGING OF ANY SUCH ACTION OR  PROCEEDING  WITH

RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY  JURISDICTION  SET

FORTH ABOVE.  NOTHING  HEREIN  SHALL AFFECT THE RIGHT TO SERVE  PROCESS IN ANY

OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY PARTY HERETO TO

BRING  PROCEEDINGS  AGAINST ANY OTHER PARTY  HERETO IN THE COURTS OF ANY OTHER

JURISDICTION.



      12.19.Counterparts;   Effectiveness;   Inconsistencies.  (a)  This
            ------------------------------------------------
Agreement  and  any  amendments,  waivers,  consents,  or  supplements  may be

executed in  counterparts,  each of which when so executed and delivered shall

be deemed an original,  but all such  counterparts  together shall  constitute

but one and the same instrument.



      (b)   This  Agreement  shall  become  effective   against  each  of  the

Borrower,  each Lender,  each Issuing  Bank,  the  Arranger,  the  Syndication

Agents,  the Documentation  Agent and the  Administrative  Agent hereto on the

date when all of such parties have duly executed and delivered  this Agreement

to each  other  (delivery  by the  Borrower  to the  Syndication  Agents,  the

Documentation  Agent, the Issuing Banks and the Lenders and by any Syndication

Agent,  Issuing  Bank or Lender  or the  Documentation  Agent to the  Borrower

being deemed to have been made by delivery to the Administrative Agent).



      (c)   This  Agreement  and each of the  other  Loan  Documents  shall be

construed to the extent  reasonable to be consistent  one with the other,  but

to the extent that the terms and  conditions  of this  Agreement  are actually

inconsistent  with the terms and conditions of any other Loan  Document,  this

Agreement shall govern.



                                   102
================================================================================


      IN WITNESS  WHEREOF,  this  Agreement has been duly executed on the date
set forth above.

                           ANNTAYLOR, INC., as Borrower


                           By:  /s/ James M. Smith
                                --------------------------
  `                             Name: James M. Smith
                                Title:Senior Vice President-Chief Financial
                                          Officer


                           Address for Notices:
                           1372 Broadway
                           New York, New York 10018
                           Attention:  Senior Vice President and General Counsel
                           Facsimile No.: (212) 536-4412
                           Telephone No.: (212) 536-4253

                           With a copy to:
                           AnnTaylor, Inc.
                           414 Chapel Street
                           New Haven, CT 06511
                           Attention:  Senior Vice President-Chief Financial
                                           Officer
                           Facsimile No.: (203) 865-2756
                           Telephone No.: (203) 865-0811




                             Signature Page 1 of 11
================================================================================

                              BANK OF AMERICA, N.A., as Administrative Agent

                              By:   /s/ Timothy H. Spanos
                                    ------------------------------
                              Name: Timothy H. Spanos
                              Title:Managing Director


                              BANK OF AMERICA, N.A., as a Lender

                              By:   /s/ Timoth H. Spanos
                              Name: Timothy H. Spanos
                              Title:Managing Director


                              Address for notices of borrowing, prepayments
                              and
                              other administrative matters:
                              1850 Gateway Boulevard, 5th Floor
                              Concord, California 94520
                              Attention:  Agency Administrative Services #5596
                                   Jeff S. Khamsivone
                              Facsimile No.:  (888) 969-2451
                              Telephone No.:  (925) 675-8432

                              Address for all other notices (including with
                              respect
                              to amendments and waivers):
                              1455 Market Street, 12th Floor
                              San Francisco, California  94103
                              Attention:  Agency Management #10831
                                   Dietmar Schiel, Vice President
                              Facsimile No.:  (415) 436-3425
                              Telephone No.:  (415) 436-2769

                              Payment Instructions:
                              Bank of America, N.A.
                              Dallas, Texas
                              ABA # 111-000-012
                              Account Number: 3750836479
                              Reference:  AnnTaylor, Inc.


                             Signature Page 2 of 11
================================================================================

                              JP MORGAN, a division of CHASE SECURITIES,
                              INC., as Syndication Agent

                              By:   /s/ B. Joseph Lillis
                                    -------------------------
                              Name: B. Joseph Lillis
                              Title:Managing Director


                              THE CHASE MANHATTAN BANK, as a Lender

                              By:   /s/ Thomas Bev
                                    --------------------------
                              Name: Thomas Bev
                              Title:Vice President


                              Address for Notices:
                              The Chase Manhattan Bank
                              1411 Broadway, 5th Floor
                              New York, New York  10018
                              Attention: Craig G. Transue
                              Telephone No.:  (212) 391-2208
                              Facsimile No.:  (212) 391-2102

                              Payment Instructions:
                              The Chase Manhattan Bank
                              4 Metrotech Center
                              Brooklyn, New York 11245
                              ABA No.:  021000021
                              Account Name: Commercial Loan #9420
                              Account No.:  _________________
                              Reference:  AnnTaylor, Inc.

                              Address for Letter of Credit Fee Payment:
                              The Chase Manhattan Bank
                              ABA No.:  021000021
                              4 Metrotech Center
                              Brooklyn, New York 11245
                              Attn:  Leila Johnson, Participation Unit
                              For Credit No.: 324331754
                              Reference:  AnnTaylor, Inc.


                             Signature Page 3 of 11
================================================================================

                              FIRST UNION NATIONAL BANK,
                              as Syndication Agent

                              By:   /s/ Susan T. Vitale
                                    --------------------------
                              Name: Susan T. Vitale
                              Title:Assistant Vice President


                              FIRST UNION NATIONAL BANK, as a Lender

                              By:   /s/ Susan T. Vitale
                                    --------------------------
                              Name: Susan T. Vitale
                              Title:Assistant Vice President


                              Address for Notices:
                              First Union National Bank
                              201 South College Street
                              Charlotte, North Carolina  28288
                              Attention:  Lisa VanNote
                              Telephone No.:  (704) 374-4282
                              Facsimile No.:  (704) 383-7999

                              Payment Instructions:
                              First Union National Bank
                              Charlotte, North Carolina
                              ABA No.:  053000219
                              Account Name:  Retail
                              Account No.:  01459168114011
                              Attention:  Lisa VanNote
                              Reference:  AnnTaylor, Inc.


                             Signature Page 4 of 11
================================================================================

                              FLEET NATIONAL BANK,
                              as Documentation Agent

                              By:   /s/ Thomas J. Bullard
                                    --------------------------
                              Name: Thomas J. Bullard
                              Title:Director


                              FLEET NATIONAL BANK, as a Lender

                              By:   /s/ Thomas J. Bullard
                                    --------------------------
                              Name: Thomas J. Bullard
                              Title:Director


                              Address for notices:
                              Fleet National Bank
                              MADE10008F
                              100 Federal Street
                              Boston, Massachusetts  02110
                              Attention:  Tom Bullard
                              Telephone No.:  (617) 434-3824
                              Facsimile No.:  (617) 434-6685

                              Payment Instructions:
                              Fleet National Bank
                              Boston, Massachusetts
                              ABA No.:  011-000-138
                              Account Name:  Commercial Loan Services
                              Account No.:  1510351-66156
                              Reference:  AnnTaylor, Inc.


                             Signature Page 5 of 11
================================================================================

                              THE CIT GROUP/BUSINESS CREDIT, INC.,
                              as Co-Agent

                              By:   /s/ Peter L. Skavla
                                    ---------------------
                              Name: Peter L. Skavla
                              Title:Vice President


                              THE CIT GROUP/BUSINESS CREDIT, INC.,
                              as a Lender

                              By:   /s/ Peter L. Skavla
                                    ------------------------
                              Name: Peter L. Skavla
                              Title:Vice President


                              Address for Notices:
                              The CIT Group/Business Credit, Inc.
                              1211 Avenue of the Americas
                              New York, New York  10036
                              Attention:  Julianne Low
                              Telephone No.:  (212) 790-9105
                              Facsimile No.:  (212) 536-1295

                              Payment Instructions:
                              Chase Manhattan Bank, New York
                              New York, New York
                              ABA No.:  021000021
                              Account Name: The CIT Group/Business Credit, Inc.
                              Account No.:  144-0-64425
                              Reference:  AnnTaylor, Inc.


                             Signature Pae 6 of 11
================================================================================

                              FIRSTAR BANK, N.A., as Co-Agent

                              By:   /s/ Thomas L. Bayer
                                    -----------------------
                              Name: Thomas L. Bayer
                              Title:Vice President


                              FIRSTAR BANK, N.A., as a Lender

                              By:   /s/ Thomas L. Bayer
                                    ---------------------------
                              Name: Thomas L. Bayer
                              Title:Vice President


                              Address for Notices:
                              Firstar Bank, N.A.
                              One Firstar Plaza, Tram 12-3
                              St. Louis, Missouri  63101
                              Attention:  Thomas L. Bayer
                              Telephone No.:  (314) 418-3993
                              Facsimile No.:  (314) 418-1963

                              Payment Instructions:
                              Firstar Bank
                              St. Louis, Missouri
                              ABA No.:  081000210
                              Account No.:  1620007599
                              Attention:  L/C Payment - D. Sansom
                              Reference:  AnnTaylor, Inc.

                             Signature Page 7 of 11
================================================================================

                              TRANSAMERICA BUSINESS CAPITAL CORPORATION, as
                              Co-Agent

                              By:   /s/ Stephen Goetschius
                                    ------------------------------
                              Name: Stephen Goetschius
                              Title:Senior Vice President


                              TRANSAMERICA BUSINESS CAPITAL CORPORATION, as a
                              Lender

                              By:   /s/ Stephen Goetschius
                                    --------------------------------
                              Name: Stephen Goetschius
                              Title:Senior Vice President


                              Address for Notices:
                              Transamerica Business Capital Corporation
                              555 Theodore Fremd Avenue, Suite C-301
                              Rye, New York  10580
                              Attention:  Gayani Herath
                              Telephone No.:  (914) 925-7231
                              Facsimile No.:  (914) 921-7248

                              Payment Instructions:
                              Bank One
                              Chicago, Illinois
                              ABA No.:  071-000-013
                              Account No.:  52-97184
                              Reference:  AnnTaylor, Inc.

                             Signature Page 8 of 11
================================================================================

                              BANK LEUMI USA, as a Lender

                              By:   /s/ John Koenigsberg
                                    ----------------------------
                              Name: John Koenigsberg
                              Title:First Vice President

                              By:   /s/ Phyllis Rosenfeld
                                    ------------------------------
                              Name: Phyllis Rosenfeld
                              Title:Vice President


                              Address for Notices:
                              Bank Leumi USA
                              562 Fifth Avenue
                              New York, New York  10036
                              Attention:  Phyllis Rosenfeld
                              Telephone No.:  (212) 626-1322
                              Facsimile No.:  (212) 626-1311

                              Payment Instructions:
                              Bank Leumi USA
                              New York, New York
                              ABA No.:  026002794
                              Account No.:  0190148600
                              Attention:  Loan Operations
                              Reference:  AnnTaylor, Inc.


                             Signature Page 9 of 11
================================================================================

                              FIFTH THIRD BANK, as a Lender

                              By:   /s/ Ann Pierson
                                    -------------------------
                              Name: Ann Pierson
                              Title:Corporate Banking Officer


                              Address for Notices:
                              Fifth Third Bank
                              38 Fountain Square
                              Cincinnati, Ohio  45263
                              Attention: Ann Person, Corporate Banking Officer
                              Telephone No.:  (513) 579-5295
                              Facsimile No.:   (513) 744-5947

                              Payment Instructions:
                              Fifth Third Bank of America
                              Cincinnati, Ohio
                              ABA No.:  042000314
                              Account No.: 72876175
                              Attention: Jennifer Pund
                              Reference:  AnnTaylor, Inc.


                            Signature Page 10 of 11
================================================================================

                              BANC OF AMERICA SECURITIES LLC,
                              as Lead Arranger

                              By: /s/ Anthony Benedetto
                                  -----------------------
                              Name:   Anthony Benedetto
                              Title:  Principal


                            Signature Page 11 of 11

</TEXT>
</DOCUMENT>
